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HomeMy WebLinkAboutRDA Packet 2005/06/07 Notice is hereby given that the Chairman of the Public Financing Authority has called and will convene a special meeting of the Public Financing Authority, Tuesday, June 7, 2005, at 4:00 p.m., immediately following the City Council meeting in the Council Chambers, loc in the Public Services Building, 276 Fourth Avenue, Chula Vista, California to c sider, derate nd act upon the following:.--- -o:J;& -- \\ all' . . \\\11 d ef\uT'I t"e ,oste It" o~ 1" ,'S"l 1\ <l t\\lI\ ' I' .Joet ~ene. ~,. \1\1 ~ ~ ..... ';1' ~'\(\ ~ f:\C . u'(\'O ......"', 0\ '" ~" _ 8t. i .\'...e\et .\.~ _,I' .' 8 O' \3" f. , u. ' 1, ....t'(\ 1101\ '!"'.\o" "!~:p ",'J 't\U 8tf\.~ , 'at v\t.. cofl\n'.U ,.. th'.S ,....,.: [:e~"'J,ce~ ....' i'u'JI.C ~.~i,^ I~SIGN"'O O~1E~y, JUNE 7, 2005 4:00 P.M. (immediately following the City Council meeting) ~V?- ~-~-= -;;:;:~---- ~- -- CI1Y OF CHUlA VISTA COUNCIL CHAMBERS PUBLIC SERVICES BUILDING SPECIAL MEETING OF THE PUBLIC FINANCING AUTHORITY MEETING .JOINTLY WITH THE REDEVELOPMENT AGENCY I CITY COUNCIL OF THE CITY OF CHULA VISTA CALL TO ORDER ROLL CALL Agency/Council/Public Financing Authority Members Castaneda, Davis, McCann, Rindone; Chair/Mayor Padilla CONSENT CALENDAR or=;:fHE\cii"Y":C'OUNCfl The staff recommendations regarding the following item(s) listed under the Consent Calendar will be enacted by the Council, Agency and/or Authority by one motion without discussion unless an Council and/or Agency member, a member of the public or City staff requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak Form" available in the lobby and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Public Hearing items. Items pulled by the public will be the first items of business. 1. ORDINANCE ADDING CHAPTER 2.55 TO THE CHULA VISTA MUNICIPAL CODE ESTABLISHING THE CHULA VISTA REDEVELOPMENT CORPORATION TO SUPPORT THE PLANNING AND REDEVELOPMENT ACTIVITIES OF THE CITY AND THE CHULA VISTA REDEVELOPMENT AGENCY WITHIN DESIGNATED AREAS OF THE CITY (SECOND READING) STAFF RECOMMENDATION: the May 24, 2005 meeting. Council adopt the ordinance as amended at . 2. ORDINANCE AMENDING SECTIONS 2.24.030, 2.32.100, AND 2.42.010 OF TITLE 2 AND SECTION 19.14.592 OF TITLE 19 OF THE CHULA VISTA MUNICIPAL CODE (SECOND READING) STAFF RECOMMENDATION: Council adopt the ordinance. ORAL COMMUNICATIONS OF THE REDEVELOPMENT AGENCY This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency' 5 jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment Agency from taking action on any issues not included on the posted agenda.) If you wish to address the Agency on such a subject, please complete the" Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your name and address for record purposes and follow up action. ACTION ITEMS OFTHE PUBLIC FINANCING AUTHORITY AND CITY COUNCIL The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by the Council/Authority, staff, or members of the general public. The items will be considered individually by the Council/Authority and staff recommendation may in certain cases be presented in the alternative. Those who wish to speak, please fill out a Request to Speak form available in the lobby and submit it to the City Clerk prior to the meeting. 3. CONSIDERATION OF (1) REFUNDING CERTAIN ASSESSMENT DISTRICT BONDS; (2) APPROVAL OF CERTAIN REASSESSMENT REPORTS AND REASSESSMENTS WITHIN CERTAIN REASSESSMENT DISTRICTS (3) ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR CERTAIN REASSESSMENT DISTRICTS AND APPROVING AGREEMENTS AND OTHER ACTIONS IN CONNECTION THEREWITH; (4) ACTING AS THE LEGISLATIVE BODY OF CERTAIN COMMUNITY FACILITIES DISTRICTS; AND (5) ISSUING REFUNDING REVENUE BONDS AND APPROVING AGREEMENTS AND OTHER ACTIONS IN CONNECTION THEREWITH On 4/5/05, Council approved a resolution making preliminary determinations and declaring their intention to issue bonds to refund the outstanding improvements bonds issued for certain existing Assessment Districts and Community Facility Districts and orderings a report thereon. (Director of Finance/Treasurer) STAFF RECOMMENDATION: 3.1. That Council adopt the following resolutions: A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING AND DIRECTING COMPLIANCE WITH THE "REFUNDING ACTION OF 19B4 FOR 1915 IMPROVEMENT ACT BONDS," AS MODIFIED, IN CONNECTION WITH THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR THE PURPOSE OF REFUNDING CERTAIN ASSESSMENT DISTRICT BONDS Redevelopment Agency, June 7, 2005 Page 2 B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING THE REASSESSMENT REPORT AND CONFIRMING REASSESSMENTS WITHIN REASSESSMENT DISTRICT NO. 2005-1 C. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING THE REASSESSMENT REPORT AND CONFIRMING REASSESSMENTS WITHIN REASSESSMENT DISTRICT NO. 2005-2 D. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR REASSESSMENT DISTRICT NO. 2005-1, APPROVING THE FORMS OF BOND INDENTURE, REFUNDING BONDS PURCHASE AGREEMENT, BOND PURCHASE AGREEMENT AND ESCROW AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH E. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR REASSESSMENT DISTRICT NO. 2005-2, APPROVING THE FORMS OF BOND INDENTURE, REFUNDING BONDS PURCHASE AGREEMENT, BOND PURCHASE AGREEMENT AND ESCROW AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH F. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 97-3 (OTAY RANCH MCMILLIN SPA ONE), COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST), COMMUNITY FACILITIES DISTRICT NO. 2000-1 (SUNBOW II - VILLAGES 5 THROUGH 10), COMMUNITY FACILITIES DISTRICT NO. 2001- 1 (SAN MIGUEL RANCH) AND COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE - WOODS, VISTAS AND LAND SWAP), AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF SEPARATE SERIES OF SPECIAL TAX REFUNDING BONDS OF EACH SUCH COMMUNITY FACILITIES DISTRICTS, APPROVING THE FORMS OF BOND INDENTURES FOR EACH SUCH SERIES OF SUCH REFUNDING BONDS, A REFUNDING BONDS PURCHASE AGREEMENT AND ESCROW AGREEMENTS FOR EACH SERIES OF REFUNDED BONDS, AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH Redevelopment Agency, June 7, 2005 Page 3 3.2. That the Public Financing Authority adopt the following resolution: G. RESOLUTION OF THE PUBLIC FINANCING AUTHORITY OF THE CITY OF CHULA VISTA AUTHORIZING THE ISSUANCE OF REFUNDING REVENUE BONDS, APPROVING THE FORMS OF AN INDENTURE OF TRUST, BOND PURCHASE CONTRACT, REFUNDING BONDS PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH OTHER BUSINESS OI5THEREDEVELOPMENTAGENCY 4. DIRECTOR'S REPORT 5. CHAIR REPORT 6. AGENCY COMMENTS ADJOURNMENT The Special Meeting of the Public Financing Authority will adjourn until further notice; the Redevelopment Agency will adjourn to a meeting on June 21, 2005, at 6:00 p.m., in the Council Chambers. AMERICANS WITH DISABILITIES ACT The City of Chula Vista, in complyin9 with the Americans with Disabilities Act (ADA), request individuals who require special accommodates to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least 48 hours in advance for meetings and five days for scheduled services and activities. Please contact the Secretary to the Redevelopment Agency for specific information at (619) 691-5047 or Telecommunications Devices for the Deaf (TDD) at (619) 585.5647. California Relay Service is also available for the hearing impaired. Redevelopment Agency, June 7, 2005 Page 4 .~ ellY OF CHUlA VISTA TUESDAY, JUNE 7,2005 4:00 P.M. (immediately following the City Council meeting) COUNCIL CHAMBERS PUBLIC SERVICES BUILDING SPECIAL MEETING OF THE PUBLIC FINANCING AUTHORITY MEETING .JOINTLY WITH THE REDEVELOPMENT AGENCY I CITY COUNCIL OF THE CITY OF CHULA VISTA CALL TO ORDER ROLL CALL Agency/Council/Public Financing Authority Members Castaneda, Davis, McCann, Rindone; Chair/Mayor Padilla CONSENT CALENDAR The staff recommendations regarding the following item(s) listed under the Consent Calendar will be enacted by the Council, Agency and/or Authority by one motion without discussion unless an Council and/or Agency member, a member of the public or City staff requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak Form" available in the lobby and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Public Hearing items. Items pulled by the public will be the first items of business. 1. ORDINANCE ADDING CHAPTER 2.55 TO THE CHULA VISTA MUNICIPAL CODE ESTABLISHING THE CHULA VISTA REDEVELOPMENT CORPORATION TO SUPPORT THE PLANNING AND REDEVELOPMENT ACTIVITIES OF THE CITY AND THE CHULA VISTA REDEVELOPMENT AGENCY WITHIN DESIGNATED AREAS OF THE CITY (SECOND READING) STAFF RECOMMENDATION: the May 24, 2005 meeting. Council adopt the ordinance as amended at 2. ORDINANCE AMENDING SECTIONS 2.24.030, 2.32.100, AND 2.42.010 OF TITLE 2 AND SECTION 19.14.592 OF TITLE 19 OF THE CHULA VISTA MUNICIPAL CODE (SECOND READING) STAFF RECOMMENDATION: Council adopt the ordinance. ORAL COMMUNICATIONS This is an opportunity tor the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment Agency trom taking action on any issues not included on the posted agenda.) If you wish to address the Agency on such a subject, please complete the "Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your name and address for record purposes and follow up action. ACTION ITEMS The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by the Council/Authority, staff, or members of the general public. The items will be considered individually by the Council/Authority and staff recommendation may in certain cases be presented in the alternative. Those who wish to speak, please fill out a Request to Speak form available in the lobby and submit it to the City Clerk prior to the meeting. 3. CONSIDERATION OF (1) REFUNDING CERTAIN ASSESSMENT DISTRICT BONDS; (2) APPROVAL OF CERTAIN REASSESSMENT REPORTS AND REASSESSMENTS WITHIN CERTAIN REASSESSMENT DISTRICTS (3) ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR CERTAIN REASSESSMENT DISTRICTS AND APPROVING AGREEMENTS AND OTHER ACTIONS IN CONNECTION THEREWITH; (4) ACTING AS THE LEGISLATIVE BODY OF CERTAIN COMMUNITY FACILITIES DISTRICTS; AND (5) ISSUING REFUNDING REVENUE BONDS AND APPROVING AGREEMENTS AND OTHER ACTIONS IN CONNECTION THEREWITH On 4/5/05, Council approved a resolution making preliminary determinations and declaring their intention to issue bonds to refund the outstanding improvements bonds issued for certain existing Assessment Districts and Community Facility Districts and orderings a report thereon. (Director of Finance/Treasurer) STAFF RECOMMENDATION: 3.1. That Council adopt the following resolutions: A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING AND DIRECTING COMPLIANCE WITH THE "REFUNDING ACTION OF 1984 FOR 1915 IMPROVEMENT ACT BONDS," AS MODIFIED, IN CONNECTION WITH THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR THE PURPOSE OF REFUNDING CERTAIN ASSESSMENT DISTRICT BONDS Redevelopment Agency, June 7, 2005 Page 2 ._~- - B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING THE REASSESSMENT REPORT AND CONFIRMING REASSESSMENTS WITHIN REASSESSMENT DISTRICT NO. 2005-1 C. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING THE REASSESSMENT REPORT AND CONFIRMING REASSESSMENTS WITHIN REASSESSMENT DISTRICT NO. 2005-2 D. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR REASSESSMENT DISTRICT NO. 2005-1. APPROVING THE FORMS OF BOND INDENTURE, REFUNDING BONDS PURCHASE AGREEMENT, BOND PURCHASE AGREEMENT AND ESCROW AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH E. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR REASSESSMENT DISTRICT NO. 2005-2. APPROVING THE FORMS OF BOND INDENTURE, REFUNDING BONDS PURCHASE AGREEMENT, BOND PURCHASE AGREEMENT AND ESCROW AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH F. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 97-3 (OTAY RANCH MCMILLIN SPA ONE), COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST), COMMUNITY FACILITIES DISTRICT NO. 2000-1 (SUNBOW II - VILLAGES 5 THROUGH 10), COMMUNITY FACILITIES DISTRICT NO. 2001- 1 (SAN MIGUEL RANCH) AND COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE - WOODS. VISTAS AND LAND SWAP), AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF SEPARATE SERIES OF SPECIAL TAX REFUNDING BONDS OF EACH SUCH COMMUNITY FACILITIES DISTRICTS, APPROVING THE FORMS OF BOND INDENTURES FOR EACH SUCH SERIES OF SUCH REFUNDING BONDS, A REFUNDING BONDS PURCHASE AGREEMENT AND ESCROW AGREEMENTS FOR EACH SERIES OF REFUNDED BONDS. AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH Redevelopment Agency, June 7, 2005 Page 3 ------- -- 3.2. That the Public Financing Authority adopt the following resolution: G. RESOLUTION OF THE PUBLIC FINANCING AUTHORITY OF THE CITY OF CHULA VISTA AUTHORIZING THE ISSUANCE OF REFUNDING REVENUE BONDS, APPROVING THE FORMS OF AN INDENTURE OF TRUST, BOND PURCHASE CONTRACT, REFUNDING BONDS PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH OTHER BUSINESS 4. DIRECTOR'S REPORT 5. CHAIR REPORT 6. AGENCY COMMENTS ADJOURNMENT The Special Meeting of the Public Financing Authority will adjourn until further notice; the Redevelopment Agency will adjourn to a meeting on June 21, 2005, at 6:00 p.m., in the Council Chambers. AMERICANS WITH DISABILITIES ACT The City of Chula Vista, in complying with the Americans with Disabilities Act (ADA), request individuals who require special accommodates to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least 48 hours in advance for meetings and five days for scheduled services and activities. Please contact the Secretary to the Redevelopment Agency for specific information at (61 g) 691-5047 or Telecommunications Devices for the Deaf (TOO) at (619) 585-5647. California Relay Service is also available for the hearing impaired. Redevelopment Agency, June 7, 2005 Page 4 ORDINANCE NO. AS REVISED AT THE MAY 24, 2005 M SECOND REAOING AND ADOPTION ETING AN ORDINANCE ADDING CHAPTER 2.55 TO THE CHULA VISTA MUNICIPAL CODE ESTABLISHING THE CHULA VISTA REDEVELOPMENT CORPORATION TO SUPPORT THE PLANNING AND REDEVELOPMENT ACTIVITIES OF THE CITY AND THE CHULA VISTA REDEVELOPMENT AGENCY WITHIN DESIGNATED AREAS OF THE CITY WHEREAS, on February 3, 2004, the City Council and Redevelopment Agency directed staff and consultants to prepare an analysis and discussion paper on the creation of a non-profit corporation to assist the City in planning and redevelopment activities; and WHEREAS, two facilitated workshops were held on the formation of such a non- profit corporation; and WHEREAS, a report evaluating four corporate structural alternatives was prepared and presented to the City Council and Redevelopment Agency; and WHEREAS, on November 23, 2004, based upon a staff report presented to the City Council which built upon the conclusions and recommendations from the workshops, the City Council and Redevelopment Agency adopted a resolution: (i) authorizing the formation of a non-profit public benefit corporation for the purposes of conducting redevelopment and planning activities, (ii) directing staff to prepare the necessary legal documents for the formation of such a corporation, and (iii) appropriating an interim operating budget and compensation schedule for the corporation and its board of directors; and WHEREAS, it is in the best interest of the City to establish the purposes, powers, composition and operating rules and regulations of such non-profit corporation in the Chula Visa Municipal Code. NOW, THEREFORE, the City Council of the City ofChula Vista hereby ordains as follows: SECTION 1: Chapter 2.55 is hereby added to Title 2 (Administration and Personnel) of the Chula Vista Municipal Code, to read as follows: Chapter 2.55 Chula Vista Redevelopment Corporation 2.55.010 Creation Authorized. The creation and formation of the Chula Vista Redevelopment Corporation is hereby authorized. 131!02392o..0001 583229.02 a04120/05 1-1 2.55.020 Purpose and Intent. It is the purpose and intent of the city council in establishing the Chula Vista Redevelopment Corporation to create a separate entity to serve as a resource to, and to advise and make recommendations to, the city council and redevelopment agency regarding planning and redevelopment of designated territories and areas of the city. The corporation shall assume certain powers and responsibilities with respect to planning and redevelopment that were previously delegated or assigned to the Chula Vista Redevelopment Agency and the planning and resource conservation commissions, and the design review committee, of the city. 2.55.030 Territory Subject to Corporation Activities. The corporation shall exercise its powers and functions over such territories or geographic areas of the city as the city council may from time to time designate by resolution or ordinance. 2.55.040 Functions and Duties. The specific functions and duties of the corporation shall be as set forth in Sections 2.55.050 through 2.55.080, and in the corporation's bylaws approved by the city council, as such bylaws may from time to time be amended in accordance with its procedures. 2.55.050 Previous Planning Commission Functions A. Legislative Activities. In addition to the exercise by the Planning Commission of advisory powers and functions with respect to legislative actions within its subject matter jurisdiction, the corporation shall review and make recommendations to the city council on all legislative planning items to the extent that the items relate to those geographic areas of the City that the city council designates as areas within which the corporation has the authority to exercise planning and redevelopment functions and within the Urban Core Specific Plan Area. These advisory powers and functions of the corporation shall be in addition to, and not in lieu of, the advisory powers and functions of the planning commission with respect to legislative planning matters. B. Administrative Activities. The corporation shall assume the functions of the planning commission with respect to administrative and quasi- judicial items that relate to lands or uses within the geographic areas of the City that the city council designates as areas within which the corporation has the authority to exercise planning and redevelopment functions. Any action by the corporation under this paragraph shall be subject to appeal to the City Council pursuant to Chapter 19.12 or Chapter 19.14, as applicable, of the Municipal Code. 1311023920-O001 583229.02 a04120/0S -2- 1-2 2.55.060 Previous Redevelopment Agency Functions. Notwithstanding any provisions of Chapter 2.24, the corporation shall have responsibility as follows: A. Recommendations. With respect to consideration of owner participation agreements, disposition and development agreements, and other approvals and agreements requiring expenditure of funds (other than solely the funds of the corporation), regulations, and other legislative functions or activities (such as eminent domain, issuance of bonds, and other financial transactions not involving solely the funds of the corporation) relating to lands or uses within those geographic areas of the City that the city council designates as areas within which the corporation has the authority to exercise planning and redevelopment functions, the corporation shall transmit a recommendation on such matters to the redevelopment agency, or to the city council, as applicable. B. Approvals. Notwithstanding the provisions of2.55.060(A), with respect to consideration of exclusive negotiating agreements, replacement housing plans, and other approvals and agreements requiring expenditure of only the funds of the corporation, the corporation shall act on such items in accordance with the applicable provisions of the bylaws. In addition, the corporation shall assume the functions of the redevelopment agency with respect to administrative and quasi- judicial items relating to lands or uses within the geographic areas of the City that the city council designates as areas within which the corporation has the authority to exercise planning and redevelopment functions. Any action by the corporation pertaining to administrative and quasi-judicial items under this paragraph shall be subject to appeal to the City Council pursuant to Chapter 19.12 or Chapter 19.14, as applicable, of the Municipal Code. 2.55.070 Previous Resource Conservation Commission Functions Notwithstanding any provision of Chapter 2.32, the Chula Vista Redevelopment Corporation shall carry out the duties of the resource conservation commission within those geographic areas of the City that the city council designates as areas within which the Chula Vista Redevelopment Corporation has the authority to exercise planning and redevelopment functions. 2.55.080 Previous Design Review Committee Functions Notwithstanding any provision of Chapter 19.14, the Chula Vista Redevelopment Corporation shall carry out the duties of the design review committee within those geographic areas of the City that the city council designates as areas within which the Chula Vista Redevelopment Corporation has the authority to exercise planning and redevelopment functions. 131/023920-000 I 583229.02 a04/20/05 -3- 1-3 2.55.090 Board of Directors' Membership. A. Number of directors. The board of directors of the corporation shall consist of nine (9) voting members, including five (5) "city directors" and four (4) "independent directors." B. City Directors. The five city directors shall be the five duly elected or appointed and qualified members of the city council then in office. C. Independent Directors. I. The four independent directors shall consist of members of the public appointed to the corporation board of directors by majority vote of the city council for four (4) year staggered terms, based upon the criteria and qualifications set forth in the corporation bylaws approved by the city council, as such bylaws may be amended from time to time. 2. The initial terms of independent directors shall be for nominal periods of two and four years, commencing upon appointment and concluding for two independent directors on June 30th of the second year of the term, and for the remaining two independent directors on June 30th of the fourth year of the term, unless an independent director's office becomes vacant prior to the end of such initial term. Thereafter, all independent directors shall serve for a term of four years, concluding on June 30th of the fourth year of the term, subject to removal or resignation pursuant to the corporation's bylaws. 3. Appointment of the independent directors to their initial nominal two-year and four-year terms shall be as determined by the Bylaws. 4. By majority vote, the city council shall have the power to remove any independent director for any reason, to reappoint any independent director to a succeeding four-year term witheet any limit 8ft the IHIffiBer sf tOffilS served lly such indCfleftaoftt directsFas set forth in the corporation bylaws approved by the city council, and to appoint any person meeting the criteria and qualifications set forth in the corporation bylaws to a vacant independent director office. Subject to the City Council's power to remove an independent director, all directors of the corporation shall hold office until a successor has been appointed and qualified. 2.55.100 Operation of the Corporation. A. Time of meetings. The regular meetings of the corporation board of directors shall be held on the second and fourth Thursdays of each month, at 6:00 P.M., and at such other dates and times as the board of directors may designate as adjourned or special meetings of the board of directors of the corporation. 131/023920-0001 583229.02 a04120/05 -4- 1-4 B. Place of meetings. Unless the corporation shall otherwise establish a meeting place in accordance with its bylaws, the meetings of the corporation board of directors shall be held at 276 Fourth A venue, in the City of Chula Vista. C. Notice of meetings. The meetings of the corporation board of directors, and notice thereof, shall be governed by the same rules and regulations by which the City Council is bound in the conduct of public meetings. D. Conduct of meetings. The conduct of meetings, including requirements for quorum, the vote required for passage of any motion, the means by which proposed actions are considered, and other matters, shall be undertaken in accordance with the bylaws approved by the city council, as such bylaws may be amended from time to time by the corporation board of directors. E. Board Operating Budget. The corporation shall annually prepare a proposed corporation board of directors operating budget, including but not limited to board director stipends, training, travel, membership, and miscellaneous expenses, and costs of audit. Upon approval by the corporation board of directors, the proposed budget shall be forwarded to the city council for consideration as part of the City's annual budget. F. Gifts and grants. Subject to approval by the City Council, the corporation may accept gifts and grants from any source to assist it in the performance of its functions. In the event that private funds or funds from other governmental agencies are made available for special projects, surveys, educational programs, or general program support, the corporation is authorized to enter into appropriate contracts for the utilization of such funds in furtherance for the purpose and intent of, and the duties of functions of, the corporation, subject to ratification of such contracts by the city council. 2.55.200 Director Compensation and Reimbursement. The city council may, by resolution, authorize and establish compensation to the board of directors of the corporation, and authorize the corporation to reimburse directors, officers and employees for actual, necessary and reasonable expenses, including mileage, incurred in the performance of their duties authorized, directed or approved by the corporation board of directors. PASSED AND ADOPTED this _ day ofa ,2005. 131/023920-0001 583229.02 a04120!OS -5- 1-5 SECOND READING AND ADOPT/O ORDINANCE NO. AN ORDINANCE AMENDING SECTIONS 2.24.030, 2.32.100, AND 2.42.010 OF TITLE 2 AND SECTION 19.14.592 OF TITLE 19 OF THE CHULA VISTA MUNICIPAL CODE WHEREAS, on February 3, 2004, the City Council and Redevelopment Agency directed staff and consultants to prepare an analysis and discussion paper on the creation of a nonprofit corporation to assist the City in planning and redevelopment activities; and WHEREAS, two facilitated workshops were held on the formation of such a nonprofit corporation; and WHEREAS, a report evaluating four corporate structural alternatives was prepared and presented to the City Council and Redevelopment Agency; and WHEREAS, on November 23,2004, based upon a staff report presented to the City Council which built upon the conclusions and reco=endations from the workshops, the City Council and Redevelopment Agency adopted a resolution: (i) authorizing the formation of a nonprofit public benefit corporation for the purposes of conducting redevelopment and planning activities, (ii) directing staff to prepare the necessary legal documents for the formation of such a corporation, and (iii) appropriating an interim operating budget and compensation schedule for the corporation and its board of directors; and WHEREAS, it is in the best interest of the City to establish the purposes, powers, composition and operating rules and regulations of such nonprofit corporation in the Chula Visa Municipal Code and to ensure consistency with regard to the functions and operations of the corporation throughout the Chula Vista Municipal Code. NOW, THEREFORE, the City Council of the City ofChula Vista hereby ordains as follows: SECTION 1: Section 2.24.030 is hereby added to Title 2 (Administration and Personnel) of the Chula Vista Municipal Code, to read as follows: 2.24.030 Implementation of Redevelopment Agency Functions in Designated Areas by ChuJa Vista Redevelopment Corporation In accordance with Chapter 2.55 of the Municipal Code, and notwithstanding any provision of Chapter 2.24, the Chula Vista Redevelopment Corporation shall carry out those duties of the redevelopment agency as set forth in Sections 2.55.050 and 2.55.060 within those geographic areas of the City that the city council designates as areas within which the Chula Vista Redevelopment Corporation has the authority to exercise planning and redevelopment functions. SECTION 2: Section 2.32.100 is hereby added to Title 2 (Administration and Personnel) of the Chula Vista Municipal Code, to read as follows: 2-1 2.32.100 Implementation of Resource Conservation Commission Functions in Designated Areas by Chula Vista Redevelopment Corporation In accordance with Chapter 2.55 of the Municipal Code, and notwithstanding any provision of Chapter 2.32, the Chula Vista Redevelopment Corporation shall carry out the duties of the resource conservation commission within those geographic areas of the City that the city council designates as areas within which the Chula Vista . Redevelopment Corporation has the authority to exercise plllIllling and redevelopment functions. SECTION 3: Section 2.42.010 of Title 2 (Administration and Personnel) of the Chula Vista Municipal Code is hereby amended to read as follows: 2.42.010 Statutory provisions applicable. Chapter 3, excepting only Article 4 thereof, and Chapter 4 of Title 7 of the Gove=ent Code of the state, relating to conservation, plllIllling, and zoning, are hereby adopted by and made applicable in and to the city, except in so far as the same may conflict with the Charter or the provisions of Chapter 2.55 of Title 2 of the Municipal Code, in which case the provisions of the Charter or such Chapter 2.55 shall be controlling. SECTION 4: Section 19.14.592 is hereby added to Title 19 (Zoning and Specific Plans) of the Chula Vista Municipal Code, to read as follows: 19.14.592 Implementation of Design Review Committee Functions in Designated Areas by Chula Vista Redevelopment Corporation In accordance with Chapter 2.55 of the Municipal Code, and notwithstanding any provision of Chapter 19.14, the Chula Vista Redevelopment Corporation shall carry out the duties of the design review committee within those geographic areas of the City that the city council designates as areas within which the Chula Vista Redevelopment Corporation has the authority to exercise plllIllling and redevelopment functions. PASSED AND ADOPTED this _ day of ,2005. 2-2 JOINT CITY COUNCIL / PUBLIC FINANCING AUTHORITY COUNCIL AGENDA STATEMENT Item No Meeting Date .3 6/07/2005 ITEM TITLE: A. Resolution of the City Council of the City of Chula Vista Authorizing and Directing Compliance with the "Refunding Act of 1984 for 1915 Improvement Act Bonds," as Modified, in Connection with the Issuance of Limited Obligation Refunding Bonds for the Purpose of Refunding Certain Assessment District Bonds B. Resolution of the City Council of the City of Chula Vista, Approving the Reassessment Report and Confirming Reassessments Within Reassessment District No. 2005-1 C. Resolution of the City Council of the City of Chula Vista, Approving the Reassessment Report and Confirming Reassessments with Reassessment District No. 2005-2 D. Resolution of the City Council of the City of Chula Vista, Authorizing and Providing for the Issuance of Limited Obligation Refunding Bonds for Reassessment District No. 2005-1, Approving the Forms of Bond Indenture, Refunding Bonds Purchase Agreement, Bond Purchase Agreement and Escrow Agreement and Authorizing Other Actions in Connection Therewith E. Resolution of the City Council of the City of Chula Vista, Authorizing and Providing for the Issuance of Limited Obligation Refunding Bonds for Reassessment District No. 2005-2, Approving the Forms of Bond Indenture, Refunding Bonds Purchase Agreement, Bond Purchase Agreement and Escrow Agreement and Authorizing Other Actions in Connection Therewith F. Resolution of the City Council of the City of Chula Vista, Acting as the Legislative Body of Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One), Community Facilities District No. 99-1 (Otay Ranch Spa One-Portions of Village One, Village Five and Village One West), Community Facilities District No. 2000-1 (Sunbow II -Villages 5 Through 10), Community Facilities District No. 2001-1 (San Miguel Ranch) and Community Facilities District No. 06-1 (Eastlake- Woods, Vistas and land Swap), Authorizing and Providing for 3-1 Page 2, Item 3 Meeting Date 6/07/2005 the Issuance of Separate Series of Special Tax Refunding Bonds of Each Such Community Facilities District, Approving the Forms of Bond Indentures for Each Such Series of Such Refunding Bonds, A Refunding Bonds Purchase Agreement and Escrow Agreements for Each Series of Refunded Bonds, and Authorizing Other Actions in Connection Therewith. G. Resolution of the Chula Vista Public Financing Authority of the City of Chula Vista Authorizing the Issuance of Refunding Revenue Bonds, Approving the Forms of an Indenture of Trust, Bond Purchase Contract, Refunding Bonds Purchase Agreement, Preliminary Official Statement and Continuing Disclosure Agreement and Authorizing Other Actions in Connection Therewith REVIEWED BY: , Director of FinanCefTreasurerhL City Manage~ (4/5ths Vote: Yes_ No _x_J SUBMITTED BY: SUMMARY: On April 5, 2005, the City Council approved a resolution making preliminary determinations and declaring its intention to issue bonds to refund the outstanding improvement bonds issued for certain existing Assessment Districts and Community Facilities Districts and ordering a report thereon. The Council is now being asked to approve the reassessment reports, confirm the reassessments, authorize the issuance and the sale of limited obligation refunding bonds for each Reassessment District and special tax refunding bonds for each Community Facilities District to the Authority, and approve other related documents and actions. The Authority is being asked to authorize the sale of bonds for the purpose of purchasing the limited obligation refunding bonds of the City and the special tax refunding bonds of the Community Facilities Districts, and to approve other related documents and actions. All of these actions are recommended with the sole purpose of achieving savings in annual assessments for property owners within the subject districts. RECOMMENDATION: The City Council approve Resolutions A through F the Chula Vista Public Financing Authority approve Resolution G. BOARDS/COMMISSIONS RECOMMENDATIONS: Not applicable. 3-2 DISCUSSION: Page 3, Item -3 Meeting Date 6/07/2005 On AprilS, 2005, the City Council approved Resolution 2005-112 making preliminary determinations and declaring their intention to issue bonds to refund the outstanding improvement bonds issued for an existing Assessment District (AD), the outstanding limited obligation refunding improvement bonds for an existing Reassessment District (RAD) and the outstanding special tax bonds for the Community Facilities Districts (CFD) and ordering a report thereon. Upon further review, it was determined that the following Assessment District, Reassessment District and six Community Facilities Districts would benefit from the refinancing: RAD of 1995 AD97 -2 CFD97-3 CFD99-1 (1999) CFD99-1 (2001) CFD2000-1 CFD2001-1 CFD06-1 CFD2001-2 Includes former AD 87-1 (East H Street) and AD 88-2 (Otay Lakes Road) Otay Ranch Village 1 Lomas Verdes Otay Ranch SPA 1 Otay Ranch SPA 1 Sunbow II Villages 5 - 10 San Miguel Ranch, Improvement Area A Eastlake-Woods, Vistas, Improvement Area A McMillin-Otay Ranch Village 6 Due to lower interest rates, improved development status, and savings derived from refinancing existing debt for these districts using a pooling concept, over 11,000 property owners will benefit from this refinancing. The criteria for the refinancing was set at a minimum savings of 3%, and based on preliminary analysis, the estimated savings varies by district, and ranges from 5.8% to 18% based on the current interest rate environment. The projected aggregate annual savings would be approximately $1 million, and the projected total savings over the life of the existing debt would be close to $12 million. Also, AD87 -1, AD88-2 and AD97-2 property owners will realize additional savings by calling bonds. This refinancing includes both ADs and CFDs in an effort to maximize the benefits achieved through economies of scale thereby reducing the costs of issuance for each district. But ADs and CFDs have different interest payment and maturity dates (March 1 and September 1 for CFDs, and March 2 and September 2 for ADs), and the refinancing must use a common interest payment and maturity date. The Mello-Roos Act prohibits extending the term of special tax bonds being refinanced, so it is necessary to modify the Assessment District dates up to March 1 and September 1 to coincide with the Community Facilities District dates. This is addressed in Resolution A. As mentioned in the April agenda item, the requirements of the refunding process include reassessing properties in RAD 2005-1 (to supersede and replace RAD of 1995) and RAD 2005-2 (to supersede and replace AD 97-2) in accordance with the applicable reassessment report, the City issuing limited obligation refunding 3-3 Page 4, Item .3 Meeting Date 6/07/2005 bonds for RAD 2005-1 and RAD 2005-2, each of the CFDs issuing special tax refunding bonds, the City and the CFDs selling such refunding bonds to the Authority, and finally, the Authority issuing revenue bonds with the proceeds used to purchase the refunding bonds from the City and the CFDs. This process has been widely used for the same purpose by many entities over the years, including Chula Vista in 1995 and 2001. In Resolutions Band C, the Council is being asked to adopt the Reassessment Reports prepared by the firm of MuniFinancial, copies of which are available in the City Clerk's office, and to confirm and order the reassessment of properties within RAD 2005-1 (formerly RAD of 1995) and RAD 2005-2 (formerly AD 97-2) pursuant to summary actions. This action is available to Council without public hearing under Section 9525 of the California Streets and Highways Code as long as: (1) each annual assessment is reduced as a result; (2) the maturity of the bonds is not extended; and (3) the principal amount of the new reassessments is less than the unpaid principal amount of the original assessment. All three tests are met in the proposed transaction for both RAD 2005-1 and RAD 2005-2. hi Resolutions D and E, the Council is being asked to authorize the issuance of the limited obligation refunding bonds for RAD 2005-1 and RAD 2005-2 in an amount not to exceed the amount of the reassessments, authorize the sale of these bonds to the Authority, and approve related documents and actions, copies of which are available in the City Clerk's office. In Resolution F, the Council, acting in its authority as the legislative body of the CFDs, is being asked to authorize the issuance of separate series of special tax refunding bonds for each Community Facilities District, authorize the sale of these bonds to the Authority, and approve the related documents and actions, copies of which are available in the City Clerk's office. In Resolution G, the Public Financing Authority is being asked to authorize the sale of bonds to the underwriter in an amount sufficient to provide funds to purchase the refunding bonds to be issued by the City and the CFDs, subject to the underwriter's discount being no more than 0.85% and the interest rate being less than 5.5%. The projected net interest cost to the Authority's bonds is 4.50%, with coupons ranging from 2.5% to 4.75%. In addition, the Authority is being asked to approve related legal documents, copies of which are available in the City Clerk's office, and to authorize the Director of Finance to take all necessary steps to complete the transaction. FISCAL IMPACT: This refinancing will result in an estimated net present value savings to the property owners of $12 million, or an average of $1,082 for each of the 11,091 parcels. The annual average savings per parcel is estimated to be $92. 3-4 Page 5, Item ..3 Meeting Date 6/07/2005 Costs of issuance, such as the fees for Bond Counsel ($164,000), Financial Advisor ($115,000), Underwriter (not to exceed 0.85% of the bond size) and reassessment report ($40,000) are estimates and will be based on the actual bond size. All costs associated with the refinancing, including City staff time reimbursement, will be paid from the bond proceeds and are factored into the reduced annual assessments and special taxes. 3-5 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING AND DIRECTING COMPLIANCE WITH THE "REFUNDING ACT OF 1984 FOR 1915 IMPROVEMENT ACT BONDS," AS MODIFIED, IN CONNECTION WITH THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR THE PURPOSE OF REFUNDING CERTAIN ASSESSMENT DISTRICT BONDS WHEREAS, the City of Chula Vista (the "City") is a municipal corporation and charter city duly organized and existing under a freeholder's charter pursuant to which the City has the right and power to make and enforce all laws and regulations with respect to municipal affairs and certain other matters in accordance with and as more particularly provided in Sections 3, 5 and 7 of Article XI of the Constitution of the State of California (the "Constitution") and the Charter of the City of Chula Vista (the "Charter"); and WHEREAS, as a charter city, the City is duly authorized and empowered to adopt regulations as they relate to municipal affairs of the City, including bond matters; and WHEREAS, the City has formed assessment districts pursuant to the Municipal Improvement Act of 1913 (California Streets and Highways Code S10000, et seq.) (the "Improvement Act"), levied assessments within such assessment districts pursuant to the Improvement Act and issued bonds ("Limited Obligation Improvement Bonds") pursuant to the Improvement Bond Act of 1915 (California Streets and Highways Code S8500, et seq.) (the "Assessment District Bond Act") for the purpose of financing the acquisition or construction of public improvements to specially benefit and serve the properties within such assessment districts; and WHEREAS, the City has formed reassessment districts pursuant to the Refunding Bond Act of 1984 for 1915 Improvement Act Bonds (the "Refunding Act") for the purpose of financing the refunding of prior Limited Obligation Improvement Bonds from the proceeds of limited obligation refunding bonds ("Limited Obligation Refunding Bonds") issued pursuant to the Refunding Act; and WHEREAS, the City has also formed community facilities districts pursuant to the Mello-Roos Community Facilities Act of 1982 (California Government Code S53311, et seq.) (the "Mello-Roos Act") and authorized such community facilities districts to levy special taxes therein and to issue bonds ("Special Tax Bonds") secured by such special taxes for the purpose of financing the acquisition or construction of public improvements benefiting new development within such community facilities districts; and WHEREAS, as a result of a combination of favorable interest rate conditions in the municipal bond market, and the level of development, diversity of ownership and increase in property values within certain assessment districts and community facilities Resolution ~ 1984 Refunding Act! (revised) I 3-6 districts previously established by the City, the City desires to issue certain Limited Obligation Refunding Bonds identified in Exhibit A to this Resolution (the "2005 Limited Obligation Refunding Bonds") to refund certain previously issued Limited Obligation Improvement Bonds (the "Prior Limited Obligation Improvement Bonds") and certain Limited Obligation Refunding Bonds (the "Prior Limited Obligation Refunding Bonds") identified in Exhibit B to this Resolution and certain special tax refunding bonds (the "2005 Special Tax Refunding Bonds") identified in Exhibit C to this resolution to refund certain previously issued Special Tax Bonds (the "Prior Special Tax Bonds") identified in Exhibit D to this Resolution to reduce the assessments, reassessments and special taxes, respectively, which must be paid by the property owners within the affected assessment districts, reassessment district and community facilities districts; and WHEREAS, the City believes that combining the issuance of 2005 Limited Obligation Refunding Bonds and the 2005 Special Tax Refunding Bonds (collectively, the "2005 Refunding Bonds") will enhance the savings to the property owners within the affected assessment districts, reassessment district and community facilities districts; and WHEREAS, the interest payment dates and maturity dates for the Prior Special Tax Bonds are March 1 and September 1, respectively, throughout the term of such bonds; and WHEREAS, the Mello-Roos Act provides that the term of each series of the 2005 Special Tax Refunding Bonds may not exceed the term of the series of the Prior Special Tax Bonds to be redeemed from the proceeds of such series of 2005 Special Tax Refunding Bonds; and WHEREAS, the interest payment dates and maturity dates for the Prior Limited Obligation Improvement Bonds and 2005 Limited Obligation Refunding Bonds are established by the Assessment District Bond Act and the Refunding Act of 1984, respectively, as March 2 and September 2 of each year; and WHEREAS, the issuance of 2005 Limited Obligation Refunding Bonds and 2005 Special Tax Refunding Bonds with common interest payment dates and maturity dates will facilitate the ability to combine such refundings to achieve enhanced savings for the affected property owners; and WHEREAS, the maturity dates for the 2005 Special Tax Refunding Bonds may not be extended to September 2 without extending the term of the 2005 Special Tax Refunding Bonds in violation ofthe Mello-Roos Act; and WHEREAS, in order to provide for the issuance of the 2005 Refunding Bonds with common interest payment dates and maturity dates it will be necessary to change the interest payment dates and maturity dates of the 2005 Limited Obligation Refunding Bonds to March 1 and September 1; and Resolution - 1984 Refunding Act - Final 2 3-7 WHEREAS, the City is not required to, but desires to, follow the refunding procedures set forth in the Refunding Act of 1984, with respect to the issuance of the 2005 Limited Obligation Refunding Bonds for the purpose of refunding the Prior Limited Obligation Improvement Bonds and the Prior Limited Obligation Refunding Bonds; and WHEREAS, the City Council desires to modify the procedures contained in the Refunding Act of 1984, as applied to issuance of the 2005 Limited Obligation Refunding Bonds, in order to allow the 2005 Limited Obligation Refunding Bonds to be issued with interest payment dates and maturity dates of March 1 and September 1. NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the City Council of the City ofChula Vista as follows: Section 1. Reference To Laws. The City of Chula Vista shall follow the provisions of the Refunding Act of 1984 for 1915 Improvement Act Bonds (California Streets and Highways Code 99500, et seq.) (the "Refunding Act of 1984"), as modified by this Resolution, in connection with the issuance of the 2005 Limited Obligation Refunding Bonds for the purpose of refunding of the Prior Limited Obligation Improvement Bonds and the Prior Limited Obligation Refunding Bonds. Section 2. Modifications To Procedures Set Forth In The Refunding Act Of 1984. The City will follow the procedures set forth in the Refunding Act of 1984, in connection with issuance of the 2005 Limited Obligation Refunding Bonds, with the following modifications (modifications are in bold, italicized text): (a) As applied to the issuance of the 2005 Limited Obligation Refunding Bonds Bonds, Subsection (a)(2) of Section 9600 of the Streets and Highways Code shall be modified to read as follows: "(2) Interest upon the refunding bonds from the September 1 or the September 2, as determined by resolution of the City Council, next preceding the date of sale thereof to not later than the September 1 or September 2, as applicable, next succeeding two years from the date." (b) As applied to the issuance of the 2005 Limited Obligation Refunding Bonds, Section 9605 of the Streets and Highways Code shall be modified to read as follows: "All of the refunding bonds shall mature on September 1 or September 2 as determined by resolution of the City Council." (c) As applied to the issuance of the 2005 Limited Obligation Refunding Bonds, Section 9606 of the Streets and Highways Code shall be modified to read as follows: Resolution - 1984 Refunding Act! (revised) 3 3-8 "In no event shall the first maturity date of any refunding bonds be earlier than the first day of September or the second day of September, as determined by resolution of the City Council, next succeeding 12 months after the date of the bonds." (d) As applied to the issuance of the 2005 Limited Obligation Refunding Bonds, Section 9607 of the Streets and Highways Code shall be modified to read as follows: "The last maturity of any refunding bonds shall not exceed 39 years from the first or second day of September, as determined by resolution of the City Council, next succeeding 12 months after the date of the bonds." (e) As applied to the issuance of the 2005 Limited Obligation Refunding Bonds, Section 9609 of the Streets and Highways Code shall be modified to read as follows: "The interest on refunding bonds shall be payable on March 1 or March 2 and September 1 or September 2, respectively, of each year, as determined by resolution of the City Council." (f) As applied to the issuance of the 2005 Limited Obligation Refunding Bonds, Section 9610 of the Streets and Highways Code shall be modified to read as follows: "The first interest payment on the bonds shall be March 1 or March 2, as determined by resolution of the City Council, proceeding the first or second day of September, as applicable, next succeeding 12 months after the date of the bonds, except that, if nay portion of the interest is funded, the legislative body may specify that the first payment of interest shall become due on an earlier interest payment date following the date of the bonds." Section 3. Official Actions. The Mayor, the City Manager, the Finance Director, the City Attorney, the City Clerk and any and all other officers of the City are hereby authorized and directed, for and in the name of and on behalf of the City, to do any and all things and take any and all actions, and to execute and deliver all certificates and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the refunding, issuance and delivery of the 2005 Limited Obligation Refunding Bonds. Section 4. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. Resolution - 1984 Refunding Act! (revised) 4 3-9 Presented by Maria Kachadoorian Director of Finance Resolution -1984 Refunding Act! (revised) 5 3-10 Approved as to form by ~ff~ ~ ~~m EXHIBIT A 2005 LIMITED OBLIGATION REFUNDING BONDS 1. City of Chula Vista Reassessment District No. 2005-1 2005 Limited Obligation Refunding Bonds to be issued in a principal amount not to exceed $8,000,000; 2, City of Chula Vista Reassessment District No 2005-2 2005 Limited Obligations Refunding Bonds to be issued in a principal amount not to exceed $11,000,000 Resolution - 1984 Refunding Act - Final 6 3-11 EXHIBIT B PRIOR LIMITED OBLIGATION IMPROVEMENT BONDS AND PRIOR LIMITED OBLIGATION REFUNDING BONDS I. The outstanding principal amount of the City of Chula Vista Assessment District No. 97-2 (Otay Ranch, Village One) Limited Obligation Improvement Bonds issued in the original principal amount of $12,430,000. 2. A portion of the outstanding principal amount of the Limited Obligation Refunding Bonds, City of Chula Vista Reassessment District of 1995 issued in the original principal amount of $19,255,000. Resolution -1984 Refunding Act - Final 7 3-12 EXHIBIT C 2005 SPECIAL TAX REFUNDING BONDS 1. City of Chula Vista Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $12,500,000. 2. City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One _ Portions of Village One, Village Five and Village One West) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $47,500,000. 3. City of Chula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $8,000,000. 4. City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2005 Improvement Area A Special Tax Refunding Bonds to be issued in a principal amount not to exceed $16,000,000. 5. City of Chula Vista Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap) 2005 Improvement Area A Special Tax Refunding Bonds to issued in a principal amount not to exceed $47,000,000. Resolution -1984 Refunding Act - Final 8 3-13 EXHIBITD PRIOR SPECIAL TAX BONDS 1. City of Chula Vista Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) Special Tax Bonds issued in the original principal amount of $11,825,000. 2. City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 1999 Special Tax Bonds issued in the original principal amount of $23,000,000. 3. City ofChula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 2001 Special Tax Bonds issued in the original principal amount of $19,000,000, 4. City of Chula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2000 Special Tax Bonds issued in the original principal amount of $7,385,000, 5. City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds issued in the original principal amount of$14,425,000. 6. City of Chula Vista Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds issued in the original principal amount of$39,000,000, Resolution - 1984 Refunding Act ~ Final 9 3-14 RESOLUTION NO. 2005- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING THE REASSESSMENT REPORT AND CONFIRMING REASSESSMENTS WITHIN REASSESSMENT DISTRICT NO. 2005-1 WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA, did previously undertake proceedings and confirmed reassessments in an assessment district pursuant to the terms and provisions of the "Refunding Act of 1984 for 1915 Improvement Act Bonds", being Division 11.5 of the Streets and Highways Code of the State of California (the "Refunding Act"), said reassessment district known and designated as Reassessment District of 1995 (the "1995 Reassessment District"); and, WHEREAS, limited obligation refunding improvement bonds representing the unpaid reassessments within the Reassessment District (the "1995 Limited Obligation Refunding Improvement Bonds") were issued and sold in the manner provided in the Refunding Act to refund limited obligation improvement bonds previously issued by the City for Assessment District No. 85-2 (EastLake) ("AD No. 85-2"), Assessment District No. 86-1 (EastLake) ("AD No. 86-1"), Assessment District No. 87-1 (East "H" Street) ("AD No. 87-1") and Assessment District No. 88-2 (Otay Lakes Road) ("AD No. 88-2"); and, WHEREAS, the term of the reassessments levied for 1995 Reassessment District on the parcels within AD No. 85-2 and AD No. 86-1 will terminate on September 2,2006 and the debt service on the principal amount of the 1995 Limited Obligation Refunding Improvement Bonds equal to such remaining unpaid principal amount of such reassessments and the interest thereon will be paid from moneys on deposit in the reserve fund established for certain bonds issued by the Chula Vista Public Financing Authority to acquire the 1995 Limited Obligation Refunding Bonds; and, WHEREAS, at this time, as a result of favorable interest rate conditions within the municipal bond market, this legislative body has initiated proceedings to reassess the parcels located within the remaining portion of the 1995 Reassessment District that were originally located in AD No, 87-1 and AD No. 88-2 (the "1995 Reassessment District Remainder"), to include such parcels in a new reassessment district to be designated as City of Chula Vista Reassessment District No. 2005-1 ("Reassessment District No. 2005-1") and to refund that principal amount of all outstanding 1995 Limited Obligation Refunding Improvement Bonds equal to the remaining unpaid reassessment liens levied on such parcels for the 1995 Reassessment District from the proceeds of refunding bonds (the "2005 Limited Obligation Refunding Bonds") to be issued pursuant to the Refunding Act as modified by that certain resolution of the City Council adopted on June 7, 2005 and entitled "A Resolution of the City Council of the City of Chula Vista Authorizing and Directing Compliance with the 'Refunding Act of 1984 for 1915 Improvement Act Bonds,' as Modified in this Resolution, in Connection with the Issuance of Limited Obligation Refunding Bonds for the Purpose of Refunding Certain Assessment District Bonds" (the "Refunding Act Resolution"); and, 1 3-15 WHEREAS, this legislative body has previously ordered the preparation of a Reassessment Report pursuant to the Refunding Act, said Report to generally contain the following: A. A schedule setting forth the unpaid principal and interest on the 1995 Limited Obligation Refunding Improvement Bonds of the 1995 Reassessment District to be refunded and the total amounts thereof; B. The total estimated principal amount of the reassessment within Reassessment District No, 2005-1 and of the 2005 Limited Obligation Refunding Bonds and the maximum interest rate thereon, together with an estimate of costs of the reassessment and of issuing the 2005 Limited Obligation Refunding Bonds; C. The Auditor's Record showing the schedule of the principal installments and interest on all unpaid original reassessments for the 1995 Reassessment District Remainder and the total amounts thereof; D. The estimated amount of each reassessment, identified by reassessment number corresponding to the reassessment number on the reassessment diagram prepared for Reassessment District No. 2005-1, together with a proposed Auditor's Record for such reassessment; E. A reassessment diagram showing Reassessment District No. 2005-1 and the boundaries and dimensions of the subdivisions ofland within Reassessment District No. 2005-1; and, WHEREAS, this legislative body has now received and considered the Reassessment Report and is ready to proceed to make certain findings and approve the Reassessment Report. NOW, THEREFORE, BE IT RESOLVED AND DETERMINED: SECTION I. The above recitals are all true and correct. SECTION 2. The Reassessment Report as presented to this City Council is hereby approved, and it is hereby determined by this City Council that if the 2005 Limited Obligation Refunding Bonds proposed to be issued for Reassessment District No. 2005-1 are issued and sold with a purchase price and at interest rates not to exceed those set forth in the Reassessment Report, the following conditions will be satisfied: A. Each estimated annual installment of principal and interest on the reassessment for Reassessment District No. 2005-1 will be less than the corresponding annual installment of principal and interest on the portion of the original reassessment being superseded and supplanted by the same percentage for all subdivisions of land within the 1995 Reassessment District Remainder being reassessed; B. The number of years to maturity of all 2005 Limited Obligation Refunding Bonds will be no more than the number of years to the last maturity of the 1995 Limited Obligation Refunding Improvement Bonds; 2 3-16 C. The principal amount of the reassessment on each subdivision of land within Reassessment District No. 2005-1 will be less than the corresponding unpaid principal amount of the portion of the original reassessment being superseded and supplanted by the same percentage for each subdivision of land within the 1995 Reassessment District Remainder being reassessed; and D. The reassessments, as set forth in the Reassessment Report, shall not be deemed to be an assessment within the meaning of, and may be ordered without compliance with the procedural requirements of, Article XIIID of the Constitution of the State of California. Based upon the foregoing determinations, this City Council hereby approves and confirms the reassessments for the 2005 Limited Obligation Refunding Bonds and the contributions from the existing funds of the 1995 Reassessment District, all as set forth in the Reassessment Report, and a copy of this Resolution shall be entered upon the minutes of this meeting of the legislative body. The reassessments and the Reassessment Report may be adjusted and finalized upon the establishment of the fmal pricing for the sale of the 2005 Limited Obligation Refunding Bonds provided that such principal amount of the reassessment on each subdivision of land within Reassessment District No. 2005-1 will be less than the corresponding unpaid principal amount of the portion of the original reassessment being superseded and supplanted by the same percentage for each subdivision ofland within the 1995 Reassessment District Remainder being reassessed. SECTION 3. This City Council hereby authorizes the issuance and sale of the 2005 Limited Obligation Refunding Bonds to represent all unpaid reassessments within Reassessment District No. 2005-1 and said refunding bonds shall bear interest at a rate or rates not to exceed the interest rates set forth in the Reassessment Report for such refunding bonds, and shall be issued in the manner as provided by the Refunding Act as modified by the Refunding Act Resolution. The last maturity of said refunding bonds shall not exceed the number of years to the last maturity of the 1995 Limited Obligation Refunding hnprovement Bonds. SECTION 4. The final reassessment within Reassessment District No. 2005-1, together with the reassessment diagram, as shall be set forth in the final Reassessment Report, shall be recorded in the Office of the Superintendent of Streets upon (a) the running of the limitations period specified in Section 9707 of the Refunding Act without the filing of an action to challenge the validity of the reassessment and refunding proceedings and/or the issuance of the 2005 Limited Obligation Refunding Bonds and (b) the execution of a bond purchase agreement with a purchase price and at interest rates not to exceed those set forth in the Reassessment Report. Immediately thereafter a copy of the reassessment diagram shall be filed in the Office of the County Recorder and a Notice of Reassessment, referencing said diagram, shall be recorded in the Office of the County Recorder, all pursuant to the provisions of Division 4.5 of the Streets and Highways Code of the State of California, and specifically Section 3114. Upon the recordation, the reassessments shall become liens upon the various parcels of property and land assessed as shown on the reassessment diagram. From and after the date of such recordation and filing, the reassessments originally levied for the 1995 Reassessment District Remainder shall be superseded and supplanted. The lien of the original reassessments is not superseded and supplanted as to any unpaid installments of the 3 3-17 reassessments originally levied which are now delinquent and the penalties and interest, if any, thereon. Amounts, if any, received from the payment of delinquent reassessments and the penalties and interest thereon, excluding attorney's fees and costs and post-judgment interest, if any, shall be deposited into the redemption fund for the 2005 Limited Obligation Refunding Bonds. SECTION 5. This City Council hereby determines and declares that the City will not obligate itself to advance available funds from the City treasury to cure any deficiency which may occur in the bond redemption fund for the 2005 Limited Obligation Refunding Bonds. SECTION 6. A copy of this Resolution confirming the reassessments within Reassessment District No. 2005-1, which reassessments shall constitute the security for the 2005 Limited Obligation Refunding Bonds, shall be filed in the Office of the Treasurer, and the Treasurer shall keep the record showing the several installments of principal and interest on the reassessments which are to be collected each year during the term of said refunding bonds. An annual portion of each reassessment, together with annual interest on said reassessment, shall be payable in the same manner and at the same time and in the same installment as the general property taxes of the County and shall be payable and become delinquent at the same time and in the same proportionate amount. Each year the annual installments shall be submitted to the County Auditor for purposes of collection, and the County Auditor shall, at the close of the tax collecting season, promptly render to the Treasurer a detailed report showing the amount of such installments, interest, penalties and percentages so collected. SECTION 7. This Resolution shall become effective upon its adoption. PREPARED BY: APPROVED AS TO FORM: (::iaJ~ y Attorney Maria Kachadoorian Director of Finance 4 3-18 RESOLUTION NO. 2005- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING THE REASSESSMENT REPORT AND CONFIRMING REASSESSMENTS WITHIN REASSESSMENT DISTRICT NO. 2005-2 WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA, did previously undertake proceedings and confirmed assessments in an assessment district pursuant to the terms and provisions of the "Municipal hnprovement Act of 1913", being Division 12 of the Streets and Highways Code of the State of California, said special assessment district known and designated as Assessment District No. 97-2 (Otay Ranch, Village One) (the "Assessment District"); and, WHEREAS, improvement bonds representing the unpaid assessments within the Assessment District (the "Limited Obligation hnprovement Bonds") were issued and sold in the manner provided in the "hnprovement Bond Act of 1915", being Division 10 of the Streets and Highways Code of the State of California; and, WHEREAS, at this time, as a result of favorable interest rate conditions within the municipal bond market, this legislative body has initiated proceedings to reassess the parcels within the Assessment District and to refund all outstanding Improvement Bonds from the proceeds of refunding bonds to be issued pursuant to the "Refunding Act of 1984 for 1915 Improvement Act Bonds", being Division 11.5 of the Streets and Highways Code of the State of California (the "Refunding Act"), said reassessment district to be designated as City of Chula Vista Reassessment District No. 2005-2 (the "Reassessment District"); and, WHEREAS, this legislative body has previously ordered the preparation of a Reassessment Report pursuant to the Refunding Act, said Report to generally contain the following: A. A schedule setting forth the unpaid principal and interest on the Limited Obligation hnprovement Bonds of the Assessment District to be refunded and the total amounts thereof; B. The total estimated principal amount of the reassessment and of the refunding bonds and the maximum interest rate thereon, together with an estimate of costs of the reassessment and of issuing the refunding bonds, including all costs of issuing the refunding bonds; C. The Auditor's Record showing the schedule of the principal installments and interest on all unpaid original assessments for the Assessment District and the total amounts thereof; D. The estimated amount of each reassessment, identified by reassessment number corresponding to the reassessment number on the reassessment diagram prepared for the Reassessment District, together with a proposed Auditor's Record for the reassessment; E. A reassessment diagram showing the Reassessment District and the boundaries and dimensions of the subdivisions ofland within the Reassessment District; and, I 3-19 WHEREAS, this legislative body has now received and considered the Reassessment Report and is ready to proceed to make certain findings and approve the Reassessment Report. NOW, THEREFORE, BE IT RESOLVED AND DETERMINED: SECTION 1. The above recitals are all true and correct. SECTION 2. The Reassessment Report as presented to this City Council is hereby approved, and it is hereby determined by this City Council that if the refunding bonds proposed to be issued for the Reassessment District are issued and sold with a purchase price and at interest rates not to exceed those set forth in the Reassessment Report, the following conditions will be satisfied: A. Each estimated annual installment of principal and interest on the reassessment will be less than the corresponding annual installment of principal and interest on the portion of the original assessment being superseded and supplanted by the same percentage for all subdivisions of land within the Assessment District; B. The number of years to maturity of all refunding bonds will be no more than the number of years to the last maturity ofthe hnprovement Bonds; C. The principal amount of the reassessment on each subdivision of land within the Reassessment District will be less than the corresponding unpaid principal amount of the portion of the original assessment being superseded and supplanted by the same percentage for each subdivision ofland within the Assessment District; and D. The reassessments, as set forth in the Reassessment Report, shall not be deemed to be an assessment within the meaning of, and may be ordered without compliance with the procedural requirements of, Article XIIID ofthe Constitution of the State of California. Based upon the foregoing determinations, this City Council hereby approves and confirms the reassessments for the refunding bonds and the contributions from the existing funds of the Assessment District, all as set forth in the Reassessment Report, and a copy of this Resolution shall be entered upon the minutes of this meeting of the legislative body. The reassessments and the Reassessment Report may be adjusted and finalized upon the establishment of the final pricing for the sale of the refunding bonds provided that such principal amount of the reassessment on each subdivision of land within the Reassessment District will be less than the corresponding unpaid principal amount of the portion of the original assessment being superseded and supplanted by the same percentage for each subdivision of land within the Assessment District. SECTION 3. This City Council hereby authorizes the issuance and sale of refunding bonds to represent all unpaid reassessments and said refunding bonds shall bear interest at a rate or rates not to exceed the interest rates set forth in the Reassessment Report for such refunding bonds, and shall be issued in the manner as provided by the Refunding Act. The last maturity of said refunding bonds shall not exceed the number of years to the last maturity of the Limited Obligation hnprovement Bonds. 2 3-20 SECTION 4. The final reassessment, together with the reassessment diagram, as shall be set forth in the final Reassessment Report, shall be recorded in the Office of the Superintendent of Streets upon (a) the running of the limitations period specified in Section 9707 of the Refunding Act without the filing of an action to challenge the validity of the reassessment and refunding proceedings and/or the issuance of the refunding bonds and (b) the execution of a bond purchase agreement with a purchase price and at interest rates not to exceed those set forth in the Reassessment Report. Immediately thereafter a copy of the reassessment diagram shall be filed in the Office of the County Recorder and a Notice of Reassessment, referencing said diagram, shall be recorded in the Office of the County Recorder, all pursuant to the provisions of Division 4.5 of the Streets and Highways Code of the State of California, and specifically Section 3114. Upon the recordation, the reassessments shall become liens upon the various parcels of property and land assessed as shown on the reassessment diagram. From and after the date of such recordation and filing, the assessments originally levied shall be superseded and supplanted. The lien of the original assessments is not superseded and supplanted as to any unpaid installments of the assessments originally levied which are now delinquent and the penalties and interest, if any, thereon. Amounts, if any, received from the payment of delinquent assessments and the penalties and interest thereon, excluding attorney's fees and costs and post-judgment interest, if any, shall be deposited into the redemption fund for the refunding bonds. SECTION 5. This City Council hereby determines and declares that the City will not obligate itself to advance available funds from the City treasury to cure any deficiency which may occur in the bond redemption fund for the refunding bonds. SECTION 6. A copy of this Resolution confirming the reassessments, which reassessments shall constitute the security for the refunding bonds, shall be filed in the Office of the Treasurer, and the Treasurer shall keep the record showing the several installments of principal and interest on the reassessments which are to be collected each year during the-term of said refunding bonds. An annual portion of each reassessment, together with annual interest on said reassessment, shall be payable in the same manner and at the same time and in the same installment as the general property taxes of the County and shall be payable and become delinquent at the same time and in the same proportionate amount. Each year the annual installments shall be submitted to the County Auditor for purposes of collection, and the County Auditor shall, at the close of the tax collecting season, promptly render to the Treasurer a detailed report showing the amount of such installments, interest, penalties and percentages so collected. SECTION 7. This Resolution shall become effective upon its adoption. PREPARED BY: APPROVED AS TO FORM: ~/,flt.d Maria Kachadoorian Director of Finance 3 3-21 RESOLUTION NO. 2005- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR REASSESSMENT DISTRICT NO. 2005-1, APPROVING THE FORMS OF BOND INDENTURE, REFUNDING BONDS PURCHASE AGREEMENT, BOND PURCHASE AGREEMENT AND ESCROW AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA, has undertaken proceedings pursuant to the "Refunding Act of 1984 for 1915 hnprovement Act Bonds" (the "Refunding Act"), being Division 11.5 of the Streets and Highways Code of the State of California, and has previousl adopted a resolution approving a report prepared and submitted pursuant to the provisions of the Refunding Act (the "Reassessment Report") and conditionally confirming reassessments upon lands within a reassessment district known and designated as Reassessment District No. 2005-1 (the "Reassessment District"); and, WHEREAS, such proceedings provide for the issuance of Limited Obligation Refunding Bonds (defined below) pursuant to the Refunding Act to represent the unpaid reassessments within such Reassessment District; and, WHEREAS, at this time, but subj ect to the fmal confirmation of the reassessments to be incorporated in a final Assessment Engineer's Report and the recordation of the reassessment diagram and notice 0 reassessment, this legislative body desires to set forth all formal terms and conditions relating to the issuance and sale of such Limited Obligation Refunding Bonds pursuant to the Act as modified by that certain resolution ofthe City Council adopted on June 7, 2005 and entitled "A Resolution ofthe City Council of the City of Chula Vista Authorizing and Directing Compliance with the 'Refunding Act of 1984 for 1915 Improvement Act Bonds,' as Modified in this Resolution, in Connection with the Issuance of Limited Obligation Refunding Bonds for the Purpose of Refunding Certain Assessment District Bonds" (the "Refunding Act Resolution"); and, WHEREAS, a portion of the proceeds of the Limited Obligation Refunding Bonds shall be used to retire, in advance of their scheduled maturities, that portion of the Limited Obligation Refunding Bonds, City of Chula Vista Reassessment District of 1995 (the "Prior Limited Obligation Refunding Bonds") equal to the remaining unpaid reassessments levied for the Reassessment District of 1995 within Assessment District No. 87-1 (East "H" Street) and Assessment District No. 88-2 (Otay Lakes Road) the bonds of which were refunded from the proceeds ofthe Prior Limited Obligation Refunding Bonds; and WHEREAS, in order to provide the most cost effective refunding of the Prior Limited Obligation Refunding Bonds, the City Council desires and requests that the Chula Vista Public Financing Authority (the "Authority") issue, sell and deliver its Refunding Revenue Bonds, Series 2005A in an aggregate principal amount not to exceed $150,000,000 (the "Authority Bonds") to provide funds to purchase, among other refunding bonds to be issued by the City or by certain community facilities districts established by the City (collectively, the "Community Facilities Districts"), the Limited Obligation Refunding Bonds; 1 3-22 WHEREAS, for the purposes of the sale and delivery of the Limited Obligation Refunding Bonds there are now on file with the City Clerk copies of the forms of the Bond Indenture by and between the Ci and U.S. Bank National Association, as fiscal agent, establishing the terms and conditions pertaining to th issuance ofthe Limited Obligation Refunding Bonds (the "Bond Indenture''); the Refunding Bonds Purchas Agreement by and between the Authority, the City and the Community Facilities Districts related to, amon other things, the sale of the Limited Obligation Refunding Bonds to the Authority (the "Refunding Bond Purchase Agreement"); the Escrow Agreement by and between the City and U.S. Bank National Association as escrow agent (the "Escrow Agreement") and the Bond Purchase Agreement among the Authority, th City, the Community Facilities Districts and Stone & Youngberg LLC, as underwriter, related to the sale 0 the Authority Bonds (the "Bond Purchase Agreement"); and reference is hereby made thereto for furthe particulars; WHEREAS, this City Council has reviewed and considered such Bond Indenture, Refunding Bond Purchase Agreement, the Escrow Agreement and the Bond Purchase Agreement and finds those document suitable for approval, subj ect to the conditions set forth in this resolution; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have bee performed precedent to and in the issuance of the Limited Obligation Refunding Bonds and the levy ofth reassessments as contemplated by this resolution and the documents referred to herein exist, have happene and have been performed or have been ordered to have been preformed in due time, form and manner a required by the laws of the State of California, including the Refunding Act and the Refunding Ac Resolution. NOW, THEREFORE, BE IT RESOLVED AND DETERMINED: SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Bonds Authorized. Pursuant to the Refunding Act as modified by the Refunding Ac Resolution, this Resolution and the Bond Indenture, limited obligation refunding bonds of the City for th Reassessment District designated as "City of Chula Vista Reassessment District No. 2005-1 Limite Obligation Refunding Bonds" (the "Limited Obligation Refunding Bonds") in an aggregate principal amoun not to exceed the unpaid reassessments levied with the Reassessment District are hereby authorized to b issued. The date, manner of payment, interest rate or rates, denominations, form, registration privileges manner of execution, place of payment, terms of redemption and other terms, covenants and conditions 0 the Limited Obligation Refunding Bonds shall be as provided in the Bond Indenture as finally executed. Th interest payment dates for such Limited Obligation Refunding Bonds shall, pursuant to the Refunding Ac Resolution, be March 1 and September 1 and such bonds shall mature on September 1 as specified in th Bond Indenture. SECTION 3. Authorization and Conditions. The City Manager or the Director of Finance and eac of their specified designees (the "Authorized Officers"), acting for and on behalf of the City, are, and each 0 them is, hereby authorized and directed to execute and deliver the various documents and instrument described in this Resolution with such changes, insertions and omissions as the Authorized Officer executin the same may require or approve as being in the best interests of the City subject to any limiting condition contained herein and further subject to the approval thereof as to form by the City Attorney or her specifie designee and Best Best & Krieger LLP, the City's bond counsel. The approval of such additions or change 2 3-23 shall be conclusively evidenced by the execution and delivery of such documents or instruments by th Authorized Officer. SECTION 4. Bond Indenture. The form of Bond Indenture with respect to the Limited Obligatio Refunding Bonds on file in the City Clerk's office is hereby approved. SECTION 5. Sale of Limited Obligation Refunding Bonds. This City Council hereby authorize and approves the sale ofthe Limited Obligation Refunding Bonds by negotiation to the Authority. The fo of the Refunding Bonds Purchase Agreement on file in the City Clerk's office is hereby approved Notwithstanding the foregoing, the authorization to execute the Refunding Bonds Purchase Agreement i subject to the satisfaction of the following conditions precedent: (a) that the aggregate principal amount 0 the Limited Obligation Refunding Bonds is equal to or less than the aggregate amount of the unpai reassessments within the Reassessment District, (b) that the final maturity of the Limited Obligatio Refunding Bonds shall not exceed the final maturity of the Prior Limited Obligation Refunding Bonds, (c that the maximum annual interest rate to be paid on the Limited Obligation Refunding Bonds shall no exceed five and one half percent (5.5%) per annum with the actual rate or rates to be set forth in the Bon Indenture as executed, and (e) that either (i) the net present value savings resulting from the defeasance an refunding of the Prior Limited Obligation Refunding Bonds shall be at least four percent (4.00%) ofth principal amount ofthe Prior Limited Obligation Refunding Bonds or (ii) if such minimum level of pres en value of savings is not achieved, the City Manger has determined, in his professional judgment followin consideration of the recommendation of the Director of Finance, that such refunding will result in such level of annual savings that such refunding will nevertheless be in the best interests ofthe property owner within the Reassessment District. SECTION 6. Escrow Agreement. The form of the Escrow Agreement on file in the City Clerk' office is hereby approved. SECTION 7. Bond Purchase Agreement. The form ofthe Bond Purchase Agreement on file in th City Clerk's office is hereby approved. SECTION 8. Costs ofIssuance. "Designated costs of issuing the refunding bonds" for purposes 0 Subsection 9600(b) and Section 9614 ofthe Refunding Act are the items specified in paragraphs (1) throu and including (5) of subsection (a) of Section 9600 of the Refunding Act, and "Costs ofIssuance" as suc phrase is used in the Bond Indenture shall mean such designated costs of issuing the Limited Obligatio Refunding Bonds. SECTION 9. Bonds Prepared and Delivered. Upon the execution ofthe Refunding Bonds Purchas Agreement, the Limited Obligation Refunding Bonds shall be prepared, authenticated and delivered, all i accordance with the applicable terms of the Refunding Act and the Bond Indenture, and the Authorize Officers, and each of them, and other responsible City officials are hereby authorized and directed to tak such actions as are required under the Refunding Bonds Purchase Agreement and the Bond Indenture t complete all actions required to evidence the delivery of the Limited Obligation Refunding Bonds upon th receipt ofthe purchase price thereof from the Authority. SECTION 10. Annual Reassessment Installments. A copy of the resolution confirming th reassessments and the reassessments, which reassessments shall constitute the security for the Limite 3 3-24 Obligation Refunding Bonds, shall be delivered to the Treasurer and the Treasurer shall keep or cause to b kept the record showing the several installments of principal and interest on the reassessments which are t be collected each year during the term of the Limited Obligation Refunding Bonds. An annual portion 0 each reassessment, together with annual interest on said reassessment, shall be payable in the same manne and at the same time and in the same installment as the general property taxes of the County of San Dieg and shall be payable and become delinquent at the same time and in the same proportionate amount. Eac year the annual installments shall be submitted to the County Auditor for purposes of collection. SECTION 11. Actions. All actions heretofore taken by the officers and agents of the City wi respect to the establishment of the Reassessment District and the sale and issuance of the Limited Obligatio Refunding Bonds are hereby approved, confirmed and ratified, and the proper officers of the City are hereb authorized and directed to do any and all things and take any and all actions and execute any and al certificates, agreements, contracts, and other documents, which they, or any of them, may deem necessary 0 advisable in order to consummate the lawful issuance and delivery of the Limited Obligation Refundin Bonds in accordance with the Refunding Act, this Resolution, the Bond Indenture, the Refunding Bond Purchase Agreement, the Escrow Agreement and the Bond Purchase Agreement and any certificate agreement, contract, and other document described in the documents herein approved. SECTION 12. Effective Date. This resolution shall take effect from and after its adoption. PREPARED BY: APPROVED AS TO FORM: Maria Kachadoorian, Director of Finance ~~ ~ ore, ty Attorney 4 3-25 RESOLUTION NO. 2005- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF LIMITED OBLIGATION REFUNDING BONDS FOR REASSESSMENT DISTRICT NO. 2005-2, APPROVING THE FORMS OF BOND INDENTURE, REFUNDING BONDS PURCHASE AGREEMENT, BOND PURCHASE AGREEMENT AND ESCROW AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA, has undertaken proceedings pursuant to the "Refunding Act of 1984 for 1915 hnprovement Act Bonds" (the "Refunding Act"), being Division 11.5 of the Streets and Highways Code of the State of California, and has previously adopted a resolution approving a report prepared and submitted pursuant to the provisions of the Refunding Act (the "Reassessment Report") and conditionally confirming reassessments upon lands within a reassessment district known and designated as Reassessment District No. 2005-2 (the "Reassessment District"); and, WHEREAS, such proceedings provide for the issuance of Limited Obligation Refunding Bonds (defined below) pursuant to the Refunding Act to represent the unpaid reassessments within such Reassessment District; and, WHEREAS, at this time, but subject to the final confirmation of the reassessments to be incorporated in a final Assessment Engineer's Report and the recordation of the reassessment diagram and notice of reassessment, this legislative body desires to set forth all formal terms and conditions relating to the issuance and sale of such Limited Obligation Refunding Bonds pursuant to the Act as modified by that certain resolution of the City Council adopted on June 7, 2005 and entitled "A Resolution of the City Council of the City of Chula Vista Authorizing and Directing Compliance with the 'Refunding Act of 1984 for 1915 Improvement Act Bonds,' as Modified in this Resolution, in Connection with the Issuance of Limited Obligation Refunding Bonds for the Purpose of Refunding Certain Assessment District Bonds" (the "Refunding Act Resolution"); and, WHEREAS, a portion of the proceeds of the Limited Obligation Refunding Bonds shall be used to retire, in advance of their scheduled maturities, the City of Chula Vista Assessment District No. 97-2 (Otay Ranch, Village One) Limited Obligation hnprovement Bonds (the "Prior Limited Obligation Improvement Bonds"); and WHEREAS, in order to provide the most cost effective refunding of the Prior Limited Obligation hnprovement Bonds, the City Council desires and requests that the Chula Vista Public Financing Authority (the "Authority") issue, sell and deliver its Refunding Revenue Bonds, Series 2005A in an aggregate principal amount not to exceed $150,000,000 (the "Authority Bonds") to provide funds to purchase, among other refunding bonds to be issued by the City or by certain community facilities districts established by the City (collectively, the "Community Facilities Districts"), the Limited Obligation Refunding Bonds; 3-261 WHEREAS, for the purposes of the sale and delivery of the Limited Obligation Refunding Bonds, there are now on file with the City Clerk copies of the forms of the Bond Indenture by and between the City and U.S. Bank National Association, as fiscal agent, establishing the terms and conditions pertaining to the issuance of the Limited Obligation Refunding Bonds (the "Bond Indenture"); the Refunding Bonds Purchase Agreement by and between the Authority, the City and the Community Facilities Districts, related to, among other things, the sale of the Limited Obligation Refunding Bonds to the Authority (the "Refunding Bonds Purchase Agreement"); the Escrow Agreement by and between the City and U.S. Bank National Association, as escrow agent (the "Escrow Agreement") and the Bond Purchase Agreement among the Authority, the City, the Community Facilities Districts and Stone & Youngberg LLC, as underwriter, related to the sale of the Authority Bonds (the "Bond Purchase Agreement"); and reference is hereby made thereto for further particulars; WHEREAS, this City Council has reviewed and considered such Bond Indenture, Refunding Bonds Purchase Agreement, the Escrow Agreement and the Bond Purchase Agreement and finds those documents suitable for approval, subject to the conditions set forth in this resolution; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance ofthe Limited Obligation Refunding Bonds and the levy of the reassessments as contemplated by this resolution and the documents referred to herein exist, have happened and have been performed or have been ordered to have been preformed in due time, form and manner as required by the laws of the State of California, including the Refunding Act and the Refunding Act Resolution. NOW, THEREFORE, BE IT RESOLVED AND DETERMINED: SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Bonds Authorized. Pursuant to the Refunding Act as modified by the Refunding Act Resolution, this Resolution and the Bond Indenture, limited obligation refunding bonds of the City for the Reassessment District designated as "City of Chula Vista Reassessment District No. 2005-2 Limited Obligation Refunding Bonds" (the "Limited Obligation Refunding Bonds") in an aggregate principal amount not to exceed the unpaid reassessments levied with the Reassessment District are hereby authorized to be issued. The date, manner of payment, interest rate or rates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption and other terms, covenants and conditions of the Limited Obligation Refunding Bonds shall be as provided in the Bond Indenture as finally executed. The interest payment dates for such Limited Obligation Refunding Bonds shall, pursuant to the Refunding Act Resolution, be March 1 and September 1 and such bonds shall mature on September 1 as specified in the Bond Indenture. SECTION 3. Authorization and Conditions. The City Manager or the Director of Finance and each of their specified designees (the "Authorized Officers"), acting for and on behalf of the City, are, and each of them is, hereby authorized and directed to execute and deliver the various documents and instruments described in this Resolution with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the City subject to any limiting conditions contained herein and further subject to the approval 2 3-27 thereof as to form by the City Attomey or her specified designee and Best Best & Krieger LLP, the City's bond counsel. The approval of such additions or changes shall be conclusively evidenced by the execution and delivery of such documents or instruments by the Authorized Officer. SECTION 4. Bond Indenture. The form of Bond Indenture with respect to the Limited Obligation Refunding Bonds on file in the City Clerk's office is hereby approved. SECTION 5. Sale of Limited Obligation Refunding Bonds. This City Council hereby authorizes and approves the sale of the Limited Obligation Refunding Bonds by negotiation to the Authority. The form of the Refunding Bonds Purchase Agreement on file in the City Clerk's office is hereby approved. Notwithstanding the foregoing, the authorization to execute the Refunding Bonds Purchase Agreement is subj.ect to the satisfaction of the following conditions precedent: (a) that the aggregate principal amount of the Limited Obligation Refunding Bonds is equal to or less than the aggregate amount of the unpaid reassessments within the Reassessment District, (b) that the final maturity of the Limited Obligation Refunding Bonds shall not exceed the final maturity of the Prior Limited Obligation Improvement Bonds, (c) that the maximum annual interest rate to be paid on the Limited Obligation Refunding Bonds shall not exceed five and one half percent (5.5%) per annum with the actual rate or rates to be set forth in the Bond Indenture as executed, and (e) that either (i) the net present value savings resulting from the defeasance and refunding of the Prior Limited Obligation Improvement Bonds shall be at least four percent (4.00%) of the principal amount of the Prior Limited Obligation Improvement Bonds or (ii) or (ii) if such minimum level of present value of savings is not achieved, the City Manger has determined, in his professional judgment following consideration of the recommendation of the Director of Finance, that such refunding will result in such a level of annual savings that such refunding will nevertheless be in the best interests of the property owners within the Reassessment District. SECTION 6. Escrow Agreement. The form of the Escrow Agreement on file in the City Clerk's office is hereby approved. SECTION 7. Bond Purchase Agreement. The form of the Bond Purchase Agreement on file in the City Clerk's office is hereby approved. SECTION 8. Costs of Issuance. "Designated costs of issuing the refunding bonds" for purposes of Subsection 9600(b) and Section 9614 of the Refunding Act are the items specified in paragraphs (1) through and including (5) of subsection (a) of Section 9600 of the Refunding Act, and "Costs ofIssuance" as such phrase is used in the Bond Indenture shall mean such designated costs of issuing the Limited Obligation Refunding Bonds. SECTION 9. Bonds Prepared and Delivered. Upon the execution of the Refunding Bonds Purchase Agreement, the Limited Obligation Refunding Bonds shall be prepared, authenticated and delivered, all in accordance with the applicable terms of the Refunding Act and the Bond Indenture, and the Authorized Officers, and each of them, and other responsible City officials are hereby authorized and directed to take such actions as are required under the Refunding Bonds Purchase Agreement and the Bond Indenture to complete all actions required to evidence the delivery of the Limited Obligation Refunding Bonds upon the receipt of the purchase price thereof from the Authority. 3-2l SECTION 10. Annual Reassessment Installments. A copy of the resolution confirming the reassessments and the reassessments, which reassessments shall constitute the security for the Limited Obligation Refunding Bonds, shall be delivered to the Treasurer and the Treasurer shall keep or cause to be kept the record showing the several installments of principal and interest on the reassessments which are to be collected each year during the term of the Limited Obligation Refunding Bonds. An annual portion of each reassessment, together with annual interest on said reassessment, shall be payable in the same manner and at the same time and in the same installment as the general property taxes of the County of San Diego and shall be payable and become delinquent at the same time and in the same proportionate amount. Each year the annual installments shall be submitted to the County Auditor for purposes of collection. SECTION 11. Actions. All actions heretofore taken by the officers and agents of the City with respect to the establishment of the Reassessment District and the sale and issuance of the Limited Obligation Refunding Bonds are hereby approved, confirmed and ratified, and the proper officers of the City are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements, contracts, and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Limited Obligation Refunding Bonds in accordance with the Refunding Act, this Resolution, the Bond Indenture, the Refunding Bonds Purchase Agreement, the Escrow Agreement and the Bond Purchase Agreement and any certificate, agreement, contract, and other document described in the documents herein approved. SECTION 12. Effective Date. This resolution shall take effect from and after its adoption. PREPARED BY: APPROVED AS TO FORM: Maria Kachadoorian, Director of Finance 4 3-29 RESOLUTION NO. 2005- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 97-3 (OTAY RANCH MCMILLIN SPA ONE), COMMUNITY FACILITIES DISTRICT NO. 99-1 (OT A Y RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST), COMMUNITY FACILITIES DISTRICT NO. 2000-1 (SUNBOW II - VILLAGES 5 THROUGH 10), COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) AND COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE - WOODS, VISTAS AND LAND SWAP), AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF SEPARATE SERIES OF SPECIAL TAX REFUNDING BONDS OF EACH SUCH COMMUNITY FACILITIES DISTRICTS, APPROVING THE FORMS OF BOND INDENTURES FOR EACH SUCH SERIES OF SUCH REFUNDING BONDS, A REFUNDING BONDS PURCHASE AGREEMENT AND ESCROW AGREEMENTS FOR EACH SERIES OF REFUNDED BONDS, AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, this City Council has conducted proceedings under and pursuant to the Mello- Roos Community Facilities Act of 1982, being Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing with Section 53311, of the California Govemment Code (the "Act"), to form Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) ("CFD No. 97-3"), Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) ("CFD No. 99-1 "), Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) ("CFD No. 2000-1"), Community Facilities District No. 2001-1 (San Miguel Ranch) and Improvement Area A therein ("CFD No. 2001-1") and Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap) and hnprovement Area A therein ("CFD No. 06-1" and, together with CFD No. 97-3, CFD No. 99-1, CFD No. 2000-1 and CFD No. 2001-1, the "Districts" or each, a "District"), to authorize the levy of special taxes upon the land within each such District, and to issue bonds for each such District secured by the special taxes authorized to be levied therein for the purpose of financing the acquisition or construction of authorized public facilities; and WHEREAS, the Districts have each previously issued special tax bonds identified in Exhibit A attached hereto and incorporated herein by this reference (collectively, the "Prior Special Tax Bonds"); and WHEREAS, as a result of a combination of favorable conditions in the municipal bond market and the level of development, diversity of ownership and increase in value of the properties within each of the Districts for which the Prior Special Tax Bonds were issued and sold, this City Council, acting as the legislative body of each of the Districts, desires to issue a separate series special tax refunding bonds (collectively, the "Special Tax Refunding Bonds" or the "Bonds") for the purpose of defeasing and redeeming the series of Prior Special Tax Bonds issued by each such 3-30 District prior to their scheduled maturity m order to reduce the borrowing costs on such indebtedness; and WHEREAS, the reduction in such borrowing costs will, in turn, result in a reduction in the rate of special taxes necessary to be levied within each of the Districts thereby resulting in savings to the owners ofthe properties subject to the levy of such special taxes; and WHEREAS, the City Council proposes to sell each series of the Special Tax Refunding Bonds to the Chula Vista Public Facilities Authority (the "Authority"); and WHEREAS, for the purposes of the issuance, sale and delivery of each series ofthe Special Tax Refunding Bonds, there are now on file with the City Clerk copies of the forms of: A. a separate Bond Indenture by and between the applicable District and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), establishing the terms and conditions pertaining to the issuance of each series of the Special Tax Refunding Bonds (each, a "Bond Indenture" and, collectively, the "Bond Indentures"); B. the Refunding Bonds Purchase Agreement by and between the Authority and each of the Districts and the City related to the sale ofthe Special Tax Refunding Bonds and certain limited obligation refunding bonds to be issued by the City for certain assessment districts within the City (the "Refunding Bonds Purchase Agreement"); C. an Escrow Agreement by and between the applicable District and U.S. Bank National Association, as escrow agent, for each series of the Prior Special Tax Bonds to provide for the defeasance and redemption of each series of the Prior Special Tax Bonds (each, an "Escrow Agreement" and, collectively, the "Escrow Agreements"); and D. the Bond Purchase Agreement by and among the Authority, the City, the Districts and Stone & Youngberg LLC (the "Underwriter") relating to the purchase by the Underwriter of the Authority's Revenue Refunding Bonds, Series 2005A (the "Authority Bonds") (the "Bond Purchase Agreement"). WHEREAS, this City Council has reviewed and considered the Bond Indentures, the Refunding Bonds Purchase Agreement, the Bond Purchase Agreement and the Escrow Agreements and finds those documents suitable for approval, subject to the conditions set forth in this resolution; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Special Tax Refunding Bonds as contemplated by this resolution and the documents referred to herein exist, have happened and have been performed or have been ordered to have been preformed in due time, form and manner as required by the laws of the State of California, including the Act. NOW, THEREFORE, BE IT RESOLVED AND DETERMINED: 2 3-31 SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Bonds Authorized. Pursuant to the Act, this Resolution and the Bond Indentures, the Special Tax Refunding Bonds are hereby authorized to be issued. The date, manner of payment, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption and other terms, covenants and conditions of each series of the Special Tax Refunding Bonds shall be as provided in each respective Bond Indenture as finally executed. In furtherance of the issuance of the Special Tax Refunding Bonds, the City Council hereby makes the following findings and determinations: (a) it is prudent in the management ofthe fiscal affairs of the City and each of the Districts to issue the Special Tax Refunding Bonds for the purpose, inter alia, of defeasing and redeeming the Prior Special Tax Bonds, (b) the total net interest cost to maturity ofthe each series of the Special Tax Refunding Bonds plus the principal amount of each series of such Special Tax Refunding Bonds will not exceed the total net interest cost to maturity ofthe series of the Prior Special Tax Bonds plus the principal amount ofthe series of the Prior Special Tax Bonds being defeased and refunded from the proceeds of such series of Special Tax Refunding Bonds, and (c) the issuance of each series ofthe Special Tax Refunding Bonds is in compliance with the City's Goals and Policies for Community Facilities Districts. The principal amount of the each series of Special Tax Refunding Bonds will be less than one fourth of the value of the property within the applicable District, as applicable, subject to the levy of the special taxes authorized under the Act securing such series of Special Tax Refunding Bonds, as confirmed by the aggregate assessed value of taxable parcels in such District. For purposes of Section 53363.2 of the Act, the City Council hereby further finds and determines that: (a) it is expected that the purchase of each series of the Special Tax Refunding Bonds will occur on the Closing Date (as such term is defined in each of the Bond Indentures), (b) the date, denomination, maturity dates, places of payment and form of each series of the Special Tax Refunding Bonds shall be as set forth in the applicable Bond Indenture, as executed, (c) the maximum annual interest rate to be paid on each series of Special Tax Refunding Bonds shall be five and one half percent (5.5%) per annum with the actual rate or rates to be set forth in each Bond Indenture as executed, (d) that either (i) the net present value savings resulting from the defeasance and refunding of each series of the Prior Special Tax Bonds shall be at least four percent (4.00%) of the principal amount of such series of the Prior Special Tax Bonds or (ii) for any series of the Prior Special Tax Bonds where such minimum level of present value of savings is not achieved, the City Manger has determined, in his professional judgment following consideration of the recommendation of the Director of Finance, that such refunding will result in such a level of annual savings that such refunding will nevertheless be in the best interests of the affected property owners; (e) the place of payment for each series of the Prior Special Tax Bonds shall be as set forth in the applicable Bond Indenture; and (f) the designated costs of issuing each series of the Special Tax Refunding Bonds shall be as described in Section 53363.8(a) ofthe Act, and as otherwise described in the applicable Bond Indenture, in the Official Statement for the Authority Bonds to finance the acquisition of the Special Tax Refunding Bonds and the closing certificates for the Special Tax Refunding Bonds, including but not limited to, a proportionate share of the fees and expenses of bond counsel, financial advisor, special tax consultant, fiscal agent, escrow agent and escrow verification agent, purchaser's discount, costs of issuance of the Authority Bonds, fees for credit 3 3-32 enhancement and ratings on the Authority Bonds, and costs of City staff incurred in connection with the sale and issuance of the Authority Bonds and the Special Tax Refunding Bonds. SECTION 3. Authorization and Conditions. The City Manager of the City or the Director of Finance and each oftheir specified designees (the "Authorized Officers"), acting for and on behalf of the Districts, are, and each of them is, hereby authorized and directed to execute and deliver the various documents and instruments described in this Resolution with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Districts subject to any limiting conditions contained herein and further subject to the approval thereof as to form by the City Attorney or her specified designee and Best Best & Krieger LLP, bond counsel. The approval of such additions or changes shall be conclusively evidenced by the execution and delivery of such documents or instruments by the Authorized Officer. SECTION 4. Bond Indentures. The form of each of the Bond Indentures on file in the City Clerk's officer is hereby approved. SECTION 5. Sale of Soecial Tax Refunding Bonds. This City Council hereby authorizes and approves the sale of the Special Tax Refunding Bonds by negotiation to the Authority. The form ofthe Refunding Bonds Purchase Agreement on file in the City Clerk's office is hereby approved. Notwithstanding the foregoing, the authorization to execute the Refunding Bonds Purchase Agreement is subject to the satisfaction of the following conditions precedent: (a) that the aggregate principal amount of each series of the Special Tax Refunding Bonds is equal to or less than the principal amount set for in Exhibit B hereto for such series, (b) that the fma1 maturity of each series of the Special Tax Refunding Bonds shall not exceed the final maturity of the applicable series of the Prior Special Tax Bonds being refunded with the proceeds of Special Tax Refunding Bonds, (c) that the maximum interest rate on the Special Tax Refunding Bonds does not exceed the maximum interest rate specified in Section 2 above and (d) that the minimum level of savings specified in Section 2 above for each series of the Prior Special Tax Bonds being defeased and redeemed is achieved. SECTION 6. Bond Purchase Agreement. The form of the Bond Purchase Agreement on file in the City Clerk's office is hereby approved. SECTION 7. Escrow Agreement. The form of each of the Escrow Agreement on file in the City Clerk's office is hereby approved. SECTION 8. Actions. All actions heretofore taken by the officers and agents of the City, acting for and on behalf of each of the Districts, with respect to the sale and issuance of each series of the Special Tax Refunding Bonds are hereby approved, confirmed and ratified, and the proper officers of the City, acting for and on behalf of each of the Districts, are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements, contracts, and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of each series of the Special Tax Refunding Bonds in accordance with the Act, this Resolution, the applicable Bond Indenture, the Refunding Bonds Purchase Agreement, the Bond Purchase Agreement, the applicable Escrow 4 3-33 Agreement and any certificate, agreement, contract, and other document described in the documents herein approved and to consummate the lawful issuance and delivery of the Authority Bonds. SECTION 9. adoption. Effective Date. This resolution shall take effect from and after its PREPARED BY: APPROVED AS TO FORM: ~.floJ ~MOO ,Ci t ey Maria Kachadoorian, Director of Finance 5 3-34 EXHIBIT A PRIOR SPECIAL TAX BONDS 1. City of Chula Vista Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) Special Tax Bonds issued in the original principal amount of$11,825,000; 2. City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One- Portions of Village One, Village Five and Village One West) 1999 Special Tax Bonds issued in the original principal amount of$23,000,000; 3. City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 2001 Special Tax Bonds issued in the original principal amount of $19,000,000; 4. City of Chula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2000 Special Tax Bonds issued in the original principal amount of$7,385,000; 5. City ofChula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds issued in the original principal amount of$14,425,000; and 6. City ofChula Vista Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds issued in the original principal amount of$39,000,000. A-I 3-35 EXHIBIT B SPECIAL TAX REFUNDING BONDS 1. City ofChula Vista Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $12,500,000; 2. City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One- Portions of Village One, Village Five and Village One West) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $47,500,000; 3. City ofChula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $8,000,000; 4. CityofChula Vista Community Facilities District No. 2001-1 (SanMiguel Ranch) 2005 hnprovement Area A Special Tax Refunding Bonds to be issued in a principal amount not to exceed $16,000,000; and 5. City of Chula Vista Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap) 2005 Improvement Area A Special Tax Refunding Bonds to issued in a principal amount not to exceed $47,000,000. B-1 3-36 RESOLUTION NO. 2005- RESOLUTION OF THE CHULA VISTA PUBLIC FINANCING AUTHORITY OF THE CITY OF CHULA VISTA AUTHORIZING THE ISSUANCE OF REFUNDING REVENUE BONDS, APPROVING THE FORMS OF AN INDENTURE OF TRUST, BOND PURCHASE CONTRACT, REFUNDING BONDS PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the CHULA VISTA PUBLIC FINANCING AUTHORITY (the "Authority") is a public agency organized under the Joint Exercise of Powers Law of the State of California and is authorized pursuant to said law and the Joint Exercise of Powers Agreement creating the Authority to assist in financing or refinancing of public capital facilities improvements of the City ofChula Vista (the "City") or the Redevelopment Agency of the City ofChu1a Vista (the "Agency"); and WHEREAS, as a result of a combination of favorable conditions in the municipal bond market and the level of development, diversity of ownership and increase in value ofthe properties within certain assessment districts and community facilities previously established by the City for the purpose of financing the acquisition or construction of public improvements required to serve new development within such districts, the City and such certain community facilities districts identified below desire and request that the Authority issue, sell and deliver its Revenue Refunding Bonds, Series 2005A (the "Series 2005A Bonds") in an aggregate principal amount not to exceed $150,000,000 to provide funds to purchase certain limited obligation refunding bonds to be issued by the City and certain special tax refunding bonds (each series of such limited obligation refunding bonds and such special tax refunding bonds are identified in Exhibit A attached hereto and incorporated herein by this reference and are collectively referred to as the "Refunding Bonds") to be issued by the following community facilities districts (individually, a "District" and, collectively, the "Districts"): A. Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One); B. Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West); C. Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10: D. Community Facilities District No. 2001-1 (San Miguel Ranch); and E. Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap); and WHEREAS, the City and the Districts desire to utilize the proceeds ofthe Refunding Bonds to defease and refund certain limited obligation improvement bonds, certain limited obligation 1 3-37 refunding bonds and the corresponding bonds of the Authority and certain special tax bonds, each series of which is identified in Exhibit B attached hereto and incorporated herein by this reference (collectively, the "Prior Bonds"); and WHEREAS, the Series 2005A Bonds are to be offered for negotiated sale to Stone & Youngberg LLC (the "Underwriter"); and WHEREAS, there has been prepared and filed with the Secretary ofthis Board of Directors the forms of the Indenture of Trust by and between the Authority and U.S. Bank National Association, as trustee (the "Indenture of Trust") establishing the terms and conditions pertaining to the issuance, sale and administration of the Series 2005A Bonds; the preliminary official statement describing the Authority, the City, the Districts, Reassessment District Nos. 2005-1 and 2005-2 and the Series 2005A Bonds (the "Preliminary Official Statement"); the Bond Purchase Agreement by and among the Authority, the City, the Districts and the Underwriter related to the purchase of the Series 2005A Bonds (the "Bond Purchase Agreement") by the Underwriter; the Refunding Bonds Purchase Agreement by and between the Authority, the City and the Districts related to the purchase of the Refunding Bonds (the "Refunding Bonds Purchase Agreement") by the Authority and the Continuing Disclosure Agreement by and between the Authority and U.S. Bank Trust National Association, as the Dissemination Agent, to provide continuing disclosure of certain information specified therein (the "Continuing Disclosure Agreement"), which forms have been reviewed by this Board of Directors; and WHEREAS, the Authority desires to authorize the issuance and sale of the Series 2005A Bonds, the distribution of the Preliminary Official Statement, and the purchase of the Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED, AND DETERMINED: SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Approval of Issuance and Sale of Series 2005A Bonds. This Board of Directors hereby approves the issuance and sale of the Series 2005A Bonds by negotiated sale to the Underwriter. The proceeds of the Series 2005A Bonds shall be expended to purchase the Refunding Bonds. SECTION 3. Indenture of Trust. The form of the Indenture of Trust relating to the Series 2005A Bonds presented at this meeting is hereby approved. The Executive Director or the Chief Financial Officer ofthe Authority and each of their specified designees (the "Authorized Officers"), acting for and on behalf ofthe Authority, are, and each of them is, hereby authorized and directed to execute, acknowledge and deliver the Indenture of Trust in substantially the form approved hereby, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Authority, and as approved as to form by the legal advisor to the Authority or her specified designee and bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof by such Authorized Officer. 2 3-38 SECTION 4. Bond Purchase Agreement. The form of the Bond Purchase Agreement by and among the Authority, the City, the Districts and the Underwriter presented at this meeting and the sale of the Series 2005A Bonds pursuant thereto is hereby approved. The Authorized Officers, acting for and on behalf of the Authority, are, and each of them is, hereby authorized and directed to evidence the Authority's acceptance of the terms and provisions of the Bond Purchase Agreement by executing and delivering the Bond Purchase Agreement, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Authority, and as approved as to form by the legal advisor to the Authority or her specified designee and bond counsel, such approval to be conclusively evidenced by the execution and delivery thereofby one or more of such Authorized Officers; provided, however, that the Authorized Officer shall execute the Bond Purchase Agreement only if: (a) the aggregate principal amount of the Series 2005A Bonds is equal to or less than $150,000,000, (b) the compensation paid to or received by the Underwriter with respect to the Series 2005A Bonds does not exceed eighty five hundredths percent (0.85%) oftheprincipal amount of the Series A Bonds, (c) the maximum annual interest rate to be paid on the Series 2005A Bonds shall not exceed five and one half percent (5.5%) per annum with the actual rate or rates to be set forth in the Indenture of Trust as executed, (d) that either (i) the net present value savings resulting from the defeasance and refunding of each series of the Prior Bonds shall be at least four percent (4.00%) of the principal amount of such series of the Prior Bonds or (ii) for any series of the Prior Bonds where such minimum level of present value of savings is not achieved, the City Manger has determined, in his professional judgment following consideration of the recommendation ofthe Director of Finance, that such refunding will result in such a level of annual savings that such refunding will nevertheless be in the best interests of the affected property owners, and ( e) that the final maturity of the Series 2005A Bonds shall not be later than September 1, 2033. SECTION 5. Aporoval ofPreliminarv Official Statement and Final Official Statement. The form of Preliminary Official Statement presented at this meeting is hereby approved. The Authorized Officers, acting for and on behalf of the Authority, are, and each of them is, hereby authorized and directed to approve such changes, insertions and omissions therein as are necessary to enable such Authorized Officer to certify on behalf of the Authority that the approved Preliminary Official Statement is deemed final as of its date except for the omission of certain information as permitted by Section 240.15c2-12(b)(1) of Title 17 of the Code of Federal Regulations. The Authorized Officers, acting for and on behalf of the Authority, are, and each of them is further authorized and directed to cause the Authority to bring the Preliminary Official Statement into the form of a final official statement (the "Final Official Statement") and to execute a statement that the facts contained in the Final Official Statement, and any supplement or amendment thereto (which shall be deemed an original part thereoffor the purpose of such statement) were, at the time of sale of the Series 2005A Bonds, true and correct in all material respects and that the Final Official Statement did not, on the date ofsa1e ofthe Series 2005A Bonds, and does not, as of the date of delivery of the Series 2005A Bonds, contain any untrue statement of a material fact with respect to the Authority and the Series 2005A Bonds or omit to state material facts with respect to the Authority and the Series 2005A Bonds required be stated where necessary to make any statement made therein not misleading in the light of the circumstances under which it was made. The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the 3 3-39 purchase of the Series 2005A Bonds and is directed to deliver copies of the Final Official Statement to all actual purchasers of the Series 2005A Bonds from the Underwriter acting in such capacity. SECTION 6. Continuing Disclosure Agreement. The form of the Continuing Disclosure Agreement presented at this meeting is hereby approved. The Authorized Officers, acting for and on behalf of the Authority, are, and each of them is, hereby authorized and directed to execute, acknowledge and deliver the Continuing Disclosure Agreement in substantially the form approved hereby, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Authority, and as approved as to form by the legal advisor to the Authority or her specified designee and bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof by such Authorized Officer. SECTION 7. Refunding Bonds Purchase Agreement. The form of the Refunding Bonds Purchase Agreement by and between the Authority and the City, on behalf of the Reassessment District Nos. 2005-1 and 2005-2, presented at this meeting and the acquisition by the Authority of the Refunding Bonds pursuant thereto is hereby approved. The Authorized Officers, acting for and on behalf of the Authority, are, and each of them is, hereby authorized and directed to evidence the Authority's acceptance ofthe terms and provisions ofthe Refunding Bonds Purchase Agreement by executing and delivering the Refunding Bonds Purchase Agreement, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Authority, and as approved as to form by the legal advisor to the Authority or her specified designee and bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof by such Authorized Officer. SECTION 8. Official Action. The Chairperson, the Vice-Chairperson, the Executive Director, the Chief Financial Officer, the Secretary, the Authorized Officers and any and all other officers of the Authority are hereby authorized and directed, jointly and severally, for and in the name of the Authority, to do any and all things and take any and all actions, including without limitation, the execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents which they, or any of them, may deem necessary and advisable in order to consummate the transactions contemplated by the documents approved pursuant to this Resolution and any such actions previously taken by such officers are hereby ratified and confirmed. In the event any such officer is unavailable or unable to execute and deliver any of the above-referenced documents, any other officer of the Authority may validly execute and deliver such document. SECTION 9. Bond Rating. The Authorized Officers are, and each of them is, with the assistance of Fieldman Rolapp & Associates, acting as the financial advisor to the Authority regarding the Series 2005A Bonds (the "Financial Advisor"), and the Underwriter, hereby authorized to apply for a rating on the Series 2005A Bonds with any nationally recognized rating agency an Authorized Officer deems advisable. Additionally, such Authorized Officers, with the assistance of the Financial Advisor and the Underwriter, are hereby authorized to apply for and accept a commitment to provide municipal bond insurance and to provide a municipal bond debt service reserve fund policy for the Series 2005A Bonds. Such Authorized Officers are, and each of them is, hereby authorized to execute any commitment letter and to do any and all other things and to deliver 4 3-40 any and all documents necessary or advisable in order to obtain such municipal bond insurance and municipal bond debt service reserve fund policy, if any, for the Series 2005A Bonds. SECTION 10. passage and adoption. Effective Date. This Resolution shall take effect immediately upon its PREPARED BY: APPROVED AS TO FORM: Maria Kachadoorian Chief Financial Officer C/\,Ann 00 av -Gen ral Counsel to the Authority 5 3-41 EXHIBIT A REFUNDING BONDS I. City of Chula Vista Reassessment District No. 2005-1 2005 Limited Obligation Refunding Bonds to be issued in a principal amount not to exceed $8,000,000; 2. City ofChula Vista Reassessment District No 2005-2 2005 Limited Obligations Refunding Bonds to be issued in a principal amount not to exceed $11,000,000; 3. CityofChula Vista Community Facilities District No. 97-3 (OtayRanchMcMillin Spa One) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $12,500,000; 4. City ofChula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $47,500,000; 5. City of Chula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2005 Special Tax Refunding Bonds to be issued in a principal amount not to exceed $8,000,000; 6. City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2005 Improvement Area A Special Tax Refunding Bonds to be issued in a principal amount not to exceed $16,000,000; and 7. City of Chula Vista Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap) 2005 hnprovement Area A Special Tax Refunding Bonds to issued in a principal amount not to exceed $47,000,000. A-I 3-42 EXHIBIT B PRIOR BONDS 1. City ofChula Vista Assessment District No. 97-2 (OtayRanch, Spa One) Limited Obligation Improvement Bonds in the original principal amount of $12,430,000. 2. $ of the outstanding principal amount of the Limited Obligation Refunding Improvement Bonds, City of Chula Vista, Reassessment District of 1995 (the "1995 Limited Obligation Refunding Improvement Bonds") and, as a result ofthe defeasance and refunding ofthe 1995 Limited Obligation Refunding Bonds, $ of the outstanding principal amount ofthe Chula Vista Public Financing Authority Local Agency Revenue Bonds (1995 Assessment Bond Refinancing), Series A and $ of the outstanding principal amount of the Chula Vista Public Financing Authority Local Agency Subordinated Revenue Bonds (1915 Assessment Bond Refinancing), Series B; 3. City ofChula Vista Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) Special Tax Bonds issued in the original principal amount of$11,825,000; 4. City ofChula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 1999 Special Tax Bonds issued in the original principal amount of $23,000,000; 5. City ofChula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 2001 Special Tax Bonds issued in the original principal amount of$19,000,000; 6. City of Chula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2000 Special Tax Bonds issued in the original principal amount of$7,385,000; 7. City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 hnprovement Area A Special Tax Bonds issued in the original principal amount of$14,425,000; and 8. City of Chula Vista Community Facilities District No. 06-1 (EastLake - Woods, Vistas and Land Swap) 2002 hnprovement Area A Special Tax Bonds issued in the original principal amount of $39,000,000. B-1 3-43 1e s:~ 0;; .~~ -go _ c fro;.:; gE " c ...<,:; 5~ '" 0 - c >>~ 0..... ... 0 B 6 ~ .- . " ~.-= o .~ ~] 8 " .'" 0- o is -0= ] ~ " S .c . o~ c 0 i:?c 8 ~ .~ .~ 'C "-' o c u 0 " u ~ " ~ " '" f- E " 8 " B "en c_ " ~ E '0 -gS..... ootZ ~ C ~ 5 ;g"2 ._ 0 c 8 " .9;.: .L:l ]~:2 0. 0.. 0 E .~ ~ o '" ~ u _ " 0-- ::;'"i;~ ~ ~ 0 :0' ~ c- o u 0 ~ ~.~ 1-0 CIl:-:: ~ e.;:i! .~ S] . . d.l '0 ..: ..s::o~ "E e 0 o . ._ Il)..c ~ '0 U - C 0 C ~ ~ 8 .-e g E:.c '';:: t8 ;3: ~ c E <ii'- <.2~g c .- .- c:: tl ~:;~ .::: ~'C ~ " 0 c ;>'-' cl:l :.= >. c~a E .~ .5 ~ E ri rn E :e ~ ~ 3 u - " t.:::C/:lCll "'-" o.~ ~ ?:>s -5 ~ O......~ ._ 0 8 " " :..:::-:S~ " " ~ ~ E >. .- c .;!l...... Cd ~.s~ Stradling Y occa Carlson & Ruth Draft of May 17, 005 PRELIMINARY OFFICIAL STATEMENT DATED NEW ISSUE-BOOK-ENTRY ONLY ,2005 RATINGS; Insured Rat ngs: Moody's: _ S&P _ Underlying Ra ngs: S&P Moody's _ In the opinion of Best Best & Krieger, LLP, San Diego, California, Bond Counsel, subject to certain qualifications described herein. under existing laws, regulations, rulings and court decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item for purp es of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax impo d on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such inte est is exempt from California personal income taxes. See the information contained herein under the caption "CONCLUDING INFORMATION-Tax Matters" and theform of opinions of Bond Counsel attached hereto as APPENDIX C. COUNTY OF SAN DIEGO STATE OF CALIFO IA $138,920,000' CHULA VISTA PUBLIC FINANCING AUTHORITY REVENUE REFUNDING BONDS SERIES 2005A Dated: Date of Delivery Due: September 1, as shown on the inside cover page The Chula Vista Public Financing Authority Revenue Refunding Bonds (2005 Pooled Refinancing), Series 2005A (the "Bonds"), are being issued y the Chula Vista Public Financing Authority (the "Authority") pursuant to an Indenture of Trust, dated as of July 1, 2005 (the "Indenture"), by and betwe the Authority and U.S. Bank National Association, as trustee (the "Trustee"), and will be secured as described herein. See "SECURITY FOR THE BONDS." The Bonds are being issued to purchase limited obligation refunding bonds (the "Reassessment Bonds") and special tax refunding bonds (the CFD Refunding Bonds"), referred to herein as the "Local Obligations". The Reassessment Bonds are being issued by the City of Chula Vista (the "City") pursu t to the Refunding Act of 1984 for 1915 Improvement Act Bonds (Division 11.5 of the California Streets and Highways Code) (the "Refunding Act") and ill be secured by certain unpaid reassessments levied by the City pursuant to the Refunding Act. The Reassessment Bonds are being issued to refund c rtain outstanding local agency revenue bonds of the Authority and certain outstanding limited obligation improvement bonds of the City. The CFD Refunding onds are being issued by various community facilities districts of the City pursuant to the Mello.Roos Community Facilities Act of 1982, as amended (Section 3311 et seq. of the Government Code of the State of California) (the "CFD Act") and will be secured by special tax liens on taxable property within the resp ctive community facilities districts. The CFD Refunding Bonds are being issued to refund certain special tax bonds of the various community facilities districts See "THE FINANCING PLAN" herein. See "INTRODUCTION-Local Obligations" herein. The Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository rust Company ("DTC"), New York, New York. Interest on the Bonds will be payable on September 1 and March I of each year, commencing March 1, 006. Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases of Bonds will be in principal amounts of $5,000 or i any integral multiple of $5,000. Payments of principal and interest will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants wh will remit such payments to the beneficial owners of the Bonds. The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as set forth herein. See "THE BONDS-Redemption" he in. The scheduled payment of the principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy to be i sued concurrently with the delivery of the Bonds by [BOND INSURER LOGOI The Bonds are special, limited obligations of the Authority, payable solely from Revenues (as defmed herein), consisting of debt service pa ents on the Local Obligations received by the Trustee, as the registered owner of the Local Obligations, and amounts in certain funds and accounts pI dged under the Indenture. Debt service payments on the Local Obligations are calculated to be sufficient to permit the Authority to pay debt service 0 the Bonds when due. The City has determined that it will not obligate itself to advance funds from its treasury to cover any delinquency on the ocal Obligations. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OF CALIFORNIA OR ANY POLlT CAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER. EXCEPT FOR THE REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENE OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE AUTHORITY. BUT ARE SPECIAL, LIMITED OBLIGATION OF THE AUTHORITY PAYABLE EXCLUSIVELY FROM REVENUES AS PROVIDED IN THE INDENTURE, AS MORE FULLY DESCRIBED HE IN. THE LOCAL OBLIGATIONS OF EACH ISSUE ARE LIMITEP OBLIGATIONS OF THE CITY AND THE RESPECTIVE COMMUNITY FACIL IES DISTRICTS. PAYABLE SOLELY FROM THE REASSESSMENTS LEVIED WITHIN THE REASSESSMENT DISTRICTS AND SPECIAL T S LEVIED WITHIN THE COMMUNITY FACILITIES DISTRICTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE L AL OBLIGATIONS INDENTURES PURSUANT TO WHICH SUCH LOCAL OBLIGATIONS ARE ISSUED. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OR THE STATE OF CALIFORNlA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE LOCAL OBLIGATIONS. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain risk factors that should be consi in addition to the other matters set forth herein when evaluating the investment quality of the Bonds. This cover page contains certain informati quick reference only. It is not a complete sununary of the Bonds. Investors should read the entire Official Statement to obtain information essen the making of an informed investment decision. MATURITY SCHEDULE (See inside cover) The Bonds are offered, when, as and if issued and accepted by the Undernriter, subject to approval as to their validity by Best B st & Krieger, LLP, San Diego, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Au rity and the City by the City Attorney and for the Underwriter by Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, Calif< mia. It is anticipated that the Bonds will be available for delivery in book-entry form in New York, New York, on or about July -,2005. Stone & Youngberg LLC Dated: July _' 2005 . Preliminary, subject to change. DOCSOC/I I 01647v7/22245-01 58 3-44 MATURITY SCHEDULE" $ Base CUSIP@ No.t; Maturity Date (&ptember 1) Principal Amount Interest Rate Yield CUSIP@ No.t Maturity Date (September 1) Principal Amount Interest Rate Yield CUSIP@ No,t . Preliminary, subject to change. r CUSIP@isaregisteredtrademarkof/heAmericanBankers Association. Copyright(;) 1999-2005 Standard & Poor's, a Division a/the McGraw Hill Companies, Inc. CUSIP@ data herein is provided by Standard & Poor's CUSI? Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the GUSI? Service Bureau. CUSlP@ numbers are providedfor convenience of reference only. Neither the District nor the Underwriter takes any responsibility for the accuracy of such numbers. DOCSOCI1101647v7/22245-0158 3-45 CITY OF CHULA VISTA CITY COUNCIL Stephen C. Padilla, Mayor Mary Salas, Deputy Mayor Patty Davis, Councilmember John McCann, Councilmember Jerry Rindone, Councilmember CITY OFFICIALS David D. Rowlands, Jr., City Manager Sid Morris, Assistant City Manager George Krempl, Assistant City Manager Cheryl Fruchter, Assistant City Manager Susan Bigelow, City Clerk Ann Moore, City Attorney Maria Kachadoorian, Director of Finance Alex AI-Agha, City Engineer CHULA VISTA PUBLIC FINANCING AUTHORITY BOARD OF DIRECTORS Stephen C. Padilla, Chair Mary Salas, Director Patty Davis, Director John McCann, Director Jerry Rindone, Director David D. Rowlands, Jr., Executive Director Susan Bigelow, Secretary Bond Counsel Best Best & Krieger, LLP San Diego, California Underwriter's Counsel Stradling Y occa Carlson & Rauth A Professional Corporation Newport Beach, California Financial Advisor to the City Fieldman, Rolapp & Associates Irvine, California Reassessment Engineer/Special Tax Consultant MuniFinancial Temecula, California Verification Agent Grant Thornton Minneapolis, Minnesota Trustee U.S. Bank National Association Los Angeles, California DOCSOC/II01647v7/22245-0158 3-46 No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Authority or the City. 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 any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein which has been obtained from parties other than the Authority and the City is believed to be reliable but is not guaranteed as to accuracy or completeness by the Authority or the City. The information and expressions of opinion stated herein are subject to change without notice. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the City, the Reassessment Districts or the Community Facilities Districts since the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement: Tbe 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 applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information herein relating to the Bonds, the Authority, the Reassessment Districts, the Community Facilities Districts and the City does not purport to be comprehensive or definitive. All references to the Bonds are qualified in their entirety by reference to the Indenture setting forth the terms and descriptions thereof. The summaries and references to any code, act, resolution, the Indenture or the Local Obligation Indentures (as defined herein), and to other statutes and documents in this Official Statement do not purport to be comprehensive or definitive, and are qualified in their entirety by reference to each statute and document. IN CONNECTION WITH THIS BOND UNDERWRITING, TIIE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS DESCRIBED HEREIN AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. [Other than with respect to information concerning (the "Insurer") contained under the caption "BOND INSURANCE" and APPENDIX E-"MUNICIPAL BOND INSURANCE POLICY SPECIMEN" herein, none of the information in this Official Statement has been supplied or verified by , and makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the Bonds; or (Iii) the tax-exempt status of the interest on the Bonds.] DOCSOC/llOI647v7/22245-0l58 3-47 TABLE OF CONTENTS Pal!e INTRODUCTION ............................................................ I Summary ................................................................... I The Bonds ................................................................. I Local Obligations ...................................................... 2 Risk Factors........................ ............................ ........... 3 THE FINANCING PLAN ................................................ 3 THE BONDS.................................................................... 8 Description of the Bonds........................................... 8 Redemption................ ............................................... 8 Selection of Bonds for Redemption .......................... 9 Notice of Redemption ............................................... 9 Effect of Redemption .............................................. 10 Transfers and Exchange ..........................................10 Debt Service Schedule ............................................ 10 Debt Service Coverage for the Bonds ..................... II SECURITY FOR THE BONDS .................................... 13 Repayment of the Bonds .........................................13 Parity Bonds ............................................................ 14 Payment of the Local Obligations ........................... 14 Levy and Collection of Reassessments ................... 17 Method of Reassessment Spread............................. 18 Levy and Collection of Special Taxes..................... 18 Rates and Methods of Apportionment..................... 19 Covenant to Foreclose............................................. 20 Judicial Foreclosure Sale Proceedings- Reassessments ..................................................21 Sales of Tax-Defaulted Properly Generally............ 22 Bond Insurance............ ............................................ 23 Priority of Lien ........................................................ 23 No Obligation of the City Upon Delinquency......... 23 Prepayment of Reassessments or Special Taxes ..... 23 BOND INSURANCE..................................................... 23 THE AUTHORITy........................................................ 23 THE CITY ......................................................................24 THE DISTRICTS ...........................................................24 The Reassessment Districts ..................................... 24 Reassessment District 2005-1................................. 24 Reassessment District No. 2005-2........................... 28 The Community Facilities Districts ........................31 Land Uses, Development Status and Estimated Assessed Value-to-Lien Ratios ........................ 50 Estimated Assessed Value-to-Lien Ratios............... 53 Delinquency History ............................................... 55 Major Taxpayers for all Districts ............................ 55 SPECIAL RISK FACTORS........................................... 58 The Bonds are Limited Obligations of the Authority ..........................................................58 The Local Obligations are Limited Obligations of the City............................................................. 58 DOCSOC/IIOI647v7/22245-0158 Pal!e The Reassessments are Not Personal Obligations of the Properly Owners .........................................59 The Special Taxes are Not Personal Obligations of the Owners........... ....................................... ......59 Potential Early Redemption of Bonds from Prepayments............ .......... ............ ........ ............59 Non-Cash Payments of Special Taxes .....................59 Risks of Real Estate Secured Investments Generally..... ............................ .........................60 Concentration of Ownership ....................................60 Failure to Develop Properly.....................................60 Bankruptcy and Foreclosure Delays ........................61 FDlC/Federal Government Interests in Properties...62 Price Realized Upon Foreclosure.............................63 Direct and Overlapping Debt ...................................63 Natural Disasters ........................................... ...........63 Land Values..... ...................................... ..................64 Hazardous Substances......................... .....................64 Cumulative Burden of Parity Taxes and Special Assessments.... ......................... .........................64 Loss of Tax Exemption............................................65 California Constitution Article XIllC and Article XlllD ....................................................65 No Acceleration .......................................................66 Limitations on Remedies .........................................67 CONCLUDING INFORMATION .................................67 Underwriting.......................................... ..................67 Financial Advisor................................ .....................67 Legal Opinion; Legal Matters ..................................68 Tax Matters............ ........................... ........... ............68 No Litigation............. ....................... ........................69 Verification of Mathematical Computations............69 Ratings of Bonds......... ..... ......... ...............................69 Continuing Disclosure .............................................69 Miscellaneous ..................... .............................. ....... 71 APPENDIX A-INFORMATION REGARDING THE CITY OF CHULA ViSTA........................... A-I APPENDIX B-SUMMARY OF BOND DOCUMENTS ......................................................B-1 APPENDIX C-FORM OF LEGAL OPINION OF BOND COUNSEL..."......................................C-I APPENDIX D-FORM OF CONTINUING DISCLOSURE AGREEMENT ............................ D-1 APPENDIX E-MUNICIPAL BOND INSURANCE POLICY SPECIMEN ....................E-I APPENDIX F-INFORMATlON CONCERNING DTC.......................................................................F-I APPENDIX G-RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS .......................................................... G-I 3-48 [AREA MAP TO COMEI DOCSOC/l101647v7/22245-0158 3-49 $138,920,000. CHULA VISTA PUBLIC FINANCING AUTHORITY REVENUE REFUNDING BONDS SERIES 200SA INTRODUCTION Summary This Official Statement is provided to furnish certain information in connection with the issuance and sale by the Chula Vista Public Financing Authority (the "Authority"), of $138,920,000. aggregate principal amount ofChula Vista Public Financing Authority Revenue Refunding Bonds, Series 2005A (the "Bonds"). The Bonds will be issued pursuant to the provisions of an Indenture of Trust, dated as of July I, 2005 (the "Indenture"), by and between the Authority and u.s. Bank National Association, as trustee (the "Trustee"). The Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, as amended, constituting Article 4 of Chapter 5, Division 7, Title I of the California Government Code (the "Bond Law"). Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS." The Bonds are being issued to finance the acquisition of the Local Obligations (defined below). As described below in "THE FINANCING PLAN," the Local Obligations to be acquired consist of the Reassessment Bonds (defined below), which are being issued to (i) refund the outstanding local agency revenue bonds of the Authority and (ii) refund an outstanding issue of limited obligation improvement bonds of the City, and the CFD Refunding Bonds (defined below) which are being used to refund six series of outstanding special tax bonds issued by five community facilities districts of the City. See "Local Obligations" below in this Introduction and "THE FINANCING PLAN" for a description of the Local Obligations. See also "THE DISTRICTS." As the owner of the Local Obligations, the Authority has pledged the payments of principal and interest it receives on the Local Obligations to pay debt service on the Bonds. Such payments, together with certain other amounts as specified in the Indenture, comprise the Revenues. The Revenues will be applied to pay principal of, premium, if any, and interest on the Bonds. The CFD Refunding Bonds are limited obligations of the respective community facilities districts payable pursuant to the respective CFD Indentures (defined below). The Reassessment Bonds are limited obligations of the City payable from the redemption fund established in the respective Reassessment Indentures (defined below). The issues of the Reassessment Bonds are each separate and distinct obligations secured by reassessments levied against certain properties within the respective Reassessment Districts (defined below). The issues of CFD Refunding Bonds are each separate and distinct obligations secured by special taxes levied against certain properties within the respective Community Facilities Districts (defined below). See "SECURITY FOR THE BONDS" for a description of the special taxes or reassessments, as applicable, and other funds securing each of the Local Obligations. Payment of the principal of and interest on the Bonds when due which will be guaranteed by a Bond Insurance Policy to be issued by (the "Insurer"). See "BOND INSURANCE." The Bonds The proceeds of the Bonds will be used to acquire the Local Obligations. . Preliminary, subject to change. DOCSOCIl101647v7/22245-0158 3-50 The Bonds are payable from and secured by the Revenues and amounts in the funds and accounts held under the Indenture (except the Residual Account of the Revenue Fund). "Revenues" is defined under the Indenture to mean (i) all amounts derived from or with respect to the Local Obligations and (ii) investment income with respect to any moneys held by the Trustee in the funds and accounts established under the Indenture. The principal and interest payments received by the Authority as the owner of the Local Obligations are the primary source offunds to repay the Bonds. See "SECURITY FOR THE BONDS." The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy (the "Bond Insurance Policy") to be issued concurrently with the delivery of the Bonds by (the "Insurer"). See "BOND INSURANCE." NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COMMUNITY FACILITIES DISTRICTS, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER. EXCEPT FOR THE REVENUES PLEDGED UNDER THE INDENTURE, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE AUTHORITY, BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE EXCLUSIVELY FROM REVENUES AS PROVIDED IN THE INDENTURE, AS MORE FULLY DESCRIBED HEREIN. THE LOCAL OBLIGATIONS ARE LIMITED OBLIGATIONS OF THE CITY AND THE COMMUNITY FACILITIES DISTRICTS AND PAYABLE SOLELY FROM THE REASSESSMENTS LEVIED WITHIN THE REASSESSMENT DISTRICTS AND SPECIAL TAXES LEVIED WITHIN THE COMMUNITY FACILITIES DISTRICTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE LOCAL OBLIGATIONS INDENTURES PURSUANT TO WHICH SUCH LOCAL OBLIGATIONS ARE ISSUED. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OR THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE LOCAL OBLIGATIONS. Local Obligations The proceeds from the sale of the Bonds will be used primarily to purchase the Reassessment Bonds and the CFD Refunding Bonds as described below and issued concurrently with the Bonds. The Reassessment Bonds and the CFD Refunding Bonds comprise the "Local Obligations." Reassessment Bonds. A portion of the proceeds from the sale of the Bonds will be used to purchase (i) the $7,770,000' City of Chula Vista Reassessment District No.2005-1 Limited Obligation Refunding Bonds (AD 87-1/88-2), and (ii) the $10,755,000' City of Chula Vista Reassessment District No. 2005-2 Limited Obligation Refunding Bonds (AD 97-2) (collectively, the "Reassessment Bonds"). The Reassessment Bonds are being issued by the City pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (Division 11.5 of the California Streets and Highways Code) (the "Refunding Act") and separate Bond Indentures, each dated as of July 1, 2005 (collectively, the "Reassessment Indentures"), by and between the City and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), and will be separately secured by certain unpaid reassessments (the "Reassessments") levied by the City pursuant to the Refunding Act on certain assessable real property within the boundaries of Reassessment District No. 2005-1 and Reassessment District No.2005-2 (collectively, the "Reassessment Districts"), and the unpaid Reassessments within each Reassessment District, together with interest thereon, constitute a trust fund for the redemption and payment of the principal of the respective Reassessment Bonds and the interest thereon. CFD Refunding Bonds. A portion of the proceeds from the sale of the Bonds will be used to purchase: (i) the $11,875,000' City of Chula Vista Community Facilities District No. 97-3 (Otay Ranch . Preliminary, subject to change. 2 DOCSOCIII01647v7/22245-0158 3-51 McMillin Spa One) 2005 Special Tax Reftmding Bonds; (ii) the $43,620,000' Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 2005 Special Tax Reftmding Bonds, (iii) the $7,520,000' City of Chula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2005 Special Tax Refunding Bonds, (iv) the $15,225,000' City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2005 Improvement Area A Special Tax Reftmding Bonds; and (v) the $42,155,000' City of Chula Vista Community Facilities District No. 06-1 (Eastlake-Woods, Vistas and Land Swap) 2005 Improvement AreaA Special Tax Refunding Bonds (collectively, the "CFD Reftmding Bonds"). The CFD Refunding Bonds are being issued pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et. seq. of the California Government Code (the "CFD Act"), and separate Bond Indentures, each dated as of July I, 2005 (collectively, the "CFD Indentures," and together with the Reassessment Indentures, the "Local Obligations Indentures"), by and between the respective Community Facilities Districts and the Fiscal Agent, and will be separately secured by special taxes (the "Special Taxes") leVIed against certain taxable real property within the boundaries of (i) Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One), (ii) Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West), (iii) Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10), (iv) Improvement Area A of Community Facilities District No. 2001-1 (San Miguel Rancb), and (v) Improvement Area A of Community Facilities District No. 06-1 (Eastlake- Woods, Vistas and Land Swap) (collectively, the "Community Facilities Districts" and collectively with the Reassessment Districts, the "Districts"). The CFD Reftmding Bonds are payable from special taxes levied on taxable real property within the respective Community Facilities Districts and remaining after the payment of the administrative expenses of the respective Community Facilities Districts. Risk Factors See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain risk factors which should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds generally. Brief descriptions of the Bonds, the security for the Bonds, the Local Obligations, the Reassessment Districts, the Community Facilities Districts, the Authority, the City and other infoooation are included in this Official Statement. Such descriptions and infoooation do not purport to be comprehensive or definitive. The descriptions herein of the Bonds, the Local Obligations, the Indenture, the Local Obligations Indentures and other documents are qualified in their entirety by reference to the fooos thereof and the infoooation with respect thereto included in the Bonds, the Local Obligations, the Indenture, the Local Obligations Indentures and other documents. THE FINANCING PLAN The Bonds are being issued in order to provide ftmds to purchase the Local Obligations which are described in Table I below. . Preliminary, subject to change. 3 DOCSOC/llOl647v7/22245-0158 3-52 TABLE 1 LOCAL OBLlGATIONS Local Obligation Reassessment Bonds City of Chula Vista Reassessment District No. 2005-1 Limited Obligation Refunding Bonds (AD 87-1/88-2) City ofChula Vista Reassessment District No. 2005-2 Limited Obligation Refunding Bonds (AD 97-2) CFD RefundinlZ Bonds City ofChula Vista Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) 2005 Special Tax Refunding Bonds City ofChula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 2005 Special Tax Refunding Bonds City of Chula Vista Community Facilities District No. 2000-1 (Sunbow II - Villages 5 through 10) 2005 Special Tax Refunding Bonds City ofChula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2005 Improvement Area A Special Refunding Tax Bonds City ofChula Vista Community Facilities District No. 06-1 (Eastlake-Woods, Vistas and Land Swap) 2005 Improvement Area A Special Tax Refunding Bonds Principal Amount. $ 7,770,000 10,755,000 11,875,000 43,620,000 7,520,000 15,225,000 42,155,000 The Local Obligations are being issued to refund: (i) the $14,460,000 Chula Vista Public Financing Authority Local Agency Revenue Bonds (1995 Assessment Bond Refinancing) Series A and Series B (the "Prior Authority Bonds'); (ii) the $12,430,000 City ofChula Vista Assessment District No. 97-2 (Otay Ranch, Village One) Limited Obligation Bonds (the "Prior Assessment Bonds"); and (iii) the six separate issues of special tax bonds described in Table 2 below under the heading "Prior CFD Bonds" (the "Prior CFD Bonds" and together with the Prior Authority Bonds and the Prior Assessment Bonds, the "Prior Bonds"). Table 2 below illustrates for each issue of Prior Bonds being refunded with the proceeds of the Local Obligations: the date of issuance, original par amount, outstanding principal amount as of May 1, 2005, redemption price and redemption date. . Preliminary, subject to change. 4 DOCSOC/lIOI647v7/22245-0158 3-53 ..... .. ..l l:ll -< ,... '" ~ z o l:ll ~ o .... ~ Ilo .. = ,... ::: -'l - " ~~ {il::l " 00: ::: .~ t ~.::: ~t " .. ~~ '- .., "'.... .s...; '" 6- ~:;j 00 00 00 0',,) 00 '" ...0 N~ "'''' ~ ~i: " " ::: '" :a.~ c o~ 00 00 -0 o ' "'~ ..'" ,r-- .. ' -.. "'''' 11 ~ .::; ,li ::: l::l ~ ~ "'''' "'''' QO~ 00 '" '" ~ ~ C C " " ~~ ~ ::: '" "l ~ ~ <1'<l ~.~ 'i: il ~C/O bO~ c c ';,:) 'r:) a a c c t:t: ~ ~ 0>:0>: "'''' c c o 0 alal cE ~ ~ 6 6 ~ ~ ~ ~ ~ ~ ~ ~ << .,.,.,., "'''' "'''' ~~ ~ ~ "'''' c c o 0 alal ~ ~ ~ " " -g 5 5 o > > CQ~~ .;: C' G' .,g 5 5 - bll bll .;:<< ...-a-; .g g ~ o...J.J ~ ~ c o ~ ~ ;; oJ bll a 0>: i? ~ '" r'- '" ~ 0 :5z co .~ - - 5 .E 60 ~ ~ 1:3 :2 6 < ~ 5 ~ J:,( ~ Q N Q '" o '" ~ Q '" o ~ . ,., o ;t. '" o o o o o '" '" o '" o o o .,; r-- '" o '" o o o o ,., .. ",' o o o .,; N 00, '" '" '" '" '" '" '" '" o '" >. ;; ~ o ,., ~ c c ~ ~ ~ ~ '" ~ c o ~ ~ ;; '" c ~ ~ ~ > > ~ ~ ~ ~ ~ ~ ]~ > ~ g ~f ~o 0 E-< ~ ~ -a..:s ~ .~;; > e.", '" '" 0 0 ~~ ~ ~ g s <;; '€ "-2 e. 0 0 ",0.. 0.. C I I == f5 ~ .- 0 rIl 0 :E cd] cd uc..oc.. :ECf)~I"J.l<n -B-5~-B-g aaf-adl 0>: 0>: "ij 0>:_ ~ ~'H ~g ~OO~O~ S ;:;;::; 0\ :::-.~ CQr-!-a.,g:;~~ o~o;-a: ~ 0 0 0 UZZ Z SOO .0 ~ao a '" ~ o 0; o ;t. '" o o o o .,; ~ '" o '" '" o o o 0' o o ,.,- N '" o o o '" ,..: '" ~ ~ ::0 0000 ~~ss ~~S2Q 0\ 0'1 0\ 0'1 0000 ~'#-#-cf. NNMM 0000 0000 0000 0000 o~orio~ci \Or-CION .,..,0\0'\"'1" oo~ \C~ l""l~ 00 - -,., ~i0'7i0'7E0'7 0000 0000 0000 o~ v1lrl~ o~ OooNO o l"'"l"<t 0 o-,^r;--.^"<t^O'I^ - -,., f,A.liA-liA~ .. o g 088N NOO,,-^ oo"N N ,- t~~~ E1i;1n'E ~ 5h5h8 o ;j ::l 0 Z<<o ~ ~ '" ~ '" c o al ~ f- .,. ." v e. C/O ~< 'll ~ rIl~~ -g~c o f- ~ CC-a5 ~'u ;;.. E-< g, 2 ]CI:l E u<- g,~8 6<~ gEe. N ~ ~ 0- 6 ~ ~C/O >", ~2!a g a...J --'" ;S~~ ~~.s ~:2'~ ,.:go> '" a ,,; >0>:'" 1_ g ::::g~ :t.?!' ] ,g:Eo sa~ ~~~ "";""";'~ 0_ gg-.o "''''0 o 0 ci ZZZ 000 "-"-"- uuu ~ c o ~ bll ,g ;; '" a 3-54 .; 13 '5 ~ is E ~ 6 ~ ~ N ~ ob ~ 00 ~ .0>: o ~ Z-s -~ a ,,'" ~ - a t c-P ~ 0 60 ~ .- ~u ~ v <.;= '" '" 0 c ~ ~13 r-!- .~ 00;0 o Z E ~ .g ~ tl ~ a ~ c 6 E~ ~ ~ ~ ~::c ~ ~ <i2 c e. :S:C .~~ ",,,, a.:J - c 52 ~ ~ CC ~ ~ ~ ~ ~ ~ ~E 6 i5 g ~ ~-8 -;j 1;; i?", e.0 bS '[;j't: .5 8- 0:< 00 ~ " ~ .. N N <::! r-- > r-- .. '<> o U o C/O u o Cl The Bonds are being sold in amounts that will provide proceeds sufficient to acquire the Local Obligations. A portion of the proceeds of the Local Obligations, together with monies held in certain funds related to the Prior Bonds, will be used to purchase federal securities which, together with cash deposits held by the escrow bank, will be sufficient in the opinion of Grant Thornton, the Verification Agent, to provide for the defeasance and redemption (on the dates specified above) of the Prior Bonds. See "CONCLUDING INFORMA TlON- Verification of Mathematical Computations." The proceeds from the sale of the Bonds, the Local Obligations and certain monies held in funds of the Prior Bonds will be used as described in Table 3 and Table 4 below. TABLE 3 ESTIMATED SOURCES AND USES THE BONDS Tbe estimated sources and uses offunds with respect to the Bonds and amounts transferred by the City and the Community Facilities Districts to the Trustee are set forth in the following table: . Sources of Funds Principal Amount of Bonds Less Net Original Issue Discount Transfer from Local Obligations(1} Total Sources Uses of Funds Program Fund(2) Underwriter's Discount Costs ofIssuance(3) Reserve Fund Total Uses (1) Such amounts include proceeds of Local Obligations transferred to the Trustee for the payment of each Local Obligation's Proportionate Share of the Reserve Requirement and costs of issuance for the Bonds. (2) Amounts in the Program Fund will be used to purchase the Local Obligations. (3) To pay costs of issuance, including legal fees, financial advisor fees, printing fees, rating agency fees, Trustee and Fiscal Agent fees and Bond Insurance Policy premium. 6 DOCSOCIlIOl647v7f22245-0158 3-55 ..,. I>;l ...l = -< ,.. '" I>;l '" ;:l ~ z- -< '" .. u ~ o '" ~ .. ,.. ~ .... ,.. '" .. '" z o .... ,.. -< " .... ...l = o ~ u o ...l OJ :0 .el gp .~ .s ::s OJ -" - .5 -" 1:: ..s - OJ ~ ~ ~ "'" " o = ~ o .;:: p,. OJ -S "'" a ~ " o .~ .~ :0 o OJ " o ...l .s B 'tl OJ c. ~ OJ ~ -s .~ ...,:,< ~~~~ ~~t:::: ~~~~ 0:; '7:P ~~=s{;i ~<::::It::t: u~:::Q ~~l:l::l ;':0:; ~.~ ~~-e~ ~<:::l t:::: u""l:::c I::l c:S~l:Q; ;':0:; ....:,< ~~:.s'; ~o... l: t: U c:S<{;~ ;,:..... 0:; "":,< ~K=S'; ~o..::: :r:: U<l{;~ ;,:..... 0:; ~ ~ ~ ~ - J.. ::: ::J'~~:.e: ~ ......::~t:::: ~.r:! ~ ~ e ~ J::l ~ ...<q ~ ..-...=-: ~ ~ ~ OIJ !!'-J..::: =;.~ ~:.s ~ t:: ~ =: =: "",.r:! ~ s: c::. ~ J::l ~ ...<q ~ O<;...,l::l:: ~ "'" ~ <,... o ~ OJ ~ ;:l "'" a ~ OJ 1:: ;:l o ~ "'" OJ 0; .5 - ~ OJ OJ -" I- .... ;; .;; ~ '" = o '" . o ." '" . <2 ~ C ~ = C .9 0 0 0 0 1C ~ u "".- u :.=Cl~ .0,,'" 00 Iii ~ 'bE~ ~ ." - - = " = ~~<2~ 0 0'- =' '" Ii!'~ eo ... . 0 tIl 0 0",- ~ "i3tJ-'s " .S:- Z ~ ~ . . g '" ~ = 0 'C ~ E tIl o-....lf-< ~ ." = = '" ... o ~ " ~ ;l -" B '" 2 ~ "'f-<~ = o;l =-- "".$ ~ ~ 0 o ~ f-< ~ Iii ~ . OJf-< 3-56 15 .~ ~ = o .~ .~ :c o " . o ....l ... o " o ~ .~ .c . d . e o '" ~ '" " " u o 6. " -= "-' o ~ .c tIl " 1<1 = o '€ o Co o . 0- <: -d = = "" t " ~ " '" " -= '" Iii c o o . ~ :; ~ ~l-o vi .", .t::: C . 0 ~'" " " 1l-= ;lS ~:f .Sf Iii 1<1 =- ~ ~ .- " "-' u o Iii ~ ~ o ._ u"-' '" 0 = ~ il'@ o u - " "2-= :a~ Co Co d 0 " - .0", ~ ~ 00 ~ <r '" .,. N N <::! .... > .... .,. '<> o 5 o en U o CI THE BONDS Description of the Bonds The Bonds will be issued in fully registered form and when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 or any integral multiple thereof. The Bonds will be dated their date of delivery. The Bonds will bear interest at the rates per annum and will mature, subject to the redemption provisions set forth below, on the dates and in the principal amounts, all as set forth on the inside cover page hereof. Interest on the Bonds is payable semiannually on March I and September I of each year, commencing March I, 2006 (each an "Interest Payment Date") to the persons in whose names ownership of the Bonds is registered on the Bond Register at the close of business on the immediately preceding Record Date, except as provided in the Indenture. Interest on the Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day months. Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in whicb 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 Date of Delivery, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. The principal of and redemption premium, if any, on the Bonds will be paid in lawful money of the United States of America at the office of the Trustee upon presentation and surrender of the Bonds at maturity or the prior redemption thereof. The Bonds will mature on September I in the principal amounts and years as shown on the inside cover page hereof and are subject to optional redemption and mandatory sinking fund redemption as shown herein. The Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., as nominee of DTC. Payment of interest with respect to any Bond registered as of each Record Date in the name of Cede & Co. will be made by wire transfer of same-day funds to the account of Cede & Co. See "Book- Entry System." Redemption Mandatory Redemption from Redemption of Local Obligations. The Bonds shall be subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part from such maturities as are selected by the Authority, from the proceeds of the mandatory redemption of Local Obligations as a result of prepayment of reassessments within the Reassessment Districts or prepayment of special taxes within the Community Facilities Districts at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date March 1,2006 through March 2, 20_ September I, 20_ and March 2, 20_ September I, 20_ and thereafter Redemption Price 102% 101 100 Optional Redemption. The Bonds maturing on and after September I, 20_ may be redeemed at the option of the Authority prior to maturity, as a whole or in part, on any Interest Payment Date on and after September I, 20_, from such maturities as are selected by the Authority, and by lot within a maturity, from 8 DOCSOC/ll 0164 7v7/22245-0158 3-57 any source of funds, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption: Redemption Date September 1,20_ through March I, 20_ September I, 20_ and March 1,20_ September I, 20_ and thereafter Redemption Price 102% 101 100 Mandatory Sinking Redemption. The Bonds maturing on September I, 20_ and September I, 20_ are subject to mandatory redemption in part by lot, on September I in each year commencing September I, 20_ and September I, 20_, respectively, from mandatory sinking payments made by the Authority at a redemption price equal to the principal amount thereof to be redeemed, without premium, plus accrued interest thereon to the date of redemption in the aggregate respective principal amounts: BONDS MATURING SEPTEMBER 1, 20_ Year Principal Amount BONDS MATURING SEPTEMBER 1, 20_ Year Principal Amount Selection of Bonds for Redemption In the event a portion of the Bonds are to be redeemed, the Trustee shall select the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption, by lot in any manner which the Authority in its sole discretion shall deem appropriate and fair; provided that, upon a redemption of pursuant to mandatory redemption from the redemption of Local Obligations, the Trustee shall redeem the same maturities of Bonds and principal amounts therein as maturities and principal amounts of the Local Obligations redeemed. See "THE BONDS-Redemption" and APPENDIX B-"SUMMARY OF BOND DOCUMENTS." Notice of Redemption At least thirty (30) days but no more than sixty (60) days prior to the redemption date, the Trustee shall give by first class mail, postage prepaid, a copy of such notice, to the respective owners of the Bonds to be redeemed at their addresses appearing on the Bond register. Failure to receive such notice or any defect . therein shall not affect the validity of the redemption, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture shall be conclusive as against all parties. In addition, notice of redemption shall be given to each of the Securities Depositories and to at least one of the Information Services. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS." 9 DOCSOC/llOl647v7/22245-0158 3-58 Effect of Redemption If on such redemption date, money for the redemption of all the Bonds to be redeemed as provided in the Indenture, together with interest to such redemption date, shall be available therefor on such redemption date, and if notice of redemption thereof shall have been given, then from and after such redemption date, interest with respect to the Bonds to be redeemed shall cease to accrue. When any Bonds have been duly called for redemption under the provisions of the Indenture and sufficient moneys shall be held irrevocably in trust for the payment of the redemption price of such Bonds or portions thereof, all as provided in the Indenture, then such Bonds shall no longer be deemed outstanding and shall be surrendered to the Trustee for cancellation. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS." Transfers and Exchange So long as the Bonds remain in book-entry form, transfer and exchange of any of the Bonds will be accomplished in accordance with the provisions of such book-entry system. In the event of termination of such book-entry system with respect to the Bonds, the Bonds may be transferred and exchanged in accordance with the terms of the Indenture. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS" and APPENDIX F-"INFORMA nON CONCERNING DTC." Debt Service Schedule The following is the debt service schedule for the Bonds, assuming no redemptions other than mandatory sinking fund redemptions. 10 DOCSOC/l101647v7/22245-0158 3-59 Year Ending (September 1) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Total TABLES DEBT SERVICE SCHEDULE Principal Interest Annual Debt Service $ $ $ $ $ $ Debt Service Coverage for the Bonds Set forth in Table 6 below is the projected sources of Revenues that will be generated by the anticipated payment of debt service on each of the Local Obligations while the Bonds are outstanding. DOCSOC/I101647v7/22245-0158 11 3-60 ~ "" ~ .", ~ ~ ",.. b ..., ~ "'~ . ~ <00 ~~ z :;: 0 u .... ,.. -< ..., '"' <!, "" .... ~~ ... i:ll . ~ 0 ~~ ... :;: -< u u 0 ... ..., '" ~ , r-< '" '" ... 0 ~ .~ i:ll !l: ~ ~ g -< ~ "," ,.. 00 " b r-< ~ ;;J ~ Z r-< "8 > ., .., ~ "-l .... '" .~ ~ ~ ~ 0 "," 00 b r-< u ~ ;;J 0 "5 rJ1 '" E ~ oA ~ ~ "" ., "" ~ .. '" ~ '" ;; ~ ..., E ~ ;f;~] ~;~ ~ '" .~ ~ ~'" ., ~ 'S ., ".. -.: ~OOO~~~~NNNN~~NN~~~ONNOOOOOO~ ~MMM~~NNOOOO~OO~OO~MO~~~~OOO~ ~~~~~~~~~MMM~~MMMM~~~MO~~~~N~ MM~~~~ ~~~~M~~N-~~~~M~~~~N~~ ~~MO~O~N~~~~~~~~O~_OM~~~ ~~~~ ~~~~~~~~O~~~~NN~~~~~~doM~~~M~ NNNN~M~~M~~~~~~~~~~~~~~~O~~O~ ~~~~~~~~N~~~~~~~~~~~~~~~N~~~N ~~~~~~~~~~~~~~~~~~~~~~~~~~MN~ M N ~ ~ ~~~~~~~oooo~~~~~~~ooooooooo~ N~~~NN~~OOOON~NN~~NOOO~OO~~OM MNNNOO~~~~~~~~~~~~~~~~~~N~~NO N~N~M~~M~OO~~~M-M~~-O~-~~~~~~ OO~~~~_~__M~OOO_~OM~_M_~M_O~~~O ~~~~~~M~O~~~~~~~~~~~~N~~~M~M~ 0000000-_000000000000000000000 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NNNNNNNNNNNNNNNNNNNNNNNNNNNN~ .... ~ ~ ~ooo~~oooooo~~oo~~o~ooooooo ;~~~~~~;~~~~~~~~~~~~~~~~~~~ N~~~~ONN~~~M~---~MM~N~~~~N~ ~~~~~d~~~~~~~~~~~~~~~~:~~~d ~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~ NOOO~~~~~~~~~~OOO~~~OOOOO ~~~~~~~~~~NN~N~~~~N~OOO~~ ~~~~~~~~~NN~~NMMM~N~~~~~~ ~~~~~MM~OOM~~~~M~~~~~O~M _~~ ~ ~~~MM~_ON~M__OON~N_ ~~~~~o~~o~~~~~~~~~o~~~~d~ -0000 00-0-0000000-000--0 ~~~~~~~~~~~~~~~~~~~~~~~~~ ~ ~NNN~~OO~~~~~~~~~~~NNNOOOO OOONN~~~~~~NNNNNN~O~~OOOO OMM~~~~~ ~~~~~~~~~~~od~~~~ ~8~~~~~~~~~~~~:~~~~~~~~~~~ ~~~~~~N~~dd~~~~~d~~~d~d~~~ ~~~~~~~~~~~~~~~~~~~~~~o~~o ~~~~~~~~~~~~~~~~~~~~~~~~~o NNNNNNNNNNNNNNNNNNNNNNNNN~ ~ ~ooo~~~~oooooooo~~oooooo ~~~~~~NNOOOOOOOO~~~~OO~O N~~~~~~~N~~N~~NN~O~~~~~N -N~~~~~~~~~~~~ N~O~~~~~ ~~~~~~~~~~~~~~N~~~~~~~~~ -N--NN-___N___N________O ~~~~~~~~~~~~~~~~~~~~~~~~ ~ 0 0 00 0 0 0 0 0 0 00 0 00 0 0 "'''' '" 0 0 00 "! 0 00 """" 0 0 0 0 00 0 0"" on "! NN N "" on 00 oci oO~ 00 oci oci oci oci oOM oci MO .:; M ~~ ... vi vi MoO 0 :; Mo, "'N 0, 0 .... ........ M "'0 N 0, 00 00 00 M 0, 00 "" 0 .... 00 M_ OO. M 00 "1 o,M 00 ""- ... .... _...or, N OM "" -.0 ~~ _~ r-: 00 ~~ .... O' ~~~~ '" 00~~ oci' M~~r-: ",,' ~- ~~ 00 ...... ... ~~~~~ ...... ~"=t~~~~~~~~"=t~.~~ ........ ............ ............ ............ .... ~~~~~~ ~~~~~ .... '" \CNNN\C\COOO t-:<r\~<r\~~OOO ~~~NoOoOOO~ ~~~t.r)~~~~~ OO~ ~<<::t~ ~ O"oQ~~O~~~~V)O-.o \O<r\~~~~~~~ =<:~ 3- 3- =~ 3- ::<:::~ ~ ~ ~ " .:: '" .... 00 0, :=: ::: ~ :; ... or, '" .... ~ 0,0 N M ... "" '" .... 00 0, 0 N M 000 0 ;;0 -NN N N N N N N N N M M M M .", 000 0 0 0 0 0 0 0 0 000 0 0 0 0 0 0 0 0 0 0 0 0 ~ NN N N N N N N N N NN N NNN N N N N N N N N N N N N ., .. 3-61 0, 0, r-' M 0 '" 00 '" N '" 0 00 ..; :; ..; 0 .... N' ~ ~ oci :; ;; ... vi' .... '" "'! M 0 '" ..,; M '" '" ~ 00 .... oci ... 0, .... 00 .... ..... - '" ... 00 "'! "" M <;' '" !\ N on ,..: ~ ... N or, N '" !C' ~ " .... .~ ~ " .... ~ ~ - ... "" '" ~ " c: "" = ;:; ;:J " 5 . ~ E 0 u - "" - ~ U ~ 0 0 "" 0 SECURITY FOR THE BONDS Repayment of the Bonds The Bonds are special, limited obligations of the Authority payable solely from and secured solely by the Revenues and other amounts pledged therefore under the Indenture. The Bonds shall not be deemed to constitute a debt or liability of the City, the Community Facilities Districts, the Reassessment Districts, the State, or any political subdivision thereof, other than the Authority. The Authority shall only be obligated to pay the principal of, interest and premium on the Bonds from the Revenues and the other funds and assets pledged pursuant to the Indenture. Neither the faith and credit nor the taxing power of the City, the Community Facilities Districts, the Reassessment Districts, the State of California or any of its political subdivisions, including the Authority, is pledged to payment of the principal of or the interest, or the premium, if any, on the Bonds. The Authority has no taxing power. General. The Bonds are payable solely from and secured by the pledged Revenues and any other amounts held in any fund or account established pursuant to the Indenture, except the Residual Account of the Revenue Fund. Revenues consist of (i) all amounts derived from or with respect to the Local Obligations and (il) investment income on the funds and accounts established under the Indenture. The Revenues will be obtained by the Authority primarily from payments of the principal of and interest on the Reassessment Bonds and the CFD Refunding Bonds which comprise the Local Obligations. The Reassessment Bonds of each Reassessment District, and the interest thereon, are payable from a portion of the annual Reassessment installments to be levied and collected on all real property within the respective Reassessment Districts subject to the unpaid Reassessments, and the proceeds, if any, from the sale of such property for delinquency of such Reassessments. The CFD Refunding Bonds of each Community Facilities District, and the interest thereon, are payable from a portion of the annual Special Taxes levied and collected on real property within the respective Community Facilities Districts subject to the Special Taxes, and the proceeds, if any, from the sale of property for delinquency of such Special Taxes. Annual payments of the principal of, and interest on, the CFD Refunding Bonds shall be made from the Special Taxes collected during that year and remaining after the payment of the administrative expenses of each respective Community Facilities District. See "-Payment of the Local Obligations" below. Payment of the principal of and interest on the Bonds when due for payment which.is unpaid by reason of nonpayment will be guaranteed by a to be issued by the Insurer. See "BOND INSURANCE" herein. Revenue Fund. All Revenues received by the Authority after the Closing Date are to be deposited into the Revenue Fund. On each Interest Payment Date of the Bonds, amounts in the Revenue Fund are required to be deposited, in the following order of priority, into the accounts and funds relating to the Bonds. First, the Trustee shall deposit in the Interest Account of the Revenue Fund an amount sufficient to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest coming due and payable on the Bonds on such Interest Payment Date and any amount previously due and unpaid. Second, the Trustee shall deposit in the Principal Account of the Revenue Fund an amount sufficient to cause the aggregate amount on deposit in the Principal Account to equal the amount of principal or mandatory sinking account payment coming due and payable on the Bonds within the Bond Year and any amount of principal previously due and unpaid. Third, the Trustee shall deposit in the Redemption Account those Revenues resulting from optional redemption of the Local Obligations. Fourth, the Trustee shall deposit all remaining amounts in the Residual Account. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS." Residual Account. So long as the Local Obligations, or any portion thereof, are outstanding under the terms of the Local Obligations Indentures, on March I and September I of each year, after all of the foregoing transfers and deposits have been made, the remaining balance in the Residual Account shall be transferred to the Fiscal Agent for each Local Obligation proportionately based on their respective Proportionate Share. 13 DOCSOC/lIOl647v7/22245-0158 3-62 Amounts in the Residual Account are no longer considered to be Revenues, and are not pledged to repay the Bonds. In the event the Local Obligations have been paid or defeased, then any amounts in the Residual Account may be used by the Authority for any lawful purpose. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS." Reserve Fund. The Indenture establishes the Reserve Fund to be maintained for the Bonds in an amount equal to the Reserve Requirement. The "Reserve Requirement" means an amount that shall, as of any date of calculation, be equal to the least of (i) 125% of average Annual Debt Service for the Bonds, (il) Maximum Annual Debt Service for the Bonds, or (iii) 10% of the issue price of the Bonds. The Reserve Requirement will be satisfied by the deposit of proceeds from each issue of Local Obligations in an amount equal to the Proportionate Share of each Local Obligation based on the ratio of the maximum annual debt service of each Local Obligation to the aggregate maximum annual debt service for all outstanding Local Obligations. The Trustee will establish and maintain a separate Reserve Account for each issue of Local Obligations and deposit into the applicable Reserve Account the amounts received from the Fiscal Agent of each issue of Local Obligations to satisfy its respective share of the Reserve Requirement. In the event that on any Interest Payment Date, the full amount of the interest, principal or mandatory sinking fund payment required to be deposited on such Interest Payment Date is not on deposit therein, the Trustee shall withdraw from the applicable Reserve Account or Reserve Accounts an amount equal to the deficiency resulting from the delinquency in the payment of scheduled debt service on the applicable series of Local Obligations and transfer such amount to the Interest Account, the Principal Account or both, as applicable, and shall notify the Authority of any such withdrawal. All money in the Reserve Fund shall be used and withdrawn by the Trustee for the purpose of making transfers to the Interest Account and the Principal Account, in such order of priority, in the event of any deficiency at any time in any of such accounts or for the retirement of all the Bonds then outstanding corresponding to the series of the Local Obligations causing such deficiency, except that so long as the Authority is not in default hereunder, any amount in the Reserve Accounts in excess of the Proportionate Share of the Reserve Requirement shall be withdrawn from the respective Reserve Accounts semiannually prior to each Interest Payment Date and be deposited in the Interest Account and credited to the applicable issue or issues of the Local Obligations. When the balance on deposit in the Reserve Account for any series of Local Obligations equals or exceeds the amount required to payor redeem the outstanding bonds of such series, including accrued interest to the date of payment or redemption thereof, the Trustee shall, pursuant to the written instructions of the Authority, transfer the amount in such Reserve Account to the applicable Fiscal AgFnt to be applied to the payment or redemption, as applicable, of such Refunding Bonds on the next succeeding Interest Payment Date or Interest Payment Dates. Investment earnings on amounts in the Reserve Fund shall be deposited first, to any Reserve Account as necessary to restore the amount therein to its Proportionate Share of the Reserve Requirement, second, to the Interest Account and third, to the Principal Account. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS." Parity Bonds The Authority may issue additional bonds ("Parity Bonds") under the Indenture secured by and payable from a lien on Revenues equal in priority to the lien and charge securing the Bonds only for the purpose of financing the acquisition of additional local obligation bonds and subject to the requirements set forth in the Indenture. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS- " Payment of the Local Obligations General. The Local Obligations are payable solely from and secured by unpaid Reassessments on certain assessable real property located within the Reassessment Districts and Special Taxes levied against 14 DOCSOC/1101647v7/22245-0158 3-63 certain taxable real property within the boundaries of the Community Facilities Districts. See "THE FINANCING PLAN" and "THE DISTRICTS" herein. Reassessments. Installments of Reassessments will be billed by the County on the general property tax bill to the owners of parcels within the Reassessment Districts. The County, upon collection, will remit the portion of the tax payment attributable to the Reassessment installments to the City. Upon receipt by the City, Reassessment installments are to be transferred to the Fiscal Agent of the respective Reassessment Indentures and deposited into such Redemption Funds to pay principal and interest payments on the respective Reassessment Bonds as they become due. Pursuant to the provisions of California Streets and Highways Code Section 8769, the City has determined not to obligate itself to advance fimds from any funds, accounts or revenues of the City to cure any deficiency which may occur in the funds and accounts held under the Reassessment Indentures for payment of the Reassessment Bonds. If a delinquency occurs in the payment of any Reassessment installment, the City, at the end of the fiscal year of delinquency, has no duty to transfer to the Fiscal Agent under the respective Reassessment Indentures the amount of the delinquency out of available funds of the City. NO OTHER FUNDS OF THE CITY ARE PLEDGED FOR PAYMENT OF DELINQUENT REASSESSMENT INSTALLMENTS. THE REASSESSMENT BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS. NEITHER THE FAITH IN CREDIT, NOR THE TAXING POWER OF THE CITY (EXCEPT AS DESCRIBED HEREIN), THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE LOCAL OBLIGATIONS. The Reassessment Bonds for each of the Reassessment Districts are issued upon and separately secured by the unpaid Reassessments levied on certain properties in the respective Reassessment Districts together with interest thereon, and such unpaid Reassessments together with interest thereon constitute a trust fund for the redemption and payment of the principal of and interest on the respective Reassessment Bonds. The Reassessment Bonds of each Reassessment District are secured by the monies in the redemption fund created pursuant to the respective Reassessment Indentures and by the unpaid Reassessments levied on the properties in the respective Reassessment Districts. [Reassessments collected to pay administrative expenses will be paid into administrative expense subaccounts, and such amounts are not pledged to the payment of the Reassessment Bonds or available for the benefit of the Authority (as the owner of the Reassessment Bonds) or the owners of the Bonds.] Reassessment installments cannot be levied or collected in any Reassessment District to cover a sbortfall in the collection of Reassessments in another Reassessment District. The redemption fund for the Reassessment Bonds of one Reassessment District is not available to cure any deficiency in the collection of the Reassessments within any of the other Reassessment Districts. There are no cross-collateralization or cross-payment provisions in effect with respect to the Reassessment Districts. Special Taxes. The Special Taxes remaining after payment of administrative expenses and any interest earned on such amounts (while any of such amounts are held in the Special Tax Fund and any account therein) in the respective Community Facilities Districts shall constitute a trust fund for the payment of the principal of, and interest on, the CFD Refunding Bonds. Special Taxes and other amounts, if any, deposited in the Administrative Expense Fund established and held pursuant to the respective CFD Indentures are not pledged to the payment of any of the Bonds, and none of the Administrative Expense Fund shall be construed as a trust fund held for the benefit of the Authority (as the owner of the CFD Refunding Bonds) or the owners of the Bonds. Special Taxes cannot be levied or collected in any Community Facilities District to cover a shortfall in the collection of Special Taxes in another Community Facilities District. The redemption fund for the CFD Refunding Bonds of one Community Facilities District is not available to cure any deficiency in the collection of the Special Taxes within any of the other Community Facilities Districts. There are no cross- collateralization or cross-payment provisions in effect with respect to the Community Facilities Districts. The amount of Reassessments that the City may levy in any year is strictly limited, and the failure of a property owner to pay an annual Reassessment installment will not result in an increase in Reassessment 15 DOCSOC/l101647v7/22245-0158 3-64 installments applicable to other properties subject to the Reassessments. The amount of Special Taxes that the Community Facilities Districts may levy in any year is strictly limited by the maximum rates approved by the qualified electors within the Community Facilities Districts. The Reassessments and the Special Taxes of a particular Reassessment District or Community Facilities District are not available to pay principal of, interest on or premium on any Local Obligations other than the Local Obligations of the Reassessment District or the Community Facilities District, as the case may be, in which they were levied. Optional Redemption of Local Obligations. Each Local Obligation Indenture provides that the Local Obligations are subject to optional redemption and mandatory sinking fund redemption. The Local Obligations may be redeemed, at the option of the City and the applicable Community Facilities Districts, from any source of funds on the date prior to maturity, in whole or in part, in the order of maturity selected by the City and the applicable Community Facilities District and by lot within a maturity, at the following redemption prices (expressed as percentages of the principal amount of the Local Obligations to be redeemed), together with accrued interest to the date of redemption. Redemption Date September I, 20_ through March 1, 20_ September I, 20_ and March 1, 20_ September 1, 20_ and thereafter Redemption Price 102% 101 100 Mandatory Redemption of Reassessment Bonds. The Reassessment Indentures provide that the Reassessment Bonds are subject to extraordinary mandatory redemption on any Interest Payment Date, prior to maturity, as a whole or in part on a pro rata basis among maturities from amounts deposited in connection with a prepayment of Reassessments. Such extraordinary mandatory redemption of the Reassessment Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Reassessment Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Dates March 1,2006 through March 2, 20_ September 1, 20_ and March 2, 20_ September 1, 20_ and thereafter Redemption Prices 102% 101 100 Mandatory Redemption ofCFD Refunding Bonds. The CFD Indentures provide that the Bonds shall be subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part on a pro rata basis among maturities in connection with a prepayment of Special Taxes pursuant to the respective Special Tax rates and methods of apportionment. Written instructions shall be delivered to the Fiscal Agent not less than 60 days prior to the redemption date directing the Fiscal Agent to utilize the Special Tax Revenues (as defined by the CFD Indentures) transferred to the CFD Refunding Bonds Redemption Account pursuant to the respective CFD Indenture to redeem CFD Refunding Bonds. Such extraordinary mandatory redemption of the CFD Refunding Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the CFD Refunding Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Dates March 1,2006 through March 1, 20_ September 1, 20_ and March 1, 20_ September 1, 20_ and thereafter Redemption Prices 102% 101 100 Certain of the Local Obligations are to be called before maturity and redeemed from the sinking fund payments that have been deposited into the applicable redemption accounts established under each Bond Resolution. The Local Obligations so called for redemption are to be redeemed at a redemption price for each redeemed Local Obligation equal to the principal amount thereof, plus accrued interest to the redemption date, 16 DOCSOCIlIOI647v7/22245-0158 3-65 without premium. See APPENDIX C-"SUMMARY OF BOND DOCUMENTS" for the maturity schedules and the mandatory sinking fund payment schedules for the Local Obligations. In the event of a partial optional redemption of the Local Obligations subject to mandatory sinking fund redemption, the remaining sinking fund payments for such Local Obligations will be reduced, as nearly as practicable, on a pro rata basis, or in such other manner as directed by the Authority, so long as the Local Obligations are owned by the Authority. Principal of and interest and premium, if any, on the Local Obligations shall be paid by the Fiscal Agent of each Local Obligation to the Trustee as the registered owner of the Local Obligations, on behalf of the Authority, out of the Redemption Funds established by the respective Local Obligations Indentures to the extent funds on deposit in such Redemption Funds are available therefor. Parity Local Obligations. The Local Obligations Indentures do not provide for the issuance of additional indebtedness payable on a parity with the Local Obligations. Levy and Collection of Reassessments Pursuant to the Refunding Act, installments of Reassessments will be billed by the County on the general property tax bill to the owner of parcels within the Reassessment Districts against which there are unpaid Reassessments. Installments of Reassessments billed against the parcels of property in the Reassessment Districts will be equal to the total principal and interest coming due on all of the respective Reassessment Bonds that year, plus an administrative charge but less any Residual Account Annual Credit. The installments billed against each property each year represent a pro rata share of the amount needed to pay the total principal and interest on the respective Reassessment Bonds coming due that year, based on the percentage which the unpaid Reassessment levied against that property bears to the total of unpaid Reassessments levied to repay the respective Reassessment Bonds. Reassessments will be collected and are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes, and the parcels upon which the Reassessments are levied are subject to the same provisions for sale and redemption as are properties for nonpayment of general taxes. Each Reassessment and each installment thereof and any interest and penalties thereon constitute a lien against the parcel of land on which it is levied until paid. Only the Reassessments and installments thereof are pledged to secure the respective Reassessment Bonds The lien of the Reassessments is co-equal to and independent of the lien for general ad valorem property taxes and other taxes, special taxes and charges collected on the property tax roll. The lien is subordinate to all fIxed special assessment liens imposed prior to the date of recordation of the assessment lien for the Reassessment Bonds upon the same property, but has priority over all existing and future private liens and over all fIxed special assessment liens which may thereafter be levied against the property. The Reassessment liens supplant the liens of the assessments for the original assessment districts. Altbougb tbe Reassessments constitute a fIXed lien on tbe respective assessed parcels, tbey do not constitute personal indebtedness of tbe affected property owners. Further, there are no restrictions on the ability of property owners to sell parcels subject to Reassessments. No assurance can be given as to the ability or the willingness of any assessee to pay the annual installments of the Reassessments when due. The failure of an assessee to pay an annual installment of a Reassessment will not result in an increase in Reassessments against other parcels in the Reassessment Districts. See "SPECIAL RISK F ACTORS-The Reassessments are Not Personal Obligations of the Property Owners" herein. 17 DOCSOCI1101647v7/22245-0158 3-66 The City has covenanted in certain circumstances to undertake and diligently prosecute foreclosure proceedings following a delinquency in the payment of Reassessments. See "--Covenant to Foreclose" below. The City is not required to bid at the foreclosure sale. In the proceedings for the authorization and issuance of the Reassessment Bonds, the City has determined not to obligate itself to advance any available funds from the City treasury to cover any deficiency or delinquency that may occur in the Redemption Fund by reason of the failure of a property owner to pay an annual installment of a Reassessment. This determination does not prevent the City, in its sole discretion, from so advancing such funds. Method of Reassessment Spread The Refunding Act provides for the issuance of refunding bonds, payable from certain reassessments. Such refunding bonds may be issued to refund bonds originally issued under the Improvement Bond Act of 1915 (the "1915 Act"), and the reassessments supersede the original assessments which secure sucb 1915 Act bonds. The Refunding Act generally requires each estimated annual installment of principal and interest on any reassessment to be less than the original assessment being superseded by the same percentage for all subdivisions ofland within the Reassessment Districts. Therefore, the reassessment spread for each parcel will be roughly proportional to the original assessment spread. The City has retained MuniFinancial, Temecula, California, as the Reassessment Engineer to calculate the Reassessments in accordance with the Refunding Act. A copy of the Reassessment Engineer's Report on the Reassessment apportionment for the Reassessment Districts prepared by the Reassessment Engineer is available for inspection at the City's Public Works Department. Levy and Collection of Special Taxes The Special Taxes are to be levied and collected by the Treasurer-Tax Collector of the County of San Diego in the same manner and at the same time as ad valorem property taxes; provided, however, that the District may directly bill the Special Tax or collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations. The Community Facilities Districts have made certain covenants in the respective CFD Indentures for the purpose of ensuring that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair a Community Facilities District's ability to collect sufficient Special Taxes to pay debt service on the CFD Refunding Bonds and administrative expenses when due. First, the Community Facilities Districts have covenanted that, to the extent it is legally permitted to do so, it will not reduce the maximum Special Tax rates and will oppose the reduction of maximum Special Tax rates by initiative where such reduction would reduce the maximum Special Taxes payable from parcels on which a completed structure is located to less than 110% of Maximum Annual Debt Service on the outstanding CFD Refunding Bonds. See "SPECIAL RISK FACTORS--California Constitution Article XIIIC and Article XIIID." Second, the District has covenanted not to permit the tender of CFD Refunding Bonds in payment of any Special Taxes except upon receipt of a certificate of a Special Tax Consultant that to accept such tender will not result in the Community Facilities District having insufficient Special Tax Revenues to pay the principal of and interest when due on the CFD Refunding Bonds remaining outstanding following such tender. See "SPECIAL RISK F ACTORS-Non-Cash Payment of Special Taxes." Although the Special Taxes constitute liens on taxed parcels within the respective Community Facilities Districts, they do not constitute a personal indebtedness of the owners of such property within the respective Community Facilities Districts. Moreover, other liens for taxes and assessments already exist on the property located within The respective Community Facilities Districts and other such liens could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners 18 DOCSOC/lI 0164 7v7/22245-0 158 3-67 therein. There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled "SPECIAL RISK F ACTORS-The Special Taxes are Not Personal Obligations of the Property Owners." Under the terms of the respective CFD Indentures, not later than the tenth Business Day after receipt, all Special Tax Revenues received by the respective Community Facilities District are to be deposited in the Special Tax Funds established and maintained by the respective CFD Indentures. Special Tax Revenues (with the exception of Special Tax Revenues representing Prepayments) are to be applied by the Fiscal Agent under the CFD Indentures in the following order of priority: (1) to deposit annually up to $75,000 to the Administrative Expense Fund, (2) to pay the principal of and interest on the CFD Bonds when due, (3) to replenish the Reserve Fund to the Reserve Requirement, (4) to make any required transfers to the Rebate Fund and (5) to pay Administrative Expenses of the Community Facilities District above the $75,000 referenced in (1) above. See APPENDIX B-"SUMMARY OF BOND DOCUMENTS." Special Tax Revenues representing Prepayments shall be transferred to the Bond Service Fund as provided for in the respective CFD Indenture and used to redeem the respective CFD Refunding Bonds. See "SECURITY FOR THE BONDS- Local Obligations-Redemption." Rates and Methods of Apportionment Each District has adopted its own rate and method of apportionment of special taxes (the "Rate and Method") following public hearings and an election conducted pursuant to the provisions of the Act. A copy of each Community Facilities District's Rate and Method is set forth in full in APPENDIX G hereto. Each Rate and Method generally provides for the rate of Special Tax to vary based on whether the property has been developed pursuant to such Rate and Method ("Developed Property") or not ("Undeveloped Property"). Certain types of property may be absolutely exempt from the Special Taxes or may be initially exempt from the Special Taxes. See "SPECIAL RISK FACTORS-Insufficiency of Special Taxes" for a general description of such property. The Rate and Method for each District taxes non-exempt property as set forth below. CDF No. 97-3. Under the Rate and Method for CFD No. 97-3, all taxable property within CFD No. 97-3 is to be classified as Developed Property, Undeveloped Property or Taxable Property Owners Association Property. All such property is subject to the levy of annual Special Taxes. Developed Property is to be further classified as one of three land use classes: Residential Property, Commercial Property or Community Purpose Facility Property. The Assigned Special Tax for each parcel of Developed Property within CFD No. 97-3 is $.392 per square foot of residential floor area for Residential Property, $4,000 per acre for Commercial Property and $1,000 per acre for Community Purpose Facility Property. The Assigned Special Tax for each parcel of Taxable Property Owners Association Property and each parcel of Undeveloped Property is $7,954 per acre. See Appendix G for more detailed information regarding the Rate and Method for CDF No. 97-3. CFD No. 99-1. Under the Rate and Method for CFD No. 99-1, all taxable property within CFD No.99-1 is to be classified as Developed Property, Undeveloped Property or Taxable Property Owners Association Property. All such property is subject to the levy of annual Special Taxes. Developed Property is to be categorized as being located in Zone A (Village One), Zone B (Village Five) or Zone C (Village One West). Developed Property is to be further classified as one of three land use classes: Residential Property, Commercial Property or Community Purpose Facility Property. The Assigned Special Tax for each parcel of Developed Property located in Zone A is $.28 per square foot of residential floor area for Residential Property, $1,600 per acre for Commercial Property and $400 per acre for Community Purpose Facility Property. The Assigned Special Tax for each parcel of Developed Property located in Zone B is $400 plus $.29 per square foot of residential floor area for Residential Property, $3,717 per acre for Commercial Property and $929 per acre for Community Purpose Facility Property. The Assigned Special Tax for each parcel of Developed 19 DOCSOC/lIO 164 7v7 /22245-0158 3-68 Property located in Zone C is $400 plus $.44 per square foot of residential floor area for Residential Property, $4,266 per acre for Commercial Property and $1,066 per acre for Community Purpose Facility Property. The Assigned Special Tax for each parcel of Taxable Property Owners Association Property and each parcel of Undeveloped Property is $7,954 per acre. See Appendix G for more detailed information regarding the Rate and Method for CFD No. 99-1. CDF No. 2000-1. Under the Rate and Method for CFD No. 2001-1, all taxable property within CFD No. 2000-1 is to be classified as Developed Property, Undeveloped Property or Taxable Property Owners Association Property. All such property is subject to the levy of annual Special Taxes. The Assigned Special Tax for each parcel of Developed Property within CFD No. 2000-1 is $.44 per square foot of residential floor area. The Assigned Special Tax for each parcel of Taxable Property Owners Association Property and each parcel of Undeveloped Property is $7,851 per acre. See Appendix G for more detailed information regarding the Rate and Method for CDF No. 2000-1. CDF No. 2001-1 (Improvement Area A). Under the Rate and Method for Improvement Area A of CFD No. 2001-1, all taxable property within Improvement Area A of CFD No. 2001-1 is to be classified as Developed Property or Undeveloped Property. All such property is subject to the levy of annual Special Taxes. Developed Property is to be further classified as Residential Property or Commercial Property. The Assigned Special Tax for each parcel of Developed Property within Improvement Area A of CFD No. 200 I-I is $475 plus $.32 per square foot of residential floor area for Residential Property and $2,263 per acre for Commercial Property. The Assigned Special Tax for each parcel of Undeveloped Property is $4,578 per acre. See Appendix G for more detailed information regarding the Rate and Method for Improvement Area A of CDF 2001-1. CFD No. 06-1 (Improvement Area A). Under the Rate and Method for Improvement Area A of CFD No. 06-1, all taxable property within Improvement Area A of CFD No. 06-1 is to be classified as Developed Property or Undeveloped Property. All such property is subject to the levy of annual Special Taxes. Developed Property is to be categorized as being located in Zone I or Zone 2. Developed Property is to be further classified as one of three land use classes: Residential Property, Commercial Property or Hotel Property. The Assigned Special Tax for each parcel of Developed Property located in Zone 1 is $.58 per square foot of residential floor area for Residential Property and $6,000 per acre for Commercial Property and Hotel Property. The Assigned Special Tax for each parcel of Developed Property located in Zone 2 $.67 per square foot of residential floor area for Residential Property and $6,000 per acre for Commercial Property. The Assigned Special Tax for each parcel of Undeveloped Property located in Zone I is $11,037 per acre and $8,332 per acre for each parcel of Undeveloped Property located in Zone 2. See Appendix G for more detailed information regarding the Rate and Method for Improvement Area A of CFD No. 06-1. Covenant to Foreclose Reassessments. The Local Obligations issued under the Refunding Act are subject to the provisions of the 1915 Act with respect to foreclosure remedies. The 1915 Act provides that in the event any installment of an assessment is not paid when due, the City may order the collection of the installment by the institution of a court action to foreclose the lien of such assessment. In such an action, the real property subject to the unpaid assessment may be sold at a judicial foreclosure sale. In the Reassessment Indentures, the City has covenanted that it will determine or cause to be determined, no later than October I of each Fiscal Year in which the Bonds are outstanding, whether or not any owners of the real property within the Reassessment Districts are delinquent in the payment of Reassessment installments. The City will order and cause judicial foreclosure actions to be commenced in the Superior Court no later than 60 days following such determination against: (a) any parcel for which there are delinquent Reassessment installments of $2,000 or more for the prior Fiscal Year or Fiscal Years, (b) each parcel for which there are delinquent Reassessment installments of $1,000 or more for the prior Fiscal Year or Fiscal Years if the Finance Director determines that the amount of delinquent Reassessment installments for the prior Fiscal Year for the entire Reassessment District, less the total delinquencies under (a) above, exceeds three percent (3%) of the total Reassessment installments due and 20 DOCSOC/IIO 164 7v7/22245-0 158 3-69 payable in the prior Fiscal Year, and (c) each parcel for which there are delinquent Reassessment installments for the prior Fiscal Year or Fiscal Years if the Finance Director of the City determines that the amount of delinquent reassessment installments for the prior Fiscal Year for the entire Reassessment District, less the total delinquencies under (a) and (b) above, exceeds three percent (3%) of the total Reassessment installments due and payable in the prior Fiscal Year. The City has also covenanted to diligently prosecute any such foreclosure action to judgment and foreclosure sale. Special Taxes. The net proceeds received following a judicial foreclosure sale of land within a Community Facilities District resulting from a landowner's failure to pay the Special Taxes when due are included within the Special Tax Revenues pledged to the payment of principal of and interest on the CFD Refunding Bonds under the CFD Indentures. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by a Community Facilities District of Special Taxes in an amount which is less than the Special Tax levied, the City Council, as the legislative body of the Community Facilities District, may order that Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the Community Facilities Districts have each covenanted for the benefit of the Authority as owner of the CFD Refunding Bonds that they will commence and diligently pursue to completion, judicial foreclosure proceedings against (i) properties under common ownership with delinquent Special Taxes in the aggregate of $5,000 or more by the October I following the close of the Fiscal Year in which such Special Taxes were due, and (Ii) against all properties with delinquent Special Taxes in the aggregate of $2,500 or more by the October I following the close of any fiscal year if the amount in the Reserve Fund is less than the respective Community Facilities Districts' Proportional Share of the Reserve Requirement. See APPENDIX B- "SUMMARY OF BOND DOCUMENTS- " herein. If foreclosure is necessary and other funds (including amounts in the Reserve Fund) have been exhausted, debt service payments on the Local Obligations could be delayed until the foreclosure proceedings have ended with the receipt of any foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the Community Facilities Districts. See "SPECIAL RISK FACTORS-Bankruptcy and Foreclosure Delays" herein. Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See "SPECIAL RISK FACTORS-Land Values" herein. Although the Act authorizes the Community Facilities Districts to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the Community Facilities Districts or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. However, the City does have the ability to use the foreclosure judgment to purchase property by credit bid at a foreclosure sale, in which case the City would have no obligation to pay such credit bid for 24 months. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes. Judicial Foreclosure Sale Proceedings-Reassessments The 1915 Act provides that the court in a foreclosure proceeding has the power to order a parcel securing delinquent Reassessments to be sold for an amount not less than all delinquent annual installments of the Reassessments, interest, penalties, costs, fees and other charges that are delinquent at the time the foreclosure action is ordered and certain other fees and amounts as provided in the 1915 Act (the "Minimum Price"). The court may also include subsequent delinquent Reassessments and all other delinquent amounts. 21 DOCSOC/II01647v7/22245-0158 3-70 If the parcel is sold to a purchaser other than the City, the City shall pay the proceeds from the sale of the parcel after payment of any expenses related to the foreclosure into the Redemption Fund of the applicable Reassessment District. The City has no obligation to advance any moneys (other than the foreclosure sale proceeds) to the Redemption Fund. However, if the City for any reason voluntarily chooses to advance funds, then the City shall be reimbursed, from the proceeds of a sale, first for amounts advanced by it to the Redemption Fund to cover delinquent installments of the Reassessments and interest with respect to the parcel or parcels sold in such proceedings. Any funds in excess of the amount necessary to reimburse the City may be applied by the City to reimburse other funds, if any, used to cover delinquent installments of the Reassessments and interest or to pay interest and penalties, costs, fees and other charges, to the extent they were included in the sale proceeds. If the parcel or parcels to be sold fails to sell for the Minimum Price, the City may petition the court to modifY the judgment so that the parcel or parcels may be sold at a lesser price or without a Minimum Price. In certain circumstances, as provided in the 1915 Act, the court may modifY the judgment after a hearing if the court makes certain determinations, including determinations that the sale at less than the Minimum Price will not result in an ultimate loss to the owners of the Reassessment Bonds or that the owners of at least seventy- five percent (75%) of the principal amount of the Reassessment Bonds outstanding have consented to the petition and the sale will not result in an ultimate loss to non consenting owners. The court may also make such modification of the judgment upon consent of the owners of at least seventy-five percent (75%) of the principal amount of the Reassessment Bonds without determining that the sale will not result in an ultimate loss to the nonconsenting owners if: the City is not obligated to advance available funds to cure a deficiency; no bids equal to or greater than the Minimum Price have been received at the foreclosure sale; no funds remain in the Reserve Funds; the City has reasonably determined that a reassessment and refunding proceeding is not practicable or has in good faith endeavored to accomplish a reassessment and refunding and has not been successful, or has completed reassessment and refunding arrangements which will, to the maximum extent feasible, minimize the ultimate loss to the owners; and no other remedy acceptable to the owners or holders of seventy-five percent (75%) or more of the principal amount of the outstanding Local Obligations, is reasonably available. As assignee of the Authority, the Trustee for the Bonds will hold one hundred percent (100%) of the Local Obligations. Neither the parcel owner nor any holder of a security interest in the parcel nor any defendant in the foreclosure action nor any agent thereof may purchase the parcel at the foreclosure sale for less than the Minimum Price. The assessment lien upon property sold at a lesser price than the Minimum Price is to be reduced by the difference between the Minimum Price and the sale price. No assurance can be given that in the event of a foreclosure proceeding a parcel could be sold for the full amount of the delinquency or that any bid would be received for such parcel. See "RISK FACTORS-- Land Values" herein. The ability of the City to foreclose the lien of a delinquent installment of a Reassessment may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by California law relating to judicial foreclosure. See "RISK FACTORS--Bankruptcy and Foreclosure Delays. " Sales of Tax-Defaulted Property Generally A parcel securing delinquent installments of a Reassessment that is not sold pursuant to the judicial foreclosure proceeding as described above may be sold, subject to redemption by the parcel owner, in the same manner and to the same extent as real property sold for nonpayment of general County property taxes. On or before June 30 of the year in which such delinquency occurs, the parcel becomes tax-defaulted. This initiates a five-year period during which the parcel owner may redeem the parcel. At the end of the five-year period the parcel becomes subject to sale by the County Treasurer and Tax Collector. Except in certain circumstances, as provided in the 1915 Act, the purchaser at any such sale takes such parcel subject to all delinquent installments ofthe Reassessment, interest and penalties, costs, fees and other charges which are not satisfied by application of the sales proceeds and subject to all prior assessments which may have priority. 22 DOCSOCflIOI647v7/22245-0158 3-71 Bond Insurance The payment of principal of and interest on the Bonds when due will be insured by a Municipal Bond Insurance Policy to be issued by simultaneously with the delivery of the Bonds. See the information under the caption "BOND INSURANCE" and APPENDIX E-"MUNICIPAL BOND INSURANCE POLICY SPECIMEN" herein. Priority of Lien The unpaid Reassessments levied within the Reassessment Districts and the Special Taxes levied within the Community Facilities Districts, and each installment thereof and any interest and penalties thereon, constitute a lien against each of the respective parcels within the Reassessment Districts and the Community Facilities Districts until the same are paid. Generally, a special assessment lien is subordinate to all special assessment liens previously imposed upon the same property, but has priority over all private liens and over all special assessment liens which may thereafter be created against the same property. However, such lien is on a parity with the lien of general property taxes, assessments and any special taxes imposed, whether prior to or after the imposition of such special assessment lien, against the same property pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, or other applicable legislation. There are liens for special taxes, assessments and the recurring lien for general property taxes on parcels within the Districts. See "THE DISTRICTS-Direct and Overlapping Debt" and "SPECIAL RISK FACTORS-Direct and Overlapping Debt." No Obligation of the City Upon Delinquency The City is under no obligation to transfer any funds of the City into the Redemption Funds for the payment of the principal of or interest on the Local Obligations if a delinquency occurs in the payment of any Reassessments or Special Taxes. See "SECURITY FOR THE BONDS--Covenant to Foreclosure" for a discussion of the City's obligation to foreclose Reassessment and Special Tax liens upon delinquencies. Pursuant to Section 8769 of the California Streets and Highways Code, the City has expressly elected not to obligate itself to advance available funds from the City's treasury to make up deficiencies in the amount of Reassessment installments collected. Prepayment of Reassessments or Special Taxes A property owner may prepay its Reassessments or Special Taxes and thereby cause a partial redemption of the Local Obligations and the Bonds. See "THE BONDS-Redemption Mandatory Redemption from Redemption of Local Obligations;" "SPECIAL RISK FACTORS-Potential Early Redemption of Bonds from Prepayments." BOND INSURANCE The following itiformation has been furnished by the Insurer for use in this Official Statement. Such information has not been independently confirmed or verified by the City or the Authority. No representation is made herein by the City or Authority as to the accuracy or adequacy of such information subsequent to the date hereof, or that the information contained and incorporated herein by reference is correct. Reference is made to APPENDIX Efor a specimen of the Bond Insurance Policy. ITO COME] THE AUTHORITY The Chula Vista Public Financing Authority was established pursuant to a Joint Exercise of Powers Agreement dated as of April 4, 1995, by and between the City and the Redevelopment Agency of the City of 23 DOCSOC/lI01647v7/22245-0158 3-72 Chula Vista. The City Council of the City is appointed as the Governing Board of the Authority. The Authority has acted as a conduit issuer for the City for a variety offinancings. THE AUTHORITY IS NOT OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS, EXCEPT FROM REVENUES RECEIVED BY THE AUTHORITY. THE CITY HAS NO LIABILITY WITH RESPECT TO THE PAYMENT OF THE BONDS, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR THE CITY IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER. The Authority has issued obligations other than the Bonds, which other obligations are and will be secured by instruments separate and apart from the Indenture and the Bonds. The holders of such obligations of the Authority have no claim on the security of the Bonds or Parity Bonds and the owners of the Bonds and Parity Bonds will have no claim on the security of such other obligations issued by the Authority. THE CITY The City of Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in the area generally known as the "South Bay." Chula Vista's city limits cover approximately 50 square miles. Chula Vista was incorporated March 17, 1911 and became a chartered city in 1949. For more information regarding the City, see APPENDIX A- "INFORMA nON REGARDING THE CITY OF CHULA VISTA." THE DISTRICTS The Reassessment Districts Assessment districts are formed to finance public improvements for assessable land which directly benefits from such public improvements. Bonds issued in connection with assessment district financing are secured by and payable by the levy of unpaid assessments on benefited property comprising the assessment district. The Reassessment Districts are areas of special assessment referring to the property that is specially benefited from the improvements financed by the original assessment districts. The land within Reassessment District 2005-1 and Reassessment District 2005-2 is primarily residential in nature. See "-Reassessment District 2005-1" and "-Reassessment District 2005-2" below. The Reassessments are levied within the Reassessment Districts by the City Council of the City (the "City Council") under proceedings taken pursuant to Resolution Nos. 2005-_ and 2005-_, adopted by the City Council on , 2005. Reassessment District 2005-1 Reassessment District 2005-1 is a consolidation of Assessment District No. 87-1 and Assessment District No. 88-2. Reassessment District 2005-1 comprises a portion of the master planned residential planned community commonly known as "Rancho Del Rey" and is primarily residential in nature, but also contains several commercial, industrial and recreational properties. See "-Land Uses, Development Status and Estimated Assessed Value-to-Lien Ratios" below. Rancho Del Rey is located in the eastern portion of the City, east of Interstate 805, west of Otay Lakes Road and to the north and south of East "H" Street. The following is a brief description of each of the Original Assessment Districts located in Reassessment District 2005-1: Assessment District No. 87-1. Assessment District No.87-1 was formed in 1987 and includes approximately 1,592 acres of land situated with the Rancho Del Rey development. Assessment District No. 87-1 is primarily residential in nature and is fully developed. The land within Assessment District 24 DOCSOC/lI01647v7/22245-0158 3-73 No. 87-1 has been developed with 2,849 single family detached units, 528 multifamily units and approximately 74 acres of30 non-residential properties. The public improvements financed through Assessment District No. 87-1 included the acquisition of street (including utilities) and storm drain improvements, reclaimed water facilities, sewer service facilities, and a portion of the capacity of major sewer mains to adjacent areas attributable to the Assessment District No. 87-1 project, and related improvements, together with appurtenances and appurtenant work, and incidental costs and expenses related thereto. All of the public improvements financed through Assessment District No. 87-1 have been completed. Table 7 below summarizes the historical delinquencies for Assessment District No. 87-1 from fiscal year 2000-01 to fiscal year 2004-05. TABLE 7 HISTORY OF DELINQUENCIES ASSESSMENT DISTRICT NO. 87-1 Fiscal Year Amount Levied No. of Amount % Amount Amount % Amount Parcels Delinquent Delinquent Delinquent1) Delinquent Levied $ NA NA $ 0.00% 3,405 23,618.68 4.00%(2) 60.14 om 3,406 22,931.40 3.75%(3) 5,463.67 0.89 3,406 22,211.00 3.65%(4) 3,354.77 0.55 3,406 NA NA 54,370.96 8.94 3,407 No. of Parcels Delinquent 2000-01 2001-02 2002-03 2003-04 2004-05 $ 611,691.32 591,171.74 611,504.08 608,834.54 608,466.36 2 4 13 187 (I) Amount delinquent as of Apri126, 2005. (2) Amount delinquent as of October 17, 2002. (3) Amount delinquent as of July 30, 2003. (4) Amount delinquent as of October 29, 2004. Source: MuniFinancial. Assessment District No. 88-2. Formed in 1988, Assessment District No. 88-2 includes approximately 1,180 acres of land situated within the Rancho Del Rey development. Land within Assessment District No. 88-2 has been developed with 1,191 single family detached homes, 138 single family attached homes and 43 acres of II non-residential properties. The public improvements financed through Assessment District No. 88.2 included the acquisition of public works, including street, water, sewer, drainage and utility improvements. All of the public improvements financed through Assessment District No. 88-2 bave been completed. 25 DOCSOC/IIOI647v7/22245-0158 3-74 Table 8 below summarizes the historical delinquencies for Assessment District No. 88-2 from fiscal year 2000-01 to fiscal year 2004-05. TABLE 8 HISTORY OF DELINQUENCIES ASSESSMENT DISTRICT NO. 88-2 No. of Amount % Amount Amount % Amount Parcels Delinquent Delinquent Delinquenl') Delinquent Levied NA NA $ 0.00% 1,339 $29,541.82 4.77%(2) 170.64 0.03 1,339 15,738.00 2.43%(3) 362.12 0.06 1,339 10,375.00 1.59%(4) 1,395.46 0.21 1,339 NA NA 30,295.17 4.66 1,340 Fiscal Year Amount Levied 2000-01 2001-02 2002-03 2003-04 2004-05 $ 639,443.06 619,198.18 646,834.36 650,652.12 650,047.02 (1) Amount delinquent as of April 26, 2005. (2) Amount delinquent as of October 17, 2002. (3) Amount delinquent as of July 30, 2003. (4) Amount delinquent as of October 29, 2004. Source: MuniFinancial. No. of Parcels Delinquent 1 I 7 70 Limited obligation bonds entitled "City of Chula Vista Reassessment District No. 2005-1 Limited Obligation Refunding Bonds (AD 87-1/88-2) (the "2005-1 Reassessment Bonds") will be issued in the aggregate principal amount of $7,770,000' concurrently with the issuance of the Bonds. The 2005-1 Reassessment Bonds are primarily payable from unpaid Reassessments levied on assessable real property within Reassessment District No. 2005-1. Debt service payable on the 2005-1 Reassessment Bonds constitutes a portion of Revenues securing payment of the Bonds. Table 9 below sets forth the estimated annual Reassessment levy and the estimated debt service on the 2005-1 Reassessment Bonds based on the annual unpaid Reassessments levied in Reassessment District No. 2005-1. TABLE 9 ESTIMATED DEBT SERVICE COVERAGE REASSESSMENT DISTRICT NO. 2005-1 Bond Year Ending September 1 2006 2007 2008 2009 2010 2011 2012 2013 2014 Reassessment Lery $ 1,060,093.76 1,058,047.52 1,064,947.52 1,070,152.52 1,077,938.76 1,083,498.76 1,085,790.00 1,080,150.00 576,645.00 (I) Preliminary, subject to change. Source: MuniFinancial. . Preliminary, subject to change. DOCSOC/II01647v7/22245-0158 2005-1 Reassessment Bonds Debt Servicl1) $ 1,060,093.76 1,058,047.52 1,064,947.52 1,070,152.52 1,077,938.76 1,083,498.76 1,085,790.00 1,080,150.00 576,645.00 26 3-75 2005-1 Reassessment Bonds Coverage 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Direct and Overlapping Debt. Within the boundaries of Reassessment District No. 2005-1 are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within Reassessment District No. 2005-1 and others have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on parcels within Reassessment District No. 2005-1. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within Reassessment District No. 2005-1 for fiscal 2004-05 is shown in Table 10 below. See "SPECIAL RlSK FACTORS-Direct and Overlapping Debt." Information for Table 10 has been obtained from California Municipal Statistics, Inc. Neither the Authority, the City nor the Underwriter has independently verified the information set forth in Table 10 and do not guarantee the accuracy or completeness of this information. 27 DOCSOC!lIOl647v7122245-0158 3-76 TABLE 10 DIRECT AND OVERLAPPING DEBT REASSESSMENT DISTRICT NO. 2005-1 2004-05 Local Secured Assessed Valuation: $1,193,845,041 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Otay Municipal Water District, J.D. No. 27 Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Sweetwater Union High School District Community Facilities District No.3 Chula Vista City School District Community Facilities District City of Cbula Vista Reassessment District No. 2005-1 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District Certificates of Participation City ofChula Vista Certificates of Participation City ofChula Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Otay Municipal Water District Certificates of Participation TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2004-05 Assessed Valuation:(I) Direct Debt ($7,770,000) .................................................................0.65% Total Direct and Overlapping Tax and Assessment Debt ..................3.94% Gross Combined Total Debt...............................................................6.45% Net Combined Total Debt ..................................................................6.30% % Aoolicable 0.090% 17.910 4.068 4.752 6.714 94.177 23.961 100. 0.473% 0.473 0.473 4.382 5.187 6.980 8.140 8.140 7.334 Debt 5/1/05 $ 376,371 1,782,941 3,658,311 3,993,581 4,959,968 22,560,797 1,903,70 I 7.770.000(1) $47,005,670 $ 1,825,811 5,923,109 60,650 117,438 1,033,769 7,818,647 10,383,791 999,188 1.882638 $30,045,041 1.882.638 $28,162,403 $77,050,711 (2) $75,168,073 (I) Preliminary, subject to change. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-honded capital lease obligations. Source: California Municipal Statistics, Inc. See Table 36 under the heading "THE DISTRICTS-Estimated Assessed Va1ue-to-lien" herein for information regarding the estimated assessed value of land in Reassessment District 2005-1 to the total estimated amount of the Bonds. Reassessment District No. 2005-2 The boundaries of Reassessment District No. 2005-2 are coterminous with the boundaries of Assessment District No. 97-2. Reassessment District No. 2005-2 is located in the eastern portion of the City, approximately five miles east of the San Diego Freeway (1-5) and two miles east of I-80S on Telegraph road, 28 DOCSOC/lI01647v7/22245-0158 3-77 and is primarily residential in nature, but also contains some commercial developments. See "-Land Uses, Development Status and Estimated Assessed Value-to-Lien Ratios" below. Assessment District No. 97-2. Formed in 1997, Assessment District No. 97-2 is part of the master planned community commonly known as "Otay Ranch." Assessment District No. 97-2 is located in "Village One" of the Otay Ranch project and includes approximately 533 acres consisting of 1,567 single family detacbed homes, 1,170 multifamily homes, approximately 8 acres of commercial uses, parks and open space. The public improvements financed through Assessment District No. 97-2 included the acquisition of street, water, drainage, and utility improvements, together with appurtenances and appurtenant work, and incidental costs and expenses related thereto. All public improvements financed through Assessment District No. 97-2 have been completed. Table II below summarizes the historical delinquencies for Assessment District No. 97-2 from fiscal year 2000-01 to fiscal year 2004-05. TABLE 11 Fiscal Year HISTORY OF DELINQUENCIES ASSESSMENT DISTRICT NO. 97-2 No. of Amount Amount % Amount Amount % Amount Parcels Levied Delinquent Delinquent Delinquent') Delinquent Levied $ 942,929.84 NA NA $ 0.00% 1,192 917,671.52 $ 8,659.00 0.94%(2) 0.00 1,574 946,847.54 15,632.00 1.65%(3) 585.20 0.06 1,576 950,936.42 4,844.00 0.51%(4) 2,297.02 0.24 1,576 950,447.58 NA NA 27,518.40 2.90 1,576 No. of Parcels Delinquent 2000-01 2001-02 2002-03 2003-04 2004-05 2 6 112 (I) Amount delinquent as of April 26, 2005. (2) Amount delinquent as of October 17, 2002. (3) Amount delinquent as of July 30, 2003. (4) Amount delinquent as of October 29, 2004 Source: San Diego County Tax Collector Limited obligation bonds entitled "City of Chula Vista Reassessment District No. 2005-2 Limited Obligation Refunding Bonds (AD 97-2) (the "2005-2 Reassessment Bonds") will be issued in the aggregate principal amount of $10,755,000' concurrently with the issuance of the Bonds. The 2005-2 Reassessment Bonds are primarily payable from unpaid Reassessments levied on assessable real property within Reassessment District No. 2005-2. Debt service payable on the 2005-2 Reassessment Bonds constitutes a portion of Revenues securing payment of the Bonds. Table 12 below sets forth the estimated Reassessment levy and the estimated debt service on the 2005-2 Reassessment Bonds based on the annual unpaid Reassessments levied in Reassessment District No. 2005-2. . Preliminary. subject to change. 29 DOCSOC/lIOI647v7/22245-0158 3-78 Bond Year Ending September 1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 (1) Preliminary, subject to change. Source: MuniFinancial. TABLE 12 ESTIMATED DEBT SERVICE COVERAGE REASSESSMENT DISTRICT NO. 2005-2 Reassessment Levy 2005-2 Reassessment Bonds Debt Servici1J 2005-2 Reassessment Bonds Coverage 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Direct and Overlapping Debt. Within the boundaries of Reassessment District No. 2005-2 are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within Reassessment District No. 2005-2 and others have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on parcels within Reassessment District No. 2005-2. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within Reassessment District No. 2005-2 for fiscal 2004-05 is shown in Table 13 below. See "SPECIAL RISK FACTORS--Direct and Overlapping Debt." $ 746,001.00 745,138.00 741,738.00 737,893.00 738,360.50 738,120.50 741,818.00 744,398.00 740,808.00 741,378.00 745,978.00 744,373.00 736,838.00 738,563.00 739,100.50 738,420.50 741,493.00 743,189.26 738,484.26 737,584.26 745,235.50 746,095.50 735,383.00 738,558.00 $ 746,001.00 745,138.00 741,738.00 737,893.00 738,360.50 738,120.50 741,818.00 744,398.00 740,808.00 741,378.00 745,978.00 744,373.00 736,838.00 738,563.00 739,100.50 738,420.50 741,493.00 743,189.26 738,484.26 737,584.26 745,235.50 746,095.50 735,383.00 738,558.00 Information for Table 13 has been obtained from California Municipal Statistics, Inc. Neither the Authority, the City nor the Underwriter has independently verified the information set forth in Table 13 and do not guarantee the accuracy or completeness of this information. DOCSOC/l101647v7/22245-0158 30 3-79 TABLE 13 DffiECT AND OVERLAPPING DEBT REASSESSMENT DISTRICT NO. 2005-2 2004-05 Local Secured Assessed Valuation: $664,556,716 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Otay Municipal Water District, J.D. No. 27 Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Sweetwater Union High School District Community Facilities District No.6 Sweetwater Union High School District Community Facilities District No. 99-1 City of Chula Vista Reassessment District No. 2005-2 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District Certificates of Participation City ofChula Vista Certificates of Participation City of Chula Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Otay Municipal Water District Certificates of Participation TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2004-05 Assessed Valuation:(l) Direct Debt ($1 0, 755,000)..................................................................1. 78% Total Direct and Overlapping Tax and Assessment Debt.....................4.63% Gross Combined Total Debt.................................................................7.14% Net Combined Total Debt ....................................................................6.99% % Aoolicable 0.050% 9.839 2.264 2.645 3.737 2.520 25.085 100. 0.263% 0.263 0.263 2.439 2.887 3.886 4.531 4.531 4.083 Debt 5/1/05 $ 209,095 979,472 2,035,992 2,222,858 2,760,709 568,719 10, I 06, 788 10.755.000 (1) $29,638,633 $ 1,015,197 3,293,399 33,723 65,365 575,379 4,352,903 5,779,970 556,182 1.048.106 $16,720,224 1.048 106 $15,672,118 $46,358,857 (2) $45,310,751 (1) Preliminary, subject to change. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. See Table 36 under the heading "THE DlSTRlCTS-Estimated Assessed Value-to-lien" herein for infonnation regarding the estimated assessed value of land in Reassessment District 2005-2 to the total estimated amount of the Bonds. The Community Facilities Districts Community facilities districts are fonned to finance public improvements for the general benefit for land within such districts. Bonds issued in connection with community facilities district financings are secured by and payable by the levy of special taxes. The CFD Refunding Bonds consist of individual issues of bonds 31 DOCSOC/I 101647v7/22245-0158 3-80 secured by Special Taxes levied in the five community facilities districts located in the City as described below. Community Facilities District No. 97-3 (Otay Ranch McMillin Spa One) ("CFD No. 97-3") was formed in 1998. CFD No. 97-3 consists of approximately 293 acres within Otay Ranch and is located approximately three miles east of the downtown area of the City. Land in CFD No. 97-3 has been developed with 1,474 single residential units, a 4.8 acre community purpose site and 2.8 acres of commercial uses. The public improvements financed through CFD No. 97-3 consists of various roadway and landscape improvements. All of the public improvements financed through CFD No. 97-3 have been completed. Table 14 below sets forth the current Maximum Special Taxes that may be levied on property within CFD No. 97-3 in fiscal year 2004-05. TABLE 14 MAXIMUM SPECIAL TAXES CFD NO. 97-3 Tax Class No.o/Units! Sq. FLlAcres 2,661,273.00 7.59 Maximum Special Tax Per Unit! Sq. FLlAcre $0.392 per Sq. Fl. $4,000 per Acre $1,00 per Acre $7,954 per Acre Maximum 2004-05 Special Taxes 1,043,219.02 30,360.00 Residential Conunercial Community Purpose Facility Property Undeveloped Source: MuniFinancial. Percent of Total 97% 3 o o Table 15 summarizes the historical delinquencies for CFD No. 97-3 from fiscal year 2001-02 (the first year in which Special Taxes were levied) to fiscal year 2004-05. TABLE 15 HISTORY OF DELINQUENCIES CFD NO. 97-3 No. of Fiscal Amount Amount % Amount Amount % Amount Parcels Year Levied Delinquent Delinquent Delinquen!1i Delinquent Levied 2001-02 $926,995.66 $ 5,862.00 0.63%(2) $ 0.00% 1,018 2002-03 786,288.24 8,241.00 1.05%(3) 0.00 1,018 2003-04 855,155.84 5,656.00 0.66%(4) 3,170.32 0.37 1,018 2004-05 878,853.50 NA NA 33,274.20 3.79 1,018 (I) Amount delinquent as of April 26, 2005. (2) Amount delinquent as of October 17, 2002. (3) Amount delinquent as of July 30, 2003. (4) Amount delinquent as of October 29, 2004. Source: MuniFinancial. No. of Parcels Delinquent 6 75 Special tax refunding bonds entitled "City of Chula Vista Community Facilities District No. 97-3 (Otay Ranch McMillan Spa One) 2005 Special Tax Refunding Bonds (the "CFD No. 97-3 Bonds") will be 32 DOCSOCIl1 0 164 7v7/22245-0 158 3-81 issued in the aggregate principal amount of $11,875,000' concurrently with the issuance of the Bonds. The CFD No. 97-3 Bonds are payable from Special Taxes levied on taxable real property within CFD No. 97-3. Debt service payable on the CFD No. 97-3 Bonds constitutes a portion of the Revenues securing payment of the Bonds. Table 16 below illustrates the estimated debt service coverage for the CFD No. 97-3 based on the Maximum Special Taxes that may be levied on property within CFD No. 97-3 based on development status as of March 1, 2004. TABLE 16 ESTIMATED DEBT SERVICE COVERAGE CFD NO. 97-3 Maximum Special Tax CFD No. 97-3 Bonds Bond Year Ending Developed Undeveloped CFD No. 97-3 Coverage from Maximum September 1 Propertyll) Property(l) Bonds Debt Service(2) Special TaxeS<2) 2006 $ 1,073,579.02 $ $ 815,812.75 1.32 2007 1,073,579.02 821,729.50 1.31 2008 1,073,579.02 817,489.50 1.31 2009 1,073,579.02 817,774.50 1.31 2010 1,073,579.02 822,165.76 1.31 2011 1,073,579.02 820,645.76 1.31 2012 1,073,579.02 817,973.26 1.31 2013 1,073,579.02 819,293.26 1.31 2014 1,073,579.02 814,382.00 1.32 2015 1,073,579.02 818,587.00 1.31 2016 1,073,579.02 821,587.00 1.31 2017 1,073,579.02 818,342.00 1.31 2018 1,073,579.02 819,137.00 1.31 2019 1,073,579.02 818,737.00 1.31 2020 1,073,579.02 822,112.00 1.31 2021 1,073,579.02 819,012.00 1.31 2022 1,073,579.02 819,623.26 1.31 2023 1,073,579.02 818,830.76 1.31 2024 1,073,579.02 816,609.50 1.31 2025 1,073,579.02 817,934.50 1.31 2026 1,073,579.02 817,547.00 1.31 2027 1,073,579.02 815,587.00 1.32 2028 1,073,579.02 817,039.50 1.31 2029 1,073,579.02 806,652.00 1.33 (I) No escalation allowed in the Rate and Method of Apportionment. (2) Preliminary, subject to change. Source: MuniFinancial. See Table 36 under the heading "THE DlSTRlCTS-Estimated Assessed Value-to-lien" herein for information regarding the estimated assessed value of land in CFD No. 97-3 to the total estimated amount of the Bonds. Direct and Overlapping Debt. Within the boundaries of CFD No. 97-3 are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within CFD No. 97-3 and others have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on . Preliminary, subject to change. 33 DOCSOC/IIOI647v7/22245-0158 3-82 parcels within CFD No. 97-3. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within CFD No. 97-3 for fiscal 2004-05 is shown in Table 17 below. See "SPECIAL RISK FACTORS-Direct and Overlapping Debt." Information for Table 17 has been obtained from California Municipal Statistics, Inc. Neither the Authority, the City nor the Underwriter has independently verified the information set forth in Table 17 and do not guarantee the accuracy or completeness of this information. TABLE 17 DIRECT AND OVERLAPPING DEBT CFD NO. 97-3 2004-05 Local Secured Assessed Valuation: $384,125,381 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Otay Municipal Water District, 1.0. No. 27 Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Sweetwater Union High School District Community Facilities District No. II City of Chnla Vista Community Facilities District No. 97-3 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND OBLIGA nON DEBT: San Diego County General Fund Obligations San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District General Fund Obligations City ofChula Vista Certificates of Participation City ofChula Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Otay Municipal Water District Certificates of Participation TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2004-05 Assessed Valuation(l} Direct Deht ($11,875,000)..................................................................3.09% Total Direct and Overlapping Tax and Assessment Debt.....................6.33% Gross Combined Total Debt.................................................................8.85% Net Combined Total Debt ....................................................................8.76% % Aoolicable 0.029% 5.922 1.309 1.519 2.160 85.209 100. 0.152% 0.152 0.152 1.410 1.669 2.246 2.619 2.619 2.360 Debt 5/1/05 $ 121,275 589,535 1,177,170 1,284,972 1,595,700 7,672,967 11.875.000 (1) $24,316,619 $ 586,730 1,903,409 19,490 37,788 332,632 2,515,857 3,340,927 321,483 605.812 $9,664,128 605812 $9,058,316 $33,980,747(2) $33,647,935 (1) Preliminary, subject to change. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. Community Facilities District No. 99-1 (Otay Ranch SPA One-Portions of Village One, Village Five and Village One West) ("CFD No. 99-1") was formed in 1999. CFD No. 99-1 consists of approximately 34 DOCSOCIlIOl647v7/22245-0158 3-83 1,000 acres within Otay Ranch and is located approximately 3.5 miles east of the downtown area of the City. Land within CFD No. 99-1 has been developed with 2,239 single family detached units, 996 multifamily units, a 3.4 acre commercial site and various community purpose facilities. The public improvements financed through CFD No. 99-1 consists of various roadway and landscape improvements and various public utilities. All of the public improvements financed through CFD No. 99-1 have been completed. Table 18 below sets forth the current Maximum Special Taxes that may be levied on property within CFD No. 99-1 in fiscal year 2004-05. TABLE 18 MAXIMUM SPECIAL TAXES CFD NO. 99-1 Maximum No. of Units/ Special Tax Per Maxifllllm 2004-05 Percent Tax Class Zone Sq. FLlAcres Unit/Sq. FLlAcre Special Taxes of Total Residential A 3,561,593.00 $0.28 per Sq Ft 997,246.04 26% Commercial A 5.53 $1,600 per Acre 8,843.20 0 Community Purpose Facility Property A $400 per acre 0 Undeveloped A 4.90 $8,864 per Acre 43,407.01 1 Taxable Property Owner Assoc. Property A $8,864 per Acre 0 Residential B 2,588,578.00 $0.29 per Sq Ft 750,687.62 20 Residential B 1,230.00 $400 per Unit 492,000.00 13 Commercial B $3,717 per Acre 0 Community Purpose Facility Property B $929 per Acre 0 Undeveloped B 4.63 $8,864 per Acre 41,031.46 1 Taxable Property Owner Assoc. Property B $8,864 per Acre 0 Residential C 2,518,246.00 $0.44 per Sq Ft 1,108,028.24 29 Residential C 861.00 $400 per Unit 344,400.00 9 Commercial C $4,266 per Acre 0 Community Purpose Facility Property C $1,066 per Acre 0 Undeveloped C 6.13 $8,864 per Acre 54,354.05 1 Taxable Property Owner Assoc. Property C $8,864 per Acre 0 Source: MuniFinanciaI. 35 DOCSOC/I101647v7/22245-0158 3-84 Table 19 below summarizes the historical delinquencies for CFD No. 99-1 from fiscal year 2001-02 (the first year in which Special Taxes were levied) to fiscal year 2004-05. TABLE 19 HISTORY OF DELINQUENCIES CFD NO. 99-1 Fiscal Year No. of Amount Amount % Amount Amount % Amount Parcels Levied Delinquent Delinquent Delinquentl) Delinquent Levied $ 2,033,394.20 $ 5,150.00 0.25%(2) $ 0.00% 849 3,352,225.02 39,393.00 1.18%(3) 587.44 0.02 2,344 3,332,601.08 23,097.00 0.69%(4) 9,931.91 0.30 2,878 3,347,435.38 NA NA 258,016.27 7.71 3,050 No. of Parcels Delinquent 2001-02 2002-03 2003-04 2004-05 I 10 224 (l) Amount delinquent as of April 26, 2005. (2) Amount delinquent as of October 17, 2002. (3) Amount delinquent as of July 30, 2003. (4) Amount delinquent as of October 29, 2004. Source: MuniFinancial. Special tax refunding bonds entitled "Chula Vista Community Facilities District No. 99-1 (Otay Ranch SPA One-Portions of Village One, Village Five and Village One West) 2005 Special Tax Refundin& Bonds (the "CFD No.99-1 Bonds") will be issued in the aggregate principal amount of $43,620,000 concurrently with the issuance of the Bonds. The CFD No. 99-1 Bonds are payable from Special Taxes levied on taxable real property within CFD No. 99-1. Debt Service payable on the CFD No. 99-1 Bonds constitutes a portion of the Revenues securing payment of the Bonds. Table 20 below illustrates the estimated debt service coverage for the CFD No. 99-1 Bonds based on the Maximum Special Taxes that may be levied on property within CFD No. 99-1 based on existing development. . Preliminary, subject to change. 36 DOCSOCIlI01647v7/22245-0158 3-85 , TABLE 20 ESTIMATED DEBT SERVICE COVERAGE CFD NO. 99-1 Maximum Special Tax Coveragefrom Maximum CFDNo. 99-1 Special Taxes Coverage from Bond Year Ending Developed Undeveloped Bonds Debt on Developed All Maximum September 1 Property(l) Property(l) Servici2) Propertyl)) Special Taxes(2) 2006 $ 3,701,205.10 $ 138,792.51 $ 2,888,060.18 1.28 1.33 2007 3,701,205.10 138,792.51 2,889,033.02 1.28 1.33 2008 3,701,205.10 138,792.51 2,889,773.02 1.28 1.33 2009 3,701,205.10 138,792.51 2,888,598.02 1.28 1.33 2010 3,701,205.10 138,792.51 2,889,619.26 1.28 1.33 2011 3,701,205.10 138,792.51 2,888,139.26 1.28 1.33 2012 3,701,205.10 138,792.51 2,892,895.50 1.28 1.33 2013 3,701,205.10 138,792.51 2,893,975.50 1.28 1.33 2014 3,701,205.10 138,792.51 2,886,221.76 1.28 1.33 2015 3,701,205.10 138,792.51 2,890,326.76 1.28 1.33 2016 3,701,205.10 138,792.51 2,890,926.76 1.28 1.33 2017 3,701,205.10 138,792.51 2,887,911.76 1.28 1.33 2018 3,701,205.10 138,792.51 2,896,539.26 1.28 1.33 2019 3,701,205.10 13 8,792.51 2,891,089.26 1.28 1.33 2020 3,701,205.10 138,792.51 2,891,889.26 1.28 1.33 2021 3,701,205.10 138,792.51 2,888,409.26 1.28 1.33 2022 3,701,205.10 138,792.51 2,890,544.26 1.28 1.33 2023 3,701,205.10 138,792.51 2,898,189.26 1.28 1.32 2024 3,701,205.10 13 8,792.51 2,895,806.76 1.28 1.33 2025 3,701,205.10 138,792.51 2,898,538.02 1.28 1.32 2026 3,701,205.10 138,792.51 2,890,830.52 1.28 1.33 2027 3,701,205.10 138,792.51 2,898,370.52 1.28 1.32 2028 3,701,205.10 138,792.51 2,900,168.00 1.28 1.32 2029 3,701,205.10 138,792.51 2,886,168.00 1.28 1.33 2030 3,701,205.10 138,792.51 2,997,168.00 1.23 1.28 2031 3,701,205.10 138,792.51 3,001,947.00 1.23 1.28 (I) No escalation allowed in the Rate and Method of Apportionment. (2) Preliminary, subject to change. Source: MuniFinancial. See Table 36 under the heading "THE DISTRICTS-Estimated Assessed Value-to-lien" herein for information regarding the estimated assessed value of land in CFD No. 99-1 to the total estimated amount of the Bonds. Direct and Overlapping Debt. Within the boundaries of CFD No. 99-1 are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within CFD No. 99-1 and others have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on parcels within CFD No. 99-1. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within CFD No. 99-1 for fiscal 2004-05 is shown in Table 21 below. See "SPECIAL RISK FACTORS-Direct and Overlapping Debt." Information for Table 21 has been obtained from California Municipal Statistics, Inc. Neither the Authority, the City nor the Underwriter has independently verified the information set forth in Table 21 and do not guarantee the accuracy or completeness of this information. 37 DOCSOC/I101647v7/22245-0158 3-86 TABLE 21 DIRECT AND OVERLAPPING DEBT CFD NO. 99-1 2004-05 Local Secured Assessed Valuation: $1,283,023,974 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Otay Municipal Water District, LD. No. 27 Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Sweetwater Union High School District Community Facilities District No.6 Sweetwater Union High School District Community Facilities District No. 12 City ofChula Vista Community Facilities District No. 99-1 City ofChula Vista Assessment District No. 97-2 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District General Fund Obligations City ofChula Vista Certificates of Participation City ofChula Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Otay Municipal Water District Certificates of Participation TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2004-05 Assessed Valuation(l) Direct Debt ($43,620,000)................................................................3.40% Total Direct and Overlapping Tax and Assessment Deb!................... 6.97% Gross Combined Total Debt............................................................... 9.48% Net Combined Total Debt .................................................................. 9.33% % Aoolicable 0.097% 18.630 4.371 5.107 7.215 83.709 100. 100. 77.118 0.508% 0.508 0.508 4.709 5.574 7.502 8.748 8.748 7.882 Debt 5/1/05 $ 405,644 1,854,617 3,930,795 4,291,923 5,330,081 18,891,620 2,774,574 43,620,000 (I) 8.295.410 $89,393,282 $ 1,960,914 6,361,394 65,138 126,201 1,110,898 8,403,365 11,159,386 1,073,820 2.023.309 $32,284,425 2.023.309 $30,261,116 $121,677,707(2) $119,654,398 (I) Preliminary, subject to change. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. Community Facilities District No. 2000-1 (Sunbow II-Villages 5 through 10) ("CFD No. 2000-1") was formed in 2000. CFD No. 2000-1 consists of approximately 141 acres located approximately five miles east of the downtown area of the City and 10 miles southeast of downtown San Diego. Land within CFD No. 2000-1 has been developed with 595 single family detached units. The public improvements fmanced through CFD No. 2000-1 consists of various roadway and landscape improvements and various public utilities. All public improvements fmanced through CFD No. 2000-1 have been completed. 38 DOCSOC/1101647v7/22245-0158 3-87 Table 22 below sets forth the current Maximum Special Taxes that may be levied on property within CFD No. 2000-1 in fiscal year 2004-05. TABLE 22 MAXIMUM SPECIAL TAXES CFD NO. 2000-1 Tax Class No. of Units! Sq. FUAcres 1,517,509.00 Maximum Special Tax Per Unit! Sq. FUAcre $0.44 per Sq Ft $7,851 per Acre $7,851 per Acre Maximum 2004-05 Special Taxes Percent of Total Residential Undeveloped Taxable Property Owner Assoc. Property 667,703.96 100% o o Source: MuniFinancial. Table 23 below summarizes the historical delinquencies for CFD No. 2000-1 from fiscal year 2001-02 (the first year in which Special Taxes were levied) to fiscal year 2004-05. TABLE 23 HISTORY OF DELINQUENCIES CFD NO. 2000-1 Fiscal Year Amount Levied No. of Amount % Amount Amount % Amount Parcels Delinquent Delinquent Delinquenll) Delinquent Levied $ 2,579.00 0.46%(2) $ 0.00% 596 8,223.00 1.40%(3) 0.00 595 489.00 0.08%(4) 489.20 0.08 595 NA NA 14,112.06 3.18 595 No. of Parcels Delinquent 2001-02 2002-03 2003-04 2004-05 $ 558,553.82 589,433.14 594,362.96 444,048.98 1 32 (I) Amount delinquent as of April 26, 2005. (2) Amount delinquent as of October 17, 2002. (3) Amount delinquent as of July 30, 2003. (4) Amount delinquent as of October 29, 2004. Source: MuniFinancial. Special tax refunding bonds entitled "Chula Vista Community Facilities District No. 2000-1 (Sunbow 11- Villages 5 though 10) 2005 Special Tax Refunding Bonds (the "CFD No. 2000-1 Bonds") will be issued in the aggregate principal amount of $7,520,000' concurrently with the issuance of the Bonds. The CFD No. 2000-1 Bonds are payable from Special Taxes levied on taxable real property within CFD No.2000-1. Debt service payable on the CFD No.2000-1 Bonds constitutes a portion of the Revenues securing payment of the Bonds. . Preliminary, subject to change. 39 DOCSOC/I 101647v7/22245-0158 3-88 Table 24 below illustrates the estimated debt service coverage for the CFD No. 2000-1 Bonds based on the Maximum Special Taxes that may be levied on property within CFD No. 2000-1 based on development status as of March 1, 2004. TABLE 24 ESTIMATED DEBT SERVICE COVERAGE CFD NO. 2000-1 Maximum Special Tax Bond Year Ending Developed Undeveloped CFD No. 2000-1 Coverage/rom Maximum September 1 Property(]) Property(]) Bonds Debt Service(2) Special TflXI!s"J 2006 $ 667,703.96 $ $ 511,114.92 1.31 2007 667,703.96 509,458.50 1.31 2008 667,703.96 508,998.50 1.31 2009 667,703.96 508,198.50 1.31 2010 667,703.96 506,894.76 1.32 2011 667,703.96 510,174.76 1.31 2012 667,703.96 507,639.76 1.32 2013 667,703.96 504,539.76 1.32 2014 667,703.96 510,857.26 1.31 2015 667,703.96 506,302.26 1.32 2016 667,703.96 511,302.26 1.31 2017 667,703.96 505,437.26 1.32 2018 667,703.96 509,164.76 1.31 2019 667,703.96 507,052.26 1.32 2020 667,703.96 509,293.50 1.31 2021 667,703.96 505,653.50 1.32 2022 667,703.96 506,333.50 1.32 2023 667,703.96 506,174.76 1.32 2024 667,703.96 510,162.26 1.31 2025 667,703.96 508,049.76 1.31 2026 667,703.96 505,051.00 1.32 2027 667,703.96 506,251.00 1.32 2028 667,703.96 511,406.00 1.31 2029 667,703.96 510,268.50 1.31 2030 667,703.96 508,134.50 1.31 (1) No escalation allowed in the Rate and Method of Apportionment. (2) Preliminary, subject to change. Source: MuniFinancial. See Table 36 under the heading "THE DISTRICTS-Estimated Assessed Value-to-lien" herein for information regarding the estimated assessed value of land in CFD No. 2000-1 to the total estimated amount of the Bonds. Direct and Overlapping Debt. Within the boundaries of CFD No. 2000-1 are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within CFD No. 2000-1 and others have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on parcels within CFD No. 2000-1. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within CFD No. 2000-1 for fiscal 2004-05 is shown in Table 25 below. See "SPECIAL RISK FACTORS-Direct and Overlapping Debt." 40 DOCSOC/l101647v7/22245-0158 3-89 Information for Table 25 has been obtained from California Municipal Statistics, Inc. Neither the Authority, the City nor the Underwriter has independently verified the information set forth in Table 25 and do not guarantee the accuracy or completeness of this information. TABLE 25 DIRECT AND OVERLAPPING DEBT CFD NO. 2000-1 2004-05 Local Secured Assessed Valuation: $222,985,700 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Otay Municipal Water District, J.D. No. 27 Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Sweetwater Union High School District Community Facilities District No.4 Chula Vista City School District Community Facilities District City ofChula Vista Community Facilities District No. 2000-1 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND OBLIGA nON DEBT: San Diego County Certificates of Participation San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District General Fund Obligations City ofChula Vista Certificates of Participation City of Chula Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGA nON DEBT Less: Otay Municipal Water District Certificates of Participation TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2004-05 Assessed Valuation(l) Direct Deht ($7,520,000)...........................................................................3.37% Total Direct and Overlapping Tax and Assessment Debl............................6.68% Gross Combined Total Debt........................................................................ 9.20% Net Combined Total Debt ........................................................................... 9.04% % Aoolicable 0.017% 3.438 0.760 0.888 1.254 33.506 4.518 100. 0.088% 0.088 0.088 0.818 0.969 1.304 1.520 1.520 1.370 Debt 511105 $ 71,092 342,253 683,460 746,275 926,393 4,253,944 358,995 7.520.000(1) $14,902,372 $ 339,686 1,101,974 11 ,284 21,922 193,122 1,460,676 1,938,988 186,581 351.679 $5,605,912 351.679 $5,254,233 $20,508,284 (2) $20,156,605 (I) Preliminary, subject to change. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. Community Facilities District No. 2001-1 (San Miguel Ranch) ("CFD No. 2001-1") was formed in 2001. Improvement Area A was designated within CFD No.200i-1 upon formation of CFD No. 2001-1. Improvement Area A ofCFD No. 2001-1 consists of approximately 475 acres and is located east of Interstate 805 approximately seven miles southeast of downtown San Diego. Land within Improvement Area A of CFD No. 2001-1 is approved to be developed with 603 single family detached units and 458 multifamily units. As of May I, 2005, land within Improvement Area A of CFD No. 2001-1 has been developed with 550 single family detached units and 110 multifamily units. 41 DOCSOC/lI01647v7/22245-0158 3-90 The public improvements financed through CFD No. 2001-1 included various roadway and landscape improvements. All of the public improvements financed through CFD No. 2001-1 for Improvement Area A bave been completed. Table 26 below sets forth the current Maximum Special Taxes that may be levied on property within Improvement Area A ofCFD No. 2001-1 in fiscal year 2004-05. TABLE 26 MAXIMUM SPECIAL TAXES CFD NO. 2001-1 IMPROVEMENT AREA A Tax Class Maximum Special No. of Units! Tax Per Unit! Maximum 1005-06 Percent of Sq. FL/Acres Sq. FLlAcre Special Taxes Total 1,447,432.00 $0.34 per Sq Ft 548,952.88 35% 574.00 $475 per Unit 272,650.00 17 $5,091 per Acre 0 73.36 $10,376 per Acre 761,183.36 48 Residential Residential Commercial Undeveloped Source: MuniFinancial. Table 27 below summarizes the historical delinquencies for Improvement Area A ofCFD No. 2001-1 from fiscal year 2002-03 (the first year in which Special Taxes were levied) to fiscal year 2004-05. TABLE 27 HISTORY OF DELINQUENCIES CFD NO. 2001-1 IMPROVEMENT AREA A Fiscal Amount Amount % Amount Amount Year Levied Delinquent Delinquent Delinquent]) 2002-03 $ 1,037,719.94 $ 0.00%(2) $ 2003-04 1,082,770.92 2,065.00 0.19%(3) 2,064.68 2004-05 1,098,293.36 NA NA 48,366.26 % Amount Delinquent 0.00% 0.19 4.40 No. of Parcels Levied No. of Parcels Delinquent 19 318 672 2 61 (1) Amount delinquent as of April 26, 2005. (2) Amount delinquent as of October 17, 2002. (3) Amount delinquent as of July 30, 2003. Source: MuniFinancial. Special tax refunding bonds entitled "Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2005 Improvement Area A Special Tax Refunding Bonds (the "CFD No. 2001-1 Bonds") will be issued in the aggregate principal amount of $15,225,000' concurrently with the issuance of the Bonds. The CFD No. 2001-1 Bonds are payable from Special Taxes levied on taxable real property within CFD No.2001-1. Debt service payable on the CFD No. 2001-1 Bonds constitutes a portion of Revenues securing payment of the Bonds. . Preliminary, subject to change. 42 DOCSOC/lIOI647v7/22245-0158 3-91 Table 28 below illustrates the estimated debt service coverage for the CFD No. 2001-1 Bonds based on the Maximum Special Taxes that may be levied on property within CFD No. 2001-1 based on development status as of March I, 2004. TABLE 28 ESTIMATED DEBT SERVICE COVERAGE CFD NO. 2001-1 IMPROVEMENT AREA A Maximum Special Tax Coverage from Bond Year CFDNo.2001-1 Maximum Special Coverage from All Ending Developed Undeveloped Bonds Debt Taxes on Developed Maximum Special September 1 Property(J) Property(]) Servici2) Property(2) Taxei2) 2006 $ 821,602.88 $ 761,183.36 $ 993,729.17 0.83 1.59 2007 821,602.88 761,183.36 993,645.00 0.83 1.59 2008 821,602.88 761,183.36 993,985.00 0.83 1.59 2009 821.602.88 761,183.36 993,690.00 0.83 1.59 2010 821,602.88 761,183.36 997,466.26 0.82 1.59 20ll 821,602.88 761,183.36 990,306.26 0.83 1.60 2012 821,602.88 761,183.36 992,120.00 0.83 1.60 2013 821,602.88 761,183.36 997,720.00 0.82 1.59 2014 821,602.88 761,183.36 991,865.00 0.83 1.60 2015 821,602.88 761,183.36 995,095.00 0.83 1.59 2016 821,602.88 761,183.36 992,095.00 0.83 1.60 2017 821,602.88 761,183.36 993,030.00 0.83 1.59 2018 821,602.88 761,183.36 992,781.26 0.83 1.59 2019 821,602.88 761,183.36 991,318.76 0.83 1.60 2020 821,602.88 761,183.36 993,612.50 0.83 1.59 2021 821,602.88 761,183.36 994,412.50 0.83 1.59 2022 821,602.88 761,183.36 993,681.26 0.83 1.59 2023 821,602.88 761,183.36 991,531.26 0.83 1.60 2024 821,602.88 761,183.36 992,937.50 0.83 1.59 2025 821,602.88 761,183.36 992,643.76 0.83 1.59 2026 821,602.88 761,183.36 995,620.00 083 1.59 2027 821,602.88 761,183.36 991,780.00 0.83 1.60 2028 821,602.88 761,183.36 991,342.50 0.83 1.60 2029 821,602.88 761,183.36 994,055.00 0.83 1.59 2030 821,602.88 761,183.36 994,785.00 0.83 1.59 2031 821,602.88 761,183.36 993,524.50 0.83 1.59 2032 821,602.88 761,183.36 990,265.50 0.83 1.60 (1) No escalation allowed in the Rate and Method of Apportionment. (2) Preliminary, subject to change. Source: MuniFinanciaI. 43 DOCSOC/l101647v7/22245-0158 3-92 Table 28A below illustrates debt service coverage for CFD No. 2001-1 Bonds based on the Maximum Special Taxes that may be levied on Developed Property only within Improvement Area A ofCFD No. 2001-1 based on development status as of March I, 2005. TABLE 28A ESTIMATED DEBT SERVICE COVERAGE CFD NO. 2001-1 IMPROVEMENT AREA A (DEVELOPED PROPERTY ONLY) CFD No. 2001-1 Bonds Coverage from Maximum CFD No. 2001-1 Bond Year Maximum Special Maximum Special CFD No. 2001-1 Special Taxes Bonds Coverage Ending Tax Devel~fted Tax UndevelotiJed Bonds Debt (Developed from Maximum September 1 Property (1 (2) Property (1) '2) ServiciJ) Properly Only pi Special TaxeiJ) 2006 $ 928,087.84 $ 433, 198.00 $ 993,729.17 0.93 1.37 2007 928,087.84 433,198.00 993,645.00 0.93 1.37 2008 928,087.84 433,198.00 993,985.00 0.93 1.37 2009 928,087.84 433,198.00 993,690.00 0.93 1.37 2010 928,087.84 433,198.00 997,466.26 0.93 1.36 2011 928,087.84 433,198.00 990,306.26 0.94 1.37 2012 928,087.84 433,198.00 992,120.00 0.94 1.37 2013 928,087.84 433,198.00 997,720.00 0.93 1.36 2014 928,087.84 433,198.00 991,865.00 0.94 1.37 2015 928,087.84 433,198.00 995,095.00 0.93 1.37 2016 928,087.84 433,198.00 992,095.00 0.94 1.37 2017 928,087.84 433,198.00 993,030.00 0.93 1.37 2018 928,087.84 433,198.00 992,781.26 0.93 1.37 2019 928,087.84 433,198.00 991,318.76 0.94 1.37 2020 928,087.84 433,198.00 993,612.50 0.93 1.37 2021 928,087.84 433,198.00 994,412.50 0.93 1.37 2022 928,087.84 433,198.00 993,681.26 0.93 1.37 2023 928,087.84 433,198.00 991,531.26 0.94 1.37 2024 928,087.84 433,198.00 992,937.50 0.93 1.37 2025 928,087.84 433,198.00 992,643.76 0.93 1.37 2026 928,087.84 433,198.00 995,620.00 0.93 1.37 2027 928,087.84 433,198.00 991,780.00 0.94 1.37 2028 928,087.84 433,198.00 991,342.50 0.94 1.37 2029 928,087.84 433,198.00 994,055.00 0.93 1.37 2030 928,087.84 433,198.00 994,785.00 0.93 1.37 2031 928,087.84 433,198.00 993,524.50 0.93 1.37 2032 928,087.84 433,198.00 990,265.50 0.94 1.37 (I) Developed Property Maximum Special Tax estimated based on building pennit5 issued in Improvement Area A of CFD No. 2001-1 as of March 1, 2005. The square footage per unit has been estimated at the average amount of2,521. (2) No escalation allowed in the Rate and Method of Apportionment. (3) Preliminary, subject to change. Source: MuniFinancial. See Table 36 under the heading "THE DISTRICTS-Estimated Assessed Value-to-lien" herein for information regarding the estimated assessed value of land in CFD No. 2001-1 to the total estimated amount of the Bonds. Direct and Overlapping Debt. Within the boundaries of CFD No. 2001-1 are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within CFD No. 2001-1 and others 44 DOCSOC/1101647v7/22245-0158 3-93 have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on parcels within CFD No. 2001-1. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within CFD No. 2001-1 for fiscal 2004-05 is shown in Table 29 below. See "SPECIAL RISK FACTORS-Direct and Overlapping Debt." Information for Table 29 has been obtained from California Municipal Statistics, Inc. Neither the Authority, the City nor the Underwriter has independently verified the information set forth in Table 29 and do not guarantee the accuracy or completeness of this information. TABLE 29 DIRECT AND OVERLAPPING DEBT CFD NO. 2001-1 2004-05 Local Secured Assessed Valuation: $244,798,261 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Otay Municipal Water District, LD. No. 27 Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Sweetwater Union High School District Community Facilities District No. 13 City ofChula Vista Community Facilities District No. 2001-1 City ofChula Vista Community Facilities District 2001-1 LA. "A" TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT % Aoolicable 0.018% 3.774 0.834 0.974 1.377 100. 100. 100. OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District Certificates of Participation City ofChula Vista Certificates of Participation City of Chu1a Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Otay Municipal Water District Certificates of Participation TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT 0.097% 0.097 0.097 0.899 1.064 1.431 1.669 1.669 1.504 GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2004~05 Assessed Valuation:(l) Direct Debt ($15,225,000) ............................................................. 6.23% Total Direct and Overlapping Tax. and Assessment Debt................. 7.74% Gross Combined Total Debt........................................................... 10.26% Net Combined Total Debt.............................................................. 10.10% Debt 5/1/05 $ 75,274 375,702 750,008 818,550 1,017,25 689,634 o 15.225.000 (1) $18,951,427 $ 374,426 1,214,676 12,438 24,093 212,055 1,602,935 2,129,060 204,870 386 077 $6,160,630 386 077 $5,774,553 $25,112,057 (2) $24,725,980 {IJ Preliminary, subject to change. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. Community Facilities District No.06-1 (Eastlake-Woods, Vistas and Land Swap) ("CFD No. 06-1") was formed in 2002. Improvement Area A was designated within CFD No. 06-1 upon formation of CFD No. 06-1. Improvement Area A of CFD No. 06-1 consists of approximately 737 acres and is located approximately five miles east of Interstate 805, along both the north and south sides of Otay Lakes Road. 45 DOCSOCIlIOI647v7/22245-0158 3-94 Land within Improvement AreaA of CFD No. 06-1 is approved to be developed with 1,439 single family detached units, 581 multifamily units, a 12-acre commercial site and an 18.4-acre tourist hotel site. As of May 01, 2005, land within Improvement Area A ofCFD No. 06-1 has been developed with 1,161 single family detached units and 164 multifamily units. The public improvements financed through CFD No. 06-1 for Improvement Area A therein consists of various roadway and landscape improvements. As of May 1, 2005, a substantial portion of the public improvements financed through CFD No. 06-1 for Improvement Area A has been completed. Table 30 below sets forth the current Maximum Special Taxes that may be levied on property within Improvement Area A ofCFD No. 06-1 in fiscal year 2004-05. TABLE 30 MAXIMUM SPECIAL TAXES CFD NO. 06-1 IMPROVEMENT AREA A Tax Class Maximum No. of Units! Special Tax Per Zone Sq. FLIAcres Unit/Sq. FLlAcre 1 t,763,502.00 $0.58 Sq Ft t $6,000 per Acre t $6,000 per Acre t 1l2.85 $11,037 per Acre 2 1,371,946.00 $0.67 Sq Ft 2 $6,000 per Acre 2 92.13 $8,332 per Acre Maximum ]005-06 Special Taxes 1,022,831.16 767,606.33 Percent of Total 26% o o 31 23 o 19 Residential Commercial Hotel Uodeveloped Residential Commercial Undeveloped 1,245,521.83 919,203.82 Source: MuniFinancial. The following Table 31 summarizes the historical delinquencies for Improvement Area A of CFD No. 06-1 from fiscal year 2003-04 (the first year in which Special Taxes were levied) to fiscal year 2004-05. TABLE 31 HISTORY OF DELINQUENCIES CFD NO. 06-1 IMPROVEMENT AREA A Fiscal Year Amount Levied No. of No. of Amount % Amount Amount % Amount Parcels Parcels Delinquent Delinquent Delinquent(1) Delinquent Levied Delinquent $ 98,762 3.48%(2) $ 87,157.84 3.07% 1,280 4 NA NA 145,722.30 5.44 1,662 112 2003-04 2004-05 $ 2,841,844.38 2,676,798.42 (1) Amount delinquent as of April 26, 2005. (2) Amount delinquent as of October 17, 2002. Source: MuniFinancial. Special tax refunding bonds entitled "Chula Vista Community Facilities District No. 06-1 (Eastlake- Woods, Vistas and Land Swap) 2005 lmprovement Area A Special Tax Refunding Bonds (the "CFD No. 06-1 Bonds") will be issued in the aggregate principal amount of$42,155,000' concurrently with the issuance of the . Preliminary, subject to change. 46 DOCSOC/I101647v7/22245-0158 3-95 Bonds. The CFD No. 06-1 Bonds are payable from Special Taxes levied on taxable real property within Improvement Area A ofCFD No. 06-1. Debt service payable on the CFD No. 06-1 Bonds constitutes a portion of the Revenues securing payment of the Bonds. Table 32 below illustrates the estimated debt service coverage for the CFD No. 06-1 Bonds based on the Maximum Special Taxes that may be levied on property within Improvement Area A of CFD No. 06-1 based on development status as of March I, 2004. TABLE 32 ESTIMATED DEBT SERVICE COVERAGE CFD NO. 06-1 IMPROVEMENT AREA A CFD No. 06-1 Maximum Special Tax Bonds Coverage CFD No. 06-1 from Maximum Bonds Coverage Bond Year Special Taxes on from All Ending Developed Undeveloped CFD No. 06-1 Developed Maximum Special September 1 Property(I) Property!I) Debt Servici2} Property!') Taxes") 2006 $1,886,621.20 $ 2,068,541.93 $ 2,709,823.21 0.70 1.46 2007 1,886,621.20 2,068,541.93 2,705,482.76 0.70 1.46 2008 1,886,621.20 2,068,541.93 2,705,422.76 0.70 1.46 2009 1,886,621.20 2,068,541.93 2,708,742.76 0.70 1.46 2010 1,886,621.20 2,068,541.93 2,709,530.26 0.70 1.46 2011 1,886,621.20 2,068,541.93 2,708,170.26 0.70 1.46 2012 1,886,621.20 2,068,541.93 2,703,577.76 0.70 1.46 2013 1,886,621.20 2,068,541.93 2,711,137.76 0.70 1.46 2014 1,886,621.20 2,068,541.93 2,710,179.00 0.70 1.46 2015 1,886,621.20 2,068,541.93 2,706,304.00 0.70 1.46 2016 1,886,621.20 2,068,541.93 2,709,704.00 0.70 1.46 2017 1,886,621.20 2,068,541.93 2,709,889.00 0.70 1.46 2018 1,886,621.20 2,068,541.93 2,707,075.26 0.70 1.46 2019 1,886,621.20 2,068,541.93 2,706,187.76 0.70 1.46 2020 1,886,621.20 2,068,541.93 2,706,935.26 0.70 1.46 2021 1,886,621.20 2,068,541.93 2,704,015.26 0.70 1.46 2022 1,886,621.20 2,068,541.93 2,707,337.76 0.70 1.46 2023 1,886,621.20 2,068,541.93 2,706,747.76 0.70 1.46 2024 1,886,621.20 2,068,541.93 2,707,175.26 0.70 1.46 2025 1,886,621.20 2,068,541.93 2,703,319.00 0.70 1.46 2026 1,886,621.20 2,068,541.93 2,705,104.00 0.70 1.46 2027 1,886,621.20 2,068,541.93 2,702,449.00 0.70 1.46 2028 1,886,621.20 2,068,541.93 2,705,311.50 0.70 1.46 2029 1,886,621.20 2,068,541.93 2,708,174.00 0.70 1.46 2030 1,886,621.20 2,068,541.93 2,706,072.00 0.70 1.46 2031 1,886,621.20 2,068,541.93 2,703,985.50 0.70 1.46 2032 1,886,621.20 2,068,541.93 2,706,655.50 0.70 1.46 2033 1,886,621.20 2,068,541.93 2,703,582.00 0.70 1.46 (1) No escalation allowed in the Rate and Method of Apportionment. (2) Preliminary, subject to change. Source: MuniFinancial. 47 DOCSOC/IIOI647v7/22245-0158 3-96 Table 32A below illustrates debt service coverage for the CFD No. 06-1 Bonds based on the Maximum Special Taxes that may be levied on Developed Property only within Improvement Area A of CFD No. 06-1 based on development status as of March 1,2005. TABLE32A ESTIMATED DEBT SERVICE COVERAGE CFD NO. 06-1 ~ROVEMENTAREAA (DEVELOPED PROPERTY ONLY) CFD No. 06-1 Bonds Coveragefrom Maximum Special CFD No. 06-1 Taxes Bonds Bond Year Maximum Special Maximum Special CFD No. 06-1 (Developed Coverage From Ending Tax Developed Tax Undeveloped Bonds Debt Property Maximum September 1 Property (1)(2) Property(1)(2) Service(j) Only/3) Special Taxesl3) 2006 $ 2,323,655.08 $ 1,650,669.18 $ 2,709,823.21 0.86 1.47 2007 2,323,655.08 1,650,669.18 2,705,482.76 0.86 1.47 2008 2,323,655.08 1,650,669.18 2,705,422.76 0.86 1.47 2009 2,323,655.08 1,650,669.18 2,708,742.76 0.86 1.47 2010 2,323,655.08 1,650,669.18 2,709,530.26 0.86 1.47 2011 2,323,655.08 1,650,669.18 2,708,170.26 0.86 1.47 2012 2,323,655.08 1,650,669.18 2,703,577.76 0.86 1.47 2013 2,323,655.08 1,650,669.18 2,711,137.76 0.86 1.47 2014 2,323,655.08 1,650,669.18 2,710,179.00 0.86 1.47 2015 2,323,655.08 1,650,669.18 2,706,304.00 0.86 1.47 2016 2,323,655.08 1,650,669.18 2,709,704.00 0.86 1.47 2017 2,323,655.08 1,650,669.18 2,709,889.00 0.86 1.47 2018 2,323,655.08 1,650,669.18 2,707,075.26 0.86 1.47 2019 2,323,655.08 1,650,669.18 2,706,187.76 0.86 1.47 2020 2,323,655.08 1,650,669.18 2,706,935.26 0.86 1.47 2021 2,323,655.08 1,650,669.18 2,704,015.26 0.86 1.47 2022 2,323,655.08 1,650,669.18 2,707,337.76 0.86 1.47 2023 2,323,655.08 1,650,669.18 2,706,747.76 0.86 1.47 2024 2,323,655.08 1,650,669.18 2,707,175.26 0.86 1.47 2025 2,323,655.08 1,650,669.18 2,703,319.00 0.86 1.47 2026 2,323,655.08 1,650,669.18 2,705,104.00 0.86 1.47 2027 2,323,655.08 1,650,669.18 2,702,449.00 0.86 1.47 2028 2,323,655.08 1,650,669.18 2,705,311.50 0.86 1.47 2029 2,323,655.08 1,650,669.18 2,708,174.00 0.86 1.47 2030 2,323,655.08 1,650,669.18 2,706,072.00 0.86 1.47 2031 2,323,655.08 1,650,669.18 2,703,985.50 0.86 1.47 2032 2,323,655.08 1,650,669.18 2,706,655.50 0.86 1.47 2033 2,323,655.08 1,650,669.18 2,703,582.00 0.86 1.47 (I) Developed Property Maximum Special Tax estimated based on building permits issued in Improvement Area A of CFD No. 06-1 as of March 1, 2005. The square footage per unit has been estimated at the average amount of 2.692 for Zone 1 and 3,008 for Zone 2. (2) No escalation allowed in the Rate and Method of Apportionment. (3) Preliminary, subject to change. Source: MuniFinancial 48 DOCSOCIl1 0 164 7v7 /22245-0158 3-97 See Table 36 under the heading "THE DISTRICTS-Estimated Assessed Value-to-lien" herein for information regarding the estimated assessed value of land in CFO No. 06-1 to the total estimated amount of the Bonds. Direct and Overlapping Debt. Within the boundaries of CFO No. 06-1 are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within CFD No. 06-1 and others have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on parcels within CFO No. 06-1. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within CFO No. 06-1 for fiscal 2004-05 is shown in Table 33 below. See "SPECIAL RISK FACTORS-Direct and Overlapping Debt." Information for Table 33 has been obtained from California Municipal Statistics, Inc. Neither the Authority, the City nor the Underwriter has independently verified the information set forth in Table 33 and do not guarantee the accuracy or completeness of this information. 49 DOCSOC/ll0l647v7/22245-0158 3-98 TABLE 33 DIRECT AND OVERLAPPING DEBT CFD NO. 06-1 2004-05 Local Secured Assessed Valuation: $569,004,382 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Otay Municipal Water District, J.D. No. 27 Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Chula Vista City Community Facilities District Sweetwater Union High School District Community Facilities District No. City oCChula Vista Community Facilities District No. 06-1, LA. No.1 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND OBI.IGATION DEBT: San Diego County General Fund Obligations San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District General Fund Obligations City ofChula Vista Certificates of Participation City of Chula Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Otay Municipal Water District Certificates of Participation (100% self-supporting) TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAl. DEBT NET COMBINED TOTAl. DEBT Ratios to 2004-05 Assessed Valuation:(1) Direct Debt ($42,155,000) ...................................................... 7.41 % Total Direct and Overlapping Tax and Assessment Deb!............... 10.41 % Gross Combined Total Debt...........................................................12.92% Net Combined Total Debt..............................................................12.77% % Aoolicable 0.043% 8.773 1.939 2.265 3.200 11.697 22.009 100. 0.225% 0.225 0.225 2.088 2.472 3.327 3.880 3.880 3.496 Debt 5/1/05 $ 179,822 873,352 1,743,723 1,903,506 2,364,000 927,897 9,079,228 42.155.000 (1) $59,226,528 $ 868,515 2,817,547 28,851 55,958 492,670 3,726,739 4,949,522 476,271 897.423 $14,313,496 897 423 $13,416,073 $73,540,024 (2) $72.637,601 (I) Preliminary, subject to change. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non.bonded capital lease obligations. Source: California Municipal Statistics, Inc. Land Uses, Development Status and Es.timated Assessed Value-to-Lien Ratios As summarized in the Table 34 below, substantial portions of the Reassessment Districts and the Community Facilities Districts have been developed with residential, commercial, recreational, institutional and industrial projects. Based on development status as of March 1, 2004, $120,792,312: or approximately 86.92% of the principal amount of the Local Obligations is payable from Reassessments and Special Taxes levied on such developed property. The remaining $18,182,688', or approximately 13.08% of the principal amount of the Local Obligations, is payable from Reassessments and Special Taxes levied on undeveloped property within the Reassessment Districts and the Community Facilities Districts. Based on development status as of March 1, 2005, 90.69% of the principal amount of the Local Obligations is payable from developed property. . Preliminary, subject to change. 50 DOCSOC/lI01647v7/22245-0158 3-99 Table 34 sets forth the estimated assessed value-to-lien estimates by land use for the taxable parcels within the Districts. 51 DOCSOC/1101647v7/22245-0158 3-100 .... .., r.1 ...:i = -< "" 'r.1 00 ;;l ~iii' -<"" ...:iU ;..Sl =~ z.... r.1~ ...." ...Z 0.... ""Il. r.1~ S~ ~~ ~o r.1lli: 000 ~f;o; oo~ OOr.1 -<"" ~oo r.1=; ""~ ~S .... "" 00 r.1 -" .-l: ~~~ ~~q ~.~ ..., " ]~~ l::l Il.I =: .... .~~~~ ~ .~ ..., '" "lS~ ~ ~ - ~ <;:, tl.;: !I.I ~.., <:..l~ .... . . ~~ .. ".- " -:::~ .5 Il.I =:=:- .5 ! l::l '" ~tl~~ Il.I tl!l.l~ er;:",<:~ ., ~" ~ ~ ~ ~ 1l.I1:; - =~ ,2" ~ ., ~ ~~.a ~ e~ ....0; . .,.!! ~~ 15" .... ~ ..., ~~ .~ ~ri: ~ '$. 0'1 0\1.0 0 t--I.... O--O"'<tl:'\ NOcici.,f'.l;i ~~ .9.9.9SBS \CNO'IIrl_e> -1.0"0 t"')o N -dONr<"iNN ......""I.OO'Il"""Il"'l 0\0\.,.,__..,. ~en::l~~::a _ft_ftiXJA -l"i -":1"- "'1"_ ... ~"l ~'" .., .., "'<to......""'"........,. r---O<:tMO\"'" 01--....0"""..,. iXJfto"Mft~,fo ..,; OOI,QN r--..,. OONN f""lf"'- (".f !--O -.... ~ -;;:; !'"l1.00t"l_0'\; is:~~O::8l'i {",ir-:QO"o\"OQ~ ~~~~~"'"t g":f::f ~ gg - ...."l. ~ l""l~ -~N-I'" ......-oO_NI'"'l I.DMr--r-- ..,. ...:r-:o"('.f..,.-.:t OO__NIrlQC 1:"10\1.0_ QO doo"o{ r--aC ~ -'" ...... ~ N ti NOr'"lO<n;:: ~~~~g~ o"o"r-"r-""","~ :! ~n~; \0 ~ III r-f-.:r"":i"" oe ~ ":i" ~~ ~ -;; . 1;' ~ " ~u O\I~ ....~... ~ - ..,. 'l"l........... <n~~ N 0... ...... =:~ 1:: 'S .~ Ol do, '" o "- u . ... ~r';l~~ 00 <;lO O'dlO 0000000 ~~O~ ---- "" r-r--r--r-- co ClCl 00 00 !;i!!;i!!;i!!;i!':i! " ~ " ~ ..., '" :i -a~_~ e;a g.~.~.s "EE'E'~~~~t se e ::s ''; ti'r;; Q "ii ~821 ~~~'i ~e -- Q 00. .... ';!. .......,.O\CI(l \00..,.- ~cici6 .s.s ....- ...'" ""':0; <n_""...... r-I.OO'IN 1.Ol""l(""lO """"0\"0"-0 ~ -- .., ~~Sg -'Ot-r<') "...""..," ot N" _onr--<n ... ~N N .., ~:! S::! ....'" _"0{ r-" ~... -~ ..; .., '" ~:! ~ ....'" -"0'1" r-" ~... -~ ..; .., __00'\ ... ... on _ I- N oJ, o o o :$<8:; r-l ~~ ~ G: ~ ~Clou ~_ ~"-O_' a... uu,,~ 0\ ~uo ,""";,~Cl '""";'-:~d.. -;"~~ 1-u"1-1-0'\1-,... ClOUClOOQClOQ~ o.{oo,,-ou <_<<u< .. ~ 'E goB" ~ ~ t' g ~ &'u 5~ mm-;l .~"s -g"~ tJa~~ .g-,::: n";;; .E.s~~ 3-101 s ... o <0 Ol~ ....'" 6l""i -~ -~ .8S "'~ -'" ::::~ ~"" ....N -~ 0'- "''''' "'::: .. ....'" ~'" "'''l. ...'" ........ ""~ :!~ .. O~ ...... NO ~.,; ...'" ...~ ~.; ~~ '" .. "'''' ...... NO ~.,; ;::: ~.; ~~ .. 9~ ~I'" ...~ ........ '" . ... Q 'il . . '" = ~ :e Q .... ,., . o o .; ::: S N .... '" .... '^ ~ ~ '" .... " '" ~ ... en E o "' ~ ~ ~ 0. ~ = o -.g .!?!l :c o .. u o ...l ~ -5 o o 00 o '6 ~ ~ :; o .. 0. '" o '0 0. ~ -5 ..... o ~ ..0 ~ '" ';j ~ '" 0. ~ -5 '0 a N ~ '1 N o ~ .; ~ .. o o o .; N '" ~ ::l .. o '" ::: .... "l. ~ '" o ... .. ... !;I '" ~ "l. ~ '" ... ... '" '" ~ ~ ... ~ '" '" ~ :! .. ... o ~ ~ o ~ - o ~ E ~ ~ ~~ ~g ~"'. ~- i3'fi o a .;;::;: ~..... ;:j 0 ..0 ;:j '0 ~ BE 13.s ..S2 ~ "tac ,~ E-: :0 o.o'~ ~ _ u Q ~ a -0 [;,5 ~~~ S 0 3 ~--g::E . ;:j ;::<:oij ~ " -- g rJj <' . . ] ~ "" ~ ~ ~ ~ . -5 !l 1:: . 'is' , . 00 "" 9 "" ..,. '" '" <:! .... > .... ..,. '" o - u o en U o Q :e Q .... '" = . - OJ Estimated Assessed Value-to-Lien Ratios Table 35 below sets forth the number of parcels within various ranges of estimated assessed value-to- lien ratios. As summarized in Table 35, the estimated assessed value-to-lien ratio for all parcels within the Districts is approximately 29.20 to I', but the ratios for individual parcels vary widely. The value of the individual parcels is significant because, in the event of a delinquency in payment, the only remedy of the City is to foreclose on the delinquent parcel. A parcel with a lower value-to-lien ratio may be less likely to sell at foreclosure or provide sale proceeds adequate to pay all delinquent Reassessment or Special Tax installments. TABLE 35 ESTIMATED ASSESSED V ALUE- TO-LIEN SUMMARY BY RATIO RANK' (ADJUSTED FOR OVERLAPPING DISTRICT) Average % of Total 1004105 Amount Reassessment Reassessment 1004105 Reassessment! Value-to- Estimated Assessed No. of Lien/Bonded Lien/Bonded Maximum Special Tax Total 2004105 Lien/Bonded Value-fo-Lien Parcels Debt(J) Debt Special Tax Levy Assessed Value Debt Greater than 20: 1 9,201 86,662,788 62.38% $ 6.140.342 $ 6,985,628 $3,494,686.861 40.33 to 1 10:1 to 19.9:1 902 23,441,180 16.87 1,691,850 1,587.705 394,756,276 16.84 to 1 5:1 to 9.9:1 600 14,638,173 10.54 1,212,208 1,006,135 108,664,451 7.42 to 1 3:1 t04.9:1 154 4,190,190 3.02 319,428 295,353 17,869,557 4.26 to 1 1:1 t02.9:1 158 3,869,717 2.79 697,279 247,969 6.072,876 1.57 to 1 Less than I: I 23 6.117,951 4.40 898,554 479,472 2,143,455 0.35 to 1 NA(2) -->.l --.-MQ 159569 34 377 814 --tlA Total 11,091 138,920.000 100.00% $11,119.230 $10,602,262 $4,058,571.290 29.20 to 1 (I) The Bonded Debt is allocated based on the Reassessment liens and the pro rata share of the principal outstanding on the Local Obligations payable from Special Taxes. (2) The parcels were not assigned a Special Tax for 2004/05. Source: MuniFinancial. . Preliminary, subject to change. 53 DOCSOC/I101647v7/22245-0158 3-102 "" ,.., r.l ...l == -< "" ~.s l;~,:!: .S ~.;:: ~:::~ ." ~ '!~~ ~~~ ~ ::; '"" U ~ "" rLl ..... ~ ... == ... i:l: ~ ~ ;l rLl o ..... "" ~ Z r.l ..... ...l , o "" , r.l ;l ...l ~ ~ r.l rLl rLl r.l rLl rLl -< Q r.l "" ~ ..... "" rLl r.l ,~ " .,,~~ ::: ~~;;:;- 1::::::: '-l...... t'~ ~ ~ .~..:: ~ ~ .l::it"l::l C ~ ,,'" ~~ ~ :::::2 ~ ~ - \),l~i:l ~i:!'=l ~ .;:: 0.:'"' ." ~.., ~ ~ ~<=l ~ 000 00l"- 00'<' 0- 0 V)~ N "'0 "'NO M~"1" 0 .. <A <A <A <A 000 000 000 000" N '" l"- '" N l"- ro) '<t t--~ <A <A ..., ~ ;;;:- ~~ ""'" .... ~ - ~ ! ~ ~ ~ -.: N -N .,..,..,. ~6 ~~ .,. N.,. 00 l"- 00 M'O'IM' "''''''' -.'" <A <A ~ ~-"l J: ~ E .. ~o., t"-o l:":'- 0.,.0 .,.~.,. M-~M~ t '!; ~ is , '" o o N 0:; Z " 'E ~ is " € ~ ~:b~ OOOOU o 0 ~ ZZU ~~<>: s .,. 00 '" N O~ O~ 0'<' ",00 "'~ l"-'<' 0"" N <A <A o l"- '<' ",' ~ N N ~ <A <A 00 00 00 "'''' "'''' l"- l"- 00 <A <A '<''<' l"- l"- ,<,'<i "'''' "'''' .,...fC '<''<' '<''<' <A <A ~1~ l"- l"- ::~ "i '" o o N 0:; Z " "5 ~ is " N U N E r-!- ~ '" ~ o ~ z U ~<>: S N .,. ..... N .9.s.s.s.s.s OI.li\CN 0 OOMO".O"I\OV"l v-i-.i::; t:'i 0-;..0 O\'<tl"lt-OOM _\0 t-N N..... \0\0 M'<t 1f"'lC\ \0- '<t~ N~ _~ \0 ~ -O\OltiNM Mrf"lO'\o-,No::t "';0::"';0150-,-0 NOO__lrIt'- N <A <A ~ ~ '<' ,., 00 00 00 O\-.:tNr-OOM M _\Ot-NN_ \0\0 M-.:!" ltlO'\ 0"1 .....- o::t- N \0- ..... v) on- '<tt'--OONr-- o::t t-- M t'- 0 If"l V) C",fon^r---M^r-- r--:' r--: -"'1" _M M <A <A 000000 0 000000 0 000000 0 v)'OOorllt') 0- d t-NN(".lonN N OO\OonN-O\ 0\ ""'-M-t---ori'N rJ'S 00 -o::t -o::t~ M ... ... -~O_Nlrllrl 0 oor-OI.OOOorJ"O 0'1 ~~~~:6:-;;; N.. NNOOO\OM\O t- _OO\t--OMr-- on o::t^M-N-"';O'\(",fM 00 OOOON'<t\O\OO V) MNNNlt"llt"llti 0 - ...; o::t^ ... 00 - '" _"'''' ON '" --M' ~ ~~~ ~O \0\0-- _r-i_ - - MO' ..... r-!-d-,gg-b O\O\NNO o 0 ci .0 0 Z Z Z Z Z~ ClClClClCl'" ~~t:.I..~u...O UUUUUE-< 3-103 ... ~ '0 [;j '" '" 0:; Z Cl '"' U d U U ~ U .0 ~ "il ~ Q, "" d '0. ~ ~N O~ ~ ~ 0:; ~ZC; '5 f-- s 00 '<' '" :l '" '" ~ .,. '<i l"- N <A <A ... ~ f-- ." 'u U Q, '" U oS d o '0 .; ~ .~ '" ~ ~ .~ "8 00 o ." '" Q, <lJ '0 .s 'c 5 on ~ ~ \0 ~ ~ ~ "E ~ l"- S tIl 8 -; :; lti U o <A >, ta '+-< <Ii.o .~ ~:Q] c: =,.:::; 'C o.~ C. 0. E"'O U I ou ..." 0. l5. ~ -s.s~~'o "E u 0 ""';' Il) .5 ~ fr~ z a I 'fi ~ ci Ei: ~"";'~:.E.:CZU ~r-. .~ouQ.d EOO~i22~<'~ o ,-.. u C:.d a ~ ~ 'i5.'~ ~ a>-5u o.1a-:!:"'i: -:5'~.d"'_o.~ "l <I)'<:::..s ~ ~ 0 <l:lo.~"'O>u"'" "'0 <l:l tI'.l il.l O;>.:!: ~ i::: 0. tl "0 0 .::: ro u td ::l C ......~. -; ;> i: :.0' l.':I .~ Cl .2o~ctlu~ou a:l ~ 0 c 0._ oS ~~b~;:::Qc ._..::::: _..0 i--O u._.....: .E ~.~ e;.,g-S.s.:s 1I,)~~c_..c::'~u 0. 8 0.(1) co'::: a ..... ..... td.- ~ 2a e "Euu.d.dVJu,- "0 "i:'C --a 1:: 'i) ~ ~ C1;j'tl......"sutdc: o .-.- 0 a 0. ::l cc.oOE- u o.'o:t":2; ou I\) U u!;fl 0 ~~~~..:e~:'~ ~ " ~ '" ,-,::::' ~ @:,.. ~ ... '" o. = !\ ~ " u ~ " ;:; ;; ;; ~ '" 00 '" " '" .,. N N N '" ~ l"- .,. '<' c: u o '" u o Cl Delinquency History The following Table 37 summarizes the historical delinquencies for all of the Districts from fiscal year 1999-2000 to fiscal year 2004-05. TABLE 37 HISTORY OF DELINQUENCIES ANNUAL PERCENT AGE FOR ALL DISTRICTS FISCAL YEARS ENDED JUNE 30(t) District 2005 2004 2003 2002 2001 2000 AD No. 87-1 8.94% 0.55% 0.89% 0.01% 0.00% 0.00% AD No. 88-2 4.66 0.21 0.06 0.03 0.00 0.00 AD No. 97-2 2.90 0.24 0.06 0.00 0.00 0.00 CFD No. 97-3 3.79 0.37 0.00 0.00 NA NA CFD No. 99-1 7.71 0.30 0.02 0.00 NA NA CFD No. 2000-1 3.18 0.08 0.00 0.00 NA NA CFD No. 2001-1 (Improvement Area A) 4.40 0.19 0.00 NA NA NA CFD No. 06-1 (Improvement Area A) 5.44 3.07 NA NA NA NA (1) Amount delinquent as of April 26, 2005. Source: MuniPinancial. Major Taxpayers for all Districts Table 38 below sets forth the top ten taxpayers among the Districts, as measured by the amount of Reassessment Liens and Special Taxes levied on property owned by such taxpayers in fiscal year 2004-2005. Table 39 below sets forth the top properties among all of the Districts based on their allocated shares of the principal amount of the Local Obligations, as organized by Developed Property and Undeveloped Property, and related value-to-lien infonnation. 55 DOCSOCIlIOI647v7/22245-0158 3-104 0Cl ..., r.l ...l ~ -< '"' ~ ""le~ ~~ ~ - ~ .... ;00, I::l ~ ~:5 ~"<::l ~ '" . . ~~ '" ~ lI-l 5 ~ ~ ~:s t <:::l .., ~ ~ '" . . ~~ '" "", .{: E :r::::::- ..... tlE:QoC:l . ~ . rs Il,ll::i . '- "'... '" . ~,a ..,~ %." '" . '! ~ ~ ~ "" '", ~ r.l ... ~ -< '"' ~ o .... ~ . ,a "'~ ~ ~ %a .... 0 i! .:; ." ~ ... . ",,a ~~ ~ ~~ .~ ~~ '# '# ~ VlN<""lt--NtrlOOIt"l_OO!"''''I= t-a,OOr-<"')NOIOIOIOOV"l-.:tCt N""';"";"";"";"":O 0 ci6-.:i...-:i 0 ......00= r--OONl""l-.:t\OOIO'<t'<tonr--M !'"l\O\O-.:tVlr--<o:r_onr-Nl""l\C 00. '<t"0I"1t"l~_"0'I" -.:t. \0. 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Q, ~ -S ... o ~ :a ..c ~ ~ e o a. " -S '0 ~ ~ e ~ " ~ E ~ ~ ~ ~ ~ 0:: . ";!; -So eN 0"'; "B-e ~ a ~;:;; ~... ;;; 0 ..9 ~ -ai:: .~ e -= .D o..;g ~ 0 u Oo;~ -0 ~.5 .g~f:: S 0 3 a:l"B::E " ~ F:<Ilij :; o _ N en '" ~ "i '" o ~ = ~ ~ = :5 = N ~ '" .., ~ ~ = '" ::: ~ "l "" '" = ... "" ... .., ... '" "" "" '" '" ... ... "" '" .., "" ... "" ~ '" '" "l ~ ~ - '" 5: ~ .. '0; f-o '" = . - '-' gj, ~ El o . '" il c; . ~ ;; ~ 0.. '" .., '" .., .,. N N C:! .... > ~ ... '" o U o en U o o SPECIAL RISK FACTORS While the Bonds will be insured, the following infonnation should be considered by prospective investors in evaluating the Bonds. However, it does not purport to be an exhaustive listing of the risks and other considerations which may be relevant to an investment in the Bonds. In addition, the order in which the following infonnation is presented is not intended to reflect the relative importance of any such risks. If any risk factor materializes to a sufficient degree, it alone could delay or preclude payment of principal of or interest on the Bonds. The Bonds are Limited Obligations of the Authority Funds for the payment of the principal of and the interest on the Bonds are derived from debt service payments on the Local Obligations which are derived only from annual Reassessment installments and annual payments of Special Taxes. The amount of annual installments of Reassessments and Special Taxes that are collected could be insufficient to pay principal of and interest on the Local Obligations due to non-payment of such Reassessment installments and Special Taxes levied or due to insufficient proceeds received from a judicial foreclosure sale ofland within the Districts following delinquency. The City's legal obligations with respect to any delinquent Reassessment installments or Special Taxes are limited to (I) payments from the Reserve Fund to the extent of funds on deposit in the respective Reserve Account, and (2) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Reassessment installments or Special Taxes are delinquent. See "SECURITY FOR THE BONDS-Covenant to Foreclose." The City has detennined that it will not obligate itself to advance funds from its treasury to cover any delinquency on the Reassessments, Special Taxes or payments on the Local Obligations. The Bonds cannot be accelerated in the event of any default. The obligation to pay Reassessment installments and Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. Enforcement of Reassessment and Special Tax payment obligations by the City is limited to judicial foreclosure in the San Diego County Superior Court pursuant to Sections 8830 et seq. of the California Streets and Highways Code. There is no assurance that any current or subsequent owner of a parcel subject to a Reassessment or Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though fmancially able to do so. The Local Obligations are Limited Obligations of the City The obligation of the City and the Community Facilities Districts, as issuers of the Local Obligations, to advance the amount of delinquencies to the Trustee, as the registered holder of the Local Obligations, is strictly limited to funds on deposit in the Reserve Fund established and held by the Trustee pursuant to the Indenture. Pursuant to Section 8769 of the California Streets and Highways Code, the City has expressly elected not to obligate itself to advance available funds from the City's treasury to make up deficiencies in the amount of Reassessment installments collected. Failure by owners of the parcels to pay Reassessment or Special Tax installments when due, delay in foreclosure proceedings, or the inability of the City or the Community Facilities Districts to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Reassessments or Special Taxes levied against such parcels may result in the inability of the City or the Community Facilities Districts to make full or timely payments of debt service on the Bonds, which may in turn result in the depletion of the Reserve Fund and the inability of the Authority to make full or timely payment on the Bonds. 58 DOCSOC/1101647v7/22245-0158 3-107 The Reassessments are Not Personal Obligations of the Property Owners Under the provisions of the Act, Reassessment installments will be billed to the owner of each parcel in the Reassessment Districts against which there is an unpaid Reassessment, with such billing to be made on the regular property tax bills sent to such owners. The Reassessment installments are due and payable at the same time and bear the same late charges and penalties as for non-payment of regular property tax installments. The obligation to pay Reassessment installments does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to the Reassessment liens. Enforcement of Reassessment payment obligations by tbe City is limited to judicial foreclosure in the San Diego County Superior Court pursuant to Sections 8830 et seq. of the California Streets and Highways Code. There is no assurance that any current or subsequent owner of a parcel subject to a Reassessment lien will be able to pay the Reassessment installments or that such owner will choose to pay such installments even though financially able to do so. The Special Taxes are Not Personal Obligations of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, a Community Facilities District has no recourse against the owner. Potential Early Redemption of Bonds from Prepayments Property owners within the Districts are permitted to prepay their Reassessments and Special Taxes at any time. Such prepayments will result in a redemption of Local Obligations on the first March I or September I which is more than 30 days following the receipt of the prepayment. The proceeds of the Local Obligations so redeemed will then be used to make a mandatory redemption of the Bonds. The Bonds will be called on a pro rata basis from the proceeds of the Local Obligations redeemed from prepayments. See 'THE BONDS-Redemption-Extraordinary Redemption from Prepayments." Non-Cash Payments of Special Taxes Under the Act, the City Council as the legislative body of a Community Facilities District may reserve to itself the right and authority to allow the owner of any taxable parcel to tender a CFD Refunding Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A CFD Refunding Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if CFD Refunding Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the Special Taxes applicable thereto by tendering a CFD Refunding Bond. Such a practice would decrease the cash flow available to the Community Facilities District to make payments with respect to other CFD Refunding Bonds then outstanding; and, unless the practice was limited by the Community Facilities District, the Special Taxes paid in cash could be insufficient to pay the debt service due with respect to such other CFD Refunding Bonds. In order to provide some protection against the potential adverse impact on cash flows which might be caused by the tender of CFD Refunding Bonds in payment of Special Taxes, the CFD Indentures include a covenant pursuant to which the Community Facilities District will not authorize owners of taxable parcels to satisfy Special Tax obligations by the tender of CFD Refunding Bonds unless the Community Facilities District shall have first obtained a report of a Special Tax Consultant certifying that doing so would not result in the Community Facilities district having insufficient Special Tax Revenues to pay the principal of and interest on all outstanding CFD Refunding Bonds issued by such Community Facilities District. 59 DOCSOC/lJOI647v7/22245-0J58 3-108 Risks of Real Estate Secured Investments Generally The Bondowners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the Districts, the supply of or demand for competitive properties in such area, and the market value of commercial and industrial buildings and/or sites in the event of sale or foreclosure, (il) changes in real estate tax rates and other operating expenses, government rules (including, without limitation, zoning laws and laws relating to threatened and endangered species) and fiscal policies and (ili) natural disasters (including, without limitation, earthquakes and floods), which may result in uninsured losses. Concentration of Ownership Certain major property owners in the Districts presently have landholdings encompassing significant amounts of the acreage in the Districts. For a summary of the ownership of land in the Districts as of January I, 2004, see "THE DISTRICTS-Major Taxpayers for all Districts." There may be subsequent transfers of ownership of the property within the Districts prior to completion of development. Failure of the owners of undeveloped property to pay the annual Reassessments and/or Special Taxes when due could result in a default in payments of the principal of, and interest on, the Local Obligations, which could result in the inability of the Authority to make payments of the principal of, and interest on the Bonds when due. Such risk may be greater or its consequence more severe when ownership is concentrated and may be expected to decrease as ownership is diversified through development and sales. Failure to Develop Property A portion of the acreage within the Community Facilities Districts is currently under development. Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency or satisfy such governmental requirements would adversely affect planned land development. Finally, development of land is subject to economic considerations. The failure to complete development of the Community Facilities Districts as planned, or substantial delays in the completion of the development, due to litigation or other causes may reduce the value of the property within the Community Facilities Districts and increase the length of time during which Special Taxes will be payable from Undeveloped Property, and may affect the willingness and ability of the owners of property within the Community Facilities Districts to pay the Special Taxes when due. Moreover, there can be no assurance that land development operations within the Community Facilities Districts will not be adversely affected by a future deterioration of the real estate market and economic conditions or future local, State and federal governmental policies relating to real estate development, the income tax treatment of real property ownership, or the national economy. A slowdown of the development process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners within the Community Facilities Districts to pay the annual Special Taxes. In that event, there could be a default in the payment of principal of, and interest on, the CFD Refunding Bonds which would affect the amount of Revenues available to pay principal of, and interest on first, the Bonds when due. Bondowners should assume that any event that significantly impacts the ability to develop land in the Community Facilities Districts would cause the property values within the Community Facilities Districts to decrease substantially and could affect the willingness and ability of the owners of land in such Districts to pay 60 DOCSOC/II01647v7/22245-0158 3-109 Special Taxes when due. Despite the amount of development that has already taken place, payment of the Bonds is currently dependent upon the payment of Special Taxes levied on undeveloped property. Undeveloped property is less valuable per unit of area than developed property, especially if there are severe restrictions on such development, and accordingly, provides less security to the Bondowners than the developed property should it be necessary to foreclose on such property due to the nonpayment of Special Taxes. The failure to complete the development as planned, or substantial delays in the completion of the development, due to litigation or other causes, may reduce the value of the property within the Community Facilities Districts, and may affect the willingness and ability of the owners of land within the Community Facilities Districts to pay Special Taxes when due. Furthermore, an inability to develop the land within the Community Facilities Districts will likely reduce or delay the diversification of ownership of land within the Community Facilities Districts. See "Concentration of Ownership" above. A slowdown or stoppage in the continued development of the Community Facilities Districts could reduce the willingness and ability of such owners of undeveloped property to pay Special Taxes and could greatly reduce the value of such property and the price which could be obtained for it in any foreclosure sale instituted to collect delinquent Special Taxes. Bankruptcy and Foreclosure Delays The payment of property owners' taxes installments and the ability of the City to foreclose the lien of a delinquent Reassessment installment and the ability of Community Facilities Districts to foreclose the lien of a delinquent Special Tax installment pursuant to the respective covenants to pursue foreclosure proceedings is normally delayed by and may be limited in other ways by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by State laws relating to judicial foreclosure. See "SECURITY FOR THE BONDS-Judicial Foreclosures" herein. In addition, the prosecution of a judicial foreclosure may be delayed due to congested local court calendars or procedural delays. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments, including the Bonds and the Local Obligations, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases. Although bankruptcy proceedings would not cause the lien of the Reassessments or Special Taxes to become extinguished, bankruptcy of a property owner or of a partner or other equity owner of a property owner, could result in a stay of enforcement of such a lien, a delay in prosecuting Superior Court foreclosure proceedings or adversely affect the ability or willingness of a property owner to pay the Reassessment or Special Tax installments and could result in the possibility of delinquent any such installments not being paid in full. In addition, the amount of any lien on property securing the payment of delinquent Reassessment or Special Tax installments could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent installments in excess of the reduced lien could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien for the Reassessments or Special Taxes, or any such delay or non-payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent Reassessment or Special Tax installments not being paid in full. Moreover, amounts received upon foreclosure sales may not be sufficient to fully discharge delinquent Reassessment or Special Tax installments. To tbe extent that a significant percentage of the property in the Districts is the subject of bankruptcy proceedings, the payment of the Reassessment and/or Special Tax installments and the ability of the City and the Community Facilities Districts to foreclose the lien of a delinquent unpaid Reassessment or Special Tax installments could be extremely curtailed by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. 61 DOCSOC/lI01647v7/22245-0158 3-110 FDIClFederal Government Interests in Properties The ability of the City to foreclose the lien of delinquent unpaid Reassessment instalIments or the ability of Community Facilities Districts to foreclose the lien of delinquent Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC") has an interest. In the event that any financial institution making any loan which is secured by real property within the Districts is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the City and the Community Facilities Districts to colIect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Reassessment or Special Tax installments may be limited. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special assessments due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The FDIC has filed claims against the City of Orange, California in the United States Bankruptcy Court and in Federal District Court contending, among other things, that special taxes are not ad valorem taxes, and therefore not payable by the FDIC, and any special taxes previously paid by the FDIC must be refunded. The FDIC is also seeking a ruling that special taxes may not be imposed on properties while they are in FDIC receiversbip. The Bankruptcy Court ruled in favor of the FDIC's positions and, on March 22, 1999, the United States Bankruptcy AppelIate Panel of the Ninth Circuit affirmed the decision of the Bankruptcy Court. The County of Orange has appealed such ruling to the United States Court of Appeals for the Ninth Circuit and the FDIC bas cross-appealed. The Ninth Circuit has not yet issued a ruling on the matter. Based on the records of the County Assessor, the FDIC does not currently own any of the property in the Reassessment District. The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Reassessment and Special Tax instalIments on a parcel within the Districts in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, a default in payment on the Bonds. 62 DOCSOC/lIOl647v7/22245-0158 3-111 Price Realized Upon Foreclosure Section 8832 ofthe Streets and Highways Code prescribes the minimum price (the "Minimum Price") at which property may be sold in a judicial foreclosure resulting from delinquencies on assessment installments. The Minimum Price is the amount equal to the delinquent installments of principal and interest of the assessment, together with all interest, penalties, costs, fees, charges and other amounts more fully detailed in said Section 8832. However, Section 8836 of the Streets and Highways Code provides that the court may authorize a sale at less than the Minimum Price if the court makes certain detenninations, based on the evidence introduced at the required hearing, which evidence must establish that no ultimate loss will result to the bondholders or that no other remedy is acceptable and at least 75% of the bondholders consent to a sale at less than the Minimum Price. Upon issuance of the Local Obligations, the Trustee will be the registered owner of ] 00% of the Local Obligations. The Reassessment lien upon property sold pursuant to this procedure at a lesser price than the Minimum Price would be reduced by the difference between the Minimum Price and the actual sale price. ]n addition, the court would pennit participation by the Authority, as owner of all of the Local Obligations, in its consideration of the petition as necessary to its determination. Reference should be made to Section 8836 of the Streets and Highways Code for the complete presentation of this provision. ]f foreclosure proceedings do not result in full collection of delinquent Reassessment installments, it is possible that owners of the Bonds may not receive payment of principal of or interest on the Bonds. Direct and Overlapping Debt Neither the Authority, City, the Reassessment Districts nor the Community Facilities Districts have control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the property within the Districts which may be incurred in the future by other governmental agencies having jurisdiction over all or a portion of the property within the Districts. Other public agencies may issue additional indebtedness on property within the Districts at any time. Furthermore, nothing prevents the owners of property within the Districts from consenting to the issuance of additional debt by other governmental agencies which would be secured by taxes on a parity with the Reassessments and Special Taxes or assessments which would be subordinate to the Reassessments and Special Taxes. To the extent such indebtedness is payable from assessments, other special taxes levied pursuant to the Mello-Roos Act or taxes, such assessments, special taxes and taxes will be secured by liens on the property within the Districts. Accordingly, the debt on the property within the Districts could increase, without any corresponding increase in the value of the property therein. The imposition of such additional indebtedness could reduce the willingness and ability of the property owners within the Districts to pay the Reassessments or Special Taxes when due. See "--Cumulative Burden of Parity Taxes and Special Reassessments" herein. Moreover, in the event of a delinquency in the payment of Reassessments or Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of property with delinquent Reassessments would be sufficient to pay the delinquent Reassessments or Special Taxes. See "-Land Values" below. Natural Disasters Tbe Districts, like all California communities, may be subject to unpredictable seismic activity, fires due to the vegetation and topography, or flooding in the event of unseasonable rainfall. The occurrence of seismic activity, fires or flooding in or around the Districts could result in substantial damage to properties in the Districts which, in turn, could substantially reduce the value of such properties. As a result of the occurrence of such an event, a substantial portion of the property owners may be unable or unwilling to pay the Reassessment andlor Special Tax installments when due, and the Reserve Fund may eventually become depleted. In addition, the value of land in the Districts could be diminished in the aftennath of such natural 63 DOCSOC/II01647v7/22245-0158 3-112 events, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Reassessment and Special Tax installments. Land Values The value of land within the Districts is an important factor in evaluating the investment quality of the Bonds. In the event that a property owner defaults in the payment of an Reassessment installment or Special Tax installment, the City's and the Community Facilities Districts' only remedy is to judicially foreclose on that property. Prospective purchasers of the Bonds should not assume that the property within the Districts could be sold for the assessed value described herein at a foreclosure sale for delinquent Reassessment or Special Tax installments or for an amount adequate to pay delinquent Reassessment or Special Tax installments. Reductions in property values within the Districts due to a downturn in the economy or the real estate market, events such as earthquakes, droughts, or floods, stricter land use regulations, threatened or endangered species or other events may adversely impact the security underlying the liens. The actual market value of the property is subject to future events such as downturn in the economy, occurrences of certain acts of nature and the decisions of various governmental agencies as to land use, all of which could adversely impact the value of the land in the Districts which is the security for the Local Obligations, which secure the Bonds. As discussed herein, many factors could adversely affect property values or prevent or delay land development within the Districts. Hazardous Substances A claim with regard to a hazardous substance on a parcel of land subject to any of the Reassessments or Special Taxes can result in a significant potential reduction in the value of the parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Super Fund Act", is well known, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels within the Districts be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition because the prospective purchase of such a parcel will, upon becoming the owner of such parcel, become obligated to remedy the condition just as the seller of such a parcel is. Hazardous substance liabilities may arise in the future with respect to any of the parcels within the Districts resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such substance. These possibilities could significantly affect the value of a parcel and could result in substantial delays in completing planned development on parcels that are currently undeveloped. Cumulative Burden of Parity Taxes and Special Assessments The Reassessments and Special Taxes constitute a lien against the parcels of land on which they have been levied. Such lien is on a parity with all special taxes or assessments levied by other agencies and is co- equal to and independent of the lien for general property taxes, regardless of when they are imposed upon the same property. Neither the City nor the Community Facilities Districts have control over the ability of other entities to issue indebtedness secured by ad valorem taxes, special taxes or assessments levied on all or a portion of the 64 DOCSOC/l101647v7/22245-0158 3-113 property within the Districts. In addition, the owners of the property within the Districts may, without the consent or knowledge of the City or the Community Facilities Districts, petition other public agencies to issue public indebtedness secured by ad valorem taxes, special taxes of assessments. See "THE DISTRICTS- Direct and Overlapping Debt." Loss of Tax Exemption As discussed under the caption "CONCLUDING INFORMATION-Tax Matters", in order to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, the Authority and the City have covenanted in the Indenture and the Local Obligations Indentures, respectively, not to take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Bonds under Section 103 of the Internal Revenue Code of 1986, as amended. 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 acts or omissions of the Authority or the City in violation of the Code. Should such an event of taxability occur, the Bonds are not subject to early redemption and will remain Outstanding to maturity or until redeemed under the optional or mandatory redemption provisions of the Indenture. California Constitution Article XIIIC and Article XIIID On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain, among other things, a number of provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. Regarding Assessments. Article XIIID requires that, beginning July I, 1997, the proceedings for the levy of any special assessment (including, if applicable, any increase in such assessment or any supplemental assessment) must be conducted in conformity with the provisions of Section 4 of Article XIIID. Section 9525(b) of the California Streets and Highways Code provides that any reassessment approved and confirmed pursuant to Section 9525 of the Califomia Streets and Highways Code shall not be deemed to be an assessment within the meaning of, and may be ordered without compliance with the procedural requirements of, Article XIIID. The Reassessments were approved and confirmed pursuant to Section 9525 of the California Streets and Highways Code. Furthermore, the original assessment districts' assessments (which are supplanted and superseded by the Reassessments) were levied prior to July I, 1997. Therefore, neither the Original Assessment Districts' assessments nor the Reassessments are subject to the provisions of Section 4 of Article XIIID. In addition, under Section 10400 of the California Streets and Highways Code, any challenge (including any constitutional challenge) to the proceedings or the assessment must be brought within 30 days after the date the assessment was levied. Article XIIIC removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. This provision of Article XIIIC is not, by its terms, restricted in its application to assessments which were established or imposed on or after July I, 1997. In the case of the unpaid Reassessments which are pledged as security for the payment of the Reassessment Bonds, the Act provides a mandatory, statutory duty of the City and the County Auditor to post installments on account of the unpaid Reassessments to the property tax roll of the City each year while any of the Reassessment Bonds are outstanding, in amounts equal to the principal of and interest on the related issue of Reassessment Bonds coming due in the succeeding calendar year. While the matter is not free from doubt, it is likely that a court would hold that the initiative power cannot be used to reduce or repeal the unpaid Reassessments which are pledged as security for payment of the Reassessment Bonds or to otherwise interfere with performance of the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid Reassessments which are pledged as security for payment of such Reassessment Bonds. 65 DOCS0C/1101647v7/22245-0158 3-114 Regarding Special Taxes. Among other things, Section 3 of Article XIIl states that ". . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The CFD Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the CFD Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the CFD Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that: "Section 3 of Article XIIlC of the Califomia Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a mlUlicipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution." Accordingly, although the matter is not free from doubt, it is likely that the initiative has not conferred on the voters the power to repeal or reduce Special Taxes if such reduction would interfere with the timely retirement of the CFD Refunding Bonds. The provisions of the initiative relating to the exercise of the initiative power have not been interpreted by the courts and no assurance can be given as to the outcome of any such litigation. It may be possible, however, for voters or the City COlUlcil acting as the legislative body of the Community Facilities Districts to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amolUlt of Special Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amolUlts greater than the amount necessary for the timely retirement of the CFD Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the CommlUlity Facilities Districts have covenanted that they will not initiate proceedings lUlder the CFD Act to reduce the maximum Special Tax rates on parcels within Community Facilities Districts to less than an amolUlt equal to 110% of maximum annual debt service on the respective CFD Refunding Bonds. The Community Facilities Districts also have covenanted that, in the event an initiative is adopted which purports to alter the respective rates and methods of apportionments, they will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants. The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS-Limitations on Remedies." The interpretation and application of the Articles XIIIC and XIIlD will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. No Acceleration There is no provision in the Indenture or Local Obligations Indentures for acceleration of the payment of principal of or interest on the Bonds or the Local Obligations in the event of default or in the event interest on the Bonds becomes included in gross income for federal income tax purposes. There is no provision in the Act, the Indenture or the Local Obligations Indentures for the acceleration of the Reassessments or Special 66 DOCSOC/IIOI647v7/22245-0158 3-115 Taxes in the event of a payment default by an owner of a parcel within the Districts or otherwise, or upon any adverse change in the tax status of interest on the Bonds. Limitations on Remedies Remedies available to the Owners may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest and premium, ifany, on the Bonds or to preserve the tax- exempt status of interest on the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds, the Indenture and the Local Obligations Indentures to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or others similar laws affecting generally the enforcement of creditor's rigbts, by equitable principles and by the exercise of judicial discretion. Additionally, the Bonds are not subject to acceleration in the event of the breach of any covenant or duty under the Indenture. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay in the exercise of, or limitations on or modifications to, the rights of the Owners. Enforceability of the rigbts and remedies of the owners of the Bonds, and the obligations incurred by the City, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor's rigbts generally, now or hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its goverrunental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against goverrunental entities in the State. See "SPECIAL RISK FACTORS-Bankruptcy and Foreclosure Delays," and "-FDIC/Federal Goverrunent Interests in Properties." CONCLUDING INFORMA nON Underwriting The Bonds are being purchased by Stone & Youngberg LLC (the "Underwriter"). The Underwriter has agreed to purchase the Bonds at a price of $ (being $ aggregate principal amount thereof, less an original issue discount of $ and less Underwriter's discount of $ ). The purchase agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the offering price stated on the cover page hereof. The offering price may be changed from time to time by the Underwriter. Financial Advisor Fieldman, Rolapp & Associates, Irvine, California, served as financial advisor to the City and the Authority with respect to the sale of the Bonds. Fieldman, Rolapp & Associates will receive compensation contingent upon the sale and delivery of the Bonds. 67 DOCSOCllI01647v7/22245-0158 3-116 Legal Opinion; Legal Matters The legality of the Bonds and certain other legal matters are subject to the approval of Best Best & Krieger LLP, Bond Counsel. Bond Counsel will render an opinion with respect to the validity and enforceability of the Bonds and the Indenture, and a copy of the opinion will accompany each Bond. Such opinion will be subject to the various assumptions, exceptions and limitations stated therein. Bond Counsel also will render an opinion with respect to the validity and enforceability of the Local Obligations. See APPENDIX C-"FORM OF BOND COUNSEL OPINIONS." Certain legal matters will be passed upon for the Authority and the City by the office of County Counsel, and for the Underwriter by Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California. Payment of the fees and expenses of Bond Counsel, Underwriter's Counsel and the Trustee is contingent upon the sale and delivery of the Bonds. From time to time, Underwriter's Counsel represents the City on matters unrelated to the Bonds. Tax Matters In the opinion of Best Best & Krieger LLP ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, althougb Bond Counsel observes that such interest is included in adjusted current earnings when calculating federal corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX hereto. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The District has covenanted to comply with certain restrictions designed to insure that interest on the Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Bonds being included in federal gross income, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation or amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the Bonds. Prospective Bondholders are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate, and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than Best, Best & Krieger LLP. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a Bondholder's federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder's other items of income or deduction, and Bond Counsel expresses no opinion regarding any such other tax consequences. 68 DOCSOC/l101647v7122245-0158 3-117 No Litigation There is no action, suit, or proceeding pending or, to the best knowledge of the City and the Authority, threatened at the present time restraining or enjoining the delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any proceedings of the City or the Authority taken with respect to the execution or delivery thereof. A no litigation opinion rendered by the City Counsel will be required to be delivered to the Underwriter simultaneously with the delivery of the Bonds. Verification of Mathematical Computations Grant Thornton, Minneapolis, Minnesota, an independent firm of certified public accountants, will deliver to the City its reports indicating that it has examined, in accordance with standards established by the American Institute of Certified Public Accountants, the information and assertions provided by the City and its representatives. Included in the scope of its examination will be a verification of the mathematical accuracy of the mathematical computations of the adequacy of the cash and the maturing principal amounts and the interest on the direct noncallable obligations of the United States of America deposited with the Escrow Agent to pay the interest, principal and redemption price coming due on the Prior Bonds on and prior to their redemption date as described in "THE FINANCING PLAN." Ratings of Bonds Moody's Investors Service ("Moody's") and Standard & Poor's Credit Markets Services ("S&P"), a division of the McGraw-Hill Companies, Inc. have assigned ratings of "Aaa" and "AAA," respectively, to the Bonds, with the understanding that, upon delivery of the Bonds, the Bond Insurance Policy will be issued by . In addition, the City has received an underlying rating of "_" from S&P and and underlying rating of "_" from Moody's. Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same at the following addresses: Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007 and Standard & Poor's Credit Markets Services, 55 Water Street, New York, New York 10041. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. Continuing Disclosure The Authority has determined that no fmancial or operating data concerning the Authority (other than the balance in certain funds and accounts established under the Indenture) is material to any decision to purchase, hold or sell the Bonds, and the Authority will not provide any such information. The City has undertaken all responsibilities for any continuing disclosure to Bond Owners as described below, and the Authority shall have no liability to the Owners of the Bonds or any other person with respect to such disclosure. The City has covenanted for the benefit of holders and beneficial owners of the Bonds (I) to provide certain financial information and operating data (the "Annual Report") relating to the City and the property in the Reassessment District not later than January 31 after the end of the City's Fiscal Year, commencing with the report for the 2004-2005 Fiscal Year, and (2) to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by MuniFinancial, as dissemination agent, on behalf of the City, with each Nationally Recognized Municipal Securities Information Repository and with each State Repository, if any. The notices of material events will be filed by MuniFinancial, as dissemination agent, on behalf of the City with the Municipal Securities Rulemaking Board and with each State Repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events is 69 DOCSOC/llOl647v7/22245-0158 3-118 set forth in the Continuing Disclosure Agreement. See APPENDIX G-"Form of Continuing Disclosure Agreement." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-I2(b)(5) (the "Rule"). It should be noted that the City is required to file certain financial statements with the Annual Report. This requirement has been included in the Continuing Disclosure Agreement solely to satisfy the provisions of the Rule. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the Authority or the City other than as described hereinabove. See "SPECIAL RISK FACTORS- The Bonds are Limited Obligations of the Authority" and "-The Local Obligations are Limited Obligations of the City." The City has never failed to comply in all material respects with any previous undertakings with regard to Rule l5c2-l2 to provide annual reports or notices of material events. The full text of the Continuing Disclosure Agreement is set forth in APPENDIX D. 70 DOCSOC/1101647v7/22245-0158 3-119 Miscellaneous All of the preceding summaries of the Indenture, the Local Obligations Indentures, applicable legislation, agreements and other documents are made subject to the provisions of such documents and legislation and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. This Official Statement does not constitute a contract with the purchasers of the Bonds. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement have been authorized by the members of the Board of Directors of the Authority and by the members of the City Council. CHULA VISTA PUBLIC FINANCING AUTHORITY By: Treasurer CITY OF CHULA VISTA By: Deputy City Manager 71 DOCSOC/I101647v7/22245"()158 3-120 APPENDIX A INFORMATION REGARDING THE CITY OF CHULA VISTA GENERAL INFORMATION This appendix sets forth general information about the City ofChula Vista ("Chula Vista") including information with respect to its finances. Thefollowing information concerning Chula Vista, the County of San Diego (the "County 'j and the State of California (the "State 'j is included only for general background purposes. General Description Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in the area generally known as "South Bay." Chula Vista's city limits cover approximately 50 square miles. Chula Vista was incorporated March 17, I91l and became a chartered city in 1949. Chula Vista operates under a Council-Manager form of goverrunent and provides the following services: public safety, community services, engineering services, plarming services, public works, general administrative services and capital improvements. With a January 2005 estimated population of 217,543, Chula Vista is the second largest city in the County. Population The historic population ofChula Vista, the County and the State is shown below. City of Chula Vista, County of San Diego and State of California Population Estimates Year City of Chula Vista County of San Diego State of California 2001 181,453 2,863,657 34,441,56 I 2002 191,033 2,920,OIO 35,088,671 2003 200,378 2,971,805 35,691,442 2004 208,5 IO 3,013,014 36,271,091 2005 217,543 3,051,280 36,810,358 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State, 2001-2005, with 2000 DRU Benchmark, Sacramento, California, May 2005. A-I DOcSOclll 0 !647v7 /22245-0158 3-121 Building Activity tables. Residential building activity for the past five calendar years for Chula Vista is shown in the following City of Ch ula Vista New Housing Units Building Permits Single Family Units Multifamily Units Total Units 2000 1,776 864 2,640 2001 2,184 1,341 3,525 2002 1,749 501 2,250 2003 2,137 1,006 3,143 2004 2,021 1,325 3,346 Source: Construction Industry Research Board. City of Chula Vista Building Permit Valuations 2000 2001 2002 2003 2004 Residential New Single Family $ 319,085,986 $ 433,850,821 $ 413,647,842 $ 498,045,931 $ 464,795,796 New Multifamily 74,634,324 107,731,702 47,388,930 118,687,194 169,795,649 Res. All. & Adds 4 862.879 7.987049 10301301 13 277 257 16795727 Total Residential 398,583,189 549,569,572 471,338,073 630,010,382 651,387,172 Nonresidential New Commercial 17,916,085 22,139,245 20,926,638 54,744,910 42,176,589 New Industrial 17,418,207 2,139,313 737,651 7,071,470 4,751,089 New Other(1) 17,890,100 11,112,335 22,761,223 28,063,492 27,637,831 Alters. & Adds. 10.527193 13 091.600 19.367.574 16 290,492 19616463 Total Non-Residential 63,751,585 48,482,493 63,793,086 106,170,157 94,181,972 Total All Building $ 462,334,774 $ 598,052,065 $ 535,131,159 $ 736,180,539 $ 745,569,144 (1) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and no-residential alterations and additions. Note: "Total All Building" is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sums because of independent rounding. Source: Construction Industry Research Board. A-2 DOcSOc/l101647v7/22245-0158 3-122 Employment The following table summarizes the labor force, employment and unemployment figures over the period 2000 through 2004 for Chula Vista, the County, the State and the United States. Chu1a Vista, San Diego County, State of California and United States Labor Force, Employment and Unemployment Yearly Average Civilian Civilian Civilian Civilian Year and Area Labor Force EmploymentI) Unemployment2) Unemployment Ratl') 2000 Chula Vista 79,400 76,000 3,400 4.2% San Diego County 1,378,700 1,324,700 54,000 3.9% California 16,869,700 16,034,100 835,600 5.0% United States(') 142,583,000 136,891,000 5,692,000 4.0% 2001 Chula Vista 81,200 77,500 3,700 4.5% San Diego County 1,410,700 1,351,800 58,900 4.2% California 17,150,100 16,217,500 932,600 5.4% United States 143,734,000 136,933,000 6,801,000 4.7% 2002 Chula Vista 83,500 78,900 4,600 5.5% San Diego County 1,449,800 1,375,400 74,400 5.1% California 17,326,900 16,165,100 1,161,800 6.7% United States 144,863,000 136,485,000 8,378,000 5.8% 2003 Chula Vista 84,600 79,900 4,700 5.6% San Diego County 1,469,800 1,393,500 76,300 5.2% California 17,414,000 16,223,500 1,190,500 6.8% United States(') 146,510,000 137,736,000 8,774,000 6.0% 2004 Chula Vista 86,000 81,600 4,400 5.1% San Diego County 1,493,200 1,422,500 70,700 4.7% California 17,552,300 16,459,900 1,092,400 6.2% United States(') 147,401,000 139,252,000 137,020,000 5.5% (1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. (') Not strictly comparable with data for prior years Source: California Employment Development Department, based on March 2004 benchmark, and U.S. Department of Labor, Bureau of Labor Statistics. A-3 DOcSOc/lIOI647v7/22245-0158 3-123 San Diego-Carlsbad-San Marcos MSA Metropolitan Statistical Area ("MSA"), which includes Chula Vista, civilian labor force and wage and salary employment figures for calendar years 2000 througb 2004 are shown in the following table. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in Chula Vista. San Diego-Carlsbad-San Marcos MSAMSA Civilian Labor Force, Employment and Unemployment Annual Averages, March 2004 Benchmark 2000 2001 2002 2003 2004 Civilian Labor Force 1,378,700 1,410,700 1,449,800 1,469,800 1,493,200 Civilian Employment 1,324,700 1,351,800 1,375,400 1,393,500 1,422,500 Civilian Unemployment 54,000 58,900 74,400 76,300 70,700 Civilian Unemployment Rate 3.9% 4.2% 5.1% 5.2% 4.7% Total Farm 11,400 11,400 11,000 11,200 11,100 Total Nonfarm 1,193,800 1,218,400 1,230,700 1,240,100 1,258,600 Total Private 987,200 1,004,700 1,011,000 1,022,900 1,043,900 Goods Producing 192,600 194,400 189,000 185,800 192,000 Natural Resources and Mining 300 300 300 300 400 Construction 69,700 75,100 76,400 80,200 87,400 Manufacturing 122,600 119,000 112,300 105,300 104,200 Durable Goods 92,200 89,300 84,700 78,800 77,900 Nondurable Goods 30,400 29,800 27,700 26,500 26,300 Service Providing 1,001,200 1,024,000 1,041,700 1,054,300 1,066,600 Private Service Producing 794,600 810,200 822,000 837,000 851,900 Trade, Transportation and Utilities 202,600 209,000 208,600 209,700 214,500 Wholesale Trade 39,100 41,500 41,300 41,600 41,900 Retail Trade 133,800 135,600 138,000 140,800 144,300 TransportatioI4 Warehousing and Utilities 29,800 32,000 29,300 27,300 28,400 Information 39,200 38,800 37,700 36,900 36,400 Financial Activities 71,200 72,000 75,000 79,900 81,600 Professional and Business Services 195,200 198,200 201,700 201,200 205,100 Educational and Health Services 115,300 116,000 119,700 121,800 121,300 Leisure and Hospitality 129,000 131,400 133,800 140,700 145,300 Other Services 42,200 44,900 45,600 46,800 47,700 Government 206,600 213,800 219,700 217,300 214,700 Total, All Industries 1,205,200 1,229,800 1,241,700 1,251,300 1,269,700 Note: The "Total, All Industries" data is not directly comparable to the employment data found herein. Source: State of California, Employment Development Department, Labor Market Information Division, San Diego-Carlsbad- San Marcos MSA Annual Average Labor Force and Industry Employment, March 2004 Benchmark. A-4 DOcSOcIlI01647v7/22245-0158 3-124 The following listings set forth Chula Vista's principal employers for fiscal year ending June 30, 2004: Chula Vista's PriucipaI Employers Business Industrial/Office Name B.F. Goodrich Aerospace Sharp Chula V ista Medical Center Scripps Memorial Hospital United Parcel Service Sears Roebuck & Co. ATe Vancom of California L P Costco Wholesale Corp# 405 Costco Wholesale Corp# 460 Wal-Mart Store #3516 Home Depot#658 Bayview Behavioral Health Campus Target #203 Federated Western Prop Raytheon Systems Company Target #1815 Target #204 Hitachi Home Electronics Inc. Knotts Soak City USA Fredericka Manor Type of Business Aerospace Manufacturing Hospital Hospital Parcel Delivery Service General Merchandise Transit Company General Merchandise General Merchandise General Merchandise Building SupplieslHardware Hospital General Merchandise Department Store Conununications Geueral Merchandise General Merchandise Home Electronics Entertainment - Theme Park Retirement Community No. of Employees 1,922 1,221 865 649 340 284 281 275 250 245 236 230 229 200 194 180 163 160 160 Source: City of Chula Vista Finance Department. Effective Buying Income "Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other than labor-related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax payments, fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. goverrunent definitions, the resultant figure is commonly known as "disposable personal income." A-5 DOCSOC/I IOI647v7/22245-0158 3-125 The following table summarizes the total effective buying income, the per capita effective buying income, the median household effective buying income and percent of households over $50,000 for Chula Vista, the County and the State between 1999 and 2003. Chula Vista, San Diego County and California Effective Buying Income(!) Median Household Percent of Effective Buying Per Capita Effective Effective Buying Households Income'2) Buying Income Income over $50,000 1999 Chula Vista $ 2,629,899 $15,776 $37,725 35.4% San Diego County 49,907,828 17,270 39,213 37.4 California 590,376,663 17,245 39,492 38.3 2000 Chula Vista $ 2,959,674 $17,268 $42,550 41.6% San Diego County 54,337,662 19,150 44,292 43.7 California 652,190,282 19,081 44,464 44.3 2001 Chula Vista $ 2,917,494 $16,128 $42,229 39.1% San Diego County 55,210,119 19,092 44,146 42.0 California 650,521,407 18,652 43,532 41.9 2002 Chula Vista $ 2,864,900 $15,231 $40,578 37.0% San Diego County 54,831,958 18,524 42,315 39.7 California 647,879,427 17,737 42,484 40.5 2003 Chula Vista $ 3,420,253 $16,225 $42,389 39.9% San Diego County 57,680,880 19,407 43,346 41.4 California 674,721,020 18,821 42,924 41.2 (I) Not comparable with prior years. Effective Buying Income is now based on money income (which does not take into account sale of property, taxes and social security paid, receipt of food stamps, etc.) versus personal income. (2) Dollars in thousands. Source: "Survey of Buying Power," Sales & Marketing Management Magazine, dated 2000,2001,2002,2003 and 2004. Sales Taxes The following table shows taxable transactions in Chula Vista by type of business during calendar years 1999 through 2003. As indicated below, total retail sales for Chula Vista in 2000 increased by approximately 10.44% over the 1999 level, in 2001 increased approximately 4.98% over the 2000 level, in 2002 increased approximately 2.42% over the 200 I level, and in 2003 increased approximately 7.4 I % over the 2002 level. A-6 DOCSOC/1101647v7/22245-0158 3-126 A summary of historic taxable transactions for Chula Vista is shown in the following table. Apparel Stores Group General Merchandise Stores Food Stores Group Eating and Drinking Group Household Group/Home Fum. Appli. Building Material Group Automotive Group Service Stations Other Retail Stores Retail Stores Total All Other Outlets Total All Outlets City of Chula Vista Taxable Transactions (Dollars in thousands) 1999 2000 2001 2002 2003 $ 61,758 $ 66,598 $ 61,937 $ 67,035 $ 67,114 439,731 495,679 524,942 525,423 553,979 85,662 90,487 92,224 99,897 103,155 142,329 155,583 164,417 169,892 188,675 61,923 66,365 67,827 74,255 78,561 87,902 102,370 97,827 91,235 100,504 126,304 145,923 151,812 156,872 178,733 95,546 121,244 119,050 123,636 148,318 139.837 157.152 183.303 205.564 223.850 $ 1,240,992 $ 1,401,401 $1,463,409 $ 1,513,809 $1,642,889 215.396 206.889 225 .256 215.349 214.344 $ I 456388 $ 1 608 290 $1 688665 $1729158 $1 857233 Note: Drugs stores are grouped with the General Merchandise Stores and package liquor stores are grouped with the Eating and Drinking Group. Source: State Board of Equalization. Education Public educational instruction from kindergarten througb high school is provided by the Chula Vista Elementary School District and Sweetwater Union Higb School District. These districts administer twenty-six elementary schools, nine junior higb schools and eigbt senior high schools. Southwestern College, a two year Community College, has an enrollment of more than 15,000. There are also four adult education schools and twelve private schools. There are seven universities or colleges within 30 minutes commuting distance from Chula Vista in the San Diego Metropolitan Area. Chula Vista has proposed a University of California campus in Chula Vista, to be located on a 400 acre site adjoining the Olympic Training Center. Community Facilities There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doctors and allied professionals in Chula Vista. There are two daily, one weekly and one semi-weekly newspapers published and circulated in Chula Vista Chula Vista has one main public library and two branch libraries. Recreational facilities within or near Chula Vista include twenty-four parks, four community centers, six "tot lots," two ball fields, twenty-eigbt tennis courts, three golf courses, four municipal swimming pools, two gymnasiums and boat launching facilities. Chula Vista's bayfront area contains a marina which houses 552 boats and miles of public beaches. Chula Vista also provides many trails for bicycling, hiking and jogging. Chula Vista is also the home of the United States Olympic Training Center. This is the third such training center in the nation and the only year round training facility. The center is located on a l50-acre site donated by EastLake Development Company adjacent to the Otay Lake reservoir. ChuIa Vista has more than sixty churches and nearly 100 service, fraternal and civic organizations. DOCSOC/1101647v7/22245-0158 A-7 3-127 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 boarder. Commuter rail service is provided by the San Diego Trolley, a ligbt rail system started in 1981 and eleven bus routes serve Chula Vista. Daily bus connections serve Chula Vista, and Southern Pacific Railway and San Diego's Lindbergb International Airport are fifteen minutes to the north of Chula Vista. Utilities Electric power and natural gas are provided by San Diego Gas and Electric. Pacific Bell provides telephone service to the area. Otay Water District and Sweetwater Water District provide water service and Chula Vista provides sewer service. A-8 DOCSOC/1101647v7/22245-0158 3-128 APPENDIX B SUMMARY OF BOND DOCUMENTS The following is a summary of selected provisions of the Indenture [and the Local Obligations Indentures] not otherwise described elsewhere in the Official Statement. This summary does not purport to be complete or defmitive and is qualified in its entirety by reference to the full terms thereof. Purchasers of the Bonds are referred to the complete text of each respective document, copies of which are available. upon written request from the Trustee. [TO COME] B-1 DOCSOCIlI01647v7/22245-0158 3-129 DOCSOC/l101647v7/22245-0158 APPENDIX C FORM OF BOND COUNSEL OPINIONS [TO COME] C-I 3-130 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT DOCSOC/l101647v7/22245-0158 C-l 3-131 APPENDIX E MUNICIPAL BOND INSURANCE POLICY SPECIMEN DOCSOC/11 01647v7/22245-0 158 D-I 3-132 APPENDIX F INFORMATION CONCERNING DTC The iriformation concerning DTC set forth herein has been supplied by The Depository Trust Company (HDTC"), and the Authority assumes no responsibility for the accuracy thereof DTC and Book-Entry System The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Bonds, payment of principal of and interest on the Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Bonds, and other Bonds-related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the Authority and the City each believes to be reliable, but the Authority and the City take no responsibility for the completeness or accuracy thereof. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC 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 securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities througb electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of Bonds under the DTC system must be made by or througb Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant througb 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 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 Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as 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 changes 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 E-I DOCSOC/lI01647v7/22245-0158 3-133 whose accounts such Bonds are credited, which mayor may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the bond documents. Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notice to Beneficial Owners, or in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 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 Trustee or the Authority, 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 (nor its nominee), the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee or the Authority, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to Beneficial Owners is the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Trustee or the Authority. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry transfers througb DTC (or a successor securities depository). In that event, Bonds will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Authority or the City believe to be reliable, but the Authority or the City take no responsibility for the accuracy thereof. None of the Authority, the City or the Trustee will have any responsibility or obligation to DTC Participants, Indirect Participants or Beneficial Owners with respect to the payments or the providing of notice to DTC Participants, Indirect Participants or Beneficial Owners or the selection of Bonds for redemption. DTC (or a successor securities depository) may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Authority. The Authority, F-2 DOCSOC/IIOI647v7/22245-0158 3-134 in its sole discretion and without the consent of any other person, may terminate the services of DTC (or a successor securities depository) with respect to the Bonds. The Authority and the City undertake no obligation to investigate matters that would enable the Authority and the City to make such a determination. In the event that the book-entry system is discontinued as described above, the requirements of the Indenture will apply. The Authority, the City and the Underwriter cannot and do not give any assurances that DTC, the Participants or others will distribute payments of principal, interest or premium, if any, with respect to the Bonds paid to DTC or its nominee as the registered Owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. The Authority, the City and the Underwriter are not responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to a Beneficial Owner with respect to the Bonds or an error or delay relating thereto. F-3 DOCSOC/1101647v7/22245-0158 3-135 APPENDIX G RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS E-I DOCSOC/11 01647v7/22245-0 158 3-136