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Home My WebLink AboutCVRC Agenda Packet 2006/05/25 . lv,,,. " . '"~\r', i\; , ":':t~; , "'."'.' . {' '( jf'~F( )r,~,'\-i!( )i"'~ CHULA VISTA Council Chambers Table REGULAR MEETING OF THE CHULA VISTA REDEVELOPMENT CORPORATION (CVRC) Thursday, May 25, 2006, 6:00 p.m. COUNCIL CHAMBERS 276 FOURTH AVENUE CHULA VISTA, CA 91910 CALL TO ORDER ROLL CALL Board Members Castaneda, Chavez, Desrochers, Lewis, McCann, Paul, Rindone, Rooney and Chairman Padilla. PLEDGE OF ALLEGIANCE, MOMENT OF SILENCE CONSENT CALENDAR (Item 1) 1. APPROVAL OF MINUTES - May 11,2006 PUBLIC COMMENTS ACTION ITEMS 2. CONSIDERATION OF THE REDEVELOPMENT AGENCY FIVE YEAR IMPLEMENTATION PLAN (2005-2009) FOR THE MERGED BA YFRONTITOWN CENTRE REDEVELOPMENT PROJECT AREA (INCLUDING BAYFRONT AND TOWN CENTRE I) AND THE MERGED CHULA VISTA REDEVELOPMENT PROJECT AREA (INCLUDING TOWN CENTRE II, SOUTHWEST, OTAY VALLEY AND ADDED AREA) The Five Year Implementation Plan has been prepared in accordance with the statutory requirements of redevelopment law and is a strategic planning document for the Redevelopment Agency which outlines key steps to successful redevelopment of western Chula '{ista for the next five years. Staff Recommendation: That the CVRC adopt the following resolution: 2. r(oroftim.lel:1l ~ESOWTiON OF THE (]-tULA VISTA REDEVElOPMENT CORPORATION MAKiNG RECOMMENDATION TO THE (HULA VISTA REDEVELOPMENT AGENCY TO ADOPT A FIVE YEAR IMPLEMENTATION PLAN FOR THE 2005- 2009 FIVE YEAR PERIOD FOR THE MERGED BAYFRONTfTOWN CENTRE I REDEVELOPMENT PROJECT AREA (INCLUDING BAYFRONT AND TOWN CENTRE i) AND THE MERGED CHULA VISTA REDEVELOPMENT PROJECT AREA (INCLUDING TOWN CENTRE II, SOUTHWEST, OTAY VALLEY, AND ADDED AREA) 3. CONSIDERATION OF AMENDING REDEVELOPMENT PLANS FOR (1) THE MERGED BAYFRONT/TOWN CENTRE I REDEVELOPMENT PROJECT AREA (ONLY PERTAINING TO BAYFRONT ORIGINAL AND TOWN CENTRE I); AND (2) THE MERGED CHULA VISTA REDEVELOPMENT PROJECT AREA (ONLY PERTAINING TO TOWN CENTRE II ORIGINAL AND OTAY VALLEY) PURSUANT TO SENATE Bill 1096 AS CODIFIED IN HEALTH AND SAFETY CODE SECTION 33333.6 The Chula Vista Redevelopment Corporation is a recommending body to the Chula Vista Redevelopment Agency on legislative actions involving redevelopment funds, plans and regulations. The Redevelopment Agency is required to make payment to a special state account - the Educational Revenue Augmentation Fund. In exchange, the State Legislature authorized agencies to extend the effectiveness of their redevelopment plans by up to two years, provided the agency can make certain findings. Staff Recommendation: That the CVRC adopt the following resolutions: a. RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION MAKING RECOMMENDATION TO THE CITY COUNCIL TO ADOPT AN ORDINANCE AMENDING REDEVELOPMENT PLANS FOR THE MERGED BAYFRONT/TOWN CENTRE I REDEVELOPMENT PROJECT AREA (ONLY PERTAINING TO BAYFRONT ORIGINAL AND TOWN CENTRE I) PURSUANT TO SENATE BILL 1096 AS CODIFIED IN HEALTH AND SAFETY CODE SECTION 33333.6 b. RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION MAKING RECOMMENDATION TO THE CITY COUNCIL TO ADOPT AN ORDINANCE AMENDING THE REDEVELOPMENT PLAN FOR THE MERGED CHULA VISTA REDEVELOPMENT PROJECT AREA (ONLY PERTAINING TO TOWN CENTRE II ORIGINAL AND OTAY VAllEY) PURSUANT TO SENATE Bill 1096 AS CODIFIED IN HEALTH AND SAFETY CODE SECTION 33333.6 Page 2 of 4 CYRC - Agenda - OS/25/06 4. CONSmlE~T~ON OIF ~SSUANCIE AND SALlE BY THlIE ~mlE'\IIELOI'MIENT AGIENCY 01' TAX AU.OCAlrilON ~IEWNmNG BONDS, ~N TWO O~ MO~IE SE~!ES, IN THIE AGGREGATlE PRiNOi"Al AMOUNT m: NOT TO EXCEED $211.5 MIlliON IN CONNECTiON WiTH THE BAYFRONT/TOWN CENnE i REDEVELOPMENT PROJECT The Chula Vista Redevelopment Corporation is a recommending body to the Chula Vista Redevelopment Agency on financial matters involving redevelopment funds. The refunding of the 1994 Senior Tax Allocation Refunding Bonds, Series A and D, and the 1994 Subordinate Tax Allocation Refunding Bonds, Series C, based on current projections, would provide an annual debt service savings to the Redevelopment Agency of $500,000, or a total savings of $4.8 million over the remaining 20 years of the bonds (20% of the par amount of the bonds). Staff Recommendation: That the CVRC adopt the following resolutions: a. RESOLUTiON OF THE CHULA VISTA REDEVElOPMENT CORPORATION RECOMMENDING THAT THE REDEVElOPMENT AGENCY AUTHORIZE THE ISSUANCE AND SALE OF TAX ALLOCATION REFUNDING BONDS iN THE AGGREGATE PRINCIPAL AMOUNT OF NOT-TO-EXCEED $28,500,000 IN CONNECTION WITH THE BAYFRONTITOWN CENTRE REDEVElOPMENT PROJECT, AND APPROVE RElATED DOCUMENTS b. RESOLUTION OF THE CHULA VISTA REDEVElOPMENT CORPORATION RECOMMENDING THAT THE CITY COUNCIL AND REDEVELOPMENT AGENCY (1) APPROVE ENTERING INTO AN AGREEMENT WITH E.j. DE LA ROSA & CO. AS UNDERWRITERS FOR THE REFUNDING OF THE CITY OF CHULA VISTA REDEVElOPMENT AGENCY 1994 SENIOR TAX ALLOCATION BONDS, SERIES C AND D; AND (2) APPROVE ENTERING INTO THE SECOND AMENDMENT TO THE AGREEMENT WITH HARRElL & COMPANY ADVISORS, LLC TO SERVE AS FINANCIAL ADVISORS FOR THIS BOND ISSUANCE AND ASSOCIATED REFUNDlNGS IN A FORM ACCEPTABLE TO THE CITY ATTORNEY'S OFFICE PUBLIC HEARINGS 5. PUBLIC HEARING: CONSIDERATION OF DESIGN REVIEW APPLICATION (DRC-05-50) AND OWNER PARTICIPATION AGREEMENT FOR EXTERIOR AND INTERIOR TENANT IMPROVEMENTS TO MODIFY AN EXISTING STRUCTURE LOCATED AT 320 THIRD AVENUE FOR THE OPERATION OF A NEW FITNESS HEALTH ClUB Exterior and interior tenant modifications to an existing structure located at 320 Third Avenue for the purpose of opening a 24 Hour Fitness Center. The structure was previously occupied by the CinemaStar Theater and has been vacant for over five years. Page 3 of 4 CVRC - Agenda - OS/25/06 5. Clmftnm.!ed Staff Recommendation: That the CVRC adopt the following resolution: RESOLUTION OF THE CHUlA VISTA REDEVElOPMENT CORPORATION RECOMMENDING THAT THE REDEVELOPMENT AGENCY (1) APPROVE DESiGN REVIEW PERMIT (DRC-05-50); AND (2) ADOPT AN OWNER PARTICIPATION AGREEMENT FOR EXTERIOR AND INTERIOR TENANT IMPROVEMENTS TO MODIFY AN EXISTING 25,742 SQUARE-FOOT STRUCTURE LOCATED AT 320 THIRD AVENUE FOR THE OPERATION OF A NEW ATHLETIC FITNESS HEALTH ClUB (FANCHER DEVELOPMENT SERVICES) 6. CHIEF EXECUTIVE OFFICER'S REPORTS a. Cancellation of June 8 CYRC meeting 7. CHAIRMAN'S REPORTS 8. DIRECTORS' COMMENTS ADJOURNMENT The Chula Vista Redevelopment Corporation will adjourn to its next regularly scheduled meeting on June 22,2006, at 6:00 p.m. In compliance with the AMERICANS WITH DISABILITIES ACT The Chula Vista Redevelopment Corporation requests individuals who require special accommodations to access, attend, and/or participate in a CVRC meeting, activity, or service request such accommodation at least forty-eight hours in advance for meetings and five days for scheduled services and activities. Please contact the Community Development Department for specific information at (619) 691-5047, or Telecommunications Devices for the Deaf (TDD) at (619) 585-5655. California Relay Service is also available for the hearing impaired. Page 4 of 4 CYRC - Agenda - OS/25106 MINUTES OF A REGULAR MEETING OF THE CHULA VISTA REDEVELOPMENT CORPORATION (CVRC) May 11,2006 6:00 P.M. A Regular Meeting of the Chula Vista Redevelopment Corporation of the City of Chula Vista was called to order at 6:04 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: PRESENT: Directors: Castaneda (arrived at 6:07 p.m.), Chavez, Desrochers, Lewis, Paul, Rindone (arrived at 6:06 p.m.), Rooney, and Vice Chairman McCann Chairman Padilla ABSENT: Directors: ALSO PRESENT: Chief Executive Officer Rowlands, General Counsel Moore, Assistant Community Development Director Hix, Redevelopment Manager Crockett, and Senior Community Development Specialist Do PLEDGE OF ALLEGIANCE, MOMENT OF SILENCE CONSENT CALENDAR (Item I) 1. APPROVAL OF MINUTES - April 27, 2006 ACTION: Vice Chairman McCann offered Consent Calendar Item 1. Director Paul seconded the motion, and it carried 6-0, with Directors Castaneda, Rindone and Chairman Padilla absent. PUBLIC COMMENTS There were none. ACTION ITEMS Vice Chairman McCann stated that Item numbers 2d and 2e were being removed from the Agenda at the request of General Counsel Moore. 2. CONSIDERATION OF EXCLUSIVE NEGOTIATING AGREEMENTS FOR THREE SITES AND AMENDMENTS TO EXCLUSIVE NEGOTIATING AGREEMENTS FOR FOUR SITES WITHIN THE MERGED AND TOWN CENTRE I REDEVELOPMENT AREAS Three new Exclusive Negotiating Agreements (ENAs) and amendments to four existing ENAs to align the ENA timeline with the proposed date of adoption for the Urban Core Specific Plan (UCSP). 1-1 ACTION ITEMS (continued) Assistant Community Development Director Hix introduced Redevelopment Projects Manager Crockett. Mr. Crockett provided an overview of the "Life Cycle of a Community" which included the phases of thriving, maturing, declining and emerging communities. He then introduced Senior Community Development Specialist Do who provided an overview of the staff report including the developer qualification process, proposed ENAs and amendments to current ENAs and the proposal sites. Mr. Crockett then introduced the following developers who provided brief overviews of their development backgrounds and visions for their projects. 2a. Jon Spelke, representing Lennar-Homes of California, Inc. and Intergulf Development Group, for development of the property known as the E Street Transit Village. Director Rindone inquired as to why the ENA did not include other parcels extending to E Street. Mr. Crockett responded that the sites included were only those under current Agency or City ownership. The other sites are still being considered for development but negotiations need to occur between the developer and each of the owners. Director Rindone suggested the entire area be looked at as the project area. Director Rindone also inquired as to whether or not MTS is being included in development discussions due to the grade separation. Mr. Crockett indicated that upon approval of the ENA, MTS will be part of the development team. Director Rindone also inquired as to what happened to the previous ENA on the site, that did include all of the parcels in addition to the City/Agency owned site, and whether or not it was legal to enter into an ENA with a new developer. Deputy City Attorney Elizabeth Hull responded that the ENA had expired and there were no outstanding issues that would prohibit the CVRC trom entering into a new ENA. 2b. James Brown and James Gates, representing Public, a California General Partnership, for development of the Church and Madrona Northwest site. 2c. David Kieffer, representing Douglas Wilson Companies, for development of Church Street and Davidson Street. Director Rindone inquired and was advised of the developers' intent to develop the two properties as a single project. Further, he clarified that the developer did not foresee any constraints with the draft Urban Core Specific Plan on their proposed project. Director Lewis inquired, and Mr. Crockett responded, that Douglas Wilson Companies had previously entered into an ENA with the Agency for the Landis Northeast site but now that the ENA is expiring the site would remain a parking lot, and if it was determined in the future that the parking was not needed, it would be considered for redevelopment. Director Rindone then inquired and received confirmation trom Mr. Kieffer, that the CCDC in San Diego defines building height trom the floor to the top floorplate. 2f. Andrew Gerber, representing A vion Development LLC, for development of the Third Avenue and E Street Southeast site. Page 2 - CVRC Minutes http://www.chulavistaca.gov 1-2 May 11,2006 ACTION ITEMS (continued) Director Rindone inquired as to whether the Leader Building was being considered for development within the scope of the ENA and was advised by Mr. Crockett that it was not. He requested staff consideration for inclusion and a report back with an analysis as to why or why not to include it. Vice Chairman McCann stated that he was looking for an outstanding project at this location as it is the gateway to Third Avenue. 2g. Dan Matheson, representing Intergulf-Mar (Park) LLC, for development of the Third Avenue and G Street Northwest site. Director Rindone inquired as to what was going to happen to the Social Security Offices. Juan Pablo, representing Intergulf-Mar, stated that the current lease expires in August of 2006, and that his firm is working on a possible relocation to another location at Third A venue and K Street. Director Desrochers made inquiry regarding the downtown parking management study and requested Staff ensure it is done concurrent with the ENA process period. He then requested a report back on how the parking is going to work in the future. Director Lewis questioned why the ENA resolutions refer to the CVRC as a legal entity but the recitals refer to the Redevelopment Agency and do not address the CVRC responsibilities. Deputy City Attorney Hull responded that the bylaws of the corporation provide the ability for the CVRC to act on behalf of the Redevelopment Agency to enter into ENAs. Staff then recommended adoption of the resolutions approving the ENAs between the CVRC and the qualified developers listed at 2a, 2b and 2c; and the resolutions approving the First Amendments to the ENAs listed as 2f and 2g. No action was taken on Item numbers 2d or 2e: a. CVRC RESOLUTION NO. 2006-018, RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION APPROVING AN EXCLUSIVE NEGOTIATING AGREEMENT WITH LENNAR-HOMES OF CALIFORNIA, INC. AND INTERGULF DEVELOPMENT GROUP FOR DEVELOPMENT OF THE PROPERTY KNOWN AS THE E STREET TRANSIT VILLAGE b. CVRC RESOLUTION NO. 2006-019, RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION APPROVING AN EXCLUSIVE NEGOTIATING AGREEMENT WITH PUBLIC A CALIFORNIA GENERAL PARTNERSHIP, FOR DEVELOPMENT OF THE CHURCH AND MADRONA NORTHWEST SITE Page 3 - CVRC Minutes http://www.chulavistaca.gov 1-3 May 11,2006 ACTION ITEMS (continued) c. CVRC RESOLUTION NO. 2006-020, RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION APPROVING AN EXCLUSIVE NEGOTIATING AGREEMENT WITH DOUGLAS WILSON COMPANIES FOR DEVELOPMENT OF THE CHURCH STREET AND DAVIDSON STREET WEST SIDES d. RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION APPROVING AN AMENDMENT TO EXCLUSIVE NEGOTIATING AGREEMENT WITH CITYMARK DEVELOPMENT LLC FOR DEVELOPMENT OF LANDIS AVENUE SOUTHEAST SITE e. RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION APPROVING AN AMENDMENT TO EXCLUSIVE NEGOTIATING AGREEMENT WITH CITYMARK DEVELOPMETN LLC FOR DEVELOPMENT OF THE THIRD AVENUE AND E STREET NORTHEAST SITE f. CVRC RESOLUTION NO. 2006-021, RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION APPROVING AN AMENDMENT TO EXCLUSIVE NEGOTIATING AGREEMENT WITH AVION DEVELOPMENT LLC FOR DEVELOPMENT OF THE THIRD AVENUE AND E STREET SOUTHEAST SITE g. CVRC RESOLUTION NO. 2006-022, RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION APPROVING AN AMENDMENT TO EXCLUSIVE NEGOTIATING AGREEMENT WITH INTERGULF-MAR (PARK) LLC FOR DEVELOPMENT OF THE THIRD AVENUE AND G STREET NORTHWEST SITE ACTION: Director Desrochers offered Action Item numbers 2a through 2c, 2f and 2g, headings read, texts waived. Director Castaneda seconded the motion and it carried 8-0 with Chairman Padilla absent. OTHER BUSINESS 3. CHIEF EXECUTIVE OFFICER'S REPORTS Chief Executive Officer Rowlands, stated that staff had been asked to report on the Vogue Theatre and requested Redevelopment Projects Manager Crockett provide the report. Mr. Crockett stated that staff had been in contact with the real estate brokers and have set a meeting with the people who currently have the property in escrow for early next week. A report will be brought back to the next CVRC meeting for discussion and possible action. 4. CHAIRMAN'S REPORTS There were none. Page 4 - CVRC Minutes http://www.chuIavistaca.gov 1-4 May 11,2006 5. DIRECTORS' COMMENTS Director Rindone, asked for an update on the public participation component and requested more than one workshop be held to solicit community input suggesting one be held in the east and one in the west, and that they be held on different evenings. Director Rooney stated he was encouraged by the quality of the developers. Director Desrochers also expressed pleasure with the selected developers, and noted that he had seen all of their projects. He then stated that the Trolley site might take longer than the 300-day timeframe. Director Lewis stated that the quality of the developers was impressive; noting they all had good credentials and interaction with City staff. He further requested that as we continue through the ENA process, consideration be given to expanding some of the sites. Director Rindone requested a report back at the very least, every 90 days, providing an update on the ENAs that were presented this evening and requested consideration of offering incentives to those who come in early. Director Chavez stated she was encouraged to see the projects moving forward and requested the Directors be provided with copies of the Urban Core Specific Plan. Director Paul stated he was waiting for the Engineering Developers to show up in the next round. Vice Chairman McCann reminded everyone that citizen input and comments were a top priority because with the community on board, the projects will be accomplished. Additionally, he stated that the completion of the Urban Core Specific Plan is a top priority for Staff. ADJOURNMENT Vice Chairman McCann adjourned the Regular Meeting of the Chula Vista Redevelopment Corporation at 7: 15 p.m. to the next regularly scheduled meeting on May 25, 2006, at 6:00 p.m. Dana M. Smith, Secretary Page 5 - CVRC Minutes http://www.chulavistaca.gov 1-5 May 11,2006 . .. 1,~()RPnRATI()I\J - -- -- CHI,'LA VISTA CVRC Board Staff Report - Page 1 Item No. 2 DATE: May 25, 2006 TO: FROM: CVRC Board Directors ~< Dana M. Smith, Secretary ~ " ! I VIA: David D. Rowlands, Jr., Chief Executive Officer ,', -":--; SUBJECT: Five Year Implementation Plan (2005-2009) BACKGROUND: The City of Chula Vista is at an important juncture in its planning efforts for the revitalization and redevelopment of western Chula Vista, The Five Year Implementation Plan provides a critical visioning tool that supports and complements those efforts by programming the key steps to successful redevelopment for the next five years, It also serves as an important educational resource to decision-makers and the public about the role and goals of redevelopment, equipping City leaders with foundational information for making balanced, well-informed decisions on future redevelopment activities and projects, The current Draft Five Year Implementation Plan was prepared in accordance with the statutory requirements of redevelopment law (Health and Safety Code 933490), but is also structured as a strategic planning document for the Redevelopment Agency that: c;> Provides important and educational information to decision-makers and the public about the role and functional purpose of redevelopment c;> Establishes coherent and consistent policy direction for redevelopment activities and projects during the next five years through the establishment of a mission statement and guiding principles for the Agency, c;> Reduces confusion about the functional structure of redevelopment, including the various redevelopment project areas in the City of Chula Vista, c;> Sets forth strategic and programmatic objectives and work plans for the next five years that seek to: :> Ensure the financial viability and effectiveness of the Agency :> Facilitate key catalyst projects and public improvements that are consistent with adopted land use plans and policies :> Eliminate blight and create important affordable housing opportunities 2-1 Staff Report - ~tem No.2 Page 2 The Draft Five Year Implementation Plan is being brought before the CVRC Board of Directors for review and recommendation to the Redevelopment Agency for adoption, consistent with Section 2.55.060(A) of the Chula Vista Municipal Code. RECOMMENDATION: Staff recommends that the Board of Directors: 1. Adopt the resolution recommending Redevelopment Agency approval and adoption of the Draft Five Year Implementation Plan (2005-2009). DISCUSSION: At the Board's March 9th Regular Meeting, staff presented an overview of a 10-month staff endeavor to programmatically develop the new Five Year Implementation Plan and strategic work program for the Redevelopment Agency. The key elements of that Plan include: <=;> Guiding Principles of Redevelopment to provide consistent policy direction for redevelopment during the next five years. <=;> The consolidation of six existing five year implementation plans into a single, cohesive planning document that is readable, user-friendly, educational, and informative. <=;> Geographic focus areas designated for redevelopment planning purposes, consistent with other City planning boundaries (e.g., General Plan, Urban Core Specific Plan, Bayfront Master Plan, etc.). <=;> Measurable strategic objectives and work programs for each geographic focus area that identify key redevelopment and housing activities and projects for the next five years. <=;> Consistency with overarching planning documents, including redevelopment plans adopted for the merged project areas, and the Community Development Department Five Year Strategic Plan (adopted on March 28, 2006). The following sections of this report provide a summary overview of these key elements of the Plan. Guiding Principles of Redevelopment The Plan is deliberately organized in a sequential order that leads from high-level policies and principles to project-level work programs and plans. The Plan establishes overarching "Guiding Principles of Redevelopment" that provide the high-level framework and context for the rest of the Plan. 2-2 Staff Report - Item No.2 Page 3 Guiding Principle #1: Leverage Public/Private Investment and Resources Leverage City/Agency resources that attract private investment to improve public amenities, infrastructure, and affordable housing through: . Strategic and accountable public investments . Land assembly . Business reinvestment and expansion . Debt issuance Guiding Principle #2: Community Outreach & Education Promote and facilitate early and transparent public input and emphasizes community education about the goals, tools, redevelopment. Geographic Focus Areas Under these guiding principles, the Five Year Implementation Plan establishes redevelopment and housing work programs for the City's redevelopment project areas. The Plan, however, recognizes that communities do not evolve, physically or socio- economically, by project area boundaries. Instead, communities develop and evolve in more regional settings, influenced by where children go to school, where people shop and dine, where people attend church, which neighborhoods residents identify with, and the ups and downs of regional housing markets. The Plan therefore designates three geographic focus areas for purposes of developing and implementing five year work programs for the Redevelopment Agency. q West: located including Southwest. q South: Project areas located south of L Street, east of 1-5, and north of the City's southerly boundary, including the Auto Park Specific Plan areas east of 1-805. Affected project areas include Southwest, Otay Valley, and Added Area. q North: Project areas located north of L Street, east of 1-5, south of SR-s4, and west of Second Avenue. Affected project areas include Town Centre I, Town Centre II, and Added Area. Project west of Bayfront areas 1-5, and partici pation and process that of i.,,:.....:'. a REDEVELOPMENT oo'ilIG. PROJECT .-.REAS tlOJECT ~ -.J AUAS ..~ \ ;... f . \........ 2-3 Staff Report - ~tem No. :2 Page <4 Strategic Objectives & Work Programs The Plan establishes five year work programs for each geographic focus area that are based on three consistent strategic objectives: q Plans & Policies. Redevelopment is a catalyst and tool to pursuing a vision that is cast by City leaders through land use plans and policies. The City's land use plans and policies set the stage for public improvements and key catalyst projects created through redevelopment. q Public Infrastructure & Amenities. By upgrading infrastructure to create capacity that supports additional future development, the Agency can greatly advance the revitalization goals of the City while creating an environment that attracts capital and is more readily responsive to market opportunities. Key Catalyst Projects. By strategically focusing and leveraging resources on a key "catalyst projects," redevelopment can create enough market confidence to attract private investment to a city's revitalization vision and plans. CONClUSIONS: The Five Year Implementation Plan provides an important educational and strategic planning tool for the CVRC and Redevelopment Agency during this critical juncture in the City's planning efforts for the revitalization and redevelopment of western Chula Vista. It identifies critical activities and projects during the next five years that will facilitate the successful redevelopment of the City, including the attraction of private investment to western Chula Vista, the financing and construction of important public infrastructure projects and amenities, the economic development of the local business community, and long-term fiscal health of the Redevelopment Agency and City to provide needed services and public improvements to the community. ATTACHMENTS: Five Year Implementation Plan PREPARED BY: Ken Lee, Principal Community Development Specialist 2-4 CVRC RESOLUTION NO. 2006- RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION MAKING RECOMMENDATION TOTHECHULA VISTA REDEVELOPMENT AGENCY TO ADOPT A FIVE YEAR IMPLEMENTATION PLAN FOR THE 2005-2009 FIVE YEAR PERIOD FOR THE MERGED BAYFRONTfTOWN CENTRE I REDEVELOPMENT PROJECT AREA (INCLUDING BA YFRONT AND TOWN CENTRE I) AND THE MERGED CHULA VISTA REDEVELOPMENT PROJECT AREA (INCLU DING TOWN CENTRE II, SOUTHWEST, OTAY VALLEY, AND ADDED AREA) WHEREAS, pursuant to Chula Vista Municipal Code Section 2.55.060(A), the Chula Vista Redevelopment Corporation ("CVRC") is a recommending body to the Chula Vista Redevelopment Agency ("Agency") on legislative functions and actions involving redevelopment plans and regulations, including five year implementation plans; and WHEREAS, Section 33490 of the California Community Redevelopment Law (Health and Safety Code 9933000 et seq.) requires that redevelopment agencies prepare and adopt, after a public hearing, an implementation plan for adopted redevelopment project areas every five years; and WHEREAS, Section 33490 of the Health and Safety Code provides that the implementation plan shall contain the specific goals and objectives of the agency for the adopted project areas, the specific programs, including potential projects, and estimated expenditures proposed to be made during the next five years, and an explanation of how the goals and objectives, programs, and expenditures will eliminate blight within the project area and implement the Agency's housing requirements contained in Health and Safety Code Section 33333.10, if applicable, and Sections 33334.2, 33334.4, 33334.6, and 33413; and WHEREAS, the Agency previously adopted initial Five Year Implementation Plans for the Town Centre I, Town Centre II, Bayfront, Southwest, and Otay Valley Redevelopment Project Areas on December 13, 1994, and subsequent Five Year Implementation Plans for those project areas on November 10, 1999; and WHEREAS, in accordance with Section 33352(c) of the Health and Safety Code, the Agency previously adopted an initial Five Year Implementation Plan for the Added Area Redevelopment Project Area on May 4,2004 in conjunction with the adoption of the Amended and Restated Redevelopment Plan for the Merged Chula Vista Redevelopment Project Area; and WHEREAS, in accordance with Section 33490(a)(1 )(B) of the Health and Safety Code, the adoption of an implementation plan does not constitute an approval of any specific program, project, or expenditure, and does not constitute a project within the meaning of the California Environmental Qual ity Act (Public Resources Code 9921000 et seq.), and is therefore statutorily exempt from the CEQA pursuant to Section 15061 (b)(l) of the State CEQA Guidelines. 2-5 CVRC Resolution No. 2006- Page 2 NOW, THEREFORE, BE IT RESOLVED that the Chula Vista Redevelopment Corporation does hereby recommend adoption by the Chula Vista Redevelopment Agency of the proposed Five Year Implementation Plan for the 2005-2009 five year period for the Merged BayfrontITown Centre I Redevelopment Project Area (including Bayfront and Town Centre I) and the Merged Chula Vista Redevelopment Project Area (including Town Centre II, Southwest, Otay Valley, and Added Area), in accordance with Section 33490 of the California Health and Safety Code. Presented by: Approved as to form by Dana M. Smith Secretary Chula Vista Redevelopment Corporation Ann Moore General Counsel Chula Vista Redevelopment Corporation 2-6 . ., FIVE YEAR IMPLEMENTATION PLAN CHULA VISTA REDEVELOPMENT AGENCY 2005 to 2009 ~~~ ~ COY Qt CHUIA VISTA U"~-" -- . . ~! v051606 Our Mission is ... "To enhance urban chula Vista through collaborative partnerships that realize the ph~sical and economic potential ot the communit~." - Chula Vista Redevelopment Agency CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 TABLE OF CONTENTS I. INTRODUCTION ...................................................................................................................1 LEGAL AUTHORITy......... ........................................ ...................................... ........................ .................. 1 PU RPOsE AN D I NTE NT ...... ..................................................................................................................... 2 ORGAN IZA TION ..................................................................................................................................... 2 II. BACKGROUND.....................................................................................................................3 CH U LA VISTA'S LIFE CYCLE .................................................................................................................... 3 THE ROLE OF REDEVELOPMENT ............................................................................................................4 ABOUT TH E PROj E CT AREAS............................. ................................... ............................... ................... 6 PAST ACCOMPL IS H ME NTs ....................................................................... ............................ .................. 8 THE GOALS OF REDEVELOPMENT .........................................................................................................9 III. STRATEGIC PLANNING .....................................................................................................11 STRATE G IC FOCU 5................. ..................................... .......................................... .......................... ...... , , GUIDING PRINCIPLES OF REDEVELOPMENT ....................................................................................... " GEOGRAPHIC FOCUS AREAS ...............................................................................................................12 IV. FIVE YEAR WORK PROGRAM ............................................................................................ 14 5 TRA TE GIC OBJECTIVES ................................. .................................... .................................. ................. 14 RE DEVELOPME NT WORK PROGRAM ................................................................................................... 15 HOUsl NG WORK PROGRAM ............................................................................................................... 19 PRO J E CTE D EX PE N DITU RES .................................. ........................................ ............................ ............ 21 APPENDIX A: TERMINOLOGY ................................................................................................................................. 22 APPENDIX B: REDEVELOPMENT WORK PROGRAMS (2005-2009) ......................................................................... 25 APPENDIX C: HOUSING COMPLIANCE .................................................................................................................. 41 APPENDIX D: REDEVELOPMENT PROJECT AREAS...................................................................................................51 APPENDIX E: REDEVELOPMENT REVENUES (2005-2009)........................................................................................59 APPENDIX F: 2000-2004 ACCOMPLISHMENTS....................................................................................................... 61 Page i ~{rt. ~ CJlYOf CHUIA VISTA CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 I. INTRODUCTION Every five years, redevelopment agencies are required to adopt implementation plans to establish strategic and programmatic work plans for carrying out their activities. These plans embody and carry out the mission, goals, and objectives of the agencies within their adopted redevelopment project areas. Over the past six years, the Chula Vista Redevelopment Agency has adopted Five Year Implementation Plans for each of the following six project areas: c;. Bayfront c;. Town Centre I c;. Town Centre II c;. Southwest c;. Otay Valley c;. Added Area This Five Year Implementation Plan covers the five-year period from 2005 to 2009 and is an update to the Agency's six existing plans. As an update, this Plan consolidates each of those six separate plans into a single, cohesive document. LEGAL AUTHORITY In 1993, the Legislature passed AB 1290 (Chapter 942, Statutes of 1993), which enacted the California Community Redevelopment Law Reform Act and made sweeping changes to state redevelopment law (Health and Safety Code 9933000 et seq.) in a major effort to increase both the effectiveness and accountability of redevelopment agencies. One notable statutory change was the addition of Article 16.5 (9933490 et seq.) to the law, which required redevelopment agencies to adopt five year implementation plans for all adopted project areas on or before December 31,1994, and every five years thereafter. Health and Safety Code Section 33490(a) requires that these implementation plans contain: c;. The Agency's goals and objectives, programs, and projects within the project area for the next five years, including estimated expenditures. c;. An explanation of how the goals and objectives, programs, projects, and expenditures will eliminate blight and promote affordable housing within the project area. '" A specific section that addresses the Agency's housing responsibilities, including the Agency's Low and Moderate Income Housing Fund (tax increment "20% set-aside") and the Agency's requirements for replacement and inclusionary housing. Aside from these requirements, the law provides flexibility for the Agency to locally determine how to best organize and format the contents of the plans. The Chula Vista Redevelopment Agency has used that flexibility to craft a cohesive and comprehensive document that will serve as the Agency's redevelopment "strategic plan" for the next five years. Midterm Review Health and Safety Code Section 33490(c) requires redevelopment agencies, during the third year of the implementation plan, to hold a public hearing and conduct a midterm review of the progress made within the project area. A midterm review of this implementation plan will be conducted during 2007 with special attention paid to the five-year work program found in Appendix B. Page 1 ~Ift.. ~ 01Y OF CHUIA V1SfA PURPOSE AND INTENT The Agency's purpose and intent in this Five Year Implementation Plan are to: 0:> Provide decision-makers and the public a clear, readable, and user-friendly document that effectively communicates the City's vision, goals and objectives, and programs for redevelopment. 0:> Establish five-year strategic objectives and work programs that are measurable, quantifiable, and track-able and promote the long-term effectiveness and financial viability of the Agency. 0:> Present information about the Redevelopment Agency in an educational and informative manner. 0:> Implement the redevelopment goals of the Agency as set forth in the Agency's adopted Redevelopment Plans. ORGANIZATION This Five Year Implementation Plan updates and consolidates six previously adopted plans into a single document. A single plan for all of the project areas reduces confusion and provides a clear, readable, and user-friendly document that supports a uniform vision for redevelopment. The first section of this plan provides a comprehensive and historical discussion of redevelopment in Chula Vista, and the role of the Agency in the City's current revitalization efforts, including: 0:> A historical overview of Chula Vista's life cycle 0:> A discussion of the role of redevelopment and the private market 0:> A summary of the Agency's accomplishments in the project areas during the last five years 0:> A description of the redevelopment project areas and a summary of the Agency's adopted goals The rest of the plan provides the Agency's strategic focus for the next five years, including Guiding Principles of Redevelopment and work programs by distinct geographic focus areas. Each work program outlines key strategic objectives that will be critical to successful redevelopment in each focus area, including: 0:> The adoption of local land use plans and redevelopment policies to guide and establish a vision for all future redevelopment activities and projects. 0:> The facilitation of key catalyst proiects consistent with local plans and policies to generate tax increment revenues for public improvements and affordable housing. 0:> The financing and planning of key infrastructure improvements and public amenities within the project areas. 0:> The financing and creation of affordable housinK through the Agency's statutory requirements and local housi ng initiatives. Page 2 - CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 II. BACKGROUND On November 17, 2004, the Chula Vista City Council and Planning Commission held a joint workshop on the City's various planning efforts for the revitalization and redevelopment of Chula Vista's Urban Core. The workshop i ncl uded a comprehensive presentation on the General Plan Update, Urban Core Specific Plan, and the role of redevelopment in the revitalization efforts for western Chula Vista. The central theme of the workshop was the concept of "The Life Cycle of a Community," as depicted in the illustrative model on the right, which takes a city through four distinct stages of evolution - Emerging, Thriving, Maturing, Declining - before the cycle leads back to the re- emergence of the city through careful reflection, reevaluation, repurposing, and re-planning. Below is a brief narrative of Chula Vista's own life cycle to date, which provides important context for this Five Year Implementation Plan. Life "t,:,L; .~'ycle of a .. MA'lilJRING Community Risk-aversion .. .. Contraction - Instability .. c:afl~ . " at .DECLlNIIIG..".. .... .."."."........"."",.".".".".".". De-investment . . + CHULA VISTA'S LIFE CYCLE Once the largest lemon growing center in the world, Chula Vista has rapidly grown, developed, and expanded to become one of the nation's fastest growing cities. Initially incorporated in 1911, much of the City's historical growth and development traces back to World War II and the relocation of Rohr Aircraft Corporation to Chula Vista in early 1941. The presence of Rohr and the post- WWII boom brought extraordinary population growth to Chula Vista, along with the demand for housing, roads, schools, public services, and retail services (e.g., shops, restaurants, markets, banks, etc.). With an established but growing population and employment base, Chula Vista's urban core and business economy thrived with commercial activity and spawned additional housing opportunities for newcomers. As the size and needs of the community continued to grow, local downtown businesses flourished and additional community amenities were created in response to the increasing service and governance demands of local citizens. Page 3 ~!ft. ~ mv!>' CHUIA VlSfA Over the next several decades, California's continued rate of population growth and housing production, coupled with Chula Vista's regional and waterfront location between the Mexican border and downtown San Diego, spurred the City's outward expansion and development to the east (east of Interstate-80S). Now home to nearly a quarter-million residents, Chula Vista is the second largest city in San Diego County. As the City has continued to expand outward, and eastern Chula Vista has begun to thrive and mature during the past 15 years, western Chula Vista has experienced a decline in commercial activity and community reinvestment as residents have sought business and retail services elsewhere, including eastern Chula Vista, downtown San Diego, and Mission Valley. The decline in private investment in the urban core has led toward decreased small business retention and attraction, reduced private investment, and a loss of external confidence in the area's housing market. It has also led to the ongoing physical deterioration of some of the City's housing stock, shrinking tax revenues to the City, and a greater need for infrastructure improvements. To evolve past western Chula Vista's cycle of decline, and create a path toward the reemergence of a thriving economy and housing market, the City Council has cast a vision for the revitalization of the City's downtown urban core through the City's General Plan Update (adopted on December 13, 2005) and the preparation of the Urban Core Specific Plan. THE ROLE OF REDEVELOPMENT The establishment of a planning and regulatory framework for the City is not the only vital ingredient that will allow a new vision for Chula Vista to unfold. Changes to the General Plan and Zoning Code do not mandate that the area must change but instead means it can change in a well thought-out, logical manner. Urban change and revitalization contain a myriad of "risk variables" that influence market forces and market confidence (or inversely, market risk), including: c:> Local demographics c:> Existing housing types and prices c:> Ability of the market to absorb new units c:> Development costs (e.g., construction costs, fees) c:> Interest rates c:> Whether the existing housing market has been tested to support similar product types and pricing Redevelopment plays an important role in urban revitalization through the tools it can employ to directly influence the private market, reduce risk, and create market confidence. Redevelopment can facilitate new development that might not normally occur under existing market conditions by using those tools to help address the risk variables described above. The tools and requirements of the Redevelopment Agency include (see Appendix A for definitions of terminology): c:> Tax increment financing to fund public improvements and provide financial assistance to qualifying developers for qualifying projects in the form of gap financing c:> Required 20 percent monetary set-aside of all tax increment revenues for low- and moderate income housi ng c:> 15 percent affordable housing production requirement Page 4 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 9 Land acquisition and parcel assemblage 9 Relocation assistance and replacement housing With these tools, redevelopment can act as a catalyst to "jumpstart" the revitalization process in conformance with the City's land use plans. Once redevelopment efforts create enough market confidence, the private market can run its own course and lead the City back toward a state of thriving through further risk-taking, renovation, and redevelopment. By law, however, redevelopment is limited only to areas of a city that are in a state of decline and are physically and economically blighted. Its direct influence on the private housing market is therefore limited to "project areas" adopted by the redevelopment agency. The following map depicts Chula Vista's redevelopment project areas in shaded zones. ~~. .- ., IEDEVElOPMENT odl~ PROJECT AREAS D "'OJECT AIEAS ~ --- .,- / ! ,/ \ \ (~j . " ~ Affordable Housing Through redevelopment tools, agencies also playa vital role in the funding and production of affordable housing. Within adopted project areas, redevelopment agencies receive a higher level of property tax revenues that would normally be allocated to the state and other taxing entities. In exchange, the state requires that 20 percent of all of these "tax increment" revenues be set aside for the development of affordable housing. To ensure that these monies are in fact used for the production of affordable housing, the state requires that 15 percent of all new residential units built in an adopted project area be restricted to households of very low-, low-, and moderate incomes. Next to the Page 5 ~,~ - 01V Of CHUIA VISTA federal government, redevelopment is the largest provider of affordable housing for California's low- and moderate income families. Later sections of this Plan will address the Agency's affordable housing priorities and obligations in much greater detail. Public Facilities and Infrastructure Improvements All tax increment monies generated in adopted redevelopment project areas are allocated among three basic public uses: (1) affordable housing, (2) schools and other public agencies, and (3) public improvements and other redevelopment activities. (The pie chart exhibit below provides an example of how $1 million of tax increment revenues would be allocated among the three uses.) One of the most important benefits of redevelopment is the ability to use tax increment funds to help pay for public improvements that would normally be paid for by the City's general fund. By relieving the City of those financial obligations, redevelopment frees up general fund dollars to help the City focus its resources on other key service and infrastructure priorities inside and outside of redevelopment project areas. The five year work program contained in this Plan recognizes the important role that redevelopment plays in funding public improvements and identifies key infrastructure projects that will be strategically critical to successful redevelopment in each of the designated focus areas. $640,000 Public Improvements and Other Redevelopment $160,000 Schools and Other Public Agencies ABOUT THE PROJECT AREAS The Chula Vista Redevelopment Agency was created on October 24, 1972 by City Council Ordinance No. 1425. Since the Agency's creation, the City has adopted and amended six project areas to encompass a total of approximately 3,563 acres of City territory. Current land uses within these areas are mostly commercial and industrial, but also include residential (primarily high and medium-high density) and public uses (e.g., governmental administrative centers, corporation yards, streets, etc.). In 1979 and 2000, the City financially merged the various project areas into two primary configurations: (1) the Merged BayfrontfTown Centre I Redevelopment Project Area (1979) and (2) the Merged Chula Vista Redevelopment Project Area (2000). The merger of project areas allows the Agency to pool tax increment revenues generated in different project areas and leverage them appropriately to create benefit for the entire merged project area. The following provides a brief historical summary of the Agency's two merged project areas. For more detailed information about each project area, please refer to the Project Area Profiles in Appendix D. Page 6 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 Early Redevelopment Efforts: Merged Bayfront/Town Centre I Project Area Following its creation in 1972, the Agency's initial focus and resources were dedicated to the City's waterfront and the historic downtown Third Avenue business corridor. In 1974, the City adopted the Bayfront Original Project Area, which encompassed approximately 637 acres of territory east of the mean high tide line. Two years later, the City adopted the Town Centre I Project Area in 1976, encompassing approximately 138 acres of territory located along and around the downtown Third Avenue business corridor. In July 1979, the two project areas were consolidated into a single Merged BayfrontlTown Centre I Redevelopment Project Area. To help facilitate planning efforts along the waterfront, the City adopted the Bayfront Amended Project Area in 1998, adding approximately 39B acres of territory west of the mean high tide line to the Merged BayfrontfTown Centre I Project Area. ... REDEVELOPMl:NT ...n... PROJECT AREAS Growth and Expansjon: Merged Chula Vista Project Area As the City's population and economic growth expanded to the south and east during the next thirty years, the City incorporated additional urbanized territories to project areas to leverage expanding development trends to address growing housing and infrastructure needs. The Town Centre II Original Project Area was adopted in 1978 to include a large number of commercial properties along the Broadway business corridor. In 1983, the City adopted the Otay Valley Project Area to capture and leverage revenues generated in the City's Auto Park Specific Plan areas. Five years later, additional territories in the northern, western, and southern sections of the City were included in the City's project areas through the adoption of the Town Centre II Amended Project Area in 1988. In 1985, the City annexed approximately 2,500 acres known as the Montgomery Area and subsequently adopted the Southwest Original Project Area in 1990 to help address the area's historical infrastructure issues as an unincorporated County community. Additional territory was added to that area in 1991 through the adoption of the Southwest Amended Project Area. Most recently in 2004, additional territories spread across western Chula Vista were incorporated to constitute the Added Area Project Area. To streamline and simplify plans and reduce confusion, the City at that time concurrently consolidated each of these areas (Town Centre II, Southwest, Otay Valley, Added Area) into a single Merged Chu/a Vista Redevelopment Project Area. ~..~:! '., A 1tE00VElOf'MENT "~_/-'- ..a.. PROJECT AREAS ....) B T<.>wnCentrefl f Page 7 ~If? ~ CI1I'Of CHUIA VIStII PAST ACCOMPLISHMENTS Recent redevelopment accomplishments from 2000 to 2004 within the project areas include the following list of examples. A more detailed discussion of the Agency's redevelopment and housing activities is provided in Appendix F of this Plan. REDEVELOPMENT PLAN EXPANSION AND AMENDMENT (Added Area) . Completed in early 2004 . Expansion of the Merged Chula Vista Redevelopment Project, including approximately 494 acres of property along the Broadway and Third Avenue corr i dors GATEWAY PHASES I & II (Town Centre I) . 347,000 square foot upscale commercial/office development . Located at the northwest corner of Third Avenue and H Street . Phase I completed in April 2002 . Phase II completed in April 2006 . Generation of $400,000 annually in new tax increment funds SPOTLIGHT ON BROADWAY (Southwest) . Mixed-use residential and retail includes 40 residential row homes with 9 loft units over first floor retail fronting Broadway . Located at 760 Broadway, south of L Street . Completed in August 2005 ~~. .~ .,r--'. . .A..... 'Ti t>. . I I , . ,";'. r;...."Y,tj. - I. ,1ll1i "'J 18: II I : - ~"I CHULA VISTA ENTRYWAY BEAUTIFICATION PROJECT (Town Centre II and Southwest) . Three City entry corridors from 1-5: E, H, and Palomar Streets . Includes enhanced median and pedestrian crosswalk paving, pedestrian-scale lighting, banners, entry monument elements, street trees, and other smaller-scale plant materials . H Street beautification elements were completed in 2003 . Palomar Street beautification elements were completed in 2004 THE CROSSINGS (Otay Valley) . 1 88,860-square foot retail shopping center with two restaurant pads . Located on the south side of Main Street and directly east of Interstate-80S . Completed in November 2005 AUTO PARK EXPANSION (Otay Valley) . Added a total of approximately 70 acres 3 new auto dealerships are now under construction . Approved in June 2003 and subsequently 2004 Page 8 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 TROLLEY TRESTLE (Southwest) . New construction of 11 transitional housing units for children transitioning from foster care programs. . 746 Ada Street . Completed in December 2000 BRISA DEL MAR (Southwest) . New construction of 106 family rental units . Units are affordable to very low and low-income households . 1695 Broadway . Completed in December 2005 '-JH'" r t I i '.} ~-1",,, THE GOALS OF REDEVELOPMENT As a Five Year Implementation Plan, this Plan establishes a programmatic work plan for implementing and achieving the goals of the Redevelopment Agency over the next five years. Those strategic goals are set forth in the Agency's adopted redevelopment plans for the Merged BayfrontfTown Centre I and Merged Chula Vista Project Areas, and are listed as follows. o CLEAN I SHOP ~ ACCESS L GO .I. WORK ~ PREIIRVI Eliminate Blight: Eliminate and prevent the spread of blight and deterioration and to conserve, rehabilitate, and redevelop the Project Areas in accordance with the Redevelopment Plans. Stimulate Economic Growth: Attract, expand, and retain desirable business and industry which effectively increases employment opportunities for community residents and enhance the tax base of local governments. Emphasize Infrastructure Improvements: Provide needed improvements to the utility infrastructure and public facilities that serve the Project Areas. Also, provide needed improvements to the community's education, cultural, and other community facilities to better serve the Project Areas. Improve traffic circulation through reconstruction and improvement of existing streets in the Project Areas. Develop Efficient and Effective Circulation: Develop a more efficient and effective circulation corridor system free from hazardous vehicular, pedestrian, and bicycle interfaces. Jobs for the Neighborhood: Promote local employment opportunities. Renovate and Restore Sites: Continue to renovate and restore sites characterized by deficiencies including, but without limitations, conditions of soil which render private development infeasible or impractical. Page 9 ~I~ ~ art()f CHUA VISrA 11 INVEST fJ GROW IIIr HELP A LlVI! Protect Local Businesses: Encourage the cooperation and participation of residents, businesses, businesspersons, public agencies, and community organizations in the redevelopment/revitalization of the Project Areas. Promote Compatible Development: To encourage the development of residential, commercial, and industrial environments which positively relate to adjacent land uses, upgrade and stabilize existing uses, and preserve artistically, architecturally, and historically worthwhile structures and sites. To provide for the development of distinct commercial districts, to attain consistent image and character, and to enhance their economic viability. Provide Quality Design: To remove impediments to land assembly and development through acquisition and reparcelization of land into reasonably sized and shaped parcels. To expand the resource of developable land by making underutilized public and privately owned property available for redevelopment. To achieve an environment reflecting a high level of concern for architectural, landscape, and urban design principals appropriate to the objectives of the Redevelopment Plans. Create physical buffers, which ameliorate the adverse effects of changing land uses along interfaces and discourage 'spot zoning" and piecemeal planning practices. Housing for All Families: Increase, improve, and preserve the community's supply of affordable housing for very low, low, and moderate-income households. In addition, improve housing and assist low and moderate-income persons and families to obtain homeownership. The five year work program contained in this Plan (Appendix B) links and cross-references each of the Agency's planned activities for the next five years back to these strategic goals. Page 1 0 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 III. STRATEGIC PLANNING STRATEGIC FOCUS It is the mission of the Chula Vista Redevelopment Agency "To enhance urban Chula Vista through collaborative partnerships that realize the physical and economic potential of the community.N Achieving this mission will be heavily influenced by the ability of the Redevelopment Agency to effectively create and leverage public resources that attract private investment. Private investment, in turn, will generate and locally capture tax increment revenues to improve public facilities, infrastructure, and amenities (e.g., streetscapes, public art, plazas, landscaping, affordable housing, etc.). Improvements to Chula Vista's urban landscape will further promote greater public and private investment in the local business community, retail base, and housing market. The strategic focus of the Agency's work program for the next five years will be to strengthen the financial viability and capacity of the Agency to proactively pursue the revitalization and redevelopment goals of the City. The Agency should leverage existing resources and assets to facilitate high-quality, urban development that will generate significant revenue streams to the City and Agency (e.g., tax increment, sales tax, transient occupancy tax) for public improvements and the creation of new affordable housing. The Agency should also prioritize outreach and education to the community about the goals, tools, and benefits of redevelopment, recognizing the critical importance of public participation in the redevelopment process. GUIDING PRINCIPLES OF REDEVELOPMENT Consistent with the strategic focus of the Agency, the policy foundation and direction of this Five Year Implementation Plan is rooted in two simple but critical Guiding Principles of Redevelopment. Guiding Principle # 1: Leverage Public/Private Investment and Resources Leverage City/Agency resources that attract private investment to improve public amenities, infrastructure, and affordable housing through: . Strategic and accountable public investments . Land assembly . Business reinvestment and expansion . Debt issuance Although past redevelopment activities in Chula Vista have created important affordable housing projects for the City, they have not historically served to strengthen the long-term financial viability of the Agency. To ensure the fiscal health of the Agency, a key priority of the Agency during the next five years will be to leverage existing resources and assets to facilitate catalyst projects that generate revenue streams that will fund needed public amenities, infrastructure, and affordable housing. This guiding principle establishes important policy direction to spend public resources and assets to improve public spaces and facilities that derive community benefit. Page 11 ~I~ 1Ili mY OF CHUIA VISrA Guiding Principle #2: Community Outreach & Education Promote and facilitate early and transparent public input and participation that emphasizes community education about the goals, tools, and process of redevelopment. The Redevelopment Agency recognizes that successful redevelopment of Chula Vista relies heavily on effective community outreach and education about the goals and benefits of redevelopment. It also recognizes the importance of early outreach and education in the redevelopment process. This guiding principle is consistent with the three Principles of Public Input & Participation adopted by the City Council on May 24, 2005 as formal policy statements. Those principles were adopted with the creation of the Chula Vista Redevelopment Corporation ("CVRC") and are as follows: 1. Public input and participation should occur early and often. 2. Public input and participation should be open, inclusive, and accessible. 3. Public input and participation should be educational and informative. One of the biggest challenges of the Redevelopment Agency over the next five years will be balancing the public participation needs of the Agency with the fundamental role of redevelopment to manage risk and attract capital investment in a high-risk market economy. GEOGRAPHIC FOCUS AREAS State redevelopment law establishes stringent requirements and restrictions on how redevelopment project area boundaries are drawn, including certain findings and determinations of blight. (See Appendix A for a definition of "blight.") While these project area boundaries are important for redevelopment purposes, this Plan recognizes that communities do not evolve, physically or socio-economically, by those boundaries. Instead, communities develop and evolve in more regional settings, influenced by where children go to school, where people shop and dine, where people attend church, which neighborhoods residents identify with, and the ups and downs of regional housing markets. Land use plans and policies are therefore crafted to shape and respond to socio-economic factors in regional contexts. Those same land use plans and policies create the vision, and the end-state, that redevelopment seeks to achieve. Past Five Year Implementation Plans in Chula Vista were individually prepared and adopted for each project area, independent of the other project areas and the planning boundaries of the City's land use plans. This document crafts a cohesive plan for all project areas and, consistent with City planning boundaries, groups project areas by geographic focus areas. Five year work programs have been developed for each of these geographic focus areas. Q North: Project areas located north of L Street, east of 1-5, south of SR-54, and west of Second Avenue. Affected project areas include Town Centre I, Town Centre II, and Added Area. The boundaries of the "north" geographic focus area are consistent with the 2005 General Plan Update (Northwest Planning Area and Urban Core Planning Subarea) and the proposed Urban Core Specific Plan. Q West: Project areas located west of 1-5, including Bayfront and Southwest. The boundaries of the "west" geographic focus area are consistent with the boundaries of the proposed Bayfront Master Plan and the GPU Bayfront Planning Area. They additionally include the West Fairfield District of the GPU Southwest Planning Area. Q South: Project areas located south of L Street, east of 1-5, and north of the City's southerly boundary, including the Auto Park Specific Plan areas east of 1-805. Affected project areas include Southwest, Otay Valley, and Added Area. The boundaries of the "south" geographic focus area encompass the Southwest Page 12 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 Planning Area of the 2005 General Plan Update ("GPU"), and the East Main Street Planning Subarea of the East Planning Area. A future Southwest Specific Plan is anticipated to cover all territories west of 1- 805. It is important to emphasize that these geographic focus areas are for planning purposes only, and that the goals, objectives, policies, and programs contained in this Plan only impact territory located within the redevelopment project areas. Five Year Implementation Plan - GEOGRAPHIC FOCUS AREAS ............ .. od!~ REDEVElOPMENT PROJECT AREAS , , , , ~ _.s:-" ....... .., _..~/... , ..... .... ...... , ,-. , , , ..' D PROJECT AREAS ~ , " I I I I :::::::::::: 11.1.1.1.111. I I I I I I :-:1:::1:1:1:- 1'.11.1.1.1.1, ............ J I I I I r I ...... ::,::,::,::,::,::,::,::, I I I I I I III ::::::::::::. SOUTH I I 1,111.11'.111. l'I','.'.'r,.I:I: t.I.I.I.I.'II. 111.1.1.1.-111.1.'.111.111.1.11'.111.1.1,1.111.1.111.1II. I. I. I. lIt. III. II :::::;:::::::::::::::::;:::::::::::::::::::::::::::::::::;::::::::::::::. I I I I I I I I I I I I I I I I I I I I I I I I I .It t.1 I. I t I I Page 13 ~{ft.. ~ C!lYOF CHUA VISfA IV. FIVE YEAR WORK PROGRAM The core elements of this Five Year Implementation Plan are the five year work programs developed for each of the three geographic focus areas. The three work programs share a common sequence of strategic objectives designed to create a logical and strategic plan for successful redevelopment. STRATEGIC OBJECTIVES Much of a redevelopment agency's success depends on its ability to time projects to market opportunities, anticipate and respond quickly to the needs of investors, and build bonding capacity to support new development and public improvements. The Agency's five year work programs are structured around three consistent strategic objectives intended to maximize the Agency's responsiveness to market opportunities, manage public and private risk, and facilitate the creation of public improvements and affordable housing. STRATEGIC OBJECTIVE #1: PLANS & POLICIES Redevelopment is a catalyst and tool to pursuing a vision that is cast by City leaders through land use plans and pol icies. Long-range plans that support redevelopment activities provide policy direction to derive the greatest public benefit from redevelopment activities and projects, and discourage inefficient piecemeal development. By establishing land use objectives and policies, development standards, and design guidelines, the City sets the policy stage for redevelopment and helps create a reduced-risk environment that more readily attracts private investment. Land use plans and policies also provide the framework for planning and financing infrastructure that will support new development. Therefore, the first and highest priority in each geographic focus area is the establishment of long-range land use plans and policies that create a vision for redevelopment. STRATEGIC OBJECTIVE #2: PUBLIC INFRASTRUCTURE & AMENITIES As land use plans and policies are crafted and updated to support the revitalization goals of the City, the City and Agency must also determine how to proactively finance and build the public infrastructure and amenities needed to support new development. Tax increment generated from new development can be financed and spent on public improvements and amenities that benefit the entire project area and neighborhood, and not just individual development projects. By upgrading infrastructure to create capacity that supports additional future development, the Agency will greatly advance the revitalization goals of the City while creating an environment that attracts capital and is more readily responsive to market opportunities. STRATEGIC OBJECTIVE #3: CATALYST PROJECTS Redevelopment acts as a "sparkplug" in city revitalization efforts, creating just enough energy and momentum in a city's economic engine to let it rev up and run on its own. By strategically focusing and leveraging resources on a few key "catalyst projects," redevelopment can spark enough market confidence to attract private investment to a city's revitalization vision and plans. The following five year work programs identify these types of key catalyst projects for each geographic focus area. Page 14 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 REDEVELOPMENT WORK PROGRAM The work programs for each geographic focus area are consistently structured around the three strategic objectives: (1) Plans & Policies, (2) Public Infrastructure & Amenities, and (3) Catalyst Projects. The specific programs, projects, or activities under these objectives, however, will vary from area to area, based on the unique physical and socia-economic characteristics of each. Detailed five year work programs identifying those programs, projects, and activities for the North, West, and South Geographic Focus Areas are located in Appendix B of this Plan. The following provides a summary description of the highlights of the strategic objectives for each focus area. North Geographic Focus Area Work Program Project areas located north of L Street, east of 1-5, south of SR-S4, and west of Second Avenue: Town Centre I, Town Centre II, and Added Area. Plans & Policies A __OIl .&. HOItCT....... Redevelopment project areas in the North Geographic Focus Area are primarily located along the commercial corridors of the City's historic neighborhoods, including Third Avenue, Broadway, E Street, and H Street. There are a broad range of existing uses along these corridors, including automobile-related businesses on Broadway; neighborhood retail services and offices along downtown Third Avenue; regional retail shopping at the Chula Vista Center on H Street; schools and neighborhood parks; and a mix of housing types (e.g., apartments, condominiums, mobile homes). The City's revitalization planning efforts, through the preparation of an Urban Core Specific Plan (UCSP), are heavily focused on these areas of change in the North Geographic Focus Area. The planning focus areas of the draft UCSP overlap the project areas in the North and propose greater intensities of use that will activate the corridors and attract private investment, future residents, and more vibrant businesses. By establishing updated development standards and design guidelines for the Urban Core, the UCSP will set the vision, plans, and policies for redevelopment of the North Geographic Focus Area, including improvements to public infrastructure and amenities, and the development of key catalyst projects. ... Public Infrastructure & Amenities Redevelopment will be an integral factor in funding public improvements envisioned by the UCSP to support new development and enhance the aesthetic environment of the Urban Core. Tax increment generated in the project areas will be an important financing tool to create bonding capacity for streetscape improvements along corridors where the Redevelopment Agency will be prioritizing key catalyst projects. The work program in Appendix B identifies the following priority projects during the next five years for improvements to public infrastructure and amenities: c:> Third Avenue Streetscape Improvement Master Plan. Public infrastructure and amenities to support key catalyst projects and future redevelopment activity along the downtown Third Avenue business corridor. The plan will include street improvements, street furniture, and lighting to improve circulation and provide for quality design, aesthetics, and identity to the area for marketing and redevelopment. (Town Centre I, Added Area) c:> F Street Improvement Plan. Public infrastructure and amenities to enhance connectivity between the Urban Core (North) and Bayfront (West), and support transit-oriented development projects adjacent to the E Street Trolley Station. The plan will include an assessment of current deficiencies in infrastructure (e.g., roads, medians, curbs, sidewalks, gutters, utilities) and the planning, design, and construction of necessary improvements to address those deficiencies. (Town Centre II, Added Area) Page 1 5 ~Irt. ~ CJ1YOF CHUIA VISTA c:> Downtown Parking Study. Conduct a comprehensive parking study of the downtown district of the Urban Core, including current supply and demand, short-term and long-term needs assessments based on UCSP development projections, and a long-range strategic parking plan for locating, financing, and constructing new facilities that support the objectives of the UCSP. (Town Centre I, Town Centre II, Added Area) Key Catalyst Projects The Agency should leverage existing resources and assets in the North Geographic Focus Area to facilitate key catalyst projects that will attract new investment to the Urban Core that will help create and improve public amenities, infrastructure, and affordable housing. Existing assets may include City- and Agency- owned properties, such as parking lots and a corporation yard. Key catalyst projects should be located in strategic locations, including transit focus areas and downtown business corridors. The downtown Third Avenue business corridor will be especially important during the next several years because of its location in the Town Centre I Redevelopment Project Area. Adopted in 1976, the Town Centre I Project Area is scheduled to expire in 2017, leaving only 11 years to collect tax increment. Key catalyst projects in the project area during next few years will increase assessed valuations and generate greater tax increment revenues for needed public improvements and amenities along and around Third Avenue. The work program in Appendix B identifies the following key catalyst projects during the next five years: c:> Third Avenue Redevelopment Opportunities. Leverage existing resources and assets along the downtown Third Avenue business corridor to collaboratively work with qualified developers to design and build high-quality, mixed-use projects that are consistent with the City's vision, plans, and policies for the Urban Core. Work with existing property owners to improve and enhance uses along the downtown Third Avenue business corridor that further the City's vision, plans, and policies for the Urban Core. (Town Centre I, Added Area) c:> E Street & Woodlawn Redevelopment Opportunities. Identify and facilitate redevelopment opportunities near the E Street Trolley Station to collaboratively work with qualified developers to design and build high-quality, transit-oriented development projects that are consistent with the City's vision, plans, and policies for the Urban Core. (Town Centre II, Added Area) West Geographic Focus Area Work Program Project areas located west of 1-5: Bayfront and Southwest. Plans & Policies Redevelopment project areas in the West Geographic Focus Area contain prime waterfront properties with amazing redevelopment opportunities to create a new and improved marina, a resort conference center, parks and recreation facilities, and new housing. The City and Port of San Diego have spent many years collaboratively developing a Bayfront Master Plan that establishes a vision and policies to guide the development of a world-class bayfront. Completion of these planning activities will require approvals of several local and state agencies, including California Coastal Commission approval of an amendment to the City's Local Coastal Program (LCP). Jl ='= Public Infrastructure & Amenities Historical uses in the West Geographic Focus Area (e.g., Goodrich Corporation, Rohr Aircraft Corporation) were primarily industrial and required limited infrastructure and utility systems to support their operations Page 16 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 and activities. Redevelopment of the Bayfront area into a dynamic array of hotel, residential, and recreational uses will require considerable infrastructure upgrades and improvements to support those uses. Developing an infrastructure financing plan will be complex and require significant inter-agency coordination and support. Tax increment financing will be a major contributor to the substantial infrastructure costs in the Bayfront. The City has spent significant time and resources coordinating with San Diego Gas & Electric (SDG&E) to reach an agreement that would facilitate the undergrounding of major SDG&E transmission lines in the Bayfront area. The undergrounding of these power lines will greatly enhance the aesthetic environment of future waterfront development in the area. (Bayfront! Key Catalyst Projects The Redevelopment Agency will play an important role in facilitating and negotiating key catalyst projects that will economically anchor the Bayfront Master Plan, including: co:> Resort Conference Center. Development of a major resort conference center will generate significant tax increment, transient-occupancy tax, and sales tax revenues to provide needed funding for the planning and financing of key public infrastructure and amenities in the Bayfront. (Bayfront! co:> Residential Development. Design and development of a major residential project that utilizes the prime waterfront location of the Bayfront, and creates greater activity in the area for shopping, dining, and recreating. (Bayfront! South Geographic Focus Area Work Program Project areas located south of L Street, east of 1-5, and north of the City's southerly boundary: Southwest, Otay Valley, and Added Area. Plans & Policies . '. ,.... , ,r'- ... ="= Redevelopment project areas in the South Geographic Focus Area include a myriad of land uses and historical development patterns. The Otay Valley Project Area encompasses territories east of the 1-805 Freeway that are planned for auto dealership uses through the City's Auto Park Specific Plans. Significant development activity is already underway in accordance with those land use plans and policies. Connectivity of this area to territories west of the 1-805 Freeway will be critical to the economic development and redevelopment of the entire South Geographic Focus Area. It is particularly important to recognize that a large portion of the South Geographic Focus Area consists of territories annexed to the City 20 years ago after many years as an unincorporated County area. The Montgomery Area is characterized by a history of piecemeal development practices, a wide range of incompatible uses, and serious infrastructure deficiencies, including roads, curbs, gutters, and sidewalks. It is also characterized, however, by numerous light-industrial uses and large-sized parcels, particularly along Main Street, that will provide important redevelopment and economic development opportunities to the City, including the creation of new commercial and light-industrial uses, and the environmental cleanup of contaminated properties. Additional residential and commercial development opportunities exist along the southern sections of Third Avenue and Broadway. To create a comprehensive and consistent vision for the successful redevelopment of the South Geographic Focus Area, it will be a high priority of the Agency to help fund and coordinate the preparation of a Southwest Specific Plan. The Southwest Specific Plan would establish development standards and design guidelines consistent with the land use policies and objectives identified in the Southwest Area Plan of the 2005 General Plan Update. ;,. Page 1 7 ~Ift. ~ mvOf (HUlA VISTA Public Infrastructure & Amenities Although the City has made significant progress upgrading Montgomery infrastructure since the 1985 annexation, major deficiencies continue to exist and will need to be addressed to support redevelopment and economic development efforts in the South Geographic Focus Area. The preparation of a Southwest Specific Plan and the development of key catalyst projects will be critical to the development of an infrastructure financing plan for the area. These redevelopment activities will compliment the City's Infrastructure Management Program, which will be designed to create a large inventory of infrastructure deficiencies and establish a prioritization system for addressing those deficiencies. To support redevelopment along Main Street, the work program in Appendix B also prioritizes the development and completion of a Main Street Improvement Plan. (Southwest) Key Catalyst Projects Upon preparation and completion of a Southwest Specific Plan, key catalyst projects in the South Geographic Focus Area will include: 0:> Auto Park Expansion. The ongoing expansion of the Auto Park area east of the 1-805 Freeway will generate much needed tax increment and sales tax revenues for public improvements throughout the South Geographic Focus Area, including a Main Street Improvement Plan. (Otay Valley) 0:> Redevelopment Opportunities. The Third Avenue, Broadway, and Main Street corridors will provide important opportunities for redevelopment and economic development. Key catalyst projects along these corridors will generate significant revenues to fund public improvements and amenities in the area. (Southwest, Added Area) Page 18 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 HOUSING WORK PROGRAM In addition to the plans, activities, and projects just described in the redevelopment work programs, the facilitation and financing of affordable housing in the project areas is an important and mandatory function of redevelopment. As tax increment revenues are generated in redevelopment project areas, 20 percent of the gross revenue stream is immediately set aside and placed in the Low and Moderate Income Housing Fund. Those funds, pooled with other federal and state resources and tax credits, provide an important financing tool to assist in the development of income-restricted, affordable housing projects. Low and Moderate Income Housing Funds also provide important financing for: q Housing programs, including First Time Homebuyer q Land purchases for affordable housing q Rehabilitation of existing multifamily housing Housing Compliance To ensure that redevelopment agencies appropriately plan and use housing set-aside funds for the creation of new affordable housing, state redevelopment law requires that five year implementation plans address three specific areas of housing that redevelopment plays a critical role in: "" Housing Production: Based on the number of housing units constructed or substantially rehabilitated over a ten-year period, a Redevelopment Agency must ensure that a percentage (15%) of these units are affordable to low and moderate income households. "" Replacement Housing: Redevelopment Agencies must ensure that any housing units destroyed or removed as a result of redevelopment agency activities are replaced within four years. "" Low and Moderate Income Housing Funds & Expenditures by Household Type: State law establishes specific requirements on the amount of housing set-aside funds an agency must spend over a 10-year period to facilitate housing that is affordable to very low and low income households. Please turn to Appendix C for a comprehensive and detailed report on each of these reporting requirements. Strategic Housing Objectives In addition to meeting these legal requirements, this Five Year Implementation Plan sets forth strategic housing objectives that promote and build capacity in the Agency's ability to proactively facilitate and fund new affordable housing opportunities in western Chula Vista. These are citywide strategic objectives that apply to all three geographic focus areas, and the redevelopment project areas within. STRATEGIC OBJECTIVE #1: EXPANSION OF REDEVELOPMENT PROJECT AREAS The Redevelopment Agency's Low and Moderate Income Housing Funds (Low-Mod Funds) are historically the largest source of funds consistently used to help finance affordable housing. Expansion of the redevelopment project areas would further the Agency's legislative charge to remove blight, and strengthen the Agency's ability to leverage Low-Mod Funds for affordable housing, including new construction and land purchases. Expansion of the project areas would not increase or impact property taxes that owners are assessed, but instead increase the portion of those taxes that is locally captured by the Agency, including monies leveraged to fund public infrastructure and amenities. Annual deposits into the Low-Mod Fund for the next five years are currently estimated to range just above $2 million per year, totaling an estimated $10.4 million during the FY 2004/05-2008109 period. Page 19 ~'ft. :;~ Q1YOf CHUIA VISrA STRATEGIC OBJECTIVE #2: AFFORDABLE HOUSING IN REDEVELOPMENT PROJECT AREAS Low-Mod Fund monies may be spent anywhere in the City of Chula Vista. To promote safe and sanitary affordable housing in western Chula Vista, however, the Agency should focus and prioritize these important resources within redevelopment project areas in neighborhoods of greatest need. The construction of new affordable housing within project areas is also required by statute. State redevelopment law contains an inclusionary housing requirement that provides that at least 15 percent of all new and substantially rehabilitated dwelling units developed within a redevelopment project area be available at affordable housing costs to, and occupied by, persons and families of low and moderate income (Health and Safety Code 933413(b)). Of this 15 percent, at least 60 percent must be available to low and moderate income persons or families. At least 40 percent must be available to very low income persons or families. Page 20 CHULA VISTA REDEVELOPMENT AGENCY Five Year Implementation Plan 2005 to 2009 PROJECTED EXPENDITURES Based on the Agency's five year work program, estimated expenditures on redevelopment activities and projects during the first three years of this Plan will be limited as redevelopment efforts are focused on the preparation and adoption of key land use plans and policies and the development of infrastructure financing programs. Upon construction of key catalyst projects, however, tax increment revenues will significantly increase and provide needed funding to finance new public infrastructure and amenities and affordable housing opportunities. Baseline projections of annual net tax increment revenues, based on current assessed values and estimated annual growth, are listed in the following table. These are net tax increment projections and exclude 20 percent set-aside monies that are deposited into the Low and Moderate Income Housing Fund. Annual Net Tax Increment Projections FY 04105 FY 05/06 FY 06/07 FY 07108 FY 08/09 TOTAL Merged Bayfront I $432,217 $246,476 $812,581 $764,768 $841,005 $3,097,047 Town Centre I Merged Chula Vista $1,471,201 $1,830,908 $2,182,069 $2,246,291 $2,313,033 $10,043,502 TOTAL $t,903,418 $2,077,384 $2,994,650 $3,011,059 $3,154,038 $13,140,549 These baseline revenues will be expended annually on the following core activities: ~ Debt service payments on outstanding bonds ~ Pass-through of tax increment to schools and other taxing entities ~ General administration During Fiscal Year 2008/09, key catalyst projects are anticipated to create 200 new housing units, generating an additional $800,000 in annual gross tax increment. These additional tax increment revenues will fund approximately $512,000 annually in new public improvements and other redevelopment activities. The pie chart below illustrates how $800,000 in annual gross tax increment would be allocated among the three basic public uses: (1) affordable housing, (2) schools and other public agencies, and (3) public improvements and other redevelopment. $512,000 Public Improvements and Other Redevelopment $128,000 Schools and Other Public Agencies Page 21 ~!~ ~ 01Y OF CHUIA VISTA APPENDIX A: TERMINOLOGY The following are definitions of terms and phrases used throughout this report. This list has been prepared to reduce confusion and avoid their common misuse to describe the City's various planning and redevelopment activities in western Chula Vista. 20 Percent Set-Aside: The California Community Redevelopment Law requires that at least 20 percent of all tax increment revenues generated from a redevelopment project area must be used by the Redevelopment Agency to increase, improve, and preserve the community's supply of affordable housing for persons and families of low and moderate income (Health and Safety Code 933334.2). Health and Safety Code Section 33334.3 further requires that all set-aside funds are required to be held in a separate Low and Moderate Income Housing Fund until used, including any interest earned and repayments to the Fund. The Agency may spend monies from the Housing Fund either within or outside of the redevelopment project areas, if the Agency finds that the use of the monies outside will benefit the project areas (933334.2(g)). Absorption Rates: The rate at which real estate properties are able to be sold or leased within a designated market region or focus area. Absorption rates are often used to forecast market conditions and analyze the feasibility of a project based on a variety of market factors. Absorption rates are also used to describe the rate of change, turnover of property, and creation of new housing units over an identified period of time. Affordable HousinR: Housing that has a deed restriction regulating the maximum income level of occupants and the maximum rent or sales price. ARency Participation: The direct participation of a redevelopment agency in a project through the execution of an agreement with the developer (e.g., Disposition and Development Agreement, Owner Participation Agreement). Such an agreement for a redevelopment project triggers the requirement for an Agency to: (1) provide relocation assistance and benefits to residents and business owners; and (2) replace housing units on a one-for-one basis if the project will destroy housing for low- or moderate income residents. BIiRht: A primary legislative charge of a redevelopment agency is to eliminate blight. Territory included within a redevelopment project area must therefore meet specific statutory requirements regarding blight. Health and Safety Code Section 33030 defines "blighted area" as one that is: (1) predominately urbanized; (2) underutilized to the extent that is constitutes a serious physical and economic burden on the community; and (3) characterized by one or more physical or economic conditions as described and set forth in Section 33031: 33031. (a) This subdivision describes physical conditions that cause blight: (1) Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions can be caused by serious building code violations, dilapidation and deterioration, defective design or physical construction, faulty or inadequate utilities, or other similar factors. (2) Factors that prevent or substantially hinder the economically viable use or capacity of buildings or lots. This condition can be caused by a substandard design, inadequate size given present standards and market conditions, lack of parking, or other similar factors. (3) Adjacent or nearby uses that are incompatible with each other and which prevent the economic development of those parcels or other portions of the project area. (4) The existence of subdivided lots of irregular form and shape and inadequate size for proper usefulness and development that are in multiple ownership. (b) This subdivision describes economic conditions that cause blight: (1) Depreciated or stagnant property values or impaired investments, including, but not necessarily limited to, those properties containing hazardous wastes that require the use of agency authority as specified in Article 12.5 (commencing with Section 33459). Page 22 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 (2) Abnormally high business vacancies, abnormally low lease rates, high turnover rates, abandoned buildings, or excessive vacant lots within an area developed for urban use and served by utilities. (3) A lack of necessary commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions. (4) Residential overcrowding or an excess of bars, liquor stores, or other businesses that cater exclusively to adults, that has led to problems of public safety and welfare. (5) A high crime rate that constitutes a serious threat to the public safety and welfare. California Community Redevelopment Law: The authority to establish a redevelopment agency, and the authorities granted to an agency, including the adoption and implementation of a redevelopment plan, is granted and governed by the California Community Redevelopment Law. The Law is contained in California Health and Safety Code Sections 33000 et seq. Eminent Domain: Eminent domain is considered by the U.S. and California Constitutions as the sovereign right of government to take private property for public use. The U.S. Constitution limits the use of eminent domain by providing that 'private property shall not be taken for a public use, without just compensation.' Some state legislatures further limit, or establish procedures for, the use of eminent domain. In California, the legislature has enacted a comprehensive statute known as the Eminent Domain Law, contained in Sections 1230.010 et seq. of the California Code of Civil Procedure. The California Community Redevelopment Law provides for the use of eminent domain to eliminate blight. The Chula Vista Redevelopment Agency has adopted local policies within the City's Redevelopment Plan for the Merged Chula Vista Project Area that prohibit the use of eminent domain on any property that is both zoned and used for residential purposes. HousinR Element: The State of California requires cities and counties to prepare a Housing Element as part of their comprehensive General Plans. The Housing Element must address the housing need for all income levels through adequate zoning, policies, and programs. The City of Chula Vista's existing Housing Element (originally created for the 1999-2004 planning cycle) was approved by the State of California in 1999. The City is in the process of updating the Housing Element to address similar housing needs and policy issues for the 2005-2010 planning cycle. Redevelopment Inclusionary HousinR Requirement: Redevelopment law requires that at least 15 percent of all new and substantially rehabilitated dwelling units developed within a redevelopment project area be available at affordable housing costs to, and occupied by, persons and families of low and moderate income (Health and Safety Code 933413(b)). Of this 15 percent, at least 60 percent must be available to low- and moderate income persons or families. At least 40 percent must be available to very low income persons or families. Redevelopment Project Area: Territories adopted by and placed under the jurisdiction and authority of a redevelopment agency. Within project area boundaries, the Agency may use its general powers to collect tax increment revenues, create a Low and Moderate Income Housing Fund, and conduct other redevelopment activities in accordance with the California Community Redevelopment Law. A project area is a 'predominantly urbanized area of a community which is a blighted area, the redevelopment of which is necessary to effectuate the public purposes" of a Redevelopment Agency as set forth under state law (Health and Safety Code 933320.1). Relocation Assistance: When applicable, Federal and state laws establish extensive relocation rules and regulations for cities and redevelopment agencies. q The Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) dictate relocation regulations in relation to the public acquisition of real estate for a Federal project or a project in which Federal funds are used. Page 23 c:> California Government Code (beginning at Section 7260) prescribes the process and procedures for relocation assistance by public agencies when applicable. Replacement Housing: Subdivision (a) of Section 33413 the California Health and Safety Code sets forth the Redevelopment Agency's statutory requirements for replacement housing: 33413. (a) Whenever dwelling units housing persons and families of low or moderate income are destroyed or removed from the low- and moderate income housing market as part of a redevelopment project that is subject to a written agreement with the agency or where financial assistance has been provided by the agency, the agency shall, within four years of the destruction or removal, rehabilitate, develop, or construct, or cause to be rehabilitated, developed, or constructed, for rental or sale to persons and families of low or moderate income, an equal number of replacement dwelling units that have an equal or greater number of bedrooms as those destroyed or removed units at affordable housing costs within the territorial jurisdiction of the agency. When dwelling units are destroyed or removed after September 1, 1989, 75 percent of the replacement dwelling units shall replace dwelling units available at affordable housing cost in the or a lower income level of very low income households, lower income households, and persons and families of low and moderate income, as the persons displaced from those destroyed or removed units. When dwelling units are destroyed or removed on or after January 1, 2002, 100 percent of the replacement dwelling units shall be available at affordable housing cost to persons in the same or a lower income category (low, very low, or moderate), as the persons displaced from those destroyed or removed units. Tax Increment: Tax increment is the primary source of revenue that redevelopment agencies have to fund and undertake public improvement and affordable housing projects. It is based on the assumption that a revitalized project area will generate more property taxes than were being produced before redevelopment. When a redevelopment project area is adopted, the current assessed values of the property within the project area are designated as the base year value. Tax increment comes from the increased assessed value of property, not from an increase in tax rate. Any increases in property value, as assessed because of change of ownership or new construction, will increase tax revenue generated by the property. This increase in tax revenue is the tax increment that goes to the Agency. Page 24 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 During the next five years, the Agency will undertake certain projects and activities in the redevelopment project areas in accordance with the strategic objectives described in this Plan: (1) Plans & Policies, (2) Public Infrastructure & Amenities, and (3) Key Catalyst Projects. The following work programs are organized by geographic focus area: North, West, South, and All Areas. ALL GEOGRAPHIC FOCUS AREAS / REDEVELOPMENT PROJECT AREAS Goals & Objectives! Project Goals Anticipated Completion Implementing Programs Area Achieved 2006 2007 2008 2009 COMPREHENSIVE PLANNING DOCUMENTS & PROCESSES Public Outreach and Education Merged 11 Develop an outreach and education Bay/ront ! program to provide the community with Town INVEST information regarding the purpose and Centre I benefits of redevelopment, the Agency's -Bay/ront role, tools used, and specific -Town development proposals. Centre I 0 Update of the City and Agency's Merged . website to provide accurate and Chula Vista appropriate information regarding -Town redevelopment in general and Centre II specific programs and projects. -Southwest 0 Development of written materials to -Otay . communicate with the general Valley public about redevelopment. -Added 0 Provide general and technical Area . . . . information to community organizations other civic groups. 0 Implement an ongoing process of . . . . educating and encouraging input from the community regarding specific development proposals Page 25 Goals & Objectives/ Project Goals Anticipated Completion Implementing Programs Area Ac hieved 2006 2007 2008 2009 AFFORDABLE HOUSING Expansion of the Chula Vista Merged 0 Redevelopment Project Area Bayfront / Adding territory to the existing Merged Town CLIi"N Centre I Chula Vista Redevelopment Project Area - Bayfront ,; would further the Agency's legislative charge to remove blight, and strengthen -Town ACCIII the Agency's ability to leverage Low- Centre I Mod Funds for affordable housing, Merged ~ including new construction and land purchases. Chula Vista PRESERVE Completion of this project would -Town Centre /I D alleviate factors hindering economically -Southwest viable use, and help fulfill the Agency's INVIIT affordable housing obligations. -Added .I. Adoption of a Survey Area Area 0 . 0 Adoption of Redevelopment Project WORK . Area expansion fJ GROW Page 26 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 NORTH GEOGRAPHIC FOCUS AREA Project Coals Anticipated Completion Coals & Objectives I Area Achieved Implementing Programs 2006 2007 2008 2009 PLANS & POLICIES Urban Core Specific Plan (UCSP) Merged I Support the preparation and completion Bayfront I of the Urban Core Specific Plan. As part Town SHOP Centre I of the City's envisioning effort for ,r continued revitalization in the Urban -Town Core, the UCSP provides design Centre I guidelines for the three districts, ACCESS identified as the Urban Core District, the Merged 11 Village District, and the Corridors Chula Vista District. These areas in the UCSP fall -Town INVEST within the existing Merged Town Centre Centre 1/ .I. II, Otay Valley and Southwest -Added Redevelopment Project Areas. Area WORK Completion of this project would alleviate factors hindering economically fJ viable use. Support City efforts to complete and GROW . [J adopt the Urban Core Specific Plan (UCSP) and certify the UCSP Program Environmental Impact Report (EIR) Town Centre I Project Area Amendment Merged fJ [J Complete ERAF extension Bayfront I . Town GROW [J Agency wi II coordi nate and work Centre I . with a redevelopment consultant to -Town amend the land use designations in Centre I the Town Centre I Project Area Redevelopment Plan. Page 27 Project Goals Anticipated Completion Goals & Objectives / Implementing Programs Area Achieved 200& 2007 2008 2009 Environmental Remediation Merged 0 . . . . 0 Agency will coordinate and work Bayfront / with the individual property owners Town CLlAN as contaminated sites are identified Centre I ~ for the remediation of hazardous -Town materials to create a viable Centre I development site. PRIIERVE Merged Completion of this project would Chula Vista 11 alleviate factors hindering economically -Town viable use. Centre /I INVIIT -Added Area PUBLIC INFRASTRUCTURE & AMENITIES Third Avenue Streetscape Improvement Merged ~ Master Plan Bayfront / To encompass the Third Avenue corridor Town ACCEII from E Street to the north and H Street to Centre I ~ the South. The plan will include street -Town improvements, street furniture, and Centre I PREIERVI lighting to improve circulation and Merged provide for qual ity design, aesthetics, Chula Vista 11 and identity to the area. -Added Completion of this project would Area INVIIT improve public infrastructure. fJ Completion of this project would alleviate factors hindering economically GROW viable use. 0 Agency will coordinate with the . . Third Avenue Village Association, the City's Engineering and General Services Department to complete a streetscape plan. 0 The General Services Department . . will complete the installation and construction of identified streetscape improvements. Page 28 , REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 Project Goals Anticipated Completion Goals & Objectives / Area Achieved Implementing Programs 2006 2007 2008 2009 F Street Streetscape Improvement Merged 0 Master Plan Bayfront I To encompass F Street from Interstate-S Town CLEAN Centre I to Fourth Avenue. The plan will include ,r an assessment of current deficiencies in -Town the infrastructure and street, to include Centre I ACCESS sewer, curbs, sidewalks, gutters, and Merged medians, and the planning, design, and Chula Vista ~ construction of necessary improvements -Town to address the deficiencies. Centre II PRESERVE Improvements would assist in the redevelopment of the City's old 11 Corporation yard. INVEST Completion of this project would improve public infrastructure. fJ Completion of this project would alleviate factors hindering economically GROW viable use. 0 Agency will coordinate with the . Engineering Department to complete an assessment of current deficiencies and an improvement plan to address identified deficiencies. The Agency will also coordinate with the Finance Department and Engineering to develop a Financing Plan for the necessary improvements. 0 The General Services Department . will complete the construction of identified street improvements. Page 29 ~!~ ~-- ~ 01Y Of CHUIA VISrA Projed Goals Anticipated Completion Goals & Objectives I Implementing Programs Area A< hieved 2006 2007 2008 2009 Parking - Downtown Merged ,; With the contemplated development of Bayfront / Agency lots currently used for surface Town ACCI.I Centre I parking, there is a long-term parking II management plan to better serve the -Town retaillcommercial uses within the Centre I vicinity. INVEST Merged Completion of this project would Chula Vista improve inadequate public -Town improvements. Centre 1/ 0 Conduct a study of the parking . . needs for the Third Avenue commercial corridor and develop a financing plan for the development of parking lots/structures. KEY CATALYST PROJECTS Third Avenue Redevelopment Merged 0 Opportunities Bayfront / The development or redevelopment of Town CLlAN Centre I vacant or underdeveloped properties I located along the Third Avenue corridor -Town from E Street to the North and G Street to Centre I SHOP the South. Merged Completion of this project would Chula Vista ~ alleviate factors hindering economically -Town viable use. Centre 1/ PRElERVE 0 Enter into Exclusive Negotiating II . Agreements and pursue Development & Disposition INVEST Agreements to provide the Agency .I. with the ability to explore, initiate, and enter into different types of development agreements for future WORK redevelopment projects. (Town Centre I) 0 Negotiate and complete four fJ . Agreements for mixed-use retail and GROW residential developments. (Town Centre 1/) Page 30 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 Project Goals Anticipated Completion Goals & Objectives / Area Achieved Implementing Programs 2006 2007 2008 2009 0 Facilitate the completion of 60,000 . sq. ft of new retail/commercial development. (Town Centre I) 0 Facilitate the completion of 400 . market rate homeownership units. (Town Centre I) E Street & Woodlawn Redevelopment Merged II Opportunities Chula Vista The redevelopment of underdeveloped -Town SHOP properties located south of E Street along Centre II Woodlawn Avenue to provide a mixed- -Added ~ use retail and residential development. Area Completion of this project would PAESERVE alleviate factors hindering economically 11 viable use. 0 The Agency wi II pursue Agreements INVEST . with Property Owners and .I. Developers to provide the Agency with the ability to explore, initiate, WORK and enter into different types of development agreements for future fJ redevelopment projects. Facilitate the completion of 300 GROW 0 . market rate homeownership units. 0 Facilitate the completion of 60,000 . sq. It of new retail/commercial development. Scripps Hospital Merged 11 . 0 Assist Scripps hospital in developing Chula Vista a business plan to maintain the -Town INVEST presence of quality medical facilities Centre II in the Northwest area of the City. fJ GROW Gateway Merged .I. . 0 Complete construction of at 100,000 8ayfront / sq feet of commercial/retai I as the Town WORK third phase of the development Centre I located at the NWC of Third Avenue -Town fJ and H Street Centre { GROW Page 31 ~!f? --- ............, CJ1Y OF CHUlA VISTA Project Goals Anticipated Completion Goals & Objectives I Area Achieved Implementing Programs 2006 2007 2008 2009 AFFORDABLE HOUSING Seniors on Broadway Merged . Complete Seniors on Broadway Chula Vista .. 0 Housing Project -Southwest LIVI This project would provide 41-units of rental housing for extremely low and very low income seniors in the Southwest Project Area at 825 Broadway between Sierra Way and 'K'Street. Completion of this project would eliminate factors hindering economically viable use, and help fulfill the Agency's affordable housing obligations. New Construction 01 Housing Merged 0 The Agency will work to acquire Baylront I .. . property for the purpose of assisting Town LIVE in the construction of 100 affordable Centre I rental units for very low and low- -Town income households. Centre I Completion of this project would eliminate factors hindering economically viable use, and help fulfill the Agency's affordable housing obligations. 0 Expand housing opportunities for . very low and low-income residents by partnering with affordable housing developers and providing land and or other financial assistance for the new construction of approximately 100 rental units. Completion of this project would eliminate factors hindering economically viable use, and help fulfill the Agency's affordable housing obligations. Page 32 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 WEST GEOGRAPHIC FOCUS AREA Project Goals Anticipated Completion Goals & Objectives / Area Achieved Implementing Programs 2006 2007 2008 2009 PLANS & POLICIES Bayfront Redevelopment - Planning Merged ~ Support the Bayfront master planning Bayfront / effort between the Port of San Diego Town ACCESS Centre I and the City of Chula Vista to create 11 comprehensive, up-ta-date, and - Bayfran! streamlined policies and initiatives for INVEST the Bayfront Project Area. Support City all efforts to prepare and apply policy and legislative documents that enable the implementation of the Chula Vista WORK Bayfront Master Plan elements located within the City's jurisdiction. tfJ Completion of this project would GROW improve inadequate public improvements. 0 Amendment to the existing Bayfront . Redevelopment Plan, changing the land use designations, which are outdated and no longer consistent with the City's General Plan. 0 Support the California Coastal . Commission (CCC) Approval of Local Coastal Plan Amendment (LCPA)and Port Master Plan Amendment (PMPA) 0 Support efforts by the developer and . the Port to obtai n State Lands Approval Page 33 ~!ft.. -~- ~ O!YOF CHUIA VISrA Project Goals Anticipated Completion Goals & Objectives / Area Achieved Implementing Programs 2006 2007 2008 2009 PUBLIC INFRASTRUCTURE & AMENITIES Bayfront Redevelopment - Merged 0 Infrastructure Improvements Bayfront / The Bayfront area lacks the necessary Town CLEAN public infrastructure to support the Centre I redevelopment of the area to more - Bayfront ~ intense land uses as proposed within the Bayfront Master Plan. The ACCES. redevelopment of the Bayfront area is a 11 joint effort between the Port of San Diego and the City of Chula Vista. INVEIT Completion of this project would .I. improve inadequate public improvements. WORK D Agency will coordinate with the . . Port, the City's Engineering fJ Department and General Services Department to complete an GROW assessment of the current public infrastructure needs. The Agency will also coordinate with the Finance Department and Engineering to develop the City's participation in the Financing Plan for the necessary improvements. Goodrich Merged 11 Goodrich has consolidated its operations Bayfront / within the Northern Area of the Bayfron!. Town INYIIT The consolidation now allows the Centre I redevelopment of their former site of -Bayfront fJ operation. GROW Completion of this project would alleviate factors hindering economically viable use. D Completion of activities to allow the . transfer of the Rados property to Goodrich as required by the Agreement to allow for the consolidation within its North Campus and vacancy of its former operations. Page 34 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 Project Goals Anticipated Completion Goals & Objectives / Area Achieved Implementing Programs 2006 2007 2008 2009 0 Demolition and removal of vacant . buildings located at Goodrich's former operations. KEY CAT AL YST PROJECTS Resort Conference Center Merged I Development of a 1,500 room hotel and Bayfront I 400,000 sq foot convention space within Town SHOP the Bayfront. Centre I Completion of this project would -Bayfront ~ alleviate factors hindering economically GROW viable use. 0 Select the developer and operator of . a quality Resort Conference Center (RCO and begin negotiations. 0 Commence construction of the . Resort Conference Center (RCO. Residential Development Merged ~ Construction of up to 2,000 units of Bayfront I residential units within the Bayfront Town GROW master planning area. Centre I - Bayfront Completion of this project would alleviate factors hindering economically viable use. 0 Entitle the residentially zoned land . of the Bayfront Master Plan area. 0 Commence construction of the first . phase of the residential development. Page 35 ~!~ --- ~ mY OF CHUlA VlSfA SOUTH GEOGRAPHIC FOCUS AREA Project Goals Anticipated Completion Goals & Objectives I Area Achieved Implementing Programs 2006 2007 2008 2009 PLANS & POLICIES Southwest Specific Plan Merged ,r Facilitate the financing and preparation Chula Vista of a Specific Plan for the Southwest to -Southwest ACCISS provide for appropriate land uses and .. development standards to facilitate the development and redevelopment of WORK properties within the area. Completion of this project would fJ alleviate factors hindering economically viable use. GROW 0 Work with the Finance Department . and the Office of Budget & Analysis to develop a financing plan for the development of the Southwest Specific Plan and initiate the development of the Plan. 0 Support City efforts to complete the . Southwest Specific Plan. Environmental Remediation Merged ~ Completion of this project would Chula Vista alleviate factors hindering economically -Southwest PREIERVE viable use. 0 Agency wi II coordi nate and work . with the Grants Manager to submit an application for EPA Brownfield Assessment Grant Program for Phase I Site Assessments for the entire Southwest Project Area 0 If awarded, the Agency will . complete Phase I Site Assessments for environmental remediation of the entire Southwest Project Area. Page 36 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 Project Goals Anticipated Completion Goals & Objectives I Area Achieved Implementing Programs 2006 2007 2008 2009 0 Agency will coordinate and work . with the Grants Manager to submit an application for EPA Revolving Loan Fund Grant Program to complete Phase II Site Assessments and cleanup. 0 If awarded funding through the EPA . Revolving Loan Fund Grant Program, the Agency will complete Phase II Site Assessments and cleanup. PUBLIC INFRASTRUCTURE & AMENITIES Main Street Improvement Plan Merged ,r Completion of this project would Chula Vista alleviate factors hindering economically -Southwest ACCESS viable use. II 0 Agency will coordinate with the . Engineering Department to INYEST complete an assessment of current fJ deficiencies and an improvement plan to address identified deficiencies. The Agency will also GROW coordinate with the Finance Department and Engineering to develop a Financing Plan for the necessary improvements. 0 The General Services Department . will complete the construction of identified street improvements to Main Street. Page 37 Project Goals Anticipated Completion Goals & Objectives I Area Ac hieved Implementing Programs 2006 2007 2008 2009 KEY CATALYST PROJECTS Redevelopment Opportunities Merged I Completion of this project would Chula Vista alleviate factors hindering economically -Southwest IHOP viable use. ~ 0 Identification of key strategic sites, . which are vacant, stagnant or PRES.RVE underutilized, to stimulate 11 redevelopment 0 Facilitate completion of 180,000 sq. INVIiIT . . ft of new industrial development .I. with appropriate access and visibility to 1-805. WORK fJ GROW Auto Park Expansion Merged 11 Completion of this project would Chula Vista alleviate factors hindering economically -Otay INVIIT viable use. Valley 0 Facilitate completion of 5 auto . dealerships 0 Complete construction of directional . signs for Auto Park, including visible freeway signage. Public Outreach and Education Merged 11 Develop an outreach and education Chula Vista program to provide the community with -Town INVIIT information regarding the purpose and Centre II benefits of redevelopment, the Agency's -Added role, tools used, and specific Area development proposals. -Southwest 0 Implement an ongoing process of -Otay . . . . educating and encouraging input Valley from the community regarding specific development proposals Page 38 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 Project Goals Anticipated Completion Goals & Objectives I Area Achieved Implementing Programs 2006 2007 2008 2009 AFFORDABLE HOUSING Affordable Housing Program Merged Expand housing opportunities for low Chula Vista .. and moderate-income residents by -Southwest LIVE partnering with affordable housing developers and providing assistance for the new construction of approximately 240 dwelling units. Completion of this project would eliminate factors hindering economically viable use. Q Complete construction of 120 new . low or moderate-income dwelling units. Q Complete construction of 120 new . low or moderate-income dwelling units. Page 39 This page is intentionally blank. Page 40 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 APPENDIX C: HOUSING COMPLIANCE "The legislature finds and declares that the provIsIon of housing is itself a fundamental purpose of the Community Redevelopment law and that a generally inadequate statewide supply of decent, safe, and sanitary housing affordable to persons and families of low or moderate income, as defined by Section 50093, threatens the accomplishment of the primary purposes of the Community Redevelopment law, including job creation, attracting new private investments, and creating physical, economic, social, and environmental conditions to remove and prevent the recurrence of blight." Health and Safety Code Section 33334.6(a) OVERVIEW To ensure that low and moderate income families have housing opportunities available to them as project areas change and redevelop, state law establishes three fundamental requirements of redevelopment agencies (listed below). As a result of these requirements, redevelopment agencies play an important role in the funding and production of affordable housing for the entire community. c:> Housing Production: Based on the number of housing units constructed or substantially rehabilitated over a ten year period, a Redevelopment Agency must ensure that a percentage of these units are affordable to low and moderate income households.' c:> Replacement Housing: Redevelopment Agencies must ensure that any housing units destroyed or removed as a result of an Agency redevelopment project are replaced within four years. c:> low and Moderate Income Housing Funds & Expenditures by Household Types: A minimum of 20 percent of all of 'tax increment' revenues must be set aside for the development of affordable housing. The law establishes specific requirements for the amount of housing set-aside funds an agency must spend over a 10-year period on housing that is affordable to very low and low income households. This section of the Implementation Plan addresses these three specific requirements of State law with respect to prior affordable housing activities and the anticipated housing program in the future. The Plan specifically demonstrates how the Agency has met its obligations in years prior to 2005 and the activities, polices and/or procedures that the City and Agency may pursue to increase and encourage the provision of housing affordable to very low and low or moderate income households over the next 10 years. 1 Since the Bayfront Original Project Area was adopted prior to 1976, State law does not trigger production requirements. However, it does apply to Bayfront Amended area. Page 41 HOUSING PRODUCTION The Agency must ensure that very low and low and moderate income households have opportunities to reside within Redevelopment Project Areas as these areas change and redevelop through the provision of affordable housing. When new or substantially rehabilitated housing is produced within Redevelopment Project Areas, the Agency incurs an obligation to provide a portion of these housing units as affordable to very low and low and moderate-income households. This requirement is known as the inclusionary housing or production requirement (California Health and Safety Code 933413). The requirement for affordable housing differs for Agency-developed housing versus privately-developed housing. If housing is developed by the Agency, the Agency's requirement to provide affordable housing is based upon a minimum of thirty percent (30%) of these housing units. Not less than half of these units, or fifteen percent (15%), shall be available for very low income households. The requirement is a minimum of fifteen percent (15%) when developed by persons or entities other than the Agency. At least forty percent (40%) of these units (or 6% of the total) must be available for very low income households. Historically, the Agency has not directly developed any housing and does not anticipate developing housing in the future. Instead, the Agency relies on other entities to develop housing with the assistance of the Agency where feasible and appropriate. The Agency may satisfy its inclusionary housing requirements by aggregating affordable housing throughout, and outside of, the Project Areas rather than by individual residential developments. When the Agency seeks to meet its affordable housing requirement outside of the Project Areas, two affordable housing units must be provided for everyone housing unit required and the Agency must make a determination of benefit to the Project Areas. Anticipated Affordable Housing Production To meet its housing production requirement for the 10-year period and the life of the Redevelopment Plans, the Chula Vista Redevelopment Agency partners with private housing developers to provide affordable housing for low and moderate income households. The Agency assists in the creation of new housing developments and the rehabilitation of existing housing both within and outside of the Project Areas. The Agency has received credit for affordable housing built primarily outside of the Project Areas through the continued implementation of Policy 3.5 of the City's Housing Element, which requires all new housing developments of 50 units or more to provide 10 percent of the housing as affordable to low and moderate income households. Over the past ten year period, there has been very little housing development within the Project Areas due to the limited availability of residentially zoned land. However, the Agency was able to participate in numerous affordable housing developments, mostly outside of the Project Areas. From Fiscal Years 1994-95 through 2003-04, a total of 389 new housing units were produced within the Project Areas, resulting in a total affordable housing requirement of 58 units (see Table 1). Within this time period, the Agency exceeded its housing production requirement with a surplus of 389 units inside and outside of the Project Areas. The surplus units, of which 66 units are for very low income households, will be used to satisfy the Agency's future production requirements for FY 2004-05 through 2013-14. With the continued growth of the City's population and its ongoing redevelopment focus in the City's Urban Core, it is anticipated that new construction of housing will increase significantly during the ten-year period from 2004-05 through 2013-14. The ten-year forecast includes actual projects approved, projects in the Page 42 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 process of completion by the Agency, and potential housing units proposed in the work program of this Implementation Plan, as detailed in Appendix B. During the current 10-year period, it is estimated that approximately 2,000 housing units will be built within the Project Areas in accordance with the Redevelopment Work Program (Appendix B). Based upon this estimate, the Agency is required to provide 300 very low and low and moderate income housing units, with 120 required as very low income. During this period, the Agency expects to assist in the production of a total of 624 affordable housing units, of which approximately 127 may be designated as very low income. The Agency expects to exceed its housing production requirement for very low and low and moderate units during the ten-year period with a surplus of 323 affordable units. See Table 1 for a comprehensive summary of the Agency's affordable housing requirements during: (1) the previous 10-year period (1994-95 to 2003- 04), (2) the current 10-year period (2004-05 to 2013-14), (3) the following 20-year period (2014-15 to 2034- 35), and (4) the cumulative duration of all redevelopment plans (1994-95 to 2034-35). Based upon these projections, it is estimated that the Agency will exceed the requirements for very low income and low and moderate-income households through the duration of the Redevelopment Plans. Should actual housing production exceed the estimated projections of this Plan, the Agency intends to leverage its available financial resources to assist private entities to provide affordable housing. Page 43 '" "- ... o 0 '" N '" ... "' "- 0 ..,. N _ "' ... co ~ : oo "- - '" 0 ... oo '" "!. - "- "- "' "' N - N "' "!. - '" 0 '" C oo a) "' 0 - N ti = ~ ~ "- .. C 0;; = 0 J: .. :Q ~ "t> ~ ~ - .. :Q ~ ~~1tl ~~ ~11~ 6~ ..J < .... ~ ::> II) ..,. ..,. (l) .. '" "- REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 REPLACEMENT HOUSING In accordance with Section 33413(a) of the Health and Safety Code, whenever a dwelling unit housing persons or families of low or moderate income are destroyed or removed from the housing market as part of a redevelopment project that is subject to a written agreement with the Agency or where financial assistance has been provided by the Agency, the Agency is responsible for replacing that unit within four years. Replacement housing must have an equal or greater number of bedrooms as those units removed and must be affordable to equal or lower income levels as those displaced. As of 2002, the Agency had replaced all 50 units removed from the redevelopment project areas. The Agency does not have any outstanding replacement housing obligations and is in full compliance with the statutory requirements. During the Implementation Plan period, the Agency anticipates a significant level of commercial and residential development. However, most existing land uses in the Project Areas are commercial, and most new development opportunities will take place on underutilized commercial properties or properties that are currently vacant. The Agency anticipates that Agency-assisted projects will not result in the displacement or removal of housing units and no replacement housing obligations will be incurred. HOUSING FUND REVENUES & EXPENDITURES California Redevelopment Law requires a Redevelopment Agency to direct a minimum of 20 percent of all gross tax increment revenues generated within its Project Areas to a separate fund to be used exclusively for the preservation, improvement, and expansion of the low and moderate income housing supply within the community. This section summarizes the Agency's Low and Moderate Income Housing Fund resources and units assisted from FY 1999-00 through 2003-04, as well as resources and activities anticipated for this current period from FY 2004-05 through 2008-09. Additionally, this section analyzes the Agency's expenditure of these funds in relation to the community's need for very low and low income housing, as well as the proportion of the population under the age of 65, as required by Section 33334.4 of the Health and Safety Code. Housing Fund Expenditures: FY 1999-00 through 2003-04 The Agency expended approximately $10.6 million over the last five years from FY 1999-00 through 2003- 04. These funds were expended for the production of 533 affordable housing units, the rehabilitation of 35 single family homes and mobile homes, and the maintenance and operation of mobile home spaces. Table 2: Housing Units Assisted 35 Subtotal 11 0 0 35 132 132 119 119 180 180 91 91 0 251 0 180 91 522 TOTAL 11 251 0 180 91 533 Page 45 Housing Expenditures by Household Type Effective January 1, 2002, the Agency's expenditure of Housing Funds must be in proportion to the community's need for very low and low income housing and housing for its population under the age of 65, as specified within the City's Housing Element, Chula Vista's Housing Element bases its housing needs for each income category from the Regional Housing Needs Assessment and for age by 2000 Census statistics. Table 3 below specifies the legal limitations governing the expenditure of the Housing Funds. Table 3: Proportionality Requirement for Housing Fund Expenditures t'ercentage ot No. of Housing Funds to Household Type Households be Expended ~ 39% Minimum 28% Minimum 33% Maximum 100% Notes: 1 2005-2010 Chula Vista Housing Element; RHNA 2 2000 U.S. Census; Low Income Households Table 4 on the following page documents the amount of Housing Fund revenue used since January 2002 for these income categories and for families and seniors. Based upon the expenditures to date, the Agency will need to target more of its Housing Funds for very low income households in order to meet the legal requirements for expenditures in proportion to the community's housing needs by income category for the 10-year period. Funds must also be targeted towards housing for families versus seniors to meet the expenditure requirements for the duration of the Redevelopment Plan. Page 46 U)C(J\ <("'0 ~c:g <5.9 I- O.;:J 1..1"1 U '" w'CO ~"'o :)E'" g:.!!! f- Q. z E w- ::;: :. "- '" 0>- --' '" w .~ >u.. w o w "" 0(")0C"') I,()L.Omm OQ)Lt)LO ""'~cit6 NCO'<t CD(DC'\I...~ 'I"'"" N oq- N or ~ = = N GI V C ;;; >- .'!:: ;;; c o 'E o Q. o ~ ... ." C .. <I> GI ~ ::J - 'is c GI Q. " w .. c 'in ::J o :t: ~ GI :a ~ o co ..... M co'<t '" co co 0 ~ N CDMCOr---. I,()'I"'""Ma ~~M Q) Q) E E o 0 u u C Q) C g.e~ u .. .... c 03 c( Q)~-gb >....::;t- "- '" '" OJ) '" "- ?fl.~cft. '" M 0 N M 0 ~ ~cF-'#. CO"'" 0 M'<tO ~ .....m COM CO '<to NO mm Mm MM .....'" r-:- mN "I::t_~ 'l"'""Nui .....COM '<t"'N '<t .....'" "'''' m..... ",ai ~ ~ '" m CO '" N ~ '" 0 M ~ '" '" M~ "'''' ~_N ..... - "'~ N~ "''''~ N ..... Future Housing Activities: FY 2004-05 through 2008-09 During the Implementation Plan period, the Agency will concentrate on housing activities that are most applicable to the Agency's goals and objectives. In developing its affordable housing program, the Agency has been guided by the goals and objectives of the City's Housing Element and General Plan, incorporated into this Plan by reference. Through its activities, the Agency will support and advance the overall Housing Element program. Housing Program For FY 2004-05 through FY 2008-09, the Agency anticipates assisting in the new construction of 247 affordable housing units and the rehabilitation of 140 housing units within the Project Areas. Outside of the Project Areas, the Agency will partner with private entities to provide both new rental housing and rehabilitate existing rental units, for a credit of 216 housing units. To accomplish these activities, the Agency will expend approximately $14,250,000. The details of these activities are provided in Appendix A. Page 48 . .\ <J1CO'> 0'> <'"0 ... ~c::~ '" < c 01J o B '" 0 ~ ~ 0- I- .Z CO ..,. U '" !:!::;c 0 ~ '" '" 0 o '" N "" E O-~ f- a. 0 ZE 0 0 w 0 2: '" '" !l. '" ... 0>- .D ...J '" L.U .~ >u... w 0 w N '" '" "" co 00 00 N '" '" 0 0 0 0 0 0 0 0 0 cj 0 0 '" '" '" N '" '" "" "" "" GI ." 1 iJ - ... c .. ;;: ." C '6 c GI ... ... <II ." C " u... ." C ";;; " Q J: "8 ~ ... Q 0 '" ...J ... ... - '" .;; GI :is ~ 0 0 0 0 0 0 0 0 0 0 C!. ... - "," ~ t* J! :'is' .s - ~t .a ';Y;: " Q) Q) " <II i;tc C c I ";;; "in " " Q 0 Q; :r: :r: ~ " :>, '0 ~ :>, l E " c .c 0 ~ " e 13 E Go' 2 :; 0 "'" 1i! ::;; :r: - .9 c - " 0 GI 0 0 E ..J .c :s! () .c ;:: ~ '" - "~ ;: '" ~ .c E'? .c " " 0 u: 0 z a:: u: I- ~'ft. ~ mY OF CHUIA VlSfA The Agency intends to expend a proportionate amount of these funds for the various income categories and senior households. Funds will be allocated from FY 2004-05 through 2008-09 in accordance with the targeted need as follows. The targeted percentage is slightly higher than the proportionate share of need outlined within the Housing Element to balance the proportionate share of prior years' expenditures. Table 6: Low-Mod Housing Fund Spending Plan by Household Type H h Id T Proportionate ouse 0 ype T t arge Ver Low Income Low Income Moderate Income Senior Housin TOTAL Housing Revenue Based upon the existing Housing Fund balance of $2,836,645 (as of June 30, 2004) and the estimated revenue received by the Agency from 2003-04 through 2008-09, approximately $13,258,000 will be available to fund the Agency's Housing Program. For FY 2004-05, approximately $2 million was deposited into the Housing Fund for eligible housing activities. Over the five-year period ending on June 30, 2009, staff conservatively estimates that the Project Areas will generate approximately $10.4 million in 20 percent housing set aside revenue. The details of these projections are provided in Appendix B. Table 7: Housing Fund Revenue Low and Moderate Income Housing Fund 2004-05 2005-06 2006-07 2007-08 2008-09 TOTAL Ba rontfT own Center I Mer ed Amended Chula Vista Interest & Other Income $1,139,108 $811,748 $51,675 $1,161,890 $827,983 $52,709 $1,185,128 $844,543 $53,763 $1,208,831 $861,433 $54,838 $1,233,007 $878,662 $55,935 $5,927,964 $4,224,369 $268,919 Revenue: 2004-05 to 2008-09 $ 10,421,252 Existing Balance as of 6/30/2004 TOTAL FUNDS $ 2,836,645 $ 13,257,897 Page 50 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 . PPENDIX D: REDEVElOPMENT PROJECT AREAS The table below shows a summary of Chula Vista's Redevelopment Project Areas and their corresponding dates of adoption and plan duration. Existing Redevelopment Project Areas Merged BayfrontfT own Centre I Adoption Date Plan Duration Redevelopment Project Area Town Centre II Original 8/1 5/78 8/15/19 Town Centre II Amended 7/19/88 7/19/29 Otay Valley 12/29/83 12/29/24 Southwest Origi nal Adopted 11/27/90 11/27/31 Southwest Amended 7/9/91 7/9/32 2004 Added Area 5/4/04 5/4/34 Merged Chula Vista Adoption Date Plan Duration Redevelopment Project Area Bayfront Original 7/16/74 7/16/15 Bayfront Amended 7/7/98 7/7/29 Town Centre I 7/6/76 7/6/1 7 I mplementation Plan 2005 to 2009 Housing Compliance Plan 2004-05 to 2013-14 (For affordable housing program plan n i ng) Page 51 ~!~ .. ";i 01Y OF CHUIA VJSrA Merged Bayfront/Town Centre I Redevelopment Project In July 1979, the Agency merged the Bayfront Original and Town Centre I Project Areas. Bayfront - Project Area Profile LAND USE: Approximately 637 acres (Original Redevelopment Area) Approximately 398 acres (amended Redevelopment Area) The Project Area is bounded by Interstate 5 on the east, San Diego Bay on the west, State Route 54 to the north, and L Street to the south Includes: Industrial Commercial Central Resort Residential National Wildlife Refuge Public and Quasi-Public Uses Historically, this area had a variety of land uses ranging from industrial to farming. Large sections of the project area, notably the Midbayfront and D Street Fill are undeveloped and lack infrastructure improvements. The Bayfront is home to a marina, park, and Goodrich Industries. They also contain valuable wetland resources and provide access to the San Diego Bay. LAND AREA: BOUNDARY: GENERAL CHARACTERISTICS: DATE ADOPTED: July 16, 1974 DATE OF AMENDMENTS: 1 st Amendment 07/17/79 20d Amendment 04/22/86 3'd Amendment 01/04/94 4th Amendment 11 /08/94 5th Amendment 06/23/9B TERM LIMIT: July 16, 2014 TAX INCREMENT LIMIT: $210 million REVENUE TERM: July 16, 2024 BONDED INDEBTEDNESS LIMIT: $50 million CURRENT GROSS TAX INCREMENT FLOW: $ 2,274,411 'SOURCE: County of San Diego Office of the Auditor and Controller "Estimated Tax incremental Revenue Fiscal Year 2005~ 2006' Page 52 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 Town Centre I - Project Area Profile LAND AREA: BOUNDARY: 138 acres LAND USE: Third Avenue is the Project Area's central north-south circulation spine. E Street bounds the project in the north and I Street is the Project's southern boundary. The east-west boundaries vary, extending to Fourth Avenue at its farthest point west and to Del Mar Avenue at its farthest point east. Includes: High and Medium-High Density Residential Professional and Administrative Commercial Retail and Service Commercial Public and Quasi-Public Uses GENERAL CHARACTERISTICS: This area serves as the valuable Chula Vista historic downtown. Town Centre I is home to the Third Avenue business corridor, San Diego South County Superior and Municipal Court Complex, Norman Park Senior Center, and Memorial Park, as well as a variety of commercial offices, retail and service commercial uses, and residential units. DATE ADOPTED: July 6,1976 (Ordinance 1691) DATE OF AMEN DMENTS: 1" Amendment 20' Amendment 3" Amendment 4th Amendment 5th Amendment 07/17/79 (Ord. 1872) 04/22/86 (Ord. 2146) 01/04/94 (Ord. 2585) 11/08/94 (Ord. 2609) 06/23/98 Reso 18969 TERM LIMIT: July 6, 2016 TAX INCREMENT LIMIT: $84 million REVENUE TERM: July 6,2026 BONDED INDEBTEDNESS LIMIT: $20 million CURRENT GROSS TAX $1,898,398.18 INCREMENT FLOW: SOURCE: County of San Diego Office of the Auditor and Controller "Estimated Tax incremental Revenue Fiscal Year 2005.2006" Page 53 ~,~ --- ~ O1YOf OIUIA VISrA Merged Chula Vista Redevelopment Project In August of 2000, Town Centre II Original, Town Centre II Amended, Otay Valley, Southwest Original, and Southwest Amended were merged. In May 2004, the Agency adopted the Amended and Restated Redevelopment Plan for the Merged Chula Vista Redevelopment Project Area, inclusive of the Added Area, which consolidated the separate redevelopment plans into a single document. The 2004 Added Area increased the size of the Merged Redevelopment Project Area to 2,390 acres. Town Centre II Project Area Profile LAND AREA: 141.11 acres BOUNDARY: The Project Area consists of eight separate areas in northwest Chula Vista, including the Chula Vista Shopping Center; and a separate area located in southwest Chula Vista. LAND USE: Professional and Administrative Commercial Retail and Service Commercial The Project Area consists of a variety of primarily commercial land uses, including the major H Street business corridor, region's major shopping mall, the new WalMart Center, the City's existing Corporate Yard, and institutional land uses. I ncl udes: GENERAL CHARACTERISTICS: DATE ADOPTED: DATE OF AMENDMENTS: July 6, 1976 Adopted Amended Amended Amended August 1978 May 1987 June 1988 November 1994 TERM LIMIT: August 15, 2019 (Original) July 19, 2029 (Amended) REVENUE TERM: $42.5 million August 15, 2029 (Original) July 19, 2039 (Amended) $100 million TAX INCREMENT LIMIT: BONDED INDEBTEDNESS LIMIT: CURRENT GROSS TAX INCREMENT FLOW: $1,185,012 SOURCE: County of San Diego Office of the Auditor and Controller "Estimated Tax incremental Revenue Fiscal Year 2005-2006" Page 54 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 Otay Valley Project Area Profile LAN D AREA: Approximately 771 acres (includes public rights-of-way, 750 acres net BOUNDARY: East of 1-805 LAND USE: Land Fill Wetland Public Streets Light Industrial 265 acres 163 acres 21 acres 322 acres GENERAL CHARACTERISTICS: This area represented the largest resource of under-developed urbanized property in the City which could be used for industrial development, thereby improving the City's employment and economic base. DATE ADOPTED: December 1983 DATE OF AMENDMENTS: 1 sl Amendment November 8, 1994 TERM LIMIT: December 29, 2024 TAX INCREMENT LIMIT: $115 million REVENUE TERM: December 29, 2034 BONDED INDEBTEDNESS LIMIT: $45 million CURRENT GROSS TAX INCREMENT FLOW: $1,481,462 SOURCE: County of San Diego Office of the Auditor and Controller "Estimated Tax incremental Revenue Fiscal Year 2005 Page 55 ~'ft.. ~ 01Y OF CHUIA VISrA Southwest Project Area Profile LAND AREA: Approximately 1,050 acres BOUNDARY: The boundaries of the Project Area comprise a large territory generally located along Interstate 5 (1-5), Broadway Avenue, south Third Avenue, and the Main Street corridors. The boundaries follow a very selective path and therefore are very irregular. LAND USE: Industrial Commercial Residential Public and Quasi-Public Uses The Project Area consists primarily of light industrial and retail commercial uses. Several residential enclaves are dispersed throughout the Project Area including the Broderick's Otay Acres area south of Main Street and east of Mace Street, the Woodlawn Park area on the north side of Main Street and west of Melrose Avenue, the Jacqua Street area, the West Fairfield area, and the Walnut Street area. I ncl udes: GENERAL CHARACTERISTICS DATE ADOPTED: 11/13/90 (Ordinance #2420) DATE OF AMENDMENTS: 151 Amendment August 1991 TERM LIMIT: November 27, 2031 (Original) July 9,2031 (Amended) TAX INCREMENT LIMIT: $150 million, to be adjusted annually based on the Consumer Price Index since 1990. REVENUE TERM: November 27, 2041 (Original) July 9, 2042 (Amended) BONDED INDEBTEDNESS: $150 million, to be adjusted annually based on the Consumer Price Index since 1990. The adjusted limit for 1999 is $186.1* million CURRENT GROSS TAX INCREMENT: $ 2,512,136 SOURCE: County of San Diego Office of the Auditor and Controller '"Estimated Tax incremental Revenue Fiscal Year 2005 Page 56 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 2004 Added Project Area Profile LAN D AREA: Approximately 494 acres BOUNDARY: Along major commercial and industrial roadways in the western part of Chula Vista (Broadway, Third Avenue, E Street, H Street, and other pocket areas in the northern part of the City) LAND USE: Commercial Light Industrial This area follows major commercial and industrial roadways in the western part of Chula Vista (Broadway, Third Avenue, E Street, H Street, and other pocket areas in the northern part of the City) to provide continuity to the Agency's redevelopment efforts such as infrastructure and capital project improvements. GENERAL CHARACTERISTICS: DATE ADOPTED: May 4, 2004 DATE OF AMENDMENTS: None to date TERM LIMIT: May 4, 2034 TAX INCREMENT LIMIT: No Limit REVENUE TERM: May 4, 2049 BONDED INDEBTEDNESS LIMIT: $175 million CURRENT GROSS TAX INCREMENT FLOW: $400,000 SOURCE: County of San Diego Office of the Auditor and Controller NEstimated Tax incremental Revenue Fiscal Year 2005 Page 57 This page is intentionally blank. Page 58 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 APPENDIX E: REDEVELOPMENT REVENUES (2005-2009) Over the next five years, the Agency can only undertake those activities that can be financially supported by its revenue stream. The Agency projects revenues equaling approximately $13 million from all the Project Areas from FY 2004/05 through 2008/09 to fund necessary administrative activities and projects/programs. The revenue sources include: . Annual tax increment revenues . Bond issuance proceeds . Other Agency and non-Agency fi nancial resources The following tax increment revenue projections are based on current assessed values in the project areas and an annual growth rate of two percent for those values. They do not account for future redevelopment projects which will significantly increase tax increment generation in the project areas. FY 2004/05 to 2008/09 Projected Revenues Available for Merged BayfrontIT own Centre I Description Fiscal Year TOTAL 2004-05 2005-06 2006-07 2007-03 2008-09 Gross Tax Increment $4,095,119 $4,172,808 $4,264,274 $4,341,390 $4,428,217 $21,301,808 less: Pass-Through Payments $36,945 $38,390 $830,213 $205,019 $222,059 $1,332,628 less: Housi ng Set-Aside $706,408 $721,896 $738,888 $868,278 $885,643 $3,921,113 Less: Debt Obligations $2,919,549 $3,165,643 $1,910,604 $2,069,300 $2,061,765 $12,126,865 Net Tax Increment Available $432,217 $246,879 $784,569 $1,198,793 $1,258,750 $3,921,204 for Admin & projects/Programs FY 2004/05 to 2008/09 Projected Revenues Available for Merged Chula Vista Description Fiscal Year TOTAL 2004-05 2005-06 2006-07 2007-03 2003-09 Gross Tax Increment $4,844,325 $5,576,142 $5,687,665 $5,801,418 $5,917,446 $27,826,996 Less: Pass-Through Pavments $840,162 $1,052,184 $1,459,240 $1,370,449 $1,419,017 $6,141,054 Less: Housing Set-Aside $968,865 $1,115,228 $1,137,533 $1,160,284 $1,183,489 $5,565,399 Less: Debt Obligations $1,564,097 $1,577,822 $1,219,921 $1,220,565 $1,219,635 $6,802,044 Net Tax Increment Available $1,471,201 $1,830,908 $1,870,971 $2,050,120 $2,095,305 $9,318,499 for Admin & Projects/Programs Page 59 ~,~ --- ~ 01V OF CHUIA VISrA FY 2004/05 to 2008/09 Projected Net Tax Increment Revenues Available for All Project Areas Merged Bayfront / $432,217 $246,879 $784,569 $1,198,793 $1,258,750 $3,921,204 Town Centre I Merged Chula Vista $1,471,201 $1,830,908 $1,870,971 $2,050,120 $2,095,305 $9,318,499 TOTAL $1,903,418 $2,077,787 $2,655,540 $3,248,913 $3,354,055 $13,239,703 Page 60 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 APPENDIX F: 2000-2004 ACCOMPLISHMENTS The following list identifies the core accomplishments of the Agency from 2000 to 2004 by geographic focus area. ALL GEOGRAPHIC FOCUS AREAS / REDEVELOPMENT PROJECT AREAS REDEVELOPMENT PLAN EXPANSION AND AMENDMENT (Added Area) . In early 2004, the Agency approved an expansion of the Merged Chula Vista Redevelopment Project to include approximately 494 acres of property located throughout the western part of Chula Vista. Expansion of the Project Area enables the Agency to more consistently implement redevelopment projects in the majority of the commercially zoned areas in the western part of Chula Vista, particularly Broadway and Third Avenue where (in many areas) the Agency previously did not have redevelopment authority. CHULA VISTA ENTRYWAY BEAUTIFICATION PROJECT (Added Area & Southwest) . From Interstate-S, Palomar Street, H Street, and E Street are considered primary entryways into the City in need of revitalization. These entryways lead to some of the most frequented retail establishments in the South Bay and provide a front door to the waterfront redevelopment areas. In December 2000, the City of Chula Vista approved the Chula Vista Entryway Beautification Project to include these three City entry corridors. Construction of the beautification elements were constructed to coincide with roadway improvement projects for each street. Completion of the H Street beautification element were completed in 2003 and included enhanced median and pedestrian crosswalk paving, pedestrian-scale lighting, three entry monument elements, street trees, and other smaller-scale plant materials. Completion of the Palomar Street beautification elements were completed in 2004 and included soundwalls, enhanced parkway and median hardscape, banners within the public right-of-way, and accommodations for future plant installation on the south side. The Agency provided funding for the beautification elements along Palomar Street. In addition to creating an enhanced gateway into the community, project goals included creating a low-maintenance, pedestrian-friendly and safe environment, while also improving the quality of the infrastructure and thereby facilitating economic and physical rehabilitation in the area. Page 61 ~If?. ~ CJ1Y OF CHUIA VISrA NORTH GEOGRAPHIC FOCUS AREA REDEVELOI'MENT PROJECT AREAS D PROJECT AREAS , --- --- .' GATEWAY CHULA VISTA PHASES I & II (Town Centre I) . 347,000 square foot luxury mixed-use commercial! office complex . Northwest corner of Third Avenue and "H" Street. . phase I opened in April 2002 . 90% occupied . Phase II is currently underway and is anticipated to be completed in Winter 2007. Page 62 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 SPOTliGHT ON BROADWAY (Southwest) . New construction of a mixed-use residential and retail project . 40 residential row homes with 9 loft units over first floor retail fronting Broadway . 760 Broadway, south of L Street, includes. . The property was owned by the Agency and conveyed to the development team of Bitterlin Enterprises and Carter Reese. . The Agency also coordinated the removal of hazardous tanks and soil as a result of the previous use of an auto dealership, Fuller Ford. . Completed in December 2005. Page 63 ~!f? .. ':> mY OF CHUIA VISrA SOUTH GEOGRAPHIC FOCUS AREA ~ REDEVELOPMENT od!~ PROJECT AREAS .. . .' .' D PROJECT AREAS , AUTO PARK EXPANSION Page 64 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 THE CROSSINGS (Otay Valley) . New construction of 188,860 square-foot retail shopping center within five retail buildings and two restaurant pads. . 17.2-acre site on the south side of Main Street and directly east of Interstate-80S. . Previously used for outdoor storage of vehicles, equipment and materials. . Traffic circulation and access issues had impeded the redevelopment of this property. . Agency financial assistance of $500,000 for street improvements, including reconfiguration and additional lanes for entering and exiting the property, and parkway and median improvements. . Agency also entered into Agreements with two adjacent property owners to dedicate a 10 foot right of way over a portion of their properties and to assign the Agency's Option to purchase an adjacent 1.6 acre property to allow for the expansion of the businesses of these owners. The 10 foot right of way allows for improved area circulation and traffic conditions for the Crossings Project and future development projects such as the Auto Park Expansion, and other anticipated projects. . Completed in November 2005. AUTO PARK EXPANSION (Otay Valley) . A 71 acre expansion of a regional automobile sales and service destination. . The Auto Park North expansion was approved in June 2003 and added approximately 39 acres. . The Auto Park East expansion approved in 2004 added approxi mately 31 acres to the Auto Park. . Toyota and McCune Motors (Dodge, Chrysler, Jeep) have entered into a OPAs with the Agency for the development of dealerships and are currently under construction. The developments are anticipated to be completed in Spring 2006. Page 65 ENVIRONMENTAL REMEDIATION OF SHINOHARA SITE (Otay Valley) . 1.6-acre site located at the corner of the Auto Park site near the Otay River and wetlands. . Unsuitable for development due to its use as a stockpile for contaminated burn-ash, estimated at 35,000 cubic yards. . The Agency received a matching grant from the California Integrated Waste Management Board (CIWMB) for priority solid waste clean up needs. . The Agency was able to dispose of the stockpiled burn-ash at the Otay Valley Landfill in November 2000. Page 66 REDEVELOPMENT PROJECT AREAS Five Year Implementation Plan 2005 to 2009 AFFORDABLE HOUSING Within Redevelopment Project Areas TROLLEY TRESTLE (Southwest) . New construction of 11 transitional housing units for children transitioning from foster care programs. o 30% or less of the Area Median Income. o 746 Ada Street o $373,000 in HOME funds. . Completed in December 2000. !I J!flfl:lr..: ~ I j 4 ' , I . ~ . ',~ 1_, . BRISA DEL MAR (Southwest) o New construction of 106 family rental units. o 10 units for very low income households at 50% AMI and 96 units for low income households at 60% AMI. . $1.5 million in Redevelopment Low-Moderate Income Housing Set Aside funds and $300,000 in HOME funds. . 1695 Broadway. . Completed in December 2005. Outside of Redevelopment Project Areas VILLA SERENA o New construction of 132 rental units for seniors. o 1231 Medical Center Dr. within the Sunbow master planned community. . 26 units for very low income seniors at 50% AMI and 106 units for low income seniors at 60% AMI. . $275,000 in Redevelopment Low-Moderate Income Housing Set Aside funds. . Completed in August 2000. Page 67 ST. REGIS PARK APARTMENT o Acquisition and rehabilitation of 119 rental units. o 24 units for very low income households at 50% AMI and 95 units for low income households at 60% AMI. o $275,000 in Redevelopment Low-Moderate Income Housing Set Aside funds. o 1025 Broadway Street o Completed in October 2000. ':1" J, i 'ii I J ,I" ~'i'i'!~III)!j' .;\~"",. ~~! .\ !\t' HARVEST RIDGE SENIOR APARTMENTS AND SUNROSE APARTMENTS o New construction of 180 affordable units for families and 91 units for seniors. o 30 units for very low income households at 50% AMI and 241units for low income households at 60% AMI. o $4.4 million in Redevelopment Low-Moderate Income Housing Set Aside funds. o 1325 Santa Rita Avenue and East Palomar within Otay Ranch Village of Heritage. o Family development completed in May 2003 and senior development in December 2003. RANCHO BUENA VISTA APARTMENTS o New construction of 150 rental units. o 30 units for very low income households at 50% AMI and 120 units for low income households at 60% AMI. o $1 million in Redevelopment Low-Moderate Income Housing Set Aside funds and $500,000 in HOME funds o 2155 Corte Vista within the Eastlake master planned community. o Completed in March 2005. Page 68 ~. . .. r-ORPORATi( )1'-1 CHI, LA ViST\ CVRC Board Staff Report - Page 1 Item No. 3 DATE: May 25, 2006 TO: CVRC Board Directors FROM: Dana M. Smith, Secretary (~~ /, , VIA: David D. Rowlands, Jr., Chief Executive Officer ,',' SUBJECT: Redevelopment Plan ERAF Extensions Project Area: Merged Bayfront I Town Centre I Redevelopment Project Area q Bayfront Original q Town Centre I Merged Chula Vista Redevelopment Project Area q Town Centre II Original q Otay Valley Project Type: Redevelopment Plan Amendments Project Description: Recommendations to the City Council to adopt ordinances pursuant to SB 1096 (Chapter 211, Statutes of 2004) and Health and Safety Code Section 33333.6(e)(2)(D) amending redevelopment plans for: q the Merged Bayfront I Town Centre I Redevelopment Project Area (Only Bayfront Original and Town Centre I) q the Merged Chula Vista Redevelopment Project Area (only Town Centre II Original and Otay Valley) to extend the duration of those plans for those project areas by two years. BACKGROUND: In 2004, the State Legislature passed Senate Bill 1096 (Chapter 211, Statutes of 2004) which, among other things, required redevelopment agencies to make payments to a special state account, the Educational Revenue Augmentation Fund ("ERAF"), for two consecutive fiscal years. "ERAF shifts" use local tax revenues to backfill the state's funding obligations to schools in deficit years and are not new to local governments during times 3-1 Staff ~ep>ort - Item No. :3 Page :2 of state budgetary woes. SB 1096 scheduled ERAF payments by redevelopment agencies in FY 2004-05 and 2005-06. In exchange, however, SB 1096 provided redevelopment agencies its own form of backfill by authorizing agencies to extend, for each year of ERAF payment, the statutory time limit of: (1) the effectiveness of redevelopment plans for qualifying project areas (40 years), including the authority of agencies to act on those plans; and (2) the authority of agencies to collect tax increment revenues in qualifying project areas to pay for bonded indebtedness (50 years). In other words, redevelopment agencies gave up two years of revenue today in exchange for two years of revenue tomorrow. To implement ERAF extensions, cities must adopt an ordinance amending the redevelopment plans for qualifying project areas in accordance with Section 33333.6(e)(2)(D) of the California Health and Safety Code. The Chula Vista Redevelopment Agency has made both of its required ERAF payments for FY 2004-05 and 2005-06, and is authorized pursuant to SB 1096 to extend the time limits of redevelopment plans for the following qualifying project areas: q Bayfront Original (adopted 1974) q Town Centre I (adopted 1976) q Town Centre II Original (adopted 1978) q Otay Valley (adopted 1983) Although SB 1096 involves Redevelopment Agency funds, the redevelopment plans were originally adopted by City Council ordinance. Amendments to these plans pursuant to SB 1096 require adoption of an ordinance by the same legislative body. The CVRC is a recommending body to the City Council and Redevelopment Agency on these legislative and fiduciary matters. RECOMMENDATION: Staff recommends that the Board of Directors: 1. Adopt the resolution making recommendation that the City Council adopt an ordinance amending redevelopment plans for the Merged BayfrontITown Centre I Redevelopment Project Area, pertaining only to the Bayfront Original and Town Centre I Project Areas, to extend the duration of the plans for those project areas by two years in accordance with Senate Bill 1096 (Chapter 211, Statutes of 2004) as codified in Health and Safety Code Section 33333.6. Adopt the resolution making recommendation that the City Council adopt an ordinance amending the redevelopment plan for the Merged Chula Vista Redevelopment Project Area, pertaining only to the Town Centre II Original and Otay Valley Project Areas, to 3-2 Staff ~epmt - ~tem No.3 i"age 3 extend the duration of the plan for those project areas by two years in accordance with Senate Bill 1096 (Chapter 211, Statutes of 2004) as codified in Health and Safety Code Section 33333.6. DISCUSSiON: Previous 2003 ERAF Shift & Backfill The SB 1096 backfill is not new. It is identical to a previous 2003 State backfill that allowed a one-year extension of redevelopment plan time limits to help redevelopment agencies absorb a $135 million statewide ERAF shift. SB 1045 (Chapter 260, Statutes of 2003) was the legislative vehicle for that backfill and was enacted as a trailer bill to the State Legislature's 2003 Budget. In accordance with SB 1045, the City Council approved ordinances on January 27, 2004 extending redevelopment plan time limits for ERAF payments made in Fiscal Year 2003-04. SB 1096 - Two-Year ERAF Shifts & Backfill SB 1096 backfills ERAF payments made by redevelopment agencies in Fiscal Years 2004- 05 and 2005-06. The statute, as codified in the California Community Redevelopment Law (Health and Safety Code !333333.6(e)(2)(D)), permits redevelopment agencies to extend the duration of qual ifying redevelopment plans by up to two years if the agencies make a finding that the ERAF payments impair their ability to fund future redevelopment activities and projects in accordance with those plans. To be eligible, the effectiveness of a redevelopment plan for a project area must be less than 20 years from the end of the fiscal year in which a payment is made. Qualifying project areas include: Bayfront Original, Town Centre I, Town Centre II Original, and Otay Valley. ERAF payments by the Chula Vista Redevelopment Agency totaled $1,643,725 in FY 2004-05 ($743,358) and FY 2005-06 ($900,367). Given the Agency's current tax increment growth rates, and current efforts to strengthen the organization's financial strategies, staff has determined that the loss of revenues from ERAF payments has substantially impacted the Agency's ability to fund proactive redevelopment activities and projects to implement the adopted redevelopment plans. Extending the duration of the redevelopment plans will enable the Agency to capture additional tax increment that will help, at least in part, make up for the revenues lost to ERAF. The proposed plan amendments would extend the duration of the Redevelopment Plans of the Merged Chula Vista Redevelopment Project Area (only pertaining to Town Centre II Original and Otay Valley) and the Merged Bayfront/Town Centre I Redevelopment Project Area (only pertaining to Bayfront Original and Town Centre I) by two years pursuant to Section 33333.6(e)(2)(D) of the California Community Redevelopment Law (Health and 3-3 Staff ~epmt - item No.3 Page 4 Safety Code 9933000 et seq.). The proposed ordinance contains the necessary findings required by state law. PREPARED BY: Ken Lee, Principal Community Development Specialist 3-4 CVRC RESOLUTION NO. 2006- RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION MAKING RECOMMENDATION TO THE CITY COUNCIL TO ADOPT AN ORDINANCE AMENDING REDEVELOPMENT PLANS FOR THE MERGED BA YFRONTfTOWN CENTRE I REDEVELOPMENT PROJECT AREA (ONLY PERTAINING TO BAYFRONT ORIGINAL AND TOWN CENTRE I) PURSUANT TO SENATE BILL 1096 AS CODIFIED IN HEALTH AND SAFETY CODE SECTION 33333.6 WHEREAS, pursuant to Chula Vista Municipal Code Section 2.55.060(A), the Chula Vista Redevelopment Corporation ("CVRC") is a recommending body to the Chula Vista Redevelopment Agency ("Agency") and City Council on legislative functions and actions involving redevelopment plans and regulations; and WHEREAS, Section 33333.6(e)(2)(D) of the California Community Redevelopment Law, Health and Safety Code Sections 33000 et seq. ("Law"), provides that when an agency is required to make payments to the Educational Revenue Augmentation Fund during Fiscal Years 2004-05 and 2005-06 pursuant to Section 33681.12 of the Law, the legislative body may extend the effectiveness of the redevelopment plan by up to two years, provided the agency can make certain findings; and WHEREAS, the City Council adopted and subsequently amended the Redevelopment Plan for the Bayfront Original Project Area on July 17, 1979 by Ordinance No. 1872, April 22, 1986 by Ordinance No. 2146, January 4, 1994 by Ordinance No. 2585, November 8, 1994 by Ordinance No. 2608, July 7,1998 by Ordinance No. 2734, January 13, 2004 by Ordinance No. 2948, and February 3, 2004 by Ordinance No. 2950; and WHEREAS, the City Council adopted and subsequently amended the Redevelopment Plan for the Town Centre I Project Area on July 17, 1979 by Ordinance No. 1872, April 22, 1986 by Ordinance No. 2146, January 4, 1994 by Ordinance No. 2585, November 8, 1994 by Ordinance No. 2609, July 7,1998 by Ordinance No. 2735, January 13, 2004 by Ordinance No. 2948, and February 3, 2004 by Ordinance No. 2950; and WHEREAS, the time limit for the effectiveness of the Redevelopment Plan for the Bayfront Original Project Area is July 16, 2015, which is more than 10 years but less than 20 years from the last day in Fiscal Year 2004-05, and less than 10 years from the last day in and Fiscal Year and 2005-06, in which the payment required by Section 33681.12 of the Law must be made; and WHEREAS, the time limit for the effectiveness of the Redevelopment Plan for the Town Centre I Project Area is July 6, 2017, which is more than 10 years but less than 20 years from the last day in Fiscal Years 2004-05 and 2005-06 in which the payment required by Section 33681.12 of the Law must be made; and WHEREAS, the eligibility requirements for redevelopment plan amendments pursuant to 3-5 CVRC Resolution No. 2006- Page 2 Section 33333.6(e)(2)(D) are met by the redevelopment plans for the Merged BayfrontfTown Centre I Project Area (only pertaining to the Bayfront Original and Town Centre I Project Areas); and WHEREAS, the amendments of redevelopment plans pursuant to the authority granted in Section 33333.6(e)(2)(D) of the Law would allow the Agency to extend the time limit to collect tax increment because of the loss of funds resulting from the requirement to make payments to the Educational Revenue Augmentation Fund that would have otherwise been used to pay for the costs of projects and activities necessary to carry out the goals and objectives of the redevelopment plans; and WHEREAS, the loss of revenues from payments to the Educational Revenue Augmentation Fund in Fiscal Years 2004-0S and 2005-06 has substantially impacted the Agency's ability to fund proactive redevelopment activities and projects to effectively implement the adopted redevelopment plans for the Merged BayfrontfTown Centre I Project Area; and WHEREAS, the Agency is in compliance with the requirements of Section 33334.6 of the Law which generally requires that not less than 20 percent of the taxes allocated to the Agency beginning in Fiscal Year 1985-86 be used to increase, improve and preserve the community's supply of affordable housing; and WHEREAS, the Agency is not subject to sanctions pursuant to subdivision (e) of Section 33334.12 of the Law for the failure to expend, encumber, or disburse an excess surplus; and WHEREAS, the Agency is in compliance with the findings required under Section 33333.6(e)(2)(D)(ii) and is proposing to adopt an updated implementation plan in accordance with the requirements of Section 33490. NOW, THEREFORE, BE IT RESOLVED that the Chula Vista Redevelopment Corporation does hereby recommend approval by the City Council of an ordinance to amend redevelopment plans for the Merged BayfrontfTown Centre I Redevelopment Project Area (only pertaining to Bayfront Original and Town Centre I), extending the time limits of those plans for those project areas by two years, pursuant to Section 33333.6 of the California Health and Safety Code. Presented by: Approved as to form by Dana M. Smith Assistant City Manager/Director of Community Development Ann Moore General Counsel 3-6 CVRC RESOLUTION NO. 2006- RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION MAKING RECOMMENDATION TO THE CITY COUNCIL TO ADOPT AN ORDINANCE AMENDING THE REDEVELOPMENT PLAN FOR THE MERGED CHULA VISTA REDEVELOPMENT PROJECT AREA (ONLY PERTAINING TO TOWN CENTRE II ORIGINAL AND OTAY VALLEY) PURSUANT TO SENATE BILL 1096 AS CODIFIED IN HEALTH AND SAFETY CODE SECTION 33333.6 WHEREAS, pursuant to Chula Vista Municipal Code Section 2.55.060(A), the Chula Vista Redevelopment Corporation ("CVRC") is a recommending body to the Chula Vista Redevelopment Agency ("Agency") and City Council on legislative functions and actions involving redevelopment plans and regulations; and WHEREAS, Section 33333.6(e)(2)(D) of the California Community Redevelopment Law, Health and Safety Code Sections 33000 et seq. ("Law"), provides that when an agency is required to make payments to the Educational Revenue Augmentation Fund during Fiscal Years 2004-05 and 2005-06 pursuant to Section 33681.12 of the Law, the legislative body may extend the effectiveness of the redevelopment plan by up to two years, provided the agency can make certai n fi nd i ngs; and WHEREAS, the City Council of the City of Chula Vista ("City Council") adopted and subsequently amended the Redevelopment Plan for the Town Centre II Original Project Area on May 19, 1987 by Ordinance No. 2207, july 19, 1988 by Ordinance No. 2274, November 8, 1994 by Ordinance No. 2610, August 22,2000 by Ordinance No. 2817, january 13, 2004 by Ordinance No. 2947, February 3, 2004 by Ordinance No. 2949, and May 4,2004 by Ordinance No. 2962; and WHEREAS, the City Council adopted and subsequently amended the Redevelopment Plan for the Otay Valley Project Area on November 8, 1994 by Ordinance No. 2611, August 22,2000 by Ordinance No. 2818, january 13, 2004 by Ordinance No. 2947, February 3, 2004 by Ordinance No. 2949, and May 4, 2004 by Ordinance No. 2962; and WHEREAS, the time limit for the effectiveness of the Redevelopment Plan for the Town Centre II Original Project Area is August 15, 2019, which is more than 10 years but less than 20 years from the last day in Fiscal Years 2004-05 and 2005-06 in which the payment required by Section 33681.12 of the Law must be made; and WHEREAS, the time limit for the effectiveness of the Redevelopment Plan for the Otay Valley Project Area is December 29,2024, which is more than 10 years but less than 20 years from the last day in Fiscal Years 2004-05 and 2005-06 in which the payment required by Section 33681.12 of the Law must be made; and WHEREAS, the eligibility requirements for redevelopment plan amendments pursuant to Section 33333.6(e)(2)(D) are met by the redevelopment plan for the Merged Chula Vista 3-7 CVRC Resolution No. 2006- Page 2 Redevelopment Project Area (only pertaining to Town Centre II Original and Otay Valley Project Areas); and WHEREAS, the amendments of redevelopment plans pursuant to the authority granted in Section 33333.6(e)(2)(D) of the Law would allow the Agency to extend the time limitto collect tax increment because of the loss of funds resulting from the requirement to make payments to the Educational Revenue Augmentation Fund that would have otherwise been used to pay for the costs of projects and activities necessary to carry out the goals and objectives of the redevelopment plans; and WHEREAS, the loss of revenues from payments to the Educational Revenue Augmentation Fund in Fiscal Years 2004-05 and 2005-06 has substantially impacted the Agency's ability to fund proactive redevelopment activities and projects to effectively implement the adopted redevelopment plans for the Merged Bayfront/Town Centre I Project Area; and WHEREAS, the Agency is in compliance with the requirements of Section 33334.6 of the Law which generally requires that not less than 20 percent of the taxes allocated to the Agency beginning in Fiscal Year 1985-86 be used to increase, improve and preserve the community's supply of affordable housing; and WHEREAS, the Agency is not subject to sanctions pursuant to subdivision (e) of Section 33334.12 of the Law for the failure to expend, encumber, or disburse an excess surplus; and WHEREAS, the Agency is in compliance with the findings required under Section 33333.6(e)(2)(D)(ii) and is proposing to adopt an updated implementation plan in accordance with the requirements of Section 33490. NOW, THEREFORE, BE IT RESOLVED that the Chula Vista Redevelopment Corporation does hereby recommend approval by the City Council of an ordinance to amend the redevelopment plan for the Merged Chula Vista Redevelopment Project Area (only pertaining to Town Centre II Original and Otay Valley), extending the time limits of that plan forthose project areas by two years, pursuant to Section 33333.6 of the California Health and Safety Code. Presented by: Approved as to form by Dana M. Smith Assistant City Manager/Director of Community Development Ann Moore General Counsel 3-8 . .. .( iRP()RAl;( li\i (HULA VISTi\ CVRC Board Staff Report - Page 1 Item No. 4 DATE: May 25, 2006 TO: CVRC Board Directors FROM: Maria Kachadoorian, Chief Financial Officer \ \, " VIA: David D. Rowlands, jr., Chief Executive Officer SUBJECT: Recommendation to the Redevelopment Agency and City Council regarding Issuance and Sale of Tax Allocation Refunding Bonds BACKGROUND: On March 22, 2005, City Council and Agency approved agreements with Harrell & Co. and E.j. De La Rosa & Co. (see attached B) to determine the feasibility of refunding the City of Chula Vista Redevelopment Agency 1994 Senior Tax Allocation Refunding Bonds, Series A. Based on current market rates at the time, the refinancing of these obligations would have resulted in an estimated savings of $ 2.3 million or 17.9% of the par amount over the life of the bonds based on an assumed interest rate of 4.93%. Due to unforeseen circumstances, the refunding was delayed. However, at this time, the 1994 Senior Tax Allocation Refunding Bonds, Series D and the 1994 Subordinate Tax Allocation Refunding Bonds, Series C are also eligible for refunding. This was not the case in March 2005. Staff has now determined that it is feasible to refinance all three outstanding bond issues. Based on the current market rate, the refunding should result in an estimated total savings of $4.8 million, or 20% of the par amount of the bonds. RECOMMENDATION: That the Board of Directors of the Corporation recommend to the Redevelopment Agency and City Council to proceed with the issuance of Tax Allocation Refunding Bonds in two or more series, in the aggregate principal amount of not to exceed $28.5 million. That the Board of Directors of the Corporation recommend to the Redevelopment Agency and the City Council entering into the second amendment to the City's contract with Harrell & Co. Advisors, financial advisor and the first amendment to the agreement with E.). De La Rosa, underwriter which are necessary to facilitate the C and D series refundings. 4-1 Staff Report - Uem No.4 Page 2 DISCUSSION: On September 20, 1994, the Redevelopment Agency authorized the issuance of the 1994 Senior Tax Allocation Refunding Bonds, Series A and Band 1994 Subordinate Tax Allocation Refunding Bonds, Series C, to advance refund the 1986 Tax Allocation Bonds previously issued by the Agency for the BayfrontITown Centre I Redevelopment Project Area. The Series B Bonds were issued on a taxable basis and were subsequently refunded on a tax-exempt basis with the issuance of the 1994 Senior Tax Allocation Refunding Bonds, Series D. As of May 1, 2006, there was $24.4 million in outstanding bonds of all series with an average net interest cost of 8.0% and a final maturity date of 2024. The 1994 Senior Tax Allocation Refunding Bonds, Series A and Series D are callable on September 1, 2006 and can be refunded up to 90 days prior, beginning June 1, 2006. The 1994 Subordinate Tax Allocation Refunding Bonds, Series C are callable on November 1, 2006 and can be refunded up to 90 days prior, beginning August 1, 2006. Based on preliminary research conducted by Harrell & Co. Advisors, strictly on a contingent fee basis, it appears that the Agency would save approximately $500,000 per year on their annual debt service payments as a result of a refunding under current market conditions with an assumed average interest rate of 5.00%. The savings between the series are broken down as follows: Current Esti mated Estimated Annual Series Amount Rate Rate Savi ngs 1994 Series A $12,590,000 7.625% 4.50%* $240,000 1994 Series C 6,855,000 8.22% 5.25% $160,000 1994 Series D 4,945,000 8.625% 5.25% $100,000 Totals $24,390,000 $500,000 * Based on obtaining bond insurance for the 2006 Series A Bonds only. The City Finance Director will continue working with Harrell and Co., financial advisors, and Stradling, Yocca, Carlson & Rauth, bond counsel, analyzing the feasibility of the refunding, determine the optimum structure and market timing of this refunding. At this time, it is anticipated that the Agency would issue 2006 Senior Tax Allocation Refunding Bonds, Series A to refinance the 1994 Series A Bonds and would issue 2006 Subordinate Tax Allocation Refunding Bonds, Series B to refinance the 1994 Series C Bonds and 1994 Series D Bonds. However, this second series may be further split into two separate series depending on the closing date selected for the transaction, but will not add to the costs of issuing the bonds. 4-2 Staff Report - Item No.4 Page 3 A resolution will be presented for the Redevelopment Agency's consideration which will authorize the Finance DirectorfTreasurer to enter into the Bond Purchase Agreement with E.J. De La Rosa & Co. finalizing the pricing of the 2006 Senior Tax Allocation Refunding Bonds, Series A and the 2006 Subordinate Tax Allocation Refunding Bonds, Series B at not to exceed interest rate for either series of 6.5%. Although, the actual expected interest rate is an average of 5.0% (2006 Senior Bonds at 4.5% and 2006 Subordinate Bonds at 5.25%). Adoption by the Redevelopment Agency of the financing-related resolution would approve the negotiated sale of the 2006 Senior Bonds in a total amount not to exceed $14.5 million and the 2006 Subordinate Bonds (whether in one series or two series) in a total amount not to exceed $14 million, approve the necessary documents in the form on file, and authorize them to be executed and distributed in connection with the sale of the bonds. In addition, the resolution would authorize the Director of Finance to solicit and obtain municipal bond insurance on the transaction if it is found to be economically advantageous. Finally, the resolution would authorize the Director of Finance to take all actions as may be necessary to close the financing, including the execution of all required closing documents. A resolution will also be presented for the City Council's consideration which will authorize the Agency issuance of debt, in accordance with the requirements of the Redevelopment Law. Included with the staff report is the Preliminary Official Statement (Attachments C and D). All other refunding documents in connection with the refunding are available for review with the City Clerk. Contract Amendments In March 2005, the City and Agency approved agreements with E.J. De La Rosa & Company to serve as underwriter and with Harrell & Co. Advisors to serve as financial advisor for the original refunding that was contemplated at the time, an approximate $14.5 million financing to refund the 1994 Senior Tax Allocation Refunding Bonds, Series A. Since the City Council and Agency are being asked to consider approval of a combined refunding in the amount of $28.5 million, in separate series with different credit characteristics, an amendment to those agreements in also required. Appointment of Financial Advisor Redevelopment Agency financing is complex in nature due to the various project areas, long-term revenue projections and rating agency coordination. Suzanne Harrell, the principal representative of Harrell & Co. Advisors has previously performed quite extensive reviews of the City/Agency outstanding debt in an effort to determine if there 4-3 Staff Report - Item No.4 Page 4 were any economically viable candidates for refinancing. Ms. Harrell has served as financial advisor on the 2000 Tax Allocation Bonds for the Redevelopment Agency and various City Certificates of Participation over the past 5 years. In 2000, Ms. Harrell prepared the Agency's Financial Plan used in determining the bonding capacity for the Agency by project area. Harrell & Co. will prepare the bond official statements, project tax increment necessary to satisfy rating agencies, bond insurers and investors of the availability of sufficient tax increment revenue to pay debt service, taking into account the dismantling of the power plant and the implementation of the first stages of the Bayfront Master Plan, assist the Agency in negotiating the interest rates on the bonds with the underwriter to assure that the Agency achieves market interest rates. The cost of serving as a Financial Advisor to refund these bonds will be approximately $85,000 plus expenses. Appointment of Underwriter E.]. De La Rosa & Co. ranks as one of the top underwriters of California municipal bonds. Since 2000, E.]. De La Rosa & Co. has underwritten over 35 tax allocation bond financings, with a total par amount of almost $2 billion. Over the last four years, E.]. De La Rosa & Co. has served as senior manager on more than 20 redevelopment financings. As a result the firm has vast knowledge of redevelopment in California. Following are examples of some of the most recent redevelopment related financings the Firm has underwritten: · $191,795,041 Long Beach Finance Authority Revenue Bonds, 2005 Series A (Tax Exempt) and 2005 Series B (Taxable) (Senior Managers) · $87,260,000 Redevelopment Agency of the City of Burbank 2003 Refunding Tax Allocation Bonds, Series A (Golden State Redevelopment Project) (Senior Managers) · $300,015,000 Community Redevelopment Agency of the City of Los Angeles Bunker Hill Project Revenue Bonds, Series A, 2004B (Taxable) and 2004L (Co- Senior Managers) Also, Raul Amezcua, underwriter with E.]. De La Rosa, served as the underwriter for the San Diego Port Authority in the acquisition of the power plant. His extensive knowledge related to the power plant and Bayfront will be instrumental in communicating with potential investors. Fiscal Impact Based on current projections, the refunding would provide an annual debt service savings to the Redevelopment Agency of $500,000 or a net present value of $4.8 million over the 4-4 Staff Report - Item No.4 Page 5 remaining 20 years of the bonds based on an assumed average interest rate of 5.00%. The debt service on the 2006 Senior and Subordinate Tax Allocation Refunding Bonds will be paid from Tax Increment Revenues generated within the Bayfront/Town Centre I Project Area. All costs of issuance, including the cost of the underwriter, bond counsel, disclosure documents etc. will be paid from the bond proceeds. The amended fees are summarized as follows: Financial Advisor - A fee of $55,000 for the issuance of the 2006 Series A Bonds and a fee of $30,000 for the issuance of the 2006 Series B Bonds is contingent on refunding of the bonds. Underwriter - The average fee is estimated at 1.21 % of the par amount of the bonds or $315,000 based on an estimated bond sizing of $26 million. Specifically, the fee proposed by the Underwriter is 0.9% of the par amount of the bonds based that have a AAA-insured rating, 1.1 % of the par amount of the bonds based that have a BBB rating for the bonds and 1.55% of the par amount of the bonds if unrated. Bond Counsel and Disclosure Counsel - A combined fee of approximately $71,000 for Bond Counsel services and a combined fee of approximately $32,000 for Disclosure Counsel services based on an existing two-party agreement. ATTACHMENTS: A - Draft Joint City Council and Redevelopment Agency Agenda Statement for the bond issuance and consulting services B - Approved March 22, 2005 Joint City Council and Redevelopment Agency Consultant Agreement Staff Report C - Preliminary Official Statement, Series A D - Preliminary Official Statement, Series B PREPARED BY: Phillip Davis, Assistant Director of Finance 4-5 ATTACHMENT A DRAFT JOINT CITY COUNCIL/REDEVELOPMENT AGENCY AGENDA STATEMENT Item Meeting Date: June 6. 2006 Item Title: RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA AUTHORIZING THE ISSUANCE AND SALE OF TAX ALLOCATION REFUNDING BONDS, IN TWO OR MORE SERIES, IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $28.5 MILLION IN CONNECTION WITH THE REDEVELOPMENT PROJECT, AND APPROVING RELATED DOCUMENTS AND ACTIONS RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE ISSUANCE BY THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA OF TAX ALLOCATION REFUNDING BONDS, IN TWO OR MORE SERIES, IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $28.5 MILLION RESOLUTION APPROVING THE FIRST AMENDMENT TO THE AGREEMENT WITH E.J. DE LA ROSA & CO. AS UNDERWRITERS FOR THE REFUNDING OF THE CITY OF CHULA VISTA REDEVELOPMENT AGENCY 1994 TAX ALLOCATION BONDS, SERIES C AND Di AND APPROVING THE SECOND AMENDMENT TO THE AGREEMENT WITH HARRELL & CO, TO SERVE AS FINANCIAL ADVISORS FOR THIS BOND ISSUANCE AND ASSOCIATED REFUNDINGS IN A FORM ACCEPTABLE TO THE CITY ATTORNEY'S OFFICE Submitted By: Chief Financial Officer Reviewed By: Chief Executive Officer (4/5ths Vote: Yes_X_No-> On March 22, 2005, City Council and Agency approved agreements with Harrell & Co. and E.J. De La Rosa & Co. (see Attachment 1) to determine the feasibility of refunding the City of Chula Vista Redevelopment Agency 1994 Senior Tax Allocation Refunding Bonds, Series A. Based on current market rates at the time, the refinancing of these obligations would have resulted in an estimated savings of $ 2.3 million or 17.9% of the par amount over the life of the bonds based on an assumed interest rate of 4.93%. Due to unforeseen circumstances, the refunding was delayed. However, at this time, the 4-6 1994 Senior Tax Allocation Refunding Bonds, Series D and the 1994 Subordinate Tax Allocation Refunding Bonds, Series C are also eligible for refunding. This was not the case in March 2005. Staff has now determined that it is feasible to refinance all three outstanding bond issues. Based on the current market rate, the refunding should result in an estimated total savings of $4.8 million, or 20% of the par amount of the bonds. Recommendation: That the City: (1) Adopt the Resolution of the City Council of the City of Chula Vista approving the issuance by the Redevelopment Agency of the City of Chula Vista of Tax Allocation Refunding Bonds in two or more series, in the aggregate principal amount of not to exceed $28.5 million, and (2) Adopt the resolution approving a second amendment to the City's contract with Harrell & Co. Advisors, financial advisor, and a first amendment to the City's contract with E.J. De La Rosa & Company, underwriter. Agency: (1) Adopt the resolution of the Redevelopment Agency of the City of Chula authorizing the issuance and sale of Tax Allocation Refunding Bonds in two or more series, in the aggregate principal amount of not to exceed $28.5 million in connection with the Redevelopment Project, and approving related documents and actions, and (2) Adopt the resolution approving a second amendment to the Agency's contract with Harrell & Co. Advisors, financial advisor, and a first amendment to the City's contract with E.J. De La Rosa & Company, underwriter. Boards/Commissions Recommendations: Not applicable Discussion: On September 20, 1994, the Redevelopment Agency authorized the issuance of the 1994 Senior Tax Allocation Refunding Bonds, Series A and Band 1994 Subordinate Tax Allocation Refunding Bonds, Series C, to advance refund the 1986 Tax Allocation Bonds previously issued by the Agency for the BayfrontITown Centre I Redevelopment Project Area. The Series B Bonds were issued on a taxable basis and were subsequently refunded on a tax-exempt basis with the issuance of the 1994 Senior Tax Allocation Refunding Bonds, Series D. As of May 1, 2006, there was $24.4 million in outstanding bonds of all series with an average net interest cost of 8.0% and a final maturity date of 2024. The 1994 Senior Tax Allocation Refunding Bonds, Series A and Series D are callable on September 1, 2006 and can be refunded up to 90 days prior, beginning June 1, 2006. The 1994 Subordinate Tax Allocation Refunding Bonds, Series C are callable on November 1, 4-7 2006 and can be refunded up to 90 days prior, beginning August 1, 2006. Based on preliminary research conducted by Harrell & Co. Advisors, strictly on a contingent fee basis, it appears that the Agency would save approximately $500,000 per year on their annual debt service payments as a result of a refunding under current market conditions with an assumed average interest rate of 5.00%. The savings between the series are broken down as follows: Current Estimated Estimated Series Amount Rate Rate Annual Savings 1994 Series A $12,590,000 7.625% 4.50%" $240,000 1994 Series C 6,855,000 8.22% 5.25% $160,000 1994 Series 0 4,945,000 8.625% 5.25% $100,000 Totals $24,390,000 $500,000 " Based on obtaining bond insurance for the 2006 Series A Bonds only. The City Finance Director will continue working with Harrell and Co., financial advisors, and Stradling, Yocca, Carlson & Rauth, bond counsel, analyzing the feasibility of the refunding, determine the optimum structure and market timing of this refunding. At this time, it is anticipated that the Agency would issue 2006 Senior Tax Allocation Refunding Bonds, Series A to refinance the 1994 Series A Bonds and would issue 2006 Subordinate Tax Allocation Refunding Bonds, Series B to refinance the 1994 Series C Bonds and 1994 Series 0 Bonds. However, this second series may be further split into two separate series depending on the closing date selected for the transaction, but will not add to the costs of issuing the bonds. A resolution will be presented for the Redevelopment Agency's consideration which will authorize the Finance DirectorfTreasurer to enter into the Bond Purchase Agreement with E.J. De La Rosa & Co. finalizing the pricing of the 2006 Senior Tax Allocation Refunding Bonds, Series A and the 2006 Senior Tax Allocation Refunding Bonds, Series B at not to exceed interest rate for either series of 6.5%. %. As noted above, the actual expected interest rate is an average of 5.0% (2006 Senior Bonds at 4.5% and 2006 Subordinate Bonds at 5.25%). Adoption by the Redevelopment Agency of the financing-related resolution would approve the negotiated sale of the 2006 Senior Bonds in a total amount not to exceed $14.5 million and the 2006 Subordinate Bonds (whether in one series or two series) in a total amount not to exceed $14 million, approve the necessary documents in the form on file, and authorize them to be executed and distributed in connection with the sale of the bonds. In addition, the resolution would authorize the Director of Finance to solicit and obtain municipal bond insurance on the transaction if it is found to be economically advantageous. Finally, the resolution would authorize the Director of Finance to take all actions as may be necessary to close the financing, including the execution of all required closing documents. 4-8 A resolution will also be presented for the City Council's consideration which will authorize the Agency issuance of debt, in accordance with the requirements of the Redevelopment Law. Included with the staff report is the Preliminary Official Statement. All other refunding documents in connection with the refunding are available for review with the City Clerk. Contract Amendments In March 2005, the City and Agency approved agreements with E.J De La Rosa & Company to serve as underwriter and with Harrell & Co. Advisors to serve as financial advisor for the original refunding that was contemplated at the time, an approximate $14.5 million financing to refund the 1994 Senior Tax Allocation Refunding Bonds, Series A. Since the City Council and Agency are being asked to consider approval of a combined refunding in the amount of $28.5 million, in separate series with different credit characteristics, an amendment to those agreements in also required. Appointment of Financial Advisor Redevelopment Agency financing is complex in nature due to the various project areas, long-term revenue projections and rating agency coordination. Suzanne Harrell, the principal representative of Harrell & Co. Advisors has previously performed quite extensive reviews of the City/Agency outstanding debt in an effort to determine if there were any economically viable candidates for refinancing. Ms. Harrell has served as financial advisor on the 2000 Tax Allocation Bonds for the Redevelopment Agency and various City Certificates of Participation over the past 5 years. In 2000, Ms. Harrell prepared the Agency's Financial Plan used in determining the bonding capacity for the Agency by project area. Harrell & Co. will prepare the bond official statements, project tax increment necessary to satisfy rating agencies, bond insurers and investors of the availability of sufficient tax increment revenue to pay debt service, taking into account the dismantling of the power plant and the implementation of the first stages of the Bayfront Master Plan, assist the Agency in negotiating the interest rates on the bonds with the underwriter to assure that the Agency achieves market interest rates. The cost of serving as a Financial Advisor to refund these bonds will be approximately $85,000 plus expenses. Appointment of Underwriter E. J. De La Rosa & Co. ranks as one of the top underwriters of California municipal bonds. Since 2000, E.J. De La Rosa & Co. has underwritten over 35 tax allocation bond financings, with a total par amount of almost $2 billion. Over the last four years, E.J. De La Rosa & Co. has served as senior manager on more than 20 redevelopment financings. As a result the firm has vast knowledge of redevelopment in California. Following are examples of some of the most recent redevelopment related financings the Firm has underwritten: 4-9 · $191,795,041 Long Beach Finance Authority Revenue Bonds, 2005 Series A (Tax Exempt) and 2005 Series B (Taxable) (Senior Managers) · $87,260,000 Redevelopment Agency of the City of Burbank 2003 Refunding Tax Allocation Bonds, Series A (Golden State Redevelopment Project) (Senior Managers) · $300,015,000 Community Redevelopment Agency of the City of Los Angeles Bunker Hill Project Revenue Bonds, Series A, 2004B (Taxable) and 2004L (Co- Senior Managers) Also, Raul Amezcua, underwriter with E.J. De La Rosa, served as the underwriter for the San Diego Port Authority in the acquisition of the power plant. His extensive knowledge related to the power plant and Bayfront will be instrumental in communicating with potential investors. Fiscal Impact: Based on current projections, the refunding would provide an annual debt service savings to the Redevelopment Agency of $500,000 or a net present value of $4.8 million over the remaining 20 years of the bonds based on an assumed average interest rate of 5.00%. The debt service on the 2006 Senior and Subordinate Tax Allocation Refunding Bonds will be paid from Tax Increment Revenues generated within the BayfrontfTown Centre I Project Area. All costs of issuance, including the cost of the underwriter, bond counsel, disclosure documents etc. will be paid from the bond proceeds. The amended fees are summarized as follows: Financial Advisor - A fee of $55,000 for the issuance of the 2006 Series A Bonds and a fee of $30,000 for the issuance of the 2006 Series B Bonds is contingent on refunding of the bonds. Underwriter - The average fee is 1.21% of the par amount of the bonds or $315,000 based on an estimated bond sizing of $26 million. Specifically, the fee proposed by the Underwriter is 0.9% of the par amount of the bonds based on obtaining a AAA-insured rating, 1.1 % of the par amount of the bonds based on obtaining a BBB rating for the bonds and 1.55% of the par amount of the bonds if unrated. Bond Counsel and Disclosure Counsel - A combined fee of approximately $71,000 for Bond Counsel services and a combined fee of approximately $32,000 for Disclosure Counsel services based on an existing two-party agreement. 4-10 ATTACHMENT B Joint City Council/Redevelopment Agency Item ,;l. Meeting Date March 22. 2005 Item Title: Resolution waiving the consultant selection process as impractical and approving an agreement with EJ. De La Rosa & Co. as underwriters for the refunding of the Oty of Chula Vista Redevelopment Agency 1994 Senior Tax Allocation Bonds, Series A; waiving the consultant selection process and approving the first amendment to the agreement with Harrell & Company Advisors, LLC to serve as financial advisors; and authorizing the Mayor to execute the contracts Director of Finance/Treasurer1'f}(. Executive Director/City Managerft'.~ 'i:' (4/5ths Vote:Yes_No.JL) '(/J With the assistance of Harrell & Co. we are expioring the feasibility of refunding the City of Chula Vista Redevelopment Agency 1994 Senior Tax Allocation Refunding Bonds, Series A. Based on preliminary projections, the refunding would provide an annual debt service savings of $185,000 or a net present value savin9s of $2.3 million or 17.9% of the par amount over the life of the bonds based on an assumed interest rate of 4.93%. Submitted By: Reviewed By: The 1994 Senior Tax Allocation Refunding Bonds Series A are callable on September 1, 2005 and can be refunded 90 days prior, or June 1, 2005. In order to proceed with the refunding in a timely manner and take advantage of the current favorable interest rates, a waiver of the consultant selection process is requested in accordance with Chula Vista Municipal Code 2.56.070.83. EJ. De La Rosa & Co. has extensive experience in structuring and marketing tax allocation obligations for California cities. Since January 1, 2000, E.J. De La Rosa & Co. has served as senior or co-senior manager for 33 tax allocation bond issues totaling over $1.6 billion. They possess the expertise and knowledge to assist the Agency in providing requisite underwriting services for this refunding. Harrell & Co. has previously performed quite extensive reviews of the City/Agency outstanding debt in an effort to determine if there were any economically viable candidates for refinancing. Harrell and Co. has served as financial advisor on the 2000 Tax Allocation Bonds for the Redevelopment Agency and various City Certificates of Participation over the past 5 years. Their knowledge of the Agency and expertise in the area of financial consulting will as?ist the Agency in refunding these bonds. 2-1 4-11 Recommendation: That Council adopt the resolution waiving the consultant selection process as impractical and approving an agreement with EJ. De La Rosa & Co. as underwriters for the refunding of the City of Chula Vista Redevelopment Agency 1994 Senior Tax Allocation Bonds, Series Ai waiving the consultant selection process and approving the first amendment to the agreement with Harrell & Company Advisors, LLC to serve as financial advisorsi and authorizing the Mayor to execute the conlTacts. Boards/Commissions Recommendations: None Discussion: On September 20, 1994, the Redevelopment Agency approved a resolution authorizing the issuance of the 1994 Senior Tax Allocation Refunding Bonds, Series A to advance refund the 1986 Tax Allocation Bonds previously issued by the Agency for the Bayfront{Town Centre I Redevelopment Project Area. As of December 31, 2004, there was $12.9 million in outstanding bonds with a net interest cost of 8.17% and a final maturity date of 2024. The 1994 Senior Tax Allocation Refunding Bonds, Series A are callable on September 1, 2005 and can be refunded 90 days prior, or June 1, 2005. Based on preliminary research conducted by Harrell & Co. Advisors, strictly on a contingent fee basis, it appears that the Agency would save approximately $185,000 per year on their annual debt service payments as a result of a refunding under current market conditions with an assumed interest rate of 4.93%. If this resolution is approved, staff will work with Harrell and Co., EJ. De La Rosa and the Agency's Bond Counsel firm of SlTadling, Yocca, Carlson & Rauth to analyze all facets of the potential refunding, and if necessary will proceed with preparation of the necessary legal documents for Agency approval to authorize the sale of the refunding bonds on a Unegotiated basis". A negotiated sale is best described as a "pre-marketed" sale given the ample time provided to a) structure the bonds to meet (ever changing) investor preferences b) explain the credit of the Agency to the complete satisfaction of prospective Investors, and c) create investor capacity to purchase the bonds by working with investors to sell current holdings to generate investable cash. A negotiated sale Includes a pre-selection of an underwriter and a negotiated interest cost, based on market conditions at the time of the sale. Due to the various complexities surrounding the Bayfront project area this potential refunding lends itself to a negotiated sale. This will allow ample time and opportunities to address any questions. Accointment of Rnancial Advisor Redevelopment Agency financing is complex in nature due to the various project areas, long-term revenue projections arid rating agency coordination. Suzanne Harrell, the principal representative of Harrell & Co. has previously performed quite extensive reviews of the Oty/Agency outstanding debt in an effort to determine if there were any economically viable candidates for refinancing. Ms. Harrell has served as financial 2-2 4-12 advisor on the 2000 Tax Allocation Bonds for the Redevelopment Agency and various City Certificates of Participation over the past 5 years. In 2000, Ms. Harren prepared the Agency's Financial Plan used in determining the bonding capacity for the Agency by project area. As part of this amended agreement, Ms. Harrell will provide the Agency with an updated Financial Plan incorporating changes in the project areas and the potential impacts related to the dismantling of the power plant. Due to Harrell & Co's. in-depth understanding of the Oty and Agency, staff is requesting Council waive the normal selection process as impractical. Harren & Co. will assist the Agency in negotiating the interest rates on the bonds with the underwriter to assure that the Agency achieves market interest rates. The cost of serving as a Financial Advisor to refund these bonds will be approximately $55,000 plus expenses. A fixed fee of $10,000 win be incurred for updating the Agency's financial plan. Appointment of Underwriter E. J. De La Rosa & Co. ranks as one of the top underwriters of California municipal bonds. Since 2000, EJ. De La Rosa & Co. has underwritten 33 tax allocation bond financings, with a total par amount of almost $1.8 billion. Over the last four years, EJ. De La Rosa & Co. has served as senior manager on 19 redevelopment financings. As a result the firm has vast knowledge of redevelopment in California. Following are examples of some of the most recent redevelopment related financings the Firm has underwritten: . $191,795,041 Long Beach Finance Authority Revenue Bonds, 2005 Series A (Tax Exempt) and 2005 Series B (Taxable) (Senior Managers) · $87,260,000 Redevelopment Agency of the City of Burbank 2003 Refunding Tax Allocation Bonds, Series A (Golden State Redevelopment Project) (Senior Managers) . $300,015,000 Community Redevelopment Agency of the City of Los Angeies Bunker Hill Project Revenue Bonds, Series A, 2004B (Taxable) and 2004L (Co- Senior Managers) Also, Raul Amezcua, underwriter with EJ. De La Rosa, served as the underwriter for the San Diego Port Authority in the acquisition of the power plant. His extensive knowledge related to the. power plant and Bayfront will be instrumental in communicating with potential investors. The fee proposed by the Underwriter is 1.1% of the par amount of the bonds based on obtaining a BBB rating (Good credit quality) for the bonds. Fiscal Impact: There is no net impact to the. General Fund. Based on preliminary projections, the refunding would provide an annual debt service savings to the Redevelopment Agency of $185,000 or a net present value of $2.3 million over the remaining 20 years of the bonds cased on an assumed interest rate of 4.93%. 2-3 ._n__. _ 4-13 = >. C ~ = c .c :1'1._ rI:I I: 't ~.- .- t ~;; " ".. .. .. =.~ = 1;; - '- s e.c :::I dJ I:,J '" ~ " .!:: ~ ~ ~ :.: c o.c '" =;: ~ ~o..:! '0 " ~ I::"';i .~ ;;>~~ >. "c . = " == = ~ "" '" e ,Q " 'C".c I: 1-0 ~ " ,,- e.c 0 ~ " :1'1 = 0 ~] .~ =:~ o 0'- ".C== " - -a. >. ... " '" e,Q .. o 0 ..., .s = .s .....g ,,~ -= = gO':: .~ ~ .Q == '- " '" OJ) ~ ~ ~ " 0 0 .. = ~ = 0 1-0 = -::: 0 .- !:IS'- ,,~ .. ;;.~ c. .c'- - O~ ~ ~ ~ " '" '" .- """,- l! 0 :; =- 0- " Y~..Q = 0 '0 O~- .. " ~ .. 0 '" ~ ~ eO" .. - ~ = = &:: :1'1 f#.I .- dJ )., ,,~O .c " " -~" - +::.- - ~ ~ = = :1'1 =0;:: ... ("I.~ ,,~- " " 0 e " ~ ~ e ;.: ~~~ ool!o _"'.c "'- '" '~.! = 0:: '" '" i;:; ,- .c 0=", 0'- .c ""~ ~ '" = ._ 1:'- e'- = .. e " -.- .- ,,- ~ .." '" =- -.- =,-'0 ~ ~ :.c:.~ 'i: f-o of.~ ATTACHMENT C DRAFT AS OF MAY 16, 2006 NEW ISSUE - BOOK-ENTRY-ONLY RATINGS S&P: Moody's: _ (See "CONCLUDING INFORMATION - Ratings on the Bonds" herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, subject, under existing law, statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel. the interest on the Bonds is exempt from State of California personal income taxes. See "LEGAL MATTERS - Tax Matters" herein. SAN DIEGO COUNTY STATE OF CALIFORNIA $13,500,000* REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA BAYFRONTffOWN CENTRE REDEVELOPMENT PROJECT 2006 SENIOR TAX ALLOCATION REFUNDING BONDS, SERIES A Dated: Date of Delivery Due: September 1 as Shown on the Inside Front Cover The cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must read the entire Official Statement to obtain infonnation essential to the making of an informed investment decision. See "BONDHOLDERS' RISKS" herein for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds. Proceeds from the sale of the Redevelopment Agency of the City of Chula Vista (the <<Agency"), Bayfrontffown Centre Redevelopment Project, 2006 Senior Tax Allocation Refunding Bonds, Series A (the "Bonds") will be used to (i) refinance existing obligations of the Agency, (ii) satisfy the reserve requirement for the Bonds and (iii) provide for the costs of issuing the Bonds. The Bonds will be issued under an Indenture of Trust, dated as of July I, 2006, by and between the Agency and U.S. Bank National Association, as Trustee (the "Trustee"). The Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of certain tax increment revenues of the Agency's Bayfrontffown Centre Project Area (the "Project Area") and a pledge of amounts in certain funds and accounts established under the Indenture, as further discussed herein. Interest on the Bonds is payable on March I, 2007, and semiannually thereafter on September I and March I of each year until maturity or earlier sinking account payment or optional redemption (see "THE BONDS - General Provisions" and "THE BONDS - Redemption" herein). The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a fmancial guaranty insurance policy to be issued concurrently with the delivery of the Bonds by . See "SOURCES OF PAYMENT FOR THE BONDS -Bond Insurance." [LOGO] The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel and by the City Attorney. It is anticipated that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about August 3, 2006 (see "APPENDIX G- BOOK-ENTRY-ONLY SYSTEM" herein). The date of the Official Statement is .2006. E. J. DE LA ROSA & CO., INC. * Preliminary, subject to change. 4-14 $13,500,000* REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA BAYFRONT/TOWN CENTRE REDEVELOPMENT PROJECT 2006 SENIOR TAX ALLOCATION REFUNDING BONDS, SERIES A MATURITY SCHEDULE (Base CUSIP@t ) Serial Bonds Maturity Date Sentember 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Principal Amount Interest Rate Reofferinf Yield CUSIP@t · Preliminary, subject to change. t CUSIP@ A registered trademark of the American Bankers Association. Copyright (0 1999-2006 Standard & Poor's, a Division of The McGraw-Hili Companies, Inc. CUSIP<ID data herein is provided by Standard & Poor's CUSIP@ Service Bureau. This data in not intended to create a database and does not serve in any way as a substitute for the CUSIP@ Service Bureau. CUSIP@ numbers are provided for convenience of reference only. Neither the Agency, the Financial Advisor nor the Underwriter takes any responsibility for the accuracy of such numbers. 4-15 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Agency in any press release and in any oral statement made with the approval of an authorized officer of the Agency or any other entity described or referenced herein, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" and similar expressions identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Agency 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 representation must not be relied upon as having been authorized by the Agency, the Financial Advisor or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has submitted the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a 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. Information Subject to Change. The information and expressions of opinions herein are subject to change without notice and neither 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 Agency or any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this Official Statement 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. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the 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 Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside front cover page hereof and said public offering prices may be changed from time to time by the Underwriter. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. 4-16 REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA CHULA VISTA, CALIFORNIA CITY COUNCIL AND AGENCY GOVERNING BOARD Stephen C. Padilla, Mayor John McCann, Mayor Pro rem Steve Castaneda, Councilmember Patricia E. Chavez, Councilmember Jerry Rindone, Councilmember CITY AND AGENCY STAFF David D. Rowlands, Jr., City Manager Laurie A. Madigan, Assistant City Manager Special Projects David Palmer, Assistant City Manager Community Services Dana Smith, Assistant City Manager Development Services/Director of Community Development Jim Thomson, Assistant City Manager Administrative Services Maria Kachadoorian, Director of FinancelTreasurer Ann Moore, City Attorney Susan Bigelow, City Clerk PROFESSIONAL SERVICES Bond Counsel and Disclosure Counsel Stradling Yocca Carlson & Rauth a Professional Corporation Newport Beach, California Financial Advisor Harrell & Company Advisors, LLC Orange, California Underwriter E. J. De La Rosa & Co., Inc. Los Angeles, California Trustee and Escrow Bank U.S. Bank National Association Los Angeles, California Verifications Grant Thornton LLP Minneapolis, Minnesota 4-17 TABLE OF CONTENTS INTRODUCTION ......................................................1 The Agency ................................................................1 The City .....................................................................1 Security and Sources of Repayment ..........................1 Purpose ..... ............................................ ........ .............2 Tax Exemption.. ............................ ..... ........................2 Professional Sezvices ......... ......... .......................... .....2 Offering of the Bonds ................................................3 Information Concerning this Official Statement........3 THE BONDS...............................................................4 General Provisions ....................................... ..............4 Redemption................................................................5 Scheduled Debt Service on the Bonds.......................6 THE FINANCING PLAN ..........................................7 Estimated Sources and Use ofFunds.........................8 SOURCES OF PAYMENT FOR THE BONDS .......9 Tax Allocation Financing........ ......... ............... ...........9 Tax Revenues ........... ...... ............................................9 Pledge of Tax Revenues........................................... 10 Reserve Account ......................................................10 Issuance of Additional Debt.....................................IO Bond Insurance ........................................................11 THE AGENCY..........................................................12 Government Organization........................................ 12 Agency Powers ........................................................12 The Chula Vista Redevelopment Corporation .........13 Redevelopment Plans...............................................13 Plan Limitations ...... ..................... ....... .....................14 Low and Moderate Income Housing........................ 14 THE PROJECT AREA............................................ 15 Description of the Project Area................................ 15 Assessed Valuations.................................................1? Major Taxpayers ......................................................19 Assessment Appeals...................................... .......... .20 Tax Collections ........................................................20 Outstanding Indebtedness of the Project Area.........21 Projected Tax Revenues and Debt Service Coverage.. ............................................ .................22 FINANCIAL INFORMATION ...............................24 Agency Budgetary Process and Administration.......24 Agency Accounting Records and Financial Statements.............................................................24 Tax Increment Revenues .........................................26 Tax Sharing Agreements.......................................... 29 Tax Sharing Statutes ................................................29 BONDHOLDERS'RISKS.......................................31 Factors Which May Affect Tax Revenues ............... 31 State of California Fiscal Issues ..............................33 Legislation Affecting Redevelopment Agencies......34 Secondary Market........ ...... ............ .......................... 35 Loss of Tax Exemption............................................ 35 LEGAL MATTERS.................................................. 36 Enforceability of Remedies .....................................36 Approval of Legal Proceedings ...............................36 Tax Matters ............. ..................................... ............ 36 Absence of Litigation ..............................................37 CONCLUDING INFORMATION ..........................38 Ratings on the Bonds...............................................38 The Financial Advisor .............................................38 Continuing Disclosure ......... .................................... 38 Underwriting ......... ................................. ................. 39 Verifications of Mathematical Computations ..........39 Additional Information... ............... .......................... 39 References ..... ........... ........... ................ .................... 39 Execution ......... ............... ........... .................... .......... 39 APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B - CITY OF CHULA VISTA INFORMATION STATEMENT APPENDIX C -AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2005 APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX E - FORM OF BOND COUNSEL OPINION APPENDIX F - SPECIMEN MUNICIPAL BOND INSURANCE POLICY APPENDIX G - BOOK-ENTRY-ONLY SYSTEM 4-18 OFFICIAL STATEMENT $13,500,000* REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA BAYFRONT/TOWN CENTRE REDEVELOPMENT PROJECT 2006 SENIOR TAX ALLOCATION REFUNDING BONDS, SERIES A This Official Statement which includes the cover page and appendices (the "Official Statemenf') is provided to furnish certain information concerning the sale of the Redevelopment Agency of the City of Chula Vista Bayftont/Town Centre Redevelopment Project 2006 Senior Tax Allocation Refunding Bonds, Series A (the "Bonds"), in the aggregate principal amount of $13,500,000'. INTRODUCTION This Introduction contains only a brief description of this issue and does not purport to be complete. The Introduction is subject in all respects to more complete information in the entire Official Statement and the offering of the Bonds to potential investors is made only by means of the entire Official Statement and the documents summarized herein. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Agency The Redevelopment Agency of the City of Chula Vista (the "Agency") is a public body, corporate and politic, existing under and by virtue of the Community Redevelopment Law of the State, constituting Part I of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). The Agency was activated by the City Council of the City of Chula Vista in 1972. The City Council, at the same time, declared itself to be the members of the Agency and appointed the City Manager to be the Agency's Executive Director (see "THE AGENCY" herein). The City The City of Chula Vista (the "City") is located on San Diego Bay in Southern California, 8 miles south of San Diego and 7 miles north of the Mexico border in an area generally known as "South Bay." The City encompasses approximately 50 square miles. Based on population, Chula Vista is the second largest city in San Diego County (see "APPENDIX B - CITY OF CHULA VISTA INFORMATION STATEMENT" herein). Security and Sources of Repayment The Bonds. The Bonds are issued and secured under an Indenture of Trust, dated as of July 1,2006, (the "Indenture"), by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee") (see "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" herein). The Agency has pledged to the repayment of the Bonds, and has secured by a lien on, all of the Tax Revenues, as defined herein. Tax Revenues means all of the Tax Increment Revenues allocated to the Agency's Bayftont/Town Centre Project Area excluding (i) amounts required to be deposited in the Agency's low and moderate income housing fund pursuant to Section 33334.3 of the Redevelopment Law, (ii) amounts payable to the Agency by the State pursuant to Section 16112.7 of the California Government Code, and (iii) amounts required to be paid pursuant to the Tax Sharing Statutes, as defined · Preliminary, subject to change. 4-19 herein to the extent not subordinated to the payment of debt service on the Bonds. Tax Increment Revenues consist of tax increment revenues receivable by the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 of the Redevelopment Law. See "THE AGENCY - Low and Moderate Income Housing," "THE PROJECT AREA - Outstanding Indebtedness of the Project Area," "FINANCIAL INFORMATION - Tax Increment Revenues" and "BONDHOLDERS' RISKS" herein. The Project Area. The BaYITont/Town Centre Project Area (the "Project Area") was created through an amendment of the Redevelopment Plans for the Agency's BaYITont Redevelopment Project and Town Centre Redevelopment Project on July 5, 1979. The BaYITont Redevelopment Project component of the Project Area (the "BaYITont Redevelopment Project") was created in 1974 and is comprised of 637 acres between the City's north and south boundaries, bounded by Interstate 5 to the east and the San Diego bay to the west. The Agency amended the Bayuont Project Area in 1999 to add 398 acres to the Project Area (the "BaYITont Amended Area"). The Town Centre Redevelopment Project component of the Project Area (the "Town Centre Redevelopment Project") was created in 1976 and comprises approximately 138 acres in the City's central business district. See "THE PROJECT AREA" herein The Bonds are special obligations of the Agency. The Bonds do not constitute a debt or liability of the City of Chula Vista, the County of San Diego, the State of California or of any political subdivision thereof, other than the Agency. The Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith aud credit nor the taxing power of the City of Chula Vista, the County of San Diego, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no taxing power. Purpose The Bonds are being issued to (i) refinance certain obligations of the Agency, (H) satisfy the Reserve Requirement for the Bonds and (Hi) provide for the costs of issuing the Bonds. See "THE FINANCING PLAN" herein. Tax Exemption In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Bond Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest (and original issue discount) on the Bonds is excluded ITom gross income for federal income tax purposes and is not an item oftax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, the interest (and original issue discount) on the Bonds is exempt ITom State of California personal income tax. See "LEGAL MATI"ERS - Tax Exemption" herein. Professional Services The legal proceedings relating to the issuance of the Bonds are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Ann Moore, City Attorney and by Stradling Yocca Carlson & Rauth, a Professional Corporation, as Disclosure Counsel. U.S. Bank National Association, serves as Trustee under the Indenture. The Trustee will act on behalf of the Bondholders for the purpose of receiving all moneys required to be paid to the Trustee, to allocate, use and apply the same, to hold, receive and disburse the Tax Revenues and other funds held under the Indenture, and otherwise to hold all the offices and perform all the functions and duties provided in the Indenture to be held and performed by the Trustee. 2 4-20 Harrell & Company Advisors, LLC (the "Financial Advisor") advised the Agency as to the financial structure and certain other financial matters relating to the Bonds. The Agency's audited general purpose financial statements for the fiscal year ended June 30, 2005, attached hereto as "APPENDIX C" have been audited by Caporicci & Larson, Certified Public Accountants, Costa Mesa, California. The Agency's audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. Accordingly, the auditor has not performed any post-audit of the financial condition of the Agency. Offering of the Bonds Autbority for Issuance. The Bonds are to be issued and secured pursuant to the Indenture, as authorized by Resolution No. of the Agency adopted on ,2006 and the Redevelopment Law. Offering and Delivery of tbe Bonds. The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Bond Counsel. It is anticipated that the Bonds, in book-entry form, will be available for delivery through the facilities of The Depository Trust Company on or about August 3, 2006. See "APPENDIX G - BOOK-ENTRY-ONLY SYSTEM." Information Concerning this Official Statement This Official Statement speaks only as of its date. The information set forth herein has been obtained by the Agency with the assistance of the Financial Advisor trom sources other than the Agency which are believed to be reliable and such information is believed to be accurate and complete, but such information is not guaranteed as to accuracy or completeness, nor has it been independently verified and is not to be construed as a representation by the Financial Advisor or the Disclosure Counsel. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended as such and are not to be construed as representations of fact. Preliminary Official Statement Deemed Final. The information set forth herein is in a form deemed final, as of its date, by the Agency for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (except for the omission of certain information permitted to be omitted under the Rule). The information herein is subject to revision, amendment and completion in a Final Official Statement. The information and expressions of opinion herein are subject to change without notice and the delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the information or opinions set forth herein or in the affairs of the Agency since the date hereof. Availability of Legal Documents. The summaries and references contained herein with respect to the Indenture, the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of the documents described herein are available for inspection during the period of initial offering of the Bonds at the offices of the Financial Advisor. Copies of these documents may be obtained after delivery of the Bonds at the trust office of the Trustee, U.S. Bank National Association, 633 West Fifth Street, 24"' Floor, Los Angeles, California, 90017 or trom the Agency at 276 Fourth Avenue, Chula Vista, California 91910. 3 4-21 THE BONDS General Provisions Repayment of the Bonds. Interest on the Bonds is payable at the rates per annum set forth on the inside front cover page hereof. Interest on the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months. Interest on the Bonds shall be payable commencing March I, 2007 and each September I and March I (each an "Interest Payment Date,") next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (H) a Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (Hi) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, or made available for payment. Interest shall be paid on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten (10) days prior to such special record date. Transfer or Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred or exchanged, pursuant to the provisions of the Indenture, upon surrender of such Bond for cancellation at the principal corporate trust office or agency of the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the Trustee shall authenticate and deliver a new Bond or Bonds for a like aggregate principal amount and of like maturity. The Trustee may require the Bondholder requesting such transfer to pay any tax or other goverrunental charge required to be paid with respect to such transfer or exchange. Transfer or exchange of any Bond shall not be permitted by the Trustee during the period established by the Trustee for selection of Bonds for redemption or if such Bond has been selected for redemption. Book-Entry Only System. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by wire of the Trustee to DTC which will in turn remit such interest and principal to DTC Participants (as defined herein), which will in turn remit such interest and principal to Beneficial Owners (as defined herein) of the Bonds (see "APPENDIX G - BOOK-ENTRY-ONLY SYSTEM" herein). As long as DTC is the registered owner of the Bonds and DTC's book-entry method is used for the Bonds, the Trustee will send any notices to bondholders only to DTC. Discontinuance of Book-Entry System. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered as described in the First Supplement. The Agency may decide to discontinue use of the system Qfbook-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered as described in the First Supplement. In addition, the following provisions shall apply: interest on the Bonds will be paid on each Interest Payment Date by check of the Trustee mailed on such Interest Payment Date by first class mail, to the person appearing on the registration books of the Trustee as the Owner thereof as of the close of business on the preceding Record Date, at such Owner's address as it appears on the registration books of the Trustee; provided however, that at the written request of the Owner of Bonds in an aggregate principal amount of at least 4 4-22 $1,000,000, which request is on file with the Trustee as of any Record Date, interest with respect to such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account within the United States of America as shall be specified in such request. The principal and prepayment price represented by any Bond at maturity or upon prepayment will be payable upon presentation and surrender of such Bond at the Office of the Trustee in Los Angeles, California, or at such place as may be designated by the Trustee. Redemption Optional Redemption. The Bonds maturing on or before September I, 2016, shall not be subject to optional redemption prior to their respective maturities. The Bonds maturing on or after September I, 2017 shall be subject to redemption in whole, or in part among such maturities as shall be determined by the Agency, and in any case by lot within a maturity, at the option of the Agency, on any date on or after September I, 2016, at the option of the Agency ITom any available source of funds, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest to the date of redemption, without premium. Notice of Redemption, The Trustee on behalf and at the expense of the Agency shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, at least thirty (30) but not more than sixty (60) days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Additionally, on the date on which the notice of redemption is mailed to the Owners of the Bonds pursuant to the provisions above, such notice of redemption shall be given by (i) first class mail, postage prepaid, (ii) confirmed facsimile transmission, or (iii) overnight delivery service to the Agency, to each of the Securities Depositories and to one or more of the Information Services as shall be designated in writing by the Agency to the Trustee. Rescission. The Agency shall have the right to rescind any optional redemption by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Agency and the Trustee shall have no liability to the Owners or any other party related to or arising ITom such rescission of redemption. The Trustee shall mail notice of such rescission ofredemption in the same manner as the original notice ofredemption was sent. Effect of Redemption. From and after the date fixed for redemption, if notice of redemption shall have been duly mailed and funds available for the payment of the principal of and interest on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon ITom and after the redemption date specified in such notice. Partial Redemption. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Agency shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. 5 4-23 Scheduled Debt Service on the Bonds The following is the scheduled annual Debt Service on the Bonds. Bond Year Ending SeDtember 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total PrinciDal Interest Annual Debt Service 6 4-24 THE FINANCING PLAN The Agency has previously issued its $14,810,000 Bayftont/Town Centre Redevelopment Project 1994 Senior Tax Allocation Refunding Bonds, Series A (the "1994A Bonds") and $5,680,000 Bayftontffown Centre Redevelopment Project 1994 Senior Tax Allocation Refunding Bonds, Series 0 (the "19940 Bonds") pursuant to an Indenture of Trust dated as of November I, 1994 by and between the Agency and U.S. Bank National Association, successor-in-interest to First Interstate Bank of California (the "1994 Senior Bonds Indenture"). In addition, the Agency has previously issued its $8,195,000 Bayftont/Town Centre Redevelopment Project 1994 Subordinate Tax Allocation Refunding Bonds, Series C (the "1994C Bonds") pursuant to an Indenture of Trust dated as of November I, 1994 by and between the Agency and U.S. Bank National Association, successor-in-interest to First Interstate Bank of California (the "1994 Subordinate Bonds Indenture," and together with the 1994 Senior Bonds Indenture, the "1994 Indentures"). As of the Delivery Date, $12,590,000 aggregate principal amount of 1 994A Bonds remains outstanding, $4,945,000 aggregate principal amount of 19940 Bonds remains outstanding and $6,855,000 aggregate principal amount of 1994C Bonds remains outstanding. Concurrent with the delivery of the Bonds, the Agency will issue its Bayftont/Town Centre Redevelopment Project 2006 Subordinate Tax Allocation Refunding Bonds, Series B (the "Series B Bonds") in the principal amount of$12,500,OOO*. On the Delivery Date, a portion of the proceeds of the Bonds and the Series B Bonds, together with certain other funds, will be deposited in trust with, as escrow holder (the "Escrow Bank") pursuant to the Indenture and an Escrow Agreement dated as of July I, 2006, between the Agency and the Escrow Bank (the "Escrow Agreement"). The deposit will be in an amount sufficient to pay principal and interest on the 1994A Bonds and the 19940 Bonds through and including September 1,2006, to pay the redemption price of the 1994A Bonds and 19940 Bonds remaining outstanding on September I, 2006, to pay principal and interest on the 1994C Bonds through and including November 1,2006 and to pay the redemption price of the 1994C Bonds remaining outstanding on November I, 2006. As a result of the deposits, the lien of the 1994A Bonds, the 19940 Bonds and 1994C Bonds created by the 1994 Indentures, including, without limitation, the pledge of the Tax Revenues to repay the I 994A Bonds, the 19940 Bonds and 1994C Bonds, will be discharged, terminated and of no further force and effect upon the deposit with the Escrow Bank of the amounts required pursuant to the Escrow Agreement. . Preliminary, subject to change. 7 4-25 Estimated Sources and Use of Funds The Trustee will receive the proceeds tram the sale of the Bonds and the Series B Bonds and, together with other finds received, will apply them as shown below. Sources of Funds The Bonds The Series B Bonds Par Amount Funds held for the 1994 Bonds Total Sources Use of Funds Transfer to Escrow Bank Original Issue Discount Underwriter's Discount Costs ofIssuance Fund (1) Reserve Account Total Uses (1) Expenses include fees and expenses of Bond Counsel, the Financial Advisor, Disclosure Counsel and the Trustee, costs of printing the Official Statement, and other costs of issuance of the Bonds. 8 4-26 SOURCES OF PAYMENT FOR THE BONDS Tax Allocation Financing The Redevelopment Law and the California Constitution provide a method for financing and refinancing redevelopment projects based upon an allocation of taxes collected within a redevelopment project area. First, the assessed valuation of the taxable property in a project area, as last equalized prior to adoption of the redevelopment plan, is established and becomes the base roll. Thereafter, except for any period during which the assessed valuation drops below the base year level, the taxing agencies, on behalf of which taxes are levied on property within the project area, will receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes on property and must look specifically to the allocation of taxes as indicated above. Tax Revenues As provided in each of the Redevelopment Plans for the constituent project areas, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law, and Section 16 ofArtic1e XVI of the Constitution of the State, taxes levied upon taxable property in the Redevelopment Projects each year by or for the benefit of the State, for cities, counties, districts or other public corporations (collectively, the "Taxing Agencies") for fiscal years beginning after the effective date of each constituent Redevelopment Plan, will be divided as follows: 1. To Taxing Agencies: The portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of said Taxing Agencies upon the total sum of the assessed value of the taxable property in the project area as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized prior to the establishment of the project area will be allocated to, and when collected will be paid into, the funds ofthe respective Taxing Agencies as taxes by or for said Taxing Agencies; and 2. To the Agencv: The portion of such levied taxes each year in excess of such amount will be allocated to, and when collected, will be paid into a special fund of the Agency to the extent necessary to pay indebtedness of the Agency, including but not limited to its obligation under the respective Indenture, to pay the principal of, prepayment premium (if any) and interest on the Bonds and to replenish the Reserve Account established under the respective Indenture. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to Taxing Agencies having the effect of reducing the property tax rate could reduce the amount of Tax Revenues that would otherwise be available to pay the Agency's obligations under the Indenture and thus reduce the amount of Tax Revenues available to pay the principal of and Interest on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See "BONDHOLDERS' RISKS" and "FINANCIAL INFORMATION - Tax Increment Revenues" herein. 9 4-27 Pledge of Tax Revenues The Tax Revenues are pledged to the payment of principal of and interest on the Bonds pursuant to the Indenture until the Bonds and any Parity Debt have been paid, or until moneys have been set-aside irrevocably for that purpose. The Trustee will covenant to exercise such rights and remedies as may be necessary to enforce the payment of the Tax Revenues when due under the Indenture, and otherwise to protect the interests of the Bondholders in the event of default by the Agency. The Bonds are limited obligations of the Agency. The Bonds do not constitute a debt or liability of the City ofChula Vista, the State of California or of any political subdivision thereof, other than the Agency. The Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and credit nor the taxing power of the City of Chula Vista, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no taxing power. The Agency has irrevocably granted a pledge of, lien on, and security interest in the Tax Revenues for the repayment of the Bonds. Tax Revenues consist of all of the Tax Increment Revenues allocated to the Project Area excluding (i) amounts required to be deposited in the Agency's low and moderate income housing fund pursuant to Section 33334.3 of the Redevelopment Law and (ii) amounts payable by the State pursuant to Section 16112.7 of the Government Code and (iii) amounts required to be paid pursuant to the Tax Sharing Statutes, as defmed herein unless subordinated to the payment of debt service on the Bonds. Tax Increment Revenues consist of tax increment revenues receivable by the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 of the Redevelopment Law. See "THE PROJECT AREA - Outstanding Indebtedness of the Project Area," "THE AGENCY - Low and Moderate Income Housing," "FINANCIAL INFORMATION - Tax Increment Revenues" and "Tax Sharing Statutes," and "BONDHOLDERS' RISKS" herein. Reserve Account A Reserve Account for the Bonds has been funded under the Indenture to be held by the Trustee to further secure the timely payment of principal and Interest on the Bonds. Tbe amount required to be maintained in the Reserve Account for the Bonds is the least of (i) 10% of the original proceeds (within the meaning of section 148 of the Code) of the Bonds, (ii) 125% of the average Annual Debt Service for that and every subsequent Bond Year, or (iii) Maximum Annual Debt Service (the "Reserve Requirement"). The Indenture provides that in lieu of a cash deposit, the Agency may satisfy all or a portion of a Reserve Requirement by means of a Qualified Reserve Account Credit Instrument (see "APPENDIX A - SUMMARY OF CERTAIN PROVJSIONS OF THE INDENTURE" herein). Issuance of Additional Debt [To be determined] Parity Debt. The Agency may issue or incur additional Parity Debt on a parity with the Bonds subject to the following specific conditions. (a) The Agency shall be in compliance with all covenants set forth in the Indenture, and all Supplemental Indentures. (b) The Tax Revenues (excluding Tax Revenues allocated to the Agency from the Existing Power Plant, as defined herein) estimated to be received for the then current Bond Year shall be at least equal to 175% of Maximum Annual Debt Service on all Bonds and any existing Parity Debt which will be Outstanding immediately following the issuance of such additional Parity Debt. The Existing Power Plant is defmed as that facility currently owned by LNG, which is scheduled to terminate operations in 2009. 10 4-28 (c) The Supplemental Indenture providing for the issuance of such additional Parity Debt shall provide that interest thereon shall not be payable on any dates other than March I and September I, and principal thereof shall be payable on September I in any year in which principal is payable. (d) The Supplemental Indenture providing for the issuance of such additional Parity Debt shall provide for the deposit into the Reserve Account of an amount required to cause the balance therein to equal the full amount of the Reserve Requirement (which may be maintained in whole or in part in the form of a Qualified Reserve Account Credit Instrument). (e) Tbe issuance of such additional Parity Debt shall not cause the Agency to exceed any applicable Plan Limit. (f) The Agency shall deliver to the Trustee and the Bond Insurer a Certificate of the Agency certifying that the conditions precedent to the issuance of such additional Parity Debt set forth in the foregoing paragraphs (a), (b), (c), (d) and (e) have been satisfied. Subordinate Debt. If the Agency is in compliance with all covenants set forth in the Indenture, the Agency may for any purpose issue or incur obligations having a lien on the Tax Revenues which is subordinate to the pledge of the Tax Revenues to the Bonds. Bond Insurance [To be completed] II 4-29 THE AGENCY Government Organization The Agency is a public body, corporate and politic, eXlstmg under and by virtue of the California Community Redevelopment Law, being Part I of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). The Agency was activated in 1972, and is governed by a five-member board (the "Agency Board") which consists of all members of the City Council. The Chairman and Vice Chairman are appointed to a one-year term by the Agency Board from among its members. The Agency's members and term expiration dates are as follows: AGENCY GOVERNING BOARD Board Member Stephen C. Padilla, Mayor and Chairman Steve Castaneda, Councilmember Term Exoires December 2006 December 2008 Patty Davis, Councilmember John McCarm, Councilmember Jerry Rindone, Councilmember December 2006 December 2006 December 2008 The City performs certain general administrative functions for the Agency and the Chula Vista Redevelopment Corporation (see "The Chula Vista Redevelopment Corporation" below). The City Manager serves as the Agency's Executive Director, the City's Director of Community Development serves as the Agency's Secretary and the City's Finance Director serves as Agency's Treasurer. The costs of such functions, as well as additional services performed by City staff are allocated annually to the Agency. The Agency reimburses the City for such allocated costs out of available Tax Increment Revenues. Such reimbursement is subordinate to any outstanding bonds, loans and other indebtedness of the Agency. Current City Staff assigned to administer the Agency and the Chula Vista Redevelopment Corporation include: David D. Rowlands, Jr., City Manager Laurie A. Madigan, Assistant City Manager Special Projects David Palmer, Assistant City Manager Community Services Dana Smith, Assistant City Manager Development Services/Director of Community Development Jim Thomson, Assistant City Manager Administrative Services Maria Kachadoorian, Director of Finance/Treasurer Ann Moore, City Attorney Susan Bigelow, City Clerk Agency Powers All powers of the Agency are vested in its members. Pursuant to the Redevelopment Law, the Agency is a separate public body and exercises governmental functions, including planning and implementing of the Project Area. The Agency may exercise the right to issue or incur loans, advances or other indebtedness for authorized purposes and to expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency may demolish buildings, clear land and cause to be constructed certain improvements, including streets, sidewalks and utilities, and can further prepare for use as a building site any real property which it owns or administers. 12 4-30 The Agency may, from any funds made available to it for such purposes, and subject to certain conditions, pay for all or part of the value of land and the cost of buildings, facilities or other improvements to be publicly owned and operated. The Agency may not construct or develop buildings, with the exception of public buildings and housing, and must sell or lease cleared property which it acquires within a redevelopment project for redevelopment in conformity with a particular redevelopment plan, and may further specifY a period within which such re development must begin and be completed. The Chula Vista Redevelopment Corporation The City formed the Chula Vista Redevelopment Corporation (the "Corporation") on June 15,2005. The Corporation is a 50lc3 Public Benefit Corporation, whose board of directors consists of the Mayor, Mayor Pro Tem, the three remaining City Council Members, and four members of the public meeting certain criteria for selection. The Corporation was formed to focus the City's redevelopment activities in certain areas, and carry out all City planning and zoning activities within such areas, including planning commission responsibilities and functions, design review committee responsibilities and functions and environmental review commission responsibilities and functions. The City Manager, the City's Director of FinancelTreasurer and the City's Director of Community Development serve as Chief Executive Officer, Chief Financial Officer and Secretary of the Corporation respectively. Redevelopment Plans Under the Redevelopment Law the goveming board is required to adopt, by ordinance, a redevelopment plan for each redevelopment project. A redevelopment agency may only undertake those activities within a redevelopment project specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the Redevelopment Law rather than a "plan" in the customary sense of the word. The general objectives of the Agency's Redevelopment Plans for the component areas of the Project Area are to encourage investment in the Project Area by the private sector. The Project Area provides for the acquisition of property, the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plans also allow the redevelopment of land by private enterprise, the rehabilitation of structures, the rehabilitation or construction of low and moderate income housing, and participation by owners and the tenants of properties in the Project Area. The City Council approved and adopted the Redevelopment Plan for the Bayfront Redevelopment Project on July 16, 1974, pursuant to Ordinance No. 1541. It was subsequently amended on July 17, 1979 to merge it with the Town Centre Redevelopment Project. The Redevelopment Plan was also amended on April 22, 1986 to include certain financial limitations, again on January 4,1994 and November 8,1994 to add limitations prescribed by AB 1290 (see "Plan Limitations" below), on July 7, 1998 to include additional territory (the "Bayfront Amended Area") and amend financial limits, on January 13, 2004 to eliminate the time limit on establishing debt and on January 27, 2004 to extend the duration of the Redevelopment Plan. The City Council approved and adopted the Redevelopment Plan for the Town Centre Redevelopment Project on July 6,1976, pursuant to Ordinance No. 1691. It was subsequently amended on July 17, 1979 to merge it with the Bayfront Redevelopment Project, on April 22, 1986 to include certain financial limitations, on January 4,1994 and November 8,1994 to add limitations prescribed by AB 1290, on July 7,1998 to amend financial limits, on January 13,2004 to eliminate the time limit on establishing debt and on January 27,2004 to extend the duration of the Redevelopment Plan (see "Plan Limitations" below). 13 4-31 Plan Limitations The Redevelopment Plans for the constituent redevelopment projects impose certain limitations on the amount of Tax Increment Revenues that the Agency may be allocated from such constituent redevelopment projects. In 1993, the State Legislature adopted Assembly Bill 1290 (AB 1290), which imposed certain time limitations on (1) the allocation of Tax Increment Revenues to a redevelopment project, (2) the effectiveness of a redevelopment plan and (3) the incurrence of debt. Prior to subsequent changes, Section 33333.6 of the Redevelopment Law provided that a redevelopment agency may not pay indebtedness or receive property taxes pursuant to Section 33670 of the Redevelopment Law after ten years from the termination of the effectiveness of a redevelopment plan (which was limited to the later of January I, 2009 or 40 years after the adoption of such redevelopment plan). In 1998, the State Legislature adopted Assembly Bill 1342 (AB 1342), which allowed redevelopment agencies to extend plan limitations to such maximum terms without having to comply with the statutory plan amendment process if such agency's existing plan limits were shorter. In 2002, the State Legislature adopted Senate Bill 211 (SB 211), allowing the elimination of the Agency's time limitation on incurring debt. More recently, Senate Bill 1045 (SB 1045) and subsequent Senate Bill 1096 (SB 1096) provided that the governing body could adopt an ordinance to extend the limits on the termination of redevelopment plans approved prior to 1994 and the authority to collect Tax Increment Revenues by one additional year each time the Agency was required to make a payment to ERAF in fiscal years 2003/04, 2004/05 and 2005/06 (see "BONDHOLDERS' RJSKS - State of California Fiscal Issues" herein). Even though the constituent redevelopment projects have been merged, the limitations established with respect to a constituent redevelopment project continue to apply to such constituent redevelopment project, except with respect to the limitation on the maximum Tax Increment Revenues and on maximum outstanding bonded indebtedness as described below. The limitations imposed by the respective Redevelopment Plans are as follows: Last Date to Collect Total Tax Increment Proiect Area Plan Expiration Date Tax Increment Limitation Bayfront: Original Area July 16,2015 July 16,2025 $210,000,000 Amended Area July 7, 2029 June 23 2044 N/A Town Centre July 6, 2017 July 6, 2027 $84,000,000 The maximum bonded indebtedness for the Project Area, with the exception of the Bayfront Amended Area, which has no limit, is $50,000,000. The Agency has eliminated the limits in each Redevelopment Plan on incurrence of debt in accordance with SB 211, but has not yet adopted any extensions on plan limits pursuant to SB 1096. Low and Moderate Income Housing In 1976, the Redevelopment Law was amended to require that for every redevelopment plan adopted after January I, 1977, or any area which is added to a redevelopment project by an amendment to a redevelopment plan after January I, 1977, not less than twenty percent (20%) of Tax Increment Revenues must be set aside annually for the purpose of increasing and improving the community's supply of low and moderate income housing available at affordable housing costs to persons and families of very low, low or moderate income households. In 1985, the Redevelopment Law was further amended to add substantially the same requirements with respect to plans adopted prior to January I, 1977. No portion of the Tax Increment Revenues required to be set aside for low and moderate income housing is available to pay debt service on the Bonds. 14 4-32 THE PROJECT AREA Description of the Project Area The Project Area is comprised of the Agency's Bayuont Redevelopment Project and Town Centre Redevelopment Project. The relative acreage uom each of the constituent redevelopment projects comprising the Project Area is shown below: Original Bayuont Area Bayuont Amended Area Town Centre 637 Acres 398 Acres 138 Acres 1,173 Acres As noted above, the Agency has a different limit on the time to collect Tax Revenues uom each separate area. See "BONDHOLDERS' RISKS - Plan Limitations" herein. The Bayfront Redevelopment Project. The Original Bayuont Redevelopment Project, fonned in 1974, is comprised of 637 acres of property located between Interstate 5 and the mean high tide line along the Chula Vista Bayuont. The Bayuont Amended Area was created in 1998 and encompasses 398 acres of property west of the mean high tide line to the water line. Of the total property in the bayfront Redevelopment Project, 45 acres are developed with a marina, and 513 acres are designated the Sweetwater Marsh National Wildlife Refuge. The goal of the Agency is to encourage development along the City's bayuont while maintaining recreational access to the waterfront. The Unified Port District of San Diego (the "Port District") administers 420 acres of state public tidelands within the Bayuont Redevelopment Project under a Tidelands Trust that guides how the land is to be used. The Port District and the City have entered into a joint venture to work together on developing the waternont under the Chula Vista Bayuont Master Plan ("CVBMP"). The objectives of the CVBMP are to create an active commercial harbor with public space at the water's edge, redevelop underutilized and vacant areas on Port tidelands, provide a continuous shoreline pedestrian walkway, and establish ecological buffers to protect environmentally sensitive resources. After much public participation in the plan development, the environmental impact report ("EIR") for the CVBMP is now in process. Once the EIR is complete, public hearings will be scheduled to receive public comment. The CVBMP must also be approved by the State Lands Commission and the California Coastal Commission. Since the Port and the Agency would like residential development to occur in the Bayfront area, they also need approval by those two commissions, since residential development is not a pennitted use for the tidelands controlled by the Port. With the pennission of the State Lands Commission, Pacifica Companies, a residential developer that already owns 128 acres of property adjacent to the tidelands, couId substitute such property for a like amount of tidelands property so that the proposed residential development could occur. Overall, if approved by all agencies, the CVBMP contemplates development of 1,700 condominiums, a 1,500 to 2,000 room resort hotel and adjacent 400,000 square foot conference facility, over 200 acres of open space including a signature City park, 570,000 square feet of retail and other development, office space, and a new marina with 1,000 boat slips. The City and the Port will also need to invest in needed inuastructure and public improvements to support the developments. The largest development that has occurred in the Original Bayuont Redevelopment Project is the completion of a 245,000 square foot BF Goodrich corporate headquarters, called the North Campus. This taxpayer accounts for 36% of the total assessed value of the Project Area. The facility was completed in _ and consolidated aviation and industrial manufacturing operations that had been spread across 83 acres and 63 buildings in the Original Bayuont Redevelopment Project. The Port has commenced with demolition of the 63 blighted industrial buildings, which had a 2005/06 tax roll value of$ 15 4-33 The South Bay Power Plant (the "Power Plant") is also located in the Original BaYITont Redevelopment Project, on ] 50 acres leased ITom the Port District. The Power Plant includes four steam-powered generation turbines, an electrical switching station, above ground fuel storage tanks, a formed liquefied natural gas facility and extensive open areas to the north and south. The Port District has a lease agreement for the facility with LSP South Bay, LLC, a subsidiary of LS Power Group. LSP South Bay, LLC acquired the Power Plant ITom Duke Energy on May 4, 2006. The lease is set to expire in 2010 dependent upon the status of the "Reliability Must Run" designation imposed by the State. The Power Plant is to be dismantled at the end of the lease term, which is predicated on the removal of the Reliability Must Run designation. The City and the Port District have supported the concept of building a newer, cleaner, more efficient power plant on Port District property near the existing Power Plant (but most likely outside the boundaries ofthe Project Area) as a means to assure that the Reliability Must Run status will be removed ITom the Power Plant and it can be decommissioned and dismantled. The dismantling of the Power Plant is an integral part of the CVBMP. The tax roll is already reflecting a reduction in assessed value of the Power Plant as the end of the lease term gets closer. The chart below details the assessed value of the Power Plant over time. Year 2002/03 2003/04 2004/05 2005/06 Assessed Value $102,736,000 57,579,000 60,194,000 5],893,000 The Agency anticipates that the value of the Power Plant will decline by 25% each year until the final year of the existing lease, at which time all value associated with the Power Plant will be eliminated ITom the tax roll. The Town Centre Redevelopment Project. The Town Centre Redevelopment Project is an area of approximately 138 acres encompassing the City's central business district. The Town Centre Redevelopment Project is urbanized and developed with a mix of public and private uses. Such uses include the San Diego South County Superior and Municipal Court Complex, the Norman Park Senior Center, Memorial Park as well as a variety of commercial office space, retail, retail service and residential uses. The Agency is in the process of developing an Urban Core Specific Plan which encompasses development in the Town Centre Redevelopment Project as well as surrounding areas. The Urban Core has three components - "The Villages," to be developed with additional multi-family housing, "The Boulevard," which is the primary commercial corridor, and "The Promenade," a pedestrian-oriented retail area. Renewed developer interest in the City's urban core has brought the first upscale Class A office development to the downtown marketplace. The Gateway Chula Vista project will be developed in three phases, the first of which was completed in 2002. The first phase consists of ] 49,000 square feet of office with ground floor retail and a four-level parking structure. The second phase of 105,000 square feet and second parking structure was completed in Apri] 2006. The final phase is anticipated to contain 93,000 square feet with construction commencing July 2006. This major mixed-use project anchors the southern entry into Downtown Chula Vista, and the Gateway project's two five-story and one six-story office building are designed specifically for high tech office use, with ground floor retail. The second phase is expected to add $21,000,000 to the 2007/08 tax roll and the third phase is expected to add $18,600,000 to the 2009/10 tax roll. ]n addition to this major project, many infill projects are proposed in the Town Centre Redevelopment Project. On the southeast comer of 3" and E Street, a mixed use residential development comprised of ]6 4-34 approximately 85 residential units and 6,000 square feet of retail on an 11,500 square foot lot is proposed by Avion. It is estimated that construction of this project could commence in January 2007 and be completed within 18 months. Estimated value at the time of completion is $30.35 million. At the intersection of 3'" and G Street, the Agency anticipates a mixed use commercial development proposed to contain approximately 150 residential units and 15,000 square feet of retail space on a41,000 square foot site could be under development as early as December 2006. Estimated value at the time of completion is $54 million and the development is anticipated to be complete in December 2007. Intergulf-Mar is the developer of this project. CityMark is proposing to build approximately 120 condominiums along Landis and Douglas Wilson is proposing to build another 35 units along Church. Estimated value at the time of completion of both projects is $54.25 million, based on an average sale price of $350,000 per unit. Completion of these housing projects is expected to occur in mid-2008. Assessed Valuations Assessed value of the constituent project areas comprising the Project Area between fiscal years 2001102 and 2005/06 are shown in the tables below. TABLE NO. I ORIGINAL BAYFRONT REDEVELOPMENT PROJECT HISTORICAL ASSESSED VALUATIONS AND TAX INCREMENT REVENUES 2001/02 through 2005/06 2001/02 2002103 2003104 2004/05 2005106 State Assessed (I) $ 88,500 $ 80,513 $ 57,579,396 $ 60,282,256 $ 51,892,582 Secured (1) 196,706,307 320,843,655 218,107,587 202,238,967 203,441,607 Unsecured 108984214 22 010 429 6678131 4363477 4921464 Total (2) $305,779,021 $342,934,597 $282,365,714 $266,884,700 $260,255,653 Less: Base year (187648628) 1187 648 628) (187648628) (187648628) (187 648 628) Incremental Increase $118,130,393 $155,285,969 $ 94,717,086 $ 79,236,072 $ 72,607,025 Tax Rate 1.009425% 1 007468% 1.006682% 1.005616% 1.005081% Tax Increment Revenues $ 1,192,438 $ 1,564,457 $ 953,500 $ 796,811 $ 729,759 Unitary Revenues (J) 737 954 703162 1 335 057 1351039 1 358 970 Total Tax Revenues (.) $ 1 9,0 192 $ 2267619 $ 228R'iS7 $ 2147850 $ 2 OSS 729 Source: San Diego County Auditor-Controller. (1) The value of the Power Plant was included in the secured tax roll value prior to 2003/04. (2) Taxable Valuation at 100% of Assessor's Market Value, as of August 20 equalized roll. (3) See "FINANCIAL INFORMATION - Tax Increment Revenues - Unitary Property" herein for a discussion of the method of allocating Unitary Revenues. (4) The "Total Tax Revenues" are based on data furnished by the San Diego County Auditor-Controller's Office. Actual Tax Increment Revenues received vary from Total Tax Revenues shown herein because of supplemental taxes, appeals or refunds, deductions for delinquencies and tax-sharing statutes and administrative charges by the County. 17 4-35 TABLE NO.2 BAYFRONT AMENDED AREA REDEVELOPMENT PROJECT HISTORICAL ASSESSED VALUATIONS AND TAX INCREMENT REVENUES 2001/02 through 2005/06 2001/02 2002/03 2003/04 2004/05 2005/06 Secured $ 36,141,469 $ 36,036,600 $ 34,004,113 $ 36,614,166 $ 37,433,140 Unsecured 18722215 21 380926 21314709 23 953 992 24 844 436 Totalj!) $ 54,863,684 $ 57,417,526 $ 55,318,822 $ 60,568,158 $ 62,277,576 Less: Base year (43 834980) (43 834980) (43 834980) (43 834 980) (43 834 980) Incremental Increase $ 11,028,704 $ 13,582,546 $ 11,483,842 $ 16,733,178 $ 18,442,596 Tax Rate 1.009158% 1.008125% 1.007267% 1.006444% 1.005589% Tax Increment Revenues $ 111 ,297 $ 136,929 $ 115,673 $ 168,410 $ 185,457 Unitary Revenues (3) 158 150 221 223 225 Total Tax Revenues (4) $ 1114'i'i $ 117079 $ 11'5 &94 $ 1 fiR fill $ 185682 Source: San Diego County Auditor-Controller, See footnotes following Table No.1. TABLE NO.3 TOWN CENTRE REDEVELOPMENT PROJECT HISTORICAL ASSESSED VALUATIONS AND TAX INCREMENT REVENUES 2001/02 through 2005/06 200 II02 2002103 2003/04 2004/05 2005/06 Secured $114,629,075 $124,721,541 $145,423,308 $155,900,245 $175,586,050 Unsecured 26 130 337 17 907 486 25418173 25 253 645 23 507 591 Total (2) $140,759,412 $142,629,027 $170,841,481 $181,153,890 $199,093,641 Less: Base year (21 227 600) (21 227600) (21 227 600) (21 227 600) (21 227 600) Incremental Increase $119,531,812 $121,401,427 $149,613,881 $159,926,290 $177,866,041 Tax Rate 1.008749'% 1.007574% 1.006867% 1.005929% 1.005265% Tax Increment Revenues $ 1,205,776 $ 1,223,209 $ 1,506,413 $ 1,608,745 $ 1,788,026 Unitary Revenues (3) 114076 108467 108197 109 630 110372 TotaJ Tax Revenues (4) $ 1119852 $ 1 'HI 676 $ 1614610 $ 1718375 $ 1898398 Source: San Diego County Auditor-Controller. See footnotes following Table No.1. 18 4-36 Major Taxpayers Not including the Power Plant, sited on land leased from the Port District and operated by LS Power, the ten largest property taxpayers represent 59.7% of the 2005/06 total assessed value of the Project Area. If the Power Plant is included, the ten largest property taxpayers represent 62.9% of the 2005/06 total assessed value of the Project Area. As discussed above, the Agency anticipates that the value of the Power Plan will be eliminated by 2009. TABLE NO.4 PROJECT AREA TEN LARGEST TAXPAYERS AS A PERCENT OF 2005/06 ASSESSED VALUE Not Including Power Plant Taxn8ver Rohr Inc. (dba BF Goodrich) Duke Energy (now LSP) Gateway Chula Vista I LLC Chula Vista Marina RV Park Chula Vista Capital EASLLC One Park Apartments LP Foster Properties 780 Bay Boulevard California Yacht Marina Chula Vista Marine Group LLC South Bay Boat Good Nite Inn Chula Vista Inc. Total 2005/06 Assessed Value $167,783,109 34,584,362 14,180,878 14,003,275 9,195,536 8,893,731 8, I 92,498 7,966,189 6,064,525 5,417,747 4 234 468 $280,516,318 %of Assessed Value 35.7% 0.0% 7.4% 3.0% 3.0"10 2.0% 1.9% 1.7% 1.7% 1.3% 1.2% 0.9% 59.7% Proiect Location Original BayfTont Original Bayfront Town Centre BayfTont Amended Original BayfTont Town Centre Town Centre Original BayfTont Original Bayfront BayfTont Amended Bayfront Amended Original BayfTont Land Use Manufacturing Energy Generation OfficelRetail RV Park Vacant Land Retail Apartments Warehouses Warehouses Marina Industrial Hotel TABLE NO.5 PROJECT AREA TEN LARGEST TAXPAYERS AS A PERCENT OF 2005/06 ASSESSED VALUE Including Power Plant 0.10 of 2005/06 Assessed Taxo8ver Assessed Value Value Proiect Location Land Use Rohr Inc. (dba BF Goodrich) $167,783,109 32.2% Original BayfTont Manufacturing Duke Energy (now LSP) 51,892,582 9.9% Original BayfToot Energy Generation Gateway Chula Vista I LLC 34,584,362 6.6% Town Centre OfficelRetail Chula VIsta Marina RV Park 14,180,878 2.7% Bayfront Amended RV Park Chula VIsta Capital 14,003,275 2.7% Original BayfTont Vacant Land EA S LLC 9,195,536 1.8% Town Centre Retail One Park Apartments LP 8,893,731 1.7% Town Centre Apartments Foster Properties 8,192,498 1.6% Original Bayfront Warehouses 780 Bay Boulevard 7,966,189 1.5% Original BayfTont Warehouses California Yacht Marina Chula Vista 6,064,525 1.2% BayfTont Amended Marina Marine Group LLC South Bay Boat 5,417,747 1.0% BayfTont Amended Industrial Good Nite IIm Chula Vista Inc. - Original Bayrront Hotel Total $329,766,085 62.9% Source: City of Chula VIsta. 19 4-37 Assessment Appeals As of December 2005, Rohr Inc. has an appeal pending for its property in the Original Bayuont Redevelopment Project. Rohr Inc. is seeking a 79% reduction in assessed value of such property to approximately $35 million. Rohr previously filed appeals for the 2002/03 tax year, seeking a 71 % reduction uom the then assessed value of $187,049,496, for the 2003/04 tax year, seeking a 79% reduction from the then assessed value of $184,593,505, and for the 2004/05, seeking a 67% reduction uom the then assessed value of $167,813,961. All prior appeals were withdrawn in February 2005 prior to action by the Appeals Board. For the 2005/06 tax year, there are also appeals pending on 2 parcels in the Town Centre Redevelopment Project with a total assessed value of $742, I 16. Tax Collections The table below represents the collection rates for taxes paid in the year levied in the Project Area. TABLE NO.5 PROPERTY TAX COLLECTIONS 2000/01 2001102 2002/03 2003/04 2004/05 Original Bayuont 98.7% 98.5% 98.4% 98.7% 99.3% Amended Area 98.5% 98.5% 98.6% 98.6% 98.5% Town Centre 98.5% 98.5% 98.6% 98.8% 98.5% Source: San Diego County Auditor-Controller. 20 4-38 Outstanding Indebtedness of the Project Area The Agency had the following obligations with respect to the Project Area as of May 5, 2006: Original Amount Final Description Issue Outstanding Maturity (1) 1994 Senior Tax Allocation Refunding Bonds, Series A $14,810,000 $12,905,000 2024 (2) 1994 Senior Tax Allocation Refunding Bonds, Series D 5,680,000 4,945,000 2024 (3) 1994 Subordinate Tax Allocation Refunding Bonds, Series C 8,195,000 6,855,000 2024 (4) City Advances N/A (5) 2005 ERAF Loan 765,000 710,000 2015 (6) 2006 ERAF Loan 930,000 930,000 2016 (I) In 1994, the Agency issued its Bayftont/Town Centre Redevelopment Project 1994 Tax Allocation Refunding Bonds, Series A (the "I994A Bonds"). The 1994A Bonds are to be refunded with the proceeds of the Bonds. (2) In 1994, the Agency authorized the issuance of its Bayftont/Town Centre Redevelopment Project 1994 Tax Allocation Refunding Bonds, Series D (the "1994D Bonds"). The 1994D Bonds were issued in 1996. The 1994D Bonds are to be refunded with the proceeds of the Bonds. (3) In 1994, the Agency issued its Bayftont/Town Centre Redevelopment Project 1994 Subordinate Tax Allocation Refunding Bonds, Series C (the "1994C Bonds"). The 1994C Bonds are to be refunded with the proceeds of the Bonds.. (4) The Agency has entered into various promissory notes with the City. Repayment is to be made as funds become available. The City Advances have a lien on the tax increment revenues subordinate to all other indebtedness of the Project Area. (5) and (6) The Agency satisfied its obligation to pay its share ofERAF in both 2004/05 and 2005/06 by borrowing the amounts required through the California Statewide Communities Development Authority. The repayment of each year's loan is payable in 20 approximately equal semi- annual installments. Tbe repayment obligation has no lien on Tax Revenues but is payable on an unsecured basis ftom any available Agency funds. Source: Agency Annual Financial Report. 21 4-39 ~ Projected Tax Revenues and Debt Service Coverage Receipt of projected Tax Revenues in the amounts and at the times projected by the Agency depends on the realization of certain assumptions relating to the Tax Increment Revenues. The projections of Tax Increment Revenues and the corresponding Tax Revenues from the component areas of the Redevelopment Projects shown on the following table were based on the assumptions shown below. The Agency believes the assumptions upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circwnstances may occur (see "BONDHOLDERS' RISKS"). To the extent that the assumptions are not actually realized, the Agency's ability to timely pay principal of and interest on the Bonds may be adversely affected. Following is a discussion of assumptions used in the projection of Tax Revenues: (a) The 2005/06 secured roll was assumed to increase 2 percent annually for inflation in future years through 2015/16, with the exception of the secured roll in the Bayfront Redevelopment Project, which is not projected to increase (see "FINANCIAL INFORMATION - Tax Increment Revenues - Manner in Which Property Valuations and Assessments are Determined (Article XIIIA)" herein). [New Development Assumptions/Demo Rohr] (b) The values of unsecured personal property and state assessed utility property and the amount of unitary revenues have been maintained throughout the projections at their 2005/06 levels except that the projected State assessed utility tax roll has been adjusted by $5 I ,893,000 to reflect the anticipated closing of the Power Plant sited on land leased from the Port District and operated by LSP South Bay, LLC (see "THE PROJECT AREA - Major Taxpayers," "FINANCIAL INFORMATION - Tax Increment Revenues - Unsecured and Secured Property" and "Unitary Property" herein). (c) A tax rate of $1.00 per $100 of assessed value applied to the taxable property in the component areas of the Redevelopment Projects was used to determine Tax Increment Revenues (see "FINANCIAL INFORMATION - Tax Increment Revenues - Property Tax Rate" herein). (d) Projected Tax Increment Revenues do not reflect delinquencies (see "FINANCIAL INFORMATION - Tax Increment Revenues" and "THE PROJECT AREA - Tax Collections" herein). (e) Projected Tax Increment Revenues do not reflect any potential decreases resulting from pending assessment appeals or future Proposition 8 adjustments, if any (see "THE REDEVELOPMENT PROJECTS - Assessment Appeals" and "FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments" herein). (I) Projected Tax Revenues include a deduction for administrative costs charged by San Diego County (see "FINANCIAL INFORMATION - Tax Increment Revenues - Administrative Costs" herein). (g) Projected Tax Revenues include a deduction for payments due to taxing agencies under applicable Tax Sharing Statutes, to the extent such payments are not subordinate to the Bonds (see "FINANCIAL INFORMATION - Tax Increment Revenues," and "Tax Sharing Statutes" herein). (h) Projected Tax Increment Revenues do not include supplemental property tax revenues which may be received by the Agency. 22 4-40 roJ t.:I ~ ~ U roJ ~ ~ roJ '" ... \0 = ~ oel .2 Z = 0. ~ ~ g = en ~ ~ [;j .t:> Z ~ ~ ~ = roJ ... U roJ ... ~ 4-41 .; ~ ..c: " .9 " " :E' " ~ c " . =" ~'o u ~ ..5] ~~ .'" z02 0<;' -0:: ~9 00 ~::c .J <ED u '"0 ~~ z-o iZ ~ - " 0:.2 " u ~" .5.,g ~== ] ~ 13 ~ :S 2 ~ " u> ~ " .go:: ]~ .g-o .- " tdt> > " -;"e' ~ 0. !>! " ~.;3 .g] -- ~ 8 .~= ~~ ~ ~ " 0 > = ~ ~ C':I:E = > ~ " o 0. -=>> ~ u ~ = " " 5< i)] o::f- ~:? " 13 t --= ~ ::: .~ ~ E g 0.= " ..8 ~ f-O:: '" N ~ :~ OJ c: . FINANCIAL INFORMATION Agency Budgetary Process and Administration The Redevelopment Law requires redevelopment agencies to adopt an annual budget containing the following: (1) The proposed expenditures of the agency. (2) The proposed indebtedness to be incurred by the agency. (3) The anticipated revenues of the agency. (4) The work program for the coming year, including goals. (5) An examination of the previous years' achievements and a comparison of the achievements with the goals of the previous years' work program. All expenditures and indebtedness of the Agency are required to be in conformity with the adopted or amended budget. The Executive Director of the Agency is responsible for preparing the proposed budget and submitting it to the Agency. After reviewing the proposed budget at a public meeting, the Agency holds a public hearing. The Agency adopts the budget prior to the start of each fiscal year. The Director of Finance is responsible for controlling expenditures within budgeted appropriations. Agency Accounting Records and Financial Statements Every redevelopment agency is required to present an annual report to its legislative body (being the city council) within six months of the end of each fiscal year. The annual report is required, among other things, to include an independent financial "audit report" and a fiscal statement for the previous fiscal year. The California Health and Safety Code defines "audit report" to mean an examination of and opinion on the financial statements of the agency which presents the results of the operations and financial position of the agency. The independent financial audit is required to be conducted in accordance with generally accepted auditing standards and the rules governing audit reports promulgated by the Governmental Accounting Standards Board. The independent financial audit report is also required to include an opinion of the agency's compliance with laws, regulations and administrative requirements governing activities of the agency. The Redevelopment Law requires the fiscal statement to contain the following information: (I) The amount of outstanding indebtedness of the agency and each project area. (2) The amount of tax increment revenues generated in the agency and in each project area. (3) The amount of tax increment revenues paid to a taxing agency pursuant to a tax sharing agreement, other than school or community college district. (4) The financial transactions report required to be submitted to the State Controller. (5) The amount allotted to school or community college districts pursuant to the Redevelopment Law. (6) The amount of existing indebtedness and the total amount of payments required to be paid on existing indebtedness for that fiscal year. 24 4-42 (7) Any other fiscal information which the agency believes is useful to describe its programs. In addition, the annual report is required to include detailed information regarding the Agency's housing program to assist low and moderate income households and deposits and expenditures from the Low and Moderate Income Housing Fund required pursuant to the Redevelopment Law. The Indenture requires the Agency to keep, or cause to be kept, proper books and accounts separate from all other records and accounts of the Agency and the City in which complete and correct entries are made of all transactions relating to the Tax Revenues. The Indenture requires the Agency to file with the Trustee annually, within 180 days after the close of each fiscal year, so long as any of the Bonds are Outstanding, its audited financial statements showing the Tax Revenues and all disbursements from the Special Fund as of the end of such fiscal year. The Agency covenants under the Indenture to furnish a copy of such statements upon reasonable request to any Bondholder. Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. GASB No. 34. The Governmental Accounting Standards Board (GASB) published its Statement No. 34 "Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments" on June 30, 1999. Statement No. 34 provides guidelines to auditors, comptrollers, and financial officers on requirements for financial reporting for all governmental agencies in the United States. Retroactive reporting is required four years after the effective date on the basic provisions for all major general infrastructure assets that were acquired or significantly reconstructed, or that received significant improvements, in fiscal years ending after June 30,1980. The Agency was required to implement the provision of GASB 34 for the fiscal year ending June 30, 2003. The Agency retained the firm of Lance, Caporicci & Larson, Certified Public Accountants, Costa Mesa, California, to examine the component unit financial statements of the Agency as of and for the fiscal year ended June 30, 2005, the most recent fiscal year for which audited financial statements have been prepared, which are included as "APPENDIX C." The firm's examination was made in accordance with auditing standards generally accepted in the United States of America, the standards applicable to fmancial audits contained in Governmental Auditing Standards issued by the Comptroller General of the United States and the Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller and as interpreted in the Suggested Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies issued by the Governmental Accounting and Auditing Cornmittee of the California Society of Certified Public Accountants. The firm reported after their examination that the Agency's financial statements present fairly its financial position and results of operations in conformity with generally accepted accounting principles and that they noted no instances of non-compliance for the fiscal year ended June 30, 2005. The Agency's audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. Accordingly, the auditor has not performed any post-audit of the financial condition of the Agency. 25 4-43 Tax Increment Revenues Procedure for the Allocation and Payment of Tax Increment Revenues. The portion of taxes required to be allocated to the Agency is allocated and paid to the Agency by the County Auditor pursuant to the following procedure: Not later than the first day of October of each year, the Agency is required to file with the County Auditor a statement of indebtedness certified to by the chief fiscal officer of the Agency for each project area. The statement of indebtedness is required to contain for each such project area: (a) The date on which each loan, advance, or indebtedness was incurred or entered into; (b) The principal amount, term, purpose, and interest rate, of each loan, advance or indebtedness; and (c) The outstanding balance and amount due or to be paid by the Agency of each loan, advance or indebtedness. At the same time or times as the payment of taxes into the funds of the respective taxing agencies of the County, the County Auditor-Controller is required to allocate and pay Tax Increment Revenues to the Agency in an amount not to exceed the amount of loans, advances and indebtedness as shown on the Agency's Statement ofIndebtedness. Manner in Which Property Valuations and Assessments are Determined (Article XIIIA). On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis- Gann Initiative) to the State Constitution which imposes certain limitations on taxes that may be levied against real property. This amendment, which added Article XIIIA to the State Constitution, among other things, defines full cash value of property to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under 'full cash value', or, thereafter, the appraised value ofreal property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by substantial damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to one percent of the full cash value of that property, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July I, 1978 and on any bonded indebtedness for the acquisition or improvement of real property which is approved after July I, 1978 by two-thirds of the votes cast by voters voting on such indebtedness. However, pursuant to an amendment to the California Constitution, redevelopment agencies are prohibited from receiving any of the tax increment revenue attributable to tax rates levied to finance bonds approved by the voters on or after January I, 1989 (see "Property Tax Rate" below). In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend the terms "purchase" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of (I) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county (or in certain cases, another county), to transfer the old residence's assessed value to the new residence. 26 4-44 For each fiscal year since Article XIIIA has become effective (the 1978/79 fiscal year), the annual increase for inflation has been at least two percent except in six fiscal years. For the 1981/82 fiscal year, the annual increase for inflation was I %; for the 1994/95 fiscal year, the annual increase for inflation was 1.0119%; for the 1995/96 fiscal year, the annual increase for inflation was 1.19%; for the 1996/97 fiscal year, the annual increase for inflation was 1.11 %, for the 1998/99 fiscal year, the annual increase for inflation was 1.853% and for the 2004/05 fiscal year, the annual increase for inflation was 1.867% reflecting the actual increase in the State Consumer Price Index, as reported by the State Department of Finance. Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. However, in 200 I an Orange County Superior Court held that such reassessment formula violates the inflationary rate increase limitation of Article XIlIA of the California Constitution. The Court held that once the assessed value of a property is reduced pursuant to Proposition 8, any subsequent increase in assessed value may not exceed the inflationary rate limitation (not to exceed 2%) of Article XllIA. On April 18, 2003, the Superior Court entered its final judgment. On June 12, 2003, the Orange County Assessor, together with the Tax Collector and the County of Orange filed notice of appeal of the Superior Court Judgment. The Appellate Court held a hearing on the matter on January 7,2004, and issued its opinion on March 26, 2004, reversing the holding of the Orange County Superior Court. The Plaintiffs filed an appeal with the California State Supreme Court and on July 21, 2004, the California State Supreme Court by a 5-2 vote decided not to hear an appeal, ending this litigation. Unsecured and Secured Property. In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property, arising pursuant to State law, has priority over all other liens on the secured property, regardless of the time of the creation of the other liens. Property in the Redevelopment Project is assessed by the San Diego County Assessor except for public utility property which is assessed by the State Board of Equalization. The valuation of secured property is determined as of January I each year for taxes owed with respect to the succeeding fiscal year. The tax rate is equalized during the following September of each year, at which time the tax rate is determined. Taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January I and become delinquent August 31, and such taxes are levied at the prior year's secured tax rate. 27 4-45 . ., Secured and unsecured property is entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing agency has four ways of collecting unsecured property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifYing certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. Currently, a 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. Property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Under State law, /Tom time of the sale of the property to the State for nonpayment of taxes, owners have five years to redeem, during which time legal title remains in the owners as taxpayers subject to a lien in favor of the County. The amount necessary to redeem the property is equal to the sum of the delinquent taxes, delinquency penalties and redemption penalties of I y,% per month. Five years after the property is in default of taxes, the tax collector has the authority to sell property which has not been redeemed. A 10% penalty also attaches to delinquent taxes with respect to property on the unsecured roll, and further, an additional penalty of I y,% per month accrues with respect to such taxes beginning the first day ofthe third month following the delinquency date. Supplemental Assessments. Legislation adopted in 1984 (Section 75, er seg. of the Revenue and Taxation Code of the State of California) provides for the supplemental assessment and taxation of property at its full cash value as of the date of a change of ownership or the date of completion of new construction (the "Supplemental Assessments"). To determine the amount of the Supplemental Assessment the County Auditor applies the current year's tax rate to the supplemental assessment roll and computes the amount of taxes that would be due for the full year. The taxes due are then adjusted by a proration factor to reflect the portion of the tax year remaining as determined by the date on which the change in ownership occurred or the new construction was completed. Supplemental Assessments become a lien against the real property on the date of the change of ownership or completion of new construction. Unitary Property. Commencing in the 1988/89 fiscal year, the Revenue and Taxation Code of the State of California changed the method of allocating property tax revenues derived /Tom state assessed utility properties. It provides for the distribution of state assessed values to tax rate areas by a county-wide mathematical' formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas. Commencing with the 1988/89 fiscal year, each county has established one county-wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property ("Unitary Revenues"). The property tax revenue derived /Tom the assessed value assigned to the county-wide tax rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to two percent of the increase in Unitary Revenues on a pro rata basis county-wide; and (2) any decrease in Unitary Revenues or increases less than two percent, or any increase in Unitary Revenues above two percent will be allocated among jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year to the total Unitary Revenues county-wide. 28 4-46 Property Tax Rate. There are numerous tax rate areas within the Project Area. The differences between the $1.00 tax rate and those actually levied (referred to as the "tax override rate") represents the tax levied by overlapping entities to pay debt service on bonded indebtedness approved by the voters. Tax override rates typically decline each year. A declining tax override rate is the result of several factors: an effective limit, established by Article X1I1A of the California Constitution, on the amount of property taxes that can be levied; rising taxable values within the jurisdictions of taxing entities levying the approved override rate (which reduces the tax rate needed to be levied by the taxing entity to meet debt service requirements); and the eventual retirement, over time, ofthe voter-approved debt. For fiscal year 2004/05 the effective tax rate, including effective the tax override rate, for the majority of the property in the Project Area was approximately $1.005 per $100 of taxable value. Future Tax Increment Revenues have been projected in "TABLE NO.6 - PROJECTED TAX REVENUES AND DEBT SERVICE COVERAGE" by applying only the general levy $1.00 per $100 of taxable value) to incremental taxable values. Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. For fiscal year 2004/05 the County charged administrative fees totaling approximately $41,000 to the Project Area. Tax Sharing Agreements Pursuant to prior Section 33401(b) of the Redevelopment Law, a redevelopment agency could enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project to alleviate any financial burden or detriment caused by the redevelopment project. These agreements are commonly referred to as ~'tax sharing agreements" or "pass through agreements." The Agency has not entered into any tax sharing agreements with respect to the Redevelopment Project. Tax Sharing Statutes Certain provisions were added to the Redevelopment Law by the adoption of AB 1290 in 1994. A discussion of these provisions as they relate to the Project Area follows. If new territory should be added to the Project Area, under Section 33607.5 of the Redevelopment Law, any affected taxing entity will share in the Tax Increment Revenues generated by such added area pursuant to a statutory formula ("Statutory Tax Sharing"). In addition, (i) pursuant to Section 33333.6(e)(2) of the Redevelopment Law, if the Agency deletes the time limit to incur indebtedness in the Redevelopment Project (pursuant to SB 211 or through a plan amendment) or (ii) pursuant to Section 33607.7 of the Redevelopment Law, as to any redevelopment plan adopted prior to January I, 1994, if the Agency increases the total amount of Tax Increment Revenues to be allocated to the project area or increases the duration of the Redevelopment Plan and the period for receipt of Tax Increment Revenues, Statutory Tax Sharing will also be required under Section 33607.7 of the Law with all affected taxing agencies not already a party to a tax sharing agreement, once the original limitations have been reached. In general, the amounts to be paid pursuant to Statutory Tax Sharing are as follows: (a) commencing in the first fiscal year after the limitation has been reached, an amount equal to 25% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; 29 4-47 (b) in addition to amounts payable as described in (a) above, commencing in the lI'h fiscal year after the limitation has been reached, an amount equal to 21 % of tax increment revenues generated by the incremental increase of the current year assessed valuation Over the assessed valuation in the preceding (10"') fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; and (c) in addition to amounts payable as described in (a) and (b) above, commencing in the 31" fiscal year after the limitation has been reached, an amount equal to 14% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding (30"') fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (d) The City may elect to receive a portion of the tax increment generated in (a) above, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (e) The Agency may subordinate the amount required to be paid to an affected taxing entity to any indebtedness after receiving the consent of the taxing entity. With respect to a taxing entity that is a party to a tax sharing agreement, tax sharing payments would continue pursuant to such tax sharing agreement after the original limitations in the Redevelopment Plan were passed unless otherwise terminated pursuant to the terms of the tax sharing agreement. Tax Increment Revenue generated in the Bayfront Amended Area has been subject to Statutory Tax Sharing since the Agency first received revenue in 1999/00. In 1998, the Agency also amended an existing time limit on incurring debt in both the Original Bayfront Redevelopment Project and the Town Centre Redevelopment Project. As a result, Statutory Tax Sharing has been payable with respect to the Tax Increment Revenue generated by such areas, using the 1999/00 tax roll as the first fiscal after the limitation had been reached, as discussed in (a) above. The additional Statutory Tax Sharing calculation described in (b) above will begin in 2009/10. 30 4-48 BONDHOLDERS' RISKS The purchase of the Bonds involves investment risk. If a risk factor materializes to a sufficient degree, it could delay or prevent payment of principal of and/or interest on the Bonds. Such risk factors include, but are not limited to, the following matters and should be considered, along with other information in this Official Statement, by potential investors. Factors Which May Affect Tax Revenues The ability of the Agency to pay principal of and interest on the Bonds depends on the timely receipt of Tax Revenues as projected herein (see "THE PROJECT AREA - Projected Tax Revenues and Debt Service Coverage" herein). Projections of Tax Revenues are based on the underlying assumptions relating to Tax Increment Revenues of each of the constituent redevelopment projects that comprise the Project Area. A number of factors which may affect Tax Increment Revenues, and consequently, Tax Revenues, are outlined below. Reductions in Assessed Value. The projections of Tax Increment Revenues contained in this Official Statement are based on current assessed valuations within the component areas of the Project Area, a tax rate equal to $1.00 per $100 of assessed value applied to the taxable property in the component areas of the Project Area and certain projected increases in property values due to inflation allowed under Article XIIIA of the California Constitution. The Agency believes that the projections of Tax Increment Revenues and the assumptions upon which the projections are based are reasonable. However, any future decrease in the assessed valuation of the component areas of the Project Area (or any increase at a rate less than assumed), any general decline in the economic stability of the area, a relocation out of a component area of the Project Area by one or more major property owners, successful appeals by property owners for a reduction in a property's assessed value, or other events that permit reassessment of property at lower values, either on a case by case basis or as a blanket reduction due to a general decline in property values and any property tax refunds which may result therefrom, the destruction of property caused by natural disasters or any delinquencies in the payment of property taxes and any potential acquisition of property by the Agency will reduce the Tax Increment Revenues allocated to, or received by, the Agency and correspondingly may have an adverse impact on the Tax Revenues and ability of the Agency to pay principal and interest on the Bonds. Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California voters approved Proposition 13 which added Article XIIIA to the California Constitution. This amendment imposed certain limitations on taxes that may be levied against real property to I % of the full cash value of the property, adjusted annually for inflation at a rate not exceeding 2% annually. Full cash value is determined as of the 1975/76 assessment year, upon change in ownership (acquisition) or when newly constructed (see "FINANCIAL INFORMATION - Tax Increment Revenues" herein for a more complete discussion of Article XIIIA). Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances. Reduction in Inflationary Rate. The annual inflationary adjustment, while limited to 2%, is determined annually and may not exceed the percentage change in the California Consumer Price Index (CCPI). Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation six times: for 1981/82, 1%; for 1994/95, 1.0119%, for 1995/96, 1.19%; for 1996/97, 1.11%, for 1998/99, 1.853% and for 2004/05, 1.0 I 867%. The Financial Advisor has projected Tax Increment Revenues based on inflationary increases in real property values. 31 4-49 Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. However, in 200 I an Orange County Superior Court held that such reassessment formula violates the inflationary rate increase limitation of Article XIIIA of the California Constitution. The Court held that once the assessed value of a property is reduced pursuant to Proposition 8, any subsequent increase in assessed value may not exceed the inflationary rate limitation (not to exceed 2%) of Article XIlIA. On April 18, 2003, the Superior Court entered its final judgment. On June 12, 2003, the Orange County Assessor, together with the Tax Collector and the County of Orange filed notice of appeal of the Superior Court Judgment. The Appellate Court held a hearing on the matter on January 7, 2004, and issued its opinion on March 26, 2004, reversing the holding of the Orange County Superior Court. The Plaintiffs filed an appeal with the California State Supreme Court and on July 21, 2004, the California State Supreme Court by a 5-2 vote decided not to hear an appeal, ending this litigation (see "FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments" herein). The Agency's ability to generate sufficient Tax Revenues to pay debt service on the Bonds will be dependent on the economic strength of the component areas of the Project Area. Since Proposition 8 adjustments are closely tied to the economics of an area, and primarily, real estate development, factors which adversely affect real estate development may adversely affect Tax Revenues. Such factors include general economic. conditions, fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development costs and other factors. If further Proposition 8 adjustments are made by the County Assessor in future years because of declines in the fair market value of properties caused by the lack of real estate development in the area generally, Tax Revenues may be adversely affected and as a possible consequence its ability to repay the Bonds may be adversely affected. Assessment Appeals. Assessment appeals may be filed by property owners seeking a reduction in the assessed value of their property. After the property owner files an appeal, the County's Appeals Board will hear the appeal and make a determination as to whether or not there should be a reduction in assessed value for a particular property and the amount of the reduction, if any. To the extent that any reductions are made to the assessed valuation of such properties with appeals currently pending, or appeals subsequently filed, Tax Increment Revenues, and correspondingly, Tax Revenues will be reduced. Such reductions may have an adverse affect on the Agency's ability to pay debt service on the Bonds. As of December 2005, appeals have been filed by 3 property owners within the Project Area for the 2005/06 tax year (see "THE PROJECT AREA - Assessment Appeals" herein). Earthquake, Fire and Other Risks. Natural and man-made disasters and hazards, including, without limitation, earthquakes, fires, floods, mudslides and other calamities, may have the effect of reducing Tax Increment Revenues through reduction of aggregate assessed valuations within the boundaries of the Project Area. According to the Public Safety Element of the City's General Plan, the City is located in a seismically active region and could be impacted by a major earthquake originating from the numerous faults in the area. The City is traversed by two potentially active faults, the Sweetwater Fault and La Nacion Fault and three inferred faults, the Otay River Fault, the Telegraph Canyon Fault and the San Diego Bay- Tijuana Fault. Seismic hazards encompass potential surface rupture, ground shaking, liquefaction and landslides. The City recently adopted its Natural Hazards Mitigation Plan. This plan includes a hazard analysis for earthquake, flood, landslide and fire risk and is required to comply with FEMA requirements for disaster relief funding. 32 4-50 Hazardous Substauces. An additional environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use ofa property within the component areas of the Project Area. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner (or operator) may be required 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 property within component areas of the Project Area be affected by a hazardous substance would be to reduce the marketability and value of the property, perhaps by an amount in excess of the costs of remedying the condition. Certain Bankruptcy Risks. The enforceability of the rights and remedies of the Owners and the obligations of the Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. Limited Obligations. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate must necessarily reduce the amount of Tax Increment Revenues, and consequently, Tax Revenues that would otherwise be available to pay the principal of, interest on the Bonds. Voter Initiatives - State Constitutional Amendment. California's voter initiative process allows measures which qualifY for the ballot to be approved or disapproved by voters in a State of California statewide election. Future voter initiatives could be enacted which adversely affect the Tax Increment Revenues and, therefore, the security for the Bonds. State of California Fiscal Issues In connection with its approval of the budget for the 1992/93, 1993/94 and 1994/95 Fiscal Years, the State Legislature enacted legislation which, among other things, reallocated funds trom redevelopment agencies to school districts by shifting a portion of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund ("ERAF"). Faced with a projected $23.6 billion budget gap for Fiscal Year 2002/03, the State Legislature adopted and the Governor signed, AB 1768 requiring redevelopment agencies to pay into ERAF in Fiscal Year 2002/03 an aggregate amount of $75 million. AB 1768 required the payment into ERAF in Fiscal Year 2002/03 only. In 2003, the State Legislature adopted SB 1045 which required redevelopment agencies to make ERAF transfers in Fiscal Year 2003/04, based on a statewide aggregate transfer by redevelopment agencies of $135 million. SB 1045 required the Agency to transfer approximately $489,000 to ERAF in Fiscal Year 2003/04 and to make this transfer payment by May 10, 2004. In enacting SB 1045, the State Legislature also amended Section 33333.6 of the Redevelopment Law. Section 33333.2(c) and Section 33333.6(e) now provide that the City Council may adopt an ordinance to extend the limits required by AB 1290 or AB 1342, as applicable, by one additional year. The City Council has adopted an ordinance under the provisions ofSB 1045. 33 4-51 The 2004/05 State Budget included a $1.3 billion shift of local government property taxes to the ERAF. The 2004/05 State Budget apportioned the $1.3 billion among cities ($350 million), counties ($350 million), special districts ($350 million) and redevelopment agencies ($250 million) and limited the $1.3 billion ERAF transfer to the two fiscal years 2004/05 and 2005/06. The Agency's share of this additional shift of property taxes was $743,000 in 2004/05 and $900,000 in 2005/06. The Agency funded its ERAF payments in these two years by borrowing ITom the California Statewide Communities Development Authority (CSCDA). The loans ITom CSCDA are payable over 10 years. As a trailer bill to the 2004/05 State Budget, the State Legislature adopted SB 1096, allowing redevelopment agencies to extend certain plan limitations if certain criteria are met. The City Council has not adopted an ordinance under the provisions of SB 1096. Future legislation could be enacted and Tax Revenues available for payment of the Bonds may be impaired. Legislation Affecting Redevelopment Agencies AB 1290. The California Legislature enacted Assembly Bill 1290 effective January I, 1994, as amended by Senate Bill 732, effective January I, 1995 (as amended, "AB 1290,") which contained several significant changes in the Redevelopment Law. Certain of the changes affected the times for incurrence and repayment of loans, advances and indebtedness of redevelopment agencies. Further, the Legislature enacted Assembly Bill 1342 effective January 1, 1999 ("AB 1342,") which contains provisions that allowed the Agency to extend certain provisions of the Redevelopment Plans, such as the time limit on the collection of Tax Increment Revenues. The limitations currently contained in the Redevelopment Plans of the component areas of the Redevelopment Projects conform to the requirements of AB 1290. See "THE AGENCY - Plan Limitations" for a further discussion of AB 1290 and AB 1342. SB 211. The California Legislature also enacted SB 211, Chapter 741, Statutes 2001, effective January I, 2002 ("SB 211 "). SB 211 provides, among other things, that, at anytime after its effective date, the limitation on incurring indebtedness contained in a redevelopment plan adopted prior to January 1, 1994, may be deleted by ordinance of the legislative body. However, such deletion triggers statutory tax sharing with those taxing entities that do not have tax sharing agreements or if not already due to any other plan amendment. Tax sharing will be calculated based on the increase in assessed valuation after the year in which the limitation would otherwise have become effective. See "THE AGENCY - Plan Limitations" describing the elimination of the limitations on the Agency's incurring of indebtedness. SB 211 also authorizes the amendment of a redevelopment plan adopted prior to January I, 1994 to extend for not more than 10 years the effectiveness of the redevelopment plan and the time to receive tax increment revenues and to pay indebtedness. Any such extension must meet certain specified requirements, including the requirement that the redevelopment agency establish the existence of both physical and economic blight within a specified geographical area of the redevelopment project and that any additional tax increment revenues received by the redevelopment agency because of the extension be used solely within the designated blighted area. SB 211 authorizes any affected taxing entity, the Department of Finance, or the Department of Housing and Community Development to request the Attorney General to participate in the proceedings to effect such extensions. It also authorizes the Attorney General to bring a civil action to challenge the validity of the proposed extensions. SB 211 also prescribes additional requirements that a redevelopment agency would have to meet upon extending the time limit on the effectiveness of a redevelopment plan, including requiring an increased percentage of new and substantially rehabilitated dwelling units to be available at affordable housing cost to persons and families of low or moderate income prior to the termination of the effectiveness of the plan. The Agency currently has no expectations of undertaking proceedings to extend the effectiveness of the redevelopment plan or to extend the time to receive tax increment revenues and to pay indebtedness. 34 4-52 SB 1045. In enacting SB 1045 (see "State of California Fiscal Issues" above), the State Legislature amended Section 33333.2 and Section 33333.6 of the Redevelopment Law. As amended, Section 33333.2(c) and Section 33333.6(e) provided that the City Council may adopt an ordinance to extend the limits required by AB 1290 by one additional year for redevelopment plans adopted prior to 1994. The City Council has adopted an ordinance pursuant to the authorization contained in SB 1045 to extend the limits required by AB 1290 by one additional year with respect to all constituent redevelopment projects except the BayfrontAmended Area, to which SB 1045 is not applicable. SB 1096. SB 1096 further amended Section 33333.6(e) to provide that the City Council may adopt an ordinance to extend the limits required by AB 1290 by an additional year for redevelopment plans adopted prior to 1994 for each year that a payment is made to ERAF by a redevelopment agency. However, SB 1096 includes criteria that must be met for redevelopment plans that have a remaining plan life between 10 and 20 years. The City Council has [not] adopted such an amendment to the redevelopment Plans pursuant to the authorization contained in SB 1096 to extend the limits required by AB 1290 by one additional year, for each of the ERAF payments made in 2004/05 and 2005106. As noted above, this extension does not apply to the Bayfront Amended Area. Proposed Eminent Domain Legislation. On June 23, 2005, the U.S. Supreme Court decided in Kelo v. City of New London, 126 S. Ct. 24 (2005) that the compensated taking of private property for the purpose of economic development satisfies the "public use" requirement of the Fifth Amendment of the U.S. Constitution. While many governmental agencies have previously used the power of eminent domain for the purpose of assembling property for economic development, the U.S. Supreme Court had never prior to Kelo considered whether the practice was constitutional under the Fifth Amendment. As a reaction to Kelo, a number of bills have been introduced in the U.S. Congress and State Legislature which propose to restrict the use of eminent domain by public agencies to varying degrees. In addition, a number of voter initiatives which also propose to restrict the use of eminent domain have been filed with the State Attorney General to prepare for petition for signatures to qualifY for the ballot. The Agency is not able to predict whether any of such bills or initiatives, or other bills or initiatives restricting the use of eminent domain will be passed, or if passed, whether there would be a significant effect upon the ability of the Agency to exercise its power of eminent domain. Although the Agency has previously utilized eminent domain proceedings for certain redevelopment projects for economic development and blight removal and may consider utilizing eminent domain proceedings in future projects, the Agency does not anticipate any of the bills or initiatives, even if passed, will have a material adverse effect on the Agency's redevelopment activities within the Project Area. Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. Loss of Tax Exemption As discussed under the caption "LEGAL MATTERS - Tax Matters" herein, interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the Agency in violation of its covenants contained in the Indenture. Should such an event of taxability occur, the Bonds are not subject to special redemption or any increase in interest rate and may remain outstanding until maturity. 35 4-53 LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Indenture is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Approval of Legal Proceedings Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Bond Counsel, will render an opinion which states that the Indenture is a valid and binding obligation of the Agency and enforceable in accordance with its terms. The legal opinion of Bond Counsel will be subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights and to the exercise of judicial discretion in accordance with general principles of equity. See "APPENDIX E" for the proposed form of Bond Counsel's opinion. The Agency has no knowledge of any fact or other information which would indicate that the Indenture is not so enforceable against the Agency, except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. Certain legal matters will be passed on for the Agency by the City Attorney, acting as Agency General Counsel and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Fees payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds. Tax Matters In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds will be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum taxable liability of such corporations. Bond Counsel's opinion as to the exclusion from gross income for federal income tax purposes of interest on the Bonds is based upon certain representations of fact and certifications made by the Agency, the Underwriter and others and is subject to the condition that the Agency complies with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Agency has covenanted to comply with all such requirements. 36 4-54 Bond Counsel's opinion may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such action or events are taken or do occur. The Indenture, the First Supplement and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the exclusion from gross income for federal income tax purposes of interest due on the Bonds, if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation. Tbe Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit ofthe Bonds (or by audit of similar securities). Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded from gross income for federal income tax purposes provided that the Agency continues to comply with certain requirements of the Code, the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences with respect to the Bonds. Tbe form of Bond Counsel's opinion is set forth in "APPENDIX E" hereto. Absence of Litigation The Agency will furnish a certificate dated as of the Delivery Date that there is not now known to be pending or threatened any litigation restraining or enjoining the execution or delivery of the Indenture or the sale or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Indenture was executed and delivered or the Bonds are to be issued or affecting the validity thereof. 37 4-55 CONCLUDING INFORMATION Ratings on the Bonds Standard & Poor's and Moody's have assigned their ratings of "AAA" and "Aaa," respectively, to the Bonds with the understanding that a Municipal Bond Insurance Policy insuring payment when due of the principal of and interest on the Bonds will be issued on the closing date by In addition, Standard & Poor's has assigned their undedying municipal bond rating of "_" notwithstanding the delivery of the Municipal Bond Insurance Policy. Such ratings reflect only the views of the rating agency and any desired explanation of the significance of such rating should be obtained ITom the rating agency. Generally, a rating agency bases its rating on the insurance and the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse efIect on the market price of the Bonds. The Financial Advisor The material contained in this Official Statement was prepared by the Agency with the assistance of the Financial Advisor, who advised the Agency as to the financial structure and certain other financial matters relating to the Bonds. The information set forth herein received ITom sources other than the Agency has been obtained by the Agency ITom sources which are believed to be reliable, but such information is not guaranteed by the Agency or the Financial Advisor as to accuracy or completeness, nor has it been independently verified. Fees paid to the Financial Advisor are contingent upon the sale and delivery of the Bonds. Continuing Disclosure The Agency will covenant to provide annually certain financial information and operating data relating to the Project Area by not later than March 31 each year commencing March 31, 2007, to provide the audited Financial Statements of the Agency for the fiscal year ending June 30, 2006 and for each subsequent fiscal year when they are available (together, the "Annual Report"), and to provide notices of the occurrence of certain other enumerated events. The Annual Report will be filed by the Trustee on behalf of the Agency with each Nationally Recognized Municipal Securities Information Repository certified by the Securities and Exchange Commission (the "Repositories") and a State repository, if any. The notices of material events will be timely filed by the Agency with the Municipal Securities Rulemaking Board, the Repositories and a State repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events and certain other terms of the continuing disclosure obligation are summarized in "APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE." The Agency has never failed to comply, in all material respects, with its undertaking, to provide continuing disclosure under the Federal Securities laws. However, the City had delivered to U.S. Bank National Association in February 2004 its continuing disclosure filings for fiscal year ending June 30, 2003 required under Rule I5c2-12 in connection with its Certificates of Participation, Series A of 2000 (2000 Financing Project), its 2002 Certificates of Participation (police Facility Project), and its 2003 Refunding Certificates of Participation (Town Centre II Parking Project) with the intention that U.S. Bank National Association would disseminate the City's continuing disclosure filings for fiscal year ending June 30, 2003 on or before March 1,2004. On May 19,2004, U.S. Bank National Association had disseminated all of the City's continuing disclosure filings for fiscal year ending June 30, 2003, and the City is now current on all filings required pursuant to its previous continuing disclosure undertakings. 38 4-56 Underwriting E. J. De La Rosa & Co., Inc., (the "Underwriter") is offering the Bonds at the prices set forth on the inside cover page hereof. The initial offering prices may be changed from time to time and concessions from the offering prices may be allowed to dealers, banks and others. The Underwriter has purchased the Bonds at a price equal to $ , which amount represents the principal amount of the Bonds ($ ), less a net original issue discount of $ . and less an Underwriter's discount of $ L%). The Underwriter will pay certain of its expenses relating to the offering. Verifications of Mathematical Computations Grant Thornton LLP will verify from the infonnation provided to them the mathematical accuracy as of the date of the closing on the Bonds of (1) the computations contained in the provided schedules to detennine that the anticipated receipts from the securities and cash deposits listed in the schedules prepared by the Financial Advisor, to be held in escrow, will be sufficient to pay, when due, the principal, redemption premium and interest requirements of the 1994 Bonds, and (2) the computations of yield on both the securities and the Bonds contained in the provided schedules used by Bond Counsel in its detennination that the interest with respect to the Bonds is exempt from federal taxation. Grant Thornton LLP will express no opinion on the assumptions provided to them, nor as to the exemption from taxation of the interest with respect to the Bonds. Additional Information The summaries and references contained herein with respect to the Indenture, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the fonn hereof included in the Indenture. Copies of the Indenture are available for inspection during the period of initial offering on the Bonds at the offices of the Financial Advisor. Copies of this document may be obtained after delivery of the Bonds from the Agency at 276 Fourth Avenue, Chula Vista, California 91910. References All statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or Owners of any of the Bonds. Execution The execution and delivery of this Official Statement by the Treasurer has been duly authorized by the Redevelopment Agency of the City ofChula Vista. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA By: Treasurer 39 4-57 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE A-I 4-58 APPENDIX B CITY OF CHULA VISTA INFORMATION STATEMENT General Information Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in an area generally know as "South Bay." Chula Vista's city limits cover approximately 50 square miles. Neighboring communities include the City of San Diego and National City to the north and the City of Imperial Beach and the communities of San Y sidro and Otay Mesa to the south. With a January 2006 estimated population of 223,423, Chula Vista is the second largest city in the County. General Organization The City ofChula Vista was incorporated as a general law city on March 17, 1911, and operates under the council/manager form of govemment. It became a charter city in 1949. The City is governed by a five- member council consisting of four members and a Mayor, each elected at large for four-year alternating terms. The positions of City Manager and City Attorney are filled by appointments of the Council. The City of Chula Vista currently employs approximately 1,547 staff members including sworn officers and fire personnel. The members of the City Council, the expiration dates of their terms and key administrative personnel are set forth in the charts below. CITY COUNCIL Council Member Stephen C. Padilla, Mayor John McCann Steve Castaneda Patricia E. Chavez Jerry Rindone Term Expires December 2006 December 2006 December 2008 December 2006 December 2008 CHIEF ADMINISTRATIVE PERSONNEL David D. Rowlands, Jr., City Manager Laurie A Madigan, Assistant City Manager Special Projects David Palmer, Assistant City Manager Community Services Dana Smith, Assistant City Manager Development Services Jim Thomson, Assistant City Manager Administrative Services Maria Kachadoorian, Director of Finance/Treasurer Ann Moore, City Attorney Susan Bigelow, City Clerk Governmental Services Public Safety and Welfare The City of Chula Vista Police Department consists of 340 sworn officers and non-sworn personnel providing patrol, traffic, animal control and investigations. There are eight fire stations located in and operated by the City, staffed by 141 fire personnel. B-1 4-59 . ...... Community Services Services provided by the City include building permit and inspection, planning and zoning, landscape and public infrastructure maintenance, street cleaning, traffic signal maintenance and municipal code compliance. Public Services Water is supplied to Chula Vista by the Otay Water District and the Sweetwater Water District. Sewer service is provided by the City. Electric power and natural gas are provided by San Diego Gas and Electric. Parks and Recreation The Chula Vista Public Library is comprised of three individual libraries with over 432,000 volumes available and connected by a wide-area network. The Library delivers books in English and Spanish, videos and CDs, and community programming to the City's residents nearly every day of the year. The Library contains an Office of Cultural Arts dedicated to advancing the arts and culture in a manner designed to preserve the diverse cultures of the area. In addition, Chula Vista provides a variety of cultural and educational facilities such as the Chula Vista Heritage Museum, Onstage Playhouse, and the San Diego Junior Theater. The Chula Vista Recreation Department provides citizens with a variety of park and recreational services on a year round basis. Facilities include nine community and recreation centers, including a youth community center and a senior center. The City also has two community pools open year round, 46 community and neighborhood parks, and a Memorial Bowl with seating for 700 at which the City's Summer Concert Series is hosted. The City also has after-school programs throughout the community. The City will open three new parks and community centers this year. Community Facilities and Services Public educational instruction for kindergarten through high school is provided by the Chula Vista Elementary School District and Sweetwater Union High School District. These districts administer 42 elementary schools, one junior high school, ten middle schools, 11 senior high schools, one continuation high school, one alternative program school and one charter school. Southwestern College, a two year Community College, has enrollment of approximately 19,000. There are also four adult education schools and 16 private schools. There are seven universities or colleges within 30 minutes commuting distance from Chula Vista in the San Diego metropolitan area. The City is currently planning a four-year college campus, to be located on a 400 acre property adjoining the Olympic Training Center. There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doctors and allied professionals in Chula Vista. There are two daily, one weekly and one semi-weekly newspapers published and circulated in Chula Vista. Chula Vista has more than 60 churches and nearly 100 service, fraternal and civic organizations. The City's mediterranean climate lends ilselfto many outdoor recreational activities. Chula Vista is home to the 20,000 seat Coors Amphitheatre, the Chula Vista Nature Center, Knotts Soak City USA, four golf courses, numerous parks and open spaces, and a harbor which includes two marinas, an RV park, and several restaurants. B-2 4-60 In addition, Chula Vista is the location of the United States Olympic Training Center. This is the third such training center in the nation and the only year round training facility. The center is located on a 150- acre property donated by EastLake Development Company adjacent to the Otay Lake reservoir. Transportation U.S. Highways 5 (along the coast) and 805 (inland) provide full freeway access from Chula Vista north to San Diego and south to the Mexican border. Commuter rail service is provided by the San Diego Trolley, a light rail system started in 1981 and I I bus routes serve Chula Vista. The City has recently introduced Chula Vista Express, a three-part pilot commuting program to promote public transportation, carpooling, vanpooling, biking and walking to work as alternatives to driving alone. If offers free bus service from eastern Chula Vista to downtown San Diego, a free shuttle from eastern Chula Vista to the H Street Trolley Station to a cash incentive for riding or joining a vanpool or carpool. San Diego's Lindbergh International Airport is IS minutes to the north of Chula Vista, providing air cargo and passenger flights is served by all major airlines. Cargo shipping is available at the Unified Port of San Diego, which serves as a transshipment facility for the region, which includes San Diego, Orange, Riverside, San Bernardino and Imperial counties, plus northern Baja California, Arizona and points east. B-3 4-61 Population The following table provides a comparison of population growth for Chula Vista, surrounding cities and San Diego County between 2002 and 2006. TABLE NO. B-1 CHANGE IN POPULATION CHULA VISTA, SURROUNDING CITIES AND SAN DIEGO COUNTY 2002 - 2006 CHULA VISTA SURROUNDING CITIES SAN DIEGO COUNTY Percentage Percentage Percentage Year Population Change Popnlation Change Popnlation Change 2002 ]9],132 ]80,747 2,921,390 2003 200,472 4.9% 183,456 1.5% 2,972,932 1.8% 2004 208,407 4.0% 183,708 0.1% 3,011,244 1.3% 2005 2] 6,694 4.0% 187,802 2.2% 3,039,277 0.9% 2006 223,423 3.1% 186,652 (0.6)% 3,066,820 0.9% % Increase Between 2002 - 2006 ]6.9% 3.3% 5.0% Surrounding cities include El Cajon, Coronado and National City. Source: State of Califomia, Department of Finance, "E-4 Population Estimates for Cities. Counties and the State, 2001-2006. with 2000 Benchmark." Effective Buying Income The most recently available effective buying income information for the City of Chula Vista, San Diego County, the State of California and the United States is summarized in the following table. TABLE NO. B-2 EFFECTIVE BUYING INCOME CITY OF CHULA VISTA, SAN DIEGO COUNTY, CALIFORNIA AND UNITED STATES 2000 - 2004 Vear Chula Vista San Diego Connty State of California United States 2000 $42,550 $44,292 $44,464 $39,129 2001 42,229 44,146 43,532 38,365 2002 40,578 42,3]5 42,484 38,035 2003 42,389 43,346 42,924 38,20] 2004 45,145 44,506 43,915 39,324 Source: Sales and Marketing Management, "Survey of Buying Power." B-4 4-62 Employment and Industry The City is located in the San Diego-Carlsbad-San Marcos MSA labor market. Six major job categories constitute 76.6% of the work force. They are government (]6.7%), professional and business services (16.3%), service producing (]4.5%), leisure and hospitality (11.6%), educational and health services (9.6%) and manufacturing (7.9%). The March 2006 unemployment rate in the San Diego-Carlsbad-San Marcos area was 3.9%. The State of California March 2006 unemployment rate (unadjusted) was 5.0%. TABLE NO. B-3 SAN DIEGO-CARLSBAD-SAN MARCOS MSA WAGE AND SALARY WORKERS BY INDUSTRY II) (in Thousands) Industry 2002 2003 2004 2005 2006 Government 223.7 222.2 216.7 2]7.6 218.3 Other Services 44.5 46.0 47.1 48.7 48.8 Leisure and Hospitality ]27.0 136.8 ]41.3 ]44.9 ]51.3 Educational and Health Services ]20.3 ]21.2 123.0 ]22.5 125.8 Professional and Business Services 201.7 201.8 203.5 208.8 212.7 Financial Activities 73.4 78.6 81.4 82.3 83.7 Information 38.2 37.3 36.2 37.3 37.1 Transportation, Warehousing and Utilities 30.5 26.6 28.1 28.5 28.5 Service Producing Retail Trade 134.9 137.0 ]41.1 ]44.4 145.2 Wholesale Trade 40.9 41.4 41.4 42.7 45.0 Manufacturing Nondurable Goods 28.0 26.6 26.4 25.0 25.3 Durable Goods 87.1 79.8 77.4 79.7 78.5 Goods Producing Construction 73.9 76.2 84.8 88.5 93.7 Natural Resources and Mining ---.!U ---.!U --2d --2d --2d Total Nonfarm 1,224.4 ],231.8 ],248.8 1,271.3 ],294.3 Farm --1.Qd ---1Q,2 ~ ----1Q.1 ----1.M Total (all industries) ~ ~ ~ UW ~ (1) Annually, as of March. Source: State of California Employment Development Department, Labor Market Information Division, "Industry Employment & Labor Force - by month March 2005 Benchmark. " B-5 4-63 The major employers operating within the City and their respective number of employees as of June 30, 2005 are as follows: Name of Company Rohr DBA Goodrich Aerospace Sharp Chula Vista Medical Center Scripps Memorial Hospital United Parcel Service Emplovment Tvpe of BusinesslProduct 1,903 Aerospace Manufacturing 1,410 Hospital 890 Hospital 637 Parcel Delivery Service 400 General Merchandise 340 General Merchandise 285 General Merchandise 284 General Merchandise 275 General Merchandise 250 General Merchandise Walmart 2291 Sears Roebuck & Co. Costco Wholesale Corp. #781 ATC Vancom Inc. Costco Wholesale Corp. #460 Walmart Store #3516 Source: City of Chula Vista. Commercial Activity The following table summarizes the most recently available published information of volume of retail sales and taxable transactions for the City ofChula Vista for 2000 through 2004 (the most recent year for which statistics are available). The City's reported sales tax has increased 20% since 2003. This increase is primarily due to continued growth in the eastern section of the City, which led to the opening of significant new commercial developments. TABLE NO. B-4 CITY OF CHULA VISTA TOTAL TAXABLE TRANSACTIONS (in Tbousands) 2000 - 2004 Total Taxable Retail Sales Retail Sales Transactions Issued Sales Year ($OOO's) 0/0 Change Permits ($OOO's) % Change Permits 2000 $1,401,401 1,780 $1,608,290 3,609 2001 1,463,409 4.4% 1,823 1,688,665 5.0% 3,690 2002 1,513,809 3.4% 1,883 1,729,158 2.4% 3,737 2003 1,642,889 8.5% 2,092 1,857,233 7.4% 3,921 2004 1,845,573 12.3% 2,199 2,073,340 11.6% 4,166 Source: State Board of Equalization, "Taxable Sales in California." B.6 4-64 The following table compares taxable transactions for the City of Chula Vista and surrounding cities for the years 2000 through 2004 (the most recent year for which statistics are available). TABLE NO. 805 CHANGE IN TOTAL TAXABLE TRANSACTIONS CHULA VISTA AND SURROUNDING CITIES (in Thousands) 2000 - 2004 % Change from City 2000 2001 2002 2003 2004 2000 - 2004 CHULA VISTA $1,608,290 $1,688,865 $1,729,158 $1,857,233 $2,073,340 28.9% E1 Cajon 1,597,168 1,725,001 1,817,568 1,939,482 2,103,099 31.7% Coronado 172,631 168,147 175,648 179,418 188,172 9.0% National City 1,179,1ll 1,231,562 1,301,407 1,389,042 1,551,301 31.6% Source: State Board of Equalization, "Taxable Sales in California. " Taxable transactions by type of business for the City of Chula Vista for 2000 through 2004 (the most recent year for which statistics are available) are summarized in Table No. B-6. TABLE NO. 806 CITY OF CHULA VISTA TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (in Thousands) 2000 - 2004 2000 2001 2002 2003 2004 Retail Stores Apparel Stores $ 66,598 $ 61,937 $ 67,035 $ 67,114 $ 82,165 General Merchandise Stores 495,679 524,942 525,423 553,979 609,028 Food Stores 90,487 92,224 99,897 103,155 106,056 Eating/Drinking Places 155,583 164,417 169,892 188,675 213,412 Home Furnishings and Appliances 66,365 67,827 74,255 78,561 87,203 Building Materials and Farm Implements 102,370 97,897 91,235 100,504 142,321 Auto Dealers/Suppliers 145,923 151,812 156,872 178,733 191,185 Service Stations 121,244 119,050 123,636 148,318 174,968 Other Retail Stores 157.152 183.303 205.564 223.850 239.235 Total Retail Stores 1,401,401 1,463,409 1,513,809 1,642,889 1,845,573 All Other Outlets 206.889 225.256 215.349 214.344 227.767 Total All Outlets $1 608 290 ~1.68R.665 $1729.158 $1.857 233 ~2.073.340 Source: State Board of Equalization, "Taxable Sales in California. " B-7 4-65 Building Activity The following table summarizes building activity valuations for the City of Chula Vista for the years 200 I through 2005. TABLE NO. B-7 CITY OF CHULA VISTA BUILDING ACTIVITY AND VALUATION (in Thousands) 2001 - 2005 2001 2002 2003 2004 2005 Residential $482,13 1,012 $467,349,014 $569,435,026 $703,847,604 $440,321,520 Non-Residential 91.667.827 81.298.075 92.855.876 123.793.323 111.908.460 Total Valuation $573 798 839 $548.647.089 $662290.902 $827640.927 $552 229980 Total Permits ~ ~ ~ ~ ~ Source: City of Chula Vista. B-8 4-66 APPENDIX C AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2005 C-l 4-67 -~- APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE [to be provided by Disclosure Counsel] D-l 4-68 APPENDIX E FORM OF BOND COUNSEL OPINION [to be provided by Bond Counsel] E-l 4-69 APPENDIX F SPECIMEN MUNICIPAL BOND INSURANCE POLICY F-l 4-70 APPENDIX G BOOK-ENTRY-ONLY 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 tbe name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an autborized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited witb DTC. DTC, tbe world's largest securities depository, is a limited-purpose trust company organized under tbe New York Banking Law, a "banking organization" within tbe meaning of tbe New York Banking Law, a member of tbe Federal Reserve System, a "clearing corporation" witbin tbe meaning of tbe New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of tbe Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries tbat DTC's participants ("Direct Participants") deposit witb DTC. DTC also facilitates tbe post-trade settlement among Direct Participants of sales and otber securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates tbe need for physical movement of securities certificates. Direct Participants include botb U.s. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain otber 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 tbe National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by tbe New York Stock Exchange, Inc., tbe American Stock Exchange LLC, and tbe National Association of Securities Dealers, Inc. Access to the DTC system is also available to otbers such as botb U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations tbat clear through or maintain a custodial relationship witb 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 tbe Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Bonds under tbe DTC system must be made by or through Direct Participants, which will receive a credit for tbe Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on tbe Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation ITom DTC of tbeir purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of tbe transaction, as well as periodic statements of tbeir holdings, from tbe Direct or Indirect Participant through which tbe Beneficial Owner entered into tbe transaction. Transfers of ownership interests in tbe Bonds are to be accomplished by entries made on tbe books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing tbeir ownership interests in Bonds, except in tbe event tbat use oftbe book-entry system for tbe Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants witb DTC are registered in tbe name of DTC's partnership nominee, Cede & Co., or such otber name as may be requested by an autborized representative ofDTC. The deposit of Bonds witb DTC and their registration in tbe name of Cede & Co. or such otber DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only tbe identity of tbe Direct Participants to whose accounts such Bonds are credited, which mayor may not be tbe Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of tbeir holdings on behalf oftbeir customers. G-I 4-71 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 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 issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium (if any), and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Agency or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not ofDTC, the Agency, or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any), and interest payments with respectto the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Agency may decide to discontinue use of the system of book-en try-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered in accordance with the provisions ofthe Indenture. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy thereof. G-2 4-72 ->>' ==8 -= =.- ~c"ti !;II'}._ .. ~(IJ~ " ...- .- ... =.~ = ...... ""'- ee-= " .. .. .. '" " .:: ~ r.: y ti 0 Q"" '" =:: ~ ~o..! -="'" I: -;.~ ::o"'~ >. 'i: , " " = 1:0 ~ .... '" e"" .. -=.."" " ... ~ .. ..... "",, Q ,,~ " 1:0 = 0 ;.:~ =:~ 00,. ;::c= .. - - >>- Co,,"" e"" ... Q Q ~ .E = .s ....s: ~~ "ti~ = ;,)0":: .~ '" .,Q c.. "".. "'''' .. Q ... .. Q ... ,,~ " Q ... = ',c Q .. =.. .. ~... 1i:i'~ Co. -=.. - o~ ~1;iI'}~ " " " .. ..- So; ,,- Q - .. ~~.c g.s:7a ;::...g =.Q it: e <::: "' ... - - cSc"; " " '" .. ;,) ... .. - Q "" " " ......;0;:: 0 - ........ -"'~ " " " =0;:: ...... CoJ.::! ,,~- .. " Q " .. '" ~ e ;: ";~~ ...... 1:0 ... 0000- - "" ,,- .. '~.! = c..'" "'Ie"" 00'" "" t't'~ " " " = =.. 's'- " ._ e Q _.. .. ..- ~ ..... .. ~ -.. "'-= '" '" :E .~ 'i: ~.; .:, ATTACHMENT D DRAFT AS OF MAY 18, 2006 NEW ISSUE" BOOK-ENTRY-ONLY NO RATING (See "CONCLUDING INFORMATION - No Rating on the Bonds" herein) In the opinion of Stradling focea Carlson & Rauth, a Professional Corpora/ion, Newport Beach, California, Bond Counsel, subject, under existing law, statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, the interest on the Bonds is exemptfrom State ofCa/iforniapersona/ income taxes. See "LEGAL MATTERS Tax Matters" herein. SAN DIEGO COUNTY STATE OF CALiFORNIA $12,500,000* REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA BAYFRONTITOWN CENTRE REDEVELOPMENT PROJECT 2006 SUBORDINATE TAX ALLOCATION REFUNDING BONDS, SERIES B Dated: Date of Delivery Due: September 1 as Shown on the Inside Front Cover The cover page contains certain information for quick reference only. It is not a summary or the issue. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. See "BONDHOLDERS' RISKS" herein for a discussion of special risk factors that should be considered in evaluating the investment quality or the Bonds. Proceeds trom the sale of the Redevelopment Agency of the City of Chula Vista (the "Agency"), BayfrontITown Centre Redevelopment Project, 2006 Subordinate Tax Allocation Refunding Bonds, Series B (the "'Bonds") will be used to (i) refinance existing obligations of the Agency, (ii) satisfy the reserve requirement for the Bonds and (Hi) provide for the costs of issuing the Bonds. The Bonds will be issued under an Indenture of Trust, dated as of July 1,2006, by and between the Agency and U.S. Bank National Association, as Trustee (the "Trustee"). The Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of certain tax increment revenues of the Agency's Bayfront/Town Centre Project Area (the "Project Area") on a basis subordinate to the Agency's Bayfrontlfown Centre Redevelopment Project 2006 Senior Tax Allocation Refunding Bonds, Series A, as described below and a pledge of amounts in certain funds and accounts established under the Indenture, as further discussed herein. Interest on the Bonds is payable on March 1, 2007, and semiannually thereafter on September I and March 1 of each year until maturity or earlier sinking account payment or optional redemption (see "THE BONDS - General Provisions" and "THE BONDS - Redemption" herein).' The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel and by the City Attorney. It is anticipated that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about August 3,2006 (see "APPENDIX G - BOOK-ENTRY-ONLY SYSTEM" herein). The date of the Official Statement is .2006. E. J. DE LA ROSA & CO., INC. * Preliminary. subject to change. 4-73 $12,500,000* REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA BAYFRONT/TOWN CENTRE REDEVELOPMENT PROJECT 2006 SUBORDINATE TAX ALLOCATION REFUNDING BONDS, SERIES B MATURITY SCHEDULE (Base CUSIP@t ) Serial Bonds Maturity Date Seotember I 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Priocipal Amount Ioterest Rate Reofferiof Yield CUSIP@t · Preliminary, subject to change. t CUSIP@ A registered trademark of the American Bankers Association. Copyright CI 1999-2006 Standard & Poor's, a Division of The McGraw-Hill Companies, Inc. CUSIP@ data herein is provided by Standard & Poor's CUSIPiI> Service Bureau. This data in not intended to create a database and does not serve in any way as a substitute for the CUSIP@ Service Bureau. CUSIP@ numbers are provided for convenience of reference only. Neither the Agency, the Financial Advisor nor the Underwriter takes any responsibility for the accuracy of such numbers. 4-74 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Agency in any press release and in any oral statement made with the approval of an authorized officer of the Agency or any other entity described or referenced herein, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" and similar expressions identifY "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially fiom those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Agency 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 representation must not be relied upon as having been authorized by the Agency, the Financial Advisor or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has submitted the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a 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. Information Subject to Change. The information and expressions of opinions herein are subject to change without notice and neither 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 ofthe Agency or any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this Official Statement 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. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the 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 Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside fiont cover page hereof and said public offering prices may be changed fiom time to time by the Underwriter. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. 4-75 REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA CHULA VISTA, CALIFORNIA CITY COUNCIL AND AGENCY GOVERNING BOARD Stephen C. Padilla, Mayor John McCann, Mayor Pro Tem Steve Castaneda, Councilmember Patricia E. Chavez, Councilmember Jerry Rindone, Councilmember CITY AND AGENCY STAFF David D. Rowlands, Jr., City Manager Laurie A. Madigan, Assistant City Manager Special Projects David Palmer, Assistant City Manager Community Services Dana Smith, Assistant City Manager Development Services/Director of Community Development Jim Thomson, Assistant City Manager Administrative Services Maria Kachadoorian, Director of Finance/Treasurer Ann Moore, City Attorney Susan Bigelow, City Clerk PROFESSIONAL SERVICES Bond Counsel and Disclosure Counsel Stradling Yocca Carlson & Rauth a Professional Corporation Newport Beach, California Financial Advisor Harrell & Company Advisors, LLC Orange, California Underwriter E. J. De La Rosa & Co., Inc. Los Angeles, California Trustee and Escrow Bank U.s. Bank National Association Los Angeles, California Verifications Grant Thornton LLP Minneapolis, Minnesota 4-76 TABLE OF CONTENTS INTRODUCTION ......................................................1 The Agency................................................................! The City .....................................................................! Security and Sources of Repayment ..........................! Purpose ........... ..................... ............................ ..........2 Tax Exemption .......... ......... ............... .................. .......2 Professional Services ............. .......... ..................... ... ..3 Offering of the Bonds ................................................3 Information Concerning this Official StatemenL.....3 THE BONDS...............................................................5 General Provisions... .................................... ..............5 Redemption........... .....................................................6 Scheduled Deht Service on the Bonds .......................7 THE FINANCING PLAN ..........................................8 Estimated Sources and Use ofFunds.........................9 SOURCES OF PAYMENT FOR THE BONDS .....10 Tax Allocation Financing.........................................! 0 Tax Revenues...........................................................!O Pledge of Tax Revenues...........................................!! Reserve Account ......................................................11 Issuance of Additional Deht.....................................!! Bond Insurance ........................................................12 THE AGENCY..........................................................13 Government Organization................. .......................13 Agency Powers ........................................................13 The Chula Vista Redevelopment Corporation .........!4 Redevelopment Plans...............................................!4 Plan Limitations.......................................................15 Low and Moderate Income Housing........................15 THE PROJECT AREA............................................ 16 Description of the Project Area................................ 16 Assessed Valuations.................................................18 Major Taxpayers ......................................................20 Assessment Appeals. ........... ......................... ........ ....2! Tax Collections ........................................................2! Projected Tax Revenues and Debt Service Coverage ...... ..... ....... .............................................23 FINANCIAL INFORMATION ...............................25 Agency Budgetary Process and Administration.......25 Agency Accounting Records and Financial Statements..... ................. ................................... ....25 Tax Increment Revenues .........................................27 Tax Sharing Agreements.......................................... 30 Tax Sharing Statutes ................................................ 30 BONDHOLDERS'RlSKS.......................................32 Factors Which May Affect Tax Revenues ...............32 Subordinate Lien ofBonds......................................34 State of California Fiscal Issues ..............................34 Legislation Affecting Redevelopment Agencies...... 35 Secondary MarkeL........ ............ ............... .............. 36 Loss of Tax Exemption............................................37 LEGAL MATTERS.................................................. 38 Enforceability of Remedies .....................................38 Approval ofLegal Proceedings............................... 38 Tax Matters.............................................................. 38 Absence of Litigation ..............................................39 CONCLUDING INFORMATION ..........................40 No Rating on the Bonds .......................................... 40 The Financial Advisor .............................................40 Continuing Disclosure ..... ............ ............ ................ 40 Underwriting ..... ..... ...... .............. ............. ................ 40 Verifications of Mathematical Computations ..........41 Additional Information... ............ ...... ....................... 41 References ............... .... ............ .......... ...................... 41 Execution .............. ...................................... .............41 APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B - CITY OF CHULA VISTA INFORMATION STATEMENT APPENDIX C - AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 2005 APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX E - FORM OF BOND COUNSEL OPINION APPENDIX F - SPECIMEN MUNICIPAL BOND INSURANCE POLICY APPENDIX G - BOOK-ENTRY-ONLY SYSTEM 4-17 OFFICIAL STATEMENT $12,500,000* REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA BAYFRONTrrOWN CENTRE REDEVELOPMENT PROJECT 2006 SUBORDINATE TAX ALLOCATION REFUNDING BONDS, SERIES B This Official Statement which includes the cover page and appendices (the "Official Statement") is provided to furnish certain information conceming the sale of the Redevelopment Agency of the City of Chula Vista Bayftont/Town Centre Redevelopment Project 2006 Subordinate Tax Allocation Refunding Bonds, Series B (the "Bonds"), in the aggregate principal amount of $12,500,000'. INTRODUCTION This Introduction contains only a brief description of this issue and does not purport to be complete. The Introduction is subject in all respects to more complete information in the entire Official Statement and the offering of the Bonds to potential investors is made only by means of the entire Official Statement and the documents summarized herein. Potential investors must read the entire Official Statement to obtain information essential to the making of an iriformed investment decision. The Agency The Redevelopment Agency of the City of Chula Vista (the "Agency") is a public body, corporate and politic, existing under and by virtue of the Community Redevelopment Law of the State, constituting Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). The Agency was activated by the City Council of the City of Chula Vista in 1972. The City Council, at the same time, declared itself to be the members of the Agency and appointed the City Manager to be the Agency's Executive Director (see "THE AGENCY" herein). The City The City of Chula Vista (the "City") is located on San Diego Bay in Southern California, 8 miles south of San Diego and 7 miles north of the Mexico border in an area generally known as "South Bay." The City encompasses approximately 50 square miles. Based on population, Chula Vista is the second largest city in San Diego County (see "APPENDIX B - CITY OF CHULA VISTA INFORMATION STATEMENT' herein). Security and Sources of Repayment The Bonds. The Bonds are issued and secured under an Indenture of Trust, dated as of July 1,2006, (the "Indenture"), by and between the Agency and U.s. Bank National Association, as trustee (the "Trustee") (see "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" herein). . Preliminary, subject to cbange. 4-78 The Agency has pledged to the repayment of the Bonds, and has secured by a lien on, all of the Tax Revenues, as defined herein on a basis subordinate to the pledge of and lien on Tax Revenues of the Agency's Bayfront/Town Centre Redevelopment Project 2006 Senior Tax Allocation Refunding Bonds, Series A (the "Senior Bonds") being issued concurrently wit the Bonds. Tax Revenues means all of the Tax Increment Revenues allocated to the Agency's Bayfront/Town Centre Project Area excluding (i) amounts required to be deposited in the Agency's low and moderate income housing fund pursuant to Section 33334.3 of the Redevelopment Law, (ii) amounts payable to the Agency by the State pursuant to Section 16112.7 of the California Government Code, and (iii) amounts required to be paid pursuant to the Tax Sharing Statutes, as defined herein to the extent not subordinated to the payment of debt service on the Bonds. Tax Increment Revenues consist of tax increment revenues receivable by the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 of the Redevelopment Law. See "THE AGENCY - Low and Moderate Income Housing," "THE PROJECT AREA - Outstanding Indebtedness of the Project Area," "FINANCIAL INFORMATION . Tax Increment Revenues" and "BONDHOLDERS' RISKS" herein. The Project Area. The Bayfront/Town Centre Project Area (the "Project Area") was created through an amendment of the Redevelopment Plans for the Agency's Bayfront Redevelopment Project and Town Centre Redevelopment Project on July 5,1979. The Bayfront Redevelopment Project component of the Project Area (the "Bayfront Redevelopment Project") was created in 1974 and is comprised of 637 acres between the City's north and south boundaries, bounded by Interstate 5 to the east and the San Diego bay to the west. The Agency amended the Bayfront Project Area in 1999 to add 398 acres to the Project Area (the "Bayfront Amended Area"). The Town Centre Redevelopment Project component of the Project Area (the "Town Centre Redevelopment Project") was created in 1976 and comprises approximately 138 acres in the City's central business district. See "THE PROJECT AREA" herein The Bonds are special obligations of the Agency. The Bonds do not constitute a debt or liability of the City of Chula Vista, the County of San Diego, the State of California or of any political subdivision thereof, other than the Agency. The Agency shaIl only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and credit nor the taxing power of the City of ChuIa Vista, the County of San Diego, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no taxiug power. Purpose The Bonds are being issued to (i) refinance certain obligations of the Agency, (ii) satisfY the Reserve Requirement for the Bonds and (iii) provide for the costs of issuing the Bonds. See "THE FINANCING PLAN" herein. Tax Exemption In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Bond Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item oftax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, the interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See "LEGAL MATTERS - Tax Exemption" herein. 2 4-79 Professional Services The legal proceedings relating to the issuance of the Bonds are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Ann Moore, City Attorney and by Stradling Yocca Carlson & Rauth, a Professional Corporation, as Disclosure Counsel. U.S. Bank National Association, serves as Trustee under the Indenture. The Trustee will act on behalf of the Bondholders for the purpose of receiving all moneys required to be paid to the Trustee, to allocate, use and apply the same, to hold, receive and disburse the Tax Revenues and other funds held under the Indenture, and otherwise to hold all the offices and perfonn all the functions and duties provided in the Indenture to be held and perfonned by the Trustee. Harrell & Company Advisors, LLC (the "Financial Advisor") advised the Agency as to the financial structure and certain other financial matters relating to the Bonds. The Agency's audited general purpose financial statements for the fiscal year ended June 30, 2005, attached hereto as "APPENDIX C" have been audited by Caporicci & Larson, Certified Public Accountants, Costa Mesa, California. The Agency's audited [mancial statements are public documents and are included within this Official Statement without the prior approval of the auditor. Accordingly, the auditor has not perfonned any post-audit of the financial condition of the Agency. Offering of the Bonds Authority for Issuance. The Bonds are to be issued and secured pursuant to the Indenture, as authorized by Resolution No. of the Agency adopted on ,2006 and the Redevelopment Law. Offering and Delivery of the Bonds. The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Bond Counsel. It is anticipated that the Bonds, in book-entry fonn, will be available for delivery through the facilities of The Depository Trust Company on or about August 3, 2006. See "APPENDIX G - BOOK-ENTRY-ONLY SYSTEM." Information Concerning this Official Statement This Official Statement speaks only as of its date. The infonnation set forth herein has been obtained by the Agency with the assistance of the Financial Advisor from sources other than the Agency which are believed to be reliable and such infonnation is believed to be accurate and complete, but such infonnation is not guaranteed as to accuracy or completeness, nor has it been independently verified and is not to be construed as a representation by the Financial Advisor or the Disclosure Counsel. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended as such and are not to be construed as representations offact. Preliminary Official Statement Deemed Final. The information set forth herein is in a fonn deemed final, as of its date, by the Agency for the purpose of Rule 15c2- 12 under the Securities Exchange Act of 1934, as amended (except for the omission of certain infonnation pennitted to be omitted under the Rule). The infonnation herein is subject to revision, amendment and completion in a Final Official Statement. The infonnation and expressions of opinion herein are subject to change without notice and the delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the infonnation or opinions set forth herein or in the affairs ofthe Agency since the date hereof. 3 4-80 Availability of Legal Documents. The summaries and references contained herein with respect to the Indenture, the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of the documents described herein are available for inspection during the period of initial offering of the Bonds at the offices of the Financial Advisor. Copies of these documents may be obtained after delivery of the Bonds at the trust office of the Trustee, U.S. Bank National Association, 633 West Fifth Street, 24"' Floor, Los Angeles, California, 90017 or nom the Agency at 276 Fourth Avenue, Chula Vista, California 91910. 4 4-81 THE BONDS General Provisions Repayment of the Bonds. Interest on the Bonds is payable at the rates per annum set forth on the inside front cover page hereof. Interest on the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months. Interest on the Bonds shall be payable commencing March I, 2007 and each September I and March I (each an "Interest Payment Date,") next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, or made available for payment. Interest shall be paid on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten (10) days prior to such special record date. Transfer or Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred or exchanged, pursuant to the provisions of the Indenture, upon surrender of such Bond for cancellation at the principal corporate trust office or agency of the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the Trustee shall authenticate and deliver a new Bond or Bonds for a like aggregate principal amount and of like maturity. The Trustee may require the Bondholder requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. Transfer or exchange of any Bond shall not be permitted by the Trustee during the period established by the Trustee for selection of Bonds for redemption or if such Bond has been selected for redemption. Book-Entry Only System. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by wire of the Trustee to DTC which will in turn remit such interest and principal to DTC Participants (as defined herein), which will in turn remit such interest and principal to Beneficial Owners (as defined herein) of the Bonds (see "APPENDIX G - BOOK-ENTRY-ONLY SYSTEM" herein). As long as DTC is the registered owner of the Bonds and DTC's book-entry method is used for the Bonds, the Trustee will send any notices to bondholders only to DTC. Discontinuance of Book-Entry System. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered as described in the First Supplement. The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered as described in the First Supplement. In addition, the following provisions shall apply: interest on the Bonds will be paid on each Interest Payment Date by check of the Trustee mailed on such Interest Payment Date by first class mail, to the person appearing on the registration books of the Trustee as the Owner thereof as of the close of business on the preceding Record Date, at such Owner's address as it appears on the registration books of the Trustee; provided however, that at the written request of the Owner of Bonds in an aggregate principal amount of at least 5 4-82 $1,000,000, which request is on file with the Trustee as of any Record Date, interest with respect to such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account within the United States of America as shall be specified in such request. The principal and prepayment price represented by any Bond at maturity or upon prepayment will be payable upon presentation and surrender of such Bond at the Office of the Trustee in Los Angeles, California, or at such place as may be designated by the Trustee. Redemption Optional Redemption. The Bonds maturing on or before September 1, 2016, shall not be subject to optional redemption prior to their respective maturities. The Bonds maturing on or after September I, 2017 shall be subject to redemption in whole, or in part among such maturities as shall be determined by the Agency, and in any case by lot within a maturity, at the option of the Agency, on any date on or after September I, 2016, at the option of the Agency from any available source of funds, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest to the date of redemption, without premium. Notice of Redemption. The Trustee on behalf and at the expense of the Agency shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, at least thirty (30) but not more than sixty (60) days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Additionally, on the date on which the notice of redemption is mailed to the Owners of the Bonds pursuant to the provisions above, such notice of redemption shall be given by (i) first class mail, postage prepaid, (ii) confirmed facsimile transmission, or (ili) ovemight delivery service to the Agency, to each of the Securities Depositories and to one or more of the Information Services as shall be designated in writing by the Agency to the Trustee. Rescission. The Agency shall have the right to rescind any optional redemption by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Agency and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. Effect of Redem ption. From and after the date fixed for redemption, if notice ofredemption shall have been duly mailed and funds available for the payment of the principal of and interest on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. Partial Redemption. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Agency shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. 6 4-83 Scheduled Debt Service on the Bonds The following is the scheduled annual Debt Service on the Bonds. Bond Year Ending Sentember 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total PrinciDal Interest Annual Debt Service 7 4-84 THE FINANCING PLAN The Agency has previously issued its $14,810,000 Bayfront/Town Centre Redevelopment Project 1994 Senior Tax Allocation Refunding Bonds, Series A (the "1994A Bonds") and $5,680,000 Bayfront/Town Centre Redevelopment Project 1994 Senior Tax Allocation Refunding Bonds, Series 0 (the "19940 Bonds") pursuant to an Indenture of Trust dated as of November I, 1994 by and between the Agency and U.S. Bank National Association, successor-in-interest to First Interstate Bank of California (the "1994 Senior Bonds Indenture"). In addition, the Agency has previously issued its $8,195,000 Bayfront/Town Centre Redevelopment Project 1994 Subordinate Tax Allocation Refunding Bonds, Series C (the "1994C Bonds") pursuant to an Indenture of Trust dated as of November I, 1994 by and between the Agency and U.S. Bank National Association, successor-in-interest to First Interstate Bank of California (the "1994 Subordinate Bonds Indenture," and together with the 1994 Senior Bonds Indenture, the "1994 Indentures"). As of the Delivery Date, $12,590,000 aggregate principal amount of I 994A Bonds remains outstanding, $4,945,000 aggregate principal amount of 19940 Bonds remains outstanding and $6,855,000 aggregate principal amount of I 994C Bonds remains outstanding. Concurrent with the delivery of the Bonds, the Agency will issue the Senior Bonds in the principal amount of$13,500,000'. On the Delivery Date, a portion of the proceeds of the Bonds and the Senior Bonds, together with certain other funds, will be deposited in trust with, as escrow holder (the "Escrow Bank") pursuant to the Indenture and an Escrow Agreement dated as of July 1, 2006, between the Agency and the Escrow Bank (the "Escrow Agreemenf'). The deposit will be in an amount sufficient to pay principal and interest on the 1994A Bonds and the 19940 Bonds through and including September 1,2006, to pay the redemption price of the I 994A Bonds and 19940 Bonds remaining outstanding on September I, 2006, to pay principal and interest on the 1994C Bonds through and including November 1,2006 and to pay the redemption price of the 1994C Bonds remaining outstanding on November 1,2006. As a result of the deposits, the lien of the 1994A Bonds, the 19940 Bonds and 1994C Bonds created by the 1994 Indentures, including, without limitation, the pledge of the Tax Revenues to repay the I 994A Bonds, the 19940 Bonds and 1994C Bonds, will be discharged, terminated and of no further force and effect upon the deposit with the Escrow Bank of the amounts required pursuant to the Escrow Agreement. · Preliminary, subject to change. 8 4-85 Estimated Sources and Use of Funds The Trustee will receive the proceeds from the sale of the Bonds and the Senior Bonds and, together with other finds received, will apply them as shown below. Sources of Funds The Bonds The Senior Bonds Par Amount Funds held for the 1994 Bonds Total Sources Use of Funds Transfer to Escrow Bank Original Issue Discount Underwriter's Discount Costs oflssuance Fund (1) Reserve Account Total Uses (1) Expenses include fees and expenses of Bond Counsel, the Financial Advisor, Disclosure Counsel and the Trustee, rating fees and bond insurance premiums with respect to the Senior Bonds, costs of printing the Official Statement, and other costs of issuance of the Bonds. 9 4-86 . SOURCES OF PAYMENT FOR THE BONDS Tax Allocation Financing The Redevelopment Law and the California Constitution provide a method for financing and refinancing redevelopment projects based upon an allocation of taxes collected within a redevelopment project area. First, the assessed valuation of the taxable property in a project area, as last equalized prior to adoption of the redevelopment plan, is established and becomes the base roll. Thereafter, except for any period during which the assessed valuation drops below the base year level, the taxing agencies, on behalf of which taxes are levied on property within the project area, will receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes on property and must look specifically to the allocation oftaxes as indicated above. Tax Revenues As provided in each of the Redevelopment Plans for the constituent project areas, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law, and Section 16 of Article XVI of the Constitution of the State, taxes levied upon taxable property in the Redevelopment Projects each year by or for the benefit of the State, for cities, counties, districts or other public corporations (collectively, the "Taxing Agencies") for fiscal years beginning after the effective date of each constituent Redevelopment Plan, will be divided as follows: I. To Taxing Agencies: The portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of said Taxing Agencies upon the total sum of the assessed value of the taxable property in the project area as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized prior to the establishment of the project area will be allocated to, and when collected will be paid into, the funds ofthe respective Taxing Agencies as taxes by or for said Taxing Agencies; and 2. To the Agencv: The portion of such levied taxes each year in excess of such amount will be allocated to, and when collected, will be paid into a special fund of the Agency to the extent necessary to pay indebtedness of the Agency, including but not limited to its obligation under the respective Indenture, to pay the principal of, prepayment premium (if any) and interest on the Bonds and to replenish the Reserve Account established under the respective Indenture. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to Taxing Agencies having the effect of reducing the property tax rate could reduce the amount of Tax Revenues that would otherwise be available to pay the Agency's obligations under the Indenture and thus reduce the amount of Tax Revenues available to pay the principal of and Interest on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See "BONDHOLDERS' RISKS" and "FINANCIAL INFORMATION - Tax Increment Revenues" herein. 10 4-87 Pledge of Tax Revenues The Tax Revenues are pledged to the payment of principal of and interest on the Bonds pursuant to the Indenture until the Bonds and any Parity Debt have been paid, or until moneys have been set-aside irrevocably for that purpose on a basis subordinate to the Senior Bonds. The Trustee will covenant to exercise such rights and remedies as may be necessary to enforce the payment of the Tax Revenues when due under the Indenture, and otherwise to protect the interests of the Bondholders in the event of default by the Agency. The Bonds are limited obligations of the Agency. The Bonds do not constitute a debt or liability of the City of Chula Vista, the State of California or of any political subdivision thereof, other than the Agency. The Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and credit nor the taxing power of the City of Chula Vista, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no taxing power. The Agency has irrevocably granted a pledge of, lien on, and security interest in the Tax Revenues for the repayment of the Bonds on a basis subordinate to the pledge and lien on the Tax Revenues of the Senior Bonds. Tax Revenues consist of all of the Tax Increment Revenues allocated to the Project Area excluding (i) amounts required to be deposited in the Agency's low and moderate income housing fund pursuant to Section 33334.3 of the Redevelopment Law and (ii) amounts payable by the State pursuant to Section 16112.7 of the Government Code and (iii) amounts required to be paid pursuant to the Tax Sharing Statutes, as defined herein unless subordinated to the payment of debt service on the Bonds. Tax Increment Revenues consist of tax increment revenues receivable by the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 of the Redevelopment Law. See "THE PROJECT AREA - Outstanding Indebtedness of the Project Area," ''THE AGENCY - Low and Moderate Income Housing," "FINANCIAL INFORMATION - Tax Increment Revenues" and "Tax Sharing Statutes," and "BONDHOLDERS' RISKS" herein. Reserve Account A Reserve Account for the Bonds has been funded under the Indenture to be held by the Trustee to further secure the timely payment of principal and Interest on the Bonds. The amount required to be maintained in the Reserve Account for the Bonds is the least of (i) 10% of the original proceeds (within the meaning of section 148 of the Code) of the Bonds, (ii) 125% of the average Annual Debt Service for that and every subsequent Bond Year, or (iii) Maximum Annual Debt Service (the "Reserve Requirement"). The Indenture provides that in lieu of a cash deposit, the Agency may satisfy all or a portion of a Reserve Requirement by means of a Qualified Reserve Account Credit Instrument (see "APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" herein). Issuance of Additional Debt Parity Debt. The Agency may issue or incur additional Parity Debt on a parity with the Bonds subject to the following specific conditions. (a) The Agency shall be in compliance with all covenants set forth in the Indenture, and all Supplemental Indentures. (b) The Tax Revenues estimated to be received for the then current Bond Year shall be at least equal to 120% of Maximum Annual Debt Service on all Bonds and any existing Parity Debt which will be Outstanding immediately following the issuance of such additional Parity Debt. (c) The Supplemental Indenture providing for the issuance of such additional Parity Debt shall provide that interest thereon shall not be payable on any dates other than March I and September 11 4-88 I, and principal thereof shall be payable on September I in any year in which principal is payable. (d) The Supplemental Indenture providing for the issuance of such additional Parity Debt shall provide for the deposit into the Reserve Account of an amount required to cause the balance therein to equal the full amount of the Reserve Requirement (which may be maintained in whole or in part in the form of a Qualified Reserve Account Credit Instrument). (e) The issuance of such additional Parity Debt shall not cause the Agency to exceed any applicable Plan Limit. (I) The Agency shall deliver to the Trustee and the Bond Insurer a Certificate of the Agency certifying that the conditions precedent to the issuance of such additional Parity Debt set forth in the foregoing paragraphs (a), (b), (c), (d) and (e) have been satisfied. Subordinate Debt. If the Agency is in compliance with all covenants set forth in the Indenture, the Agency may for any purpose issue or incur obligations having a lien on the Tax Revenues which is subordinate to the pledge of the Tax Revenues to the Bonds. 12 4-89 THE AGENCY Government Organization The Agency is a public body, corporate and politic, existing under and by virtue of the California Community Redevelopment Law, being Part I of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). The Agency was activated in 1972, and is governed by a five-member board (the "Agency Board") which consists of all members of the City Council. The Chairman and Vice Chairman are appointed to a one-year term by the Agency Board from among its members. The Agency's members and term expiration dates are as follows: AGENCY GOVERNING BOARD Board Member Stephen C. Padilla, Mayor and Chairman Steve Castaneda, Councilmember Patricia E. Chavez, Councilmember John McCano, Councilmember Jerry Rindone, Councilmember Term Exoires December 2006 December 2008 December 2006 December 2006 December 2008 The City performs certain general administrative functions for the Agency and the Chula Vista Redevelopment Corporation (see "The Chula Vista Redevelopment Corporation" below). The City Manager serves as the Agency's Executive Director, the City's Director of Community Development serves as the Agency's Secretary and the City's Finance Director serves as Agency's Treasurer. The costs of such functions, as well as additional services performed by City staff are allocated anoually to the Agency. The Agency reimburses the City for such allocated costs out of available Tax Increment Revenues. Such reimbursement is subordinate to any outstanding bonds, loans and other indebtedness of the Agency. Current City Staff assigned to administer the Agency and the Chula Vista Redevelopment Corporation include: David D. Rowlands, Jr., City Manager Laurie A. Madigan, Assistant City Manager Special Projects David Palmer, Assistant City Manager Community Services Dana Smith, Assistant City Manager Development Services/Director of Community Development Jim Thomson, Assistant City Manager Administrative Services Maria Kachadoorian, Director of Finance/Treasurer Ann Moore, City Attorney Susan Bigelow, City Clerk Agency Powers All powers of the Agency are vested in its members. Pursuant to the Redevelopment Law, the Agency is a separate public body and exercises governmental functions, including planning and implementing of the Project Area. The Agency may exercise the right to issue or incur loans, advances or other indebtedness for authorized purposes and to expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency may demolish buildings, clear land and cause to be constructed certain improvements, including streets, sidewalks and utilities, and can further prepare for use as a building site any real property which it owns or administers. 13 4-90 The Agency may, ti-om any funds made available to it for such purposes, and subject to certain conditions, pay for all or part of the value of land and the cost of buildings, facilities or other improvements to be publicly owned and operated. The Agency may not construct or develop buildings, with the exception of public buildings and housing, and must sell or lease cleared property which it acquires within a redevelopment project for redevelopment in conformity with a particular redevelopment plan, and may further specifY a period within which such re development must begin and be completed. The Chula Vista Redevelopment Corporation Tbe City formed the Chula Vista Redevelopment Corporation (the "Corporation") on June 15,2005. The Corporation is a 501c3 Public Benefit Corporation, whose board of directors consists of the Mayor, Mayor Pro Tem, the three remaining City Council Members, and four members of the public meeting certain criteria for selection. The Corporation was formed to focus the City's redevelopment activities in certain areas, and carry out all City plarming and zoning activities within such areas, including plarming commission responsibilities and functions, design review committee responsibilities and functions and enviromnental review commission responsibilities and functions. The City Manager, the City's Director of Financerrreasurer and the City's Director of Community Development serve as Chief Executive Officer, Chief Financial Officer and Secretary of the Corporation respectively. Redevelopment Plans Under the Redevelopment Law the governing board is required to adopt, by ordinance, a redevelopment plan for each redevelopment project. A redevelopment agency may only undertake those activities within a redevelopment project specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the Redevelopment Law rather than a "plan" in the customary sense of the word. The general objectives of the Agency's Redevelopment Plans for the component areas of the Project Area are to encourage investment in the Project Area by the private sector. The Project Area provides for the acquisition of property, the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plans also allow the redevelopment of land by private enterprise, the rehabilitation of structures, the rehabilitation or construction of low and moderate income housing, and participation by owners and the tenants of properties in the Project Area. The City Council approved and adopted the Redevelopment Plan for the Bayti-ont Redevelopment Project on July 16, 1974, pursuant to Ordinance No. 1541. It was subsequently amended on July 17, 1979 to merge it with the Town Centre Redevelopment Project. The Redevelopment Plan was also amended on April 22, 1986 to include certain financial limitations, again on January 4, 1994 and November 8, 1994 to add limitations prescribed by AB 1290 (see "Plan Limitations" below), on July 7, 1998 to include additional territory (the "Bayti-ont Amended Area") and amend financial limits, on January 13, 2004 to eliminate the time limit on establishing debt and on January 27, 2004 to extend the duration of the Redevelopment Plan. The City Council approved and adopted the Redevelopment Plan for the Town Centre Redevelopment Project on July 6, 1976, pursuant to Ordinance No. 1691. It was subsequently amended on July 17, 1979 to merge it with the Bayftont Redevelopment Project, on April 22, 1986 to include certain financial limitations, on January 4,1994 and November 8,1994 to add limitations prescribed by AB 1290, on July 7, 1998 to amend financial limits, on January 13,2004 to eliminate the time limit on establishing debt and on January 27, 2004 to extend the duration of the Redevelopment Plan (see "Plan Limitations" below). 14 4-91 Plan Limitations The Redevelopment Plans for the constituent redevelopment projects impose certain limitations on the amount of Tax Increment Revenues that the Agency may be allocated from such constituent redevelopment projects. In 1993, the State Legislature adopted Assembly Bill 1290 (AB 1290), which imposed certain time limitations on (I) the allocation of Tax Increment Revenues to a redevelopment project, (2) the effectiveness of a redevelopment plan and (3) the incurrence of debt. Prior to subsequent changes, Section 33333.6 of the Redevelopment Law provided that a redevelopment agency may not pay indebtedness or receive property taxes pursuant to Section 33670 of the Redevelopment Law after ten years from the termination of the effectiveness of a redevelopment plan (which was limited to the later of January I, 2009 or 40 years after the adoption of such redevelopment plan). In 1998, the State Legislature adopted Assembly Bill 1342 (AB 1342), which allowed redevelopment agencies to extend plan limitations to such maximum terms without having to comply with the statutory plan amendment process if such agency's existing plan limits were shorter. In 2002, the State Legislature adopted Senate Bill 211 (SB 211), allowing the elimination of the Agency's time limitation on incurring debt. More recently, Senate Bill 1045 (SB 1045) and subsequent Senate Bill 1096 (SB 1096) provided that the governing body could adopt an ordinance to extend the limits on the termination of redevelopment plans approved prior to 1994 and the authority to collect Tax Increment Revenues by one additional year each time the Agency was required to make a payment to ERAF in fiscal years 2003/04, 2004/05 and 2005/06 (see "BONDHOLDERS' RISKS - State of California Fiscal Issues" herein). Even though the constituent redevelopment projects have been merged, the limitations established with respect to a constituent redevelopment project continue to apply to such constituent redevelopment project, except with respect to the limitation on the maximum Tax Increment Revenues and on maximum outstanding bonded indebtedness as described below. The limitations imposed by the respective Redevelopment Plans are as follows: Last Date to Collect Total Tax Increment Proiect Area Plan EXDiration Date Tax Increment Limitation Bayftont: Original Area July 16,2015 July 16, 2025 $210,000,000 Amended Area July 7, 2029 June 23 2044 N/A Town Centre July 6, 2017 July 6, 2027 $84,000,000 The maximum bonded indebtedness for the Project Area, with the exception of the Bayfront Amended Area, which has no limit, is $50,000,000. The Agency has eliminated the limits in each Redevelopment Plan on incurrence of debt in accordance with SB 211, but has not yet adopted any extensions on plan limits pursuant to SB 1096. Low and Moderate Income Housing In 1976, the Redevelopment Law was amended to require that for every redevelopment plan adopted after January I, 1977, or any area which is added to a redevelopment project by an amendment to a redevelopment plan after January I, 1977, not less than twenty percent (20%) of Tax Increment Revenues must be set aside annually for the purpose of increasing and improving the community's supply of low and moderate income housing available at affordable housing costs to persons and families of very low, low or moderate income households. In 1985, the Redevelopment Law was further amended to add substantially the same requirements with respect to plans adopted prior to January I, 1977. No portion of the Tax Increment Revenues required to be set aside for low and moderate income housing is available to pay debt service on the Bonds. 15 4-92 THE PROJECT AREA Description of the Project Area The Project Area is comprised of the Agency's Bayfi-ont Redevelopment Project and Town Centre Redevelopment Project. The relative acreage fi-om each of the constituent redevelopment projects comprising the Project Area is shown below: Original Bayfi-ont Area Bayfi-ont Amended Area Town Centre 637 Acres 398 Acres 138 Acres 1,173 Acres As noted above, the Agency has a different limit on the time to collect Tax Revenues fi-om each separate area. See "BONDHOLDERS' RISKS - Plan Limitations" herein. Tbe Bayfront Redevelopment Project. The Original Bayfi-ont Redevelopment Project, formed in 1974, is comprised of 637 acres of property located between Interstate 5 and the mean high tide line along the Chula Vista Bayfi-ont. The Bayfi-ont Amended Area was created in 1998 and encompasses 398 acres of property west of the mean high tide line to the water line. Of the total property in the Bayfront Redevelopment Project, 45 acres are developed with a marina, and 513 acres are designated the Sweetwater Marsh National Wildlife Refuge. The goal of the Agency is to encourage development along the City's bayfi-ont while maintaining recreational access to the waternont. The Unified Port District of San Diego (the "Port District") administers 420 acres of state public tidelands within the Bayfi-ont Redevelopment Project under a Tidelands Trust that guides how the land is to be used. The Port District and the City have entered into a joint venture to work together on developing the waternont under the Chula Vista Bayfi-ont Master Plan ("CVBMP"). The objectives of the CVBMP are to create an active commercial harbor with public space at the water's edge, redevelop underutilized and vacant areas on Port tidelands, provide a continuous shoreline pedestrian walkway, and establish ecological buffers to protect environmentally sensitive resources. After much public participation in the plan development, the environmental impact report ("EIR") for the CVBMP is now in process. Once the EIR is complete, public hearings will be scheduled to receive public comment. The CVBMP must also be approved by the State Lands Commission and the California Coastal Commission. Since the Port and the Agency would like residential development to occur in the Bayfi-ont area, they also need approval by those two commissions, since residential development is not a permitted use for the tidelands controlled by the Port. With the permission of the State Lands Commission, Pacifica Companies, a residential developer that already owns 128 acres of property adjacent to the tidelands, could substitute such property for a like amount of tidelands property so that the proposed residential development could occur. Overall, if approved by all agencies, the CVBMP contemplates development of 1,700 condominiums, a 1,500 to 2,000 room resort hotel and adjacent 400,000 square foot conference facility, over 200 acres of open space including a signature City park, 570,000 square feet of retail and other development, office space, and a new marina with 1,000 boat slips. The City and the Port will also need to invest in needed infi-astructure and public improvements to support the developments. The largest development that has occurred in the Original Bayfi-ont Redevelopment Project is the completion of a 245,000 square foot BF Goodrich corporate headquarters, called the North Campus. This taxpayer accounts for 36% of the total assessed value of the Project Area. The facility was completed in _ and consolidated aviation and industrial manufacturing operations that had been spread across 83 acres and 63 buildings in the Original Bayfi-ont Redevelopment Project. The Port has commenced with demolition of the 63 blighted industrial buildings, which had a 2005/06 tax roll value of$ 16 4-93 The South Bay Power Plant (the "Power Plant") is also located in the Original Bayuont Redevelopment Project, on 150 acres leased uom the Port District. The Power Plant ineludes four steam-powered generation turbines, an electrical switching station, above ground fuel storage tanks, a formed liquefied natural gas facility and extensive open areas to the north and south. The Port District has a lease agreement for the facility with LSP South Bay, LLC, a subsidiary of LS Power Group. LSP South Bay, LLC acquired the Power Plant uom Duke Energy on May 4, 2006. The lease is set to expire in 20 I 0 dependent upon the status of the "Reliability Must Run" designation imposed by the State. The Power Plant is to be dismantled at the end of the lease term, which is predicated on the removal of the Reliability Must Run designation. The City and the Port District have supported the concept of building a newer, eleaner, more efficient power plant on Port District property near the existing Power Plant (but most likely outside the boundaries ofthe Project Area) as a means to assure that the Reliability Must Run status will be removed uom the Power Plant and it can be decommissioned and dismantled. The dismantling of the Power Plant is an integral part of the CVBMP. The tax roll is already reflecting a reduction in assessed value of the Power Plant as the end of the lease term gets closer. The chart below details the assessed value of the Power Plant over time. Year 2002/03 2003/04 2004/05 2005/06 Assessed Value $102,736,000 57,579,000 60,194,000 51,893,000 The Agency anticipates that the value of the Power Plant will decline by 25% each year until the final year of the existing lease, at which time all value associated with the Power Plant will be eliminated uom the tax roll. The Town Centre Redevelopment Project. The Town Centre Redevelopment Project is an area of approximately 138 acres encompassing the City's central business district. The Town Centre Redevelopment Project is urbanized and developed with a mix of public and private uses. Such uses include the San Diego South County Superior and Municipal Court Complex, the Norman Park Senior Center, Memorial Park as well as a variety of commercial office space, retail, retail service and residential uses. The Agency is in the process of developing an Urban Core Specific Plan which encompasses development in the Town Centre Redevelopment Project as well as surrounding areas. The Urban Core has three components - "The Villages," to be developed with additional multi-family housing, "The Boulevard," which is the primary commercial corridor, and "The Promenade," a pedestrian-oriented retail area. Renewed developer interest in the City's urban core has brought the first upscale Class A office development to the downtown marketplace. The Gateway Chula Vista project will be developed in three phases, the first of which was completed in 2002. The first phase consists of 149,000 square feet of office with ground floor retail and a four-level parking structure. The second phase of 105,000 square feet and second parking structure was completed in April 2006. The final phase is anticipated to contain 93,000 square feet with construction commencing July 2006. This major mixed-use project anchors the southern entry into Downtown Chula Vista, and the Gateway project's two five-story and one six-story office building are designed specifically for high tech office use, with ground floor retail. The second phase is expected to add $21,000,000 to the 2007/08 tax roll and the third phase is expected to add $18,600,000 to the 2009/10 tax roll. 17 4-94 In addition to this major project, many infiIl projects are proposed in the Town Centre Redevelopment Project. On the southeast comer of 3,4 and E Street, a mixed use residential development comprised of approximately 85 residential units and 6,000 square feet of retail on an 11,500 square foot lot is proposed by Avion. It is estimated that construction of this project could commence in January 2007 and be completed within 18 months. Estimated value at the time of completion is $30.35 million. At the intersection of 3,4 and G Street, the Agency anticipates a mixed use commercial development proposed to contain approximately 150 residential units and 15,000 square feet of retail space on a 41,000 square foot site could be under development as early as December 2006. Estimated value at the time of completion is $54 million and the development is anticipated to be complete in December 2007. Intergulf-Mar is the developer of this project. CityMark is proposing to build approximately 120 condominiums along Landis and Douglas Wilson is proposing to build another 35 units along Church. Estimated value at the time of completion of both projects is $54.25 million, based on an average sale price of $350,000 per unit. Completion of these housing projects is expected to occur in mid-2008. Assessed Valuations Assessed value of the constituent project areas comprising the Project Area between fiscal years 2001102 and 2005/06 are shown in the tables below. TABLE NO.1 ORIGINAL BAYFRONT REDEVELOPMENT PROJECT HISTORICAL ASSESSED VALUATIONS AND TAX INCREMENT REVENUES 2001102 through 2005/06 200 I /02 2002/03 2003104 2004/05 2005/06 State Assessed (I) $ 88,500 $ 80,513 $ 57,579,396 $ 60,282,256 $ 51,892,582 Secured (1) 196,706,307 320,843,655 218,107,587 202,238.967 203,441,607 Unsecured 108984214 22010 429 6678731 4363477 4921 464 Total (2) $305,779,021 $342,934,597 $282,365,714 $266.884,700 $260,255,653 Less: Base year ( 187 648 628) (187648628) ( 187 648 628) (187648628) (187 648 628) Incremental Increase $][8,130,393 $155,285,969 $ 94,717,086 $ 79,236,072 $ 72,607,025 Tax Rate 1.009425% 1.007468% 1.006682% 1.005616% 1.005081 % Tax Increment Revenues $ 1,192,438 $ 1,564,457 $ 953,500 $ 796,811 $ 729,759 Unitary Revenues (3) 737954 703 162 1 335 057 I 351 039 I 358 970 Total Tax Revenues (4) $ 1910392 $ 2267619 $ 2 2RR 'j'j7 $ 2147 R:'50 $ 2 ORR 719 Source: San Diego County Auditor-Controller. (I) The value of the Power Plant was included in the secured tax roll value prior to 2003/04. (2) Taxable Valuation at 100% of Assessor's Market Value, as of August 20 equalized roll. (3) See "FINANCIAL INFORMATION - Tax Increment Revenues - Unitary Property" herein for a discussion of the method of allocating Unitary Revenues. (4) The "Total Tax Revenues" are based on data furnished by the San Diego County Auditor-Controller's Office. Actual Tax Increment Revenues received vary from Total Tax Revenues shown herein because of supplemental taxes, appeals or refunds, deductions for delinquencies and tax-sharing statutes and administrative charges by the County. 18 4-95 TABLE NO.2 BAYFRONTAMENDED AREA REDEVELOPMENT PROJECT HISTORICAL ASSESSED VALUATIONS AND TAX INCREMENT REVENUES 2001102 through 2005/06 2001/02 2002/03 2003104 2004/05 2005/06 Secured $ 36,141,469 $ 36,036,600 $ 34,004,113 $ 36,614,166 $ 37,433.140 Unsecured 18722 215 21 380926 21314709 23 953 992 24 844 436 Total (2) $ 54,863,684 $ 57,417,526 $ 55,318,822 $ 60,568,158 $ 62).77,576 Less: Base year (43834980) (43834980) (43 834980) (43834 980) (43 834 9801 Incremental Increase $ 11 ,028,704 $ 13,582,546 $ 11 ,483,842 $ 16,733,178 $ 18,442.5% Tax Rate 1.009158% 1008125% 1.007267% 1.006444% 1.0055891'/0 Tax Increment Revenues $ 111).97 $ 136,929 $ 115,673 $ 168,410 $ 185,457 Unitary Revenues (3) 158 150 221 223 225 Total Tax Revenues (4\ $ 1114:'i'i $ 117079 $ 115894 $ 168/133 $ '85682 Source: San Diego County Auditor-Controller. See footnotes following Table No.1. TABLE NO.3 TOWN CENTRE REDEVELOPMENT PROJECT HISTORICAL ASSESSED VALUATIONS AND TAX INCREMENT REVENUES 2001/02 through 2005/06 2001/02 2002103 2003104 2004/05 2005/06 Secured $114.629,075 $124,721,541 $145,423,308 $155,900,245 $175,586,050 Unsecured 26 130 337 17 907486 25418173 25 253 645 23507591 Total (2) $140,759.412 $142,629,027 $170,841,481 $181,153,890 $199,093,641 Less: Base year (21 227 600) (21 227 600) (21 227600) (21 227 600) (21 227600) Incremental Increase $119,531,812 $121,401,427 $149,613,881 $159,926,290 $177,866,041 Tax Rate 1.008749% 1.007574% 1.006867% 1.005929% 1.005265% Tax Increment Revenues $ 1,205,776 $ 1,223).09 $ 1,506,413 $ 1,608,745 $ 1,788,026 Unitary Revenues (J) 114076 108467 108 197 109 630 110372 Total Tax Revenues (4) $ 1319852 $ 1331676 $ 1614610 $ 171817<; $ 1 898 398 Source: San Diego County Auditor-Controller, See footnotes following Table No.1. 19 4-96 Major Taxpayers Not including the Power Plant, sited on land leased from the Port District and operated by LS Power, the ten largest property taxpayers represent 59.7% of the 2005/06 total assessed value of the Project Area. If the Power Plant is included, the ten largest property taxpayers represent 62.9% of the 2005/06 total assessed value of the Project Area. As discussed above, the Agency anticipates that the value of the Power Plan will be eliminated by 2009. TABLE NO.4 PROJECT AREA TEN LARGEST TAXPAYERS AS A PERCENT OF 2005/06 ASSESSED VALUE Not Including Power Plant %of 2005/06 Assessed Taxnftver Assessed Value Value Proiect Location Land Use Rohr Inc. (dba BF Goodrich) $167,783,109 35.7% Original Bayfront Manufacturing Duke EneIj\Y (now LSP) 0.0% Original BaYITont Energy Generation Gateway Chula Vista I LLC 34,584,362 7.4% Town Centre OfficelRetail Chula Vista Marina RV Park 14,180,878 3.0% Bayfront Amended RV Park Chula Vista Capital 14,003,275 3.0% Original Bayfront Vacant Land EASLLC 9,195,536 2.0"10 Town Centre Retail One Park Apartments LP 8,893,731 1.9% Town Centre Apartments Foster Properties 8,192,498 1.7% Original Bayfron! Warehouses 780 Bay Boulevard 7,966,189 1.7% Original BaYITont Warehouses California Yacht Marina Chula Vista 6,064,525 1.3% Bay&ant Amended Marina Marine Group LLC South Bay Boat 5,417,747 1.2% Bayfron! Amended Industrial Good Nite hm Chula Vista Inc. 4 234 468 0.9% Original Bayfront Hotel Total $280,516,318 59.7% TABLE NO.5 PROJECT AREA TEN LARGEST TAXPAYERS AS A PERCENT OF 2005/06 ASSESSED VALUE Inclnding Power Plant %of 2005/06 Assessed Taxo8ver Assessed Yalue Yalue Proiect Location Land Use Rohr Inc. (dba BF Goodrich) $167,783,109 32.2% Original Bayfront Manufacturing Duke EnOljlY (now LSP) 51,892,582 9.9% Original Bayfront Energy Generation Gateway Chula Vista I LLC 34,584,362 6.6% Town Centre OfficeIRetai1 Chula Vista Marina RV Park. 14,180,878 2.7% Bayfront Amended RV Park Chula Vista Capital 14,003,275 2.7% Original Bayfront Vacant Land EASLLC 9,195,536 1.8% Town Centre Retail One Park Apartments LP 8,893,731 1.7% Town Centre Apartments Foster Properties 8,192,498 1.6% Original Bayfront Warehouses 780 Bay Boulevard 7,966,189 1.5% Original Bayfront Warehouses California Yacht Marina Chula Vista 6,064,525 1.2% Bayfront Amended Marina Marine Group LLC South Bay Boat 5,417,747 1.0% Bayfront Amended Industrial Good Nite Inn Chula Vista Inc. - Original Bayfront Hotel Total $329,766,085 62.9% Source: City of Chula Vista. 20 4-97 Assessment Appeals As of December 2005, Rohr Inc. has an appeal pending for its property in the Original Bayftont Redevelopment Project. Rohr Inc. is seeking a 79% reduction in assessed value of such property to approximately $35 million. Rohr previously filed appeals for the 2002/03 tax year, seeking a 71% reduction ftom the then assessed value of $187,049,496, for the 2003/04 tax year, seeking a 79% reduction ftom the then assessed value of $184,593,505, and for the 2004/05, seeking a 67% reduction ftom the then assessed value of$167,813,961. All prior appeals were withdrawn in February 2005 prior to action by the Appeals Board. For the 2005/06 tax year, there are also appeals pending on 2 parcels in the Town Centre Redevelopment Project with a total assessed value of$742,1 16. Tax Collections The table below represents the collection rates for taxes paid in the year levied in the Project Area. TABLE NO.6 PROPERTY TAX COLLECTIONS 2000/01 2001102 2002103 2003/04 2004/05 Original Bayftont Amended Area Town Centre 98.7% 98.5% 98.5% 98.5% 98.5% 98.5% 98.4% 98.6% 98.6% 98.7% 98.6% 98.8% 99.3% 98.5% 98.5% Source: San Diego County Auditor-Controller. . 21 4-98 Outstanding Indebtedness ofthe Project Area The Agency had the following obligations with respect to the Project Area as of May 5,2006: Original Amount Final Description Issue Outstanding Maturity (I) 1994 Senior Tax Allocation Refunding Bonds, Series A $14,810,000 $12,905,000 2024 (2) 1994 Senior Tax Allocation Refunding Bonds, Series D 5,680,000 4,945,000 2024 (3) 1994 Subordinate Tax Allocation Refunding Bonds, Series C 8,195,000 6,855,000 2024 (4) City Advances N/A (5) 2005 ERAF Loan 765,000 710,000 2015 (6) 2006 ERAF Loan 930,000 930,000 2016 (I) In 1994, the Agency issued its Bay!TontITown Centre Redevelopment Project 1994 Tax Allocation Refunding Bonds, Series A (the "1994A Bonds"). The 1994A Bonds are to be refunded with the proceeds of the Senior Bonds. (2) In 1994, the Agency authorized the issuance of its BayfrontITown Centre Redevelopment Project 1994 Tax Allocation Refunding Bonds, Series D (the "1994D Bonds").The 1994 Bonds were issued in 1996. The 1994D Bonds are to be refunded with the proceeds of the Bonds. (3) In 1994, the Agency issued its Bay!Tont/Town Centre Redevelopment Project 1994 Subordinate Tax Allocation Refunding Bonds, Series C (the "1994C Bonds"). The 1994C Bonds are to be refunded with the proceeds of the Bonds.. (4) The Agency has entered into various promissory notes with the City. Repayment is to be made as funds become available. The City Advances have a lien on the tax increment revenues subordinate to all other indebtedness of the Project Area. (5) and (6) The Agency satisfied its obligation to pay its share ofERAF in both 2004/05 and 2005/06 by borrowing the amounts required through the California Statewide Communities Development Authority. The repayment of each year's loan is payable in 20 approximately equal semi- annual installments. The repayment obligation has no lien on Tax Revenues but is payable on an unsecured basis !Tom any available Agency funds. Source: Agency Annual Financial Report. 22 4-99 Projected Tax Revenues and Debt Service Coverage Receipt of projected Tax Revenues in the amounts and at the times projected by the Agency depends on the realization of certain assumptions relating to the Tax Increment Revenues. The projections of Tax Increment Revenues and the corresponding Tax Revenues from the component areas of the Project Area shown on the following table were based on the assumptions shown below. The Agency believes the assumptions upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circumstances may occur (see "BONDHOLDERS' RISKS"). To the extent that the assumptions are not actually realized, the Agency's ability to timely pay principal of and interest on the Bonds may be adversely affected. Following is a discussion of assumptions used in the projection of Tax Revenues: (a) The 2005/06 secured roll was assumed to increase 2 percent annually for inflation in future years through 2015/I6, with the exception of the secured roll in the Bayfront Redevelopment Project, which is not projected to increase (see "FINANCIAL INFORMATION - Tax Increment Revenues - Manner in Which Property Valuations and Assessments are Determined (Article XIIIA)" herein). [New Development Assumptions/Demo Rohr] (b) The values of unsecured personal property and state assessed utility property and the amount of unitary revenues have been maintained throughout the projections at their 2005/06 levels except that the projected State assessed utility tax roll has been adjusted by $51,893,000 to reflect the anticipated closing of the Power Plant sited on land leased from the Port District and operated by LSP South Bay, LLC (see "THE PROJECT AREA - Major Taxpayers," "FINANCIAL INFORMATION - Tax Increment Revenues - Unsecured and Secured Property" and "Unitary Property" herein). (c) A tax rate of $1.00 per $100 of assessed value applied to the taxable property in the component areas of the Redevelopment Projects was used to determine Tax Increment Revenues (see "FINANCIAL INFORMATION - Tax Increment Revenues - Property Tax Rate" herein). (d) Projected Tax Increment Revenues do not reflect delinquencies (see "FINANCIAL INFORMATION - Tax Increment Revenues" and "THE PROJECT AREA - Tax Collections" herein). (e) Projected Tax Increment Revenues do not reflect any potential decreases resulting from pending assessment appeals or future Proposition 8 adjustments, if any (see "THE REDEVELOPMENT PROJECTS - Assessment Appeals" and "FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments" herein). (f) Projected Tax Revenues include a deduction for administrative costs charged by San Diego County (see "FINANCIAL INFORMATION - Tax increment Revenues - Administrative Costs" herein). (g) Projected Tax Revenues include a deduction for payments due to taxing agencies under applicable Tax Sharing Statutes, to the extent such payments are not subordinate to the Bonds (see "FINANCIAL INFORMATION - Tax Increment Revenues," and "Tax Sharing Statutes" herein). (h) Projected Tax Increment Revenues do not include supplemental property tax revenues which may be received by the Agency. 23 4-100 .\ (oj ~ ~ (oj :>- o u (oj u ~ ~ (oj '" ... ....:! o~ z~ :J~ ='" ~~ z (oj :>- ~ ~ ~ (oj ... u (oj ., ~ ... '0 " " i5. = o " " ..c E 4-101 oJ ~ .., " 3 <oj u :E' " ~ - " " . == e.~ " " .E-" >< ' ~~ ,~ zO<: 0'" -0<: ~9 00 ~~ ....)0 <10 o ~o z" <.3 2;"8 '" > , " 0:.2 " " .3'" " .5.c ,,- 1-0:: l! ~ ~ ""2 g ~ 5 " > ~ " .g..: ~ >< ~~ .g"O .- " :;;t> > " _00' '" ~ ~ '" " " ;;.s ~ " 3-" - t> " " " :E'a " ~ ~ " " ~ :;; gj " 0 > " o ~ ..c.g "'.- " > ~ 8 0'" -">. ~ " ~ " g ~ ,,-< " " >-" ~E- ~-2 ~'o "0 ~ ~~ ,,- " -~ .~" 8 " "'5 ~ ;; E-": ..,. N ~ " :~ ] ... * FINANCIAL INFORMATION Agency Budgetary Process and Administration The Redevelopment Law requires redevelopment agencies to adopt an annual budget containing the following: (I) The proposed expenditures of the agency. (2) The proposed indebtedness to be incurred by the agency. (3) The anticipated revenues of the agency. (4) The work program for the coming year, including goals. (5) An examination of the previous years' achievements and a comparison of the achievements with the goals of the previous years' work program. All expenditures and indebtedness of the Agency are required to be in conformity with the adopted or amended budget. The Executive Director of the Agency is responsible for preparing the proposed budget and submitting it to the Agency. After reviewing the proposed budget at a public meeting, the Agency holds a public hearing. The Agency adopts the budget prior to the start of each fiscal year. The Director of Finance is responsible for controlling expenditures within budgeted appropriations. Agency Accounting Records and Financial Statements Every redevelopment agency is required to present an annual report to its legislative body (being the city council) within six months of the end of each fiscal year. The annual report is required, among other. things, to include an independent financial "audit report" and a fiscal statement for the previous fiscal year. The California Health and Safety Code defines "audit report" to mean an examination of and opinion on the financial statements of the agency which presents the results of the operations and financial position of the agency. The independent financial audit is required to be conducted in accordance with generally accepted auditing standards and the rules governing audit reports promulgated by the Governmental Accounting Standards Board. The independent financial audit report is also required to include an opinion of the agency's compliance with laws, regulations and administrative requirements governing activities of the agency. The Redevelopment Law requires the fiscal statement to contain the following information: (I) The amount of outstanding indebtedness of the agency and each project area. (2) The amount of tax increment revenues generated in the agency and in each project area. (3) The amount of tax increment revenues paid to a taxing agency pursuant to a tax sharing agreement, other than school or community college district. (4) The financial transactions report required to be submitted to the State Controller. (5) The amount allotted to school or community college districts pursuant to the Redevelopment Law. (6) The amount of existing indebtedness and the total amount of payments required to be paid on existing indebtedness for that fiscal year. 25 4-102 (7) Any other fiscal information which the agency believes is useful to describe its programs. In addition, the annual report is required to include detailed information regarding the Agency's housing program to assist low and moderate income households and deposits and expenditures trom the Low and Moderate Income Housing Fund required pursuant to the Redevelopment Law. The Indenture requires the Agency to keep, or cause to be kept, proper books and accounts separate trom all other records and accounts of the Agency and the City in which complete and correct entries are made of all transactions relating to the Tax Revenues. The Indenture requires the Agency to file with the Trustee annually, within 180 days after the close of each fiscal year, so long as any of the Bonds are Outstanding, its audited financial statements showing the Tax Revenues and all disbursements trom the Special Fund as of the end of such fiscal year. Tbe Agency covenants under the Indenture to furnish a copy of such statements upon reasonable request to any Bondholder. Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. GASB No. 34. The Governmental Accounting Standards Board (GASB) published its Statement No. 34 "Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments" on June 30, 1999. Statement No. 34 provides guidelines to auditors, comptrollers, and financial officers on requirements for financial reporting for all governmental agencies in the United States. Retroactive reporting is required four years after the effective date on the basic provisions for all major general intrastructure assets that were acquired or significantly reconstructed, or that received significant improvements, in fiscal years ending after June 30, 1980. The Agency was required to implement the provision of GASB 34 for the fiscal year ending June 30, 2003. The Agency retained the firm of Lance, Caporicci & Larson, Certified Public Accountants, Costa Mesa, California, to examine the component unit financial statements of the Agency as of and for the fiscal year ended June 30, 2005, the most recent fiscal year for which audited financial statements have been prepared, which are included as "APPENDIX C." The firm's examination was made in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller General ofthe United States and the Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller and as interpreted in the Suggested Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. The firm reported after their examination that the Agency's financial statements present fairly its fmancial position and results of operations in conformity with generally accepted accounting principles and that they noted no instances of non-compliance for the fiscal year ended June 30, 2005. The Agency's audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. Accordingly, the auditor has not performed any post-audit of the financial condition of the Agency. 26 4-103 Tax Increment Revenues Procedure for the Allocation and Payment of Tax Increment Revenues. The portion of taxes required to be allocated to the Agency is allocated and paid to the Agency by the County Auditor pursuant to the following procedure: Not later than the first day of October of each year, the Agency is required to file with the County Auditor a statement of indebtedness certified to by the chief fiscal officer ofthe Agency for each project area. The statement of indebtedness is required to contain for each such project area: (a) The date on which each loan, advance, or indebtedness was incurred or entered into; (b) The principal amount, term, purpose, and interest rate, of each loan, advance or indebtedness; and (c) The outstanding balance and amount due or to be paid by the Agency of each loan, advance or indebtedness. At the same time or times as the payment of taxes into the funds of the respective taxing agencies of the County, the County Auditor-Controller is required to allocate and pay Tax Increment Revenues to the Agency in an amount not to exceed the amount of loans, advances and indebtedness as shown on the Agency's Statement of Indebtedness. Manner in Which Property Valuations and Assessments are Determined (Article XIIIA). On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis- Gann Initiative) to the State Constitution which iroposes certain limitations on taxes that may be levied against real property. This amendment, which added Article XIIIA to the State Constitution, among other things, defines full cash value of property to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under 'full cash value', or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by substantial damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to one percent of the full cash value of that property, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July I, 1978 and on any bonded indebtedness for the acquisition or improvement of real property which is approved after July I, 1978 by two-thirds of the votes cast by voters voting on such indebtedness. However, pursuant to an amendment to the California Constitution, redevelopment agencies are prohibited from receiving any of the tax increment revenue attributable to tax rates levied to finance bonds approved by the voters on or after January I, 1989 (see "Property Tax Rate" below). In the general election held November 4,1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend the terms "purchase" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of (I) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county (or in certain cases, another county), to transfer the old residence's assessed value to the new residence. 27 4-104 For each fiscal year since Article XIIIA has become effective (the 1978/79 fiscal year), the annual increase for inflation has been at least two percent except in six fiscal years. For the 1981/82 fiscal year, the annual increase for inflation was I %; for the 1994/95 fiscal year, the annual increase for inflation was 1.0119%; for the 1995/96 fiscal year, the annual increase for inflation was 1.19%; for the 1996/97 fiscal year, the annual increase for inflation was 1.11 %, for the 1998/99 fiscal year, the annual increase for inflation was 1.853% and for the 2004/05 fiscal year, the annual increase for inflation was 1.867% reflecting the actual increase in the State Consumer Price Index, as reported by the State Department of Finance. Proposition 8 Adjustm ents. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. However, in 2001 an Orange County Superior Court held that such reassessment formula violates the inflationary rate increase limitation of Article XIIIA of the California Constitution. The Court held that once the assessed value of a property is reduced pursuant to Proposition 8, any subsequent increase in assessed value may not exceed the inflationary rate limitation (not to exceed 2%) of Article XIIIA. On April 18,2003, the Superior Court entered its final judgment. On June 12, 2003, the Orange County Assessor, together with the Tax Collector and the County of Orange filed notice of appeal of the Superior Court Judgment. The Appellate Court held a hearing on the matter on January 7,2004, and issued its opinion on March 26, 2004, reversing the holding of the Orange County Superior Court. The Plaintiffs filed an appeal with the California State Supreme Court and on July 21, 2004, the California State Supreme Court by a 5-2 vote decided not to hear an appeal, ending this litigation. Unsecured and Secured Property. In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property, arising pursuant to State law, has priority over all other liens on the secured property, regardless of the time of the creation of the other liens. Property in the Redevelopment Project is assessed by the San Diego County Assessor except for public utility property which is assessed by the State Board of Equalization. The valuation of secured property is determined as of January 1 each year for taxes owed with respect to the succeeding fiscal year. The tax rate is equalized during the following September of each year, at which time the tax rate is determined. Taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January I and become delinquent August 31, and such taxes are levied at the prior year's secured tax rate. 28 4-105 Secured and unsecured property is entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing agency has four ways of collecting unsecured property taxes: (I) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. Currently, a 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. Property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Under State law, ITom time of the sale of the property to the State for nonpayment of taxes, owners have five years to redeem, during which time legal title remains in the owners as taxpayers subject to a lien in favor of the County. The amount necessary to redeem the property is equal to the sum of the delinquent taxes, delinquency penalties and redemption penalties of I \1,% per month. Five years after the property is in default of taxes, the tax collector has the authority to sell property which has not been redeemed. A 10% penalty also attaches to delinquent taxes with respect to property on the unsecured roll, and further, an additional penalty of I \1,% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. Supplemental Assessments. Legislation adopted in 1984 (Section 75, ef seg. of the Revenue and Taxation Code of the State of California) provides for the supplemental assessment and taxation of property at its full cash value as of the date of a change of ownership or the date of completion of new construction (the "Supplemental Assessments"). To determine the amount of the Supplemental Assessment the County Auditor applies the current year's tax rate to the supplemental assessment roll and computes the amount of taxes that would be due for the full year. The taxes due are then adjusted by a proration factor to reflect the portion of the tax year remaining as determined by the date on which the change in ownership occurred or the new construction was completed. SupplementaJ Assessments become a lien against the real property on the date of the change of ownership or completion of new construction. Unitary Property. Commencing in the 1988/89 fiscal year, the Revenue and Taxation Code of the State of California changed the method of allocating property tax revenues derived ITom state assessed utility properties. It provides for the distribution of state assessed values to tax rate areas by a county-wide mathematical formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas. Commencing with the 1988/89 fiscal year, each county has established one county-wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property ("Unitary Revenues"). The property tax revenue derived ITom the assessed value assigned to the county-wide tax rate area shall be allocated as follows: (I) each jurisdiction will be allocated up to two percent of the increase in Unitary Revenues on a pro rata basis county-wide; and (2) any decrease in Unitary Revenues or increases less than two percent, or any increase in Unitary Revenues above two percent will be allocated among jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year to the total Unitary Revenues county-wide. 29 4-106 Property Tax Rate. There are numerous tax rate areas within the Project Area. The differences between the $1.00 tax rate and those actually levied (referred to as the "tax override rate") represents the tax levied by overlapping entities to pay debt service on bonded indebtedness approved by the voters. Tax override rates typically decline each year. A declining tax override rate is the result of several factors: an effective limit, established by Article XIIIA of the California Constitution, on the amount of property taxes that can be levied; rising taxable values within the jurisdictions of taxing entities levying the approved override rate (which reduces the tax rate needed to be levied by the taxing entity to meet debt service requirements); and the eventual retirement, over time, of the voter-approved debt. For fiscal year 2004/05 the effective tax rate, including effective the tax override rate, for the majority of the property in the Project Area was approximately $1.005 per $100 of taxable value. Future Tax Increment Revenues have been projected in "TABLE NO.7 - PROJECTED TAX REVENUES AND DEBT SERVICE COVERAGE" by applying only the general levy $1.00 per $100 of taxable value) to incremental taxable values. Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. For fiscal year 2004/05 the County charged administrative fees totaling approximately $41,000 to the Project Area. Tax Sharing Agreements Pursuant to prior Section 3340 I (b) of the Redevelopment Law, a redevelopment agency could enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project to alleviate any financial burden or detriment caused by the redevelopment project. These agreements are commonly referred to as "tax sharing agreements" or "pass through agreements." The Agency has not entered into any tax sharing agreements with respect to the Redevelopment Project. Tax Sharing Statutes Certain provisions were added to the Redevelopment Law by the adoption of AB 1290 in 1994. A discussion of these provisions as they relate to the Project Area follows. If new territory should be added to the Project Area, under Section 33607.5 of the Redevelopment Law, any affected taxing entity will share in the Tax Increment Revenues generated by such added area pursuant to a statutory formula ("Statutory Tax Sharing"). In addition, (i) pursuant to Section 33333.6(e)(2) of the Redevelopment Law, if the Agency deletes the time limit to incur indebtedness in the Redevelopment Project (pursuant to SB 211 or through a plan amendment) or (ii) pursuant to Section 33607.7 of the Redevelopment Law, as to any redevelopment plan adopted prior to January I, 1994, if the Agency increases the total amount of Tax Increment Revenues to be allocated to the project area or increases the duration of the Redevelopment Plan and the period for receipt of Tax Increment Revenues, Statutory Tax Sharing will also be required under Section 33607.7 of the Law with all affected taxing agencies not already a party to a tax sharing agreement, once the original limitations have been reached. In general, the amounts to be paid pursuant to Statutory Tax Sharing are as follows: (a) commencing in the first fiscal year after the limitation has been reached, an amount equal to 25% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; 30 4-107 (b) in addition to amounts payable as described in (a) above, commencing in the 11th fiscal year after the limitation has been reached, an amount equal to 21 % of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding (10th) fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; and (c) in addition to amounts payable as described in (a) and (b) above, commencing in the 31" fiscal year after the limitation has been reached, an amount equal to 14% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding (30th) fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (d) The City may elect to receive a portion of the tax increment generated in (a) above, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (e) The Agency may subordinate the amount required to be paid to an affected taxing entity to any indebtedness after receiving the consent of the taxing entity. With respect to a taxing entity that is a party to a tax sharing agreement, tax sharing payments would continue pursuant to such tax sharing agreement after the original limitations in the Redevelopment Plan were passed unless otherwise terminated pursuant to the terms of the tax sharing agreement. Tax Increment Revenue generated in the Bayfront Amended Area has been subject to Statutory Tax Sharing since the Agency first received revenue in 1999/00. In 1998, the Agency also amended an existing time limit on incurring debt in both the Original Bayfront Redevelopment Project and the Town Centre Redevelopment Project. As a result, Statutory Tax Sharing has been payable with respect to the Tax Increment Revenue generated by such areas, using the 1999/00 tax roll as the first fiscal after the limitation had been reached, as discussed in (a) above. The additional Statutory Tax Sharing calculation described in (b) above will begin in 2009/10. 31 4-108 .', BONDHOLDERS' RISKS The purchase of the Bonds involves investment risk. If a risk factor materializes to a sufficient degree, it could delay or prevent payment of principal of and/or interest on the Bonds. Such risk factors include, but are not limited to, the following matters and should be considered, along with other information in this Official Statement, by potential investors. Factors Which May Affect Tax Revenues The ability of the Agency to pay principal of and interest on the Bonds depends on the timely receipt of Tax Revenues as projected herein (see "THE PROJECT AREA - Projected Tax Revenues and Debt Service Coverage" herein). Projections of Tax Revenues are based on the underlying assumptions relating to Tax Increment Revenues of each of the constituent redevelopment projects that comprise the Project Area. A number of factors which may affect Tax Increment Revenues, and consequently, Tax Revenues, are outlined below. Reductions in Assessed Value. The projections of Tax Increment Revenues contained in this Official Statement are based on current assessed valuations within the component areas of the Project Area, a tax rate equal to $1.00 per $100 of assessed value applied to the taxable property in the component areas of the Project Area and certain projected increases in property values due to inflation allowed under Article XIIIA of the California Constitution. The Agency believes that the projections of Tax Increment Revenues and the assumptions upon which the projections are based are reasonable. However, any future decrease in the assessed valuation of the component areas of the Project Area (or any increase at a rate less than assumed), any general decline in the economic stability of the area, a relocation out of a component area of the Project Area by one or more major property owners, successful appeals by property owners for a reduction in a property's assessed value, or other events that permit reassessment of property at lower values, either on a case by case basis or as a blanket reduction due to a general decline in property values and any property tax refunds which may result therefrom, the destruction of property caused by natural disasters or any delinquencies in the payment of property taxes and any potential acquisition of property by the Agency will reduce the Tax Increment Revenues allocated to, or received by, the Agency and correspondingly may have an adverse impact on the Tax Revenues and ability of the Agency to pay principal and interest on the Bonds. Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California voters approved Proposition 13 which added Article XIIIA to the California Constitution. This amendment imposed certain limitations on taxes that may be levied against real property to I % of the full cash value of the property, adjusted annually for inflation at a rate not exceeding 2% annually. Full cash value is determined as of the 1975/76 assessment year, upon change in ownership (acquisition) or when newly constructed (see "FINANCIAL INFORMATION - Tax Increment Revenues" herein for a more complete discussion of Article XIIIA). Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances. Reduction in Inflationary Rate. The annual inflationary adjustment, while limited to 2%, is determined annually and may not exceed the percentage change in the California Consumer Price Index (CCPI). Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation six times: for 1981/82,1%; for 1994/95, 1.0119%, for 1995/96, 1.19%; for 1996/97, 1.11%, for 1998/99, 1.853% and for 2004/05, 1.01867%. The Financial Advisor has projected Tax Increment Revenues based on inflationary increases in real property values. 32 4-109 Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. However, in 200 I an Orange County Superior Court held that such reassessment formula violates the inflationary rate increase limitation of Article XIIIA of the California Constitution. The Court held that once the assessed value of a property is reduced pursuant to Proposition 8, any subsequent increase in assessed value may not exceed the inflationary rate limitation (not to exceed 2%) of Article XIIIA. On April 18, 2003, the Superior Court entered its final judgment. On June 12, 2003, the Orange County Assessor, together with the Tax Collector and the County of Orange filed notice of appeal of the Superior Court Judgment. The Appellate Court held a hearing on the matter on January 7,2004, and issued its opinion on March 26, 2004, reversing the holding of the Orange County Superior Court. The Plaintiffs filed an appeal with the California State Supreme Court and on July 21, 2004, the California State Supreme Court by a 5-2 vote decided not to hear an appeal, ending this litigation (see "FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments" herein). The Agency's ability to generate sufficient Tax Revenues to pay debt service on the Bonds will be dependent on the economic strength of the component areas of the Project Area. Since Proposition 8 adjustments are closely tied to the economics of an area, and primarily, real estate development, factors which adversely affect real estate development may adversely affect Tax Revenues. Such factors include general economic conditions, fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development costs and other factors. If further Proposition 8 adjustments are made by the County Assessor in future years because of declines in the fair market value of properties caused by the lack of real estate development in the area generally, Tax Revenues may be adversely affected and as a possible consequence its ability to repay the Bonds may be adversely affected. Assessment Appeals. Assessment appeals may be filed by property owners seeking a reduction in the assessed value of their property. After the property owner files an appeal, the County's Appeals Board will hear the appeal and make a determination as to whether or not there should be a reduction in assessed value for a particular property and the amount of the reduction, if any. To the extent that any reductions are made to the assessed valuation of such properties with appeals currently pending, or appeals subsequently filed, Tax Increment Revenues, and correspondingly, Tax Revenues will be reduced. Such reductions may have an adverse affect on the Agency's ability to pay debt service on the Bonds. As of December 2005, appeals have been filed by 3 property owners within the Project Area for the 2005/06 tax year (see "THE PROJECT AREA - Assessment Appeals" herein). Earthquake, Fire and Other Risks. Natural and man-made disasters and hazards, including, without limitation, earthquakes, fires, floods, mudslides and other calamities, may have the effect of reducing Tax Increment Revenues through reduction of aggregate assessed valuations within the boundaries of the Project Area. According to the Public Safety Element of the City's General Plan, the City is located in a seismically active region and could be impacted by a major earthquake originating ttom the numerous faults in the area. The City is traversed by two potentially active faults, the Sweetwater Fault and La Nacion Fault and three inferred faults, the Otay River Fault, the Telegraph Canyon Fault and the San Diego Bay- Tijuana Fault. Seismic hazards encompass potential surface rupture, ground shaking, liquefaction and landslides. The City recently adopted its Natural Hazards Mitigation Plan. This plan includes a hazard analysis for earthquake, flood, landslide and fire risk and is required to comply with FEMA requirements for disaster relief funding. 33 4-110 Hazardous Substances. An additional environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use ofa property within the component areas of the Project Area. In general, the OWners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner (or operator) may be required 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 property within component areas of the Project Area be affected by a hazardous substance would be to reduce the marketability and value of the property, perhaps by an amount in excess of the costs of remedying the condition. Certain Bankruptcy Risks. The enforceability of the rights and remedies of the Owners and the obligations of the Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. Limited Obligations. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate must necessarily reduce the amount of Tax Increment Revenues, and consequently, Tax Revenues that would otherwise be available to pay the principal of, interest on the Bonds. Voter Initiatives - State Constitutional Amendment. California's voter initiative process allows measures which qualify for the ballot to be approved or disapproved by voters in a State of California statewide election. Future voter initiatives could be enacted which adversely affect the Tax Increment Revenues and, therefore, the security for the Bonds. Subordinate Lien of Bonds Payment of the principal and interest on the Bonds is payable on a basis subordinate to the payment ofthe Senior Bonds. Accordingly, the Senior Bonds and the reserve requirement for the Senior Bonds must be maintained in each debt service year before any Tax Revenues may be set aside under the Indenture for payment of the Bonds and any Parity Debt. State of California Fiscal Issues In connection with its approval ofthe budget for the 1992/93, 1993/94 and 1994/95 Fiscal Years, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund ("ERAF"). Faced with a projected $23.6 billion budget gap for Fiscal Year 2002/03, the State Legislature adopted and the Governor signed, AB 1768 requiring redevelopment agencies to pay into ERAF in Fiscal Year 2002/03 an aggregate amount of $75 million. AB 1768 required the payment into ERAF in Fiscal Year 2002/03 only. 34 4-111 In 2003, the State Legislature adopted SB 1045 which required redevelopment agencies to make ERAF transfers in Fiscal Vear 2003/04, based on a statewide aggregate transfer by redevelopment agencies of $135 million. SB 1045 required the Agency to transfer approximately $489,000 to ERAF in Fiscal Vear 2003/04 and to make this transfer payment by May 10, 2004. In enacting SB 1045, the State Legislature also amended Section 33333.6 of the Redevelopment Law. Section 33333.2(c) and Section 33333.6(e) now provide that the City Council may adopt an ordinance to extend the limits required by AB 1290 or AB 1342, as applicable, by one additional year. The City Council has adopted an ordinance under the provisions ofSB 1045. The 2004/05 State Budget included a $1.3 billion shift oflocal government property taxes to the ERAF. The 2004/05 State Budget apportioned the $1.3 billion among cities ($350 million), counties ($350 million), special districts ($350 million) and redevelopment agencies ($250 million) and limited the $1.3 billion ERAF transfer to the two fiscal years 2004/05 and 2005/06. The Agency's share of this additional shift of property taxes was $743,000 in 2004/05 and $900,000 in 2005/06. The Agency funded its ERAF payments in these two years by borrowing from the California Statewide Communities Development Authority (CSCDA). The loans from CSCDA are payable over 10 years. As a trailer bill to the 2004/05 State Budget, the State Legislature adopted SB 1096, allowing redevelopment agencies to extend certain plan limitations if certain criteria are met. The City Council has not adopted an ordinance under the provisions of SB 1096. Future legislation could be enacted and Tax Revenues available for payment of the Bonds may be impaired. Legislation Affecting Redevelopment Agencies AB 1290. The California Legislature enacted Assembly Bill 1290 effective January I, 1994, as amended by Senate Bill 732, effective January I, 1995 (as amended, "AB 1290,") which contained several significant changes in the Redevelopment Law. Certain of the changes affected the times for incurring and repaying loans, advances and indebtedness of redevelopment agencies. Further, the Legislature enacted Assembly Bill 1342 effective January I, 1999 ("AB 1342,") which contains provisions that allowed the Agency to extend certain provisions of the Redevelopment Plans, such as the time limit on the collection of Tax Increment Revenues. The limitations currently contained in the Redevelopment Plans of the component areas of the Redevelopment Projects conform to the requirements of AB 1290. See "THE AGENCY - Plan Limitations" for a further discussion of AB 1290 and AB 1342. SB 211. The California Legislature also enacted SB 21I, Chapter 741, Statutes 2001, effective January I, 2002 ("SB 21I "). SB 21I provides, among other things, that, at anytime after its effective date, the limitation on incurring indebtedness contained in a redevelopment plan adopted prior to January I, 1994, may be deleted by ordinance of the legislative body. However, such deletion triggers statutory tax sharing with those taxing entities that do not have tax sharing agreements or if not already due to any other plan amendment. Tax sharing will be calculated based on the increase in assessed valuation after the year in which the limitation would otherwise have become effective. See ''THE AGENCY - Plan Limitations" describing the elimination of the limitations on the Agency's incurring of indebtedness. SB 21I also authorizes the amendment of a redevelopment plan adopted prior to January I, 1994 to extend for not more than 10 years the effectiveness of the redevelopment plan and the time to receive tax increment revenues and to pay indebtedness. Any such extension must meet certain specified requirements, including the requirement that the redevelopment agency establish the existence of both physical and economic blight within a specified geographical area of the redevelopment project and that any additional tax increment revenues received by the redevelopment agency because of the extension be used solely within the designated blighted area. SB 21I authorizes any affected taxing entity, the Department of Finance, or the Department of Housing and Community Development to request the Attorney General to participate in the proceedings to effect such extensions. It also authorizes the Attorney General to bring a civil action to challenge the validity of the proposed extensions. 35 4-112 SB 211 also prescribes additional requirements that a redevelopment agency would have to meet upon extending the time limit on the effectiveness of a redevelopment plan, including requiring an increased percentage of new and substantially rehabilitated dwelling units to be available at affordable housing cost to persons and families of low or moderate income prior to the termination of the effectiveness of the plan. The Agency currently has no expectations of undertaking proceedings to extend the effectiveness of the redevelopment plan or to extend the time to receive tax increment revenues and to pay indebtedness. SB 1045. In enacting SB 1045 (see "State of California Fiscal Issues" above), the State Legislature amended Section 33333.2 and Section 33333.6 of the Redevelopment Law. As amended, Section 33333.2(c) and Section 33333.6(e) provided that the City Council may adopt an ordinance to extend the limits required by AB 1290 by one additional year for redevelopment plans adopted prior to 1994. The City Council has adopted an ordinance pursuant to the authorization contained in SB 1045 to extend the limits required by AB 1290 by one additional year with respect to all constituent redevelopment projects except the Bayfront Amended Area, to which SB 1045 is not applicable. SB 1096. SB 1096 further amended Section 33333.6(e) to provide that the City Council may adopt an ordinance to extend the limits required by AB 1290 by an additional year for redevelopment plans adopted prior to 1994 for each year that a payment is made to ERAF by a redevelopment agency. However, SB 1096 includes criteria that must be met for redevelopment plans that have a remaining plan life between 10 and 20 years. The City Council has [not] adopted such an amendment to the redevelopment Plans pursuant to the authorization contained in SB 1096 to extend the limits required by AB 1290 by one additional year, for each of the ERAF payments made in 2004/05 and 2005/06. As noted above, this extension does not apply to the Bayfront Amended Area. Proposed Eminent Domain Legislation. On June 23, 2005, the U.S. Supreme Court decided in Kelo v. City of New London, 126 S. Ct. 24 (2005) that the compensated taking of private property for the purpose of economic development satisfies the "public use" requirement of the Fifth Amendment of the U.S. Constitution. While many governmental agencies have previously used the power of eminent domain for the purpose of assembling property for economic development, the U.S. Supreme Court had never prior to Kelo considered whether the practice was constitutional under the Fifth Amendment. As a reaction to Kelo, a number of bills have been introduced in the U.S. Congress and State Legislature which propose to restrict the use of eminent domain by public agencies to varying degrees. In addition, a number of voter initiatives which also propose to restrict the use of eminent domain have been filed with the State Attorney General to prepare for petition for signatures to qualify for the ballot. The Agency is not able to predict whether any of such bills or initiatives, or other bills or initiatives restricting the use of eminent domain will be passed, or if passed, whether there would be a significant effect upon the ability of the Agency to exercise its power of eminent domain. Although the Agency has previously utilized eminent domain proceedings for certain redevelopment projects for economic development and blight removal and may consider utilizing eminent domain proceedings in future projects, the Agency does not anticipate any of the bills or initiatives, even if passed, will have a material adverse effect on the Agency's redevelopment activities within the Project Area. Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. 36 4-113 Loss of Tax Exemption As discussed under the caption "LEGAL MATTERS - Tax Matters" herein, interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the Agency in violation of its covenants contained in the Indenture. Should such an event oftaxability occur, the Bonds are not subject to special redemption or any increase in interest rate and may remain outstanding until maturity. 37 4-114 LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Indenture is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Approval of Legal Proceedings Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Bond Counsel, will render an opinion which states that the Indenture is a valid and binding obligation of the Agency and enforceable in accordance with its terms. The legal opinion of Bond Counsel will be subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights and to the exercise of judicial discretion in accordance with general principles of equity. See "APPENDIX E" for the proposed form of Bond Counsel's opinion. The Agency has no knowledge of any fact or other information which would indicate that the Indenture is not so enforceable against the Agency, except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. Certain legal matters will be passed on for the Agency by the City Attorney, acting as Agency General Counsel and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Fees payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery ofthe Bonds. Tax Matters In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds will be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum taxable liability of such corporations. Bond Counsel's opinion as to the exclusion from gross income for federal income tax purposes of interest on the Bonds is based upon certain representations of fact and certifications made by the Agency, the Underwriter and others and is subject to the condition that the Agency complies with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Agency has covenanted to comply with all such requirements. 38 4-115 Bond Counsel's opinion may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such action or events are taken or do occur. The Indenture, the First Supplement and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the exclusion ITom gross income for federal income tax purposes of interest due on the Bonds, if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation. The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax. exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by audit of similar securities). Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded ITom gross income for federal income tax purposes provided that the Agency continues to comply with certain requirements of the Code, the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences with respect to the Bonds. The form of Bond Counsel's opinion is set forth in "APPENDIX E" hereto. Absence of Litigation The Agency will furnish a certificate dated as of the Delivery Date that there is not now known to be pending or threatened any litigation restraining or enjoining the execution or delivery of the Indenture or the sale or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Indenture was executed and delivered or the Bonds are to be issued or affecting the validity thereof. . 39 4-116 CONCLUDING INFORMATION No Rating on the Bonds The Agency has not made, and does not contemplate making, any application for a rating on the Bonds. No such rating should be assumed based upon any other Agency rating that may be obtained. Prospective purchasers of the Bonds are required to make independent determinations as to the credit quality of the Bonds and their appropriateness as an investment. Should a Bondholder elect to sell a Bond prior to maturity, no representations or assurances can be made that a market will have been established or maintained for the purchase and sale ofthe Bonds. The Underwriter assumes no obligation to establish or maintain a market for the purchase and sale of the Bonds and is not obligated to repurchase any of the Bonds at the request of the holder thereof. The Financial Advisor The material contained in this Official Statement was prepared by the Agency with the assistance of the Financial Advisor, who advised the Agency as to the financial structure and certain other financial matters relating to the Bonds. The information set forth herein received from sources other than the Agency has been obtained by the Agency trom sources which are believed to be reliable, but such information is not guaranteed by the Agency or the Financial Advisor as to accuracy or completeness, nor has it been independently verified. Fees paid to the Financial Advisor are contingent upon the sale and delivery of the Bonds. Continuing Disclosure The Agency will covenant to provide annually certain financial information and operating data relating to the Project Area by not later than March 31 each year commencing March 31, 2007, to provide the audited Financial Statements of the Agency for the fiscal year ending June 30, 2006 and for each subsequent fiscal year when they are available (together, the "Annual Report"), and to provide notices of the occurrence of certain other enumerated events. The Annual Report will be filed by the Trustee on behalf of the Agency with each Nationally Recognized Municipal Securities Information Repository certified by the Securities and Exchange Commission (the "Repositories") and a State repository, if any. The notices of material events will be timely filed by the Agency with the Municipal Securities Rulemaking Board, the Repositories and a State repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events and certain other terms of the continuing disclosure obligation are summarized in "APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE." The Agency has never failed to comply, in all material respects, with its undertaking, to provide continuing disclosure under the Federal Securities laws. However, the City had delivered to U.S. Bank National Association in February 2004 its continuing disclosure filings for fiscal year ending June 30, 2003 required under Rule 15c2-12 in connection with its Certificates of Participation, Series A of 2000 (2000 Financing Project), its 2002 Certificates of Participation (police Facility Project), and its 2003 Refunding Certificates of Participation (Town Centre II Parking Project) with the intention that U.S. Bank National Association would disseminate the City's continuing disclosure filings for fiscal year ending June 30, 2003 on or before March I, 2004. On May 19, 2004, U.S. Bank National Association had disseminated all of the City's continuing disclosure filings for fiscal year ending June 30, 2003, and the City is now current on all filings required pursuant to its previous continuing disclosure undertakings. Underwriting E. J. De La Rosa & Co., Inc., (the "Underwriter") is offering the Bonds at the prices set forth on the inside cover page hereof. The initial offering prices may be changed from time to time and concessions trom the 40 4-117 offering prices may be allowed to dealers, banks and others. The Underwriter has purchased the Bonds at a price equal ($ discount of $ offering. to $ ), less , which amount represents the principal amount of the Bonds a net original issue discount of $ . and less an Underwriter's L%). The Underwriter will pay certain of its expenses relating to the Verifications of Mathematical Computations Grant Thornton LLP will verify ITom the information provided to them the mathematical accuracy as of the date of the closing on the Bonds of (I) the computations contained in the provided schedules to determine that the anticipated receipts ITom the securities and cash deposits listed in the schedules prepared by the Financial Advisor, to be held in escrow, will be sufficient to pay, when due, the principal, redemption premium and interest requirements of the 1994 Bonds, and (2) the computations of yield on both the securities and the Bonds contained in the provided schedules used by Bond Counsel in its determination that the interest with respect to the Bonds is exempt ITom federal taxation. Grant Thornton LLP will express no opinion on the assumptions provided to them, nor as to the exemption ITOm taxation of the interest with respect to the Bonds. Additional Information The summaries and references contained herein with respect to the Indenture, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the form hereof included in the Indenture. Copies of the Indenture are available for inspection during the period of initial offering on the Bonds at the offices of the Financial Advisor. Copies of this document may be obtained after delivery of the Bonds ITom the Agency at 276 Fourth Avenue, Chula Vista, California 91910. References All statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or Owners of any of the Bonds. Execution The execution and delivery of this Official Statement by the Treasurer has been duly authorized by the Redevelopment Agency of the City of Chula Vista. REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA By: Treasurer 41 4-118 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE A-I 4-119 APPENDIX B CITY OF CHULA VISTA INFORMATION STATEMENT General Information Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in an area generally know as "South Bay." Chula Vista's city limits cover approximately 50 square miles. Neighboring communities include the City of San Diego and National City to the north and the City of Imperial Beach and the cornmunities of San Y sidro and Otay Mesa to the south. With a January 2006 estimated population of 223,423, Chula Vista is the second largest city in the County. General Organization The City ofChula Vista was incorporated as a general law city on March 17, 1911, and operates under the counciVmanager form of government. It became a charter city in 1949. The City is governed by a five- member council consisting of four members and a Mayor, each elected at large for four-year alternating terms. The positions of City Manager and City Attorney are filled by appointments of the Council. The City of Chula Vista currently employs approximately 1,547 staff members including sworn officers and fire personnel. The members of the City Council, the expiration dates of their terms and key administrative personnel are set forth in the charts below. CITY COUNCIL Council Mem ber Stephen C. Padilla, Mayor John McCann Steve Castaneda Patricia E. Chavez Jerry Rindone Term Exnires December 2006 December 2006 December 2008 December 2006 December 2008 CHIEF ADMINISTRATIVE PERSONNEL David D. Rowlands, Jr., City Manager Laurie A Madigan, Assistant City Manager Special Projects David Palmer, Assisrant City Manager Community Services Dana Smith, Assistant City Manager Development Services Jim Thomson, Assistant City Manager AdminisTrative Services Maria Kachadoorian, Director of Finance/Treasurer Ann Moore, City Attorney Susan Bigelow, City Clerk Governmental Services Public Safety and Welfare The City of Chula Vista Police Department consists of 340 sworn officers and non-sworn personnel providing patrol, traffic, animal control and investigations. There are eight fire stations located in and operated by the City, staffed by 141 fire personnel. B-1 4-120 Community Services Services provided by the City include building permit and inspection, planning and zoning, landscape and public infrastructure maintenance, street cleaning, traffic signal maintenance and municipal code compliance. Public Services Water is supplied to Chula Vista by the Otay Water District and the Sweetwater Water District. Sewer service is provided by the City. Electric power and natural gas are provided by San Diego Gas and Electric. Parks and Recreation The Chula Vista Public Library is comprised of three individual libraries with over 432,000 volumes available and connected by a wide-area network. The Library delivers books in English and Spanish, videos and CDs, and community programming to the City's residents nearly every day of the year. The Library contains an Office of Cultural Arts dedicated to advancing the arts and culture in a manner designed to preserve the diverse cultures of the area. In addition, Chula Vista provides a variety of cultural and educational facilities such as the Chula Vista Heritage Museum, Onstage Playhouse, and the San Diego Junior Theater. The Chula Vista Recreation Department provides citizens with a variety of park and recreational services on a year round basis. Facilities include nine community and recreation centers, including a youth community center and a senior center. The City also has two community pools open year round, 46 community and neighborhood parks, and a Memorial Bowl with seating for 700 at which the City's Summer Concert Series is hosted. The City also has after-school programs throughout the community. The City will open three new parks and community centers this year. Community Facilities and Services Public educational instruction for kindergarten through high school is provided by the Chula Vista Elementary School District and Sweetwater Union High School District. These districts administer 42 elementary schools, one junior high school, ten middle schools, II senior high schools, one continuation high school, one alternative program school and one charter school. Southwestern College, a two year Community College, has enrollment of approximately 19,000. There are also four adult education schools and 16 private schools. There are seven universities or colleges within 30 minutes commuting distance from Chula Vista in the San Diego metropolitan area. The City is currently planning a four-year college campus, to be located on a 400 acre property adjoining the Olympic Training Center. There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doctors and allied professionals in Chula Vista. There are two daily, one weekly and one semi-weekly newspapers published and circulated in Chula Vista. Chula Vista has more than 60 churches and nearly 100 service, fraternal and civic organizations. The City's mediterranean climate lends itself to many outdoor recreational activities. Chula Vista is home to the 20,000 seat Coors Amphitheatre, the Chula Vista Nature Center, Knotts Soak City USA, four golf courses, numerous parks and open spaces, and a harbor which includes two marinas, an RV park, and several restaurants. B-2 4-121 In addition, Chula Vista is the location of the United States Olympic Training Center. This is the third such training center in the nation and the only year round training facility. The center is located on a 150- acre property donated by EastLake Development Company adjacent to the Otay Lake reservoir. Transportation U.S. Highways 5 (along the coast) and 805 (inland) provide full freeway access from Chula Vista north to San Diego and south to the Mexican border. Commuter rail service is provided by the San Diego Trolley, a light rail system started in 1981 and I I bus routes serve Chula Vista. The City has recently introduced Chula Vista Express, a three-part pilot commuting program to promote public transportation, carpooling, vanpooling, biking and walking to work as alternatives to driving alone. If offers free bus service from eastern Chula Vista to downtown San Diego, a free shuttle from eastern Chula Vista to the H Street Trolley Station to a cash incentive for riding or joining a vanpool or carpool. San Diego's Lindbergh International Airport is 15 minutes to the north ofChula Vista, providing air cargo and passenger flights is served by all major airlines. Cargo shipping is available at the Unified Port of San Diego, which serves as a transshipment facility for the region, which includes San Diego, Orange, Riverside, San Bernardino and Imperial counties, plus northern Baja California, Arizona and points east. B-3 4-122 Population The following table provides a comparison of population growth for Chula Vista, surrounding cities and San Diego County between 2002 and 2006. TABLE NO. B-1 CHANGE IN POPULATION CHULA VISTA, SURROUNDING CITIES AND SAN DIEGO COUNTY 2002 - 2006 CHULA VISTA SURROUNDING CITIES SAN DIEGO COUNTY Percentage Percentage Percentage Year Population Change Population Change Popnlation Change 2002 191,132 180,747 2,921,390 2003 200,472 4.9% 183,456 1.5% 2,972,932 1.8% 2004 208,407 4.0% 183,708 0.1% 3,011,244 1.3% 2005 216,694 4.0% 187,802 2.2% 3,039,277 0.9% 2006 223,423 3.1% 186,652 (0.6)% 3,066,820 0.9% % Increase Between 2002 - 2006 16.9% 3.3% 5.0% Surrounding cities include El Cajon, Coronado and National City. Source: State of California, Department of Finance, "E-4 Population &timates for Cities, Counties and the State, 2001-2006, with 2000 Benchmark. " Effective Buying Income The most recently available effective buying income information for the City of Chula Vista, San Diego County, the State of California and the United States is summarized in the following table. TABLE NO. B-2 EFFECTIVE BUYING INCOME CITY OF CHULA VISTA, SAN DIEGO COUNTY, CALIFORNIA AND UNITED STATES 2000 - 2004 Year Chula Vista San Diego County State of California United States 2000 $42,550 $44,292 $44,464 $39,129 2001 42,229 44,146 43,532 38,365 2002 40,578 42,315 42,484 38,035 2003 42,389 43,346 42,924 38,201 2004 45,145 44,506 43,915 39,324 Source: Sales and Marketing Management, "Survey of Buying Power." B-4 4-123 Employment and Industry The City is located in the San Diego-Carlsbad-San Marcos MSA labor market. Six major job categories constitute 76.6% of the work force. They are government (16.7%), professional and business services (16.3%), service producing (14.5%), leisure and hospitality (11.6%), educational and health services (9.6%) and manufacturing (7.9%). The March 2006 unemployment rate in the San Diego-Carlsbad-San Marcos area was 3.9%. The State of California March 2006 unemployment rate (unadjusted) was 5.0%. TABLE NO. B-3 SAN DIEGO-CARLSBAD-SAN MARCOS MSA WAGE AND SALARY WORKERS BY INDUSTRY (1) (in Thousands) Industry 2002 2003 2004 2005 2006 Government 223.7 222.2 216.7 217.6 218.3 Other Services 44.5 46.0 47.1 48.7 48.8 Leisure and Hospitality 127.0 136.8 141.3 144.9 151.3 Educational and Health Services 120.3 121.2 123.0 122.5 125.8 Professional and Business Services 201.7 201.8 203.5 208.8 212.7 Financial Activities 73.4 78.6 81.4 82.3 83.7 Informatiou 38.2 37.3 36.2 37.3 37.1 Transportation, Warehousing and Utilities 30.5 26.6 28.1 28.5 28.5 Service Producing Retail Trade 134.9 137.0 141.1 144.4 145.2 Wholesale Trade 40.9 41.4 41.4 42.7 45.0 Manufacturing Nondurable Goods 28.0 26.6 26.4 25.0 25.3 Durable Goods 87.1 79.8 77.4 79.7 78.5 Goods Producing Construction 73.9 76.2 84.8 88.5 93.7 Natural Resources and Mining ~ ~ ---.M ---.M ---.M Total Nonfarm 1,224.4 1,231.8 1,248.8 1,271.3 1,294.3 Farm ---1Q.2. ---1Q.2 ~ --.l.U -1.QA Total (all industries) ~ ~ J..W.Q ~ ~ (I) Annually, as of March. Source: State of California Employment Development Department, Labor Market Information Division, "Industry Employment & Labor Force - by month March 2005 Benchmark. " B-5 4-124 . ...... The major employers operating within the City and their respective number of employees as of June 30, 2005 are as follows: Name of Companv Rohr DBA Goodrich Aerospace Sharp Chula Vista Medical Center Scripps Memorial Hospital United Parcel Service EmDlovment 1,903 1,410 890 637 400 340 285 284 275 250 Walmart 2291 Sears Roebuck & Co. Costco Wholesale Corp. #781 ATC Vancom Inc. Costco Wholesale Corp. #460 Walmart Store #3516 Source: City of Chul. Vista. Commercial Activity Tvpe of Business /Product Aerospace Manufacturing Hospital Hospital Parcel Delivery Service General Merchandise General Merchandise General Merchandise General Merchandise General Merchandise General Merchandise The following table summarizes the most recently available published information of volume of retail sales and taxable transactions for the City of Chula Vista for 2000 through 2004 (the most recent year for which statistics are available). The City's reported sales tax has increased 20% since 2003. This increase is primarily due to continued growth in the eastern section of the City, which led to the opening of significant new commercial developments. TABLE NO. B-4 CITY OF CHULA VISTA TOTAL TAXABLE TRANSACTIONS (in Thousands) 2000 - 2004 Total Taxahle Retail Sales Retail Sales Transactions Issued Sales Year ($OOO's) % Change Permits ($OOO's) 0/0 Change Permits 2000 $1,401,401 1,780 $1,608,290 3,609 2001 1,463,409 4.4% 1,823 1,688,665 5.0% 3,690 2002 1,513 ,809 3.4% 1,883 1,729,158 2.4% 3,737 2003 1,642,889 8.5% 2,092 1,857,233 7.4% 3,921 2004 1,845,573 12.3% 2,199 2,073,340 11.6% 4,166 Source: State Board of Equalization, "Taxable Sales in Califarnia." B-6 4-125 The following table compares taxable transactions for the City of Chula Vista and surrounding cities for the years 2000 through 2004 (the most recent year for which statistics are available). TABLE NO. 8-5 CHANGE IN TOTAL TAXABLE TRANSACTIONS CHULA VISTA AND SURROUNDING CITIES (in Thousands) 2000 - 2004 0/0 Change from City 2000 2001 2002 2003 2004 2000 . 2004 CHULA VISTA $1,608,290 $1,688,865 $1,729,158 $1,857,233 $2,073,340 28.9% El Cajon 1,597,168 1,725,001 1,817,568 1,939,482 2,103,099 31.7% Coronado 172,631 168,147 175,648 179,418 188,172 9.0% National City 1,179,111 1,231,562 1,301,407 1,389,042 1,551,301 31.6% Source: State Board of Equalization, "Taxable Sales in California. " Taxable transactions by type of business for the City of Chula Vista for 2000 through 2004 (the most recent year for which statistics are available) are summarized in Table No. B-6. TABLE NO. 8-6 CITY OF CHULA VISTA TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (in Thousands) 2000 - 2004 2000 2001 2002 2003 2004 Retail Stores Apparel Stores $ 66,598 $ 61,937 $ 67,035 $ 67,114 $ 82,165 General Merchandise Stores 495,679 524,942 525,423 553,979 609,028 Food Stores 90,487 92,224 99,897 103,155 106,056 EatinglDrinking Places 155,583 164,417 169,892 188,675 213,412 Home Furnishings and Appliances 66,365 67,827 74,255 78,561 87,203 Building Materials and Farm Implements 102,370 97,897 91,235 100,504 142,321 Auto Dealers/Suppliers 145,923 151,812 156,872 178,733 191,185 Service Stations 121,244 119,050 123,636 148,318 174,968 Other Retail Stores 157.152 183.303 205.564 223 .850 239.235 Total Retail Stores 1,401,401 1,463,409 1,513,809 1,642,889 1,845,573 All Other Outlets 206.889 225.256 215.349 214.344 227.767 Total All Outlets $1.608290 $1 688.665 $1.729158 $1.857.233 $2 073 340 Source: State Board of Equalization, "Taxable Sales in California. " B.7 4-126 Building Activity The following table summarizes building activity valuations for the City ofChula Vista for the years 2001 through 2005. TABLE NO. B-7 CITY OF CHULA VISTA BUILDING ACTIVITY AND VALUATION (in Thonsands) 2001 - 2005 2001 2002 2003 2004 2005 Residential $482,131,012 $467,349,014 $569,435,026 $703,847,604 $440,321,520 Non-Residential 91.667.827 81.298.075 92.855.876 123.793.323 111.908.460 Total Valuation ~573 79R R39 ~54R 647 OR9 ~662 290 902 ~R27 640 927 ~552 229 9RO Total Permits ~ ~ ~ ~ ~ Source: City of Chura Vista. B-8 4-127 APPENDIX C AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30,2005 C-I 4-128 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE [to be provided by Disclosure Counsel] D-1 4-129 APPENDIX E FORM OF BOND COUNSEL OPINION [to be provided by Bond Counsel] E-l 4-130 APPENDIX F SPECIMEN MUNICIPAL BOND INSURANCE POLICY F-l 4-131 APPENDIX G BOOK-ENTRY-ONLY SYSTEM The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate 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 securities 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 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments trom over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities 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, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both u.s. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. 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 trom 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, trom 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 certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, 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. G-I 4-132 Conveyance of notices and other communications by DTC to Direct Participants. by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 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 issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium (if any), and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Agency or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Agency, or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any), and interest payments with respect to the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Agency may decide to discontinue use of the system of book-en try-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered in accordance with the provisions of the Indenture. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy thereof. G-2 4-133 CVRC RESOLUTION NO. RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION RECOMMENDING THAT THE REDEVELOPMENT AGENCY AUTHORIZE THE ISSUANCE AND SALE OF TAX ALLOCATION REFUNDING BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT-TO- EXCEED $28,500,000 IN CONNECTION WITH THE BA YFRONT/TOWN CENTRE REDEVELOPMENT PROJECT, AND APPROVE RELATED DOCUMENTS WHEREAS, on September 20, 1994, the Redevelopment Agency approved a resolution authorizing the issuance of the 1994 Senior Tax Allocation Refunding Bonds, Series A to advance refund the 1986 Tax Allocation Bonds previously issued by the Agency for the Bayfront/Town Centre I Redevelopment Project Area; and WHEREAS, as of December 31, 2004, there was $12.9 million in outstanding bonds with a net interest cost of 8.17% and a final maturity date of2024; and WHEREAS, the 1994 Senior Tax Allocation Refunding Bonds, Series A are callable on September I, 2006, and can be refunded 90 days prior, beginning June I, 2006, as the 2006 Senior Tax Allocation Refunding Bonds, Series E; and WHEREAS, on March 22, 2005, staff was directed to determine the feasibility of refunding the 1994 Senior Tax Allocation Refunding Bonds, Series A; and WHEREAS, based on preliminary research, it appears that the Agency would save approximately $185,000 per year on their annual debt service payments as a result of a refunding under current market conditions with an assumed interest rate of 4.93%; and WHEREAS, based on current market rates, the refinancing of these obligations will result in an estimated savings of $2.3 million, or 17.9% of the par amount over the life of the bonds based on an assumed interest rate of 4.93%. NOW, THEREFORE, BE IT RESOLVED that the Chula Vista Redevelopment Corporation does hereby recommend that the Redevelopment Agency authorize the issuance and sale of Tax Allocation Refunding Bonds in the aggregate principal amount of not-to-exceed $28,500,000 in connection with the Bayfront/Town Centre Redevelopment Project, and approve related documents. Presented by: Approved as to form by Dana M. Smith Assistant City Manager/ Director of Community Development Ann Moore General Counsel 4-134 CVRC RESOLUTION NO. 2006- RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION RECOMMENDING THAT THE CITY COUNCIL AND REDEVELOPMENT AGENCY (I) APPROVE ENTERING INTO A FIRST AMENDMENT TO AN AGREEMENT WITH E.J. DE LA ROSA & CO. AS UNDERWRITERS FOR THE REFUNDING OF THE CITY OF CHULA VISTA REDEVELOPMENT AGENCY 1994 SENIOR TAX ALLOCATION BONDS, SERIES C AND D; AND (2) APPROVE ENTERING INTO THE SECOND AMENDMENT TO THE AGREEMENT WITH HARRELL & COMPANY ADVISORS, LLC TO SERVE AS FINANCIAL ADVISORS FOR THIS BOND ISSUANCE AND ASSOCIATED REFUNDINGS IN A FORM ACCEPTABLE TO THE CITY ATTORNEY'S OFFICE WHEREAS, Harrell and Company has previously performed extensive reviews of the City of Chula Vista and Redevelopment Agency to determine if there were any economically viable candidates for refinancing; and WHEREAS, Harrell and Company has served as financial advisor on the 2000 Tax Allocation Bonds for the Redevelopment Agency and various City Certificates of Participation over the past 5 years; and WHEREAS, their knowledge of the Agency and expertise in the area of financial consulting will assist the Agency in refunding these bonds; and WHEREAS, E.J. De La Rosa & Co. has extensive expenence III structuring and marketing tax allocation obligations for California cities; and WHEREAS, since January 1,2000, E. J. De La Rosa & Co. has served as senior or co- senior manager for 33 tax allocation bond issues totaling over $1.6 billion; and WHEREAS, they possess the expertise and knowledge to assist the Agency in providing requisite underwriting services for this refunding; and WHEREAS, based on preliminary projections assisted by Harrell & Co., the refunding of the City of Chula Vista Redevelopment Agency 1994 Senior Tax Allocation Refunding Bonds, Series A would provide an armual debt service savings of $185,000, or a net present value savings of $2.3 million, or 17.9% of the par amount over the life of the bonds based on an assumed interest rate of 4.93%. NOW, . THEREFORE, BE IT RESOLVED that the Chula Vista Redevelopment Corporation does hereby recommend that the Redevelopment Agency (I) approve entering into an agreement with EJ. De La Rosa & Co. as underwriters for the refunding of the City ofChula Vista Redevelopment Agency 1994 Senior Tax Allocation Bonds, Series C and D; and (2) approve entering into the second amendment to the agreement with Harrell & Company 4-135 CVRC Resolution No. 2006- Page 2 Advisors, LLC to serve as financial advisors for this bond issuance and associated refundings in a form acceptable to the City Attorney's office. Presented by: Approved as to form by Dana M. Smith Assistant City Manager/ Director of Community Development Ann Moore General Counsel 4-136 . .. ( .lRP()i<ATI( jj'.; CHULA VISTA CVRC Board Staff Report - Page 1 Item No. 5 DATE: May 25, 2006 TO: CVRC Board Directors FROM: Dana M. Smith, Secretary (~ VIA: David D. Rowlands, Jr., Chief Executive Officer / I 1" SUBJECT: Public Hearing: Consideration of Design Review Application (DRC-05-50) and Owner Participation Agreement for exterior and interior tenant improvements to modify an existing structure located at 320 Third Avenue for the operation of a new fitness health club. Project Area: Town Centre I Redevelopment Project Area Agreement: Design Review Permit and Owner Participation Agreement Developer: Fancher Development Services Project Site: 320 Third Avenue Project Type: Commercial Project Description: 320 Third Avenue BACKGROUND: The applicant, Fracher Development Services, has filed a Design Review application to perform exterior and interior tenant modifications to the existing structure located at 320 Third Avenue for the purpose of opening a fitness health club; specifically, a 24 Hour Fitness center (see Attachments 1 and 2). The structure, built in 1983, was previously occupied by the CinemaStar Theater and has been vacant for over five years. The project site is located within the Towne Centre I Redevelopment Project Area and an Owner Participation Agreement (OPA) is required from the applicant. The Town Centre I Land Use Policy, as amended by the Redevelopment Agency in January 2002, and the Town Centre Design Manual procedurally govern development proposals for the Town Centre I Redevelopment Project Area. The Chula Vista Redevelopment Corporation (CVRC) is generally the final authority for consideration of the Design Review application; however, because the subject project has an associated OPA, which requires 5-1 Staff Report - !tern No.5 Page 2 approval by the Redevelopment Agency, the CVRC will consider both Design Review and OPA before forwarding a recommendation to the Redevelopment Agency as the final decision-making authority. The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the project qualifies for a Class 1 (existing facilities) categorical exemption pursuant to Section 15301 of the State CEQA Guidelines. Thus, no further environmental review is necessary. RECOMMENDATION: That the CVRC recommend approval to the Redevelopment Agency a resolution approving Design Review Permit (DRC-OS-SO) and the attached Owner Participation Agreement. DISCUSSION: Proposal The applicant proposes the construction of exterior and interior tenant improvements of a currently vacant structure for operation of a new 24 Hour Fitness health club. The proposed fitness center will encompass approximately 25,742 square feet (see Attachment 3). The existing vacant retail uses along Third Avenue will not be included in the square footage of the proposed fitness club. The proposed fitness center will consist of a main gym, free weights area, aerobic room, kid's club and other various uses. The use will be open and accessible to the public twenty-four hours a day, seven days a week. The project, as proposed, is consistent with the development standards of the Chula Vista Municipal Code for the Central Business Zone, the guidelines of the Town Centre Design Manual and the Landscape Manual, and the goals and objectives for the Town Centre I Redevelopment Project Area. Project SeWn!: The proposed 24 Hour Fitness is to be located in the vacant CinemaStar theater building that was built in 1983. The project site is located at 320 Third Avenue within the Towne Centre I Redevelopment Project Area. The property is bounded on the north by existing commercial uses; to the east by Third Avenue with existing commercial uses across the street; to the south by Fuddrucker's Restaurant; and to the west by a parking structure. (see Attachment 1) ANALYSIS The proposed use is to be located within an existing structure. The project proposes exterior fac;:ade and plaza enhancements, and interior tenant improvements. As such, the analysis has principally focused upon the projects' potential to energize and enhance pedestrian activity along Third Avenue as well as provide visual relief from the impact of 5-2 Staff Report - Item No.5 Page 3 the existing hardscape. In contrast, traditional analysis of a new structure would emphasize the proposed building's height, bulk and lot coverage. land Use The proposed use of the site for fitness center uses is consistent with the Chula Vista Municipal Code land use classification of the Central Business Zone and the Town Centre I Land Use Policy, both of which allow fitness and health club uses at the proposed project location. Development Standards The development standards do not regulate building height within the Central Business Zone. The height and bulk of the existing structure, however, is compatible with the adjacent buildings in the Chula Vista Town Centre I Redevelopment Area. The project proposes to retain the building height of 28-feet. The project also proposes to retain the existing front, side or rear yard building setbacks although these too are not regulated by the Central Business zone. Desi~n and Architecture Existing exterior building materials visible from the Third Avenue include storefront glazing, glass roofs at the entry, exposed cylindrical concrete columns and a horizontal metal signage band located at the vacant retail storefronts. The proposed 24 Hour Fitness design incorporates materials that will help soften the streetscape as well as help create an active pedestrian atmosphere. The exposed cylindrical gray concrete columns are being squared off and clad with a simulated "stacked stone" material that is warm in color and complements the architectural portals that are being added to the building. The proposed exterior colors and building materials are in compliance with the guidelines of the Town Centre Design Manual and are consistent with the development standards of the Central Business zone The entry to the building has been relocated from its previous location on the northeastern corner of the building to Third Avenue, and redesigned with a textured plaster portal. A 30-square-foot sign incorporating the company's logo will be located above the portal. A "sense of entry" will be established through the addition of those architectural elements, a reduction in the overall amount of storefront glazing and an entry that faces Third Avenue. (see Attachment 4). A decorative metal trellis and tiered fountain are proposed for the existing courtyard area, which is located on the northeastern corner of the property. The pavement and paving patterns will also be reconfigured within the courtyard area. Vines will be attached to the trellis and the relaxing sounds from the Spanish-inspired water fountain will enhance the existing courtyard space. The water feature will also provide visual relief from the impact of the existing hardscape. The trellis, which will be visible from Third Avenue, will enhance the pedestrian scale of the two-story structure. Street furniture and fixtures used in the plaza area will complement those existing in the public 5-3 Staff Report - Item No.5 Page 4 right-of-way. Ample seating in both shaded and sunny locations will be provided in the plaza area. Parking, Pedestrian Access and Circulation The proposed project is located within the Downtown Parking District of the Town Centre I Redevelopment Project Area. The district was created to increase density in the downtown area. Uses that are allowed by right, such as the proposed athletic use, and that locate within existing commercial buildings along Third Avenue within this district are considered to have met their parking standard. Therefore, no additional parking spaces are required by the proposed project. The main entrance into the structure will be relocated to the front of the structure facing Third Avenue. Access into the proposed fitness center will be through these relocated front doors. This new entry location will encourage and enhance pedestrian activity along the street. Parking will be available in the in the adjacent public parking structure located to the west of the proposed fitness center. Sidewalks from the public parking structure are located along the northern and southern edges of the structure. Patrons can also park on the surrounding streets. The site is accessible from the north by way of Garrett and F Streets, from the east by Third Avenue and from the west by Center Street. The site is also easily accessible by pedestrians. Landscapin!!: The courtyard area design has six trees and raised planter boxes that would be removed and replaced with fountain and street furniture. The existing street trees along Third Avenue would remain. Vines would be planted to grow on the proposed metal trellis. The reconstructed planter boxes attached to the existing structure would be replanted. Final landscape and irrigation plans will be required to be reviewed and approved by the City Landscape Planner for compliance with the City Landscape Manual prior to issuance of building permits. Conformance with Desi!!:n Manual The proposed project is consistent with the Town Centre Design Manual in terms of Compatibility, Building Fac;:ade and Roof Articulation, Overheads and Awnings, Materials and Colors, Landscape and Screening (see Attachment 6, pages 2 and 3). CONCLUSION: The proposed project is consistent with the development standards of the Municipal Code for the Central Business Zone, the guidelines of the Town Centre Design Manual, City Design Manual and the Landscape Manual, and the goals and objectives for the Town 5-4 Staff Report - Item No.5 Page 5 Centre I Redevelopment Project Area. The proposed design review application is recommended for approval subject to the conditions in the draft resolution. The OPA (see Attachment 5) is also recommended for approval. A IT ACHMENTS: A. Locator Map B. Application C. Plans D. Front Elevation E. Draft Owner Participation Agreement PREPARED BY: Frank Alvarez, Community Development Specialist II 5-5 ATTACHMENT A , C HULA VISTA PLANNING AND BUILDING DEPARTMENT LOCATOR PROJECT F h D ItS . PROJECT DESCRIPTION: C) APPLlCANl: anc er eve opmen ervlces DESIGN REVIEW PROJECT 320 Third Avenue Request Proposing 24 Hours Fitness in T1 Redevelopment Area. Tenant ADDRESS: improvement of! closed thealer for new construction and operation SCALE: FILE NUMBER: of new health club. NORTH No Scale DRC-05-50 5- ~elated cases: IG-05-020 ATTACHMENT B '; ""'\ ~!~ -r- - P I ann n g & B u Id ng Department Planning Division CITY OF CHUlA VISfA APPLICATION · DEVELOPMENT PROCESSING . TYPE A Part 1 RECEIVED CITY OF CHULA VISTA T e of Review Re uested o Conditional Usa Permit []I Design Review o Variance o .speciai Use Permit (redevelopment area only) o Misc. PLANNING AND 8LJI BUILDING 01 A lication Informotion Applicant Name Fancher DeveloDment Services Applicant Address 1342 Bell Avenue., Ste 3K. >Tustin, CA 92780 Contact Name 1\1; n" R" feY Phone (71 4) 258 -1808 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.) 0 Own 0 Rent IX] Other: Authorized Aqent Architect/Agent: STDR Architects Address: 3190 K Airport Loop Dr. Costa Mesi Contact Name: nel Shotwell Phone: (714) 444-1960 Primary contaci is: Ii] Applicant 0 Architect/Agent Email ofprimaryc..!!.tact:fandev(i!direcpc.com J General Project Description (all types) Project Name: 24 Hour Fitness ProoosedUse:Health & Fitness Club General Description of Proposed Project: 'l'pn"nt- imorovement of closed j;;heater fnr construction and ooeration of new health club. >Has this prqject received pre-application review comments? 181 'fes (Date:) 0 No Subject Property Information (all types I 0 Location/Street Address: 320 Third- Avenue. c.hula VisEa I Assessor's Parcel #: 56R~27 0 -2 2 Total Acreage: 73 Redevelopment Area (If applicable): Yes General Plan Designation: ~ CAt Zone Designation: CB Planned Community (if"~plicable): RedeveloDment Area Current Land Use: rFl Within Montgomery Specific Plan? 0 Ves !XI No > Proposed Project [oil types) Type of use proposed: 0 Residential IZI Commercial Landscape Coverage (% of lot): Rxi st i ng o Industrial 0 Other: Building Coverage (% of lot): R 0 . 5 % 276 Fourth Avenue 5-7 (hula Vista I California 91910 (619) 691-5101 Form 320 RIJV5.03 PiJ112 APPLICATION · DEVELOPMENT PROCESSING . TYPE A Part 2 01Y OF CHUIA VISrA Residential Project Summary Type of dwelling unit(s): Dwelling units: N/A Number of lots: PROPOSED E,XISTlNG 1 Bedroom 2 Bedroom 3+ Bedroom TOTAL Density (DU/acre):, Maximum building height: Minimum Ipt size: Average lot size: Parking Spaces: Required by code: Provided: Type of parking (i.e. size; whether covered. etc.): 'Open space description (acres each of private, common, and landscaping): Non-Residential Project Summary Gross floor area: 25.742 SF Proposed: 25.74 2SF Existing: 25,74 2SF Building Height: 28' Hours of opera lion (daYs & hours): 24 hours/7davs a week Antlcipateq number of employees: 1 00 Maximum number of employees at anyone time: Number and ages of students/children (if applicable): N / A Seating capacity: N / A Parking Spaces: Reo;juired by code: Provided: Ex i 5 t i ng Type of parking (i.e. size; 'whelher covered, etc,): F.x i "t i no 25 Parking Par kino Structure Structure and Street Parking. - , Print applicant name: Authorization NN' ~:~ p_! Date: Applicant Signalure: Owner Signalure" Date: Print owner name.: letter of consent may be provided in lieu of signature. 276 Fourth Avenue Chula Vista 5-8 California 91910 (619) 691-5101 Form 320 R_S.o3 "212 P I ann n g & Building Planning Division I Department Development Processing CIIY OF CHUIA VISTA APPLICATION APPENDIX A Project Description & Justification Project Name: 24 Hour Fitness Applicant Name: Fancher Development Services/Nina Raey 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. Inciude 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. The proposal ~ for tenant improvement of vacant building previously used by a movie theater for c.onstruction and operation of a 24 hour fitness health club. The scope also includes removinq of existing store fronts and exist doors and replacinq with either new walls or new doors. Removal of existinq roof equipment and placement of new roof equipment; clean. repair and paint buildinq to match existinq colors and materials. The health club is prooosed to operate 24 hours a day, seven days a week. The health club will ~nefit the community hy r~n~Ti~in~ h~~l~h ~W~TOnQQ~ ~n~ ~i~nA~~ ~n~ jnh~ tn ln~~l residents. 276. Fourth Avenue Chur~ Vista ~-~ali 'ornia 91910 (619) 6.91-51 01 & Building Planning Division P I ann Department De\.elopmerlt Processing n a o CITY OF CHULA. VISTA Disclosure Statemr-t Pursuant to Council Policy 101-01, prior to any a"ction 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. 2. 3, 4. 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, sub'f'ntractor, material supplier. ?!, Hr",.r 'F'it,T1"AA A~Partners AA T"T1Rnt To Califo~a General Yarcners~p '. "Owner" & Landlord The Subject Property '. 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. Arnold Schlesinger Gregory Scott ' V"ra Guerin 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. Please identify every person, including any agents, employees, consultants, or indepeAdent contractors you have assigned to represent you before the City in this matter. . NiDa Raey, Fancher Development R;-ll rn~gn+~TI J ?I, Hnnr Wi +'-r:!=!~H 5. Arnold Schlesinger Gregory Scott Vera Guerin Has any person" associated with this contract had any financial dealings with an official" of tbe City of Chute Vista as it reiates to this contract within the past 12 months. Yes_ No~ ". - If Yes, briefly describe the nature of the financial interest the official- may have in this contract. 6. Have you made a ~ontributlon of more than $250 within the past twelve (12) months to a current member of th Chula Vista City Council? No _ Yes ~ If yes, which Coun'oil member? - .. n_-"5lqlO4-~-Qa;n ii!2.00 Qh3/D"I D",t'\ \-\oJ2!5D, F~il\/.oli ::5t~ ~4~)ooo ~ J . . 276 Fourth ."venue 5-10 Chula Vista I difornia 91910 (619) 691-5101 ------ ,.... City Of Chula Vista 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? (This includes being a source of income, money to retire a legal debt, gift. loan, etc.) Yes No If Yes, which official" and what was the nature of item provided? S"?,,!.L,d..c ,4-R.I'IO l-,D cj"C/-f Le5I//6bt!!... Print or type name of Contractor/Applicant . Person is defined as: any individual, finm, I co-partnership, joint venture, .association, social club, fratema organization, corporation, estate, trust, receiver, syndicate, any other county, city, municipality, district, or othel political subdivision, -or any other group or combination acting as a unit. Date: 5~~ ~OS' .. 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Iti:S ' :-Ij::;: . !.lit'..:! !:::;'':!: . j.;;: it Q z o f- 0( > w ~ w f- Z o 0: w ATTACHMENT E OWNER PARTICIPATION AGREEMENT This Agreement is entered into by and between the City of Chula Vista Redevelopment Agency ("Agency") and A VG Partners, a California General Partnership ("Developer"). The Agency and Developer agree as follows: I. AGREEMENT PURPOSE AND TERMS A. Purpose of the Aereement. The purpose of this Agreement is to (i) effectuate the Redevelopment Plan ("Redevelopment Plan") for the Chula Vista Town Centre Redevelopment Project Area approved and adopted by the City Council of the CityofChula Vista by Ordinance No. 1691 on July 6,1976, ("Project"), by providing for the redevelopment of certain real property (the "Site") which is included within the boundaries of the Project area. The redevelopment of the Site pursuant to this Agreement and the fulfillment generally of this Agreement are in the vital and best interests of the City of Chula Vista ("City'') and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable Federal, State and local laws and requirements. B. The Redevelopment Plan. This Agreement is subject to the provisions of the City's Redevelopment Plan as defined herein. C. Terms and Definitions. In addition to those terms defmed above, the following terms and definitions shall apply to this Agreement: (I) "Compl~mentary retail use" shall mean and include only businesses that will be compatible with the primary use of the Subject Property as a Fitness Center and encourage pedestrian traffic. Said use shall be one that is allowed in the Commercial Business (CB) zoning district. (2) "Minor changes" or "Minor Field Changes" means those minor changes that make no substantial change in appearance and have no adverse effect on the improvements and are made so as to expedite the construction work in response to field conditions. Changes in exterior design, treatment, building materials, site improvements, landscaping or colors shall under no circumstances be deemed minor changes. Changes that conflict with the terms and conditions of this Agreement shall not be deemed minor changes. (3) The "Subject Property" or "Site" shall mean and include that parcel located at 320 Third Avenue, Chula Vista, California (APN 568-270-22), as further I 24 Hour Fitness OP A 5-17 shown on the attached "Site Map", and as more fully described by attached Exhibit "A". The Site currently contains a Cinema Star Theatre to be redeveloped and improved by Developer for the operation of a fitness center, with related retail uses, pursuant to the terms of this Agreement. II. THE PARTIES A. The Aeencv. The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code section 33000 et seq.) As used in this Agreement, "Agency" includes the City of Chula Vista and any assignee of or successor to its rights, powers and responsibilities. B. The Develoner. The Developer is the owner in fee of the Site and a nationwide retail developer owning over 20 sports fitness facilities occupied by a sports fitness facility. "Developer" as used in this Agreement shall include A VG Partners, a California General Partnership, and any assignee or successor-in-interest. The qualifications and identity of the Developer are of particular concern to the City and Agency, and it is because of such qualifications and identity that the Agency has entered into this Agreement with Developer. The Developer shall not assign all or any part of this Agreement without the prior written approval of the Agency. III. DEVELOPMENT OF THE SITE A. Scone of Develonment. The Site shall be redeveloped, at Developer's sole expense, to convert the existing movie theatre into a sports fitness facility, with complementary retail uses. The Scope of Development shall be that described in attached Exhibit "B" identifying the scope, amount, and quality of the redevelopment of the improvements to be constructed by Developer on the Site pursuant to the terms and conditions of this Agreement. ("Developer Improvement") Developer shall develop or cause to be developed the Tenant Improvements in accordance with the Scope of Development, subject to any and all applicable laws, codes, regulations and policies, including all applicable Federal and State labor standards. Within thirty (30) days of obtaining all necessary governmental permits and approvals, Developer shall commence development and construction of the Site in a manner that allows the operation of the fitness facility. Developer and its consultants shall have discretion to determine the manner and methods in which the Site is developed and improved within the terms and conditions of 2 24 Hour FilIless OP A 5-18 this Agreement and all applicable laws and regulations in effect as of the date of this Agreement. Developer shall have no obligation to develop and improve the Site until it has obtained legal possession and ownership of it. B. Land Use Approvals. The parties recognize that the Subject Property is located in the Towne Centre Redevelopment Project Area. It has a General Plan Land Use designation of Mixed-Use Residential (MUR) and is zoned Commercial Business (CB). Applicable land use controls permit the development of the Site as proposed in accordance with the provisions of this Agreement. Developer acknowledges that execution of this Agreement by the Agency and approvals of plans hereunder do not constitute approval by the City or any of its boards or commissions of the land use approvals required for the proposed redevelopment of the Site. In no way is the City's discretion limited in the permit and approval process except as expressed herein. Before commencement of the construction of the Developer Improvements, the Developer shall, at its own expense, secure or cause to be secured any and all permits which may be required by any other governmental agency with jurisdiction over such construction, induding, without limitation, building permits. The staff of the Agency will, without obligation to incur liability or expense therefor, use its best efforts to expedite the City's issuance of building permits for construction and certificates of occupancy that meet the requirements of the City Municipal Code, and all other applicable laws and regulations. Developer recognizes that the restrictions in this Agreement requiring the retail space to be limited to uses that are complimentary to the Fitness Center is a condition of this Agreement. Retail uses that are not complimentary to the Fitness Center induding any office uses shall not be allowed on the Subject Property for the duration of the Agreement even if those uses are allowed within the CB Zone. Developer acknowledges Agency's desire to create an active Towne Center emphasizing pedestrian traffic and associated retail uses. Therefore, uses without walk-in customer traffic shall not be allowed on the Subject Property for the duration of the Agreement. All proposed complementary retail uses must be pre-approved by the Agency. C. Cost of Construction and Development. The entire cost of developing and improving the Site and of constructing all improvements thereon shall be borne solely by Developer except for work expressly set forth in this Agreement to be performed or paid for by the Agency or others. D. Use ofthe Site. Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest that for a period of at least Ten (10) years, Developer shall devote the Site (or any part thereof) to the use of a fitness facility, and such other uses as expressly allowed by Agency. Agency shall take no action to prevent or interfere with Developer's ownership and operation of the fitness facility at the Site. The foregoing covenant shall run with the land 3 5-19 24 Hour Fitness OP A E. Insurance and Indemnitv. I. Bodily Injury and Property Damage Insurance. Prior to the commencement of construction of the Developer Improvements on the Property and throughout the term of Construction, the Developer shall obtain and maintain, or shall cause its contractor or contractors to obtain and maintain a policy of general commercial liability insurance which shall include blanket contractual coverage, and shall have limits of not less than Two Million Dollars ($2,000,000.00) per occurrence, and if a policy form with a general aggregate limit is used or provided, the aggregate limit shall be not less than twice the per occurrence limit. The Agency, the City and their respective officers, employees, agents, and consultants shall be named as additional insureds under the policy. Said insurance shall cover comprehensive general liability, including, without limitation, automobile liability covering owned, nonowned and hired vehicles; contractor liability; subcontractor liability; premises-operations; explosion and collapse; and broad form property damage and personal injury. Any and all insurance policies required hereunder shall be obtained from companies rated at least "A:VI" or better in Best's Insurance Guide. All of said insurance policies shall provide that they may not be cancelled, non-renewed, reduced in coverage or amount or otherwise altered unless the Agency and the City receive written notice thereof at least thirty (30) calendar days prior to the effective date of such cancellation, reduction or alteration. Any and all insurance obtained by the Developer hereunder shall be and shall state in an endorsement that it is primary to any and all insurance which the Agency and/or City may otherwise carry, including self insurance, which Agency and City insurance for all purposes of this Agreement shall be separate and apart from the insurance provided under this Agreement. Any and all insurance required hereunder shall be maintained and kept in force until the City has issued the Certificate of Occupancy with respect to the Developer Improvements. The Developer shall furnish an endorsement(s) of insurance countersigned by an authorized agent of the insurance carrier on a form of the insurance carrier evidencing and/or effecting the requirements herein and/or the changes to the Developer's policy to effect such conformity and setting forth the general provisions of the insurance coverage, and an endorsement that shall name the City and the Agency and their respective officers, boards, agents, employees, and consultants as additional insureds under the policy with respect to this Agreement. The endorsement by the insurance carrier shall contain a statement of obligation on the part of the issuing agent or carrier to notify the City and the Agency of any material reduction, cancellation, or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material change, or non-renewal. Not less than fifteen (15) days prior to the expiration date of any policy of insurance required by this Section, Developer shall cause to be delivered to Agency a binder or certificate of insurance with respect to each renewal or new policy, bearing a notation evidencing payment of the premium therefor, or other proof of payment reasonably satisfactory to the Agency. In each instance of the provision of insurance, certified duplicate copies of the policy(s) or renewal policy(s), as applicable, shall be delivered to the Agency's Executive Director within thirty (30) days of the date of such policy(s). The Developer shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that Developer and any contractor with whom it has contracted for the 4 24 Hour Fitness OP A 5-20 performance of work on the Property or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. 2. Indemnification. The Developer shall defend, indemnify, assume all responsibility for, and hold the Agency and the City, and their representatives, volunteers, officers, employees, agents, and consultants harmless from any and , all claims, demands, damages, defense costs or liability of any kind or nature relating to any damages to property or injuries to persons, including accidental death (including reasonable attorneys fees and costs), which are in full or in part caused by or arise directly or indirectly out of any acts or omissions of the Developer's activities in connection with the Property under this Agreement, whether such activities or performance thereof be by the Developer or by anyone directly or indirectly employed or contracted with by the Developer and whether such damage shall accrue or be discovered before or after termination of this Agreement. Developer shall indemnify, defend and hold harmless Agency from and against any and all claims, liabilities, obligations, costs, with regard to hazardous materials on the Site from and after the date of acquisition of the Site by Developer, regardless of the date of release, spill, or contamination, of or by, hazardous materials. As to any claim or challenge falling under the purview of this Section for which Developer shall indemnify and hold harmless: Developer shall, at City's or Agency's option, either defend the City and/or Agency, or provide the City and/or Agency the cost of reasonable attorneys' fees for an attorney of the City and/or Agency's choosing. IV. EFFECT AND DURATION OF COVENANTS Except as otherwise expressly provided herein, the covenants contained in this Agreement shall remain in effect until July 6, 2016(the termination date of the Redevelopment Plan). The Agency and City are deemed the beneficiaries of the terms and provisions of this Agreement and of the covenants running with the land for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. This Agreement and the covenants shall run in favor of the Agency and City without regard to whether the Agency or City has been, remains, or is an owner of any land or interest in the Site of the Project area. The Agency and City shall have the right, if this Agreement or the covenants herein are breached, 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 terms of this Agreement and/or the covenants to which it or any other beneficiaries of this Agreement and the covenants may be entitled. V. DEFAULTS, REMEDIES AND TERMINATION 5 5-21 24 Hour Fitness OP A A. Defaults - General. Subject to any extensions of time agreed upon in writing, failure or delay by either party to perform any term or provision of this Agreement constitutes a default under this Agreement. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence and during any period of curing shall not be in default. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. The injured party may not constitute a proceeding in default until fifteen (15) days after giving such notice. Any failure or delay in giving such notice shall not constitute a waiver of any default or remedy nor shall it change the time of default. B. Leeal Actions. 1. Institution of Legal Actions. In addition to any other rights or remedies, except for rights or remedies expressly declared in this Agreement to be exclusive, the rights and remedies of the parties are cumulative, and either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain specific performance or any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of San Diego, State of California, and in no other place. 2. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. C. Remedies and Riehts of Termination. I. Termination by Developer. Developer, at its option, may terminate this Agreement if any of the following occur: (a) The conditions precedent set forth in this Agreement are not satisfied, after good faith diligent efforts on the Developer's part, within the time set forth herein; or (b) Agency fails to timely perform any material obligation of this Agreement and any such failure is not commenced to be cured and cured within the times provided in this Agreement; Then this Agreement may, at the Developer's option, be terminated by written notice thereof to the Agency. Upon such termination, neither the Agency nor the Developer shall have any further rights against or liability to the other under this Agreement. 2. Termination bv Agency. 6 24 Hour Fitness OP A 5-22 . The Agency, at its option, may tenninate this Agreement if Developer or any other successor in interest to this Agreement or any portion of the Site: (a) does not submit pennit applications, construction drawings and related documents as required by this Agreement, and such breach is not cured within fifteen (15) days after the date of written demand therefore by the Agency; or (b) has not perfonned the work required by this Agreement within the time frame specified in the Schedule ofPerfonnance and has failed to cure the same within fifteen(l5) days after the written demand therefore by the Agency; (c) fails to timely perfonn any other material obligation of this Agreement, and any such failure is not commenced to be cured and cured within the times provided in this Agreement; (d) transfers or assigns or attempts to transfer or assign this Agreement or any rights herein or in the Site in violation of this Agreement; (e) is in breach or default with respect to any other obligation on the Developer under this Agreement; then this Agreement, and any rights of the Developer or its successor in interest may, at the Agency's option, be tenninated by the Agency by written notice thereof to Developer. If Developer defaults by failing to undertake any matterreferred to above, the Agency shall have no right to seek specific perfonnance to require Developer to undertake any of the tasks described therein, or damages, or any other remedy at law or equity, for failure to undertake any such tasks, but Agency's exclusive remedy in the event of such default by Developer shall be tennination of this Agreement. VI. SPECIAL PROVISIONS A. Amendments to this Aereement. The parties shall mutually consider reasonable requests for amendments to this Agreement, provided the requests are consistent with this Agreement and do not substantially alter the basic tenns and conditions included herein. All amendments shall be in writing and approved by the Agency Board. VII. GENERAL PROVISIONS 7 5-23 24 Hour Fitness OP A A. Notices. Demands and Communications Between the Parties. F onnal notice, demands and communications between the Agency and Developer shall be in writing and shall be effected: (1) on personal delivery; (2) on the second business day after mailing by certified or registered U.S. Mail return receipt requested; or (3) on the next business day after mailing by Express Mail or after deposit with a private delivery service of general use (e.g., Federal Express) postage or fee paid as appropriate, addressed to the party as shown below: Ifto Developer, to: Attention: with a copy to: and if to Agency, to: Chula Vista Redevelopment Agency 276 Fourth Avenue Chula Vista, CA 91910 with a copy to: City Attorney City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 B. Attornev Fees. In the event of any legal action between Developer and Agency arising out of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys fees and costs trom the non-prevailing party, including those incurred for the purpose of enforcing any judgment. C. Enforced Delav: Extension of Time of Performance. 8 24 Hour Fitness OP A 5-24 In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extensions is sent to the other party within fifteen (15) days of the commencement of the cause. Times and performances under this Agreement may also be extended by written agreement between the Agency and Developer. D. Compliance with Laws. I. Nondiscrimination in Employment. The Developer certifies and agrees that (i) all persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies, and (ii) all subcontractors, bidders and vendors, are and will be treated equally by it without regard to, or because of race, color, religion, ancestry, national origin, sex, age, pregnancy, childbirth or related medical condition, medical condition (cancer related) or physical or mental disability, and in compliance with all applicable Governmental Requirements, including Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sections 2000, et seq., the Federal Equal Pay Act of 1963, 29 U .s.c. Section 206( d), the Age Discrimination in Employment Act of 1967,29 U.S.c. Sections 621, et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Sections 1324b, et seq., 42 U.S.C. Section 1981, the California Fair Employment and Housing Act, California Government Code Sections 12900, et seq., the California Equal Pay Law, California Labor Code Sections 1197.5, California Government Code Section 11135, the Americans with Disabilities Act, 42 U.S.C. Sections 12101, et seq., and all other anti-discrimination laws and regulations of the United States and the State of California as they now exist or may hereafter be amended. The Developer shall allow representatives of the Agency access to its employment records related to this Agreement during regular business hours to verify compliance with these provisions when so requested by the Agency, unless access to such employment records is otherwise prohibited by law. 2. Standards. Developer shall carry out the design and construction of the improvements to the Site in a timely manner and in conformity with all applicable laws, including but not limited to all applicable state labor and work safety laws and regulations, including the provisions of Labor Code Sections 1770, et seq. relating to prevailing wages, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.c. Sections 12101, et seq., California Government Code Section 4450, et seq., California Government Code Sections 11135, et seq., and the Unruh Civil Rights Act, California Civil Code Sections 51, et seq. to the extent applicable to the improvements to the Site as to which the City makes no representations. Developer agrees to hold the City and the Agency harmless and to indemnify and defend the City and the Agency from any claims arising under the provisions of Labor Code 99 1720, et seq., including, but not limited to, the provisions of Labor Code Section 1726 and 1781. Developer expressly 9 24 Hour Fitness OP A 5-25 waives any rights it may have under Labor Code Sections 1726 or 1782. It shall be the sole responsibility of the Developer to determine the applicability of such laws to the Developer Improvements. 3. Taxes and Assessments. The Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Property. The Developer shall remove or have removed any levy or attachment made on any of the Property, or any part thereof, or assure the satisfaction thereof within a reasonable time. Notwithstanding anything herein to the contrary, pursuant to the provisions of Health and Safety Code Section 33673 the Property shall be assessed and taxed in the same manner as other privately owned property and Lessee shall pay taxes upon the assessed value of the entire Property and not, merely the assessed value of Lessee's leasehold interest. E. Entire Ae:reement. Written Modifications. Counterparts. This Agreement integrates all of the terms and conditions agreed upon between the parties, and supersedes all other negotiations or previous agreements between the parties with respect to all or any part of the subject matter of this Agreement. All waivers and amendments of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Agency and Developer. This Agreement and subsequent amendments may be executed in counter parts. F. Maintenance ofthe ProDertv. The Developer shall maintain or cause to be maintained the interiors and exteriors of the Property in a decent, safe and sanitary manner, in accordance with the standard of maintenance of similar commercial buildings within the City. If at any time Developer fails to maintain the Property in accordance with this Agreement and Developer does not correct or commence to correct such condition within ten (10) days after written notice from the Agency with respect to graffiti, debris, waste material, and general maintenance, or thirty days after written notice from the Agency with respect to landscaping and building improvements, then the Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Property and perform all acts and work reasonably necessary to protect, maintain, and preserve the Developer Improvements and landscaped areas on the Property, including a ten percent (10%) administrative charge, which amount shall be promptly paid by Developer to the Agency upon demand. G. Release of Easement. The Parties recognize the applicability of the recorded document described as the "Reciprocal Grant of Easements and Declaration Establishing Restrictions and Covenants" ("Easement''), entered into on December 15, 1983 by the City, Agency and Developer's predecessor in interest. A copy of said agreement is attached hereto and incorporated herein by reference as Exhibit "C ". Prior to issuance of a certificate of occupancy for the Project, Agency and Developer shall enter into a Release of Developers rights under said Easement. Said Release of Easement shall be in a form acceptable to the City Attorney and Agency Counsel. Said Release shall survive the termination of this Agreement. 10 24 Hour Fitness OP A 5-26 CHULA VISTA REDEVELOPMENT AGENCY Dated: By: Approved As To Form: Redevelopment Agency General Counsel Dated: Approved As To Content: Redevelopment Manager DEVELOPER Dated: By: Approved: Attorney for Developer 11 5-27 24 Hour Fitness OP A CVRC RESOLUTION NO. 2006- RESOLUTION OF THE CHULA VISTA REDEVELOPMENT CORPORATION RECOMMENDING THAT THE REDEVELOPMENT AGENCY (I) APPROVE DESIGN REVIEW PERMIT (DRC-05-50); AND (2) ADOPT AN OWNER PARTICIPATION AGREEMENT FOR EXTERIOR AND INTERIOR TENANT IMPROVEMENTS TO MODIFY AN EXISTING 25,742 SQUARE-FOOT STRUCTURE LOCATED AT 320 THIRD AVENUE FOR THE OPERATION OF A NEW ATHLETIC FITNESS HEALTH CLUB (FANCHER DEVELOPMENT SERVICES) A. RECITALS 1. Project Site WHEREAS, the parcel, which is the subject matter of this resolution, is represented in Exhibit A attached hereto and incorporated herein by this reference, and for the purpose of general description is located at 320 Third Avenue, Chula Vista; and 2. Project Application WHEREAS, on March 9, 2005 a duly verified application for a Design Review Permit (DRC-05-50) was filed with the City of Chula Vista on behalf of Fancher Development Services (Applicant); and 3. Project Description; Application for Design Review Permit WHEREAS, Applicant requests Design Review Permit approval for exterior and interior improvements to modify a 25,742 square-foot building for fitness uses (Project) as depicted in plans on file with the Community Development Department; and 4. Chula Vista Redevelopment Corporation Record on Application WHEREAS, the Chula Vista Redevelopment Corporation held a duly noticed public hearing to consider said application on May 25, 2006 and after considering all evidence and testimony presented recommended by a vote of 9-0 that the Chula Vista Redevelopment Corporation APPROVE Design Review Permit (DRC-05-50); and NOW, THEREFORE, BE IT RESOLVED that the Redevelopment Agency does hereby find, determine, and resolve as follows: 5-28 CVRC Resolution No. 2006- Page 2 B. CHULA VISTA REDEVELOPMENT CORPORATION RECORD The proceedings and all evidence on the Project introduced before the Chula Vista Redevelopment Corporation at their public hearing on this Project held on May 25, 2006, and the minutes resulting therefrom, are hereby incorporated into the record of this proceeding. C. ENVIRONMENTAL DETERMINATION The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the project qualifies for a Class I (existing facilities) categorical exemption pursuant to Section 15301 of the State CEQA Guidelines. Thus, no further environmental review is necessary. D. CONFORMANCE WITH DESIGN MANUAL The Redevelopment Agency does hereby find that the Project is in conformance with the Town Centre Design Manual, as herein below set forth, and sets forth, thereunder, the evidentiary basis that permits the stated fmding to be made. 1. The arrangement of structures, parking and circulation areas, and open space should recognize the particular characteristics of the site and should relate to the surrounding built environment in pattern, function, scale, character and materials. In developed areas, new projects should meet or exceed the standards of quality, which have been set by surrounding development. The proposed facade design colors and materials, such as simulated stacked stone veneer that will cover the exposed cylindrical concrete columns, will help soften the front entry and streetscape. The existing courtyard in the northeastern comer of the proposed project will be enhanced with the addition of a vine-covered trellis and tiered fountain as well as the reconfiguration of the paving and paving patterns in that area. The trellis will enhance the pedestrian of the existing two-story tall building. Street furniture and fixtures used in the plaza area will complement those in the public right-of-way. Ample seating in both shaded and sunny locations will be provided in the plaza area. This outdoor area will connect to the existing northern commercial development, Park Plaza at the Village, as well as enhance the existing outdoor courtyard space. 2. Building entries should be readily identifiable. Use recesses, projections, columns and other distinctive architectural elements, as well as materials and colors, to articulate entries. The existing building's cylindrical gray concrete columns are being proposed to be squared off and clad with a simulated stacked stone material that is warm in color and complements the architectural portals to be added to the building. The entry to the building has been redesigned with a textured plaster portal with the company's sign 5-29 CVRC Resolution No. 2006- Page 3 located above it. This architecture element will reduce the overall amount of storefront glazing and will give the building a "sense of entry". 3. Arcades, canopies, trellises and awnings are recommended for functional as well as aesthetic reasons. A decorative metal trellis will be located alongside the northern edge of the building's front entry and overhang onto the courtyard area. The addition of vines on the trellis and the relaxing sounds from the tiered Spanish inspired concrete water fountain will enhance the existing courtyard space. 4. Colors and materials should be consistent with the chosen architectural style and compatible with the character of surrounding development. The colors and materials samples submitted for review indicate that the building facade will consist of light beige and tan colors, clear glass roofs at the entry and autumn- colored stone to cover the existing cylindrical concrete columns. The proposed colors and materials are consistent with the contemporary architecture of the building, which in turn is compatible with the surrounding commercial development. The most common colors along Third Avenue commercial uses consist of light cream, dark brown, and dark tan colors, as well as lighter warm colors such as pale and dark yellow. Color and materials samples have been submitted to the Chula Vista Redevelopment Corporation for review. 5. All mechanical equipment shall be screened from view. All screening devices should be compatible with the architecture, material and color of the adjacent structures. All utilities and equipment will be architecturally screened and/or located at out public view as required. E. TERMS OF GRANT OF PERMIT The Chula Vista Redevelopment Corporation does hereby approve Design Review Permit (DRC-05-50) subject to the following conditions: I. The subject property shall be developed and maintained in substantial conformance with the approved application, plans, and color and material board, except as modified herein. 2. Submit all exterior lighting plans, landscape and irrigation plans, solid waste and recycling plans shall be submitted for review and approval prior to the issuance of building permits. 3. The applicant will devote I % of the total cost of the proposed project to the procurement and installation of works of fine art. 4. Architecturally screen and/or locate out of public view all utilities and equipment. 5-30 CVRC Resolution No. 2006- Page 4 5. Repair or replace all cracked or broken tiles on planter boxes in front and, on the north side, of the building. 6. Repair all damaged walkways surrounding the building. 7. A graffiti resistant treatment shall be specified for all wall and building surfaces and shall be noted on all building and wall plans prior to issuance of building permits. 8. The project shall comply with applicable codes and requirements including but not limited to CBC, CFC, CMC, CPC, CEC, ADA requirements, Title 24, and other codes in effect at the time of issuance of any permit. 9. The applicant/owner shall comply with all applicable federal, state, and local requirements, and in any case where it does not comply, this permit is subject to modification or revocation. 10. This permit shall become void and ineffective if not used or extended within one year from the effective date thereof, in accordance with Section 19.14.600 of the Municipal Code. 11. This permit shall be subject to any and all new, modified, or deleted conditions imposed after approval of this permit to protect the public from a specific condition dangerous to its health or safety or both due to the project, which condition(s) the City shall impose after advance written notice to the permittee and after the City has given the permittee the right to be heard with regard thereto. However, the City in exercising this reserved right/condition, may not impose a substantial expense or deprive permittee of a substantial revenue source which the permittee cannot, in the normal operation of the use permitted, be expected to economically recover. 12. The applicant shall and does hereby agree to indemnify, protect, defend, and hold harmless the City, its Council members, officers, employees, agents, and representatives from and against all liabilities, losses, damages, demands, claims, and costs, including court costs and attorney's fees (collectively, liabilities) incurred by the City arising directly or indirectly from a) City's approval and issuance of this permit, b) City's approval or issuance of any other permit or action, whether discretionary or non discretionary, in connection with the use contemplated herein, and without limitation, any and all liabilities arising from the operation of the facility. Applicant shall acknowledge their agreement to this provision by executing a copy of this permit where indicated below. The applicant's compliance with this provision is an express condition of this permit and this provision shall be binding on any and all of the applicant's successors and assigns. F. EXECUTION AND RECORDATION OF RESOLUTION OF APPROVAL The property owner and the Applicant shall execute this document by signing the lines provided below, said execution indicating that the property owner and Applicant have each read, 5-31 CVRC Resolution No. 2006- Page 5 understood, and agreed to the conditions contained herein. Upon execution, this document shall be recorded with the County Recorder's Office of the County of San Diego, and a signed, stamped copy returned to the Community Development Department. Failure to return a signed and stamped copy of this recorded document within ten days of recordation to the Community Development Department shall indicate the property owner/Applicant's desire that the Project, and the corresponding application for building permits and/or a business license, be held in abeyance without approval. Said document will also be on file in the Community Development Department's files and known as Resolution No_. Signature of Property Owner/Applicant Date Signature of Property Owner/Applicant Date G. CONSEQUENCES OF FAILURE OF CONDITIONS If any of the forgoing conditions fail to occur, or if they are, by their terms, to be implemented and maintained over time, and any of such conditions fail to be so implemented and maintained according to their terms, the Redevelopment Agency shall have the right to revoke or modify all approvals herein granted; deny or further condition issuance of future building permits; deny, revoke, or further condition all certificates of occupancy issued under the authority of approvals herein granted; institute and prosecute, litigate, or compel their compliance; or seek damages for their violations. Applicant or successor in interest gains no vested rights by the Redevelopment Agency approval of this Resolution. H. INVALIDITY; AUTOMATIC REVOCATION It is the intention of the Redevelopment Agency 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 and the permit shall be deemed to be automatically revoked and of no further force and effect ab initio. 1. NOTICE OF EXEMPTION The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the project qualifies for a Class I (existing facilities) categorical exemption pursuant to Section 15301 of the State CEQA Guidelines. 5-32 CVRC Resolution No. 2006- Page 6 BE IT FURTHER RESOLVED that the Chula Vista Redevelopment Corporation of the City of Chula Vista does hereby recommend that the Redevelopment Agency (1) approve Design Review Permit (DRC-05-50); and (2) adopt an Owner Participation Agreement for exterior and interior tenant improvements to modify an existing 25,742 square-foot structure located at 320 Third Avenue for the operation of a new athletic fitness health club (Fancher Development Services). Presented by: Approved as to form by Dana M. Smith Assistant City Manager/ Director of Community Development Ann Moore General Counsel 5-33