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Agenda Packet 2001/10/02
CITY COUNCIL AGENDA October 2, 2001 4:00 p.m. Council Chambers Public Services Building 276 Fourth Avenue, Chula Vista CI'IY OF CHULA VISI'A City Council City Manager Patty Davis David D. Rowlands, Jr. Stephen C. Padilla City Attorney Jerry R. Rindone John M. Kaheny Mary Salas City Clerk Shirley A. Horton, Mayor Susan Bigelow The City Council meets regularly on the first calendar Tuesday at 4:00 p.m. and on the second, third and fourth calendar Tuesdays at 6:00 p.m. Regular meetings may be viewed at 7:00 p.m. on Wednesdays on Cox Cable Channel 17 or Chula Vista Cable Channel 47 AGENDA October 2, 2001 4:00 P.M. CALL TO ORDER ROLL CALL: Councilmembers Davis, Padilla, Rindone, Salas, and Mayor Horton. PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY · INTRODUCTION BY DIRECTOR OF PLANNING AND BUILDING, BOB LEITER OF THE EMPLOYEE OF THE MONTH - KAREN SEITER, SENIOR SECRETARY · pRESENTATION BY POLICE CHIEF EMERSON OF A PROCLAMATION TO LEN MOORE, JACK MITCHELL, AND THE CHULA VISTA CHAMBER OF COMMERCE FOR THE DEVELOPMENT OF THE CHULA VISTA POLICE DEPARTMENT SENIOR VOLUNTEER PATROL · pRESENTATION BY DAN WILLIAMS (HUMPHREY MORTUARY) AND DR. EMERALD RANDOLPH, CAST DIRECTOR, OF TWIN TOWERS MEMORIAL QUILTS CONSENT CALENDAR (hems 1 through 8.1) The Council will enact the staff recommendations regarding the following items listed under the Consent Calendar by one motion, without discussion, unless a Councilmember, a member of the public, or City staff requests that an item be removed for discussion. If you wish to speak on one of these items, please fill out a Request to Speak fo (available in the lobby) and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Action Items. Items pulled by the public will be the first i'tems of business. 1. APPROVAL OF MINUTES of August 21 and August 28, 2001. Staff recommendation: Council approve the minutes. 2. WRITTEN COMMUNICATIONS A. Letter from Zig Kanstul, Chula Vista High School Band Director, requesting contribution of police services, including security, traffic and crowd control, along the route of their annual Band Review on November 10, 2001. Staff recommendation: The letter be referred to staff with the direction to return to Council with a report. B. Letter of resignation from Judy Schulenberg, member of the Bayfront Conservancy Trust. Staff recommendation: The resignation be accepted with regret, and the City Clerk be directed to post immediately in accordance with Maddy Act requirements. C. Letter from Mary Anne Grimes, resident of Brentwood Mobilehome Park, requesting assistance with resolving some maintenance issues in the park. Staff recommendation: The letter be referred to the Planning and Building Department with the direction to furnish a report to Council. 3 A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING FINAL MAP OF CHULA VISTA TRACT NO. 79-15, VILLA SAN MIGUEL AS A RE-SUBDIVISION OF APPROVED FINAL MAP 10173, APPROVING THE SUBDIVISION IMPROVEMENT AGREEMENT FOR THE COMPLETION OF IMPROVEMENTS REQUIRED BY SAID SUBDIVISION, AND AUTHORIZING THE MAYOR TO EXECUTE SA1D AGREEMENT B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT FOR CHULA VISTA TRACT NO. 79-15, VILLA SAN MIGUEL, AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT (CONTINUED FROM THE MEETING OF SEPTEMBER 25, 2001) On March 27, 1979, Council conditionally approved the tentative subdivision map for Chula Vista Tract No. 79-15, Villa San Miguel. On January 13, 1981, Council conditionally approved the final map for Tract No. 79-15, Villa San Miguel. However, no development occurred on Tract No. 79-15. On April 4, 2000, the engineering staff drafted a letter at the request of San Miguel Development Co., discussing revisions to the original map to be made in order for a re-subdivision to occur. Adoption of the resolutions will approve the final map, subdivision improvement agreement, and supplemental subdivision improvement agreement for Villa San Miguel, which will include 19 single-family residences. (Director of Public Works) Staff recommendation: Council adopt the resolutions. 4. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE EASTLAKE III DETENTION BASINS, FILTRATION POND, DESILTATION, AND NPDES COMPLIANCE AGREEMENT BETWEEN THE CITY AND EASTLAKE DEVELOPMENT COMPANY, LLC, AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT On August 14, 2001, Council approved Tentative Map No. 01-09 for Eastlake III Woods and Vistas. The tentative map conditions require the developer to enter into an agreement to provide for the construction, maintenance, and siltation removal of certain existing and proposed drainage improvements in Salt Creek prior to issuance of the first grading permit. The developer is also required to enter into an agreement to ensure compliance with the new NPDES permit recently adopted by the Regional Water Quality Control Board. (Director of Public Works) Staff recommendation: Council adopt the resolution. Page 2 - Council Agenda 10/02/01 5. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING AND APPROPRIATING $6,775 FROM UNANTICIPATED DONATIONS COLLECTED BY THE CHULA VISTA CHAMBER OF COMMERCE FOR SUPPORT OF THE SENIOR VOLUNTEER PATROL PROGRAM (4/5THS VOTE REQUIRED) The Chula Vista Senior Volunteer Patrol Program (SVPP) was founded with the support and guidance of the Chamber of Commerce and former Councilmember, Len Moore in 1994. While the SVPP program is a recognized volunteer branch of the Police Department, the Chamber of Commerce has served as the program's organizational host. Since the program's inception, the Chamber of Commerce has managed the donations for the SVPP, as well as financially supported the program. (Chief of Police) Staff recommendation: Council adopt the resolution. 6. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA WAIVING THE FORMAL BIDDING PROCESS AS IMPRACTICAL, APPROVING A CONTRACT WITH CROSS CURRENT CORPORATION FOR THE DESIGN AND DEVELOPMENT OF AN AUTOMATED INTERFACE BETWEEN THE COMPUTER AIDED DISPATCH SYSTEM (CAD) AND THE GEOGRAPHIC INFORMATION SYSTEM (GIS), AMENDING FISCAL YEAR 2002 BUDGET BY APPROPRIATING $116,937 FROM THE UNAPPROPRIATED FUND BALANCE OF THE GENERAL FUND, AND AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT (4/5THS VOTE REQUIRED) In August 1998, City staff converted the Police and Fire dispatch system to a new CAD system in order to facilitate dispatching emergency personnel and equipment to proper locations. The CAD system relies upon street information located within the CAD system to determine necessary information concerning the location where assistance is needed. During the past three years this information was updated manually each time new streets were added. This is a time-consuming and cumbersome process, which causes delays and inconsistencies within the current system, sometimes causing delays in dispatching emergency vehicles. Since the City's GIS system is updated in a more efficient manner, interfacing the GIS system would improve the accuracy of the street information in CAD, thereby eliminating delays caused by inconsistent street data. (Director of Management and Information Services) Staff recommendation: Council adopt the resolution. 7. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING PHASE II OF THE CLASSIFICATION AND COMPENSATION SCHEDULE Adoption of the resolution will approve several classification and compensation adjustments for positions in the support category, resulting from a formal classification study. (Director of Human Resources) Staff recommendation: Council adopt the resolution. 10/02/01 Page 3 - Council Agenda 8. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROViNG A PURCHASE AGREEMENT WITH CAMEO JANITORIAL PAPER AND SUPPLY TO PROVIDE JANITORIAL SUPPLIES ON AN "AS-NEEDED" BASIS THROUGH AUGUST 31, 2002, AND AUTHORIZING THE PURCHASiNG AGENT TO RENEW THE AGREEMENT FOR FIVE ADDITIONAL, ONE-YEAR OPTION PERIODS Chula Vista acted as the lead agency for this multi-govemmental janitorial supplies bid. The Cities of National City and Santee also participated and provided their own respective specifications. The intent of the bid process was to standardize janitorial supply requirements, take advantage of volume purchase discounts, and commit to a qualified supplier over an extended period of time for favorable terms and pricing. (Assistant City Manager Powell) Staff recommendation: Council adopt the resolution. 8.1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA EXTENDiNG THE AGREEMENT WITH AMERICAN MEDICAL RESPONSE FOR BASIC AND ADVANCED LIFE SUPPORT AMBULANCE SERVICE FOR 60 DAYS WITH THE OPTION TO EXTEND THE AGREEMENT LIP TO 180 DAYS The City entered into an agreement with American Medical Response for Basic and Advanced Life Support Ambulance Service. This agreement commenced on November 1, 1998 and expires on October 31, 2001. Staff recommends exercising the first of three possible 60-day extensions of the agreement while they explore the possibility of exercising the option to renew the agreement for three years. (Acting Fire Chief) Staff recommendation: Council adopt the resolution. ORAL COMMUNICATIONS Persons speaking during Oral Communications may address the Council on any subject matter within the Council's jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Council from taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff Comments are limited to three minutes. ACTION ITEMS The items listed in this section of the agenda are expected to elicit substantial discussion and deliberation by the Council, staff, or members of the public. The items will be considered individually by the Council, and staff recommendations may, in certain cases, be presented in the alternative. If you wish to speak on any item, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. Page 4 - Council Agenda 10/02/01 9. CONSIDERATION OF ADOPTION OF RESOLUTIONS AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF A SECOND SERIES OF SPECIAL TAX BONDS FOR COMMUNITY FACILITIES DISTRICT 99-1 (CFD 99-1), AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS, AND APPROVING THE FORM OF THE SECOND AMENDMENT TO THE ACQUISITION/FINANCING AGREEMENT FOR CFD 99-1 Adoption of the resolutions will authorize the issuance of a second series of special tax bonds for the district, estimated not to exceed $19 million, approve the related legal documents, authorize staff to take necessary actions to complete the bond issuance transaction, and approve the second amendment to the acquisition/finance agreement with Otay Project, L.P. The amendment will establish the procedure for acquiring certain improvements, modify language to include the interim transportation facilities as a potential priority within the agreement, and allow the developer to request the incremental acquisition of complete discreet components of the project, rather than requiring the project be fully completed and accepted by the City prior to acquisition. (Assistant City Manager Powell/Director of Public Works) Staffrecommendation: Council adopt the following resolutions: A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE- PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST); AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF A SECOND SERIES OF SPECIAL TAX BONDS OF THE DISTRICT; APPROVING THE FORM OF THE FIRST SUPPLEMENTAL RESTATED BOND INDENTURE, BOND PURCHASE AGREEMENT, pRELIMINARY OFFICIAL STATEMENT; CONTINUING DISCLOSURE AGREEMENT AND OTHER DOCUMENTS, AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FORM OF THE SECOND AMENDMENT TO THE ACQUISITION/FINANCING AGREEMENT FOR COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) 10. CONSIDERATION OF APPROVAL OF AN AGREEMENT WITH TIMOTHY STANTON FOR WATER-RELATED SERVICES In December 1995, the City entered into an agreement with Otay Water District for the provision of water service to a portion of Chula Vista. The agreement was the result of a study the City conducted to determine if it would be feasible for Chula Vista to provide water to the new Otay Ranch. There were many provisions in the agreement that Otay was to follow; however, since January 2001, the Board of Directors is new, and many high-level staffmembers have left the district. Chula Vista wants to be assured that Otay is following all the provisions of the agreement. (Director of Public Works) Staff recommendation: Council adopt the following resolution: 10/02/01 Page 5 - Council Agenda RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA WAIV1NG THE CONSULTANT SELECTION POLICY AND APPROVING AN AGREEMENT WITH TIMOTHY STANTON FOR WATER-RELATED SERVICES AND APPROPRIATING $50,000 FROM THE AVAILABLE FUND BALANCE OF THE GENERAL FUND (4/5THS VOTE REQUIRED) ITEMS PULLED FROM TItE CONSENT CALENDAR OTHER BUSINESS 11. CITY MANAGER'S REPORTS A. Scheduling of meetings. 12. MAYOR'S REPORTS 13. COUNCIL COMMENTS CLOSED SESSION 14. CONFERENCE WITH LEGAL COUNSEL REGARDING INITIATION OF LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(C) · One Case 15. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION pURSUANT TO GOVERNMENT CODE SECTION 54956.9(A) · Tuchscher Development Enterprises, Inc. v. City of Chula Vista (case no. GIC 758620) · Itam Plastering, Inc. v. City of Chula Vista (case no. IS 5571) ADJOURNMENT to a Regular Meeting of October 9, 200l, at 6:00 p.m. in the Council Chambers. 10/02/01 Page 6 - Council Agenda O £HtlLA VISTA SCHOOl.. FOR THE O CREATIVE AND PERFORMING ARTS RON HOliES o FACILITATOR OFFICE: (619) 691-5775 820 FOURTH AVENUE FAX: (619) 427-5824 E-mail: rbolles@sdcoe.k12.ca.us CHULA VISTA, CA. 9191 1 September 18, 2001 The Honorable Mayor Shirley Horton and the Chula Vista City Council 276 4~" Avenue Chula Vista, CA 91910 Dear Mayor Horton and City Council Members, What's more American than a parade down the city's main street? Near Veteran's day, on November 10, 2001, the City's namesake school, Chula Vista High School, is planning to once again sponsor it's annual Band Review. We are hoping that this may again take place on Broadway. This highly successful "All American" event has attracted up to 30 bands and their families from all over California as well as from throughout San Diego County. The Chula Vista High School Band has been rated one of the best bands in the state and acts as city ambassadors wherever they go to perform. They carry the City's banner proudly. This Band Review has also helped to show Chula Vista as one of the centers of the musical arts in Southern California! Last year, we considered ourselves exti'e~nely fortunate in having the Chula Vista Police Department support the review by providing security, traffic and crowd control free of charge along the route of our musical contribution to the city. We are writing to request the generous donation of their help once again with this year's Review. The Review is funded solely by the host school band, and our funds are seriously limited. The presence of the police department has greatly enhanced the smooth running of the event and we realize that their participation is required for it to even take place. Your consideration in the contribution of the police department's services would be greatly appreciated. As the new Band Director here, I am eager to have the opportunity to meet with you personally at your convenience and continue this working relationship between the city and our school. If you need any further inibrmation or have any additional questions, please do not hesitate to call me, Mr. Zig Kanstul, Chula Vista High School Band Director (427-7860). I am generally available to meet daily from 9:30 to 10:00 AM. I will contact you regarding a possible meeting date in the near future. Chula Vista High School Band Director e~e~ o~ ¢ot~ D C00NCiLOFF,C[S CHULA VISTA, CA A NATIONAL GRAMMY SIGNATURE SCHOOL 2000, 2001 A._~ ~ A CAL,FO..,A STAT~ GOLOE. ~EL~ AWARO FINALIST J .J A SA. O,~GO CO~.T~ "~ST ..AC..O~S" AWA.~ .~C,.,E.~ Sept, 1, 2001 RECEIVED To the Mayor and City Council of Chula Vista California: 1)1 Theh structurel that you have chosen to be your abode, the land where youri~cl~i~Jtl.ch~' sou d be safe and protected, ffyou own your own home, wether it is buil~bt~fdt~[8 wood or it is a "manufactured" home you have rules and regulations as to its upkeep. In a home built of brick and wood, you are expected to keep this home in a safe manner. Your property and grounds need to be clean and landscaped. If you live in a manufactured home you pay rent for a "space" on which to place your home. By paying rent you expect to receive certain services. You pay the park owner/manager for electricity, gas, sewer and water. These services are necessary to living. You also pay for the use of the land on which your home rests. I think that you are in agreement so far. Did you know that there is a mobile park in your city that does not meet these requirements for living? Yet we residents pay monies every month and don't get the services that we are paying for each month. In August of 2000 we united and sued to owner/manager and won for"failure to maintain". To this date no improvements have taken place. It is my understanding that the City monitors mobile home parks for safety. Our question to you is "what happened to Brentwood and why was the park owner allowed to commit so many violations without redress? Most homes do not have adquate electric voltage, ffyou have your toaster and the microwave on at the same time you lose power. The palm trees are a safety hazard and well as a health hazard. The trees have not been maintained with trimming for many years. The dead fronds are falling on people's homes causing damage. "Tough" says management. It must also be noted that rodents and pigeons are nesting in the trees. Both are health hazards. Pigeon feces carry histoplasmosis which is a deadly lung disease. "Tough-they are your responsibility". If you would trim or cut the trees down without maoagem~nts permission they can evict you for violat,.'ng t~e rules. W~at eau you say about poor sewage drainage. It is odiferous and a health hazard. I ask all of you "Do you like feces in your bathtub when you flush the toilet?" I think not! The residents of Brentwood are begging the Mayor and City Council to help us keep our park safe and habitai. Come visit, talk to the residents and see for yourselves how we are living. If you want more proof-call our lawyers. Mr. Jim Allen of the firm Endeman, Lincoln, Turek and Heater whose phone number is (619) 544-0123. You are probably saying "why don't you move?". In order for us to move we must first sell our homes and people come, look at the park and leave. Move it to another park-who has the money to accomplish such a task. Most of us are locked in and have no other alternative for living. Some of the residents have been here over 10 years. It was a nice retirement park once, but now it is a "family park" and that is OK but just maintain it and keep it safe for the residents. The children have no place to play except in the streets. Will it take a fatality, or a severe injury to a child to make changes? I hope not for children are 25% of the population now but 100% of our tomorrow. They need a safe place to play and live. Thank you for taking the time to read this long epistle but we need help and soon and don't know where else to turn. We tried the court system and no results as yet. We are very discouraged to say the least. Sincerely, //~ /~ ~, A resident l~fBrentwood Mobile Park Spaceg ~0 ~ CC:Shirley Hot, on-Mayor Patty Davis-member Stephen C. Padilla-member Jerry R. Rindone-member Mary Salas-member David D. Rowlands, Jr. City Manager John M. Kaheny-City Attorney Susan Bigelow-CIty Clerk I declare unci... penalty 01 perjury that' am employad by the City 01 ChuIa Vlata In the Office 01 the City CI8rIc and that , poal8d thI8 document on the bulletin ÞoIrd ICCOI'CIIng to NOTICE OF SPECIAL ME~Act raqulramanll. Dalad lOl, /01 slgnecl2h.o/1ßj'j.?mu¿ ADDENDUM TO THE AGENDA OF THE CHULA VISTA CITY COUNCIL NOTICE IS HEREBY GIVEN that the following item has been added to the agenda ofthe Regular Meeting of the City Council of the City ofChula Vista to be held Tuesday, October 2,2001, at 4:00 p.m. in the Council Chambers located in the Public Services Building, 276 Fourth Avenue: SPECIAL ORDERS OF THE DAY PRESENTATION BY DAN WILLIAMS (HUMPHREY MORTUARY) AND DR. EMERALD RANDOLPH, CAST DIRECTOR, OF TWIN TOWERS MEMORIAL QUILTS Dated and posted: October 1,2001 dnu<l- , ){~ Donna Norris, Assistant City Clerk COUNCIL AGENDA STATEMENT Item ~ Meeting Date 10/2/01 ITEM TITLE: A) Resolution Approving Final Map of Chula Vista Tract No. 79-15, Villa San Miguel as a resubdivision of approved final map 10173, approving the Subdivision Improvement Agreement for the completion of improvements required by said subdivision and authorizing the Mayor to execute said agreement. B) Resolution Approving Supplemental Subdivision Improvement Agreement for Chula Vista Tract No. 79-15, Villa San Miguei and authorizing the Mayor to execute said agreement. SUBMITTED BY: Director of Public Works~/ REVIEWED BY: City Manager, S~ (4/5ths Vote: Yes No X ) On March 27, 1979 by Resolution No. 9540, Council conditionally approved the Tentative Subdivision Map for Chula Vista Tract No. 79-15, Villa San Miguel. On January 13, 1981 by Resolution No. 10374, the Final Map (see Exhibit "A") for Tract No. 79-15 Villa San Miguel, was conditionally approved by Council. However, no development occurred on Tract No. 79-15. On April 4, 2000, the City of Chula Vista engineering staff drafted a letter (see Exhibit "B") at the request of San Miguel Development Co. discussing revisions to the original map to be made in order for a resubdivision to occur. The Final Map, Subdivision Improvement Agreement and Supplemental Subdivision Improvement Agreement for Villa San Miguel (totaling 19 single family residences) are now before Council for consideration and approval. RECOMMENDATION: That Council adopts the resolutions: (A) approving the Final Map, and Subdivision Improvement Agreement; and (B) approving the Supplemental Subdivision Improvement Agreement for Villa San Miguel. BOARD/COMMISSIONS RECOMMENDATIONS: Not Applicable DISCUSSION: The project site is located off of Hilltop Drive between G Street and F Street, and is accessed from Hilltop Drive via Lion Circle. Rectangular in shape, the subdivision consists of 19 single- family private residential lots and one private park site on 10.9 acres, as follows: Page 2, Item ~ Meeting Date 10/02/01 Park lot, HOA Total Number of Lots Residential Lots maintained Open Space, and Street Total Acreage (acres) 20 lots 19 lots - 7.3 ac. 3.6 10.9 All easements within the subdivision, as approved January 13, 1981 on the Final Map for Villa San Miguel, have been abandoned with the right of ingress and egress for the construction and maintenance of sewer and drainage facilities and for general utilities and access per map 10173 granted to the City of Chula Vista, a municipal corporation, pursuant to section 66499.20½ of the Subdivision Map Act. Said easements are no longer required as all utilities within the subdivision have since been proposed to be private. A new general utilities and access easement with the revised alignment is being granted and accepted on this final map. Although the sewer system for Villa San Miguel is to be a private system, any sewer system upstream from the site will be allowed to connect under provisions contained within the CC&Rs. These provisions allow for the connections to be made at the expense and responsibility of the connecting party. The final map has been reviewed by the Department of Planning and Building and found to be in substantial conformance with the approved Tentative Map. There is no increase in the number of lots however pad sizes have increased due to some grading modifications and lot line reconfigurations (see exhibit "A" for the original layout of the project and Exhibit "C" for the new configuration). A public forum was held on June 25 1998 due to the final map being approved in 1981 without subsequent development and to provide the public with an opportunity to comment on the new configuration. An informational letter was sent on January 1 I, 2001 to those residents who were interested in the project. The developer has worked with the neighborhood to satisfy their concerns and answer their questions. Satisfied Conditions and Agreements The Developer has satisfied the resubdivision conditions of approval described in the April 4, 2000 letter through the design, grading and improvement plans, the bonding of work, the payment of all applicable fees, granting of easemems, and by entering into the proposed Supplemental Subdivision Improvement Agreement (SSIA) and Subdivision Improvement Agreement (SIA). The Developer has executed the SSIA in order to satisfy the outstanding Tentative Map Conditions. The Developer has also executed a Subdivision Improvement Agreement (SIA) and has provided bonds to guarantee the installation of surveying monuments & the construction of the on site Page 3, Item __ Meeting Date 10/02/01 improvements. The Engineering Division, at the request of the developer, has previously issued a construction permit for all the onsite facilities (i.e. grading, street, sewer, drainage, etc) serving the proposed subdivision. FISCAL IMPACT: None to the General Fund. Developer deposits will cover all staff costs associated with processing subject final map and agreements. Exhibits: A) Original Final Map No. 10173 B) Letter from City of Chula Vista Engineering Staff to Nasland Engineering (SAN MIGUEL Development) dated April 4~ 2000. C) Resubdivided Final Map D) Disclosure statement .h\Engineer\LANDDEV~villa san miguel\AI 13-vs-FM2.rny.doc - CrIy Ot: CHUIA VISTA DEPARTMENT OF PUBLIC WORKS 4740 Ruffnet Strut SanDiego, CA 92111 R.e: Cit-3, o£ Chuta Vista Planni-~g and Eagm~--nng Cornmcuts £or. Vilta San MS. guel As you ~:lUCSrt~l, the City hn~ prepared this letter to compile ~11 applicable ~=a oy Nasland Eng~ 'n ~dng and me prrvmusly approved Final Map_, the City's En ' '~g aatarmmed rhathe £ollowin=; .... ~ gmeann~, and Plarming divisions have · = ~a.~ms n~-a to be adriressed: ENGLN-EERTNG'L4_WD DE'¥W~,LOP_'MEENT SECTION CO-M~{E_NU?S General 1. Based upan review and d/scusszon of the proposed revSxions to the [Final Subdivision Man 0VrLT No. I " - . 0173), sta~tms amid to process your r~um-ted amcnnm=nt for a n:vissd Final Ma~ p~r s=.~on 6649920 %-of the Subdivisiozi Mz~ Ac~ This Pr°cessy°arrequzstw~thontrm~u/rmganzwtentm~vers=~,.~__= . .allows ttm City /o ..... = =~ ausmm~i and approved by both the Planning Commission and City Coumi:bSoz anT, City's Subdi~dSion Ordinmnce r~x:~uL-~s Cirv ~' " ~vEmnmeatalre~-e~ The Final 2Visas a~c . , .. - . t~ouncli smnroval oi ~j] ~-'~ai - . approved t>y me Ciw ~-~,,,...~ .... -- ~a}s. Usually ---, ,~-~oa me _coz.~at~calender. ~ow~wm:, in this case, shaffpreference is that tbJs Pizml Map .be apPmvetl~-a- . . - ~ubl~c heanng 2_ Based ugon remew and at:rproval of the £oltoMng mem:ioned clocuraeats as well as payment o£all applicable fe~, the City may make a finding of substantial conformance with the previously .approved and recorded Fizmt ~ per section 6649920 ½ o£the State Map Act_ Submittal of an amended FfilaJ. Map_, pm'm~t to section 6649920 ½ of thc Stale -Map Act_ Map rna provide ba~_ _~m~aa_~c showiu~ the ' easement(s) orpordonth=rmf. .... n __ . ~ ab _an_oo_nment of any existin= -, '-~ ",-~ ,~ snow any public easements to Ex~trte a new Subdiv/mon Impmveanent ~ ' - - ' ~p~sted__m~r~e_fleei the ~ost of c°rrrpletmg public zmm-ovements and monnmenfing the land as required b3~ the ~.ma/ Map (Map 10173), t~e Subdivision Map Ack and the Chula V/sm MunScipai Code and Subdivision .Manual. Said Imorovcmen~ AD-camem and asso~iacd bond(~y be derived :[rom utxt~!~-] bond : plm~s, csumm~s based on th~ now imo.r0v~_ AIpL~n mbmitml' payment of all mmaui £ees, plan check d=posi~s totaling $29,0t will b~ requirmi The plm~ check dcposi~ of-~Vo,000 is - for: G-rad~g Plan revie~ _ $$,000; I ~mpmvememt .pltn rawi~sv - $12,000; F?n~! M~tp review - Z13,000. cL Easement docum~alt~ inclndin§ a~:ess ens~xnent~ for the thr~ properties at l ~ ' and 21 Crexta Way. e. Submit for rewiew and approval CC&R document, consurrent with Final Map subrrfit~ whichindnd~s discusskm ot5 1) rnxMt~nmace of private road (Lion CircI~ as.walt.as all ~ ~nrt Pn:rposedJanri~caping, both in pnvale ownership.; 2) easement restrictions, common m-eas and trod: £ Iui~ me ancl comp. i~ the pmoessm VV ' change ~es for~ite rJlre-e resSdenrs on Crew[ <- Provide exe~u~ hold hmzml~s and i~de ' - ' ' - nmmcaI~on _a.~aam~t- 3. All plans to be smbmitted -~h~iI be'co~d~i~ a ~t ~lan c~k review and ~q/~ comnl~ with'mi~i~ mtnkemems pea- the City's Subdivision'ManuaL The following Mditional information will be r~.zluired prior to approval ofbuildSag or con.va-action a A conc~mai lot toyota and sim eroding cezaik. ' .. . _ scheme, mcluomg retaining waiJ ~.I1 be pmnoed ~or City sta~re~dew and approval odor to ' ' - - ~ u arrprovemealt plans. b. Gzmiing plans drawn to gm-rem City . .a&ixessed by a C~oteak~cal Standards ~ath areas o£tmdocumenmd En~°/neer,/nclnding a new soils r~port for ~e entire a~elopmeat are~ The Soils End/near must c~ary,h~, ~1 i/l&~al _marling b:tw~ tbs old mad the new aerial pho~ogra~hs was done in accordance w/th a~c~?rable or wql be rewo~ct to the safis~on o£the City ~o~-ate ' - . -~uy prop0s~ ~m-ad/ng will requn-e ~Let~ of?erm/ssion ~o Grade".~ c. ImpmvemeaX ?lans must be updmed to cum~nt City Standards on new sheers. The exSsting 5 sheets which you des/re to rmn~in unch~ged must new sa of' .n~provement plans This requm~ ~s dne to the fact fl~xt a DXF file must be submitted to the Bob H~yp~s~ P_Y_ · ~. 2000 .~' lmnder~at:>c and ~on P~ w~ mat ~ow bo~ ~e rotation of c>ds~g mess : ~ o~~ ~ ~ ~ w~ ~ pmpos~ ~g ~d ~ga~on. Tr~ . '::-.~ ....... . ~on ~ ~ ~= p~o~ ~on Io~ ~d on · ~ -~ · ~ ~ of~= ~p~, ~ oflo~ 15, 16 ~d I7, ~ a ~p~v~ by :a:Si~ P~g D~r_ ~]a~ be ~bm{,~e ~ ~. _ . · ,- ad ~Dr0v~ - ~- _ ans zo~e O~w~. wa~d ~e ~ ~ ~o~xC~le p~ffi~.~ = ~ ~ be r~one ~ p~ of ~e new set of ~e ~;~,~ ~m P~ ~ ~- ~ ...... ~d W~ S~fio~ have re~dew~ 4. -~ a~s gain k propos~ at ~e sou~west en~ ~ ~o ~e projecL Per ~e Ciq, of Ch~ V~ S~v~ion M~ a ~o~d ~oMd ~ provid~ at ~e io~fion of 6. ~e p~s~ ~ ~ ~d sewer a~s ~ ~-~- ~e ~ be~n ~ ~ ~d 13 is proposed ~m~e r~t~ ~ ~ ~o~ ~ of~e road 7. ~e Ci~ do~ not s~ ~e n~ for Slo~alo~ 15, 16~ 17~w~esoa~ofaeprope~' Hows ~om ~=e lo~ n~ ~ be ~o~ ~ ~ flows ~e ~ve~ ~om flow~ omo ~e 9, -~ ~7t ~=_~e n~ lo be ~s~ by ~e propos~ ro~ ao~s ~ r~ve ff ...... ~ _ . no~ of Lot l~7~Pi~e ~0., ' ¢~ ~.~e ~ ro~ t~ b~ Io~ 12 ~ I3, a po~on of ~e ~on lot, or a p~ of one of~e ~o lorn? Bob Hayn~, P.E. ~ April 4, 2000 ~" I 1. Provide one disabled parking stall adja ~cem to the recreation area. : Dmim~e A Notice of Intent needs to be filed with the San Diego RegSonal Wa~ Quality Control Board. 2. Am lq'PDES General Permit for Storm Water Disc-barges Associated with Construction A~be required. 3. A Storm Water Pollution Prevention Plan (SWPPP) WJ]l be required. 4. Best ManagemanI Praczims (BM[Ps) nerd to be implemented to eliminate or reduce, tO m~i,,,mn extem practicable polluzion of storm dam~nage sysmms dm-lng and afmr ¢ cOl:k~p~ c'dom ' 5. J,, ,pacts of development on ex/sting downstream drMn~ge facilities need to be studied. 5. .Am easement n~y be reqmred rot dzmn~ge or me-soum east pb-rfion of the site. {~) 7. Limh-s of private and public damin~ge fa~l~ries need m be delnned on the map. Waslteymter 1. Verify the ex/sten~ and locations of some of the sewer lines shown on the r)Ians, there stains to be some/nconsisteacies between the lines shown and our r~..~ords (~ attached drawSng). 2. The plan should show the dkecrion of flor( (or invert elevations) and a legend. ti. FIRE DEP_,LRTMENT COMMENTS 1. The cross-section of the proposed private loop street indicates a dknension of 20 f~r in ~ A mirdmum dimmsion of 20 feeriu width for fire access Js necessary and p. arMng will nor be p=,;,,~ecl along the loop strum 2. Lot 5 and 6 may be required to have sprinklers and/or rekufurced driveway,s due to set ba~k from the street. 3. Gates may be reaui .~4 m_ have Knox lock access and strobes for entry... \~¢~:~,_~ 4. Five fire hydrants shall be located to the safisMction of the Fire Deparanent. Bob Haynes, P.E. -5- April 4, 2000 ILL PLANNING DIVISION CO/VIMENTS 1. Th.e pmk. am:~., road !~. l~osed off of FHlltop Drive called oui a~ to be 40 feet in Md~ The em_4mg mad ~ at:~prmamat~Iy 12 feet wide with *natnm_ ~ mm-~i~g as a border. Thc:re are,,,i, uerons fearers and other i ~rr?mveamm~s 0.e. da:iv~m~ay~, patios) within a few feel of the e-zi~ng mad_ The mS.vdng marl ha~ a very xural charaetm: and tmmddes access to several r~ideaees. ' - The w~denmg of the existing mad would substantialjy dlm~ni~h the rmal eharac-tm- and mmbiance of the ex/sting neighborhood, due to increased tm~=~¢ mad the removal ofvegetafionfxmpmvements. Although the prexSously approved subdivision ma~ depicts the same easement width, it does not specify that the en~, =ty of the access easemea~t would be irrrproved. We would suggest that the access mad maintain a width that would preserve existing vegetation and the rural ch,xracmm- of the ne/gbhorhood if at all possible~ 2. I=fOA msements 6n the private lot slopes and cor,,,r:on lob for acc.~s amd m~intenanc~ prrrposes need m be shown. 3. The retaining wail materials, top of fooling versus top of w~A1 derails includirtg r. he sidewalk adjacent to ~e wail needs ro be shown. 4_ Provide lot area calculahons. Bob H~ync~' Apr/l 4. 21 Additional discussion is needed Mth the Pl~-m~g Department regarding the recrearior ' ame~fifies and ~mln~ ofi~,--,;- feelfreeto contitctLombardoDeTrJnirt~t Ci..~=_~- ._ Y nave any quesUons, p,, Asr~:/at~ ?l~rm~r, at (619) 40~-58~4. S~n~rely, A. ~sta~t D/rector of?lanning Depmy Director of Public Works/City Enghae~ Beverly Blcxmmt, Senior P/ann~ John Lit~hr' Dir~ ofP~blic W~ Al~x.~l-.4jgh.. Smlior Civ~ Peggy McCarb=rg, Deputy CiB, AlXorncy Steve Power. Aam=iatc Pla~ H: ~tOME~ENG1NK~LtNDDEV~LN~ .-¢ LION 10 7 8 6 1 3~i LOT A 15 1,6 I 19 18 17 ~ LION CIRCLE LOT ,J ~ ~p ~' NAS~ND , TH~ CITY OF CHULA ~v~ISTA DISCLOSURE STATEMENT Pursuant to Council Policy 101431, prior to any action upon maners winch will require discretional- action by the Coun Planning Commission and alt other official bodies of the City, a statement of disclosure of certain Ownership or finan, interests, payments, or campaign contfibutiom for a City of Chula Vista election must be rifled. The following inforr' must be disclosed: 1. List the names of all persons having a financial interest in the property that is the subject of the application or contract, e.g., owner, applicant, contractor, subcontractor, material supplier. 2. If any person* identified pursuant to (1) above is a corporation or parmership, list the names of all individuals a $1000 invesUnent in the business (corporation/parmersinp) entity. 3. If any person* identified pursuant to (I) above is a non-profit organization or trust, list the names of any pets, serving as director of the non-profit organization or as trustee or beneficiary or trnstor of the trust. 4. Please identify every, person, including any agents, employees, consultants, or independent contractors you ha,~ assigned to represent you before the City in this matter? 5. Has any person* associated with this contract had any financial dealings with an official** of the City of Chul~ Vista as it relates to this contract within the past 12 months. Yes~ No If Yes, briefly describe the nature of the financial interest the official** may have in this COntract? 6. Have you made a contribution of more than $250 within the past twelve (12) months to a current member of the Chula Vista City Council? No/X( Yes __ If yes, which Council member? 7. Have you or any member of your governing board (i.e. Corporate Board of Directors/Executives, non-profit Boarc of Directors made contributions totaling more than $1,(X)0 over the past four (4) years to a current member of the Chula Vista City Council? Yes~ No~_ If Yes, which Council member? 8. Have you provided more than $300 (or an item of equivalent valt~e) to an official** of the City of Chula Vista in the past twelve (1'>) Yes __ No~_~ months? (This includes being a source of inCOme, money to retire a legal debt, gift, loan, etc.) If Yes. which official** and what was the nature of item provided? ,Signature ° f.~Cg-ntractor/Applicant * Person is de~ed ~: ~y ~vid~, fire, co-p~ers~p, jolt venue, ~sociafion, s~i~ club, ffatem~ org~afion, co~on, estate, mt, receiver, s~cate, ~y o~er co.w, ci~, mmcip~i~, ~s~ct, or O~er poli~c~ subdivision, -or ~y o~er group or comb~ation act~g ** O~ci~ includes, but ~ not bruited to: Mayor, Co~cil member, Pl~g Co~ssioner, Member of a bo~d, CO~ssion, or co~u~e of ~e Ci~, employee, or stuff members. II:'HOME ENGiNEER\ADMFNICONTRAC~,STL25200 23 (Boilsr Minl ~ ~ f/ ~ RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING FINAL MAP OF CR-ULA VISTA TRACT NO. 79-15, VILLA SAN MIGUEL AS A RESUBDIVISION OF APPROVED FINAL MAp 10173, APPROVING THE SUBDIVISION IMPROVEMENT AGREEMENT FOR THE COMPLETION OF IMPROVEMENTS REQUIRED BY SAID SUBDIVISION AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista hereby finds that that certain map survey entitled Chula Vista Tract No. 79-15, Villa San Miguel, and more particularly described as follows: Being a merging and resubdividing without reversion of Chula Vista Tract No. 79-15, Villa San Miguel, in the City of Chula Vista, County of San Diego, State of California, according to Map thereof No. 10173, filed A~ugust 17, 1981 in the Office of the County Recorder of San Diego County, State of California, pursuant to the provision of the ubdlvlslon Map Act Section No. 66499.20 ~ Total Number of Lots 20 (10.gac.} 19 Residential Lots (7.3ac.) 1 Open Space, and Street lot (3.6 ac.) is made in the manner and form prescribed by law and conforms to the surrounding surveys; and that said map and subdivision of land shown thereon is hereby approved and accepted upon receipt by the City of Chula Vista of all improvement securities described in the Subdivision Improvement Agreement. BE IT FURTHER RESOLVED that said C ' ouncll hereby acknowledges that the access road (Lion Circle), the sewer and storm drain within the property shall be HOA owned and maintained. BE IT FURTHER RESOLVED that said Council hereby accepts on behalf of the City of Chula Vista the General Utility and Access Easement as shown on said map within said subdivision. BE IT FURTHER RESOLVED that said Council hereby abandons all easements to the City, as shown on map 10173 within said subdivision BE IT FURTHER RESOLVED that the City Clerk of the City of Chula Vista is hereby authorized and directed to endorse upon said map the action of said Council~ that said Council has approved said subdivision map, general utility and access, as granted thereon and shown on said map within said subdivision are accepted on behalf of the City of Chula Vista as hereinbefore stated. BE IT FURTHER RESOLVED that the City Clerk is hereby directed to transmit said map to the Clerk of the Board of Supervisors of the County of San Diego only upon the acceptance by the City of Chula Vista and its City Attorney of the improvement securities described in the Subdivision Improvement Agreement. BE IT FURTHER RESOLVED that that certain Subdivision Improvement Agreement dated the day of , 2001, for the completion of improvement~ in said subdivision, a copy of which is on file in the Office of the City Clerk is hereby approved. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized and directed to execute said agreement for and on behalf of the City of Chula Vista. Presented by Approved as to form by John P. Lippitt Jo Director of Public Works City Attorney J:~attorney~Villa San Miguei SIA 3-/? Recording Requested by: CITY CLERK When Recorded, Mail to: CITY OF CHLrLA VISTA 276 Fourth Avenue Chula Vista, Ca. 91910 No transfer tax is due as this is a conveyance to a public agency of less than a fee interest for which no cash consideration has been paid or received. Declarant SUBDIVISION IMPROVEMENT AGREEMENT THIS AGREEMENT, made and entered into this ~ day of 2001, by and between THE~CITY OF CHULA VISTA, a municipal corporation, hereinafter called "City", and SAN MIGUEL DEVELOPMENT COMPANy LLC a California limited liability company, 2010 Jimmie Durante Boulevard, Del Mar, CA 92014, hereinafter called "Subdivider,, with reference to the facts set forth be]owl which Recitals constitute a part of this Agreement; - RECITALS: WHENEAS, Subdivider is about to present to the City Council ef the City of Chula Vista for approval and'recordation, a final subdivision map efa proposed resuhdivision without reversion to acreage, to be known as VILL~ SAN MIGUEL pursuant to the provisions of the Subdivision Map Act of the State of California, and in compliance with the provisions of Title 18 of the Chula Vista Municipal Code relating to the filing, approval and recordat!on of subdivision map; and WHEREAS, the Code provides that before said map is finally approved by the Council of the City of Chula Vista, Subdivider must have either installed and completed all of the public improvements and/or land development work required by the Code to be installed in subdivisions before final maps of subdivisions are approved by the Council for purpose of recording in the Office of the County Recorder of San Diego County, o~, as an alternative thereto, Subdivider shall enter into an agreement with City, secured by an approved improvemenu security to insure the performance of said work pursuant to the requirements of Title 18 of the Chula Vista Municipal Code, agreeing to install and complete, free of liens at Subdivider~s own expense, all of the public improvements and/or land development work required in said subdivision within a definite period of time prescribed by said Council; and WHEREAS, Subdivider is willing in consideration of the approval and recordation of said map by the Council, to enter into this agreement wherein it is provided that Subdivider will install and complete, at Subdivider's own expense, all the public improvement work required by City in connection with the proposed subdivision and will deliver to City improvement securities as approved by the City Attorney; and WHEREAS, a tentative map of said subdivision has heretofore been approved, subject to certain requirements and conditions, as contained in Resolution No. 9540, approved on the 27th day of March, 1979 ("Tentative Map Resolution ) , and WHEREAS, a final map of said subdivision has heretofore been approved, subject to certain requirements and conditions, as contained in Resolution No. 10374, approved on the 13th day of January, !981 ('~Final Map 9esolutlon / - and WHEREAS, complete plans and specifications for the construction, installation and completion ef said public improvement work Nave been prepared and submitted te the City Engineer, as shown on Drawing Nos. 01035-01 through 0103B-10 inclusive, en file in the office ef the City Engineer; and WHEREAS, an estimate of the cost of constructing said public improvements according to said plans and specifications has been submitted and approved by the City in the amount of FIVE HUNDRED THIRTY.EIGHT THOUSAND SIX HUNDRED TWENTY-EIGHT DOLLARS AND NO CENTS ($538,628.00) . NOW, THEREFORE, IT iS MUTUALLY UNDERSTOOD ANID AGREED AS FOLLOWS: 1. Subdivider, for itself and his successors in interest, an obligation the burden of which encun~ers and runs with the ].and, agrees he comply with all ef the terms, conditions and requirements of the T ' entatl~e Map Resolution; to de and perform or cause to be done a~d performed, at its own expense, without cost to City in a good and workmanlike manner, under the direction and to the satisfaction and approval of the City Engineer, all of the public improvement and/or land development work required to be done in and adjoining said subdivision, including the improvements described in the above Recitals ("Improvement Work"); and will furnish the necessary materials therefor, all in strict conformity and in accordance with the plans and specifications, which documents have heretofore been filed in the Office of the City Engineer and as described in the above Recitals this reference are incorporated herein and made a part hereof. 2. It is expressly understood and agreed that all monuments have been or will be installed within thirty (30) days after the completion and acceptance of the Improvement Work, and that Subdivider has installed or will~ install temporary street name signs if permanent street name signs have not been installed. 3. It is expressly understood and agreed that Subdivider will cause all necessary materials to be furnished and all Improvement Work required under the proPisions of this contract to be done on or before the second anniversary date of Council approval of the Subdivision Improvement Agreement. 4. It is understood and agreed that Subdivider will perform said Improvement Work as set forth hereinabove, or that portion of said Improvement Work serving any buildings or structures ready for occupancy in said subdivision, prior to the issuance of any certificate of clearance for utility connections for said buildings or structures in said subdivision, and such certificate shall not be issued until the City Engineer has ertl~led in writing the completion of said public improvements or the portion thereof serving said building or structures approved by the City; provided, however, that the improvement security shall not be required to cover the provisions of this paragraph. 5. It is expressly understood and agreed to by Subdivider that, in the performance of said Improvement Work, Subdivider will conform to and abide by all of the provisions of the ordinances of the City of Chula Vista, and the laws of the State of California applicable to said work. 6. Subdivider further agrees to furnish and deliver to the City of Chula Vista, simultaneously with the execution of this ag~eement~ an approved improvement security from a sufficient surety, whose sufficiency has been approved by the City Jn the sum of TWO HUNDRED NINETY-SIX THOUSAND TWO ~RED FIFTY DOL~S ' AND NO CENTS ($296,250.00) which security shall guarantee the faithful performance of this contract by Subdivider and is attached hereto, marked Exhibit "A" and made a part hereof. 7. Subdivider further agrees to furnish and deliver to the City of Chula Vista simultaneously with the execution of this agreement, an approved improvement security from a sufficient surety, whose sufficiency has been approved by the City in the sum of TWO HUNDRED NINETY-SIX THOUSANID TWO HtINDRED FIFTY DOLLARS AND NO CENTS ($296,250.00) to secure the payment of material and labor in connection with the installation of said public improvements, which security is attached hereto, marked Exhibit "B" and made a part hereof and the bond amounts as contained in Exhibit "B", and made a part hereof. 8. Subdivider further agrees to furnish and deliver to the City of Chula Vista, simultaneously with the execution of this agreement, an approved improvement security from a sufficient surety, whose sufficiency has been approved by the City in the sum of SIXTEEN THOUSAND FIVE HUNDRED .DOLLARS AND NO CENTS ($16,500.00) to secure the installation of monuments, which security is attached hereto, marked Exhibit '~C" and made a part hereof. 9. It is further agreed that if tile Improvement Work is not completed within the time agreed herein, the sums provided by said improvement securities may be used by City for the completion of the Improvement Work within said subdivision in accordance with such specifications herein contained or referred, or at the option of the City, as are approved by the City Council at the time of engaging the work to be performed. Upon certification of completion by the City Engineer and acceptance of said work by City, and after certification by the Director of Finance that all costs hereof are fully paid, the whole amounn, or any part thereof not required for payment thereof, may be ~eleased to Subdivider or its successors in interest, pursuant to the terms of the improvement security. Subdivider agrees to pay to the City any difference between the total costs incurred to perform the work, including design and administration of construction (including a reasonable allocation of overhead), and any proceeds from the improvement security. [0~ It is also expressly agreed and understood by the parties lnsre~o that i~ no case will the City ef Chula Vista, or any department, beard er officer thereof, be iiable for any portion of the costs and expenses of the work aforesaid nor shall any zflcer, his sureties or bondsmen, be liable for the pap~ent of any sum or sums for said work or any materials furnished therefor, except to the limits established by the approved improvement security in accordance with the requirements of the State Subdivision Map Act and the provisions of Title 18 of the Chula Vista Municipal Code. 11. It is further understood and agreed by Subdivider that any engineering costs (including plan checking, inspection, materials furnished and other incidental expenses) incurred by City in connection with the approval of the Improvement Work plans and ins~allatzon of Improvement Work hereinabove provided for, and the cost of street signs.and street trees as required by City and approved hy the City Engineer shall be paid by Subdivider, and that Subdivider shall deposit, prior to recordation of the Final Map, with City a sum of money sufficient to cover said cost. 12. It is understood and agreed that until such time as all Improvement Work is fully completed and accepted by City, Subdivider will be responsible for the care, maintenance of, and any damage to, the streets, alleys, easements, water and Sewer lines within the proposed subdivision. It is further understood and agreed that Subdivider shall guarantee all public improvements for a period of one year from date of final acceptance and correct any and all defects or deficiencies arising during said period as a result of the acts or omission of Subdivider, its agents or employees in the performance of this agreement, and that upon acceptance of the work by City, Subdivider shall grant to City, by appropriate conveyance, the public improvements constructed pursuant to this agreement; provided, however, that said acceptance shall not constitute a waiver of defects py City as set forth hereinabove. 13. It is understood and agreed that City, as indemnitee, or any officer or employee thereof, shall not be liable for any injury to person or property Occasioned by reason of the acts or omissions of Subdivider, its agents or employees, or indemnitee, related to this agreement. Subdivider further agrees to protect and hold the City, its officers and employees, harmless from any and all claims, demands, causes of action, liability or loss of any sort, because of or arising out of acts or omissions of Subdivider, its agents or employees, or indemnitee, related to this agreement; provided, however, that the approved improvement security shall, not be~ required to cover the provisions of this paragraph. Such indemnification and agreement to hold harmless shall extend to damages to adjacent or downstream properties or the taking of property from owners of such adjacent or downstream properties as a result of the construction of said subdivision and the public improvements as provided herein. It shall also extend to damages resulting from diversion of waters, change in the volume of flow, modification of the velocity of the water, erosion or siltation, or the modification of the point of discharge as the result of the construction and maintenance of drainage systems. The approval of plans providing for any or all of these conditions shall not constitute the assumption by City of any responsibility for such damage or taking, nor shall City, by said approval, be an insurer or surety for the construction of the subdivision pursuant to said approved improvement plans. The provisions of this paragraph shall become effective upon the execution of this agreement and shall remain in full force and effect for ten (10) years following the acceptance by the City of the improvements. 14. Subdivider agrees to defend, indemnify, and hold harmless the City or its agents, officers, and employees from any claim, action, or proceeding against the City or its agents, officers, or employees to attack, set aside, void, or annul, an approval of the City, advisory agency, appeal board, or legislative body concerning a subdivision, which action is brought within the time period provided for in Section 66499.37 of the Government Code of the State of California. 15. Assignability. Upon request of the Subdivider, any or all on site duties and obligations set forth herein may be assigned to Subdivider,s successor in interest if the City Manager in his/her sole discretion determines that such an assignment will not adversely affect the City's interest. The City Manager in his/her sole discretion may, if such assignment is requested, permit a substitution of securities by the successor in interest in place and stead of the original securities described herein so long as such substituted securities meet the criteria for security as set forth elsewhere in this Agreement. Such assignment will be in a form approved by the City Attorney. SIGNATURE PAGE SUBDIVISION IMPROVEMENT AGREEMENT FOR VILLA SAN MIGUEL IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed the day and year first hereinaboYe set forth. THE CITY OF CHULA VISTA SAN MIGUE~ DEVELOPMENT COMPANY ~BY C~q~L_~N DEVE~MENT COMPANY Mayor of the City of Chula Vista ATTEST City Clerk Approved as to form by (A~tach Notary Acknowledgment) LIST OF EXHIBITS Exhibit "A" Improvement Security - Faithful Performance Form: Bond Amount: 8296,250.00 Exhibit "B" Improvement Security - Material and Labor: Form: Bond ' Amount: $296,250.00 Exhibit "C" Improvement Security - Monuments: Form: Bond Amount: $16,500.00 Securities approved as to form and amount by Improvement Completion Date: Two (2) years from date of City Council approval of the Subdivision Improvement Agreement. g:[Attorney[SIA[Vi]]a San Miguel State of California ~AN DIEGo ~ ss. Cou~ o~ ~N~ A. WA~8 ~'-' ~ ~ , before me, ~ersonally known to me I; proved to me on the basis of satisfacto~ ~ z evidence to be the person~ whose name(N is~ subscribed to the within instrument and acknowledged to me that he/~y executed the Same in his/~ authorized capacity(~, and that by his/~ signature~on the instrument the ogrsoq(~, or the entity upon behalf of which the person(~ ~ ~~~o C~;~ .... ; acted, executed the instrument. WITNESS my ha~d and offi ' s al. ............................................ OPTIONAL ~ Though the information below/s not required by law, it may prove valuable to persons relying on the document Description of Attached Document~ ~ , . ~ Document Date: ~ ~ ~ C] ~ . * , /~ ' ~/ ~ .... ¢~ ' ~ _ Number of Pages: ~ Signer(s) Other Than Named Above: Capacity(ies) Cla~med by Signer Signer's Name: ti individual ~ f 3 Corporate Officer -Title(s): f ~ Pa~ner~l ] Limited .... -- ~ - ~ General ~ ~- I ] Attorney in Fact ~] Trustee [~ Guardian or Conse~ator ~ I Other: Signer Is Representing: I~[EClYD~ IE TRI?LICATE .............. File No.: SURVEY MONUMENT INSTALLATION BOND BondNo.: BE2625026 Premium: $297.00 LET IT BE KNOWN BY THESE PRESENTS, that SAN MIGUEL DEVELOPMENT COMI~ANY, LLC as the subdivider (hereinafter "Principal"), and GULF INSURANCE COMPANY a corporahon of the State of MISSOURI (hereinafter "Surety"), are held and firmly bound unto the City of Chula Vista, a municipal corporation (hereinafter "City"), in the County of San Diego, State of California, and to and for the benefit of any and all persons who may suffer damage by reason of the breach of the conditions hereof, in the penal sum of SIXTEEN THOUSAND FIVE HUNDRED AND NO/100THS dollars ($ 16,500.00 ~) lawful money of the United States, to be paid to City. WHEREAS, Pnncipal is presently engaged in subdividing certain lands to be known as VILLA SAN MIGUEL subdivision in the City of Chula Vista; and, WItEREAS, Priucipal and City have entered into a Subdivision Improvement Agreement approved by City Council Resolution No. (hereinafter referred to as '~Agreement') whereby' Principal agrees to install durable survey monuments for said subdivision, which said Agreement, dated ....... 20___ and identified as project VILLA SAN MIGUEL , is hereby referred to and made a pan hereof; and, WHEREAS, PrincipaI desires to not install durable survey monuments prior to the recordation of the final map of the subdivision and desires to install same at a Iater date, NOW THEREFORE, the condition of the above obligation is that if Principal shall have installed durable monuments of the survey by -__ NASLAND ENGINEERING (Name of Licensed Civil Engineer or Land Sur~,eyor) in accordance with thc final map of said subdivision, a copy of' which said map is hereby made and same is iucorporated herein as though set forth in full, and according to the ordinances of the City of Chula Vista in full force and effect at the time of the giving of this bond, on or before the expiration of thirty (30) consecutive days following completion and acceptance of public improvements within said subdivision as specified in said Ageement, then the obligation shall be void, otherwise to be and remain i2 full force and effect. As part of the obligation secured hereby and in addition to the face amount specified therefor, there shall be included costs and reasonable expenses and fees, and including reasonable attorney's , fbes, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgment rendered. IN WITNESS WHEREOF, this instrument has been duly executed by the Principal and Surety above named, on SEPTEMBER 4, ,20 - 01 By 125 BROAD STKEET, 7TH AND 8TH FLOOR Address of Surety Company BE2625026 NEW YORK, NEW YORK 10004 Bond/Policy No, City State Zip Code ABOVE-SIGNATORIES MUST BE NOTARIZED APPROVED AS TO FORM: City ~" ~ J :\EngineeiLANDDEV'\ Fomzs O fficia[Bonds\Bond Monument s.doc State of C~liforni~ Coun~ of S~ D~EGO } ss. On SEPTE~ER 4, 20~, before me. LAVETTA A. HEERINC~OTAR7 personally appeared ~GINA ~EEVES ~ personally known to me ~ proved to me on the basis of satisfacto~ evidence ~ to be th~ person(~) whose name~) is/~ subscribed to the within instrument and ~ acknowledged to me that h~she~executed the same in hm/her/~ authorized ~ capacity(~), and tha~ by ~/hed~k signature~) on the instrument the person(s), or the entity upQn behalf of which the person~) acted, executed the instrument. WIT~ES~ my hand and official~eal. OPTIONAL Though the info~ation below is not required by am it may prove valuable to pemons relying on the document Description of A~ached Document ~t[e or T~pe of Document: Document Date: Number of Pages: Signer{s) Other Than Named Above: Capaci~(ies) Cla~med by Signer Signer's Name: ~ ~ndividual ~ Corporate Officer ~ ~tle(s): op of ~humb here ~ Padner--- ~ Limited ~ General ~ AEomey in Fact D Trustee J Guardian or Conse~ator ~ Other: Signer Is Representing: ~ GULF INSURANCE COMPANY ST. LOUIS, MISSOURI POWER OF ATTORNEY Board d Direc[ors d th~ Said C~ ~:~1 ~le 1~11 ~a-~ NX~SL 1~3. ~ur~ ~mmlt~ee - ~ t,,o~ing in ~b Po~r d ~ sha~l be r. om~rue~i ~ a ~m ~ ~t~ m - PAUL J. HERING REGINA REEVF-S ROBERT C. HALLOCK of San Diego, in the State of California fheobligationofU~eCompanyshaflnotexceed F±'~'e L~i11±OQ and 00/i00 ........ -'ff$5,000,000.00~ STATE OF NEWYORK } SS Lawmuce p. Miniter COUNT~ OF KI]NGS F-xeeutive Vice President .... is the Exesu~ive Vice President of the Gulf Insurance Col STATE OF NEW YORK SS Notary Public. S~tate of New York COUNTY OF NEW YORK Na. 0ZlAdgsaaa4 Qua~li~ed in Fdngs County Signed and Sealed ac the Cl ty of New York, ~~g=~ll Da ted the .41:h day o£ SEPTEHBER State of California Coun~ of SAN DIEGO } ss. UNDA A. WA~S - / On ~~ ~before me, ~J~ personally appeared ~ e ~ "' ~ ' ' ~, lo~l'l~ ~onally known to me ~ proved to me on the basis of satisfactoW evidence to be the person(~ whose name~ is/~ subscribed to the within instrument and acknowledged to me that he/~xecuted ~ . . . z the same in his/~ authorized capacity(~), and that by his/~- ~ ~~C=~,~ signature(s)on the instrument the person~, or the entity upon behalf of which the perso~ acted, executed the instrument, OPTIONAL ~ Though the iniormation below is not required by law, it may prove valuable to persons relying on the document ~Rd could prevent fraudulent removal ~nd rea~achment oi this form to another document. Description of A~ached Document ~ _~ : ~ ) I ~ Number of Pages: ~ Signer(s) Other Than Named Above: ~~¢¢¢% Signer's Name: /¢~¢~ ~ Corporate Officer ~ ~tle(s): ._ Top of thumb here ~¢ Pa~ner ~ Limited f ~ General ~ ABorney in Fact :~ Trustee ~ Guardian or Conse~ator 3 Other: Signer Is Representing: ND FOR FAITHFUL PERFORMANCE Bond No_: BE2625019 ~ (To Be Used Prior to Approval of Subdivision4mprovement Agreement) Premium:~$10,665.00 WHEREAS, the City Council of the City of Chula Vista, County of San Diego, State of California, and SAN MIGUEL DEVELOPMENT COMPANY, LLC _ (hereinafter "Principal") desire to enter into a Subdivision Improvement Agreement (hereinafter referred to as "Agreement") whereby Principal agrees to install and complete certain designated public improvements for the project known as VILLA SAN MIGUEL DEVELOPMENT ;and VV-HEREAS, Principal desires to commence construction of said public improvements prior to approval of said Agreement by the City Council of the City of Chula Vi. sta; and, WHEREAS, the City of Chula Vista, County of San Diego, State of California, has issued to Principal Construction Permit No. 79-15/l&500tF (hereinaFter referred to as ~'Pemnit") for the public improvement work as set forth in more dettail on City of Chula Vista Drawing Nos01035-01 through 01035-t 0 , regarding construction of said public improvements, which Permit is hereby referred to and made a part hereof; and, WHEREAS, said Principal is required under the terms of said Permit to furnish a bond for faithful performance of said Permit and will be required to maintain such bond pursuant to the Agreement. NOW THEREFORE, we, the Principal and GULF INSURANCE COMPANY _, a corporation of the State of MISSOURi , (hereinafter "Surety"), are held and firmly bound unto the City of Chula Vista, a municipal corporation (hereinafter "city") in the County of San Diego, State of California, and to and for the benefit of any and all persons who may suffer damages by breach of the conditions hereof, in the penal sum of FIVE HUNDRED NINETY TWO THOUSAND_FOUR ~I[[NnRED ~i~iFTy~3N~, ^~rD NO,Llnna, uc dollars, ($ 5--92,491.00 ), lawful money of the United States, for the p~j~n{en~ 6Fv~h~ch sh~ i,)Yl~and truly to be made, we bind ourselves, our heirs, successors, executors and administrators, jointly and severally, firmly by these presents. The condition of this obligation is such that if the above-bound Principal, his or its heirs, executors, administrators, successors or assigns, shall in all things stand to and abide by, and well and truly keep and perform the terms, covenants, conditions, and provisions of said Permit and the subsequent Agreement, which is incorporated herein and any alteration thereof made as therein provided, on his or their part, to be kept and performed at the time and in the manner therein specified, as to installation and completion of said public Improvements both pr/or to and subsequent to City approval of the Agreement and in all respects according to their true intent and meaning, and shall indemnify and save harmless City, its officers, agents and employees, as therein stipulated, then this obligation shall become null and void; otherwise, it shall be and remain in full force and effect. As part of the obligation secured hereby and in addition to the face amount specified therefor, there shall be included costs and reasonable expenses and fees, including reasonable attorney's fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in anyjfidgment rendered. The Surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Permit or the Agreemegt or to the work to be performed thereunder or the specifications accompanying the same shall in anywise affect its obligations on this bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Permit or the Agreement or to the work or to the specifications. In addition to the acts bonded for pursuant to the Permit incorporated above and alt terms, condition}- ' and provisions of the Agreement, the following acts and performances are additionally subject to the terms of this bond: IN WITNESS WHEREOF, this instrument has been duly executed by the Pvlncip~l and Surety above named, on ,JULY 1i ,20 0N SAN MIGUEL DEVELOPMENT COMPANy, LLC Nan~oT/rlnEip~p~ __ G~ULF IN_SURANCE COMPANY N,ame of Surety Cg.mpany By ~5~/1 ~'~.. ~..~:r--'-- B~ By_ ~ ~,~,~f~a xt~e, vE$, ATTORNEY-IN-FACT 110 WE~$T A STREET ~'~1805 Address of Surety Company BE2625019 s~2~ DIk~o CA 92101 Bond/Policy No. City State Zip Code ABOVE-SIGNATORIES MUST BE NOTARIZED APPROVED AS TO FORM: J:\Enginecr~LANDDEV~Fomls-Officia[\Bonds\Bond Faith Perf prior to S IA.DOC State of California ~ County of SAN DIEGO ss. ~ On JULY 11, 2001 _, before me, LAVETTA A. HERRING. NOTARY PUBT,TC personally appeared _REGINA REEVES " ~ personally known to me · ~ proved to me on the basis of satisfactory ~ evidence to be tfl~ person(~) whose name¢) ~ .......~' ............. ~:~'~'1 subscribed to the within instrument and ~! F~'''~'~' ;'' ~E"el~° ackn°wledged to me that he/sheRhscc:executed :i < ~ ~,- ~ the , ~ N,,,Ory ~ u~hc C:ohfomia >z same in I~i~/her/ti~ek authorized · j :~:~ l~i~go ::aunty ~ capacity(~P~), and that by ;i '~ '~'*~'" t,~Comm, e/,~Nov IS 200~ signaturebs) on the instrument the oe"son(s), or the entity upon behalf of which tl~e person(~) ~ acted, execbted the instrument. '~/ W_ITNE4~y hand and official, seal. OPTIONAL -~ ~ Though the information below ~s not required by/aw, ~t may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document ~tle or Type of Document: ~!l Document Date: ;,~ _ Number of Pages: _ t Signer(s) Other Than Named Above: ,~ Capacity(les) Claimed by Signer ~: Signer's Name: ~ '-~ Individual ~ '~ '~ Corporate Officer -- Title(s): To~ Of thumb here -% Partner -- C_ Limited 23 General :y ~ Attorney in Fact ~ Trustee ~ Guardian or Conservator ., ~ Other: Signer Is Representing: GULF INSURANCE COMPANY ST. LOUIS, MISSOURI POWER OF ATTORNEY ~OWN ~L ~EN BY ~ESE PRESENTS: Tiaa{ th~ ~ulf I~ ~. ~ co~au~ ou~y ~.~-~n~ ~ ~ r~ a~ ~ au~i~ ~t~ him ~ ~ (be Pr~t~-~ PAUL Jo HERING REGINA REEVES ROBERT C. HALLOCK of San Diego~ in the State of California The o~li~ationofti~eCom~nysnall no[exceed Five ~ill±oD. and 00/[00 ..................... -($5,000,000.00~ GULF INSURANCE COMPANY STATE OF NEWYORK ) SS Lawrence p. Miniter COUNTY OF KINGS Exec-ative. Vice President STATE OF NEWYORK SS COUNTY OF NEW YORK No. 0ZJA4958634 Qualilled in King; County Signed and Sealed at the City of New York. ~ Dated the 1 1 TH day of JULY State of California County of ~ ' ~_ personally appeared ~:f:~ ~ fcv~:l[,~ % personally known to me ~roved to me on the basis of satisfacto~ evidence to be the person(s) whose name(s~re subscribed to the w~,i,nstrument and acknowledged to ~ ~e/they executed the same in ~er/their ~authorized c~pacity(ies), and that by ~er/their s~gnature(s) on the instrument the Farson(s), or the entity upon behalf of which the person(s) acted, exeSuted the instrument. ~ y ~an~and offid~~ OPTIONAL ~ Though the information below ts not required by law. ~t may prove valuable to persons retying on the documet~t and could prevent fraudulent femovat and rea~achment of th~s form to another document DesoriptionofAttachedDocumen, ~-- q ~'~ / "-'~:O h Title or Type of Document: ~' 1~O1¢~ .~LC'L'_ L; ex ~ ¢~,~ Document Date: ~ ......... Number of Pages: Signer(s) Other Than Named Above: Capacity{les) Claimed by Signer Signer's Name: Individual ~ Corporate Of~cer -- Title(s): op of thumb here Partner--: Limited General Attorney in Fact Trustee Guardian or Conservator Other: Signer Is Representing: _ _ ..coo File No.: ~.5oo I F- Premium: INCL~ED k. BOND FOR MATERIAL AND LABOR --~ (To Be Used Prior To ApproVal of ~-~div~sion Improvement Agreement) J- WHEREAS, the City Council of the City of Chula Vista, County of San Diego, State-of California, and SAN MIGUEL DEVELOPHENT COIq~'AN~, LLC (hereinafter "Principal") desire to enter into a Subdivision Improvement Agreement (hereinafter referred to as "Agreement") whereby Principal agrees to install and complete certain designated public improvements for the project known as VILLA SAN MIGUEL DEVELOPiVlENT ;and WHEREAS, Principal desires to commence conslruction of said public improvements prior to approval of said Agreement by the City Council of the City of Chula Vista; and, WHEREAS, the City of Chula Vista, County of San Diego, State of Califo~ Construction Permit No. 79-i5~o1~c. (hereinafter referred to as Permit ) for the pul~lic ia, has.issued to Principal Improvement work as set forth in more detail on City of Chula Vista Drawing Nos. 01035-01 through 01035-10 , regarding construction of said public improvements, which Permit is hereby referred to and made a part hereof; and, ~VHEREAS, under the terms of said Permit, Principal is required, before entering upon the performance of the work, to file a good and sufficient payment bond with the City of Chula Vista to secure the claims t. which reference is made in Title 15 (commencing with Section 3082), Part 4, Division 3, of the Civil Code oi the State of California and ~vill be required to maintain such bond pursuant to the Agreeement. NOW THEREFORE, said Principal and GULF INSURAiqCE COiq:PANY __, a corporation of the State of I~D_SSOURi _, (hereinafter "Surety"), are held and firmly bound unto the City of Chula Vista, a municipal corporation (hereinafter "City") in the County of San Diego, State of California, and all contractors, subcontractors, laborers, materialmen and other persons employed in the performance of the aforesaid Permit and referred to in the aforesaid Code of Civil Procedure in the sum of ~i~R~BLrNDI~FD, T~NIoNi~ETYAN~BOiqoT~T.~ FOUR dollars, ($~91o00 ), lawful money of the United States, for materials furnished or labor thereon of any kind, or for amounts due under the Unemployment Insurance Act with respect to such work or labor, that said Surety Mil pay the same in an amount not exceeding the amount hereinabove set forth, and also in case suit is brought upon this bond, will pay, in addition to the face amount thereof, costs and reasonable expenses and fees, including reasonable attorney's fees, incurred by City· in successfully enforcing such obligation, to be awarded and fixed by the court, and to be taxed as costs and to be included in the judgment therein rendered. It is hereby expressly stipulated and agreed that this bond shall inure to the benefit of any and all persons, companies and corporations entitled to file claims under Title 15 (commencing with Section 3082), Part 4, Division 3, of the Civil Code, so as to give a right of action to them or their assigns in any suit brought upon this bond. The condition of this obligation is such that if the above-bound Principal, his or its heirs, executors, administrators, successors or assigns, shall in all things stand to and abide by, and well and truly keep and perform the terms, covenants, conditions, and provisions of said Permit and the subsequent Agreement, which is incorporated herein and any alteration~thereof made as therein provided, on his or their part, to be kept and performed at the time and in the manner therein specified, as to installation and completion of said public Improvements both prior to and subsequent to City approval of the Agreement and in all respects according to their true intent and meaning, and shall indemnify and save harmless City, its officers, agents and employees, as therein stipulated, then this obligation shall become null and void; otherwise, it shall be and remain in full force and effect. The Surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Permit or the Agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anywise affect-its obtigations on this bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Permit or the Agreement or to the work or to the specifications. As part of the obligation secured hereby and in addition to the face amount specified ~erefor, there shall be included costs and reasonable expenses and fees, and including reasonable attorney's fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgment rendered. In addition to the acts bonded for pursuant to the Permit incorporated above and all terms, conditions and provisions of the Agreement, the following acts and performances are additionally subject to the terms of this bond: iN WITNESS WHEREOF, this instrument has been duly executed by the Principal and Surety above named, on JULY 11 20. 01 : SAN MIGUEL DEVE~LOPMZNT C~PANY, LLC GULF INSURANCE COMPANy Nahrne ~f Pri-~pa~(~ -- Naif Surety C~n~any By . . By~ --~/~ ~--'-~/~ ~'~.j,~ r,~mve.:5, ATTORNEY-iN_FACT By___ i10 WEST A STREET ~1805 Address of Surety Company BE2625019 SAN DIEGO,___ CA --9~2101 Bond/Policy No. City State Zi~Code ABOVE-SIGNATORlrES MUST BE NOTARIZED APPROVED AS TO FORM: C J:\Engineer\LANDDEV~Forms-Official\Bonds\Bond Material & Labor Prior to SIA.doc State of California County of SAN DIEGO On JULY l l, 2001 _, before me, LAVETTA A. HERRTf~G, Nf~TAR¥ P~IBTrTC personally appeared P~EGIN__A REEVES ~ personally known to me ~ proved to me on the basis of satisfactory evidence to be th'e person(~) whose name(m) subscribed to the within instrument and ~ . . z acknowledged to me that he/she/~[~executed ,~ ~ San Diego Counht f the same in hi~/her/tJ~,k authorized '~ ~ ~¢~'Comm. b~ire~No,,~.Z)04~ capacity(~-2), and that by :l~s/her/¢/~: '"-'~-~' signatu.re(m) on the instrument the person(s), or the entity upon behalf of which the person68) acted, execated the instrument. WlTr',~, my hand and officialcseaL OPTIONAL Though the information below iL~ not required by law, it may prove valuable to persons relying on the document Description of Attached Document l~tle or Type of Document: Document Date: Number of Pages: __ Signer(s) Other Than Named Above: Capacity(lee) Claimed by Signer Signer's Name: D Corporate Officer -- ~tle(s): Top ct thumb here ~,. [] Partner -- I~ Limited [] General ~ A[torney in Fact [3 Trustee [] Guardian or Conservator Signer Is Representing: GULF INSURANCE COMPANY ST. LOUIS, IVIISSOURI ?OW~R 0~' ATt'ORH~Y ~0W~ ~L MEN ~ ~ESE ~ T~ t~ Gull l~ ~ "~ PAUL ]. HERING REGINA REEVES ROBERT C. HALLOCK of San Diego, in the Slate of Ca,if°mia l'he®l~tionofmegom~a~smllnotexceed F'rve ~t~Zo~ and 00/100 ..................... ~$5,000,000.00a: GULF INSU~CE COMPANY STATE OF ~WYO~ ) SS ~w~nce R ~iter CO~ OF ~GS ~e~eVice P~id~nt On ~is ~ ~h ~ Of ~O~e~b~ , ~000 ~D., ~fore me ~me ~wrence P. STATE OF NEW YO~ SS ~ Pubhc S~te or New York COU~ OF NEW YO~ No. 02]A495~634 Q~alt~ in Kin~ County Dated the 1 1 TH day of , JULY State of California } County of ¢v f~¢ ~¢'~- _ ss. On __ ¢ , before me, ¢¢r I~ f~'~ personally appeared ~t( ~-% · 0'0 - - .= personally known to me -~proved to me on the basis of satisfactory to be the person(s) whose name( re subscribed to the wi,~ctia, instrument and acknowledged to me/tha., h(~/~he/they executed the same in (~j.SJher/their 4:3~thorzed capacity(les) and that by h~'l~er/their signature(s) on the instrumeqt the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WtTNE my/hand and offici seal¢-- OP TIONA L Description of Attached Docu ,r~nt , _ ¢ [ / -- ~ - -- --- - __ Number of Pages: Signer(s) Other Than Named Above: Capacity(les) Claimed by Signer Signer's Name: Individual ....... Corporate Officer -- Title(s): opo thumb here Padner -.- % Limited :- General Attorney in Fact Trustee Guardian or Conservator Other: Signer Is Representing RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT FOR CHULA VISTA TRACT NO. 79-15, VILL~t SAi~ MIGUEL ~ AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT WHEREAS, the developer has executed the SSIA in order to satisfy the outstanding Tentative Map Conditions. NOW, THEREFORE, BE IT FURTHER RESOLVED that the City Council of the City of Chula Vista does hereby approve the Supplemental Subdivision Improvement Agreement for Chula Vista Tract No. 79-15, Villa San Miguel, a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to ex~cute said Agreement on behalf of the city of Chula Vista Presented by Approved as to form by Director of Public Works City Attorney J~\attorney~ssia Villa San Miguel RECORDING REQUEST BY: City Clerk WHEN RECORDED MAIL TO: CITY OF CHULA VISTA 276 Fourth Avenue Chula Vista, CA 91910 No transfer tax is due as this is a ) conveyance to a public agency of less than a fee interest for which no cash consideration has been paid or received. Developer Above Space for R ' ecorder s Use SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT FOR CHULA VISTA TRACT NO. 79-15 VILLA SAN MIGUEL (Conditions of Resolution 9540 for Chula Vista Tract No. 79-15, Villa San Miguel) This Supplemental Subdivision Improvement Agreement ("Agreement") is made this __.day of ,2001, by and between THE CITY OF CHULA VISTA, California ("City" or "Grantee" for recording purposes only) and SAN MIGUEL DEVELOPMENT COMPANY, LLC ("Developer" or "Grantor"), with reference to the facts set forth below, which recitals constitute a part of this Agreement: RECITALS A. This Agreement concerns and affects certain real property located in Chula Vista, California, more particularly described on Exhibit "A" and as shown on Exhibit "A-1" attached hereto and incorporated herein ("Property"). The Property is referred to as Villa San Miguel, Chula Vista Tract No. 79-15. For purposes of this Agreement the term "Project" shall mean "Property". For the purposes of this agreement, "Villa San Mi " guel shall refer to the Tentative Map for Villa San Miguel C.V.T. 79-15, approved by City Council on March 27, 1979 by Resolution 9540. B. Developer is the owner of the Property. C. Developer has applied for and the City has approved a Tentative Subdivision Map I commonly referred to as Chula Vista Tract No. 79-15, Villa San Miguel, ("Tentative Subdivision Map") for the subdivision of the Property. D. The City has adopted Resolution 9540 ("Resolution") pursuant to which it has approved the Tentative Subdivision Map subject to certain conditions as more particularly described in the Resolution. E. City is willing, on the premises, security, terms and conditions herein contained to approve the revised final map for which Developer has applied ("Final Map") as being in substantial conformance with the Final Map and Tentative Subdivision Map described in this Agreement. Developer understands that subsequent final maps may be subject to the same conditions. F. Final Map No. 1073 was recorded as to the property on January 13,1981, pursuant to Resolution No. 10174. Developer has applied for a revised Final Map pursuant to California Government Code section 66499.20 ½. NOW, THEREFORE, in exchange for the mutual covenants, terms and conditions herein contained, the parties agree as set forth b'elow. 1. Agreement Applicable to Subsequent Owners. 1.1 Agreement Binding Upon Successors. This Agreement shall be binding upon and inure to the benefit of the successors, assigns and interests of the parties as to any or all of the Property until released by the mutual consent of the parties. 1.2 Agreement Runs with the Land. The burden of the covenants contained in this Agreement ("Burden") is for the benefit of the Property and the City, its successors and assigns and any successor in interest thereto. City is deemed the beneficiary of such covenants for and in its own right and for the purposes of protecting the interest of the community and other parties public or private, in whose favor and for whose benefit of such covenants running with the land have been provided without regard to whether City has been, remained or are owners of any particular land or interest therein. If such covenants are breached, the City shall have the right to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breach to which it or any other beneficiaries of this agreement and the covenants may be entitled. a. E)eve~oper R[e~ease on Guest Builder Assignments. If Developer assigns any portion of the Project, Developer may have the right to obtain a release of any of Developer's obligations under this Agreement, provided Developer obtains the prior written consent of the City to such release. Such assignment shall, however, be subject to this Agreement and the Burden of this Agreement shall remain a covenant running wi[h the land. The City shall not withhold its consent to any such request for a release so long as the assignee acknowledges that the Burden of the Agreement runs with the land, assumes the obligations of the Developer under this Agreement, and demonstrates, to the reasonable satisfaction of the City, its ability to perform its obligations under this Agreement as it relates to the portion of the Project which is being acquired by the Assignee. b. Partial Release of Developer's Assignees. If Developer assigns any portion of the Project subject to the Burden of this Agreement, upon request by the Developer or its assignee, the City shall release the assignee of the Burden of this Agreement as to such assigned portion if such portion has complied with the requirements of this Agreement and such partial release will not, in the opinion of the City, jeopardize the likelihood that the remainder of the Burden will not be completed. .C..Implement Mitigation Measures Developer shall diligently implement, or cause the implementation of all mitigation measures pertaining to the Project. Any measures not satisfied by a specific condition or by the project design shall be implemented to the satisfaction of the Director of Planning and Building. Modification of the sequence of mitigation shall be at the discretion of the Director of Planning and Building should changes in the circumstances warrant such revision. 2. (ADA Standards). The Developer Agrees to construct sidewalk widths and pedestrian ramps on all walkways to meet or exceed the "Americans with Disabilities ct (ADA) and C~ty Standards. (Private Storm Drain Clean Outs). The Developer agrees to designate as private and maintain by a Home Owner's Association all storm drain clean outs on site. Developer further agrees to include in the CC&R's conditions and restrictions to assure proper maintenance. 4. (Erosion). The Developer agrees to defend, indemnify, and hold harmless the City, and its agents, officers or employees, from any claim, action or proceeding against the City, or its agents, officers or employees, related to erosion, siltation or increased flow of drainage resulting from the Villa San Miguel Development. City agrees to reasonably cooperate with the Developer in the defense of any such action, claim or proceeding. (Withhold Permits). The Developer understands and agrees that the performance of Developer's obligations hereunder is required for the health and safety of the residents of its Project. Therefore Developer agrees: That the City may withhold building permits for any and all buildings within the Project if any one of the following occurs: i. Regional development threshold limits set by the East Chula Vista Transportation Phasing Plan, as amended from time to time and as applicable to the Project, have been reached or in order to have the Project comply with the Growth Management Program as may be amended from time to time. ii. Traffic volumes, levels of service, public utilities and/or services either exceed the adopted City threshold standards or fail to comply with the then effective Growth Management Ordinance and Growth Management Program and any amendments thereto. Public utilities shall include, but not be limited to, air quality, drainage, sewer and water. b. That, on the condition that City shall promptly notify the Developer of any claim, action or proceeding and on the further condition that the City fully cooperates in the defense, the Developer shall defend, indemnify, and hold harmless the City, and its agents, officers and employees, from any claim, action or proceeding against the City, or its agents, officers or employees, to attack, set aside, void or annul any approval by the City, includir, g approvals by its Planning Commission, City Council, or any approval by its agents, officers, or employees with regard to this Project. c. That the City may withhold the issuance of building permits for the Project, should the Developer be determined by the City to be in breach of any of the terms of the Tentative Map Conditions or this Agreement. The City shall provide the Developer of notice of such determination and allow the Developer reasonable time to cure said breach. (~nden~ifica~ion). The Developer agrees to defend, indemnify and hold harmless the City and its agents, officers and employees, from any claim, action or proceeding against the City, or its agents, officers, or employees, to attack, set aside, void or annul any approval by the City, including approval by its Planning Commission, City Council or any approval by its agents, officers, or employees with regard to this subdivision pursuant to Section 66499.37 of the State Map Act provided the City promptly notifies the subdivider of any claim, action Or proceeding and on the further condition that the City fully cooperates in the defense. (Cable Television), The Developer agrees to permit all cable television companies franchised by the City of Chula Vista equal opportunity to place conduit to and provide cable television service for each lot or unit within the Tentative Map area. Developer further agrees to grant, by license or easement, and for the benefit of, and to be enforceable by, the City of Chula Vista, conditional access to cable television conduit within the properties situated within the final map only to those cable television companies franchised by the City of Chula Vista the condition of such grant being that (a) such access is coordinated with Developer's construction schedule so that it does not delay or impede Developer's construction schedule and does not require the trenches to be reopened to accommodate that placement of such conduits; and (b) any such cable company is and remains in compliance with, and promises to remain in compliance with the terms and conditions of the franchise and with all other rules, regulations, ordinances and procedures regulating and affecting the operation of cable television companies as same may have been, or may from time to time be, issued by the City of Chula Vista. Developer hereby conveys to the City of Chula Vista the authority to enforce said covenant by such remedies as the City determines appropriate, including revocation of said grant upon determination by the City of Chula Vista that they have violated the conditions of grant. 8. (Landscape and Irrigation Plan). The Developer agrees to, within 30 days of City CounCil approval of this agreement, to prepare, submit and obtain approval by the Director of Planning and Building for detailed landscape and irrigation plans, including water management guidelines in accordance with the Chula Vista Landscape Manual 9. (Relocate Utilities). The Developer agrees to relocate at Devehper's own expense, the necessary above and undergrot~nd ut lities serving individual homes to accommodate the required street trees with the street tree planting easement if determined necessary by the City Engineer, 10. ("As-Built"). The Developer agrees o submit as-built ~mprovement and grading plans as required by the city Subdivision Manual and to provide the City said plans in digital D.X.F. file format. 11, {NAD 83). The Developer agrees to Tie the boundary of the subdivision to the California System -Zone VI (1983). 12, (Notice to Owners). The Developer agrees that future property owners shall be notified during escrow by a document to be initialized by the owners, and approved by the City Engineer and Director of Planning and Building of the maintenance responsibility of the HCA and their estimated annual cost. 13. (Fire Hydrants)° The Developer agrees to install and make operable the hydrants and 20-foot wide fire access roads prior to delivery of combustible building materials, 14, (Code Compliance}. The Developer agrees to comply with all applicable sections of the Chula Vista Municipal Code. Developer further agrees that preparation of the Final Map and all plans shall be in accordance with the provisions of the Subdivision Map Act and the City of Chula Vista Subdivision Ordinance and Subdivision Manual. 15. (Code Compliance). The Developer agrees to pay all applicable fees in accordance with the City Code and Council Policy, including, but not limited to, the following: 1. The Transportation and Public Facilities Development Impact Fees. 2. All applicable sewer fees, including but not limited to sewer connection fees. (Clean Water). The Developer agrees to comply with all relevant Federal, State, and Local regulations, including the Clean Water Act, and shall provide all required testing and documentation to demonstrate said .compliance as required by the City Engineer. (Urban Runoff). The Developer agrees to comply with all applicable regulations established by the United States Environmental Protection Agency (USEPA) as set forth in the National Pollutant Discharge Elimination System (N.P.D.E.S.) permit requirements for urban runoff and storm water discharge and any regulations adopted by the City of Chula Vista pursuant to the N.P.D.E.S. regulations or requirements. (HOA Easer~ents). The Developer agrees to submit proof, within 60 days of Final Map approval, of easements being granted to the HOA for Lot A, and within individual lots, including utility, slope, sewer, storm drain, and maintenance easements. The above easements shall be to the satisfaction of the City Engineer. 19. Unfu]fi]ied Conditions. Developer hereby agrees, unless otherwise conditioned, that Developer shall comply with all unfulfilled conditions of approval of'the Villa San Miguel, Chula Vista Tract No. 79,51 Tentative Map (adopted by Resolution 9540) and shall remain in compliance with and implement the terms, conditions and provisions of the Resolution. R~ecording. This Agreement, or an abstract hereof prepared by either or both parties, may be recorded by either party. 21. Assignability. Upon request of the Developer, any or all on-site duties and obligations set forth herein may be assigned to subdivider's successor in interest if the City Manager in his/her sole discretion determines that such an assignment will not adversely affect the City's interest. The City Manager in his/her sole discretion may, if such assignment is requested, permit a substitution of securities by the successor in interest in place and stead of the original securities described herein, so long as such substituted securities meet the criteda for security as set forth elsewhere in this Agreement. Such assignment will be in a form approved by the City Attorney. 22. Building Permits. Developer understands and agrees that the City may withhold the issuance of building permits for the Project, should the Developer be determined by the City to be in breach of any of the terms of this Agreement. The City shall provide the Developer of notice of such determination and allow the Developer with reasonable time to cure said breach. 23~ IVliscellaneous. a. Notices. Unless otherwise provided in this Agreement or by law, any and all notices required or permitted by this Agreement or by law to be served on or delivered to either party shall be in writing and shall be deemed duly served, delivered, and received when personally delivered to the party to whom it is directed, or in lieu thereof, when three (3) business days have elapsed following deposit in the U.S. mail, certified or registered mail, return receipt requested, first-class postage prepaid, addressed to the address indicated in this Agreement. A party may change such address for the purpose of this paragraph by giving written notice of such change to the other party. CITY OF CHULA VISTA 276 Fourth Avenue Chula Vista, CA 91910 Attn: Director of Public Works Developer: SAN MIGUEL DEVELOPMENT COMPANY LLC 2010 Jimmie Durante Boulevard Del Mar, CA 92014 Attn: Charles D. Tourtellotte ? A party may change such address for the purpose of this paragraph by giving written notice of such change to the other party in the manner provided in this paragraph. b. Captions. Captions in this Agreement are inserted for convenience of reference and do not define, describe or limit the scope or intent of this Agreement or any of its terms. c. Entire Agreement. This Agreement contains the entire agreement between the parties regarding the subject matter hereof. Any prior oral or wdtten representations, agreements, understandings, and/or statements shall be of no force and effect. This Agreement is not intended to supersede or amend any other agreement between the parties unless expressly noted. d. Preparation of Agreement. No inference, assumption or presumption shall be drawn from the fact that a party or his attorney prepared and/or drafted this Agreement. It shall be conclusively presumed that both parties participated equally in the preparation and/or drafting this Agreement. e. Recitals; Exhibits. Any recitals set forth above and exhibits referenced herein are incorporated by reference into this Agreement. f. Attorneys' Fees. If either party commences litigation for the judicial interpretation, reformation, enforcement or rescission hereof, the prevailing party will be entitled to a judgment against the other for an amount equal to reasonable a ' ttorney s fees and court costs incurred. The "prevailing party" shall be deemed to be the party who is awarded substantially the relief sought. (NEXT PAGE IS SIGNATURE PAGE) SIGNATURE PAGE TO SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT VILLA SAN MIGUEL CHULA VISTA TRACT NO. 79-15 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first hereinabove set forth. THE CITY OF CHULA VISTA S,S.~UzL~ DEVE_.~-Q~MENT ~,,~ ~! ~ .A?..Y. ~/C/AL §~JJ~)~TELOPM ENT By:_ ATTEST__ By: City Clerk Its: Approved as to form by (Attach Notary Acknowledgment) J:\ENGINEER\LANDDEV~ViLLA SAN MIGUEL\VSM_SSIAREVISION1.DOC List of Exhibits Exhibit "A" Legal Description Exhibit "A-I" Plat of Property EXHIBIT "A" LOTS 1 THROUGH 20, INCLUSIVE, OF CHULA VISTATRACT NO. 79-15, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORSING TO THE MAP THEREOF NO 10173, FILED IN THE OFFICE OF COUNTY RECORDER OF SAN DIEGO COUNTY, AUGUST 17, 1981. LOT A J LION 10 7 5 8 6 1 3 LOT A LION CIRCLE ~-0~ 0 ~N~SLAND ENGINEERIN STATE OF CALIFORNIA COUNTY OF SAN DIEGO ) On ~~/~, 2001, before me, LINDA A. WATTS, Notary Public, personally appeared CHARLES D. TOURTELLOTE, proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instr~ent and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. My co~lssion expires: 1/30/02 My co~ission #1171588 OPTIONAL Though the Lnformat:~on behow is not required by la~, it may p~ove valu~61-e ~o persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Si~ (s) O~r Than ~d ~ov~: ~ Capacity(i~s} Claimed b~ Si~ Individual ~ Pa~r ~- ~ Limited ~ ~en~ral ~ Attorney in Fact COUNCIL AGENDA STATEMENT Item Y~ Meeting Date 10/2/01 ITEM TITLE: Resolution Approving the Eastlake III Detention Basins, Filtration Pond, Desiltation, and NPDES Compliance Agreement between the City and Eastlake Development Company, LLC and authorizing the Mayor to execute said Agreement./ ^ill SUBMITTED BY: Director of Public Works~/lt~}~/ REVIEWED BY: City Manager k'~ (4/Sths Vote: Yes_No X~0 On August 14, 2001 by Resolution No. 2001-269, the City approved Tentative Map No. 01-09 for Eastlake II! Woods and Vistas (see attachment 1). The Tentative Map conditions require that prior to issuance of the first grading permit, developer shall enter into an agreement to provide for the construction, maintenance and siltation removal of certain existing and proposed drainage improvements in Salt Creek. Developer is also required to enter into an agreement to ensure compliance with the new NPDES permit recently adopted by the Regional Water Quality Control Board. RECOMMENDATION: That Council approves the agreement and authorizes the Mayor to sign said agreement. BOARDS/COMMISSIONS RECOMMENDATION: N/A. DISCUSSION: Currently Eastlake is processing separate grading plans for the Eastlake III Vistas and Woods neighborhoods. Issuance of these grading permits is anticipated shortly after approval of said grading plans, posting of grading bonds, and Council approval of the subject Eastlake III Detention Basins, Filtration Pond, Desiltation and NPDES Compliance Agreement ("Proposed Agreement"). The Proposed Agreement addresses conditions of approval # 50, 74, 75, 77 & 78 of the Tentative Map (see Attachment 2) as follows: Tentative Map Condition #50 requires the developer to construct permanent detention basins in Salt Creek to ensure that post-development peak flows do not exceed pre-development levels and to provide water quality treatment. The Proposed Agreement requires developer to construct these facilities at the earliest to occur of the following events: 1) not later than three years from approval of this agreement by Council, or 2) when determined by the City Engineer based on recommendations of hydrologic/hydraulic studies. These studies will be required for all applicable project grading and/or improvement proposals, as determined by the City Engineer. Security for the construction of the permanent basins would be posted prior to approval of any grading permit for the installation of these facilities or prior to approval of the first final map for Eastlake III, whichever occurs earlier. Page 2 Item Meeting Date 10/2/01 In compliance with Tentative Map Condition #74 the Proposed Agreement requires developer to prepare and secure the implementation of a maintenance program for the permanent detention facilities. Said program shall be in place prior to issuance ora grading and/or construction permit for the construction of the permanent basins. The Proposed Agreement also ensures compliance with Tentative Map Condition//75 by requiring developer to accomplish the following: · Provide for the removal of siltation attributable to Eastlake III from all existing and proposed improvements in Salt Creek until all upstream project grading is completed and erosion protection planting is adequately established. · Provide for the removal of any siltation attributable to Eastlake III from all proposed improvements in Salt Creek for a minimum of five years after their maintenance is assumed by a maintenance district or the City. In satisfaction of Tentative Map Condition//77 the developer agrees to the following: · Comply with the requirements of the new Municipal Storm Water Permit (Order No. 2001- 01) issued by the San Diego Regional Water Quality Control Board (RWQCB) on February 21,2001, including revision of plans as necessary. · Indemnify, and hold ham~Iess the City, its elected and appointed officers and employees, from and against all fines, costs, and expenses arising out of non-compliance with the requirements of the NPDES regulations. Said indenmification shall include any and all costs, expenses, attorney's fees and liability incurred by the City. · That the City Engineer may require incorporation of Standard Urban Water Mitigation Plan (SUSMP) requirements during the implementation period preceding the adoption of the local SUSMP by the City (anticipated for August 21, 2002) for all priority projects or phases of priority projects undergoing approval process. A model regional SUSMP is currently being developed collectively by the San Diego County, the Port of San Diego, and 18 cities within the County to address post-construction urban mn-off pollution from new development and significant redevelopment. This model regional SUSMP would be approved by the RWQCB on February 21, 2002. Following this approval, the City will have a period of six months ending on August 21, 2002 for adopting its local SUSPM. · To not protest the formation of a facilities benefit district or any other funding mechanism approved by the City to finance the operation, maintenance, inspection, and monitoring of NPDES facilities. In compliance with Tentative Map Condition #78 the developer agrees to secure and construct a permanent filtration pond and water quality treatment in OS-5 lot within the Vistas. Security for the construction of the filtration pond would be posted prior to approval of the first final map for the Vistas or issuance of the first grading permit proposing to deposit storm water into the existing drainage facilities in Olympic Parkway, whichever occurs earlier. The Proposed Agreement also requires developer to prepare and secure the implementation of a maintenance program for the filtration pond. Said program shall be in place prior to issuance of a grading and/or construction permit for the construction of the filtration pond. Page 3 Item ~ Meeting Date 10/2/01 The proposed Agreement stipulates that the City may withhold building permits if the developer is determined by the City not to be in compliance with the terms of the Agreement. The Agreement has been executed by the developer and approved as to form by the City Attorney. FISCAL IMPACT: None. All costs associated with the construction of the proposed drainage facilities in Salt Creek will be paid for by the developer. The developer will be also responsible for maintaining the proposed improvements until a maintenance district approved by the City assumes said maintenance. Attachments: Attachment 1: Location Plat Attachment 2: TM Conditions 50, 74, 75, 77 & 78 J:\engineer\aGENDA\A113 Eatlk Ill desiltation agreement.doc ATTACI~4ENT 1 LOCATION PLAT FOR EASTLAKE III WOODS & VISTAS WOODS 0 : Vl~-k!/ VISTAS SIT£ ATTACHMENT 2 CONDITIONS NO'S 50,75,& 77 OF CVT 01-09 TENTATIVE MAP APPROVAL Eastlake III Desiltation and NPDES Compliance Agreement 50. Prior to approval of grading plans, demonstrate the adequacy of existing drainage runoff detention facilities or include, in the grading plans, the construction of additional detention facilities, to ensure that the maximum allowable discharges after development do not exceed pre-development discharges, all to the satisfaction of the City Engineer. The developer shall provide for the future maintenance of the detention basin facilities through the establishment of a Master Home Owners Association, or other funding mechanism as approved by the City. 75. Prior to approval of the first final map or issuance of the first grading permit for the Project, Developer shall enter into an agreement with the City of Chula Vista, wherein Developer agrees to the following: a. Provide for the removal of siltation attributable to the Project for: 1) all proposed drainage and water quality treatment facilities in Salt Creek, including, but not limited to, the naturalized drainage channel, wetlands restoration areas as allowed by the resource agencies, detention basins, water quality treatment facilities and any future facility constructed by the Eastlake Trails project, and 2) all existing drainage and water quality treatment facilities in Salt Creek, including but not limited to the detention basin and wetland restoration area in Eastlake Trails as allowed by the resource agencies until all upstream grading of the area contained within the Project is completed and all erosion protection planting is adequately established as determined by the City Engineer, Director of Planning & Building and Director of Parks & Recreation. b. Provide for the removal of siltation for all proposed drainage and water quality treatment facilities in Salt Creek, including, but not limited to, the naturalized drainage channel, wetlands restoration areas as allowed by the resource agencies, detention basins and water quality treatment facilities, attributable to the Project, for a minimum period of 5 years after maintenance of such facility is accepted by the City or an Open Space District. Page 1 of 2 c. Developer shall provide security, satisfactory to the City Engineer, guaranteeing the performance of the aforementioned siltation removal obligations. 77. Prior to the approval of the first final map, or issuance of the first grading permit for the Project, whichever occurs earlier, enter into an agreement with the City of Chula Vista, wherein the Developer agrees to the following: a. Comply with the requirements of the new Municipal Storm Water Permit (Order No. 2001-01) issued by the San Diego Regional Water Quality Control Board, including revision of plans as necessary. b. Indemnify, and hold harmless the City, its elected and appointed officers and employees, from and against all fines, costs, and expenses arising out of non-compliance with the requirements of the NPDES regulations, in connection with the execution of any construction and/or grading work for the Project, whether the non-compliance results from any action by the Developer, any agent or employee, subcontractors, or others. The Developer's indemnification shall include any and all costs, expenses, attorney's fees and liability incurred by the City. c. That the City Engineer may require incorporation of Standard Urban Water Mitigation Plan (SUSMP} requirements during the implementation period preceding the adoption of the local SUSMP by the City for all priority projects or phases of priority projects undergoing approval process, in accordance with Order No. 2001-01, NPDES No. CAS0108758 Municipal Permit, as determined by the City Engineer. d. To not protest the formation of a facilities benefit district or any other funding mechanism approved by the City to finance the operation, maintenance, inspection, and monitoring of NPDES facilities. This agreement to not protest shall not be deemed a waiver of the right to challenge the amount of any assessment, which may be imposed due to the addition of these improvements and shall not interfere with the right of any person to vote in a secret ballot election. The above noted agreement shall run with the entire land contained within the Project. Page 2 of 2 RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE EASTLAKE III DETENTION BASINS, FILTRATION POND, DESILTATION, AND NPDES COMPLIANCE AGREEMENT BETWEEN THE CITY AND EASTLAKE DEVELOPMENT COMPANY, LLC, AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT WHEREAS, on August 14, 2001 by Resolution No. 2001-269, the City approved Tentative Map No. 01-09 for Eastlake III Woods and Vistas; and WHEREAS, the Tentative Map conditions require that prior to issuance of the first grading permit, Eastlake Development Company ("Developer") shall enter into an agreement to provide for the construction, maintenance and siltation removal of certain existing and proposed drainage improvements in Salt Creek; and WHEREAS, Developer is also required to enter into an agreement to ensure compliance with the new NPDES permit recently adopted by the Regional Water Quality Control Board NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista, does hereby approve the Eastlake III Detention Basins, Filtration Pond, Desiltation, and NPDES Compliance Agreement between the City of Chula Vista and Eastlake Development Company, LLC., a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to execute said agreement on behalf of the City. PRESENTED BY: APPROVED AS TO FORM BY: John P. Lippitt Joh~M. Kaheny O Director of Public Works City Attorney J:\atmrney\reso\EASTLAKE Ii1 DETENTION BASIN COUNCIL AGENDA STATEMENT Item No ~ Meeting Date 1012/01 ITEM TITLE: Resolution - Accepting and Appropriating $6,775 from unanticipated donations collected by the Chula Vista Chamber of Commerce for Support of the Senior Volunteer Patrol Program (SVPP). SUBMITTED BY: Chief of Polic~-~' REVIEWED BY: City Manager (4/5ths Vote: Yes XX No ) The Chula Vista Senior Volunteer Patrol Program (SVPP) was founded with the support and guidance of the Chamber of Commerce and former Councilmember Lan Moore, in 1994. While the SVPP program is a recognized volunteer branch of the Police Department, the Chamber of Commerce has served as the program's organizational host. Since the program's inception, the Chamber of Commerce has managed the donations for the SVPP as well as financially supported the program. RECOMMENDATION: Staff recommends accepting and appropriating $6,775 from an unanticipated donation from the Chula Vista Chamber of Commerce in support of the Senior Volunteer Patrol Program (SVPP). BOARDS AND COMMISSION RECOMMENDATION: N/A DISCUSSION: The SVPP is an integral part of the community and an important volunteer branch of the Police Department. As a result, the Chamber of Commerce and the Police Department jointly concluded it would be best to relocate the SVPP organizationally within the Police Department. The SVPP is currently part of the Patrol Division of the Police Department and is supervised by the Community Relations Unit Sergeant. A total of $32,234 is budgeted within the Police Department for SVPP Program activities. The Chamber is requesting transfer of the Program including donations to the Police Department. Transfer of the unanticipated donations to the Police Department will centralize SVPP's funds. Page 2, Item Meeting Date 10/2/01 During the FY 01-02 budget process, a line item budget was created for SVPP in the Police Department. The Chamber is requesting that various donations be accepted and appropriated for the SVPP Program. The Police Department recognizes the dedication of the Chamber and former Councilmember Len Moore and accepts responsibility for the program. FISCAL IMPACT: There is no net fiscal impact to the general fund for acceptance of the program and unanticipated donation. Approval of this item will authorize additional expenditures for the SVPP of $6,775. RESOLUTION NO. ACCEPTING AND APPROPRIATING $6,775 FROM UNANTICIPATED DONATIONS COLLECTED BY THE CHULA VISTA CHAMBER OF COMMERCE FOR SUPPORT OF THE SENIOR VOLUNTEER PATROL PROGRAM (SVPP) WHEREAS, the Chula Vista Senior Volunteer Program was founded with the support and guidance of the Chamber of Commerce and former Councilmember Len Moore in 1984; and, WHEREAS, the SVPP program is a recognized volunteer branch of the Chula Vista Police Department; and, WHEREAS, the Chamber of Commerce has served as the program's organizational host and managed donations for the SVPP as well as financially supported the program; and, WHEREAS, during the FY 01-02 budget process, a line item budget was created for SVPP in the Police Department; and, WHEREAS, the Chamber of Commerce and the Police Department jointly conclude that it is best to relocate the SVPP organizationally within the Police Department; and, WHEREAS, the Chamber of Commerce is requesting transferring the program including donations to the Police Department; and, WHEREAS, transfer of the unanticipated donations to the Police Department will centralize SVPP funds and result in no fiscal impact to the General Fund: NOW, THEREFORE, BE IT RESOLVED that the City Council accepts and appropriates $6,775 from unanticipated donations collected by the Chula Vista Chamber of Commerce for support of the Senior Volunteer Patrol Program (SVPP). Presented by Approved as to form by Richard P. Emerson John M. Kahe~'y' Police Chief City Attorney COUNCIL AGENDA STATEMENT Item Meeting Date 10/02/01 ITEM TITLE: Resolution Waiving the t'ormal bidding process as impractical, approving a contract with Cross Current Corporation for the design and development of an automated interface between the Computer Aided Dispatch System (CAD) and the Geographic Information System (GIS), amending the fiscal year 2002 budget by appropriating $116,937 from the unappropriated Fund Balance of the General Fund and authorizing the Mayor to execute the contract. / SUBMITTED BY: Director of Management and Information Service-s/~/ REVIEWED BY: City Manage~~') (4/5ths Vote: Yes X No ) In August 1998, City staff.convened the Police and Fire Dispatch system to a new CAD system in order to facilitate the dispatching o£emergency personnel and equipment to the proper locations. The CAD system relies upon the street information located within the CAD system to determine necessary information concerning the location where assistance is needed. During the past 3 years this information was updated manually each time new streets were added. This is a time consuming and cumbersome process, which causes delays and inconsistencies within the street file sometimes causing delays in dispatching emergency vehicles. Sincethe City's GIS system is updated in a more efficient manner, interfacing the GIS system and the CAD system would improve the accuracy o£the street information in CAD thereby eliminating the delays that are caused by inconsistent data in the street file. RECOMMENDATION: That Council adopt the resolution waiving the formal bidding process as impractical, approving a contract with Cross Current Corporation for the design and development of an automated interface between the Computer Aided Dispatch System (CAD) and the Geographic Information System (GIS), amending the fiscal year 2002 budget by appropriating $116,937 from the unappropriated Fund Balance of the General Fund and authorizing the Mayor to execute the contract. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable DISCUSSION: In August 1998, City staff.converted the Police and Fire Dispatch system to a new CAD system in order to facilitate the dispatching of emergency personnel and equipment to the proper locations. The CAD system relies on the street information located within the CAD system to determine necessary information concerning the location where assistance is needed. When the CAD system was first implemented it was thought that the procedure to update the information in the street file would be sufficient to ensure that the information would be accurate and updated in a timely manner. The process has proven to be much more time consuming and cumbersome than anticipated and has caused delays in updating the data and inconsistencies within the street file sometimes causing delays in dispatching emergency vehicles. The City maintains a Geographic Information System (GIS) to keep data concerning the City's infrastructure such as streets, parcels, sewer lines and many others. This information is updated by the GIS staff.in a timely manner and is very accurate. Much of the information is provided by the developers in automated format in the new areas of the City which makes the procedure to update the Page. 2 Item %o Meeting Date 10/02/01 system much less time consuming and more accurate. Since the City's GIS system is updated in a more efficient manner, interfacing the GIS system and the CAD system would improve the accuracy of the street information in CAD thereby eliminating the delays that are caused by inconsistent data in the street file. By implementing this change, dispatcher time will be saved because the street information will be loaded into the CAD system in a timelier manner eliminating the need to access the GIS system separately for street information. Officer time will be saved because they will be given more accurate information, and back-office staff time will be saved since the process will be much more automated. Staff has discussed the feasibility of creating this interface with our CAD vendor and staff has received a proposal from them concerning the effort it would take to accomplish the task. The full scope of work and proposal are attached and will cost $116,937. Completing this project will ensure that the street information is accurate and up-to-date in the CAD system thus facilitating the quick and efficient dispatching emergency personnel where it is needed. Since the CAD software is a proprietary product of the Cross Current Corporation, only they can legally make changes to their software. For this reason this project must be done by Cross Current and cannot be bid upon by other vendors. Fiscal Impact: Approval of staffs recommendation will appropriate $116,937 from the unappropriated balance of the General Fund. In addition, maintenance costs for the CAD system will increase by $3,000 beginning 1 year after the installation of the product. Stafftime will be saved in the dispatch center and the back-office once the procedure is automated. RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA WAIVING THE FORMAL BIDDING PROCESS AS IMPRACTICAL, APPROVING A CONTRACT WITH CROSS CURRENT CORPORATION FOR THE DESIGN AND DEVELOPMENT OF AN AUTOMATED INTERFACE BETWEEN THE COMPUTER AIDED DISPATCH SYSTEM (CAD) AND THE GEOGRAPHIC INFORMATION SYSTEM (GIS), AMENDING THE FISCAL YEAR 2002 BUDGET BY APPROPRIATING $116,937 FROM THE UNAPPROPRIATED FUND BALANCE OF THE GENERAL FUND AND AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT WHEREAS, in August 1998, City staff converted the Police and Fire Dispatch system to a new CAD system in order to facilitate the dispatching of emergency personnel and equipment to the proper locations; and WHEREAS, the CAD system relies upon the street information located within the CAD system to determine necessary information concerning the location where assistance is needed; and WHEREAS, during the past three years, this information was updated manually each time new streets were added; and WHEREAS, this is a time consuming aod cumbersome process causing delays and inconsistencies within the street files creating delays in dispatching emergency vehicles; and WHEREAS, since the City's GIS system is updated in a more efficient manner, interfacing the GIS system and the CAD system would improve the accuracy of the street information in CAD thereby eliminating the delays that are caused by inconsistent data in the street file; and WHEREAS, since the CAD software is a proprietary product of the Cross Current Corporation, only they can legally make changes to their soft~vare, and for this reason, this project must be done by Cross Current and cannot be bid upon by other vendors. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby waive the formal bidding process as impractical for the reasons set forth hereinabove. BE IT FURTHER RESOLVED that the City Council does hereby approve a contract with Cross Current Corporation for the design and development of an automated interface between the Computer Aided Dispatch System (CAD) and the Geographic Information System (GIS), a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the fiscal year 2002 budget is hereby amended by appropriating $l 16,937 from the unappropriated Fund Balance of the General Fund. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized and directed to execute the contract on behalf of the City of Chula Vista. Presented by Approved as to form by John P. Lippitt John M. Kaheny (J Director of Public Works City Attorney J:/attomey\reso\ Cross Cun'ent CA[) bid City of Chula Vista, California ccCAD -Geo Import Tool Statement of Work Prepared August 15, 200~ by Cross Current Corporation L Overview The City of Chula Vista ("Chula") has requested a modification to the existing ccCAD application. The request is for Cross Current Corporation ("CCC") to provide a tool that will import a properly formatted flat file containing GIS data (created with an export tool developed by Chula) into the ccCAD goo files. II. Solution Functional Overview CCC will develop a software tool that will take a "properly formatted flat file" containing GIS data and import it into the ccCAD Geofile data structures. Chula will create the flat file/database file, usually on a monthly basis, with a custom software tool that takes raw GIS data and converts it into Chula specific data. Chula will provide a copy of this GIS flat file/database to CCC for the purposes of developing and testing the import tool requested. A "properly formatted flat file" is required to accommodate a clean import of the goo data. In order to determine what a properly formatted flat file is, the following events should occur before the detailed design document is written: Chula will provide the flat file generated by their existing custom export tool. · CCC will review the file and collaborate with Chula on understanding the structure of the file and how it relates to the ccCAD goo files. · CCC will inform Chula whether or not the flat file contains or lacks the appropriate record structure. CCC will coordinate ~vith Chula to determine which fields in the record structure ~vill be imported into the ccCAD geo files. · If the file from Chula does not possess the correct record structure, CCC will provide an example file containing the correct record structure. Chula will be responsible for modifying their custom export tool to create a file with the correct record structure. Once the flat file from Chula possesses the correct record structure, both parties will sign off indicating the file fore, at is correct. Once the tool is designed, developed and tested, Chula is responsible to perform the following steps to utilize this tool: * Generate the GIS flat file with Chula's custom-written GiS data export tool Cross Current Corporation (o ~ ':~' Page 1 of 5 ccCAD Chula Vista Gee Impor~Tool · Execute the gee import utility from the user interface. The gee import tool will automatically perform the following tasks: o Create two copies of the gee database files. One will be the "working copy" and the other will be a "fail-back" copy. o Import gee data from the fiat file into the working copy of the gee files o Generate exception logs (contain records rejected by the tool) · Review the import exception log ,, Execute the gee file integrity report - This will check the working copy's Common Place, Alias, and Intersection integrity and generate an exception log · Review the integrity exception log Shutdown ccCAD on all workstations and manually copy the working copy to the server where the ccCAD database resides III. Scope Any activity or requirement not explicitly specified in writing in this Statement of Work is out of scope. Once software development coding has begun, any activity or requirement not explicitly specified in writing in the functional specification is out of scope. Any changes to this SOW must be submitted in writing to Cross Current to avoid potential misinterpretations of requirements. CCC and Chula will discuss ana evaluate each requested change to determine if the change is within the context of the agreed SOW. If CCC and Chuta determine that the requested change is not within the scope of the SOW, CCC and Chula will negotiate an amendment to the SOW based on the change in scope. Both parties must agree in writing to the requested change, whether or not it impacts cost or timeline, before the work can begin. Upon signoff of this SOW, a detailed design document xvill be written describing the details of how the gee import tool will work. This document will require Chula's signoff before any development begins. Although the gee import tool will be designed to handle exceptions, the successful import ofgeofile data will require clean GIS soume data and ccCAD geofile database. Any work required to repair GIS source data is the responsibility of Chula and is out of the scope of this SOW. Chula will be charged on a Time & Materials basis for repairing the ccCAD geofile database, if necessary. IV~ Quality Assurance QA test scripts will be written to validate the gee import tool's functionality. These scripts will be executed at the end of the development cycle as well as during the integrated testing phase. The import tool will be thoroughly tested prior to delivery. CCC warrants that the solution provided from this document is the property of CCC and protects and indemnifies Chula against any copyright or patent infringements. Cross Current Corporation /~ ~. ~ Page 2 of 5 ccCAD Chula Vista Geo Import Tool V. Deployment Cross Current will provide to the Chula ccCAD System Administrator all necessary software to deploy the geo import tool. CCC will provide telephone support to the Chula ccCAD administrator during the implementation of the geo import tool. Chula will be responsible for the actual deployment of the import tool. The deployment will not require any on-site assistance fi:om CCC. If CCC personnel are required to be on site by Chula, Chula will be charged for time spent in full day (eight-hour) increments at the applicable 2001 annual maintenance contract rate. In addition, all travel expenses associated with an on-site trip will be charged to Chula at actual cost. VI. Deliverables The geo import tool deliverable will meet the functional requirements specified in the detailed design document, which will be written subsequent to acceptance of this Statement of Work. Cross Current will deliver the following items: ,, Detailed Design Document - New geo import tools executable(s) Modified ccCAD executables - new versions of the existing ccCAD executable files as required for the import tool User's Manual - A document describing the set-up and usage of the new geo import tool. · Acceptance Test Plan - A document describing the step-by-step testing procedure and expected results to validate that the modification meets the functional requirements described in Section II, Functional Overview. CCC will coordinate with Chula in the development of the test plan. Both parties must agree to the Acceptance Test Plan. VII. Post Delivery Support CCC is providing Chula with a custom software tool. CCC will provide support for the CCC developed and delivered functionality for 365 days beyond delivery. Once the software is delivered, CCC will fix any bugs that are defined below: · A reproducible bug that is critical in nature, i.e., makes critical features of the system unusable. Reproducible means censistently repeatable by following the same steps each time. A reproducible bug in the software that causes the application not to function properly as described in this SOW or in an accompanying functional requirements document. Cross Current Corporation ~ ~ r7 Page 3 of 5 ccCAD Chula Vista Gee Import Tool The following are not included in post-delivery support and will be billable as additional development under either an additional Statement of Work or on a Time and Materials basis, to be determined if required: Installation of the application in Production unless specifically included in this SOW. e Production configuration issues. Functionality that was not defined in this SOW or was not an agreed upon change during the development period. It is not the responsibility of CCC to support the application after the -365-day post- delivery support period unless such support has been contracted under a separate support agreement. CCC is not providing production application support under this SOW. VIII. Maintenance Maintenance support for the gee import tool is out of scope of the current maintenance contract between Chula and Cross Current Corporation. Supplemental annual maintenance cost of $3,000 will be charged to support the gee import tool. Price and Schedule 1. Fixed Price The cost for completion of this modification as defined in this statement of work is $116,937. This price is valid for 90 days from the date of this statement of work. Normal business expenses and travel are not included in the fixed price and, if they become necessary, will be billed at cost. This estimate does not include any computer hardware or third party software. Changes in requirements are changes in scope and may affect the cost and/or delivery schedule. 2. Payment Terms Cross Current will invoice 10% upon project approval, 40% at sign-off of the Detailed Design Document 40% upon delivery of the application and documentation to Chula and the remaining 10% after the import tool has been operating in production for 30 days. When the final deliverables are submitted, payment is due. Our terms are net 30. Cross Current will charge interest at the rate of 1V2% per month for overdue invoices. At Approval $11,693 Upon Completion of Detailed Design $ 46,775 At Delivery $ 46,775 30 days after installation $11,694 3. Schedule Based upon the development and testing effort described in this SOW, it is anticipated that the project will take approximately six months to complete. The estimated calendar schedule is dependent upon timeliness of responses from Chula when required. Cross Currellt Corporation ~/~ ~ Page 4 of 5 ccCAD - Chula Vista Geo Import Tool Assumptions · Chula is responsible for the accuracy of the GIS data in the flat file · Chula will provide a properly formatted flat file containing GIS data. Approval Please sign below to indicate acceptance of this Statement of Work: Shirley Horton Date Mayor City of Chul~ Vista Sam Hirsh, Cross Current Corporation Date Vice-President Cross Current Corporation /19 - ? Page 5 of 5 COUNCIL AGENDA STATEMENT ITEM MEETING DATE 10/2/01 ITEM TITLE: Resolution Adopting Phase II Classification and Compensation Schedule. SUBMITTED BY: Candy Emerson, Director of Human Resources ~) REVIEWED BY: City Manager (~ (4/Sth Vote: Yes X No__) SUMMARY: Council is being asked to approve several classification and compensation adjustments for positions in the Support category resulting from a formal Classification study. RE. COMMENDATION: Adopt the Resolution approving the classification results of the Phase II study and the corresponding salary schedule. BOARD/COMMISSION RECOMMENDATION: N/A DISCUSSION: The City of Chula Vista contracted with the consulting firm Shannon & Associates to conduct a city- wide classification and compensation study. Represented sworn Police and Fire positions were not included. In January 2000 Council approved the initial results of the compensation portion of the study, which greatly assisted us in attracting and retaining good employees. Over the past 21 months the consultant, along with staff from the Human Resources Department, have been working on the classification of the Support Series (Phase II), and the Clerical Series (Phase I), which Council approved on 8/21/01. Phase II consisted of 55 positions or 22 classifications. As for compensation, of the 55 positions it is proposed that 16% receive an increase, 78% stay relatively at the same salary level, 6% are new positions and one classification is proposed to be Y-rated. We are also recommending changing the title of the Mid-Managemem position Organization Development and Training (ODT) Specialist to Senior ODT Specialist. This change will conform with the titling conventions in Phase I & II. This is a single incumbent classification, and there willbe no salary change at this time. City staffmet with the CVEA bargaining unit and the Confidential group to discuss impacts on their members. Decisions affecting compensation have been discussed during the "meet and confer" and ~'meet and consult" process with the appropriate groups, and finer details will continue to be worked out prior to the next COLA. FISCAL IMPACT: Unlike Phase I, which created several new classifications and required salary comparisons with the market, Phase II created almost no new classifications, therefore no market comparisons were necessary, which eliminated the Y-rating situations that were prevalent in Phase I. The ovem&e~ majority oftbe positions will remain at their currem salary. The few adjustments will cost approximately $26,000 for the remainder of FY 02 and $34,500 for FY 03. It is anticipated that impacted departments will be able to absorb this additional cost within their existing budget allocations. ATTACHMENTS: Support Series Salary Schedule effective 10/5/01. CITY OF CHULA VISTA Salary Ranges (Monthly) Phase H Effective 10/5/01 ~ew ~t~ n ~ B Accounting Assistant $2,552 $2,680 $2,814 $2,954 $3,102 Accounting Technician $3,228 $3,390 $3,55~ $3,737 $3,924 Benefits Technician $2,930 $3,077 $3,231 $3,392 $3,562 Business License Representative $2,552 $2,680 $2,814 $2,954 $3,102 Circulation Assistant $2,175 $2,285 $2,39~ $2,518 $2,644 Customer Service Represemative $2,552 $2,680 $2,814 $2,954 $3,102 Development Services Technician $2,863 $3,006 $3,156 $3,3t3 $3,479 Library Technician $2,502 $2,627i $2,759 $2,896 $3,041 ODT Specialist I $3,547 $3,724 $3,91C $4,106 $4,311 ODT Specialist II $3,901 $4,09( $4,301 $4,516 $4,742 Planning Technician $2,863 $3,00( $3,156 $3,313 $3,479 Procuremem Specialist $3,541 $3,718 $3,904 $4,099 $4,304 Records Manager $3,096 $3,251 $3,413 $3,584 $3,763, Records Technician $2,425 $2,54{ $2,673 $2,807 $2,947 Senior Accounting Assistant $2,935 $3,081 $3,236 $3,397 $3,567 Senior Business License Represemative $2,935 $3,081 $3,236 $3,397 $3,565 Senior Circulation Assistant $2,502 $2,625 $2,759 $2,896 $3,041 Senior Development Services Technician $3,292 $3,45{ $3,629 $3,810 $4,001 Senior Planning Technician $3,292 $3,45~ $3,629 $3,810 $4,001 Senior Police Data Specialist $2,535 $2,661 $2,795 $2,934 $3,081 Senior Procurement Specialist $4,072 $4,27~ $4,490 $4,714 $4,95£ RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHU-hA VISTA ADOPTING PHASE II CLASSIFICATION A_ND COMPENSATION SCHEDULE WHEREAS, the City of Chula Vista contracted with the consulting firm Shannon & Associates to conduct a city-wide classification and compensation study; and WHEREAS, in January 2000, with Council approval, the initial results of the compensation portion of the study, was implemented; and WHEREAS, over the past 21 months, the consultant, along with staff from the Human Resources Department, have worked on the classification of the Support Series (Phase II), and the Clerical Series (Phase I); and WHEREAS, Phase II consists of 55 positions or 22 classifications, all in the support series, and it is proposed that 16% receive an increase, 78% stay at the same salary level, 6% are new positions and one classification is proposed to be Y-rated; and WHEREAS, it is recommended that the title of the Mid- Management position, Organization Development and Training (ODT) Specialist, be changed to Senior ODT Specialist to conform with the titling conventions in Phase I and II; and WHEREAS, City Staff met with CVEA and the Confidential group to discuss impacts on their members; and WHEREAS, all positions recommended for an increase will receive it effective 10/5/01 and the one position that is Y-rated will NOT experience a decrease in pay, but will share up to 50% of future cost of living adjustments (COLA) until the new salary range catches up with the current salary. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby adopt the Phase II Classification and Compensation Schedule as set forth in Attachment I, attached hereto and incorporated herein by reference as if set forth in full, effective the pay period beginning 10/5/01. Presented by Approved as to form by Candy Emerson -/~h! M.~Kah~ ~r~ Director of Human Resources City Attorney Id %ATTO RN E"AR E SO/Cia $ sJ[ication Study Phase 11 (Sep[ember 26, 2001 (1:18PM}] '" ATTACH?lENT I City of Chula Vista Phase II Salary Ranges (Monthly) (Effective 10/05/01) New Cla~sffi~ati°n II A B c Accounting Assistant $2,552 $2,680 $2,814 $2,954 $3,102 Accounting Technician $3,22~ $3,390 $3,559 $3,737 $3,924 Benefits Technician $2,93( $3,077 $3,231 $3,392 $3,562 Business License Reoresentative $2,55~ $2,680 $2,814 $2,954 $3,102 Circulation Assistant $2,175 $2,285 $2,399 $2,518 $2,644 Customer Service Representative $2,552 $2,680 $2,814 $2,954 $3,102 Develot~ment Services Technician $2,863 $3,00( $3,156 $3,313 $3,479 Library Technician $2,502 $2,623 $2,759 $2,896 $3,041 ODT Snecialist 1 $3,547 $3,724 $3,910 $4,106 $4,311 ODT Snecialist II $3,901 $4,09~ $4,301 $4,516 $4,742 Plaunin~ Technician $2,863 $3,00{ $3,156 $3,312 $3,479 Procurement Soecialist $3,541 $3,718 $3,904 $4,09~c $4,304 Records Manager $3,096 $3,251 $3,413 $3,58,~ $3,763 Records Technician $2,425 $2,546 $2,673 $2,802 $2,947 Senior Accounting Assistant $2,935 $3,081 $3,236 $3,39~ $3,567 Senior Business License Representative $2,935 $3,081 $3,236 $3,397 $3,567 Senior Circulation Assistant $2,502 $2,627 $2,759 $2,896 $3,041 Senior Development Services Technician $3,292 $3,456 $3,629 $3,8113 $4,001 Senior Planning Technician $3,292 $3,456 $3,62~c $3,81~3 $4,001, Senior Police Data Snecialist $2,535 $2,661 $2,795 $2,934 $3,081 Senior Procurement Specialist $4,072 $4,276 $4,49( $4,714 $4,95( COUNCIL AGENDA STATEMENT ITEM MEETING DATE: 10/2/01 ITEM TITLE: Resolution approving a purchase agreement with Cameo Janitorial Paper and Supply to provide janitorial supplies on an "as-needed" basis through August 31,2002, and authorizing the Purchasing Agent to renew the agreement for five (5) additional, one (l) year option periods. SUBMITTED BY: Assistant City Manager Powell REVIEWED BY: City Manage~~'~ (4/5ths Vote: Yes_No X~) Chula Vista acted as the lead agency for this multi-governmental janitorial supplies bid. The cities of National City and Santee also participated and provided their own respective specifications. The intent of the bid process was to standardize janitorial supply requirements, take advantage of volume purchase discounts, and commit to a qualified supplier(s) over an extended period of time for favorable terms and pricing. RECOMMENDATION: That Council adopt a resolution approving a purchase agreement on an "as-needed" basis with Cameo Paper and Janitorial Supply, the overall low responsive and responsible bidder meeting specifications and authorizing the Purchasing Agent to renew the agreement for five (5) additional, one (1) year option periods. BOARDS/COMMISSION RECOMMENDATION: Not applicable. DISCUSSION: The City of Chula Vista developed janitorial product specifications and Council awarded multi-year contracts to several suppliers in 1996. As a result, the City was able to reduce on-hand storeroom stock and purchase janitorial supplies at favorable pricing. Ease of ordering and consistency of product has also been achieved. The janitorial supplies agreement has recently expired. In order to take advantage of volume discounts, Chula Vista took the role as the lead agency along with National City and Santee in a cooperative purchase venture. Specifications were obtained from each agency and abid package was prepared. Three sections were defined, delineating each agency's particular requirements. Bids for janitorial supplies opened on September 21, 2001. Thirteen (13) potential bidders were contacted; eight (8) bidders responded. The bid was also advertised in The Star News on September 3, 2001. No local vendors submitted a bid. Cameo Paper & Supply is the overall low bidder when factoring in terms for the Chula Vista section. Waxie, Inc. is the low, acceptable bid for National City. Unisource is recommended for award by the City of Santee. Recommendation of award to three different suppliers may be due to variations in products specified by each city, and because Chula Vista considers cash discount terms of 15 days or greater when evaluating bids. Page 2, Item Meeting Date 10/2/01 The City was able to leverage the large janitorial supply requirement of three local agencies to its advantage by securing favorable pricing, terms, and conditions. Prices for items not specifically listed in the bid are locked in at a cost not to exceed ten percent (10%) off prevailing published prices at time of order. Product cost increases for any option year renewal must be justified and may not exceed five percent (5%) over prior year prices. By committing to one supplier, quality and consistency will be achieved. Standards will be adhered to, and staff will be familiar with products obtained. Furthermore, should issues arise, a single point of contact would be responsible for resolution. A summary of all bids received is not included in this report because thirty line items were listed for the City of Chula Vista section alone. Furthermore, bidders were not required to bid on every line item. However, copies of all bids received are on file for review in the Purchasing Office. FISCAL IMPACT: There is no direct fiscal impact from approving this resolution in that funds expended will have been approved through the normal budget or appropriation process. Purchase orders will be issued as authorized departmental requests are received. The projected annual expenditure for Chula Vista is $85,000. RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A PURCHASE AGREEMENT WITH CAMEO JANITORIAL PAPER AND SUPPLY TO PROVIDE JANITORIAL SUPPLIES ON AN "AS- NEEDED'' BASIS THROUGH AUGUST 31, 2002, ~ AUTHORIZING THE PURCHASING AGENT TO RENEW THE AGREEMENT FOR FIVE (5) ADDITIONAL, ONE (1) YEAR PERIODS WHEREAS, the City of Chula Vista developed janitorial product specifications and Council awarded multi-year contracts to several suppliers in 1996; and WHEREAS, the janitorial supplies agreement has recently expired and in order to take advantage of volume discounts, Chula Vista took the role as the lead agency along with National City and Santee in a cooperative purchase venture; and WHEREAS, bids for janitorial supplies were opened on September 21, 2001 and Cameo Paper & Supply is the overall low bidder when factoring in terms for the Chula Vista section; and WHEREAS, by committing to one supplier, quality and consistency will be achieved, standards will be adhered to, and staff will be familiar with products obtained. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby approve a purchase agreement with Cameo Janitorial Paper and Supply to provide janitorial supplies on an "as-needed" basis through August 31, 2002, with an option to renew the agreement at the discretion of the Purchasing Agent, for five (5) additional, one (1) year periods. Presented by Approved as to form by Assistant City Manager t J ~ \attorney\ reDo\cameo paper COUNCIL AGENDA STATEMENT ITEM ~ MEETING DATE: 10/2/01 ITEM TITLE: Resolution approving a purchase agreement with Cameo Janitorial Paper and Supply to provide janitorial supplies on an "as-needed" basis through August 31, 2002, and authorizing the Purchasing Agent to renew the agreement for five (5) additional, one (1) year option periods. SUBMITTED BY: Assistant City Manager Powell~7 REVIEWED BY: City Manage~ (4/5ths Vote: Yes_No X~) Chula Vista acted as the lead agency for this multi-governmental janitorial supplies bid. The cities of National City and Santee also participated and provided their own respective specifications. The intent of the bid process was to standardize janitorial supply requirements, take advantage of volume purchase discounts, and commit to a qualified supplier(s) over an extended period of time for favorable terms and pricing. RECOMMENDATION: That Council adopt a resolution approving a purchase agreement on an "as-needed" basis with Cameo Paper and Janitorial Supply, the overall low responsive and responsible bidder meeting specifications and authorizing the Purchasing Agent to renew the agreement for five (5) additional, one (1) year option periods. BOARDS/COMMISSION RECOMMENDATION: Not applicable. DISCUSSION: The City of Chuta Vista developed janitorial product specifications and Council awarded multi-year contracts to several suppliers in 1996. As a result, the City was able to reduce on-hand storeroom stock and purchase janitorial supplies at favorable pricing. Ease of ordering and consistency of product has also been achieved. The janitorial supplies agreement has recently expired. In order to take advantage of volume discounts, Chula Vista took the role as the lead agency along with National City and Santee in a cooperative purchase venture. Specifications were obtained from each agency and a bid package was prepared. Three sections were defined, delineating each agency's particular requirements. Bids for janitorial supplies opened on September 21, 2001. Thirteen (13) potential bidders were contacted; eight (8) bidders responded. The bid was also advertised in The Star News on September 3, 2001. No local vendors submitted a bid. Cameo Paper & Supply is the overall low bidder when factoring in terms for the Chula Vista section. Waxie, Inc. is the low, acceptable bid for National City. Unisource is recommended for award by the City of Santee. Recommendation of award to three different suppliers may be due to variations in products specified by each city, and because Chula Vista considers cash discount terms of 15 days or greater when evaluating bids. Page 2, Item <~ Meeting Date 10/2/01 The City was able to leverage the large janitorial supply requirement of three local agencies to its advantage by securing favorable pricing, terms, and conditions. Prices for items not specifically listed in the bid are locked in at a cost not to exceed ten percent (10%) off prevailing published prices at time of order. Product cost increases for any option year renewal must be justified and may not exceed five percent (5%) over prior year prices. By committing to one supplier, quality and consistency will be achieved. Standards will be adhered to, and staff will be familiar with products obtained. Furthermore, should issues arise, a single point of contact would be responsible for resolution. ^ summary of all bids received is not included in this report because thirty line items were listed for the City of Chula Vista section alone. Furthermore, bidders were not required to bid on every line item. However, copies of all bids received are on file for review in the Purchasing Office. FISCAL IMPACT: There is no direct fiscal impact from approving this resolution in that funds expended will have been approved through the normal budget or appropriation process. Pumhase orders will be issued as authorized departmental requests are received. The projected annual expenditure for Chula Vista is $85,000. RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A PURCHASE AGREEMENT WITH CAMEO JANITORIAL PAPER AND SUPPLY TO PROVIDE JANITORIAL SUPPLIES ON AN ~AS- NEEDED" BASIS THROUGH AUGUST 31, 2002, AIqD AUTHORIZING THE PURCHASING AGENT TO RENEW THE AGREEMENT FOR FIVE (5) ADDITIONAL, ONE (1) YEAR PERIODS WHEREAS, the City of Chula Vista developed janitorial product specifications and Council awarded multi-year contracts to several suppliers in 1996; and WHEREAS, the janitorial supplies agreement has recently expired and in order to take advantage of volume discounts, Chula Vista took the role as the lead agency along with National City and Santee in a cooperative purchase venture; and WHEREAS, bids for janitorial supplies were opened on September 21, 2001 and Cameo Paper & Supply is the overall low bidder when factoring in terms for the Chula Vista section; and WHEREAS, by committing to one supplier, quality and consistency will be achieved, standards will be adhered to, and staff will be familiar with products obtained. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby approve a purchase agreement with Cameo Janitorial Paper and Supply to provide janitorial supplies on an "as-needed" basis through August 31, 2002, with an option to renew the agreement at the discretion of the Purchasing Agent, for five (5) additional, one (1) year periods. Presented by Approved as to form by Assistant City Manager t J ~ ~at torney~reso\cameo paper COUNCIL AGENDA STATEMENT Item: '8. I MeetinG Date: 1õ=2=õ1 ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA EXTENDiNG THE AGREEMENT WITH AMERICAN MEDICAL RESPONSE FOR BASiC AND ADVANCED LIFE SUPPORT AMBULANCE SERVICE FOR 60 DAYS WITH THE OPTION TO EXTEND THE AGREEMENT UP TO 180 DAYS SUBMITTED BY: Fire Chief DA,.., REVIEWED BY: City Manager (4I5ths Vote: Yes_No-!} The City entered into an agreement with American Medical Response for Basic and Advanced Ufe Support Ambulance Service. This agreement commenced on November 1, 1998 and expires on October 31, 2001. Staff recommends exercising the first of three possible 50-day extensions of the agreement while they explore the possibility of exercising the option to renew the agreement for three years. RECOMMENDATION: That council approves the first sixty-day extension of the current Advanced Life Support/Basic Life Support (ALSIBLS) agreement with American Medical Response (AMR) and authorize Acting Fire Chief Perry to exercise two additional 50-day extensions. BOARDS/COMMISSIONS RECONNENDA TION: N/A DISCUSSION: Backaround The City of Chula Vista entered into an agreement on November 1, 1998 with AMR to provide ALSIBLS service for the period of November 1, 1998 through October 31,2001. In the May 19, 1998 staff report, staff informed Council that it may be in the City's best interest to have optional contract extension periods available beyond the three years above, and that further discussions with AMR would include contract elements that could provide for extensions beyond the year 2001, at the City's option. The Council approved a provision for 3,3-year extensions. In order for an extension to be considered, staff needs to perform an evaluation of performance of service, confirm compliance with all contract provisions, and analyze the market and determine how the current bid climate might affect costs to the users of the service. Approximately six weeks ago, the Fire Department met with representatives from AMR to discuss possible enhancements to the contract. We have met twice but due to some unforeseen delays have not been able to get very far in the process. '(;, 1- J The Fire Department has had a personnel change and AMR has not been able to provide some important information requested. Because of this situation, staff believes we need an additional sixty days for fact finding. There is a 180-day holdover clause in the contract to ensure the uninterrupted provision of ALSIBLS service to the community. It is very important for staff to complete this process with AMR before a recommendation to extend the contract or write a Request for Proposal (RFP) for the competitive bid process. In the event that the evaluation process is not completed within the 60 days, staff requests that Acting Fire Chief Perry be authorized to extend the agreement for two additional periods of 60 days. FISCAL IMPACT: There is no fiscal impact to the City of Chula Vista. The users of this system pay the fees for ALS service in Chula Vista. This is a non- subsidized service. The sixty-day extension will not change any fees or costs. <6- J - ~ RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA EXTENDING THE AGREEMENT WITH AMERICAN MEDICAL RESPONSE FOR BASIC AND ADVANCED LIFE SUPPORT AMBULANCE SERVICE FOR 60 DAYS WITH THE OPTION TO EXTEND THE AGREEMENT UP TO 180 DAYS WHEREAS, the City entered into an agreement with American Medical Response for Basic and Advanced Life Support Ambulance Services; and WHEREAS, the agreement commenced on November 1,1998 and expires on October 31,2001; and WHEREAS, staff recommends exercising the first of three possible 60-day extensions of the agreement while exploring the possibility of exercising the option to renew the agreement for three years. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista, does hereby extend the Agreement with American Medical Response for Basic and Advanced Life Support Ambulance Service for 60 days with the option to extend the Agreement up to 180 days. BE IT FURTHER RESOLVED that the Acting Fire Chief is hereby authorized to exercise two additional 60-day extensions. PRESENTED BY: APPROVED AS TO FORM BY: 1Itî4 ~~R'R John M. Kaheny City Attorney Douglas Perry Acting Fire Chief J:lanorneylresolAMR extension 'ð, 1- 3 COUNCIL AGENDA STATEMENT Item C~ Meeting Date 10/02/01 1TEM TITLE: A) Resolution of the City Council of the City of Chula Vista, California acting in its capacity as the legislative body of Community Facilities District No. 99-1 (Otay Ranch SPA One Portions of Village One, Village Five and Village One West), Authorizing and providing for the issuance of a second series of special tax bonds of the District, Approving the form of First Supplemental Restated Bond Indenture, Bond Purchase Agreement, Preliminary Official Statement, Continuing Disclosure Agreement, and other documents and authorizing certain actions in connection with the issuance of such bonds. B) Resolution of the City Council of the City of Chula Vista, California, approving the form of the Second Amendment to the Acquisition/Financing Agreement for Community Facilities District No. 99-1 (Otay Ranch SPA One Portions of Village One, Village Five and Village One West). SUBMITTED BY: Assistant City Manager Powell(J/ Director of Public Works REVIEWED BY: City Manager (4/5ths Vote: Yes No X) On August 31, 1999, the City Council completed the public hearing forming and establishing Community Facilities District No. 99-1 (CFD 99-1). The District was formed for the purpose of providing for the financing of the acquisition of certain authorized public facilities including a significant portion of the Olympic Parkway improvements serving the Otay Ranch SPA One. On November 30, 1999, the City Council considered and approved the authorization of the issuance of the first series of special tax bonds for CFD 99-1 in the amount of $23,000,000 and approved the form of certain documents related to the issuance of the first series of bonds including a Bond Indenture, Bond Purchase Contract and Preliminary Official Statement. Tonight, Council will consider the authorization to issue a second series of Special Tax Bonds for the District estimated not to exceed $19 million, approval of the related legal documents, and authorization for staff to take actions necessary to complete the bond issuance transaction. In addition, the City Council will consider the approval of the Second Amendment to the Acquisition/Finance Agreement with Otay Project L.P., that establishes the procedure for acquiring certain improvements, modifying language to include the interim transportation facilities as a potential priority within the agreement and allowing the developer to request the incremental acquisition of complete discreet components ora project, rather than requiring the project be fully completed and accepted by the City prior to acquisition. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. Page 2, Item ~_ Meeting Date 10/02/01 RECOMMENDATION: That Council: · Approve the Resolution (A) Authorizing the Issuance of a Second Series of Special Tax Bonds of the District, Approving the Form of the First Supplemental Restated Bond Indenture, Bond Purchase Agreement, Preliminary Official Statement, Continuing Disclosure Agreement, and other Documents for Community Facilities District No. 99-1 and Authorizing Certain Actions in Connection therewith. · Approve the Resolution (B) approving the Second Amendment to the Acquisition/Financing Agreement that (i) establishes the terms and conditions pursuant to which the City will acquire the authorized public improvements, (ii) establishes the terms and conditions pursuant to which the District will agree to issue special tax bonds to finance the acquisition of such improvements and (iii) establishes the procedure for acquiring the improvements from the developer within Community Facilities District No. 99-1, and (iv) revises the prior facilities list to include the interim transportation components. DISCUSSION: Background A. First Bond Sale At the Council Meeting of August 31, 1999, the City Council completed the public hearing forming and establishing Community Facilities District No. 99-1. This public hearing was held pursuant to the provisions of the "Mello-Roos Community Facilities Act of 1982". Later that night a special election was held outside the City Council chambers, stafftallied the ballots cast. The results showed 100% of the votes cast in favor of authorizing the levy of the proposed special tax and the issuance of special tax bonds in an aggregate principal amount not to exceed $60,000,000 secured by such special taxes. Also, on the meeting of August 31s', the City Council approved the resolutions establishing CFD 99-1, authorizing the levy of special taxes, declaring necessity to Incur a Bonded Indebtedness, holding the special election and declaring the results of the special election, and the first reading of the ordinance authorizing the levy of the special tax for CFD No. 99-1. On September 14~, 1999, the City Council conducted and completed the second reading of the Ordinance authorizing the levy of the Special Tax in CFD No. 99-1. In addition, the City Conncil has approved a separate resolution authorizing the future annexation of certain parcels to CFD 99-1. The annexations of these parcel has been completed and are now part of this district and will be subject to the provisions and special tax obligations as presented in the Rate and Method of Apportionment. The culmination of several months of staff processing, public heatings and document approval before the City Council ended with the First series of Bonds being issued in December 1999 for a total of $23,000,000. A priority list of facilities has been adopted for this first series of bonds and a portion of these proceeds in the amount orS 17 million will be used to fund the acquisition or construction of certain portions of the Olympic Parkway improvements. To date the City and Page 3, Item Meeting Date 10/02/01 their consultants have been auditing the reimbursement program (TDIF and Non-TDIF) that derives from the proceeds of the first bond sale and note that construction fund is nearing depletion. Subsequently, the second bond sale was initiated to continue the construction program, fund the reimbursement processing for the City, and to provide funds for the interim transportation facilities. B. Second Bond Sale The second bond sale is anticipated to be sized around $19 million with net construction proceeds totaling approximately $16.1 million. This amount is based upon the maximum special tax rate that can be applied to the developed property, undeveloped property and taxable property association property within the Community Facilities District No. 99-1 (CFD No. 99-1). The Rate and Method of Apportionment (RMA) has, pursuant to its terms, been adjusted to reflect the Tentative Map revisions for Village One West and Village Five approved by the City Council over the past months. Coupled with the approved units within the annexation parcels and the revised unit counts based on the Tentative Maps, has given CFD No. 99-1 the ability to garner additional bonding capacity. The first bond sale estimated that the second series of parity bonds in the amount of approximately $9.1 million, however now with the adjustments explained above the parity bond sizing is now approximately $19 million. All units within the CFD No. 99-1 will be subject to the provisions of the RMA, and will follow the same methods of allocation of the special tax for each subsequent year, until the bonds are retired. Collectively, the first series of bonds and the proposed second series of bonds are repaid from an annual special tax collected from the property within the CFD No. 99-1. The RMA defines the annual special tax revenues required to meet the annual debt service for the bonds. There is no direct cost to or obligation of the City. CFD 99-1 is primarily an acquisition district wherein the developer constructs the authorized public improvements and the City acquires them upon completion with funds derived solely from the sale of bonds. District Boundaries Exhibit 1 presents the boundaries of CFD 99-1, which includes all parcels located within Otay Ranch SPA One - Portions of Village One, Village Five and Village One West (approximately 920 total acres). At buildout, the district would contain a total of 2,890 Single Family Residences, 1,743 Multi-Family Units, 3.4 acres for commercial uses, and 11.3 acres for Community Purpose Facilities (chumhes, day care, ballfields, etc). The Improvements The proposed bond sale amount of approximately $19 million will finance around $16.1 million in facilities (i.e. grading, landscaping, streets, utilities, drainage, sewer, facilities authorized to be financed from the City's public facilities development impact fee, facilities authorized to be financed from the City's pedestrian bridge development impact fee). The balance will provide for a reserve fund, capitalized interest and pay district formation, administration and bond issuance costs. Page 4, Item / Meeting Date 10/02/01 The list of facilities proposed to be financed by this bond sale include the backbone streets and associated improvements (i.e. grading, sewer, streets, dry utilities), pedestrian bridges authorized to be financed from the City's pedestrian bridge development impact fees, public facilities authorized to be financed from the City's public facilities development impact fees and backbone utilities. In addition, the City Council will also be considering the approval of the Second Amendment to the Acquisition/Financing Agreement to allow the City to utilize proceeds of this second series bond sale for the construction of certain interim transportation facilities within the Eastern Territories. This authorization will give the City flexibility on how and when to use certain proceeds for transportation projects to meet the transportation service demands resulting fi-om development within CFD No. 99-1. The City's CFD Policy requires a determination of the priority for the acquisition of improvements by a CFD. Based on the first series of bonds staff prioritized the developer's list of projects as follows. Priority Facility 1 TDIF Facilities including Olympic Parkway from Brandywine to SR125 (Phases 1, 2, and 3), Pasco Ranchero and East Palomar Street in Village 1 West. 2 Non-TDIF Improvements of Olympic Parkway (Phases 1,2, and 3) Pasco Ranchero, and Non-TDIF Facilities (Sewer, Slope Landscaping, East Palomar Street in Village 5) 3 Those Facilities to be financed from the Proceeds of Public Facilities Development Impact Fees payable as a condition of development of property within CFD 99-1 4 Those Facilities to be financed from the Proceeds of Pedestrian Bridge Development Impact Fees payable as a condition of development of property within CFD 99-1 5 Environmental Mitigation Costs for Olympic Parkway Priority 1 is assigned to the construction of TDIF improvements in Olympic Parkway and Pasco Ranchero, all of which are key facilities for developing the Eastern Territories of the City. The Second Amendment to the Acquisition/Financing Agreement allocates approximately $16 million of the bond proceeds for the construction of these facilities. The second Bond series will generate construction proceeds to fund the revised Priorities listed above. In addition, Priority 2 will be assigned to funds for Non-TDIF Facilities that are necessary to serve future phases of the project. Priority 3 items will be assigned a proportionate share of the funds for PFDIF facilities. In the event that additional funding is remaining, Priority 4 and 5 would fund PedBridge DIF facilities to serve the future phases of the subdivision developments, and environmental mitigation costs. (See Exhibit A of the Second Amendment to the Acquisition/Financing Agreement for CFD No. 99-1" Project Description and Estimated Costs"). The Second Amendment to the Acquisition/Financing Agreement includes language that allows a modified list of facilities to be financed by CFD 99-1 and assigns a priority, and is attached as Exhibit 2. Staff recommends Council approval of the proposed language, to give the City flexibility Page 5, Item Meeting Date 10/02/01 in determining the best use, timing, and nature of the proceeds for the interim transportation facilities. Total project costs to be borne by Otay Project L.P. are estimated to exceed $48.0 Million. As mentioned before, the first series of bonds was $23,000,000 and it is estimated that the second series bond sale will be $19 million for CFD No. 99-1. The total bonding capacity of properties within the district is estimated to be approximately $42.0 million. Consequently, in the Bond Indenture for the second series of bonds, CFD No. 99-1 will covenant not to issue any additional bonds secured by the special taxes except refunding bonds. On July 13, 1999, Council adopted the "Resolution Declaring Intention to Issue Bonds" approving a maximum bond authorization of $60 million. Subsequently, the maximum bond authorization was reduced to $45 million to more accurately reflect the districts ability to fund certain facilities. The actual amount to be financed by CFD No. 99-1 would be determined after the bond sale when the interest rates on the bonds and the final value to lien ratios are known. Ultimately, as subdivision exactions, the developer will finance other improvements required as a condition of approval of the development of the property within CFD 99-1 that this CFD cannot finance. CFD 99-1 lies within various Development Impact Fee (DIF) benefit areas, (Poggi Canyon Sewer, Transportation, and the proposed Pedestrian Bridge DIFs) which places a cap on the CFD's ability to finance these D1F improvements. Maximum Taxes The maximum special tax rates remain the same regardless of the phase bond sale program. As each development moves thru the entitlement process, the special tax rate will apply to the project, tracked by the consultants for the City and placed on the tax rolls each year. CFD 99-1 is divided into the following 3 Zones: · Zone A: applies only to Developed Property, and means a specific geographic location known as the Village One area; · Zone B: applies only to Developed Property, and means a specific geographic location known as the Village Five area; and · Zone C: applies only to Developed Property, and means a specific geographic location known as the Village One West area. The application of the Maximum Rate of Special Tax levy to a variety of dwellings and to commercial and industrial is presented below. In accordance with the City of Chula Vista CFD Policy, these Maximum Tax Rates are not subject to escalation. Land Use Zone A Zone B Zone C (Village One) (Village Five) (Village One West) Page 6, Item -/ Meeting Date 10/02/01 Single Family Residence $560 $980 $1,280 (2000 SF) Single Family Residence $420 $835 $1,060 (1500 SF) Multi Family (1000 SF) $280 $690 $840 Commercial/Industrial $1,600 $3,717 $4,266 (1 Acre) Community Purpose $400 $929 $1,066 Facility (1 Acre) Vacant Land (1 Acre) $8,864 $8,864 $8,864 A preliminary calculation of the maximum tax and assessment burden on the projected homes within CFD 99-1, using estimated house prices, has been completed and all homes fall within the 2% limit on the armual tax and assessment obligation on such homes as established by the City's CFD policies. A final test will be performed at escrow closing using the actual sale price of the house. The CFD Policy requires that at or prior to each closing of escrow, the escrow company shall apply a "calculation formula" previously approved by the City Engineer to determine the aggregate of regular County taxes, Mello-Roos taxes (other than special taxes levied to finance maintenance), and assessment installments (other than assessments levied to finance maintenance). If the 2% limit on annual tax and assessment obligation for any home were exceeded, the builders would be required to provide cash to buy down the lien to an amount sufficient to meet the 2% limit. Compliance with this procedure would ensure that the aggregate annual tax and assessment obligation to be paid by the purchaser of the house meets the City's criteria. Due to changes that occurred to the Tentative Maps for Village One West and Village Five the RMA has been modified to take into account the additional units and mix of residential sizes. This modification is important to reflect the revised development expectations within each of these areas prior to the sale and delivery of the bonds. Staff considers this modification administrative in nature and will result in a more accurate projection of expected development within CFD No. 99-1. The modified RMA is attached as Exhibit 3. City Financial Criteria Value to Lien Ratio. The City's Statement of Goals and Policies for Community Facilities Districts ("CFD policy") requires a minimum value to lien ratio of 4:1. In addition, the policy establishes the following criteria: "The required value4o-debt ratio shall be determined with respect to all taxable property within the community facilities district in the aggregate and with respect to each development area for which no final subdivision map has been filed. A community facilities district with a value-to-debt ratio of less than 4:1 but equal to or greater than 3:1 may be approved, in the sole discretion of the City Council, upon a determination by the City Manager, after consultation with the finance director, the bond counsel, the underwriter and the financial advisor, that a value to debt ratio of less than 4:1 is financially prudent under the circumstances of the particular community facilities Page 7, Item / Meeting Date 10/02/01 district." Bruce W. Hull & Associates conducted an appraisal (dated June 26, 2001) for the second series bonds on the parcels within CFD No. 99-1. The appraisal indicates the substantial changes that have occurred with the district over the past two years. Their report clearly shows that the district has had tremendous growth in the residential sector (single/multi-family), with office and other commercial property that has been constructed or in the process of being constructed. The appraisal notes that the land owned by the merchant builders is valued at $148,690,000, while the homeowners collectively are valued at $175,565,000, and the remaining property owned by the Otay Project LP is valued at $56,450,000. The total value for the district is $380,705,000. Exhibit 4 shows that the second series of bonds totaling $19 million will result in an overall lien ratio of at least 7.61 to 1. On September 12, 2001, Otay Project L.P. submitted a waiver letter (See Exhibit 5) requesting approval of a lien ratio of less than 4:1 but greater than 3:1. Staffand consultants have reviewed this request and determined that approving: 1) an overall lien ratio of at least 4:1, 2) a lien ratio of at least 3:1 for the remaining Planning Areas of R15, R19, R20, R21 and R31 is financially prudent and recommend approval by Council. It should be noted that although the appraised value of Planning Area R21 at the time of the formal appraisal resulted in a value to lien ratio of only 2.93 to 1, staffhas been able to verify that the owner of that property has since spent almost $965,000 in various development-related fees which would have the effect of increasing that ratio to approximately 3.75 to 1. Staffrecommends that Council approve the developer's request for a lower lien ratio criteria based on the following: 1. Property ownership and special tax obligations within CFD 99-1 are somewhat diversified. The merchant homebuilders currently are responsible for approximately 35% of the special tax obligations of CFD 99-1. Diversification of special tax obligation is perceived by the City finance team to assist in mitigating the risk to the bondholders. 2. Development has been tremendous over the past two years and is anticipated to continue its growth at moderate rates. Homes permits have been issued within 31 neighborhoods. Home sales within Otay Ranch are well underway with 16 merchant builders. The property within CFD No. 99-1 is well diversified with several different builders and pending sales transactions, including the fact that from the 3,021 permits issued a total 683 have been purchased by individual homeowners. CFD No. 99-1 has atotal of 4,631 planned residential traits. Of the remaining 1,610 planned units owned by the Otay Project LP, there have been letters of intent with nationally recognized builders to obtain these units. Aggregating these numbers, it is concluded that 65.2% of the property is in the hands of other homebuilders or homeowners. 3. Infrastructure construction is completed for Paseo Ranchero, East Palomar, Olympic Parkway Phase One, as well as numerous internal and backbone streets within CFD No. 99-1. The completion of significant levels of infrastructure necessary to serve the district helps to mitigate the risk to the bondholders. 4. Mapping process is nearing completion of SPA One, which includes the majority of CFD No. 99-1. There are only twelve (12) remaining Planning Areas that have not completed their Page 8, Item Meeting Date 10/02/01 Final maps processing. As allocated by Exhibit I of the Olympic Parkway Financing Agreement, Otay Project L.P. anticipates processing maps for the remaining planning areas during 2001/02. The status of physical development indicates financial commitment to the project and leads to anticipation of finalizing construction. As of June 31, 2001, Otay Project LP has over $91,000,000 invested in the project. 5. The market absorption study concludes that CFD 99-1 will reach buildout by the year 2003/04. This short absorption period indicates that the developer should be responsible for special tax payment for a limited time. The Olympic Parkway Agreement imposes certain limitations on the development phasing of the properties within Otay Ranch SPA One Portions of Village One, Village Five and Village One West (see Exhibit 6 - Exhibit I of the Olympic Parkway Finance Agreement: Allocation of Final Maps). The obligations for Stages 3a and 3b are being met, construction is proceeding with the Olympic Parkway and development of planning areas within the Otay Project L.P. project are well underway. Other obligations that are nearing completion are: 1) Issuance of environmental permits by the Resource Agencies (completed) 2) Approval of grading plans and bonding for the following facilities: Olympic Parkway - Brandywine to SR-125 (Phase 1 completed, Phase 2 under construction, and Phase 3 in design) · Paseo Ranchero - East Palomar to Olympic Parkway (nearing completion) · East Palomar - In Village 5 (nearing completion) 3) Approval of the Poggi Canyon maintenance agreements (completed) Compliance with Stages 3a and 3b obligations are essential for constructing those portions of Olympic Parkway that are needed to fully develop the CFD 99-1 properties. As of October 15, 1999, environmental clearances have been obtained and many of the construction projects are underway. Staff and consultants recommend proceeding with the second series bond sale amount of not to exceed $19.0 million, with the City accept the Otay Project LP waiver request to allow a 3:1 value ratio, instead of the City's Policy of 4:l for Planning Areas R15, R19, R20, R21 and R31. It should also be mentioned that a portion of $16.1 million net proceeds will represent the Otay Project L.P. remaining TDIF obligation of the properties within CFD No. 99-1. The remaining net proceeds may be used for acquiring additional improvements, funding the Reserve Funds, paying the Underwriter's discount and consultant's fees. The specific net proceeds allocation will be brought back to City Council via the Acquisition/Finance Agreement, Final Official Statement, and other related bond documents. The developer concurs with the staff's proposal. Staff considers this a reasonable solution and recommends Council approval. The Resolutions There are two resolutions on today's agenda that, if adopted, will accomplish the following: Page 9, Item ! Meeting Date 10/02/01 (A) The RESOLUTION AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF A SECOND SERIES OF SPECIAL TAX BONDS AND APPROVING THE FORM OF CERTAlN RELATED DOCUMENTS authorizes the issuance of limited obligation bonds, pursuant to the Mello-Roos Act in a principal amount not to exceed $45.0 million (the First Series of Bonds was $23.0 Million, the proposed Second Series of Bonds are estimated at $19.0 million). The final bond sale amount for the Second Series of Bonds will be known once the interest on the bonds is determined at the bond sale. In addition, the resolution approves the form of the following documents: The Bond Indenture (Exhibit 7) between the City and the Fiscal Agent, US Bank Trust National Association, that sets forth the terms and conditions relating to the issuance and sale of the bonds. · The Bond Purchase Contract (Exhibit 8). The Bond Purchase Contract authorizes the sale of bonds to the designated Underwriter (Stone & Youngberg LLC). The underwriter's discount for this negotiated sale is not to exceed 1.75% of the total bond amount that translates into a fee not to exceed $332,500 (based on a projected bond issue size of $19.0 million) · The Preliminatw Official Statement (Exhibit 9) describing the Community Facilities District and type of bonds, including terms and conditions thereof, for the bondholders. · Continuing Disclosure Agreement between the City and U.S. Bank Trust National Association, as dissemination agent, pursuant to which the City is required to disclose certain financial information on an annual basis regarding the Community Facilities District and certain significant events. These disclosures include but are not limited to: Special tax delinquencies Bond calls Events reducing density or causing modifications Other events reflecting financial difficulties of CFD 99-1 This resolution also accepts the determination of the City Manager after consultation with the Assistant City Manager, the City's bond counsel, the City's financial advisor and Stone & Youngberg, LLC, the underwriter of the Series 2001 Bonds (the "Underwriter"), that the value-to- debt ratio for those properties having a ratio of less than 4 to 1, but more than 3 to 1, is financially prudent under the circumstances of the District. (B) The RESOLUTION APPROVING THE FORM OF THE SECOND AMENDMENT TO THE ACQUISITION/FINANCING AGREEMENT with Otay Project L.P. for Community Facilities District No. 99-1 (Otay Ranch SPA One Portions of Village One, Village Five and Village One West) is the formal action approving the Second Amendment Acquisition/Finance Agreement, that establishes the procedure for acquiring the improvements from the developer, including provisions which allow for the incremental acquisition of complete discreet components of a project, rather requiring the project be fully completed and accepted by the City prior to acquisition. · The agreement provides that the City may reimburse 75% of the total cost of the drainage, paving, utilities, and landscaping improvements upon the determination by the City Engineer Page 10, Item Meeting Date 10/02/01 that those improvements have been installed per approved plans with required City Inspections. Those facilities may not be functional at that time, and certain activities (i.e. testing, completion of punch list, preparation of as-built drawings) may still be pending. The 25% final payment may be made once all projects within a phase are fully complete and accepted by the City. Grading is the exception where 100% rather than 75% is reimbursed at the time the City Engineer determines that grading and drainage has been installed per plans. · The agreement also conditions the purchase of said discreet improvements to developer's compliance with all the applicable conditions and obligations imposed on the property within CFD No. 99-1 pursuant to the land use entitlements approved by the City, including but not limited to, payment of all applicable fees, dedication of right-of-ways or other property (i.e. parks, open space, etc), payment of assessments installments or special taxes, and construction of all applicable public improvements.. · Staffhas reviewed the proposed agreement and believes that 1) the 25% payment retention, and 2) the condition requires compliance with approved land use entitlement will provide enough security to guarantee completion of the improvements while ensuring the financial health of CFD 99-1. · The City retained the firm of Best Best & Krieger LLP as Bond Counsel for CFD No. 99-1. Bond Counsel drafted these agreements for and on behalf of the City with input and review by City staff. It should be noted that Council would only be approving the form of the aforementioned documents. The proposed resolution authorizes the Director of Finance to approve the final form and to execute such documents on behalf of the City following review by and consultation with the City Attorney, Bond Counsel, and Financial Consultant. No additions or changes in the documents are permitted which would result in the annual interest rate on the bonds to exceed 7.0%, or in a purchase price for such bonds not less than 98.25% of the par amount of the bonds (excluding original issue discount, if any). FISCAL IMPACT: None, the developer will pay all costs and has deposited money to fund initial consultant costs, and City costs in accordance with the approved Reimbursement Agreement. The City will receive the benefit o£the full cost recovery for stafftime involved in district formation (estimated at $40,000) and administration activities. Staff anticipates that most of the CFD 99-1 administration will be contracted out. The CFD administration cost is estimated at $75,000 annually. In accordance with the CFD Policy, as consideration £or the City's agreement to use the City's bonding capacity to provide the financing mechanism for the construction of the proposed improvements, the developer has paid one percent (1%) of the total bond sale. Based on a bond sale amount of $19 million, said monetary compensation would be $190,000. Said amount will be deposited into the General Fund. The CFD Policy also stipulates that said compensation is not eligible for financing by CFD No.99-1. Page ll, Item -/ Meeting Date 10/02/01 Attachments Exhibit 1: Boundary Map for CFD 99-1 Exhibit 2: Second Amendment to the Acquisition/Financing Agreement for CFD 99-1 Exhibit 3: Modified Rate and Method of Apportionment for CFD No. 99-1 Exhibit 4: Estimated Value to Lien Ratios Based on Appraisal Exhibit 5: Otay Project LP Request for Waiver, dated September 11, 2001 Exhibit 6: Exhibit I of the Olympic Parkway Finance Agreement: Allocation of Final Maps Exhibit 7: Bond Indenture for CFD No. 99-1 Exhibit 8: Bond Purchase Contract for CFD No. 99-1 Exhibit 9: Preliminary Official Statement for CFD No. 99-1 H:\HOME\ENGINEER~AGENDA\991-1130-A.doc 9/26/01 10:46 AM File No. CFD No. 99-1 O~ o~ ~9© 0 TM ~).~/& EXHIBIT 1 10.02.01 SECOND AMENDMENT TO ACQUISITI ON/FIN.~NCING AGREEMENT THIS SECOND AMENqDMENT TO ACQUISITION/FINANCING AGREEMENt1', dated as of September 1, 2001 (the "Second Amendment"), by and between the City of Chula Vista, a charter city duly organized and validly existing under the Constitution and the laws of the State of California (the "City"), acting for and on behalf of itself and Community Facilities District No. 99-1 (the "Community Facilities District"), and Otay Project L.P.. a California timited liability company (the "Developer') is entered into by the parties hereto to amend that certain Acquisition/Financing Agreement made and entered into the __ day of _, 1999, by and between the City, acting for and on behalf of itself and the Dislrict, and the Developer, as amended by the First Amendment to Acquisition/Financing Agreement. dated as of July 1, 2001, by and between such parties (as amended by the First Amendment, the "Existing Acquisition Agreement" and as amended by this Second Amendment, the "Acquisition Agreement"). Capitalized terms used in this Second Amendment shall have the meanings given such terms in the Existing Acquisition Agreement unless otherwise provided for herein or the context of the use of any such capitalized term requires otherwise. RECITALS WHEREAS, the City and the Developer entered into the Acquisition Agreement to, among other things, establish the terms and conditions pursuant to which the City would acquire certain Projects and Improvements constructed by the Developer from proceeds of Bonds issued by the Commumty Facihties Disthct for such purpose; WFiEREAS, Exhibit A to the Existing Acquisition Agreement contains a description of each of the Projects into which the various Improvements have been combined; and WHEREAS, Exhibit B to the Existing Acquisition Agreement contains a description of the Discrete Components of each of the Improvements; and V~rHEREAS, Exhibit E to the Existing Acquisition Agreement contains a description of those Projects eligible for DIF credit; and WHEREAS, Section 7(f)(i) of the Existing Acquisition A~eement establishes a pr/oritization for the pa3rment of the Purchase Price for Improvements from the proceeds of the Bonds issued by the Commun/ty Facilities District; and WHEREAS, the City is proposing to impose a development impact fee to finance certain additional street improvements (the "SR 125 Development Impact Fee") as a condition of approval of the development of the property within the District and that provide substantially the same .type of benefit to the properties ~4thin the Dislrict as those street improvements currently included among the Improvements; and EXZIE3IT 2 10.02.01 WHEREAS, the City and the Developer desire to amend Exhibit A and Section 7(f)(i) of the Existing Acquisition Agreement and to authorize the future amendment of Exhibits B and E as necessary t&-.~dd to the description of the Improvements such additional slreet improvements the construction of which would otherwise be financed from the proceeds of the SR 125 Development Impact Fee; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Second Amendment do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Second Amendment. NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows: SECTION 1. Recitals. The above recitals are all true and correct. SECTION 2. Amendment to Section 7(00) of the Existing Acquisition Agreement. Section 7(f)(i) of the Existing Acquisition Agreement is hereby amended to read as follows: "a. Payments from the First Series of Bonds. The first proceeds of the first series of Bonds authorized and available to pay the Purchase Price for the acquisition of Improvements in an amount equal to the aggregate remaining Traffic Development Impact Fees ("TD13"') (for purposes of this section, such Improvements are referred to collectively as the "First Series Olympic Parkway TD[F Improvements") which may be collected as a result of development within the Community Facilities District shall be utilized in the following order of priority: (I). Pr/ori~l: Project No. 1 in Exkibit A. Olympic Parkway Phase 1 - TDIF Eligible Improvements (2). Pr/or/~ IA: Project No. 15 in Exhibit A. Reimbursement of Advances Made by Merchant Builders (R-6, 9, 13, 14, 34, 36, 37 and 38) Towards the Cost of Construction of Olympic Parkway Improvements Authorized to be Financed Under the TDIF Program (3). Priority2: Project No. 3 in Exl-dbit A. Olympic Parkway Phase 2 TDEF Eligible Improvements EXHIBIT 2 10.02.01 Project No. 5 in Exhibit A. Olympic Parka,ay Phase 3 - TDIF Eligible _ I__mprovements (4). Priority 3: Project No. 7 in Exhibit A. Pasco Ranchero (Palomar to Olympic) - TDI2: Eligible Improvements (5). Priority 4: Project No. 9 in Exhibit A. East Palomar (within Village One West) - TDIF Eligible Improvements Notwithstanding the foregoing, proceeds of the first series of Bonds set aside for the payment of the First Series Olympic Parkway TDI]: Improvements may, upon the submission of a written request of the Developer accompanying a Payment Request, be utilized to pay the Purchase Price of First Series Olympic Parkway Non-TDIF Improvements (defined below); provided, however, the mount of such proceeds so utilized may not exceed $3,000,000 and provided further that such proceeds may not be so utilized if, at the time of the requested payment, the Developer is not in compliance with the provisions of the Olympic Parkway Agreement or any permits issued for the conslrucfion of Olympic Parkway. Developer covenants and pledges that the proceeds of the pa3maent of such Purchase Price or any portion thereof shall be used by Developer solely to make payments to contractors, subconn-acturs, materJalmen and agents and employees of the Developer for any costs directly related to the design, engineering, construction or construction administration and supervision of any First Series Olympic Parkway TD~ Improvements and/or any other First Series Olympic Parkway Non-TDIF Improvements that may be included in the Purchase Price for such Improvements pursuant to Section 7(a) ("Authorized Payments"). The zTitten request of the Developer referred to in the first sentence of this paragraph shall itemize all such Authorized Payments to be made fi:om the proceeds of the payment to the Developer of the Purchase Price. To the extent that proceeds of the first series of Bonds set aside for the payment of First Series Olympic Parkway TD]2F knprovements are instead utilized pursuant to this paragraph to pay the Purchase Price of First Series Olympic Parkway Non-TD13' Improvements, an mount equal to the aggregate mount of all such payments shall be set aside from the proceeds of any subsequent series of bonds for the payment of the Purchase Price for those First Series Olympic Parkway TDIF Improvements not paid fi:om the proceeds of the first series of bonds. The remainder of the proceeds of the first series of Bonds authorized and available to pay the Purchase Price for the acquisition of Improvements shall be utilized in the following order of priority: 3 EXHIBIT 2 10.02.01 l 1). Priority I: Project No. 2 in Exh/bit A. Olyrnpic Parkwvay Phase 1 - Non-TDIF Eligible Improvements (for purposes of this section, 22i~e "First Series Olympic Parkway Non- TDIF Improvements") b. Payments fi.om Any Subsequent Series of the Bonds Yhe first proceeds of any subsequent series of bonds authorized and available to pay the Purchase Price for the acquisition of Improvements shall be utilized to pay the Purchase Price of any First Series Olympic Parkway TDIF Improvements not paid fi-om the proceeds of the first series of bonds as a result of and to ~e extent that proceeds of the first series of bonds originally set aside pursuant to Section 7(f)(i)(a) to pay the Purchase Price of such First Series Olympic Parkway TDIF Improvements were instead utilized pursuant to such Section to pay First Series Olympic Parkway Non-TDIF Improvements. Except as provided otherwise hereinbelow, .the next $4,000,000 of the proceeds of any subsequent series of Bonds authorized and available to pay the Purchase Price for the acquisition of Improvements shall be utilized to pay the following: (1) PriofiB, 1: Project No. 11 in Exhibit A. Facilities to be otherwise financed from the proceeds of Public Facilities Development Impact Fees. Except as provided otherwise hereinbelow, the remainder of the proceeds of any subsequent series of Bonds authorized and available to pay the Purchase Price for the acquisition of Improvements shall be utilized in the following order of priority: (1). Priority 1: Project No. 2 in Extfibit A. Olympic Parkway Phase 1 - Non-TDI2c Eidgible Improvements (2). Prioritsr2: Project No. 4 in Exhibit A. Olympic Parkway Phase 2 - Non-TDIF Eligible Improvements (3). Priority 3: Project No. 8 in Exhibit A. Paseo Ranchero (Palomar to Olympic) - Non-TDIF Eligible Improvements (4). Priority 4: Project No. 10 in Exhibit A. East Palomar (within Village Five) - Non-TDIF Eligible 4 EXHIBIT 2 (I.02.01 (5). Priority5: Those facilities to be financed from the proceeds of the Pedestrian Bridge Development Impact Fees payable as a 2-~ondition of development of property within the Community Facilities Dish-icl (6). Priority6: Project No. 13 in Exhibit A. Slope Landscaping (Development Slopes) (7). Priority 7: Project No. 14 in Exhibit A. Enviromnental Mitigation Cost for Olympic Parkway Notwithstanding the foregoing, the City may, in its sole discretion, elect to authorize and make the proceeds of any subsequent series of Bonds available to pay the cost of construction or the Purchase Price for the acquisition of the Improvements included in Project No. 16 in Exhibit A and to establish the priority for the utilization of such proceeds for such purpose; provided, however, such priority shall not be equal to or exceed the priority of the use of the proceeds of such Bonds to pay the Purchase Price for the acquisition of any First Series Olympic Parkway TDIF Improvements authorized to be paid from the proceeds of such Bonds. The Purchase Price for any lower priority Improvement within a funded group of Improvements shall not be paid until the Purchase Price for any higher priority Improvement within such group has been paid. For example, assume that the first $10,000,000 from the ehgible proceeds of the first series of Bonds is set aside to finance the Purchase Price of the First Series Olympic Parkway TDIF Improvements and the next $5,000,000 fi-om the eli~ble proceeds of the first series of Bonds is set aside to finance the Purchase Price of the First Series Olympic Parkway Non-TDll~ Improvements. The Purchase Price of a First Series Olympic Parlc~,ay TD~ Improvement with a Priority 2 may not be funded from the $10,000,000 set aside to finance the Purchase Price of the First Series Olympic Parkway TDI17 Improvements until the Purchase Price for each of the First Series Olympic Parkway TDI~ Improvements with the Priority 1 and Priority lA has been fully funded. However, the $5,000,000 of proceeds of the first series of Bonds which are set aside to fund the Purchase Price of the Olympic Parkway Non-TDIF Improvements may be used to pay the Purchase Price of such Olympic Parkway Non-TDIF Improvements notwithstanding the fact that Purchase Price for all of the Olympic Parkway TDIF Improvements has not been funded from the $10,000,000 set aside to fmance the Purchase Price of such Improvements." 5 EXHIBIT 2 10.02.01 SECTION4. Amendment of Exhibit A. Exhibit A to the Existing Acquisition A~eement are hereby amended in their entirety to read as set for[h in Attachment 1 hereto which is incorporated herein by this reference. SECTION 5. Authorization for Amendment to Exhibits B and E. The City and the Developer authorize the amendment Exhibit B and Exhibit E to the Existing Agreement 1o reflect, as necessary, the Improvements and Discrete Components to be included in Project 16 upon the establishment by the City of such Improvements and Discrete Components thereof, if any, to be financed fi.om the proceeds of the SR 125 Development Impact Fees and the agreement thereto by the Developer. Such amendments shall be evidenced by the execution of such amended Exhibits by the City Manager, acting for and on behalf of the City, and a duly author/zed representative of the Developer. Such amended Exhibits shall be attached hereto at Attachment 2 and, upon such attachment, shall be incorporated herein. SECTION 6. Effect of this Second Amendment on the Other Terms and Provisions of the Existing Acquisition Agreement. The provisions of this Second Amendment shall supersede and prevail over any conflicting provisions of the Existing Acquisition A~eement. Save and except as expressly amended hereby, all of the terms and provisions of the Existing Acquisition Agreement continue in full force and effect and are applicable to the provisions of this Second Amendment and the obligations of the parties hereunder. SECTION 7. General Provisions (a) The Existing Acquisition Agreement as amended by this Second Amendment and the a~eements expressly referred to herein contains all of the agreements of the parties hereto w/th respect to the matters contained herein and all other prior and contemporaneous a~eements, representations, negotiations and understandings of the parties hereto, oral or'written, are hereby superseded and merged herein. The foregoing sentence shall in no way affect the vahdity of the Olympic Parkway A~eement. No provision of this Second Amendment may be modified, waived, amended or added to except by a writing signed by the party against wh/ch the enforcement of such modification, waiver, amendment or addition is or may be sought. Co) This Second Amendment has been reviewed by legal counsel for City and Developer and shall be deemed for all purposes to have been jointly drafted by City and Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Second Amendment. The language in all parts of this Second Amendment, in all cases, shall be construed as a whole and in accordance with its fair meaning and not sthctly for or against any party and consistent with the provisions hereof, in order to achieve the objectives of the parties hereunder. The captions of the sections and subsections of this Second Amendment are for convenience 6 ~'f ~' EXHIBIT 2 10.02.01 only and shall not be considered or referred To in resolving questions o£ construction. (c) Except as expressly-pr-ovided otherwise in this Second Amendment, all provisions of Sections 21 'through 34 of the Acquisition Agreement shall apply to this Second Amendment. [Remainder o£this page intentionally left blank] EXHIBIT 2 10.02.01 IN WITNT. SS WHEREOF the parties hereto have executed this Second Amendment on the date above written. - -- "CITY" CITY OF CHULA VISTA MAYOR CITY OF CHULA VISTA STATE OF CALIFORNIA ATTEST: APPROVED AS TO FORM: CITY CLERK JOHN KAHENY, CITY ATTORNEY CITY OF CHULA VISTA CITY OF CHULA VISTA STATE OF CALIFORNIA STATE OF CALIFORNIA "DEVELOPER" OTAY PROJECTLP, a California limited liability company, By: Otay Ranch, LLC, a Califomia limited liability company, General Partner By: Otay Ranch Development, LLC, a Delaware limited liability company, Authorized Member By: Title: EXH~IT 2 t0.02.01 ATTACHMENT 1 EXHIBIT A Exhibit A to the Existing Acquisition Agreement is amended in its entirety to read as set forth in the following pages: 9 EXHIBIT 10.02.01 ATTACHMENT 2 Exhibits B and E Upon attachment hereto, Exhibits B and E to the Existing Acquisition A~eement a~e amended in their entirety to read as set forth in the following pages: EX~I1BIT 2 DRA?T ~ RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE- PROTIONS OF VILLAGE ONE, VILLAGE FIVE AND grILLAGE ONE WEST) A Special Tax as hereinafter defined shall be levied on all Taxable Proper~y within the City of Chula Vista Community Facilities District No. 99-1 ("CFD No. 99-1") and collected each Fiscal Year commencing in Fiscal Year 1999-2000, in an amount determined by the City Council through the application of the appropriate Special Tax for "Developed Property," "Taxable Property Owner Association Property," and "Undeveloped Property" as described below. All of the real property in CFD No. 99-1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps are not available, the Acreage shall be determined by the City Engineer. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code o£the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 99-1 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 99-1 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 99-1 or any designee thereof of comply/ng with City, CFD No. 99-1 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 99- 1 or any designee thereof related to an appeal of the Special Tax; the costs of any credit e~rhancement obtained by the City or CFD No. 99-1 (but excluding the costs of any credit enhancement required to be provided by the Master Developer or any other owner of property within CFD No. 99-1), and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 99-1 for any other administrative purposes of CFD No. 99-1, City of Chula Vista /, c~ ~ May 12, 1999 Communi~_, Facilities District No. 99-1 Page ] DR~?T #$ including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Annexation Parcels" means those specific Assessor's Parcels that are subject to future annexation into CFD No. 99-1 as depicted in Exhibit B attached herein. Any Annexation Parcels that annex to CFD No. 99-1 will be subject to the Maximum Annual Special Tax and the Backup Special Tax of the zone of CFD No. 99-I within which such Annexation Parcel is located and the approximate land use category of CFD No. 99-1 to which such Annexation Parcel. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Available Funds" means the balance in the reserve fund established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, delinquent special tax payments, foreclosure proceeds, the portion of proceeds of Backup Special Tax payments and Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. "Backup Special Tax" means the Special Tax that is required to be paid as a condition precedent to the issuance of building permits or recordation of final maps, as determined in accordance with Section E below. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD No. 99-1 under the Act and secured by the levy of the Special Taxes. "CFD Administrator" means an official of the City acting for and on behalf of CFD No. 99- 1, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD No. 99-I" means City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch SPA One - Portions of Village One, Village Five, and Village One West), as depicted in Exhibit A. "City" means City of Chula Vista. "Commercial Property" means all Assessor's Parcels of Developed Property for which a building permit(s) was issued for a non-residential use, excluding Community Purpose Facility Property. "Community Purpose FaciliD, Property" means all Assessor's Parcels of Developed Property which are classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452. Cio; of Chula Vista i ~ ? May 12, ]999 CommuniO' Facilities Disu'ict No. 99-I [ Page 2 DRAFT #3 "Council" means the City Council of the City, acting as the legislative body of CFD No. 99- 1. "County" means the County of San Diego. "Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Taxable Property Owner Association Property for which a building permit for new construction was issued prior to April I of the prior Fiscal Year. "Development Projection" means an annual calculation for each Planning Area of CFD No. 99-1 of: (i) the number and total Residential Floor Area of existing dwelling units of Residential Property, the number of existing Acres of Commercial Property, and the number of existing Acres of Community Purpose Facility Property, and (ii) a projection of all future development, including the acreage, projected number of residential dwelling units, projected Residential Floor Area, projected Commercial Property Acres, projected Community Purpose Facility Property Acres, and an absorption schedule for all future development within CFD No. 9%1. The Development Projection shall be dated as of March 1 and prepared each Fiscal Year by the Master Developer. Upon submittal, the CFD Administrator shall review, modify if necessary, and approve the Development Projection. If the Development Projection is not received by the CFD Administrator on or before April 1 or each year, the CFD Administrator shall then prepare or cause to be prepared a Development Projection. "Final Residential Subdivision" means a subdivision of property created by recordation of a final map or parcel map, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.), recordation of a lot line adjustment approved by the City which creates a parcel for which a building permit may be issued or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which residential building permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Tables 1, 2 and 3 of Section C. "Master Developer" means the owner or owners of the predominant amount of Undeveloped Property in CFD No. 99-1. "Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C below, that may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Occupied Residential Property" means all Assessor's Parcels of Residential Property which have closed escrow to an end user. CiO, qf Chula Zista ~ ~ ~, Communiiy Facilities Disu'ict No. 99-1 ,. ~x ~ May 12, 1999 ~ Page 3 DRAFT #3 "Outstanding Bonds" means ail Bonds which remain outstanding. "Planning Areas" means those areas shown on Exhibit C. Minor adjustments in the boundaries of the Planning Areas may be made by the CFD Administrator to conform to the tentative and final maps, lot line adjustment or other property line adjustment approved by the City for these areas. The Planning Areas in Exhibit C existing at the time of formation of CFD No. 99-1 may be expanded to include Annexation Parcels from time to time or additional Planning Areas may be established to include Annexation Parcels from time to time. "Property Owner Association Property" means any property within the boundaries of CFD No. 99-1 owned by or dedicated to a property o,amer association, including any master or sub- association. "Proportionately" means for Developed Property that the ratio of the actual Special Tax levy to the Maximum Annual Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 99-1. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property within CFD No. 99-1. "Public Property" means any property within the boundaries of CFD No. 99-1 that is used for fights-of-way or any other purpose and is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by reference to appropriate records kept by the City's Building Department. Residential Floor Area will be based on the building permit(s) issued for each dwelling unit prior to it being classified as Occupied Residential Property, and shall not change as a result of additions or modifications made after such classification as Occupied Residential Property. "Special Tax" means the: (i) annual special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement pursuant to Section D, and (ii) the Backup Special Tax that may be required as a result of changes in development. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 99- 1 to: (i) pay annual debt service on all Outstanding Bonds as defined in Section A.; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; (v) and pay directly for acquisition and/or construction of facilities, which are authorized to be financed by CFD No. 99-1; (vi) less a credit for Available Funds. CiO, of Chula V~'sta ~ ? ~ Ma), 12, 1999 Community Facilities District No, 99-1 t Page 4 DRAFT #3 "State" memos the State of California. "Taxable Property." means all of the Assessor's Parcels within the boundaries of CFD No. 99-1 which are not exempt from the Special Tax pursuant to law or the provisions of Section F below. "Taxable Property Owner Association Property" means ail Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to the provisions of Section F below. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means, for each Fiscal year, ali Taxable Property not classified as Developed Property or Taxable Properly Owner Association Property. "Zone A" applies only to Developed Properly, and means a specific geo~aphic location known as the Village One area as depicted in Exhibit A attached herein. "Zone B" applies only to Developed Property, and means a specific geographic location known as the Village Five area as depicted in Exhibit A attached herein. "Zone C" applies only to Developed Property, and means a specific geographic location known as the Village One West area as depicted in Exhibit A attached herein. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Properly within CFD No. 99-1 shall be classified as Developed Property, Taxable Property Owner Association Property, or Undeveloped Property, and shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Developed Property shall further be assigned to Zone A, Zone B, or Zone C. The Maximum Annual Special Tax for an Assessor's Parcel of Residential Properly shall be based on the Residential Floor Area and the number of the dwelling units located on such Assessor's Parcel. The Maximum Annual Special Tax for an Assessor's Parcel of Commercial Properly and Community Purpose Facility Property shall be based on the Acreage of such Assessor's Parcel. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Land Use Class of Developed Property within Zone A, Zone B, or Zone C shall be the applicable amount shown on Tables 1, 2 and 3 below. The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property shall equal the specified amount per dwelling unit times the number of dwelling units on such Assessor's Parcel plus the specified amount per square foot times the square footage of Residentlal Floor Area on such Assessor's Parcel. C~O, of Chula Vista C~ ~, ~;~ May 12, 1999 Communi~ Facilities District No 99-1 ~ ~ Page 5 TABLE 1 Maximum Annual Special Tax for Developed Property in Zone A (Village One) Community Facilities District No. 99-1 Land Use Maximum Annual Special Tax Class Description 1 I Residential Property $0 per dwelling unit + $.28 per ~l square foot of Residential Floor I Area 2 Commercial Property $1,600 per Acre 3 Community Purpose Facility $400 per Acre Property TABLE 2 Maximum Annual Special Tax f~r Developed Property in Zone B (Village Five) Community Facilities District No. 99-1 Laud Use ] Class I Description Maximum Annual Special Tax 1 Residential Property $400 per dwelling unit + $.29 per square foot of Residential I Floor Area 2 I Commercial Property $3,717 per Acre 3 i Community Purpose Facility $929 per Acre Property TABLE 3 Maximum Annual Special Tax for Developed Property in Zone C (Village One West) Community Facilities District No. 99-1 Land Use [ Class I Description Maximum Annual Special Tax 1 Residential Property $400 per dwelling unit + $.44 per square foot of Residential I Floor Area 2 I Commercial Property $4,266 per Acre I 3 Community Purpose Facility $1,066 per Acre I Property 2. Undeveloped Property and Taxable Property Owner Association Property The Maximum Annual Special Tax for each Assessor's Parcel classified as Undeveloped Property and Taxable Property Owner Association Property shall be $8,864 per Acre. CiO, qf Chula IQsta ("~t ~ May 12, ]999 Com,nuniv¢ Facihtie~ District P~O. 99-! '[' ~3[ . ~ Page 6 Dt~T #$ D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 1999-2000 and for each following Fiscal Year, the Council shall determine or cause to be determined the Special Tax Requirement and shall determine or cause to be determined the applicable annual Special Tax so that the amount of the Special Taxes equals the Special Tax Requirement for such Fiscal Year. The armual Special Tax shall be calculated and levied each Fiscal Year as follo~vs: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property within Zone A, Zone B, or Zone C at up to 100% of the applicable Maximum Annual Special Tax to satisfy the Special Tax Requirement. Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property and Public Property, if applicable, as provided for in Section F at up to the Maximum Annual Special Tax for Taxable Property Owner Association Property and Public Property, if applicable. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Occupied Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Assessor's Parcel of CFD No. 99-1. E. BACKUP SPECIAL TAX The following definitions apply to this Section E: "Actual Average Special Tax Per Unit" means, for each Planning Area, the ActuaI Special Tax Revenue divided by the sum of the number of units included in any current building permit application(s) plus the number of units within such Planning Area for which building permits have previously been issued. Any Residential Floor Area created by building permits issued after an Assessor's Parcel has been classified a.s Occupied Residential Property shall not be included in determining the Actual Average Special Tax Per Unit. "Actual Special Tax Revenue" means, for each Planning Area, the sum of the total Residential Floor Area shown on any current building permit application(s) plus the total Residential Floor 3a-ea from any previously issued building permits within the Planning Area multiplied by the applicable Maximum Annual Special Tax. Any Residential Floor Area created by building permits issued after an Assessor's Parcel has been classified as Occupied Residential Property shall not be included in determining the Actual Special Tax Revenue. ' ~ Page 7 Communi9, Facilities Disn'ict No. 99-1 ~ DR,4FT #$ "Backup Special Tax Fund" means, for each Planning Area, the fund or account identified in the Indenture to hold Backup Special Tax payments received from property owners within such Planning .&rea. "Expected Special Tax Revenue" means, with respect to each Planning Area, the amount shown in the column so labeled in Tables 4, 5, and 6. "Required Average Special Tax Per Unit/Acre" means, for each Planning Area, the Expected Special Tax Revenue divided by the total expected number of dwelling units or non- residential Acres (as applicable) expected to be developed within the Planning Area, as determined by the CFD Administrator based on tentative maps, Final Residential Subdivision maps, the Development Projection, and all other relevant information available to the CFD Administrator. In cases where residential and non-residential property are both included within a Planning Area, the CFD Administrator may adjust the Required Average Special Tax Per Unit/Acre as necessary. "Share of Annual Debt Service" means, for each Planning Area, the maximum annual debt service on the Bonds multiplied by that Planning Area's percentage of the total Special Tax revenue, as shown in Tables 4, 5, and 6 below. A Planning Area's Share of Annual Debt Service shall be adjusted to reflect any prepayments within that Planning Area. 1. Expected Development and Special Tax Revenues Tables 4, 5, and 6 below identify the amount of development and Special Tax revenue that is currently expected from each Planning Area in Zone A, Zone B or Zone C. Tables 4, 5, and 6 may be revised by the CFD Administrator if the Planning Area boundaries are modified as a result of the annexation of Annexation Parcels to CFD No. 99-1 or otherwise. The owner of the Annexation Parcels, upon such annexation, shall provide the CFD Administrator the total number of residential units or the total number of non- residential Acres, and the total Residential Floor Area expected to be developed within the land area of such Annexation Parcels. The CFD Administrator shall utilize this information to modify Tables 5 and 6 to include the additional Expected Special Tax Revenue, and to recalculate the percent of total revenue for each Planning Area. City qf Chula Vista (~"~) ~ C!~ Mav 12, 1999 CommumO, Facilities District No. 99-1 ,fi ~ '~*~ Page 8 DtL~FT TABLE 4 Expected Development and Special Tax Revenue by Planning Area within Zone A Community Facilities District No. 99-1 NUMBER EXPECTED OF TOTAL SPECIAL PERCENT P L.~d'q2qIN G EXPECTED UNITS/ RESIDENTIAL TAX OF TOTAL AREA PRODUCT TYPE ACRES FLOOR AREA REVENUE REVENUE R-6 Residential Property 77 units 179,872 $50,364 5.09% R-7 Residential Property 131 units 411,078 115,102 11.64% R-9 Residential Property 74 units 182,928 51,220 5.18% R-10 Residential Property 123 units 324,351 90,818 9.18% R-12 Residential Property 83 units 168,988 47,317 4.78% R-13 Residential Property 88 units 146,256 40,952 4.14% R-14 Residential Property 139 units 215,589 60,365 6.10% R- 15 Residential Property '464 units 464,000 129,920 13.13% R-16 Residential Property 115 units ~ 178,365 49,942 5.05% R-17 Residential Property 98 units 199,528 55,868 5.65% R-18 Residential Property 74 units 122,988 34,437 3.48% R-19 Residential Property 204 units 204,000 57,120 5.77% R-20 Residential Property 160 units 160,000 44,800 4.53% R-21 Residential Property 168 units 168,000 47,040 4.76% R-47 Residential Property 174 units 156,600 43,848 4.43% R-48 i Residential Property 96 units 195,456 54,728 5.53% C-1 CommercialPropertyl 8.1 Acres N/A 12,960 1.31% CPF-1 Community Purpose 1.5 Acres N/A 600 0.06% Facility ProCerty CPF-2 Community Purpose 4.5 Acres N/A 1,800 I 0.18% Facility ProCertv TOTAL 2_,268 units I I $989,201 ] 100.00% CommuniO; Facilities District No. 99-1 Page 9 DPMFT #3 TABLE 5 Expected Development and Special Tax Revenue by Planning Area within Zone B Community Facilities District No. 99-1 NUMBER EXPECTED OF TOTAL SPECIAL PERCENT PLANNING EXPECTED UNITS/ RESIDENTIAL TAX OF TOTAL AREA PRODUCT TYPE ACRES FLOOR AREA REVENUE REVENUE R-25 Residential Property 56 units 182,000 $75,180 5.48% R-26A Residential Property 29 units 91,002 37,991 2.77% R-26B Residential Property 34 units 92,295 40,366 2.94% R-27 Residential Property 69 units 136,517 67,190 4.90% R-28 Residential Property 73 units 121,326 64,385 4.69% R-29 Residential Property 83 units 126,658 69,931 5.10% R-30A Residential Property 247 units 247,000 170,430 12.41% R-30B Residential Property 326 units 326,000 224,940 16.38% R-31 Residential Property 85 units 168,810 82,955 6.05% R-32A Residential Property 61 units 143,899 60,417 4.40% R-32B Residential Property 57 units 114,884 63,662 4.64% R-33 Residential Property 42 units 117,600 49,863 3.63% R-34 Residential Property 35 units 92,295 41,553 3.03% R-35 Residential Property 36 units 112,968 47,161 3.44% R-36 Residential Property 62 units 153,264 69,247 5.05% R-37 Residential Property I 60 units 99,720 52,919 3.86% R-38 Residential Property [ 43 units ~ 87,548 42,589 3.10% R-39 Residential Property 122 units 193,004 106,576 7.77% CPF-5 . FacilityC°mmunitYPropertyPurp°se 5.3 acres N/A 4,924 0.36% TOTAL I 1,520 units I $1,372,279 100.00% Commum'O: Facilities Disn'ict No. 99-l Page lO DIL4FT #3 TABLE 6 · Expected Development and Special Tax Revenue by Planning Area within Zone C Community Facilities District No. 99-1 NUMBER EXPECTED OF TOTAL SPECIAL PERCENT PLANNING EXPECTED UNITS/ RESIDENTIAL TAX OF TOTAL ,~REA PRODUCT TYPE ACRES FLOOR AREA REVENUE REVEl,rUE R-49A/B Residential Property 116 units 242,962 $153,303 10.79% I R-50 Residential Property 84 units 207,606 124,947 8.79% I R-51AfB Residential Property 89 units 225,081 134,636 9.48% R-52A/B Residential Property 75 units 253,688 141,623 9.97% R-53 Residential Property 36 units 121,770 67,979 4.78% R-54 Residential Property 38 units 89,300 52,820 3.72% R-55 Residential Property 87 units 278,400 179,307 12.62% R-56 :Residential Property ' 75 units 195,000 144,147 10.14% R-57 Residential Property 94 units 216,200 159,984 11.26% R-58 Residential Property 60 units 192,000 123,660 8.70% R-59 Residential Property 91 units 236,600 138,502 9.75% TOTAL 845 units $1,420,908 I00.00% 2. Calculation of Required Average Special Tax Per Unit/Acre At the time the first building permit application for a Planning Area is submitted to the City, the CFD Administrator shall calculate the Required Average Special Tax Per Unit/Acre. 3. Backup Special Tax due to Loss of Units/Acres If at any time after the Required Average Special Tax Per Unit/ Acre has been calculated initially for a Planning Area, the CFD Administrator determines that based on tentative maps, Final Residential Subdivision maps, the Development Projection, and any other available information there has been a reduction in the total expected number of dwelling units or non-residential Acres within that Planning Area, then a Backup Special Tax payment shall be required for each lost unit or Acre prior to the issuance of any additional building permits or the recordation of any additional final maps for such Planning Area. 4. Backup Special Tax due to Loss of Residential Floor Area For Planning Areas that include Residential Property, before each building permit (or group of permits) is issued, the CFD Administrator shall calculate the Actual Average Special Tax Per Unit for the Planning Area. If the Actual Average Special Tax Per Unit is less than the Required Average Special Tax Per Unit then a Backup Special Tax payment will be required prior to issuance of the building permit(s) included within the calculation. Corem unity Facilities District No. 99- l · ~J Page ] ] DRA?T #3 5. Calculation of Backup Special Tax The Backup Special Tax payment amount will be calculated using the prepayment formula described in Section 1.1, with the following exceptions: (i) if the Backup Special Tax is required as a result of Section E.3, then the amount used in Paragraph No. 1 of the prepayment formula described in Section 1.1 shall equal the number of lost units or Acres, as applicable, times the Required Average Special Tax Per UnitY Acre. In the event Residential Property as identified in Tables 4, 5, and 6 is rezoned in whole or part to non-residential property, the CFD Administrator shall determine the Maximum Annual Special Tax revenue by using the Developed Property rates applicable to such non-residential property and the amount so derived shall be applied as a reduction to the amount determined in the preceding sentence; (ii) if the Backup Special Tax is required as a result of Section E.4, then the amount used in Paragraph No. 1 of the prepayment formula described in Section 1.1 shall equal the difference between the Actual Average Special Tax Per Unit and the Required Average Special Tax Per Unit times the sum of the number of units for which permits are being issued plus the number of units within the Planning Area for which building permits have previously been issued. The amount determined pursuant to the preceding sentence shall be reduced by the balance in the Backup Special Tax Fund that ]nas been established for such Planning Area; (iii) in Paragraph No. 7 of the prepayment formula described in Section I.I, compute the amount needed to pay interest on the Bond Redemption Amount until the first redemption date that occurs after five years from the date of the first Backup Special Tax payment in the Planning Area; (iv) any Backup Special Tax payments received for a Planning Area (less Administrative Fees and Expenses) shall be deposited into the Backup Special Tax Fund for that Planning Area and disbursed pursuant to the Indenture; and (v) the Maximum Annual Special Taxes applicable to property within a Planning Area shall not be reduced or relieved as a result of payment of the Backup Special Tax. 6. Use/Release of Backup Special Tax Payments When a Planning Area reaches full buildout (i.e. all expected building permits have been issued), the CFD Administrator shall calculate the actual Developed Property Maximum Annual Special Tax revenues that will be generated from such Planning Area. If the actual Developed Property Maximum Annual Special Tax revenues are greater than or equal to 1.1 times that Planning Area's Share of Annual Debt Service, the balance in the Backup Special Tax Fund shall be returned to the payer. If Backup Special Taxes have been paid by more than one entity, the amount of Backup Special Taxes returned to each payer shall be in proportion to the amount paid by each entity. If the actual Developed Property Maximum Annual Special Tax revenues are less than 1.i times that Planning Area's Share of Annual Debt Service, then to the extent necessary to generate 110% coverage, the balance in the Backup Special Tax Fund shall be used to redeem bonds on the next available redemption date. Any moneys remaining in Backup Special Tax Fund shall be returned to the payer. If a Planning Area has not reached full buildout within five years after the first payment of Backup Special Taxes for such Planning Area, then all moneys in the Backup Special Tax Fund shall be used to redeem bonds on the next available redemption date. CiO' of Chula Vista May 12, 1999 Community Facilities District No. 99 1 Page 12 DRAFT #3 F. EXEMPTIONS No Special Tax shall be levied on? up to 517.5 Acres of Property Owner Association Property and Public Property. Tax-exempt status will be irrevocably assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property or Public Property. After the limit of 517.5 exempt Acres has been reached, the Maximum Annual Special Tax obligation for any additional Public Property shall be prepaid in full pursuant to Section 1.1, prior to the transfer/dedication of such property. Until the Maximum Annual Special Tax obligation for any such property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Undeveloped Property. Taxable Property Owner Association Property shall be subject to the levy of the Special Tax Undeveloped Property and shall be taxed Proportionately as part of the third step in Section D above, at up to 100% of the Maximum Annual Special Tax for Taxable Property Owner Association Property. G. REVIEW/APPEAL COMMITTEE The Council shall establish as part of the proceedings and administration of CFD No. 99-1 a special three-member Review/Appeal Committee. Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error may file a written notice with the Review/Appeal Committee appealing the amount of the Special Tax levied on such Assessor's Parcel. The Review/Appeal Committee may establish such procedures as it deems necessary to undertake the review of any such appeal. The Review/Appeal Conunittee shall interpret this Rate and Method of Apportioument and make determinations relative to the armual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. H. MANNER OF COLLECTION The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 99-1 may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Assessor's Parcels which are delinquent in the payment of Special Taxes. Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. I. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section I: Ci~ of Chula Vista May 12, 1999 Community Facilities District No. 99-1 Page ]3 DiL4FT #3 "CFD Public Facilities" means either $31.6 million in 1999 dollars, which shall increase by the Constraction Inflation Index on July 1, 2000, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the public facilities under the authorized bonding program for CFD No. 99-1, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the annual percentage change in the Engineering News-Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds as defined in Section A., minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment, and minus public facilities costs paid directly with Special Taxes. "Outstanding Bonds" means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes. 1. Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied by an Assessor's Parcel of Developed Property, Undeveloped Property for which a building permit has been issued, or Public Property. The Maximum Annual Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. )m owner of an Assessor's Parcel intending to prepay the Maximum Annual Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. CiO~ of Chula l/ista May 12, 1999 Communiiy Facilities District No. 99-1 Page I4 DRAFT #3 The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: 1. For Assessor's Parcels of Developed Property, compute the Maximum Annual Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property to be prepaid, compute the Maximum Annual Special Tax for that Assessor's Parcel as though it was already designated as Deyeloped Property, based upon the building permit which has already been issued for that Assessor's Parcel. For Assessor's Parcels of Public Property to be prepaid, compute the Maximum Annual Special Tax for that Assessor's Parcel. 2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Special Tax revenues in Tables 4, 5, and 6 in Section E., excluding any Assessor's Parcels, which have been prepaid. 3. Multiply the quotient computed pursuant to paragraph 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). 4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemt~tion Premium"). 5. Compute the Future Facilities Costs. 6. Multiply the quotient computed pursuant to paragraph 2 by the amount determined pursuant to paragraph 5 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 8. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. C/ty of Chula gista May 12, 1999 Communio, Facilities District No. 99-1 [0 Page 15 DRAFT #3 9. Detem~ine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 7 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. Verify the administrative fees and expenses of CFD No. 99-1, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 2 by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit"). 15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 6, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount"). 16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to para~aph 6 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 99-1. The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special City of Chula Vista :,i~ May 12, 1999 Communi9: Facilities District No. 99-1 [ Page 16 DRAFT #3 Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Board shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within CFD No. 99-1 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. 2. Prepayment in Part The Maximum Annual Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has be~.n issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section L I; except that a partial prepayment shall be calculated according to the following formula: PP = PE x F These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section I. 1 F = the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by which the Maximum Annual Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Annual Special Tax for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Paragraph 16 of Section I. 1, and (ii) indicate in the records of CFD No. 99-1 that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. CiO, of Chula Vista 9 May 12, 1999 CommuniO, Facilities District No. 99-1 ~ ~ Page 17 DP~£T #3 J. TERM OF MA~XIMUM ANNUAL SPECIAL TA~ The Maximum Annual Special Tax Shall be levied commencing in Fiscal Year 1999-2000 to the extent necessary to fully satisfy the Special Tax Requirement for a period no longer than the 2034-2035 Fiscal Year. ciO, of Chula Vista ~/f'i~3 ~ L/:'3 Ma), 12, 1999 Communi~. Factlities Dist~'ict No. 99-] Page ]8 Otay Project, L.P. 270 Newport Center Dr., Suite 200 Newport Beach, CA 92660 (949) 644-4202 * Fax (949) 644-7856 September 1 I, 200I Mr. David Rowlands Mr. Bob Powell City of Chula Vista 276 4t~ Avenue Chula Vista. CA 91910 Re: City Goals and Policies on Community Facilities District Financing - CFD No. 99-1 Gentlemen: As you know, the City of Chula Vista ("City") has established value-to-lien criteria in their Goals and Policies Statement relative to Community Facilities District financing. The mtevant excerpt from the Goals and Policies states that "A community facilities disu'ict with a value-to-debt ratio of less than 4:1 but equal to or greater than 3:1 may be approved in the sole discretion of the City Council, upon a determination by the City Manager, after consultation with the Finance Director, the bond counsel, the underwriter and the financial advisor, that a value-to-debt ratio of less than 4:1 is financially prudent under the circumstances of the particular community facilities district." Based on the appraisal report prepared by Bruce Hull & Associates, the appraised value for the remaining Otay Project L.P. holdings (the "Otay Project, L.P. Properties") does not, as of the date of value, provide an overall value that will result in the value-to-lien ratio of 4:l or more for the Otay Pr~ect, L.P. Properties. We believe that the particular circumstances of both CFD No. 99-1 and the Otay Project, L.P. Properties should allow the City to determine that a value-to-lien ratio of 3:1 or more for the Otay Project, L.P. Properties is financially prudent. The circumstances that are present in CFD No. 99- t are described as follows: 1. Otay Project L.P. has expended over, including the Otay Project, L.P. Properties, $91,000,000 in infrastructure improvements to improve the property within CFD No. 99- 1 as of June 31st. The remaining improvements to be constructed are anticipated to be substantially completed by the end of 2002. 2. Within the Otay Project, L.P. Properties, Otay Project L.P. has only 1,425 of the 4,631 total planned residential dwelling units within the project remaining to sell to merchant homebuilders including affiliated and third party entities. Additionally, Otay Project, L.P. is in negotiations for the sale of an additional 768 residential units in planning areas, R30B, R39, R56, R57, R58 and R59 within Villages One West South and Village Five EXHIBIT 5 Mr. David Rowlands Mr. Bob Powell City of Chula Vista ~ included among the Oily Project, L.P. Properties, all of which are anticipated to close before year end. Oily Project, L.P. anticipates that by year end it will have sold all but 657 (14%) of the residential units within CFD No. 99-1 to merchant builders. Our internal business plan provides an expectation that Otay Project, L.P. will fully divest its holdings in the Oily Project, L.P. Properties through sales to merchant builders by the end of 2002. 3. Although the CFD appraiser did not provide a new value conclusion in their update letter, a current value conclusion for the Otay Project, L.P. Properties would very likely be higher than the current April 2, 2001 date of value based on: i) increases in home and finished lot pricing since the appraisal date of value. ii) an additional approximately $5,000,000 which has been expended on infrastructure improvements just on the Oily Project, L.P. Properties since the appraisal date of value.. 4. All property within CFD No. 99-1, including the Oily Project, L.P. Properties has approved tentative maps that meet the housing demand requirements in the residential marketplace. The existence of approved tentative maps makes such properties readily marketable to merchant builders who in turn record final maps and construct houses. 5. The City's Policy Statement of Assessment Districts only requires a value-to-lien ratio of 3:1. As you know, assessment districts and community facilities dislxicts are substantially similar from a bond pricing and security perspective. 6. The Mello-Roos Community Facilities District Act of 1982 requires only a value-to-lien ratio of 3:l and a significant percentage of bonds issued by local governments in California utilize this value-to-lien ratio. Based on the above-described circumstances relative to the Oily Project, L.P. Properties, it is respectfully requested that the City approve a value-to-lien ratio of 3:1 or more for these properties for this financing. If you have any questions or comments or desire additional information, please do not hesitate to call me. Sincerely, Chief Financial Officer cc: George Krempl, City of Chula Vista Bill Huck, Stone & Youngberg Warren Diven, Brown, Diven, Hessel and Brewer Tom Johnsen, Fieldman Rolapp & Associates EXHIBIT 6 9.14.01 FIRST SUPPLEMENTAL RESTATED BOND INDENTURE by and between City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) and U.S. Bank Trust National Association, as Fiscal Agent Dated as of September 1, 2001 Re: $ City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village O~e, Village Five and Village One West) Series 2001 Bonds EXHIBIT 7 9.14.01 FIRST SUPPLEMENTAL RESTATED BOND INDENTURE This First Supplemental Restated Bond Indenture, dated as of September 1, 2001, is entered into by and between Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "District"), a community facilities district organized and existing under the laws of the State of California, and U.S. Bank Trust National Association, as Fiscal Agent (the "Fiscal Agent"), pursuant to and in order to supplement that Restated Bond Indenture dated February 15, 2000 and effective as of March 1, 2000 (the "Restated Indenture") and entered into by and between the District and the Fiscal Agent to provide for the issuance of the Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) Series 2001 Bonds. ARTICLE I. DEFINITIONS SECTION 1.01 Definitions. Except as otherwise defined in this First Supplemental Restated Bond Indenture, the capitalized terms used herein shall have the meanings given such terms in the Restated Indenture. "Indenture" means the Restated Indenture as amended by the First Supplemental Restated Bond Indenture. "Series 1999 Bonds Acquisition and Construction Account" means the account by that name established in the Acquisition and Construction Fund pursuant to Section 3.01 hereof. "Series 1999 Bonds Rebate Account" means the account by that name established in the Rebate Fund pursuant to Section 3.01 hereofi "Series 2001 Bonds Redemption Account" means the account by that name established in the Redemption Fund pursuant to Section 3.01 hereof. "Series 2001 Bonds" shall mean the $ Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) Series 2001 Bonds issued pursuant to the Indenture as amended by the First Supplemental Restated Bond Indenture. "Series 2001 Bonds Acquisition and Construction Account" means the account by that name established in the Acquisition and Construction Fund pursuant to Section 3.01 hereof. "Series 2001 Bonds Rebate Account" means the account by that name established in the Rebate Fund pursuant to Section 3.01 hereof. "Series 2001 Bonds Redemption Account" means the account by that name established in the Redemption Fund pursuant to Section 3.01 hereof. EXHIBIT 7 9.14.01 ARTICLE Il. GENERAL AUTHORIZATION AND TERMS SECTION 2.01 Amount, Issuance and Purpose. The Series 2001 Bonds shall be designated City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) Series 2001 Bonds. The purpose of the Bonds shall be to (a) pay for the acquisition and/or construction of the Project, Co) fund the Reserve Fund, and (c) pay the Costs of Issuance. SECTION 2.02 Terms of the Series 2001 Bonds. The Series 2001 Bonds shall mature on September 1 in the years, and in the respective principal amounts set forth opposite such years, and shall bear interest at the respective rates per annum, as follows: Maturity Date Principal (September 1) Amount Interest Rate(%) ARTICLE III - FUNDS AND ACCOUNTS SECTION 3.01 Establishment of Accounts. In addition to the funds and accounts established by the Indenture, the following accounts identified in this Section 3.01 are hereby created and established and shall be maintained by the Fiscal Agent: A. Series 2001 Bonds Capitalized Interest Subaccount of the Interest Account of the Bond Service Fund; B. Series 1999 Bonds Rebate Account of the Rebate Fund; C. Series 2001 Bonds Rebate Account of the Rebate Fund; D. Series 1999 Bonds Redemption Account of the Redemption Fund; E. Series 2001 Bonds Redemption Account of the Redemption Fund; £~ /' 2 ~1 9.14.01 , F. Series 1999 Bonds Acquisition and Construction Account of the Acquisition and Construction Fund; and G. Series 2001 Bonds Acquisition and Construction Account of the Acquisition and Construction Fund. SECTION 3.02 Bond Service Fund Section 3.03 of the Indenture is hereby amended in its entirety to read as follows: "A. Interest Account. All moneys in the Interest Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity). The Fiscal Agent shall withdraw all moneys Sn deposit in the Series 2001 Bonds Capitalized Interest Subaccount to pay interest on the Series 2001 Bonds before utilizing other moneys on deposit in the Interest Account for such purpose." SECTION 3.03 Acquisition and Construction Fund. Section 3.05 of the Indenture is hereby amended in its entirety to read as follows: "A. On the Date of Delivery of the Series 2001 Bonds and prior to the deposit of the proceeds of such Bonds in the Series 2001 Bonds Acquisition and Construction Account pursuant to Section 3.__, the Fiscal Agent shall deposit all funds then on deposit in the Acquisition and Construction Fund in the Series 1999 Bonds Acquisition and Construction Account. The Fiscal Agent shall, fi.om time to time, disburse monies fi.om the Acquisition and Construction Fund to pay the Project Costs; provided, however, the Fiscal Agent shall first disburse all funds then on deposit in the Series 1999 Bonds Acquisition and Construction Account prior to disbursing funds from the Series 2001 Bonds Acquisition and Construction Account. Upon receipt of a payment request duly executed by an Authorized Representative, the Fiscal Agent shall pay the Project Costs from amounts in the Acquisition and Construction Fund directly to the contractor or such other person, corporation or entity entitled to payment hereunder (including reimbursements, if any, to the District) unless the District requests payment to be made to the contractor or such other party jointly, in which case said Project Costs shall be paid jointly. The Fiscal Agent may rely on an executed payment request as complete authorization for said payments. B. After the final payment or reimbursement of all Project Costs as certified by delivery of a written notice fi.om an Authorized Representative to the Fiscal Agent, the Fiscal Agent shall transfer excess monies, if any, on deposit in, or subsequently deposited in, the Series 1999 Bonds Acquisition and Construction 3 9.14.01 Account to the Fiscal Agent for deposit in the Special Tax Fund or the Series 1999 Bonds Redemption Account as an Authorized Representative may direct in writing and the Fiscal Agent shall apply the amount so transferred in accordance with Section 3.02 or 3.06 as directed by the Authorized Representative. After the final payment or reimbursement of all Project Costs as certified by delivery of a written notice from an Authorized Representative to the Fiscal Agent, the Fiscal Agent shall transfer excess monies, if any, on deposit in, or subsequently deposited in, the Series 2001 Bonds Acquisition and Construction Account to the Fiscal Agent for deposit in the Special Tax Fund or the Series 2001 Bonds Redemption Account as an Authorized Representative may direct in writing and the Fiscal Agent shall apply the amount so transferred in accordance with Section 3.02 or 3.06 as directed by the Authorized Representative. C. On or after June 1, 2002, ,the District may deliver to the Fiscal Agent a written certificate executed by an Authorized Representative certifying that the District, in its sole and absolute discretion_has determined that it will not be necessary for the District to utilize the the funds then remaining on deposit in the Series 1999 Bonds Acquisition and Construction Account to fund Project Costs and directing the Fiscal Agent to transfer all such moneys to the Redemption Fund for the purpose of redeeming Series 1999 Bonds prior to maturity pursuant to Section 4.03B(2). Upon receipt of such certificate, the Fiscal Agent shall transfer such moneys to the Redemption Fund as so directed. On or after 1, 2004, the District may deliver to the Fiscal Agent a written certificate executed by an Authorized Representative certifying that the District, in its sole and absolute discretion_has determined that it will not be necessary for the District to utilize the funds then remaining on deposit in the Series 2001 Bonds Acquisition and Construction Account to fund Project Costs and directing the Fiscal Agent to transfer all such moneys to the Redemption Fund for the purpose of redeeming Series 2001 Bonds prior to maturity pursuant to Section 4.03B(2). Upon receipt of such certificate, the Fiscal Agent shall transfer such moneys to the Redemption Fund as so directed. D. Notwithstanding anything herein to the contrary, if on the date which is three (3) years fi'om the Date of Delivery of any series of the Bonds, any funds derived from such series of the Bonds remain on deposit in the Acquisition and Construction Fund, the Fiscal Agent shall mediately restrict the Yield on such amounts so that the Yield earned on the investment of such amounts is not in excess of the Yield on such series of the Bonds, unless in the written opirdon of Bond Counsel delivered to the Fiscal Agent such restriction is not necessary to prevent an impairment of the exclusion of interest on such series of the Bonds from gross income for federal income tax purposes." 3.03 Rebate Fund Section 3.07 is hereby amended to read as follows: 9.14.01 "A. On the Date of Delivery of the Series 2001 Bonds, the Fiscal Agent shall deposit all funds then on deposit in the Rebate Fund in the Series 1999 Bonds Rebate Account. The District shall calculate Excess Investment Earnings on the Series 1999 Bonds as defined in, and in accordance with, the Rebate Instructions, and shall, in writing, direct the Fiscal Agent to transfer fimds to the Series 1999 Rebate Account fi.om funds furnished by the District as provided for in this Indenture and the Rebate Instructions. B. The District shall calculate Excess Investment Earnings on the Series 2001 Bonds as defined in, and in accordance with, the Rebate Instructions, and shall, in writing, direct the Fiscal Agent to transfer funds to the Series 2001 Rebate Account fi.om funds furnished by the District as provided for in this Indenture and the Rebate Instructions. C. Notwithstanding the foregoing, the Rebate Instructions, including the method of computing Excess Earnings (as defined in the Rebate Instructions) may be modified, in whole or in part, without the consent of the Owners of the Bonds, upon receipt by the District of an opinion of Bond Cotmsel to the effect that such modification shall not adversely affect the exclusion fi.om gross income of interest on the Bonds then Outstanding for federal income tax purposes. D. The Fiscal Agent shall not be responsible for calculating rebate amounts or for the adequacy or correctness of any rebate report or rebate calculations The Fiscal Agent shall be deemed conclusively to have complied with the provisions of this Indenture regarding calculation and payment of rebate if it follows the directions of the District and it shall have no independent duty to review such calculations or enforce the compliance by the District with such rebate requirements. SECTION 3.04 Disposition of Series 2001 Bond Proceeds. Upon the receipt of $ as sale proceeds for the Series 2001 Bonds (being the par amount of $ less the underwriter's discount of $ ), the Fiscal Agent did transfer or set aside and cieposit or cause to be deposited such funds as follows: $ shall be deposited in the Series 2001 Bonds Acquisition and Construction Account of the Acquisition and Construction Fund; $ shall be deposited in the Series 2001 Bonds Capitalized Interest Subaccotmt of the Interest Account of the Bond Service Fund; $ shall be deposited in the Reserve Fund; EXHIBIT 7 9.14.01 $ shall be deposited into the Costs of Issuance Fund. ARTICLE IV REDEMPTION OF SERIES 2001 BONDS SECTION 4.01 Series 2001 Bonds - Redemption Prices and Terms. A. Optional Redemption The Series 2001 Bonds maturing on and after September 1, 20__ may be redeemed at the option of the District prior to maturity as a whole, or in part on any Interest Payment Date on and after September 1, 20__, from such maturities as are selected by the District, and by lot within a maturity, from any source of funds, at the following redemption prices (expressed as percentages of the principal amount of the Series 2001 Bonds to be redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Price September 1, 20__ and March 1,20__ 10,2% September t, 20__ and March 1, 20__ 101% September 1, 20__ and thereafter 100% B. Extraordinary Mandatory. Redemption. (1) Redemption From Proceeds of Special Tax Prepayment. The Series 1999 Bonds may be redeemed on any Interest Payment Date, prior to maturity, as a whole or in part on a pro rata basis among maturities from the prepayment of Special Taxes pursuant to the Special Tax RMA. Such extraordinary mandatory redemption of the Series 2001 Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Series 2001 Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Redemption Price On or prior to March 1, 20__ I03% September 1, 20__ and March 1, 20__ 102% September 1, 20__ and March 1, 20__ 101% September 1, 20__ and thereafter 100% (2) Redemption from Unexpended Proceeds in the Series 2001 Bonds Acquisition and Construction Account. The Series 2001 Bonds may be redeemed prior to maturity, on 1, 2004, or any Interest Payment Date thereafter in part on a pro rata basis among maturities, fi'om funds transferred from the Acquisition and Construction Fund to the Redemption Fund pursuant to Section 3.05. Such extraordinary mandatory redemption of the Series 2001 Bonds shall be at a redemption price equal to the principal amount of the Series 2001 Bonds to be EXHIBIT 7 9.14.01 redeemed, without premium, together with accrued interest thereon to the date of redemption. C. Mandatory Sinking Fund Redemption The Series 2001 Bonds maturing on September 1, 20__ are subject to mandatory sinking fund redemption, in part by lot, on September 1 in each year commencing September 1, 20__, at a redemption price equal to the principal mount of the Series 2001 Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amount and in the years shown on the following redemption schedule: Redemption Principal Redemption Date Principal Date Amount (September 1) Amount (September 1) The Series 2001 Bonds maturing on September 1, 20__ are subject to mandatory sinking fired redemption, in part, by lot, on September 1 of each year commencing September 1, 20__, at a redemption price equal to the principal amount of the Series 2001 Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown in the following redemption schedule. Redemption Principal Redemption Date Principal Date Amount (September 1 ) Amount (September 1) EXHIBIT 7 9.14.01 ARTICLE V. COVENANTS SECTION 5.01 Parity Bonds Section 6.04C is hereby amended in its entirety to read as follows: "C. The District will not issue any other obligations payable, principal or interest, from the Special Taxes which have, or purport to have, any lien upon the Special Taxes superior to or on a parity with the lien of the Series 1999 Bonds and the Series 2001 Bonds. Nothing in this Indenture shall, however, prevent the District fi-om issuing and selling, pursuant to law, refunding bonds or other refunding obligations payable from and having a first lien upon the Special Taxes on a parity with the Outstanding Series 1999 Bonds and Outstanding Series 2001 Bonds." ARTICLE VI. BOND FORM SECTION 6.01 Form of Series 2001 Bonds. The format of the Series 2001 Bonds as authorized and to be issued for these proceedings shall be substantially in the form as set forth in the attached, referenced and incorporated Exhibit SECTION 5.02 Temporary Bonds. Any Series 2001 Bonds issued under the Indenture as amended by this First Supplemental Restated Bond Indenture may be initially issued in temporary form exchangeable for definitive bonds. The Series 2001 Bonds may be issued as one temporary bond with an attached maturity schedule and interest rate schedule to represent all Series 2001 Bonds. The temporary bond may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the District and may contain such references to any of the provisions of this Indenture as may be appropriate. Every temporary Series 2001 Bond shall be executed by the District in substantially the same manner as provided in Section 2.06 of the Indenture. If the District issues one or more temporary Series 2001 Bonds, it will execute and furnish definitive Series 2001 Bonds without delay upon the request of any Owner and thereupon the temporary bonds may be surrendered for cancellation at the Principal Corporate Trust Office of the Fiscal Agent, and the District shall deliver in exchange for such temporary bonds an equal aggregate principal amount of definitive Series 2001 Bonds of the same interest rates and maturities. Until so exchanged, the temporary bonds shall be entitled to the same benefits under the Indenture as definitive Series 2001 Bonds issued hereunder. FYHIRTT 7 9.14.01 IN WITNESS WHEREOF, the District and the Fiscal Agent have executed this Bond Indenture effective the date first above written. COMMUNITY FACILITIES DISTRICT NO. 99-t (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) By: DIRECTOR OF FINANCE U.S. BANK TRUST NATIONAL ASSOCIATION, as Fiscal Agent By: AUTHORIZED OFFICER EXHIBIT 7 COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE V~EST) 2001 SPECIAL TAX BONDS BOND PURCHASE AGREEMENT September __, 2001 Community Facilities District No. 99-1 (Otay Ranch Spa One--Portions of Village One, Village One West and Village Five) City. of Chula Vista Chula Vista, California Ladies and Gentlemen: Stone & Youngberg LLC (the "Underwriter"), acting nor as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement with Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "District") which was fonned by the City of Chula Vista (the "City") which, upon acceptance, will be binding upon the District and upon the Underwriter. This offer is made subject to acceptance of it by the District on the date hereof, and if not accepted will be subject to withdrawal by the Underwriter upon notice delivered to the District at any time prior to the acceptance hereof by the District. 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter agrees to purchase from the District, and the District agrees to sell to the Underwriter, all (but not less than all) of the Community Facilities District No. 99-1 (Otay Ranch Spa One-Portions of Village One, Village Five and Village One West) 2001 Special Tax Bonds (the "Bonds") in the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated the Closing Date (hereinafter defined), and bear interest (payable semiannually on March 1 and September 1 in each year, commencing March 1, 2002) at the rates per annum and maturing on the dates and in the amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be the amount specified as such in Exhibit A hereto. The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, the Bond Indenture (the "Original Indenture") by and between the District and U.S. Bank Trust National Association, as Fiscal Agent (the "Fiscal Agent"), dated as of November 1, 1999, approved in Resolution No. 19695 adopted by the City Council of the City, as the legislative body of the District, on November 30, 1999, respectively (the "Resolution of Issuance"), as supplemented and amended by the First Supplemental Bond Indenture, dated as of September 1, 2001, by and between the District and the Fiscal Agent (the "Supplemental Indenture" and together with the Original Indenture, DOCSOC\844565v2~22450120 EXHIBIT 8 the "Bond Indenture"), approved in Resolution No. __, adopted by the City Council of the City, as the legislative body of the District, on September __, 2001 (the "Second Resolution of Issuance"). The Bonds and interest thereon will be payable from a special tax (the "Special Tax") levied ~and collected on the taxable land within the District in accordance with Resolution No. 19584 adopted by the City Council on August 31, 1999 (the "Resolution of Formation"). Proceeds of the sale of the Bonds will be used in accordance with the Bond Indenture and the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act") and the City of Chula Vista Community Facilities District Ordinance ("Authorizing Ordinance" and together with the Act the "Law"), to acquire certain public improvements described in the Resolution of Formation. The Resolution of Issuance, the Second Resolution of Issuance, the Resolution of Formation, the Authorizing Ordinance, Ordinance No. 2795, Resolution No. 19585, Resolution No. and all other resolutions adopted with respect to the formation of the District are collectively referred to herein as the "District Resolutions." (b) At or prior to the acceptance hereof by the District, the District shall cause to be delivered to the Underwriter (i) a Certificate of Representations and Warranties of the City, dated as of the date of this Purchase Agreement (the "City Certificate"), in substantially the form attached hereto as Exhibit B, with only such changes therein as shall have been accepted by the Underwriter, and (ii)a certificate executed by Otay Project, LLC and Otay Project, L.P. (collectively the "Developer") dated on or prior to the date of this Purchase Agreement and addressed to the Underwriter and the District deeming the information in the Preliminary Official Statement (as defined in (c) below) relating to the Developer final and accurate as of its date. (c) Subsequent to its receipt of a certificate from the District deeming the Preliminary Official Statement for the Bonds, dated September__, 2001(which Preliminary Official Statement, together with the cover page and all appendices thereto, is herein collectively referred to as the "Preliminary Official Statement" and which, as amended with the prior approval of the Underwriter and executed by the District, will be referred to herein as the "Official Statement") final for purposes of Rule 15c2-12 of the Securities and Exchange Commission ("Rule 15c2-12"), the Underwriter has distributed copies of the Preliminary Official Statement. The District hereby ratifies the use by the Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and distribute the final Official Statement dated the date hereof (including all information previously permitted to have been omitted by Rule 15c2-12 and any supplements and amendments thereto as have been approved by the City as evidenced by the execution and delivery of such document by an officer of the City (the "Official Statement"), the Bond Indenture, the Continuing Disclosure Agreement of the District (the "District Disclosure Agreement"), this Bond Purchase Agreement, any other documents or contracts to which City or the District is a party, and all information contained therein, and all other documents, certificates and statements furnished by the City and the District to the Underwriter in connection with the transactions contemplated by this Bond Purchase Agreement, in connection with the offer and sale of the Bonds by the Underwhter. The Underwriter hereby agrees to deliver a copy of the Official Statement to a national repository on or before the Closing Date (as hereinafter defined) and to each investor that purchases any of the Bonds prior to the "end of the underwriting period" (as such term is defined in Section 2(g) below) and otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. (d) At 8:00 A.M., Pacific Daylight Time, on September__, 2001, or at such earlier time or date as shall be agreed upon by the Underwriter and the District (such time and date being herein referred to as the "Closing Date"), the District will deliver (i) to the Depository Trust DOCSOCx844565v2L222450120 [ * EXHIBIT 8 Company in New York, New York, the Bonds in definitive form (all Bonds being in book-entry form registered in the name of Cede & Co. and having .the CUSIP numbers assigned to them printed thereon), duly executed by the officers of the District as provided in the Bond Indenture, and (ii) to the Underwriter, at the offices of Best, Bern& Krieger LLP, Bond Counsel, or at such other place as shall be mutually agreed upon by the District and the Underwriter, the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in Los Angeles clearinghouse funds (such delivery and payment being herein referred to as the "Closing"). Notwithstanding the foregoing, the Underwriter may, in its discretion, accept delivery of the Bonds in temporary form upon making arrangements with the District which are satisfactory to the Underwriter relating to the delivery of the Bonds in definitive form. 2. Representations, Warranties and Agreements of the District. The District represents, warrants and covenants to and agrees with the Underwriter that: (a) The City is duly organized and validly existing as a charter city duly organized and validly existing under the Constitution and laws of the State of California and has duly authorized the formation of the District pursuant to the Resolution of Formation and the Law. The City Council as the legislative body of the City and the District has duly adopted the District Resolutions, and has caused to be recorded in the real property records of the County of San Diego on September 15, 1999 as Document No. 1999-0631800 a Notice of Special Tax Lief, (the "Notice of Special Tax Lien") (such District Resolutions and Notice of Special Tax Lien being collectively referred to herein as the "Formation Documents"). Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The District is duly organized and validly existing as a community facilities district under the taws of the State of California. The City has, and at the Closing Date will have, as the case may be, full legal right, power and authority to execute, deliver and perform on behalf of itself and the District its obligations under that certain Acquisition Financing Agreement between the City and Otay Project L.P., together with all amendments thereto (the "Funding Agreement") and to carry out all transactions contemplated by the Funding Agreement. The District has, and at the Closing Date will have, as the case may be, full legal right, power and authority (i) to execute, deliver and perform its obligations under this Bond Purchase Agreement, the District Disclosure Agreement, and the Bond Indenture, and to carry out all transachons contemplated by each of such agreements, (ii) to issue, sell and deliver the Bonds to the Underwriter pursuant to the Resolution of Issuance and Bond Indenture as provided herein, and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents and by the Bond Indenture, this Bond Purchase Agreement, the District Disclosure Agreement and the Funding Agreement (collectively, the "District Documents") and the Official Statement; (b) The District and the City, as applicable, each has complied, and will at the Closing Date be in compliance, in all material respects with the Formation Documents and the District Documents, and any immaterial compliance by the District and the City, if any, will not impair the ability of the District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the District will continue to comply with the covenants of the District contained in the District Documents; (c) The City Council has duly and validly: (i) adopted the District Resolutions, (ii) called, held and conducted in accordance with ali requirements of the Law the election within the District to approve the levy of the Special Tax and the issuance of the Bonds and recorded the Notice 3 DOCSOC\844565v2',22245 0120 EXHIBIT 8 of Special Tax Lien xvhich established a continuing lien on the land within the District securing the Special Tax, (iii) authorized and approved the execution and delivery of the Bonds and the District Documents, (iv) authorized the preparation and delivery of the Preliminary Official Statement- and the Official Statement, and (v)anthorized and approved the performance by the District of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by, each of the District Documents (including, without limitation, the collection of the Special Tax), and at the Closing Date the Formation Documents will be in full force and effect and the District Documents and the Bonds will constitute the valid, legal and binding obligations of the District and (assuming due authorization, execution and delivery by other parties thereto, where necessary) will be enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; (d) To the best of the District's knowledge, neither the District nor the City is in breach of or default under any applicable law or administrative role or regulation of the State of California (the "State"), or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, bond indenture, contract, agreement or other instrument to which the District or the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the District of its obligations under the Bonds, the Formation Documents or the District Documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or a material breach of or default under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the District or the City, as the ease may be, is a party or is otherwise subject or bound; (e) Except for compliance with the blue sky or other states securities law filings, as to which the District makes no representations, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the District of its obligations hereunder, or under the Formation Documents or the District Documents, have been obtained and are in full force and effect; (f) The Special Tax constituting the security for the Bonds has been duly and lawfully authorized and may be levied under the Law and the Constitution and the applicable laws of the State of California, and such Special Tax, when levied, will constitute a valid and legally binding continuing lien on the properties on which it has been levied; (g) Until the date which is twenty-five (25) days after the "end of the underwriting period" (as hereinafter defined), if any event shall occur of which the Disthct is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements in the Official Statement, in light of the circumstances existing at such time, not misleading, the District shall forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter's opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the DOCSOC\844565v2',22245 0120 ~.~ c~ EXHIBIT 8 District shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term "end of the underwriting period" means the later of such time as (i) the District delivers the Bonds to the Underwriter, or (ii) the Underwriter does not retain, directly or-as a member of an underwriting syndicate, an-unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the "end of the underwriting period" shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the District at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the "end of the underwriting period"; (h) The Bond Indenture creates a valid pledge of the Special Taxes and the moneys in the Special Tax Fund, the Bond Fund and the Reserve Fund established pursuant to the Bond Indenture, including the investments thereof, subject in all cases to the provisions of the Bond Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein; (i) Except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or, to the best knowledge of the District, threatened (i) which would materially adversely affect the ability of either the City or the District to perform its obligations under the Bonds, the Formation Documents or the District Documents, or (ii) seeking to restrain or to enjoin the development of the land within the District, the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Bond Indenture or the Funding Agreement, or the collection or application of the Special Tax pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the . '3 validity or enforceability of the Bonds, the Formation Documents, the District Documents, the land use approvals granted by the City with respect to the land within the District, any other instruments relating to the development of any of the property within the District, or any action contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official Statement or the powers or authority of the District with respect to the Bonds, the Formation Documents, the District Documents, or any action of the District contemplated by any of said documents; nor is there any action pending or, to the best knowledge of the District, threatened against the City or the District which alleges that interest on the Bonds is not excludable from gross income for fedemI income tax purposes or is not exempt from California personal income taxation; (j) The District will furnish such information, execute such instruments and take such other action in cooperation with the Underwhter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sate under the "Blue Sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; provided, however, the District shall not be required to register as a dealer or a broker of securities or to consent to service of process in connection with any blue sky filing; (k) Any certificate signed by any authorized official of the City and the District authorized to do so shall be deemed a representation and warranty to the Underwriter as to the statements made therein; (1) The District will apply the proceeds of the Bonds in accordance with the Bond Indenture and as described in the Official Statement; (m) The information contained in the Preliminary Official Statement (other than information under the caption "THE BONDS - Book-Entry-Only System," as to which no view is expressed) was as of the date thereof, and the information contained in the Official Statement (other than information under the caption "THE~ BONDS - Book-Entry-Only System," as to which no hew is expressed) as of its date and on the Closing Date shall be, true and correct in all material respects and such information does not and shall not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (n) The District shall use its best efforts to cause the Developer to cooperate with the Underwriter in the preparation of the Official Statement; provided, however, that such efforts shall not include the expenditure of funds by the District; (o) The Preliminary Official Statement heretofore delivered to the Underwriter was deemed final by the District as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of Rule 15c2-t2. The District hereby covenants and agrees that, within seven (7) business days from the date hereof, the District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the District so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board; (p) Neither the City nor the District is in default with respect to any reporting obligation that it has undertaken under Rule 15c2-12 for any indebtedness issued by it. 3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and wan'anties on the part of the District contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City and the District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the District of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions: (a) At the Closing Date, the Formation Documents and the District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated thereby and by this Bond Purchase Agreement, all such actions as, in the opinion of Best, Best & Krieger LLP, Bond Counsel for the District, and Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Underwriter, shall be necessary and appropriate; (b) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: DOCSOC\844565v2L22245 0120 6 ?~ ~/ EXHIBIT 8 (1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of - Congress, or favorably reported for passage~to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest as would be received by the holders of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; (2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Bond Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of the Bonds, including any or all underwriting arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws, rules or regulations as amended and then in effect; (3) any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the District, its property, income, securities (or interest thereon), the validity or enforceability of the Special Tax or the ability of the City or the District to construct or acquire the improvements as contemplated by the Formation Documents, the District Documents or the Official Statement; or (4) any event occurring, or information becoming known, which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or results in the Official Statement containing any untrue statement ora material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) On the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter: (1) The Formation Documents and the District Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that each Formation Document is a true, correct and complete copy of the one duly adopted by the City Council; (2) The Official Statement; 7 DOCSOC\844565v2~_2245.0120 EXHIBIT 8 (3) An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Best, Best & Krieger LLP, Bond Counsel for the District, in the form attached to the Preliminary Official Statement as Appendix H, and an unqualified opinion of such counsel, dated the Closing Date and-addressed to the Underwriter, to the effect that such - approving opinion addressed to the District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it; (4) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Best, Best & Krieger LLP, Bond Counsel for the District, to the effect that (i) the District Documents have been duly authorized, executed and delivered by the City or the District, as applicable, and, assuming such agreements constitute a valid and binding obligation of the other parties thereto, constitute the legally valid and binding agreements of the City or the District, as applicable, enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, moratorium, insolvency or other laws affecting creditor's rights or remedies and is subject to general principles of equity (regardless of whether such enforceability is considered in equity or at law); (ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; (iii) the information contained in the Official Statement on the cover and under the captions "INTRODUCTION," "THE BONDS," "SOURCES OF PAYMENT FOR THE BONDS," "THE COMMUNITY FACILITIES DISTRICT," "SPECIAL RISK FACTORS - Proposition 218," "TAX MATTERS," "LEGAL MATTERS" and Appendices E and H thereof, insofar as it purports to summarize certain provisions of the Law, the Formation Documents, the Bonds and the Bond Indenture and the exclusion fi.om gross income for federal income tax purposes and exemption fi.om State of California personal income taxes of interest on the Bonds, present a fair and accurate summary of such provisions; and (iv) the Special Tax has been duly and validly authorized in accordance with the provisions of the Law and, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights, by equitable principles and by the exercise of judicial discretion in appropriate cases, a lien to secure payment of the Special Taxes has been imposed on all nonexempt property in the District; (5) An opinion, dated the Closing Date and addressed to the Underwriter, of Stradling, Yocca, Carlson & Rauth, a Professional Corporation, counsel for the Underwriter, to the effect that (i) the Bonds are exempt from the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (ii) without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the City, Bond Counsel, representatives of the Underwriter and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Official Statement as of its date and as of the Closing Date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as any financial or statistical data, appraisals, assessed values or projections contained in the Official Statement); (6) A certificate, dated the Closing Date and signed by an authorized representative of the District, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds; 8 DOCSOC\844565v2'~22245.0120 EXHIBIT 8 and certifying that (i) the representations and warranties of the District contained in Section 2 hereof are tree and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed irt the Official Statement for the purposes for which it is to be used in order to make the statements and information contained in the Official Statement not misleading in any material respect, and the Bonds, the Formation Documents and the Disthct Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement; (iii) the District has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Formation Documents, the District Docutnents and the Official Statement at or prior to the Closing Date; and (iv) the representations and warranties of the City contained in the City Certificate are true and correct in all material respects on and as of the Closing Date, with the same effect as if made on the Closing Date, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Official Statement; (7) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, to the effect that (i) to the best of his or her knowledge and except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened which would materially adversely affect the ability of the District to perform its obligations -nder the Bonds, the Formation Documents or the District Documents, or seeking to restrain or to enjoin the development of property within the District, the issuance, sale, delivery or exclusion from gross income for federal income tax purposes or State of California personal income taxes of interest on the Bonds, or the application of the proceeds thereof in accordance with the Bond Indenture, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Formation Documents or the District Documents or the accuracy of the Official Statement, or any action of the City contemplated by any of said documents; (ii) the City is duly organized and validly existing as a charter city under the Constitution and laws of the State of Califomia and the District is duly organized and validly existing as a community facilities district under the laws of the State of California, and the District has full legal right, power and authority to issue the Bonds and to perform all of its obligations under the Formation Documents and the District Documents; (iii) the City and the District have obtained all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Special Tax, the issuance of the Bonds or the performance by the District of its obligations thereunder or under the Bond Indenture, except that no opinion need be expressed regarding compliance with blue sky or other securities laws or regulations, whatsoever; (iv) the City Council has duly and validly adopted the District Resolutions at meetings of the City Council which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the District Resolutions are now in full force and effect and have not been amended; and (v) each of the City and the District has duly authorized, executed and delivered the District Documents to which it is a party and the Bonds and has duly authorized the preparation and delivery of the Official Statement, and the District Documents and the Bonds constitute legal, valid and binding agreements of the District and the City, as applicable, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought and to the limitations on legal remedies against cities in the State of California; 9 t ~:,*' ~ DOCSOC\844565v2~22245 0120 ~ EXHIBIT 8 (8) A certificate dated the Closing Date and addressed to the Underwriter, the City and the District, from the Developer in substantially the form attached hereto as Exhibit C; (9) An opinion-dated the Closing Date and addressed to the Underwfifer, the City and the District, by counsel to the Developer, substantially in the form attached hereto as Exhibit D; (10) A certificate dated the Closing Date from McGill, Martin Self, Inc. addressed to the City, the District and the Underwriter to the effect that (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes as of the Closing Date would generate at least 110% of the maximum annual debt service payable with respect to the Bonds and all bonds payable on a parity therewith, based on such assumptions and qualifications as shall be acceptable to the Underwriter, and (ii) all information supplied by it for use in the Official Statement is tree and correct as of the date of the Official Statement and as of the Closing Date; (11) A letter dated the Closing Date from Brace W. Hull & Associates, Inc. (the "Appraiser") addressed to the Underwriter, the District and the City to the effect that it has prepared the appraisal report (the "Appraisal") with respect to the property located within the District and that (a) the Appraisal, in the form set forth in Appendix C to the Official Statement, may be included in the Preliminary Official Statement and the Official Statement, (b) neither the Appraisal included in Appendix C nor the information in the Official Statement referring to the Appraisal contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (c) no events or occurrences have been ascertained by it or have come to its attention that would materially change the opinion set forth in its report; (12) A letter from The Meyers Group dated the Closing Date addressed to the Underwriter, the City and the District to the effect that it has prepared the market absorption study (the "Study") referred to in the Official Statement and that (a) the summary of the Study in Appendix B thereto may be included in the Preliminary Official Statement and the Official Statement, (b) neither the summary nor the information regarding the projected absorption of the proposed development described in the Official Statement contains any untrue statement of a material fact or om/ts to state a material fact necessary in order to make the statements therein, in light of the cimumstances under which they were made, not misleading, and (c) no events or occurrences have been ascertained by it or have come to its attention that would materially change the opinion set forth in its report; (13) A certificate of the District dated the Closing Date, in a form acceptable to Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (14) A certificate to the Fiscal Agent and an opinion of counsel to the Fiscal Agent dated the Closing Date and addressed to the City, the District and the Underwriter to the effect that it has duly authorized the execution and delivery of the Bond Indentxtre and that the Bond Indenture is a valid and binding obligation of the Fiscal Agent enforceable in accordance with its terms; DOCSOC\844565v2~22245.0120 - EXHIBIT 8 (15) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in the Preliminary Official Statement and the Off~ial Statement, of the District's representations and - warranties contained herein and the due performance or satisfaction by the District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the District in connection with the transactions contemplated hereby and by the Official Statement; and If the District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the District shall be under any further obligation hereunder, except that the respective obligations of the District and the Underwriter set forth in Section 5 and Section 6 hereof shall continue in full force and effect. 4. Conditions of the District's Obligations. The District's obligations hereunder are subject to the Underwriter's performance of its obligations hereunder, and are also subject to the following conditions: (a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the District executing the certificate referred to in Section 3(c)(6) hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the Formation Documents, the District Documents or the existence or powers of the City or the District; and (b) As of the Closing Date, the District shall receive the approving opinions of Bond Counsel referred to in Section 3(c)(3) and (4) hereof, dated as of the Closing Date, addressed to the City, the District and the Underwriter. 5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth here/n: (a) The Underwriter shall be under no obligation to pay, and the District shall pay or cause to be paid (out of any legally available funds of the District) all expenses incident to the performance of the District's obligations hereunder, including, but not limited to, the cost of printing and delivering the Bonds to the Underwriter, the cost of preparation, printing, distribution and delivery of the Bond Indenture, the Preliminary Official Statement, the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Fiscal Agent for the Bonds, Bond Counsel, counsel to the UnderWriter in the amount of $10,000, and any accountants, engineers or any other experts or consultants the District has retained in connection with the Bonds; and (b) The District shall be under no obligation to pay, and the Underwriter shall pay, any fees of the California Debt and Investment Advisory Commission, the cost of preparation of any "blue sky" or legal investment memoranda and this Bond Pumhase Agreement; expenses to qualify the Bonds for sale under any "blue sky" or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds DOCSOC\844565v2k22245.0120 EXHIBIT 8 (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel and any advertising expenses. 6. Notices. Any notice or other communication to be given to the City under this Bond Purchase Agreement may be given by delivering the same in writing to the City at 276 Fourth Avenue, Chula Vista, California 91910, Attention: Director of Finance; and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Stone & Youngberg, 4350 La Jolla Village Drive, Suite 140, San Diego, California 92122, Attention: L. William Huck, and to 50 California Street, 35th Floor, San Francisco, California 94111, Attention: Public Finance. 7. Parties in Interest. This Purchase Agreement is made solely for the benefit of the District and the Underwriter (including their successors or assigns), and no other person shall acquire or have any fight hereunder or by virtue hereof. 8. Survival of Representations and Warranties. The representations and warranties of the District and the City set forth in or made pursuant to this Bond Purchase Agreement and any certificates delivered hereunder shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Bond Purchase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the District and the City and regardless of delivery of and payment for the Bonds. 9. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Dislrict and shall be valid and enforceable as of the time of such acceptance. This Purchase Agreement may be signed in counterparts by each party. i0. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds for the District. 11. Governing Law. This Bond Purchase Agreement shall be governed by the laws of the State of California. DOCSOC\844565v2L22245.0120 ~ EXHIBIT 8 12. Counterparts. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Very truly yours, STONE & YOUNGBERG LLC By:_ Managing Director ACCEPTED: September__, 2001 COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FiVE AND VILLAGE ONE WEST) By: Director of Finance DOCSOC',844565v2~22245.0120 EXHIBIT 8 EXHIBIT A MATqJRJTY SCHEDULE COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) 2001 SPECIAL TAX BONDS Maturity Date Principal Coupon Yield Price Par Amount Underwfiter's Discount Purchase Price DOCSOC\844565v2~22245 0120 . EXHIBIT 8 EXHIBIT B CERTIFICATE OF ~EPRESENTATIONS AND WARRANTIES OF THE-CqTY OF CHULA VISTA - September __, 2001 To: Stone & Youngberg LLC San Diego, California Re: Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One WesO 200] Special Tax Bonds Ladies and Gentlemen: We are delivering to you this certificate in connection with the issuance and sale of $ aggregate principal amount of the Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) 2001 Special Tax Bonds and pursuant to the Bond Purchase Agreement, dated the date hereof (the "Pumhase Contract"), by and between you and Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "District"). All capitalized terms used herein without definition shall have the meanings assigned to such terms in the Purchase Contract. The undersigned, in his capacity as an officer of the City and not in his individual capacity, on behalf of the City, represents and warrants to you that: (I) The City is duly organized and validly existing as a charter city under the Constitution and laws of the State of California and the City Council of the City has duly and validly adopted each of the District Resolutions and authorized the formation of the District pursuant to the Law. (2) The information contained in the Preliminary Official Statement is, as of the date thereof and as of the date hereof, true and correct in all material respects and does not, as of the date thereof and as of the date hereof, contain any untrue statement ora material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. CITY OF CHULA VISTA By:. Director of Finance DOCSOC\844565v2~22245.0120 ~ EXH1BIT 8 EXHIBIT C CERTIFICATE OF DEVELOPER OF LAND WITHIN THE DISTRICT September __, 2001 Stone & Youngberg LLC 4350 La Jolla Village Drive, Suite 840 San Diego, California 92122 City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Re: $ Community Facilities District No. 99-] (Otay Ranch Spa One - Portions of Village One, Village Five and Village One WesO 2001 Special Tax Bonds (the "Bonds ") Ladies and Gentlemen: Otay Project LLC, a California limited liability company and Otay Project, a California limited parmership (collectively the "Developer"), hereby certifies that: 1. The Developer is the owner of certain of the land within Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village One West and Village Five) (the "District"), as described in the Preliminary Official Statement of the District dated September __, 2001 relating to the above-captioned Bonds (the "Preliminary Official Statement"). 2. The Developer covenants that, while the Bonds are outstanding, the Developer will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body which in any way seeks to challenge or overturn the District, the levy of the Special Tax in accordance with the revised rate and method of apportionment contained in the Notice of Special Tax Lien recorded as Document No. 1999-0631800 in the real property records of the County of San Diego (the "Rate and Method of Apportionment") or the validity of the Bonds or the proceedings leading up to their issuance. The foregoing covenant shall not prevent the Developer from bringing an action or suit contending that the Special Tax has not been levied in accordance with the methodology contained in the Rate and Method of Apportionment. 3. Any and all information submitted by the Developer to the City and the Underwriter in connection with the preparation of the Preliminary Official Statement, and any and ali information submitted by the Developer to the Special Tax Consultant, the Appraiser and the Market Absorption Consultant, was, to the best of the Developer's knowledge, true and correct when given and remains true and correct as of the date hereof, and all information in the Preliminary Official Statement relating to the Developer and the development of its land within the District was final as of its date DOCSOC\84456Sx2~22245.0120 C-I ~7i'), // ¢ EXHIBIT R for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934. 4. The statements relating to-the Developer, its proposed development in the District~ its property ownership and its contractual arrangements contained in the Preliminary Official Statement do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time subsequent hereto and within 25 days after the Closing Date any statement in the Preliminary Official Statement or the Official Statement becomes untrue or if any material fact is omitted, the Developer agrees to notify the City and the Underwriter immediately. 5. No proceedings are pending or, to the best of the Developer's knowledge, threatened in which the Developer or any of its members may be adjudicated as bankrupt or discharged from any or all of their debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts. 6. Except as disclosed in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or, to the best of the Developer's knowledge, threatened, in any way seeking to restrain or enjoin the development of the property within the District or in any way seeking to invalidate or set aside any final or vesting tentative maps on land in the District. 7. Except as disclosed in the Preliminary Official Statement, to the best of the Developer's knowledge, no other public debt secured by a tax or assessment on the land in the District is in the process of being authorized and no assessment districts or community facilities districts have been or are in the process of being formed which include any portion of the land within the District. 8. Except as disclosed in writing to the Underwriter and the City, to the best of the Developer's knowledge, based upon due inquiry, there are no events of monetary default or events which with the passage of time would constitute a monetary default under any loan or similar credit arrangement to which the Developer or any of its members is a party or to which any of its properties are subject. 9. The Developer has duly authorized and executed the Funding Agreement and will, prior to the Closing Date, execute the Continuing Disclosure Agreement (collectively, the "Developer Agreements"), and upon execution such Developer Agreements will be the valid obligations of the Developer, enfomeable against the Developer in accordance with their respective terms, and none of the documents which govern the Developer would cause such Developer Agreements to be invalid or unenforceable against the Developer in accordance with their terms; and no event has occurred which, with the passage of time, would constitute a default by the Developer of any of its obligations under the Developer Agreements. DOCSOC\84456Sv22/224S 0120 EXlqlBII 8 : 10. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Bond Purchase Agreement to be' entered into between the District and Stone & Youngberg LLC relating to the sale of the Bonds. OTAY PROJECT LLC, a California limited liability company [NEW SIGNATURE BLOCK NEEDED] OTAY PROJECT, L.P., a California limited partnership By: Otay Ranch Development LLC, a California limited liability company By:_ Title: DOCSOC\S44565v2~22245 0120 ' EXHIBIT 8 EXHIBIT D OPINION OF DEVELOPER COUNSEL [CLOSING DATE] City of Chula Vista Chula Vista, California Stone & Youngberg LLC San Diego, California Re: $ Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One WesO 2001 Special Tax Bonds Ladies and Gentlemen: We have acted as counsel for Otay Project LLC, a California limited liability company and Otay Project, L.P., a California limited parmership (collectively the "Developer"), in connection with its participation in a real estate development (the "Development"), located in the incorporated area of the City of Chula Vista (the "City"), a portion of the financing for which is proposed to be provided through the use of the proceeds of the above-referenced bonds (the "Bonds") being issued by Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "District"). The Bonds are being sold to Stone & Youngberg LLC as the underwriter (the "Underwhter"). All capitalized terms used but not otherwise defined in this opinion have the respective meanings ascribed to those terms in the Bond Purchase Agreement (as hereinafter defined). In rendering the opinions hereinafter expressed, we have reviewed and examined the following documents: 1. the Bond Purchase Agreement, dated as of September __, 2001, between the Underwriter and the District (the "Bond Purchase Agreement"); 2. all District Documents as defined in the Bond Purchase Agreement; 3. the Official Statement, dated September __, 2001, relating to the Bonds (the "Official Statement"); 4. the Certificate of Developer of Land Within the District, dated September __, 2001, executed by the Developer pursuant to the Bond Purchase Agreement; 5. the Developer Agreements referenced in the Certificate of Developer described in (4) above (the "Developer Documents"); 6. the operating agreement of Otay Project LLC and the partnership agreement of Otay Project, L.P. (collectively the "Operating Agreements"); D-I / DOCSOC\844565v2~22245 0120 EXHIBIT 8 7. such other agreements and documents as we deemed necessary in order to render the opinions set forth below. In conducting our examination, we-have assumed, without investigation: (i) the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals from which such copies were made; and (ii) that there are no oral or written terms or conditions agreed to by the City and the Developer which would expand or modify the respective rights and obligations of the City or the Developer set forth in the Funding Agreement or which would have an effect on the opinions rendered herein. We have not made or undertaken to make any investigation as to the state of title to the Development, and we express no opinion with respect to title to such Development. We have made such examination of California taw and the law of the United States of America as we deem relevant for the purposes of this opinion. We have not considered the effect, if any, of the laws of any other jurisdiction upon the matters covered by this opinion. Based on and subject to the foregoing, and based on our examination of such questions of law as I have deemed appropriate under the circumstances, we are of the opinion that: (i) Otay Project LLC is a duly formed and validly existing limited liability company under the laws of the State of California, is duly qualified to transact business in the State of California, and is possessed of full power and authority to conduct its business as presently conducted and as contemplated to be conducted by the Operating Agreement and to own its properties (including, without limitation, the Development) and Otay Project, L.P. is a duly formed and validly existing limited partnership under the laws of the State of California, is duly qualified to transact business in the State of California, and is possessed of full power and authority to conduct its business as presently conducted and as contemplated to be conducted by the Operating Agreement and to own its properties (including, without limitation, the Development); (ii) the Developer has full power and authority to execute, deliver and perform the obligations set out in the Developer Documents, which have been duly authorized, executed and delivered by the Developer, and when executed by the other parties thereto will be the legally valid and binding obligations of the Developer enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws, or by legal or equitable principles relating to or limiting creditors' rights generally; (ii/) the execution and delivery of the Developer Documents and compliance with the provisions thereof by the Developer will not result in a violation of, a breach of, or a default under the Operating Agreements or, to our knowledge, of any trust agreement, mortgage, deed of trust, note, lease, commitment, agreement or other instrument to which the Developer is a party, or, to our knowledge, any order, rule or regulation of any court or other governmental body having jurisdiction over the Developer, the breach of which might have a materially adverse effect on the ability of the Developer to perform its obligations under the Developer Documents; (iv) to our knowledge, there is no action, suit, proceeding, inquiry or investigation by or before any court, governmental agency, public board or body, pending or threatened, against the Developer (a) which affects or seeks to prohibit, restrain or enjoin the development by the Developer D-2 ~?~' 77 DOC8OC\844565v2L22245.0120 / EXHIBIT 8 of the Development, or (b) in which the Developer or any of its members may be adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, or (c) which seeks to grant an extension of time to pay the Developer's debts, or' (d) seeks to effect a reorganization or readjustment oi?the Developer's debts; and (v) to our knowledge, the statements contained in the Official Statement relating to the Development and the Developer (excluding therefrom the financial and statistical data included therein) do not contain any untrue statement of a material fact or omit to state a material fact required to be stated ~herein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except as to financial information contained therein, as to which no view is expressed). Although we are licensed to practice law in California, we do not purport to be an expert in, or to express any opinion herein concerning, any law other than the law of the State of California and the federal law of the United States of America. This opinion is limited to the matters expressly set forth herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. This opinion is as of the date shown above. We have not undertaken, and hereby disclaim any obligation, to advise the parties to whom this opinion is addressed, or to whomever else may (with prior written approval) seek to rely upon it and its content, s, of any change in any matter stated in this opinion subsequent to the date hereof. This opinion is furnished solely for the benefit of addressees and may not be relied upon by any other person nor may this opinion or any copy hereof be distributed to any other person, without my express prior written consent, which consent will not be unreasonably withheld or delayed. Respectfully submitted, DOCSOC/844565v2~22245.0120 EXHIBIT 8 PRELIMINARY OFFICIAL'STATEMENT DATED AS OF OCTOBER __, 2001 NEW ISSUE - BOOK-ENTRY-ONLY NO RATING In the opinion of Best Best & Krieger LLP, Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions and a-v.vatnillg, atm3ng other matters, compliance with certain covenants, interest on the Bonds is excluded from gr~ss income for federa'l income tar purposes under Section ]03 of the htternal Revenue Code of 1986 and is exempt from State of California personal income taxes. ln thefurtheropinionofBondCounsel, interest on the Bonds is not a s. pecific preference item for purposes of federal individual or corporate alternate minimum taxes althou~,h Bond Counsel observes tt a such nterest is ncluded in adjusted current earnings in calculating ]-ederal corporate alternative minimum-taxable income. Bond Counsel e~rpresses no opinion regarding any other federal or state income tax consequences relating to the ownership or disposition of o~r the accrual or receipt of interest on. the Bonds. See "TAX MA IT'£RS" herein. 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 Dated: Date of Deliver' Due: September 1, as shown on the inside page The 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 (the "Bonds") are being issued and delivered to finance various public improvements needed to develop properly located within Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "District"). The District h~ been formed by and is located in the City of Chula Vista (the "City"), County of San Diego, California. The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 e_t se~¢. of the Government Code of the State of California), and pursua~,,t to an Inde.n,t,,ure, dated as of December 1, 1999, by and between the District and U.S. Bank Trust National Association, as fiscal agent (the Fiscal Agent ), as amended and supplemented to the date hereof (the "Indenture"). The Bonds are special obligations of the District and are payable solely from revenues derived from certain annual Special Taxes (as defined herein) to be levied on and collected from the owners of the taxable land within the District and from certain other funds pledged under the Indenture, all as further described herein. The Special Taxes are to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. See "SOURCES OF PAYMENT FOR THE BONDS - Rate and Method of Apportionment." The City Council of the City is the legislative body of the District. The Bonds are payable on a parity with those certain 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 (the "1999 Bonds"). The Bonds are issuable in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Individual purchases may be made in principal amounts of $5,000 and integral multiples thereof and will be in book-entry form only. Purchasers of Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described herein. Interest on the Bonds will be payable on March 1, 2002 and semiannually thereafter on each March l and September 1. Principal of and interest on the Bonds will be paid by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the Bonds. See "THE BONDS - Description of the Bonds" and "- Book-Entry-Only System" herein. Neither the faith and credit nor the taxing power of the City, the County of San Diego, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Special Taxes. no other taxes are pledged to the payment of the Bonds. The Bonds are special tcz~ obligations of the District pc(pable solely from Special Taxes and other amounts held under the Indenture as more fully described herein. The Bonds are subject to optional redemption, extraordinary mandatory redemption and mandatory sinking fund redemption prior to maturity as set forth herein. See "THE BONDS - Redemption" herein. CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE DISTRICT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS WHEN DUE. THE PURCHASE OF THE BONDS INVOLVES SIGNIFICANT RISKS, AND THE BONDS ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS. SEE THE SECTION OF THIS OFFICIAL STATEMENT ENTITLED "SPECIAL RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE BONDS. This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. MATURITY SCHEDULE (See Inside Cover Page) The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Best Best & Krieger LLP, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by the City Anomey and for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as counsel to the Underwriter. It is anticipated that the Bonds in book-entry form will be available for delivery to DTC in New York, New York, on or about October ,2001. STONE & YOUNGBERG LLC Dated: October ,2001 ~- o ~ Preliminary, subject to change. MATURITY SCHEDULE (Base CUSIP: ) Maturity - -- Maturity - Date Principal Interest Date Principal Interest (September 1) Amount Rate Yiel4 CUSIP (September 1) Amount Rate Yield CUSIP $ % Term Bonds due September 1, 20__ Price: __% - CUSIP: __ $ , % Term Bonds due September 1, 20__ Price: __% - CUSIP: __ DOCSOC\836206v5~22245 0120 ] EXHIBIT 9 CITY OF CHULA VISTA, CALIFORNIA CITY COUNCIL Shieley Horton, Mayor - Patty Davis, Councilmember Steve Padilla, Councilmember Mary Salas, Councilmember Jerry Rindone, Councilmember CITY STAFF David D. Rowlands, Jr., City Manager Sid Moms, Assistant City Manager George Krempl, Assistant City Manager Susan Bigelow, City Clerk John Kaheny, City Attorney Robert Powell, Deputy City Manager BOND COUNSEL Best Best & Krieger LLP San Diego, California FINANCIAL ADVISOR TO TH ~; CITY Fieldman Rolapp & Associates h-vine, CaIifomia SPECIAL TAX CONSULTANT REAL ESTATE APPRAISER McGill Martin Self, Inc. Brace W. Hull & Associates, Inc. Chula Vista, California Irvine, California MARKET ABSORPTION CONSULTANT FISCAL AGENT The Meyers Group U.S. Bank Trust National Association Solana Beach, California Los Angeles, California '7),-8't DOCSOC\836206vS~22245.0120 EXHIBIT 9 Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Fiscal Agent or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, the Fiscal Agent or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the pumhasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with a nationally recognized municipal securities depository. The information set forth herein has been obtained from sources which are believed to be reliable but is not guaranteed as to accuracy or completeness by the City or the District. In accordance with its responsibilities under the federal securities laws, the Underwriter has reviewed the information in this Official Statement but does not guarantee its accuracy or completeness. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the District or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WIIlCH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WItlCH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY T1ME. THE BONDS HAVE NOT BEEN REGISTERED UNDER TIlE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. DOCSOC\836206v5~22245.0120 EXHIBIT 9 TABLE OF CONTENTS Page INTRODUCTION .................................................................................................................................. 1 General ........................................................................................................................................ :..,. 1 Forward Looking Statements ............. :.::: .................................................................................... .~... 2 The District ...................................................................................................................................... 2 Sources of Payment for the Bonds ................................................................................................... 4 Description of the Bonds ................................................................................................................. 4 Tax Matters ...................................................................................................................................... 5 Professionals Involved in the Offering ........................................................................................ :... 5 Continuing Disclosure ..................................................................................................................... 6 Bond Owners' Risks ........................................................................................................................ 6 Other Information ............................................................................................................................ 6 ESTIMATED SOURCES AND USES OF FUNDS ............................................................................. 7 THE BONDS ......................................................................................................................................... 7 Authority for Issuance ...................................................................................................................... 7 Purpose of the Bonds ....................................................................................................................... 7 Description of the Bonds ................................................................................................................. 7 Redemption ...................................................................................................... : ............................... 8 Notice and Selection of Bonds for Redemption ............................................................................ 10 Notice of Redemption .................................................................................................................... 11 Effect of Redemption ..................................................................................................................... 11 Transfer and Exchange of Bonds ................................................................................................... 12 Book-Entry-Only Systema ............................................................................................................... 13 Debt Service Schedule for the Bonds ............................................................................................ 16 SOURCES OF PAYMENT FOR THE BONDS ................................................................................. 17 Limited Obligations ....................................................................................................................... 17 Special Taxes ................................................................................................................................. 17 Reserve Fund ................................................................................................................................. 21 Issuance of Parity Bonds ................................................................................................................ 22 THE COMMUNITY FACiLITiES DISTRICT ................................................................................... 22 General Description of the District ................................................................................................ 22 Description of Authorized Facilities .............................................................................................. 22 Status of Construction .................................................................................................................... 24 Principal Taxpayers ....................................................................................................................... 24 Estimated Direct and Overlapping Indebtedness ........................................................................... 26 Expected Tax Burden ..................................................................................................................... 30 Estimated Value-to-Lien Ratios ..................................................................................................... 32 Permitted Land Use ....................................................................................................................... 34 THE DEVELOPMENT AND PROPERTY OWNERSHIP ................................................................ 35 General Description of the Otay Ranch ......................................................................................... 35 The Developer ................................................................................................................................ 36 Proposed Development and Developer's Pro-forma ..................................................................... 38 Infrastructure Requirements and Construction Status ................................................................... 44 Merchant Builders .......................................................................................................................... 46 -i- DOCSOC\836206v5~22245.0120 ~ EXHIBIT 9 TABLE OF CONTENTS Page Potential Limitations on Development .......................................................................................... 46 Certain Limitations on Development Phasing ...... : ........................................................................ 49 Appraisal ..................................................................................................................................... .:. 54 Market Absorption Study ................... :...-: .................................................................................... .~. 56 SPECIAL RISK FACTORS ............ . ...... 57 Concentration of Ownership .......................................................................................................... 57 Limited Obligations ....................................................................................................................... 58 Insufficiency of Special Taxes ..................................................................................................... :. 58 Tax Delinquencies of Developer Affiliates and Other Matters ..................................................... 58 Failure to Develop Properties ........................................................................................................ 60 Future Land Use Regulations and Growth Control Initiatives ...................................................... 61 Endangered Species ....................................................................................................................... 62 Natural Disasters ............................................................................................................................ 63 Hazardous Substances .................................................................................................................... 63 Parity Taxes, Special Assessments and Land Development Costs ................................................ 63 Disclosures to Future Purchasers ................................................................................................... 64 Special Tax Delinquencies ............................................................................................................. 65 Non-Cash Payments of Special Taxes ........................................................................................... 65 Payment of the Special Tax is not a Personal Obligation of the Owners ......................................65 Land Values ................................................................................................................................... 65 Electricity Supply in California ..................................................................................................... 66 FDIC/Federal Government Interests in Properties ........................................................................ 67 Bankruptcy and Foreclosure .......................................................................................................... 68 No Acceleration Provision ............................................................................................................. 69 Loss of Tax Exemption .................................................................................................................. 69 Limitations on Remedies ............................................................................................................... 69 Limited Secondary Market ............................................................................................................ 69 Proposition 218 .............................................................................................................................. 70 Ballot Initiatives ............................................................................................................................. 71 CONTINUING DISCLOSURE ........................................................................................................... 71 TAX MATTERS .................................................................................................................................. 72 LEGAL MATTERS ............................................................................................................................. 73 LITIGATION ....................................................................................................................................... 73 NO RATING ........................................................................................................................................ 74 UNDERWRITING ............................................................................................................................... 74 FINANCIAL INTERESTS .................................................................................................................. 74 PENDING LEGISLATION ................................................................................................................. 74 · ~ ADDITIONAL INFORMATION 75 DOCSOC\836206vS~22245.0120 EXHIBIT 9 TABLE OF CONTENTS Page APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ................... A-1 APPENDIX B SUMMARY OF MARKET ABSORPTION STUDY ............................................. B-I APPENDIX C APPRAISAL REPORT ..~..~.. .................................................................................... :C-1 APPENDIX D INFORMATION REGARDING THE CITY OF CHULA VISTA ......................... D-1 APPENDIX E SUMMARY OF INDENTURE ................................................................................ E-1 APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT ..................... F-1 APPENDIX G CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER ............... G-1 APPENDIX H FORM OF OPINION OF BOND COUNSEL ......................................................... H-1 DOCSOC',836206v5~22245 0120 ~' EXHIBIT 9 [AERIAL PHOTO] DOCSOC\836206vS~224q 01'~0 ('~ q~) ~? EXHIBIT 9 $ 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 INTRODUCTION General This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The sale and delivery of Bonds to potential investors is made only by means of the entire Official Statement. All capitalized terms used in this Official Statement and not defined shall have the meaning set forth in Appendix E -- "SUMMARY OF THE INDENTURE -- Cc~'tain Definitions" herein. The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the "Official Statement"), is to provide certain information concerning the issuance of the $ * City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West), 2001 Special Tax Bonds (the "Bonds"). The proceeds of the Bonds will be used to construct and acquire various public improvements needed with respect to the proposed development within City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "District"), to fund the Reserve Fund securing the Bonds, to pay costs of issuance of the Bonds and to capitalize interest on the Bonds to September 1, 2002. The Bonds are authorized to be issued pursuant to the Act (as defined herein) and an Indenture dated as of December 1, 1999, by and between the Disthct and U.S. Bank Trust National Association (the "Fiscal Agent"), as supplemented and amended to the date hereto (the "Indenture"). The Bonds are secured under the Indenture by a pledge of and lien upon Special Tax Revenues (as defined herein) and all moneys in the funds and accounts under the Indenture other than the Rebate Fund and the Administrative Expense Fund. The Bonds are payable on a parity with those certain 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 (the "1999 Bonds") currently outstanding in the aggregate amount of $22,705,000. Approximately $14.4 million fi.om the proceeds of the 1999 Bonds have been used to finance Phase One of the construction of Olympic Parlc,vay. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP - Infrastructure Requirements and Construction Status." Preliminary, subject to change. 1 DOCSOC\836206v5~22245.0120 ~'~. EXHiBIT 9 / Forward Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the O~ted States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget" or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption "THE COMMUNITY FACILITIES DISTRICT" and "THE DEVELOPMENT AND PROPERTY OWNERSHIP." THE ACHIEVEMENT OF CERTAiN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. The District Formation Proceeding,*. The District has been formed by the City of Chula Vista (the "City") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act"), and the City of Chula Vista Community Facilities District Ordinance. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness. The City Council of the City acts as the legislative body of the District. Pursuant to the Act, the City Council adopted the necessary resolutions stating its intent to establish the District, to authorize the levy of Special Taxes on taxable properly within the boundaries of the District, and to have the District incur bonded indebtedness. Following public hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions establishing the District and calling special elections to submit the levy of the Special Taxes and the incurring of bonded indebtedness to the qualified voters of the District. On August 31, 1999, at an election held pursuant to the Act, the landowners who comprised the qualified voters of the District, authorized the District to incur bonded indebtedness in the aggregate principal amount not to exceed $60,000,000 and approved the rate and method of apportionment of the Special Taxes for the District to pay the principal of and interest on the bonds of the District which is set forth in Appendix A hereto (the "Rate and Method"). DOCSOC\836206vS~22245.0120 EXHIBIT 9 The master developer of the property in the Disthct is Otay Project, LLC, a California Limited Liability Company, and its 99.9% owned affiliate Otay Project L.P., a California Limited Partnership (collectively, the "Developer"): For certain information concerning the Developer~ see "THE DEVELOPMENT AND PROPER_T~Y OWNERSHIP -- The Developer." The District is a small portion of a 23,000-acre area of the City and surrounding areas historically referred to as the "Otay Ranch." In 1997, the City annexed approximately 9,100 of the 23,000 acres, which acres are now being developed by the Developer and other landowners. The Developer currently owns approximately 4,500 acres of what was historically known as the "0tay Ranch" and is now doing business under the copyrighted name of "Otay Ranch." The land use entitlements for the Otay Ranch permit development of the 4,500 acres in sub-areas known as "villages." The District is located within portions of Village One, Village One West and Village Five. The Developer plans to develop the remaining acres that it owns in Otay Ranch, some of which are located outside the District, over a period of 10 to 15 years. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP." Development Status. The District consists of approximately 1,000 gross acres divided into 50 planning areas. The District is located approximately 3.5 miles east of the downtown area of the City and 13 miles southeast of downtown San Diego, approximately 3 miles north of the United States-Mexico International boarder. Based on current land use approvals and projections, the land within the District is expected to be developed into 2,888 detached residential units, 1,743 multifamily residential units, and 19.4 acres of commercial development. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Potential Limitations on Development." Development of the land within the District is ongoing. As of April 2, 2001, the Developer owned __ acres within the District and had sold or transferred land to others upon which 2,025 single family units and 996 multifamily units are constructed or are anticipated to be constructed. As of April 2, 2001, the Developer owned property within the District upon which there are proposed to be 863 detached residential units, 747 multifamily units, a 3.4 acre commercial site and various community purpose facilities on three small parcels totaling 11.3 acres. Certain of the merchant builders have commenced the construction of residential units. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Merchant Builders." Brace W. Hull & Associates, Inc. (the "Appraiser") has conducted an appraisal (the "Appraisal") of the land within the District and has concluded, based upon the assumption and limiting conditions contained in the Appraisal that as of April 2, 2001, the aggregate value of land within the District was $380,705,000, consisting of individual owned homes valued at $175,565,000, merchant builder owned parcels valued at $148,690,000 and Developer owned parcels valued at $56,450,000. The Meyers Group (the "Market Absorption Consultant") has prepared a Market Analysis and Absorption Projection report (the "Market Absorption Study") for the purpose of developing a build-out projection for the 1,735 for-sale residential units and 1,350 multifamily rental units planned, but not yet sold, in the District as of April 2, 2001. The Market Absorption Study concludes that the residential units with the District should be fully built-out in the 2001-2004 period assuming continued development with no stops due to unanticipated market or business factors. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Appraisal" and "-- Market Absorption Study," APPENDIX B -- "SUMMARY OF MARKET ABSORPTION STUDY" and APPENDIX C -- "SUMMARY APPRAISAL REPORT." DOCSOC~836206v522245.0120 :~'? ' EXHIBIT 9 Sources of Payment for the Bonds Special Taxes. As used in this Official Stat6ment, the term "Special Tax" is that tax which has been authorized pursuant to the Act to be levied against certain land within the District pursuant to the Act and in accordance with the P~t~-and Method. See "SOURCES OF PAYMENT OF BONDS -- Special Taxes" and APPENDIX A - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES." Under the Indenture, the District has pledged to repay the Bonds from the Special Tax Revenues and amounts on deposit in the Fund and Accounts established under the Indenture other than the Rebate Fund and the Administrative Expense Fund. Special Tax Revenues are defined in the Indenture to include the proceeds of the Special Taxes received by the District, including any scheduled payments and prepayments thereof, interest and penalties thereon and the proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the delinquent Special Taxes in the amount of said lien and interest and penalties thereon. The Special Taxes are the primary security for the repayment of the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal Agent, including amounts held in the Reserve Fund. See "SOURCES OF PAYMENT FOR THE BONDS -- Reserve Fund." Foreclosure Proceeds. The District has covenanted for the benefit of the owners of the Bonds that it will commence, and diligently pursue to completion, judicial foreclosure proceedings against Assessor's parcels under common ownership with delinquent Special Taxes in the aggregate in excess of $5,000 by the October 1 following the close of the fiscal year in which such Special Taxes were due, and it will commence and diligently pursue to completion judicial foreclosure proceedings against all Assessor's parcels with delinquent Special Taxes in the aggregate in excess of $2,500 by the October 1 following the close of any fiscal year if the amount in the Reserve Fund is tess than the Reserve Requirement. See "SOURCES OF PAYMENT FOR THE BONDS -- Proceeds of Foreclosure Sales" herein." There is no assurance that the property within the District can be sold for the appraised value or assessed values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event ora default in payment of Special Taxes by the current or future landowners within the District. See "SPECIAL RISK FACTORS -- Land Values" and APPENDIX C -- "SUMMARY APPRAISAL REPORT" herein. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM SPECIAL TAXES AND AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN. Description of the Bonds The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to actual purchasers of the Bonds (the "Beneficial Owners") in the denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, ordy through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book- entry-only system described herein is no longer used with respect to the Bonds, the Bonds will be 4 DOCSOC 836206v5~22245.0120 ~'/ EXHIBIT 9 registered and transferred in accordance with the Indenture. See "THE BONDS -- Book-Entry-Only System" herein. Principal of, premium, if any, an_d~interest on the Bonds is payable by the Fiscal Agen~t to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry-only system is no longer used with respect to the Bonds, the Beneficial Owners will become the registered owners of the Bonds and will be paid principal and interest by the Fiscal Agent, all as described herein. See "BOOK-ENTRY-ONLY SYSTEM" herein. The Bonds are subject to optional redemption, extraordinary mandatory redemption and mandatory sinking fund redemption as described herein. For a more complete descriptions of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see "THE BONDS" and Appendix E -- "SUMMARY OF INDENTURE" herein. Tax Matters In the opinion of Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded fi.om gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt fi.om State of California personal ~ncome taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of federal individual or corporate alternate minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings in calculating federal corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other federal or state income tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See "TAX MATTERS" herein. Professionals Involved in the Offering U.S. Bank Trust National Association will act as Fiscal Agent under the Indenture and as the initial Dissemination Agent under the Continuing Disclosure Agreement and the Developer Continuing Disclosure Agreement. See APPENDICES F and G. Stone & Youngberg LLC is the Underwriter of the Bonds. All proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Best Best & Krieger LLP, San Diego, Bond Counsel. Fieldman Rolapp & Associates is acting as Financial Advisor to the City in connection with the Bonds. Certain legal matters will be passed on for the City and the District by the City Attorney, and for the Underwriter by Stmdling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Underwriter's Counsel. Other professional services have been performed by McGill Martin Self, Inc. as Special Tax Consultant, Bruce W. Hull & Associates, Inc. as Appraiser, and The Meyers Group, Solana Beach, California, as Market Absorption Consultant. For information concerning the respects in which certain of the above-mentioned professionals, advisors, counsel and agents may have a financial or other interest in the offering of the Bonds~ see "FINANCIAL INTERESTS" herein. DOCSOC\836206v5'~2245 0120 t... ~ EXHIBIT 9 Continuing Disclosure Each of the District and the Developer has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12(f5)(5) adopted by the Securities and Exchange Commission certain annual financial information and operating data. The District has further agreed to provide notice of certain material events. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5). See "CONTINUING DISCLOSURE" herein, APPENDIX F and APPENDIX G hereto for a description of the specific nature of the annual reports to be filed by the District and the Devel~)per and notices of material events to be provided by the District. Bond Owners' Risks Certain events could affect the timely repayment of thc principal of and interest on the Bonds when due. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The Bonds are not rated by any nationally recognized rating agency. The purchase ~?f the Bonds involves signi~cant risks, and the Bonds may not be appropriate investments for some investors. See "SPECIAL RISK FACTORS" herein. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the constitution and laws of the State as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. Copies of the Indenture, the Continuing Disclosure Agreements and other documents and information referred to herein are available for inspection and (upon request and payment to the City of a charge for copying, mailing and handling) for delivery from the City at 276 Fourth Avenue, Chula Vista, CA 91910, Attention: Director of Finance. 6 DOCSOC\836206v5~22245.0120 )~ f C;:: EXHIBIT 9 ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the expected uses of Bond proceeds: Sources of Funds - -- Principal Amount of Bonds $ TOTAL SOURCES $ Uses of Funds Interest Account°) $ Acquisition and Construction Fund Reserve Fund Cost of Issuance Fund Underwriter's Discount TOTAL USES $ R~ptcscnts capitalized interest on the Bonds until September 1, 2002. THE BONDS Authority for Issuance The Bonds in the aggregate principal amount of $ are authorized to be issued by the District under and subject to the terms of the Indenture, the Act and other applicable laws of the State of California. Purpose of the Bonds The Bonds are being issued to provide funds to: (i) finance the costs of constructing and acquiring certain public facilities related to the proposed development within the District; (ii)pay costs related to the issuance of the Bonds; (iii) fund the Reserve Fund for the Bonds in the initial amount ors _; and (iv) fund capitalized interest on the Bonds to September 1, 2002. See "ESTIMATED SOURCES AND USES OF FUNDS." Description of the Bonds The Bonds will be issued as fully registered bonds without coupons in denominations of $5,000 and any integral multiple thereof and shall be dated the date of delivery thereof. The Bonds will be issued in book-entry only form and The Depository Trust Company, New York, New York ("DTC') will act as securities depository for the Bonds. So long as the Bonds are held in book-entry only form, principal of, premium, if any, and interest on the Bonds will be paid directly to DTC for distribution to the beneficial owners of the Bonds in accordance with the procedures adopted by DTC. See "THE BONDS -- Book-Entry-Only System" herein. The Bonds will mature on DOCSOC\836206v5~22245.0120 EXHIBIT 9 September 1, in the principal amounts and years, and bearing rates of interest, as shown on the inside cover of this Official Statement. Interest on the Bonds will be payg_ble semiannually on March 1 and September 1 of each year, commencing March 1, 2002 (each, an "Interest Payment Date") and will be computed on the basis of a 360-day year comprised of twelve 30-day months. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication, thereof, unless (i) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the date of the Bonds; provided, however, that if at the time of authentication of a Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment. Interest on any Bond shall be paid to the person whose name shall appear in the books of registration as the owner of such Bond as of the close of business on the Record Date immediately preceding such Interest Payment Date. Such interest shall be paid by check of the Fiscal Agent mailed to such Bondowner at his or her address as it appears on the books of registration or, upon the request in writing prior to the Record Date of a Bondowner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account in the United States designated by such Owner. Redemption Optional Redemption. The Bonds maturing on and after September 1, 20__ may be redeemed at the option of the District prior to maturity as a whole, or in part on any Interest Payment Date on and after September 1, 20__, from such maturities as are selected by the District, and by lot within a maturity, from any source of funds, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Price DOCSOC\836206vS'~222450120 ' f ' EXHIBIT 9 Extraordinary Mandato~3, Redemption from Special ~Tax Prepayment. The Bonds are subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part on a pro rata basis among maturities from the proceeds of the prepayment of Special Taxes pursuant to the Rate and Method. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as pementages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Redemption Price See "SOURCES OF PAYMENT FOR THE BONDS -- Special Taxes -- Prepayment of Special Taxes" and Section I of Appendix A for a description of how a property owner may prepay, or will be required to prepay, Special Taxes. Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ are subject to mandatory sinking fund redemption, in part, by lot, on September 1 in each year commencing September 1, 20__, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown on the following redemption schedule. Redemption Date Principal (September 1) Amount DOCSOC',836206vSL22245.0120 EXHIBIT 9 The Bonds maturing on September 1, 20__ are subject to mandatory sinking fund redemption, in part, by lot, on September 1 in each year commencing September 1, 20 , at a redemption price equal to the principal amo~nt of the Bonds to be redeemed, plus accrued and unpaid ~nterest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown on the following redemption schedule. Redemption Date Principal (September 1) Amount Purchase in Lieu of Redemption. In lieu of such an optional, extraordinary mandatory or mandatory sinking fund redemption, the District may elect to purchase such Bonds at public or private sale at such prices as the District may in its discretion determine; provided, that, unless otherwise authorized by law, the purchase price (including brokerage and other charges) thereof shall not exceed the principal amount thereof plus accrued interest to the purchase date. Notice and Selection of Bonds for Redemption In the event the District shall elect to redeem Bonds as provided in the Indenture, the District shall give written notice to the Fiscal Agent of its election so to redeem, the redemption date, the principal amount of the Bonds to be redeemed, the maturities bom which such Bonds are to be redeemed and the principal amount of the Bonds to be redeemed from each such maturity, the Bonds or portions thereof to be selected for redemption. The notice to the Fiscal Agent shall be given not tess than 60 days prior to the redemption date or such shorter period as shall be acceptable to the Fiscal Agent. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the District shall treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000. 10 ~ DOCSOC\836206v5\222 4 5 0120 , EXHIBIT 9 Notice of Redemption Notice by Mail to Registered Owners. The Fiscal Agent shall mail, at least 30 days but.not more than 45 days prior to the date of recl. e__mption, notice of intended redemption, by first-class ~aiI, postage prepaid, to the original purchasers of the Bonds and the respective registered Owners of the Bonds at the addresses appearing on the Bond registry books. The notice of redemption shall: (a) state the redemption date; (b) state the redemption price; (c) state the bond registration numbers, dates of maturity and CUSIP numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part, the respective principal portions to be redeemed; provided, however, that whenever any call includes all Bonds of a maturity, the numbers of the Bonds of such maturity need not be stated; (d) state that such Bonds must be surrendered at the principal corporate trust office of the Fiscal Agent; (e)state that further interest on such Bonds will not accrue from and after the designated redemption date; (f) state the date of the issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state that any other descriptive information needed to identify accurately the Bonds being redeemed as the District shall direct. Further Notice. Further notice of redemption shall be sent at least two days before the notice of redemption is mailed to the Bondholders, as described above, by registered or certified mail or overnight delivery service to the registered securities depositories and to the national information services listed in the Indenture or, in accordance with the then-current guidelines of the Securities and Exchange Commission, such other securities depositories and services providing information on called bonds, or such other securities depositories and services, as the District may determine in its sole discretion. Failure to Receive Notice. So long as notice by first class mail has been provided as set forth above, the actual receipt by the Owner of any Bond of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for redemption of such Bonds or the cessation of interest on the date fixed for redemption. Certificate of Giving Notice. The notice or notices described above shall be given by the Fiscal Agent on behalf of the District. A certificate by the Fiscal Agent that notice of call and redemption has been given to the registered Owners of the Bonds as herein provided shall be conclusive as against all parties, and no Owner whose Bond is called for redemption may object thereto, or object to cessation of interest on the redemption date, by any claim or showing that he failed to receive actual notice of call and redemption. Notice from DTC to Beneficial Owners. So long as the Bonds am held in book-entry-form, notice of redemption will be sent by the Fiscal Agent only to DTC or its nominee. Conveyance of redemption notice by DTC to Beneficial Owners is determined by DTC and its participants and is not the responsibility of the District. See "THE BONDS--Book-Entry-Only System." Effect of Redemption When notice of redemption has been given, and when the amount necessary for the redemption of the Bonds called for redemption is set aside for that purpose in the Redemption Fund, the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and upon presentation and surrender of said Bonds at the place specified in the notice of redemption, with the form of assignment endorsed thereon executed in blank, said Bonds shall be DOCSOC\836206vSL22245.0120 " ~ EXHIBIT 9 redeemed and paid at the redemption price out of the Redemption Fund and no interest will accrue on such Bonds or portions of Bonds called for redemption from and after the redemption date specified in said notice, and the Owners of such Bonds so called for redemption after such redemption flare shall look for the payment of principal and_premium, if any, of such Bonds or portions of Bonds 0nly to said Redemption Fund. Ail Bonds redeemed shall be canceled forthwith by the Fiscal Agent and shall not be reissued. Upon surrender of Bonds redeemed in part, a new Bond or Bonds of the same maturity shall be registered, authenticated and delivered to the registered Owner at the expense of the District, in the aggregate principal amount of the unredeemed portion. All unpaid interest payable at or prior to the date fixed for redemption shall continue to be payable to the respective registered owners of such Bonds or their order, but without interest thereon. Transfer and Exchange of Bonds There shall be kept by the Fiscal Agent, sufficient books for the registration and transfer of the Bonds and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said register, Bonds. The ownership of the Bonds shall be established by the Bond registration books held by the Fiscal Agent. Whenever any Bond or Bonds shall be surrendered for reg!stration of transfer or exchange, the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of the same maturity, for a like aggregate principal amount of authorized denominations; provided that the Fiscal Agent shall not be required to register transfers or make exchanges of(i) Bonds for a period of 15 days next preceding the date of any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. Bonds may be exchanged at the Principal Corporate Trust Office, for a like aggregate principal amount of Bonds of authorized denominations, interest rate and maturity, subject to the terms and conditions of the Indenture, including the payment of certain charges, if any, upon surrender and cancellation of a Bond. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same maturity and for the same aggregate principal amount will be issued to the transferee in exchange therefor. The transfer of any Bond may be registered only upon such books of registration upon surrender thereof to the Fiscal Agent, together with an assignment duly executed by the Owner or his attorney or legal representative, in satisfactory form. Upon any such registration of transfer, a new Bond or Bonds shall be authenticated and delivered in exchange for such Bond, in the name of the transferee, of any denomination or denominations authorized by the Indenture, and in an aggregate principal amount equal to the principal amount of such Bond or Bonds so surrendered. In all cases in which Bonds shall be exchanged or transferred, the Fiscal Agent shall authenticate the Bonds in accordance with the provisions of the Indenture. All Bonds surrendered in such exchange or transfer shall forthwith be canceled. The Fiscal Agent may make a charge for every such exchange or registration of transfer of Bonds sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration or transfer. 12 DOCSOC\836206vSV22245.0120 ~ EXHIBIT 9 Book-Entry-Only System General Description As noted above, DTC will act as securities depository for the Bonds. The Bonds wil~ be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds 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 through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants ("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. Transfers of Bonds under the DTC system must be made by or through Direct Participants, which will receive credit for the Bonds on DTC's records. The ownership interest of each actual owner of each security ("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 Participant or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in thc 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. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual t~eneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. 13 DOCSOC\836206v5~222450120 ~ EXHIBIT 9 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 regula!ory requirements as may be in effect from tim. e__to time. Redemption notices shall be sent to Cede & Co. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal of and interest on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on and Interest Payment Date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on an Interest Payment Date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the District or the Fiscal Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services or securities depository with respect to the Bonds at any time by giving reasonable notice to the City or the Fiscal Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered to the Beneficial Owners. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered and will be governed by the provisions of the Indenture with respect to payment of principal and interest and rights of exchange and transfer. The District cannot and does not give any assurances that DTC Participants or others will distribute payments with respect to the Bonds received by DTC or its nominee as the registered Owner, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will service and act in the manner described in this Official Statement. According to DTC, the foregoing information with respect to DTC has been provided to the industry for informational purposes only and is not intended to serve as a representation, warranty, or contract modification of any kind. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable, but neither the City nor the Underwriter takes any responsibility for the accuracy thereof. DOCSOC\836206v5\22245.0120 EXHIBIT 9 Discontinuation of Book-Entry-Only System; Payments to Owners In the event that the book-entry system described above is no longer used with respect to the Bonds, the principal of the Bonds is pay.ab~_le upon surrender thereof at the Principal Corporate T_mst Office of the Fiscal Agent. Interest on the Bonds is payable on each Interest Payment Date to the registered owner thereof as of the close of business on the Record Date immediately preceding each Interest Payment Date, such interest to be paid by check of the Fiscal Agent, mailed by first-class mail to the registered owner at his address as it appears on the Register (or at such other address as is furnished to the Fiscal Agent in writing by the registered owner). A registered owner of $1,000,900 or more i~* principal amount of Bonds may be paid interest by wire transfer in immediately available funds to an account in the United States if the registered owner makes a written request of the Fiscal Agent no later than the applicable Record Date. DOCSOC\836206v5~22245.0120 EXHIBIT 9 Debt Service Schedule for the Bonds Debt Service on Period Ending Debt Service Prin.ci~p_al Interest Debt Service 1999 Bonds (September 1) on 1999 Bonds on Bonds on Bonds on Bonds and Bonds -' DOCSOC\836206v5'~22245 0120 EXHIBIT 9 SOURCES OF PAYMENT FOR THE BONDS Limited Obligations The Bonds are special, limited obligations of the District payable only from amounts pledged under the Indenture and from no other sources. The Special Taxes are the primary security for the repayment of the Bonds. Under the Indenture, ~he District has pledged to repay the Bonds and the 1999 Bonds from the Special Tax Revenues remaining atSer the payment of the annual Administrative Expense Requirement of $75,000 and from amounts held in the funds and accounts under the Indenture, other than amounts held in the Rebate Fund and the Administrative Expense Fund. Special Tax Revenues are defined in the Indenture to include the proceeds of the Special Taxes received by the District, including any scheduled payments and prepayments thereof, interest and penalties thereon, the proceeds of the redemption of delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien of delinquent Special Taxes in the amount of said lien, and interest and penalties thereon. In the event that the Special Tax Revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal Agent, including amounts held in the Reserve Fund, for the exclusive benefit of the Owners of the Bonds. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF SAN DIEGO, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDMSION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN. Special Taxes Authorization and Pledge. In accordance with the provisions of the Act, the City Council established the District on August 31, 1999 for the purpose of financing the acquisition, construction and installation of various public improvements to serve the District. At a special election held on August 31, 1999, the owners of the property within the District authorized the District to incur indebtedness in an amount not to exceed $60,000,000, and approved the Rate and Method which authorizes the Special Tax to be levied to repay District indebtedness, including the Bonds. The District has covenanted in the Indenture that by July 1 of each year (or such later date as may be authorized by the Act) it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in the amount required for the payment of principal of and interest on any ('httsmnding Bonds becoming due and payable during the ensuing calendar year, including any necessary replenishment or expenditure of the Reserve Fund and the amount estimated to be sufficient to pay the Administrative Expenses during such calendar year. DOCSOC\g36206v5L22245 0120 : EXHIBIT 9 7he Special Taxes levied in any fiscal year may not exceed the maximum rates authorized pursuant to the Rate and Method. See Appendix A -- "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES" hereto. There is no assurance that the Special _Tax proceeds will, in all circumstances, be ac[equate to pay the principal of and interest on the Bonds when due. See "SPECIAL RISK FACTORS -- Insufficiency of Special Taxes" herein. Rate and Method of Apportionment of Special Taxes. Under the Rate and Method, Developed Property in each Zone will be taxed as Residential Property, Commercial Property or Community Purpose Facility Property at the rates set forth in the tables below. The maximum annual Special Tax rate for Undeveloped Property and taxable property owned by a homeowner's association is $8,864 per acre. Maximum Annual Special Tax for Developed Property in Zone A (Village One) Commnnity Facilities District No. 99-1 Land Use Class Description Maximum 1 Residential Property $0 per dwelling unit + $.28 per square foot of Residential Floor Area 2 Commercial Property $1,600 per Acre 3 Community Purpose Facility Property $400 per Acre - -- Maximum Annual Special Tax for Developed Property in Zone B (Village Five) Community Facilities District No. 99-1 Land Use Class Description Maximum Annual Special Tax 1 Residential Property $400 per dwelling unit +$.29 per square foot of Residential Floor Area 2 [ Commercial Property $3,717 per Acre 3 Community Purpose Facility $929 per Acre Property Maximum Annual Special Tax for Developed Property in Zone C (Village One West) Community Facilities District No. 99-1 Land Use Class Description Maximum Annual Special Tax 1 Residential Property $400 per dwellnig unit + $.44 per square foot of Residential Floor Area 2 Commercial Property $4,266 per Acre 3 Community Purpose Facility $1,066 per Acre Property DOCSOC\836206vS~22245 0120 EXHIBIT 9 In each fiscal year, all taxable property within the District will be classified as Developed Property, Undeveloped Property or Taxable Property Owner Association Property. A parcel is classified as Developed Property if a building permit has been issued prior to March I of the f~scal year preceding the Special Tax levy. Deye~ped Property will be further assigned to Zone A, Zone B or Zone C. Zone A pamels are within the area of the District known as "Village One," Zone B parcels are within the area of the District known as "Village Five," and Zone C parcels are within the area of the District known as "Village One West." After classifying the parcels, the City Council will determine the Special Tax Requirement (as defined in the Rate and Method) for the fiscal year. "Special Tax Requirement" is defined in the Rate and Method as the amount required in any Fiscal Year for the District to: (i) pay annual debt service on all Outstanding Bonds; (ii) pay periodic costs on the Bonds, including, but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of facilities, which are authorized to be financed by the District; (vi) less a credit for Available Funds. "Available Funds" is defined in the Rate and Method as the balance in the Reserve Fund established pursuant to the terms of the Indenture in excess of the Reserve Requirement as defined in the Indenture, delinquent Special Tax payments, foreclosure proceeds, the portion of proceeds of Backup Special Tax payments and Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in the Indenture. The Special Tax will be levied first on Developed Property up to the applicable maximum rate. If additional monies are needed to satisfy the Special Tax Requirement after levying on all Developed Property at the applicable maximum rate, the Special Tax will be levied next on Undeveloped Property up to the maximum rate and finally on Taxable Property Owner Association Property up to the maximum rate. See APPENDIX A -- "RATE AND METHOD OF APPORTIONMENT." Prepayment of Special Taxes. There are certain events that will result in a required prepayment of Special Taxes. In addition, under the Rate and Method, the owner of a parcel for which a building permit has been issued may prepay the Special Tax obligation for a parcel in whole or in part. Any required or voluntary prepayment of Special Taxes will result in an extraordinary redemption of Bonds. See "THE BONDS-- Redemption-- Extraordinary Mandatory Redemption from Special Tax Prepayment." A required prepayment of Special Taxes will occur in certain situations where a Backup Special Tax is levied under the Rate and Method as a result of a reduction in the total expected number of dwelling units or non-residential acres in a planning area or if smaller residential units than was originally anticipated in the Rate and Method are constructed in a planning area. The Backup Special Tax paid with respect to a planning area will be held in a Backup Special Tax Account of the Special Tax Fund under the Indenture. If at buildout of the plaiming area, the maximum ~pecial Taxes that can be levied within the planning area are less than 1.1 times that planning area's share of annual debt service on the Outstanding Bonds, as calculated under the Rate and Method, then to the extent necessary to achieve the 1.1 coverage ratio, the balance in the Backup Special Tax Account attributable to the planning area will be used to redeem Bonds. If a planning area does not reach fall buildout within five years after the first payment of Backup Special Taxes, then all moneys in the Backup Special Tax Fund for the planning area will be applied to redeem Bonds. Based on the existing development plan, the Developer does not expect any future prepayments to occur under the foregoing provisions of the Rate and Method. No assurance can be given, however, that future development plans will not change and result in a prepayment of Special Taxes and a redemption of Bonds. DOCSOC\836206v5~2224q 01 *0 ~ ~ EXHIBIT 9 A required prepayment of Special Taxes will also occur on a parcel to the extent necessary to comply with the City's policy that the total annual taxes and assessments on a parcel, exclusive of special taxes for services, will not exceed two percent (2%) of the sales price of a parcel t.o a residential homeowner. The Developer h.a~.s agreed with the City to require all merchant builders to comply with this policy. Based on estimated retail home sales prices, the Developer does-not anticipate that the total special taxes, exclusive of special taxes for services, will exceed 2% of the sales price. Under the policy, prior to the closing of an escrow for the sale of a residential unit, the merchant builder is to deposit into escrow the amount needed to partially prepay the Special Taxes so that following such prepayment the parcel will be in compliance with the policy. Upon the closing of the escrow, the required prepayment will be paid to the Director of Finance of the City and will be sent to the Fiscal Agent to redeem Bonds. Collection and Application of Special Taxes. The Special Taxes are levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes. The District has made certain covenants in the Indenture for the purpose of ensuring that the current maximum Special Tax rotes and method of collection of the Special Taxes are not altered in a manner that would impair the District's ability to collect sufficient Special Taxes to pay debt service on the Bonds and Administrative Expenses when due. First, the District has covenanted that, to the extent it is legally permitted to do so, it will not reduce the maximum Special Tax rates and will oppose the reduction of maximum Special Tax rates by initiative where such reduction would reduce the maximum Special Taxes payable from parcels on which a completed structure is located to less than 110% of Maximum Annual Debt Service on Outstanding Bonds and Parity Bonds. See "SPECIAL RISK FACTORS -- Proposition 218." Second, the District has covenanted not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a cerhficate of an Independent Financial Consultant that to accept such tender will not result in the District having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds and any Parity Bonds remaining Outstanding following such tender. See "SPECIAL RISK FACTORS -- Non- Cash Payment of Special Taxes." Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners therein. See "SPECIAL RISK FACTORS -- Parity Taxes, Special Assessments and Land Development Costs" herein. There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled "SPECIAL RISK FACTORS." Under the terms of the Indenture, not later than the tenth Business Day after receipt, all Special Tax Revenues received by the District are to be deposited in the Special Tax Fund. Special Tax Revenues are to be applied by the Fiscal Agent under the Indenture in the following order of priority: (1) to deposit annually $75,000 to the Administrative Expense Fund, (2) to pay the principal of and interest on the Bonds when due, (3)to replenish the Reserve Fund to the Reserve Requirement, (4) to make any required transfers to the Rebate Fund and (5) to pay Administrative Expenses of the District above the $75,000 referenced in (1) above. See Appendix E -- "SUMMARY OF INDENTURE." 20 DOCSOC\836206v5~22245 0120 ? EXHIBIT 9 Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of land within the District resulting from a landowner's failure to pay the Special Taxes when due are included within the Special Tax Revenues pledged to the payment of principal of and interest on the Bonds under the Indenture. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Tax levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a superior court action to foreclose the lien within specified time limits.. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District has covenanted for the benefit of the owners of the Bonds that it will commence and diligently pursue to completion, judicial foreclosure proceedings against (i) properties under common ownership with delinquent Special Taxes in the aggregate of $5,000 or more by the October 1 following the close of the Fiscal Year in which such Special Taxes were due, and (ii) against all properties with delinquent Special Taxes in the aggregate of $2,500 or more by the October 1 following the close of any fiscal year if the amount in the Reserve Fund is less than the Reserve Requirement. See Appendix E -- "SUMMARY OF iNDENTURE -- Other Covenants of the District" herein. If foreclosure is necessary and other funds (including amounts in the Reserve Fund) have been exhausted, debt service payments on the Bonds could be delayed until the foreclosure proceedings have ended with the receipt of any foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See "SPECIAL RISK FACTORS -- Bankruptcy and Foreclosure" herein. Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See "SPECIAL RISK FACTORS -- Land Values" herein. Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. However, the City does have the ability to use the foreclosure judgment to purchase property by credit bid at a foreclosure sale, in which case the City would have no obligation to pay such credit bid for 24 months. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes. Reserve Fund In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the Bonds, to deposit in the Reserve Fund and thereafter to maintain the Reserve Fund at an amount equal to the Reserve Requirement. The Indenture provides that the amount in the Reserve Fund shall, as of any date of calculation, equal the lesser of(i) 10% of the sale proceeds of the Bonds and any Parity Bonds, (ii) the maximum annual debt service of the Bonds and any Parity Bonds, or (iii) one hundred twenty-five percent (125%) of the average annual debt service on the proceeds of the Bonds and any Parity Bonds (the "Reserve Requirement"). Subject to the limits on the maximum annual Special Tax which may be levied within the District, as described in Appendix A, the District has covenanted to levy Special Taxes in an amount 21 DOCSOC\g36206v5L22245.0120 EXHIBIT 9 that is anticipated to be sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Fund at the Reserve Requirement. Amounts in the Reserve Fund are to be applied to (i) pay debt service on the Bonds, to the extent other monies are not avail_able therefore, (ii) redeem the Bonds in whole_ o~ in part, and (iii) pay the principal and interest due in_ the final year of maturity of the Bonds. In the event of a prepayment of Special Taxes, under certain circumstances, a portion of the Reserve Fund will be added to the amount being prepaid. As described in the Rate and Method, the Reserve Fund Credit will be equal to the lesser of: (a) the expected reduction in the Reserve Requirement, if any, as a result of prepayment, or (b) the amount derived by subtracting the new Reserve Requirement in effect after the redemption from the balance in the Reserve Fund, but in no event shall such amount be less than zero. See Appendix E- "SUMMARY OF INDENTURE -- Reserve Fund" herein. Issuance of Parity Bonds In the Indenture, the District covenanted not to issue any other obligations payable from the Special Taxes which have, or purport to have, any lien upon the Special Taxes superior to or on a parity with the lien of the 1999 Bonds and the Bonds. Nothing in the Indenture, however, prevents the District fi'om issuing and selling, pursuant to law, refunding bonds or other refunding obligations payable from and having a first lien upon the Special Taxes on a parity with the 1999 Bonds and the Bonds. See Appendix E -- "SLrMMARY OF iNDENTURE -- Conditions for the Issuance of Parity Bonds" herein. THE COMMUNITY FACILITIES DISTRICT General Description of the District The District consists of approximately 1,000 gross acres located in the easterly portion of the City, approximately 3.5 miles east of the City's downtown area. The District is located in San Diego County approximately 13 miles southeast of downtown San Diego and approximately 3 miles north of the United States-Mexico International border. Description of Authorized Facilities The facilities authorized to be acquired or constructed by the District with the proceeds of the Bonds consist of various public improvements described in Table 1 below. 22 /'~ )( DOCSOC\836206~ 5'~22245.0120 , L2 EXHIBIT 9 Status of Construction The major improvement to be financed, in part, by the District from Bond proceeds is a regional roadway known as "Olympic Pa~r~kway," a six-lane road which is to connect from Inter~tate 805 to the proposed State Route 125. Olympic Parkway will run through the District in an east-~est direction. Olympic Parkway is being constructed in segments, with the City, the Developer and an adjacent property owner (McMillin Otay Ranch LLC) all assuming responsibility for completing portions of the constxuction. The total cost of the portions of Olympic Parkway to be constructed by the Developer and McMillin is estimated to be $49,500,000, of which $12,240,000 is to be paic~ by McMillin and $37,260,000 is to be paid by the City, the Developer, and the Bonds. Of the $37,260,000, approximately $10,000,000 is being funded by the City from other funds currently on deposit with the City or awarded to the City from State of California transportation funds, approximately $26,000,000 from Bond proceeds and approximately $1,260,000 from the Developer. The grading of Olympic Parkway began in October, 1999 and Phase One fi.om Interstate 805 to Paseo Ranchero opened for use in June 2001. Phase Two easterly to Palomar Street is expected to be completed by June 2002. Phase Three easterly to State Route i25 is expected to be completed by the end of 2002. Principal Taxpayers Along with the numerous owners of individual homes within the District and the Developer, there are currently 18 merchant builders owning property within the District. Table 2 below sets forth the percentage of the Special Tax that each of these property owners would pay in fiscal year 2001-02 based on a projected Special Tax levy of $2,063,369.80, and their estimated ownership and land use status as of April 2, 2001, the date o£value used in the Appraisal. DOCSOC\836206v5L22245.0120 EXHIBIT 9 TABLE 2 PROJECTED PRINCIPAL TAXPAYERS FOR FISCAL YEAR 2001-02 Plannin~ Area Projected Fiscal Year % ~f Owner°) 2001-02 Special Tax Total Otay Ranch Affiliated Merchants R16 Otay Ranch One LLC $ 29,789.76 1.44% R17 Otay Ranch Two LLC $ 40,916.96 1.98% R31 Otay Ranch Three, LLC $ 46,361.00 2.25% R-34 through 38 Otay Ranch V LLC $ 96,775.48 4.68% Subtotal 10.35% RWR Otay Affiliated Merchants R49A & 49B RWR Otay Investors 49A, LLC $ 48,867.00 2.37% R50 RWR Otay Investors 50, LLC $ 50,546.00 2.45% R-5 lA and 5 lB LB/L-RWR Otay 62 LLC $ 68,169.08 3.30% R52 A/B & 53 LB/L-RWR Otay 91 LLC $ 87,272.88 4.23% Subtotal 12.35% R-7 and 10 Shea Land Holdings, LLC $ 89,914.72 4.35% R-14 and 29 W Lyon Homes/PHI Otay Ranch $ 33,124.70 1.61% R15 East Palomar Apartments $ 41,273.82 2.00% R18 and R48 Standard Pacific $ 75,660.20 3.67% R19 and 20 BRE Properties Inc. $ 68,948.60 3.34% R21 Aegis Realty Trust, Inc. $ 44,950.00 2.18% R25 Continental Residential $ 37,840.60 1.83% R27 Dr Horton San Diego Holding Company $ 26,062.40 1.26% C-1 Liwemnt Family Trust $ 7,520.00 0.36% Various individual Homeowners $ 477,470.00 23.14% Various Master Developer $ 691,906.60 33.40% Total $ 2,063,369.80 100.00% (~) Ownership information taken fi.om Appraisal. Source: McGill Martin Self, Inc. and the City 25 DOCSOC\g36206vSk22245.0120 EXHI13IT 9 Estimated Direct and Overlapping Indebtedness Within the District's boundaries are numerous overlapping local agencies providing pu_blic services. Some of these local agencies_h~ave outstanding bonds which are secured by taxes and assessments on the parcels within the Disrcict and others have authorized but unissued bonds wl~ich, if issued, will be secured by taxes and assessments levied on parcels within the District. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on the parcels within the District for fiscal year 2000-01 is shown in Table 3 below (the "Debt Report"). Table 4 below summarizes the additional taxes that could be levied by other existing and proposed community facilities districts that overlap some or all of the District boundaries. The Debt Report has been derived from data assembled and reported to the District by California Municipal Statistics, Inc. Neither the District, the City nor the Underwriter has independently verified the information in the Debt Report and do not guarantee its completeness or accuracy. DOCSOC\836206vSX22245.0120 EXHIBIT 9 TABLE 3 DIRECT AND OVERLAPPI~qG DEBT SUMMARY CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 99-1 2000-01 Assessed Valuation: $129,568,985 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 4/1/01 Metropolitan Water District 0.013% $ 68,572 San Diego County Water Authority 0.075 3,544 Otay MUmcipal Water District, I.D. No. 27 5.491 618,561 Chula Vista City School District 1.226 514,184 Sweetwater Union High School Disthct CFD No. 6 62.835 2,691,356 City of Chula Vista CFD No. 99-1 100. 23,000,000 City of Chula Vista AD No. 97-2 76.841 9,512,916 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $36,409,133 OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County Genre'al Fund Obligations 0.073% $ 397,092 San Diego County Pension Obligations 0.073 231,662 San Diego County Superintendent of Schools Obligations 0.073 1,588 Southwestern Community College District General Fund Obligations 0.746 31,146 Sweetwater Union High School District Certificates of Participation 0.909 239,340 Chula Vista City School District General Fund Obligations 1.293 678,566 City of Chula Vista Certificates of Participation 1.564 582,434 City of Chula Vista Pension Obligations 1.564 221,565 Otay Municipal Water Dislrict Certificates of Participation 1.458 397,815 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT $ 2,781,208 Less: Otay Municipal Water District Certificates of Participation 397,815 TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT $ 2,383,393 GROSS COMBINED TOTAL DEBT $ 39,190,341(~) NET COMBINED TOTAL DEBT $38,792,526 (~) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non- bonded capital lease obligations. Ratios to 2000-01 Assessed Valuation: Direct Debt ($23,000,000) ......................................................................... 17.75% Total Direct and Overlapping Tax and Assessment Debt .......................... 28.10% Gross Comb/ned Total Debt ...................................................................... 30.25% Net Combined Total Debt .......................................................................... 29.94% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/01:$0 27 DOCSOC\836206vSL22245.0120 EXHIBIT 9 Some or all of the parcels within the District are encumbered by assessment liens for the City's Assessment District No. 97-2 ("AD No. 97-?) and also are within the boundaries of other community facilities districts formed by the-City and two school districts. AD No. 97-2 was formed to finance various public improvements .w~ithin the portion of Otay Ranch known as "Village One." Community Facilities Districts 97-1, 97-2 and 99-1 of the City of Chula Vista (collectively, the "City Maintenance CFDs") were formed to maintain open space and preserved lands within the Otay Ranch and the Chula Vista Elementary School District CFD No. 6, Chula Vista Elementary School District CFD No. 12, Sweetwater High School District CFD No. 6 and Sweetwater High School District CFD No. 12 (collectively, the "School District CFDs") were formed to finance school facilities needed within the Otay Ranch area. Table 3 above does not reflect the overlapping debt that may be incurred by the School CFDs, or the special taxes that may be levied by the City Maintenance CFDs. Each of the School District CFDs is authorized to incur debt in the amount of $250,000,000, although special taxes that could currently be levied by each School District CFD could support only a much lower debt level. Currently, none of the School District CFDs have outstanding debt. For a description of the direct and overlapping tax and assessment debt, as well as the overlapping general fund obligation debt of the school districts underlying the School District CFDs, see Table 3 above. The existing City Maintenance CFDs and the School CFDs are summarized in Table 4 below. 28 : ~ DOCSOC\836206vS~22245.0120 EXHIBIT 9 TABLE 4 SUMMARY OF OVERLAPPING coMMUNITy FACILITIES DISTRICTS - -- Final Map Developed Non- ~ Undeveloped Properly Residential Residential Land Special Special Tax Special Tax Special Tax District Purpose Tax Per Acre Per Acre Per Sq. FL Per Acre CityCFDNo. 97-11~xA~ Maintenance $ 4,723.00 N/A $ 0.3201 $ 4,176.00 City CFD No. 97-20~ Maintenance 150.00 5;233.00 0.0144 233.00 City CFD No. 99-2® Maintenance 4,937.00 0.40(}4 N/A Chula Vista E[ementary CFD Elementary 1,422.00 N/A 0.2521 N/A No. 612)°) Schools Sweetwater High School High Schools 1,751.00 N/A 0.3105 N/A District CFD No. 6(2X3) Chula Vista Elemental/CFD Elem Schools 1,839.00 N/A 0.1954 N/A No. 12(4) Sweetwater High School CFD High Schools 2,209.00 N/A 0.2511 N/A No. 12 (4) (0 On July 1 of each year, the maximum special tax rates shall be increased or decreased by a factor which shall be the lesser of the annual percentage change in the January to January San Diego Metropolitan Area All Urban Consumer Price Index (All Items) or the annual percentage change in the estimated Caiifomia Fourth Quarter Per Capita Personal Income as contained in the Governor's budget published every January. (2) On July 1 of each year, the maximum special tax rates shall be increased prior to development of a parcel by the greater of (i) the annual percentage change in the Engineering News Record building cost index for the City of Los Angeles determined every May 31 for the prior 12-month period, or (ii) two percent per fiscal year, and afl.er development ora parcel at the rate of 2% per annum. (3) Taxes pertain only to Village One and Village Five. t4) Taxes pertain only to Village One West. Source: McGill Martin Self, Inc. DOCSOC\836206v5~22245 0120 EX3IIBIT 9 Expected Tax Burden It is expected that the total tax burden, excluding any special taxes to be levied by the City Maintenance CFDs, on residential units i.n~__~e District will be slightly less than 2% of the initial s'ales price of the units. The estimated total effective tax rate for a typical single family detached ~unit including the City Maintenance CFDs is estimated to be between 2.13% and 2.27%. Table 5 below sets forth an estimated property tax bill for a single family detached unit of 2,118 square feet in Village One, 2,160 square feet in Village Five and 2,913 square feet in Village One West. 30 DOCSOC\836206vS~22245 0120 EXHIBIT 9 TABLE 5 SAMPLE PROPERTY TAX BILL PROJECTED FOR FISCAL YEAR 2001-02 FOR A SINGLE'FAMILY DETACHED UNIT Percent of Total Village One Assessed Village One Village Five West Assessed Valuation and Property Taxes Valuation Amount Amount _Amount HOUSE SQUARE FOOTAGE°1 2,118 2,160 2,913 SALES PRICE{21 $246,000 $276,000 $346,000 TOTAL ASSESSED VALUE131 $239,000 $269,000 $339,000 AD VALOP,~EM PROPERTY TAXES® Basic Levy 1.00000% $2,390.00 $2,690.00 $3,390.00 MWD 0.00880% 21.03 23.67 29.83 County Water Authority 0.00091% 2.17 2.45 3.08 Chula Vista Elementary General Obligation Bond 0.02479% 59.25 66.69 84.04 Ota¥ Water ID #27 0.07000% 167.30 188.30 237.30 Total General Properly Taxes and Overrides 2,639.76 2,971.11 3,744.2~' ASSESSMENTS, SPECIAL TAXES AND PARCEL CHARGES® Chula Vista Elementary CFD No. 6 533.95 544.54 N/A Chula Vista Elementary CFD No. 6 Credit Isl (59.25) (66.69) N/A Sweetwater Union High School CFD No. 6 657.64 670.68 N/A Chula Vista Elementary CFD No. 12 N/A N/A 569.20 Chula Vista Elementary CFD No. 12 Credit 15) N/A N/A (84.04) Sweetwater Union High School CFD No. 12 N/A N/A 731.45 Chula Vista Open Space CFD 97-1 677.97 691.42 N/A Chula Vista Preserve CFD 97-2 8.05 8.21 11.07 City of Chula Vista Open Space CFD No. 99-2 N/A N/A 1,166.37 Chula Vista Assessment District 97-2 370.87 N/A N/A City of Chula Vista CFD No. 99-I 593.04 1,026.40 1,681.72 Mosquito/Rat Control 2.29 2.29 2.29 MWD Water Standby Charge 11.50 11.50 11.50 CWA Water Availability 10.00 10.00 10.00 Total Assessments and Parcel Charges 2,806.06 2,898.34 4,099.56 TOTAL. ALL PROPERTY TAXES141 $5,445.81 $5,869.45 $7,829.15 Total Effective Tax Rate141 2.21375% 2.12661% 2.26700% Total Effective Tax Rate excluding City Maintenance CFDs{4~ 1.93488% 1.87315% 1.92670% NOTES: (1) Estimated single family detached home size provided by Developer. (2) Estirrated sales price proxSded by Developer. (3) Assessed single-farr~ly detached value and ad valorem taxes incorporate owner-occupied assessed valuation exemplion of $7,000. Sales price is used to determine the initial Total Assessed Value. (4) All tax rates and charges presented herein is based on the applicable m',e for Fiscal Year 2001412. The actual amounts charged will vary and may increase or decrease in future years. '`N/A" means "Not Applicable." Properly not included within these taxing districts. (5) Chula Vista Elementary School District corrtmunity facilities dist~ct special taxes are expected to be reduced by the amount ofproperg~ lax paid for Chula Vista Gen~t-al Obligation bonds. Sources: McGill Martin Self, inc.; County of San Diego, City of Chula Vista, Chula Vista Elementa~y School District, Sweetwater Union High School District, Otay Water District. 31 c:~ '~" ' DOCSOC\836206v5X22245.0120 EXHIBIT 9 Estimated Value-to-Lien Ratios ~he value of the land within the District is significant because in the event of a delinque_ncy in the payment of Special Taxes the Dis.tyic__t may foreclose only against delinquent parcels. Tab~le 6 below summarizes the existing direct and overlapping debt payable from taxes and~ assessments levied on property within the District and the appraised value-to-lien ratios for property in the District. The assessed value of the land within the District for fiscal year 2000-01 which is expected to be taxed in fiscal year 2001-02 was $129,568,985. The estimated assessed value-to-lien ratio of the property within the Dist~ct following the issuance of the Bonds based on the fiscal year 200Q-01 Assessor's roll is 2.59 to 1. The appraised value of the land within the District as set forth in the Appraisal is $380,705,000. The estimated appraised value-to-lien ratios based upon land values and property ownership in the District described in the Appraisal as of April 2, 2001 is 7.61 to 1. As set forth in Table 3 above, there is $36,409,133 of additional land-secured debt which is payable from taxes and assessments levied on property within the District which, if included in the estimated value-to-lien calculations, would lower the ratios somewhat from that stated above and from the ratios in Table 6 below. DOCSOC\836206vSk22245 0120 EXHIBIT 9 Permitted Land Use Table 7 below describes the currently approved land uses within the District. TABLE 7 LAND USE SUMMARY COMMUNITY FACILITIES DISTRICT NO. 99-1 Current District Boundaries Dwelling Use Acres Units Single Family Residential 577.0 2,888 Multifamily Residential 59.6 1,743 Commercial 8.1 Parks 29.9 Community Purpose Facilities 11.3 School 20.5 Open Space and Roads 290.8 __ Total 997.~2 4.631 Source: City and Developer DOCSOC\836206vS~22245.0120 EXHIBIT 9 THE DEVELOPMENT AND PROPERTY OWNERSHIP Except for the information under___the captions "Appraisal" and "Market Absorption Stu~_y, " the Developer has provided the information in this section. The information herein regarding ownership of property in the District has been included because it is considered relevant to an informed evaluation of the Bonds. The inclusion in this Official Statement of information related to existing owners of property should not be construed to suggest that the Bonds, or the Special Taxes that will be used to pay the Bonds, are recot~rse obligations of the property owners. A property owner may sell or otherwise dispose of land within the District or a development or any interest therein at any time. No assurance can be given that the proposed development within the District will occur as described below. As the proposed land development progresses and parcels are sold, it is expected that the ownership of the land within the District will become more diversified. Although planning for the development of Otay Ranch is at an advanced stage, actual construction of improvements are as described below under the caption "Infrastructure Requirements and Construction Status." No assurance can be given that development of the land within the District will occur, or that it will occur in a timely manner or in the configuration or intensity described herein, or that any landowner described herein or the Developer will obtain or retain ownership of any of the land within the District. The Bonds and the Special Taxes are not personal obligations of any landowners or the Developer and, in the event that a landowner defaults in the payment of the Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any landowner. As a result, other than as provided herein, no financial statements or information is, or will be, provided about the Developer or other landowners. The Bonds are secured solely by the Special Taxes and other amounts pledged under the Indenture. See "SECURITY FOR THE BONDS" and "SPECI4L RISK FACTORS." General Description of the Otay Ranch The Otay Ranch, of which the District is a part, consists of approximately 23,000 acres situated in southwestern San Diego County approximately 3.5 miles east of the City's downtown and 13 miles southeast of downtown San Diego. The United States-Mexico International border is approximately 3 miles south of the southernmost boundary of Otay Ranch. After over ten years of planning and study, the San Diego County Board of Supervisors and the City Council jointly adopted a General Development Plan ("GDP") for the entire Otay Ranch in 1993. The GDP permits a maximum of 27,059 dwelling units to be developed over the next three decades accommodating a projected population of 78,555 persons. The plan also provides for 376 acres of commercial land and 285 acres of industrial land. The various land uses are arranged within 18 villages that utilize a planning concept focusing on village cores. The Otay Ranch has been grouped geographically to from three distinct parcels. The Otay Valley Parcel is approximately 9,400 acres and consists of gently rolling terrain. The Proctor Valley Parcel (7,900 acres) consists of the relatively fiat Proctor Valley area, the Jamul Mountains, and a 1,000-acre plateau overlooking Otay Lakes. The San Ysidro Mountains Parcel (5,600 acres) includes the San Ysidro Mountains and has a more mgged terrain than the other two parcels, providing expansive views of the Otay Lakes, downtown San Diego and the Pacific Ocean. DOCSOC\836206v5~22245.0120 EXHIBIT 9 The Otay Valley Parcel is the largest and westernmost parcel of the three. The City annexed approximately 9,100 acres of the Otay Valley Parcel on March 20, 1997. The District lies within the 9,100 acres of the Otay Ranch annexed bythe City and within the 37,600 acre Eastern Territories Planning Area. The Eastem Territories P. la__nning Area is bounded by Interstate 805 on the west,_San Miguel Mountain and State Route 54 on the north, the Otay Reservoirs and the Jamul foothills on the east, and the Otay River Valley on the south. The portion of the Otay Ranch annexed by the City is currently planned to include eleven urban villages, a resort village and golf course community, two industrial areas, two rural estate planning areas and open space. The Developer initially owned approximately 5,300 acres in the Eastern Territories Planning Area which it is developing under.the name "The Otay Ranch." The Developer The Developer consists of two entities, Otay Project, LLC, a California limited liability company, and Otay Project L.P., a California limited parmership. Otay Project, LLC was formed August 15, 1997 by South Bay Project, LLC and Otay Ranch Development, LLC. Otay Project L.P. was formed on January 20, 1999 by Otay Project, LLC as its general partner and South Bay Project, LLC and Otay Ranch Development, LLC, as its limited partners. As of May 1, 2001, South Bay Project, LLC ceased to be a member of Otay Project, LLC and ceased to be a limited parmer of Otay Project L.P. The Developer is under the control of James and Alfred Baldwin. James and Alfred Baldwin and their affiliated companies are land developers and homebuilders in Southem California primarily engaged in the development of master-planned communities in coastal areas in the counties of Orange, San Diego, Ventura and Los Angeles. Their companies have operated in the Southem California market for 40 years and have built over 15,000 homes and developed over 20,000 lots in the region. Certain entities owned and controlled by James and Alfred Baldwin have previously filed for bankruptcy and have been delinquent in the payment of property taxes and assessments and were subject to outstanding judgments in connection with these delinquencies. See "SPECIAL RISK FACTORS -- Tax Delinquencies of Developer Affiliates and Other Matters." No parcels within the District are currently delinquent in the payment of property taxes and assessments and no affiliate of the Developer is currently subject to bankruptcy proceedings. 36 t? DOCSOC\836206x5t22245.0120 EXHIBIT 9 The current organizational structure of the Developer is depicted in Table 8 below: TABLE 8 DEVELOI~E~R ORGANIZATIONAL CHART - James Baldwin Family Alfred Baldwin Family I Otay Ranch Development, LLC Otay Project, LLC 1 Otay Project, L.P. The primary business of the Developer is to own, develop and sell the approximately 5,300 acres that it acquired in Otay Ranch. The Otay Ranch property was purchased by South Bay Project LLC on August 26, 1997 and substantially alt of such land was immediately contributed to the Developer at its net fair market value. South Bay Project LLC was formed by several individuals and entities for the sole purpose of acquiring the property and participating in its development. South Bay Project, LLC is managed by Golden State Developers, based in Irvine, California. For the period from August 26, 1997 to December 30, 1999, day-to-day management decisions of the Developer were delegated to Otay Ranch Development LLC, with major management decisions remaining subject to the approval of South Bay Project, LLC. On December 30, 1999, the members of the Developer began a process described below which terminated the management responsibilities of South Bay Project, LLC and reduced its ongoing interest in future net profits to 2% of distributable cash, plus an interest in certain supplemental revenues related to cable television and telecommunication agreements, merchant builder price participation payments and certain transportation fee credits. On December 30, 1999, South Bay Project, LLC and Otay Ranch Development, LLC entered into a Third Amended and Restated Operating Agreement for Otay Project LLC, the effect of which was to transfer all management responsibilities to Otay Ranch Development, LLC and to change the profit allocation of South Bay Project, LLC with respect to certain future revenues received by the Developer. Otay Ranch Development, LLC was also granted an option to acquire the remaining profit allocation of South Bay Project, LLC for $2,000,000, which Otay Ranch Development, LLC has exercised. In return, South Bay Project, LLC received from the Developer a $20,000,000 cash DOCSOC\g36206v5~22245 0120 EXHIBIT 9 distribution, which was paid in part by the Developer from undistributed cash and in part from the proceeds of a $10,000,000 loan obtained by the Developer from a private lender. Such loan requires monthly interest payments of $104,166.67, with all principal due and payable on December 30, 2002. In addition, the Developer also agreed to~ m__ake additional future distributions to South Bay Pro~_ect, LLC totaling $10,810,540. The obligation to make such distributions was evidenced by promissory notes, both of which have been paid in full. Proposed Development and Developer's Pro-forma The District consists of approximately 1,000 gross acres in Villages One, One West and Five. A combination of 894 single family homes and multifamily units and 4.7 commercial acres within the District are currently owned by individual owners. Current development plans with tentative map approval for property within the District include an additional 3,739 residential units, 3.4 acres of commercial development, 11.3 acres of community purpose facilities, 29.9 acres of parks, 20.5 acres for school sites and 290.8 acres of open space and roads. As of April 2, 2001, the Developer had sold or transferred title to 485 acres of land within the District approved for the development of 3,021 housing units. Included within these 3,021 units are 236 single family units to be developed on 51.7 acres in Village Five by Otay Ranch V, LLC, an entity owned by the Alfred Baldwin family. Also included are 298 single family units on 50.1 acres to be developed by Otay Ranch One, LLC, Otay Ranch Two, LLC and Otay Ranch Three, LLC, all of which are entities affiliated with Jim Baldwin. The Developer anticipates selling or transferring ownership of the 236 developable acres of land currently owned by it on which the balance of the residential units, the commercial development and community purpose facilities are planned to be developed. The Developer is continuing the planning and development of Village One, Village One West and Village Five as part ora common business plan, and plans to use certain land sale revenues from these properties and a 50-acre parcel in Village Two to finance a portion of the development costs in the District. The Developer has already transferred substantial portions of Villages One, Five and One West to various merchant builders. The Developer also has transferred 236 single family units in Village Five to Otay Ranch V, LLC, with such transfer generating no revenues to the Developer. See "-- Merchant Builders" below. The Developer's plan is to develop the land into finished lots, or, in the case of multifamily units, superpads, and to sell the land to merchant builders to construct residential units. The Developer proposes to develop its remaining land within Village One West into lots for approximately 445 units of single family residential development. A map of the Planning Areas within Village One, Village One West and Village Five is set forth on the opposite page, and a summary of the planned units by Planning Area and their current development slams is set forth in Table 9 below. Exhibit I of the Market Absorption Study provides additional information by Planning Area as to the proposed unit sizes and estimated product types and prices. Based on current economic and market conditions, the Developer expects to continue to develop the portions of Village One, Village One West and Village Five included in the District concurrently over the next several years. The Developer's development expectations could change, however, due to economic and market conditions, or other factors. Constituent members of the Developer are under no obligation to contribute capital to the Developer. Therefore, sufficient cash may not be available to develop Village One, Village One West and Village Five. DOCSOC\836206v5~22245~0120 EXHIBIT 9 In addition to its remaining property in the District, the Developer owns an additional approximately 4,000 acres in the Otay Ranch. C. ertain of this property is being planned and improved as part of the Developer's longer range strategy to develop the Otay Ranch. DOCSOC\836206v5~22245.0120 EXH1BIT 9 [PLANNING AREA MAP] 40 ~/~ DOCSOC\836206v5~22245.0120 [ EXHIBIT 9 TABLE 9 SUMMARy OF DEVELOPMENT BY PLANNING AREA Final Building Escrows Planning Area Owner Lots Acres MapsO> Permitsa) Closedo} Village One R~5 Individual 77 21.6 77 77 77 R-7 Individuals/Shea Land Holdings 131 31.2 131 131 84 R-9 Indiv/duals 74 16 4 74 74 74 R-I 0 Individuals/Shea Land Holdings 123 32.3 123 100 75 R-12 Individuals 83 14.5 83 83 83 R-13 Individuals 88 9.6 88 88 88 R-I4 Individuals/PHI Otay Ranch Associates 139 16.6 139 139 138 R-15 East Palomar Apartments 464 16.3(4) _/4) 0 0 R-16 Otay Ranch One 115 14.5 115 55 24 R-17 Otay Ranch Two 98 17.1 98 51 2 R-I 8 Standard Pacific Coq~. 73 t0.3 73 73 34 R-19 BRE ~operties, Inc. 204 6.8® _In) 204 0 R-20 BRE Properties, lnc. ] 60 6.6® -(4) 160 0 R-21 Meet Capitol 168 7.0141 _141 168 0 R47 Developer 174 4 4{n) -(*) 0 0 R48 Standard Pacific of San Diego 95 16.5 95 95 31 C-1 Developer 3.4 _ia) 0 0 C-1 Liwerant Trust 4.714) _ia) 1 0 CPF-I Developer 1.5® _(4) 0 0 CPF-2 Developer 4.5(4) --(4) 0 0 2,266 255.8 1,096 1498 710 Village Five R-25 Conanental Residential 56 16.2 56 17 0 R-26A Developer 29 6.8 29 16 0 R-26B Developer 34 69 34 18 0 R-27 D.R. Horton San Diego 69 11.8 69 34 0 R-28 Developer 73 11.9 73 24 0 R-29 William Lyon Homes 83 10.4 83 51 0 R-30A Developer 247 8.0® _~4/ 0 0 R-30B Developer 326 10.5{43 _m 0 0 R-31 Otay Ranch Three 85 18~5 85 3 0 R-32A Developer 61 10~9 61 24 0 R-32B Developer 57 12.0 57 20 0 R-33 Developer 42 I 1.7 42 0 0 R-34 lndiv/duals/Otay Ranch V 35 9.0 35 32 29 R-35 lndiv/duals/Otay Ranch V 36 98 36 35 15 R-36 [ndiv/duals/Otay Ranch Development 62 13.3 62 61 37 R-37 Otay Ranch V 60 11.9 60 59 56 R-38 Otay Ranch V 43 7.7 43 39 39 R-39 Developer 122 14.8 0 0 - CPF-5 Developer 5.3(4> _14) 0 - 1,520 207 4 825 433 176 Village One West R49MB RW2v. Otay Investors 116 19.5 116 3 0 R-50 RWR Otay Investors 84 21.5 84 3 0 R-51A/B LB/L-RWR Otay 89 25.0 89 39 0 R-52A LB/L-RWR Otay I 11 28.5 111 60 11 R~54 Developer 38 6.3 0 0 0 R-55 Developer 87 21.5 0 0 0 R-56 Developer 75 16.5 0 0 0 R-57 Developer 94 19.9 0 0 0 R-58 Developer 60 18.2 0 0 0 R-59 Developer 91 16.2 0 0 0 845 192.8 400 105 1 ] Grand Total 4,631 656 2,321 2,036 897 o l Total lots created by Final Maps approved as of August 30, 2001. /2) Building permits as of August 28, 2001 per City of Chula Visla. ~> Units which had closed escrow as of August 30, 2001 according to the merchant builders. The merchant builders report that sales contracts for an additional 23 units had been signed. ~4/ No Final Maps required. DOCSOC\836206v5L22245.0120 EXHIBIT 9 The full development of the District property requires the expenditure of substantial amounts both directly related to the District property and for qther infrastructure improvements for properties outside the District. Table 10 below has been provided by the Developer to indicate its pre~ent projection of the sources and uses associ_ate__d with the development of both the District property_and other property located outside the District. The Developer's projection of sources and uses associated with the development of this property is based on current land use approvals. There can be no assurance that the Developer will have timely access to the sources of funds (as shown below) which will be necessary to construct the various public facilities and other capital improvements necessary to accommodate the proposed development. There can also be no assurance that there will be no substantial changes in the sources and uses of funds shown below. Although Table 10 reflects the Developer's current projections, many factors beyond the Developer's control, or a decision by the Developer to alter its current plans, makes it possible that actual sources and uses will differ from the projections. Table 10 is presented to show that expected revenues make the development proposed feasible and not to guarantee a particular cash flow to the Developer. 42 DOC SOC\836206x 5x~22245.0120 EXHIBIT 9 TABLE 10 DEVELOPER'S PROJECTED soURCES AND USES OF FLrI~qDS 6/1/01 to 2003 and 12/31/01 Year 2002 Beyond Totals Sources of Funds Beginning Cash Balance $ 4,932,307 $ $ $ 4,932,307 Net Land Sale ProceedsIt) 56,323,382 74,509,938 73,319,871 204,153,191 Borrowings 2,118,404 2,118,404 Net Bond Proceeds - AD 97-2 3,755,349 3,755,349 Net Bond Proceeds - CFD 99-1(21 6,476,119 18,065,041 24,541,160 Third Party Cost Sharing(3) 2,587,500 2,312,500 4,900,000 Future CFDI'~} 4,000,000 5,171,080 9,171,080 TotalSources $ 76.193.06~1 $ 98.887.479 $ 78.490.95~1 $ 253.571.49! Uses of Funds(~3 Public Facilities - CFD 99-1 $ 8,475,314 $ 7,660,97I $ 2,702,440 $ 18,838,725 Public Facilities - AD 97-2 244,142 20,122 264,264 Other Capital Improvements 18~961,488 42,213,775 14,469,835 75,645~098 Subtotal Development Costs 27,680,944 49,894~868 17,172,275 94,748,087 Operating Costs l, 108,982 4,244,129 5,901,950 11,255,061 Debt £er~ice 20, 176,155 11,250,000 31,426,155 Distributions 10,170,831 16,000,000 20,000,000 46,170,831 Total Uses 59,136,912 81,338,997 43,074,225 183,600,134 Sourcesin Excess of Uses $ 17.056.14~9 $ 17.498.48~1 ~ $ 69.971.35~7 Aggregate Annual Sources Over Uses $ 17.056.14~9 $ 34.554.63~0 $ 69.971.35~7 $ 69.971.35~7 I~l Includes Developer's property in Village One, Village One West, Village Five and Village Six and a 50-acre high school site in Village Two. 12) Expected Bond proceeds from the District. As of July 31, 2001, the Developer projects that approximately $15,916,000 of net Bond Proceeds will be received by December 31, 2001, with the remaining approximately $8,625,000 projected to be received in 2002. (3) Amounts to be contributed by the City and adjacent property owners for Olympic Parkway constraction. ('~) The contemplated future community facilities district has not been formed and there can be no guarantee that such formation will occur. (si Includes expenditures related to development of the land within the District and other portions of the Otay Ranch owned by Developer. Source: The Developer. As of May 3t, 2001, the Developer had expended over $129,202,000 developing the land within Village One, Village One West, Village Five and Village Six, including approximately $36,893,000 for public improvements. As of May 31, 2001, a total of $9,439,709 fi:om proceeds of lhe 1999 Bonds has been reimbursed to the Developer for Olympic Parkway Phase 1 improvements. Thc Developer expects to expend an additional approximately $103,244,000 to complete development of the land, including approximately $18,094,000 for public improvements being financed in part by the District. The Developer has no lines of credit or external sources of funds available to it. In the event that land sales are not realized as projected above, the Developer would 43 DOCSOC\836206vSk22245.0120 I EXHIBIT 9 intend to defer land development, as much as possible, in an attempt to reduce costs and keep expenditures in line with revenues. The projected sources and use_s__of funds in Table 10 has been prepared based u_pon assumptions of furore sales revenues, development costs, operating costs, property taxes, public facilities financing and other items. The Developer does not currently have any contracts with prospective buyers or appraisals which might assist in determining the sales revenue amounts or timing. The Developer has previously closed sales of land to buyers prior to commencement of grading, and the projections assume a continuation of this practice. The Developer may decide or may be required by the marketplace to postpone the closings of sales until after commencement or possibly completion of grading. Therefore, there can be no assurance that the projected revenues will not be less than projected or occur later than projected by the Developer. Development plans have not yet been approved nor construction bids received for all of the work to be undertaken with respect to the development of the final phase of Village One or with respect to Village Five and Village One West. Therefore, there can be no assurance that the actual development costs will not be greater than projected or occur sooner than projected by the Developer. The Developer has made and will make in the future cash distributions to its member. The amounts and timing of any distribution will reduce the cash available to the Developer for construction of improvements and its operations. Furthermore, the member of the Developer has no obligation to contribute funds to the costs of the proposed development. There can be no assurance that any of the other assumptions made by the Developer in Table 10 will occur or that other matters not considered in the projections will occur that have an adverse impact on cash available to the Developer for construction of improvements. There can be no assurance that projected sources of revenue will, in fact, be available as projected by the Developer. To the extent that actual revenues are less than projected in Table 10 or are received more slowly than projected in Table 10, other needed financing mechanisms are not put into place, other property owners do not contribute funds as projected, or actual expenses are greater than or occur earlier than projected above, there could be a shortfall in the cash required to complete the development as projected above. See "-- Certain Limitations on Development Phasing" below. Infrastructure Requirements and Construction Status The infrasl~'ucture requirements for the District consist of four major construction categories, each of which is discussed below. ~Ma~or Backbone Infrastructure. The major backbone infrastructure for Village One and Village One West consists of the 6-lane arterial Paseo Ranchero (between Telegraph Canyon Road and Olympic Parkway), the 4-lane collector Palomar Street (between Paseo Ranchero and the easterly Village One boundary), the 44ane major Palomar Street (between Paseo Ranchero and the westerly boundary at Sunbow) and the 2-lane collector Monarche Drive. These roads provide access from existing City improvements to residential and commercial areas. All of these roads are complete with the exception of ongoing landscape work. Village Five is adjacent to the existing 6-lane Otay Lakes Road. A short segment of the 4- lane collector Palomar will be constructed between the existing improvements in the adjacent Lomas Verdes project and Phase 3 of Olympic Parkway. Improvement Plans have been approved by the City Engineering Department. 44 DOCSOC\836206v5/22245.0120 EXHIB IT 9 Minor Backbone Infrastructure. A series of two-lane collector roads complete the onsite improvements being installed by the Developer to prgvide access from the major backbone roads to the merchant builder sites. Santa Inez, Santa Madera, Santa Lucia and Santa Alicia in Village One are completed and provide access to atl. e_~xisting builder parcels. Santa Paula and Santa Rosa in Village Five are completed. The remaining future minor backbone roads in Village One West will be coordinated with the timing requirements of future merchant builders. Intract Infrastructure. These roads and improvements occur within the merchant builder tracts and are directly accessed by residential units. Each merchant builder is responsible for the timing and construction of these facilities to accommodate their sales and construction schedules. In~act infrastructure is complete for the majority of the units in Village One, approximately 200 units in Village Five and approximately 200 units in Village One West. Regional Infrastructure. Olympic Parkway is the major regional infrastructure required by development in the District. Improvement plans have been prepared for construction of the second and third phases of Olympic Parkway between Paseo Ranchero and State Route 125 to the east. Olympic Parkway has received all environmental clearances, and grading commenced in October, 1999. Phase One of Olympic Parkway from Interstate 805 to Pasco Ranchero was completely paved and open to traffic as of June, 2001. Phase Two construction is underway with completion planned for mid 2002. The Developer is participating in the City's Transportation Development Impact Fee ("TDIF") program and the merchant builders will be participating in the City's Public Facilities Development Impact Fee Program ("PFDIF") to provide regional mitigation for various public facilities. Construction Status. Grading is complete for all of Village One. Paved roads and all utilities are in place to builder parcels. Standard Pacific Corporation, Shea Land Holdings LLC, Oakwood Development, Otay Ranch One, LLC and William Lyon Homes, Inc. are currently marketing 6 projects within Village One. As of August 30, 2001, 710 homes have closed escrow within Village One. Grading is completed for all of Village Five. Pacific Coast Communities and Otay Ranch V, LLC are marketing 15 model homes in 5 projects within Village Five. Two new projects by William Lyon Residential, Inc. and D.R. Hortan San Diego Housing Company, Inc. are open and sales are underway. Models are under construction in Village Five by Continental Homes, Otay Ranch Three, LLC and Oak:wood Development. As of August 2001, 176 homes have closed escrow within Village Five. Village One West has an approved tentative map on the entire property. Grading is complete on approximately 50% of the project within Village One West. This first phase is located north of E. Palomar Street and includes 4 projects to be developed by RWR Communities. Two of the model complexes are open and sales are underway, with 11 homes having closed escrow as of August 30, 2001. DOCSOC\836206v5~22245.0120 EXHIBIT 9 Merchant Builders The merchant builders within the Districi that, when aggregated with affiliates, _are responsible for at least 10% of the proj_ec__ted 2001-2002 special tax levy are discussed in greater detail below. The Developer intends to complete the land development process and sell all of the developable land within the District to merchant builders. Otay Ranch VLLC. Otay Ranch V LLC was formed by Pacific Coast Communities. Pacific Coast Communities is owned by the Alfred Baldwin family, which, in turn, owns an interest in the Developer. Pacific Coast Communities is comprised of a management team with over 40 year~ of experience in the home building industry, which has overseen the construction of over 4,000 homes in master planned communities in Southern California. Otay Ranch V LLC purchased planning areas R-23B, R-28, R-32A, R-32B, R-33, R-34, R-35, R-36, R-37 and R-38 to accommodate various projects. The R-34 project will be known as "The Vineyards" and is planned for single family detached homes ranging in size from 2,650 to 2,950 square feet. The models were completed in October, 1999 and 29 homes have been sold to date. The R-35 project will be known as "Oakridge" and is planned for single family detached homes ranging in size from 2,928 to 3,150 square feet. The R-36/R-32B project will be known as "Sycamore Grove" and is planned for 119 single family detached homes ranging in size from 2,254 to 2,464 square feet. Models were completed in September, 1999 and 37 homes have been sold to date. The R-37/R-28 project will be known as "The Willows" and is planned for single family detached homes ranging in size from t,470 to 1,800 square feet. Models were completed in October, 1999 and 56 homes have been sold to date. The R-38/R-32A project will be known as "Sage Crest" and is planned for single family detached homes ranging in size from 1,858 to 2,170 square feet. Models were completed in October, 1999 and 39 homes have been sold to date. Potential Limitations on Development Growth Management Oversight Commission ("GMOC"). The City has established a Threshold Standards Policy (the "Threshold Policy") through the adoption of a Growth Management Ordinance, which established eleven public facility and service area "quality of life" measures. The eleven public facility and service thresholds include police, fire and emergency medical services, traffic, schools, parks and recreation, libraries, sewer, drainage, fiscal impact, air quality and water. The Threshold Policy established goals, objectives, standards or thresholds and applicable implementation measures for the eleven services. The GMOC was created to provide an annual independent review for compliance with the Threshold Policy. The GMOC review for compliance occurs on a fiscal year cycle. The Threshold Policy calls for preparation of short-range, 12 to 18 month, and mid-range, five to seven year, development forecasts. These forecasts are utilized by City staff and external service agencies to evaluate projected service levels, identify any potential threshold problems and address implementation measures to avoid level of service problems. As a condition to developing property within the District, a developer must, prior to final map approval for a parcel, enter into an agreement with the City acknowledging that building permits may be withheld if any of the required development threshold limits set in the City transportation planning phase are exceeded. The tentative map conditions for the land within the District subject the land to the provisions of the GMOC. DOCSOC,836206v5L22245.0120 EXHIBIT 9 The Threshold Policy includes traffic thresholds which require that level of service "C" be maintained on the arterial street system except level of service "D" can occur for no more than two hours of the day. The level of service is a descriptive and qualitative measure of the degree of traffic congestion experienced by motorists. Tllel:.C are six levels of congestion, assigned letters 'A' thrctugh 'F.' Levels of service 'A' Through 'D' represent generally acceptable levels of service with level of service 'A' corresponding to no congestion and level of service 'C' represents a range in which the ability of vehicles to maneuver is affected by the presence of other vehicles and speeds begin to show some reduction. Level of service 'D' is approaching roadway capacity with the ability to maneuver being severely restricted and traffic is subject to speed reductions. Level of service 'E' is at roadway capacity with unstable speeds. Level of service 'F' occurs when roadway capacity is exceeded, excessive delays are experienced and stop-and-go traffic conditions exist. In the spring of 2000, traffic analyses were performed for the Eastern Territories Area of the City assuming the completion of a regional roadway known as Olympic Parkway as currently phased, but without the completion of State Route 125 (a north-south toll road proposed f~om Highway 54 to the Mexican border). The analysis included forecasts by property owners of 16,138 units being ready for occupancy between 2000 and 2004 or an average of 3,228 units per year. (The actual number of units occupied in 2000 was less than that average at 2,583 units). Based on those assumptions, without any attempts either to increase roadway capacities or slow supply, the City could experience an unacceptable level of service in the a.m. peak period on a segment of Telegraph Canyon Road approaching 1-805 sometime in late 2002 or early 2003. Should the traffic threshold be exceeded, the Threshold Policy calls for a building permit moratorium to be considered by the City Council until the threshold problem can be mitigated. To avoid the possibility of a moratorium, the City is working with the development community to identify additional roadways that can be constructed should State Route 125 be delayed (currently expected to be completed by 2005) and the rapid pace of development be sustained. One such roadway that could increase capacity is an interim facility within portions of the State Route 125 corridor. So far, the City has collected $9 million in its transportation development impact fee program for the interim State Route 125 facility, the first phase of which is estimated to cost $12.4 million. Other transportation improvements that are being studied in the next year which would increase system capacity are interchange improvements at 1-805 and East "H" Street, 1-805 and Telegraph Canyon Road, a half diamond interchange at 1-805 and East Palomar Street, the southerly extension of Paseo Ranchero in Otay Ranch firom Telegraph Canyon Road to Main Street, and the extension of Mt. Miguel Road in San Miguel Ranch westerly to Proctor Valley Road. These are all possible improvements to allow for continued development until State Route 125 can be completed. In addition, the first phase of Olympic Parkway from 1-805 to Pasco Ranchero, a new 6 lane east-west facility, was opened to traffic in June 2001. The remaining three phases which extend to the eastern city limits is being expedited to be completed by September, 2002 instead of the previous 2003 time schedule. These improvements will significantly relieve the congestion on Telegraph Canyon Road. The roadway level of service at the City's critical intersections will be retested fbllowing the completion of these various phases to see how much the level of service has been improved. 47 DOCSOC\836206v5L22245 0120 EXHIBIT 9 The City also is exploring ways to lower traffic congestion generally by taking vehicles off the road during peak times. Considerations include.offering City employers incentives to promote carpooling or asking that they adjust schedules to stagger times when people are traveling to .and from work. , _ Concurrently, on the supply side, the City is exploring Transportation Demand Management Measures to reduce the peak hour traffic demand. Surveys are being prepared for major employers and residents living east of 1-805 to explore the level of interest in techniques such as staggered work hours, van pooling and carpooling to alleviate the peak a.m. and p.m. traffic volumes. In sum, the City is continuing to monitor development activity, conducting additional traffic studies, studying various absorption models, pursuing how the interim facility within the State Route 125 corridor might be constructed and looking at other roadway improvements to enhance capacity. If the traffic forecasts prove accurate, and if the development pace does not decrease from the levels projected by property owners, and if State Route 125 is delayed significantly, and if no additional roadway capacity can be delivered in the interim, the City may impose a development slowdown (i.e. a metering of permits) in lieu of ever having to impose a moratorium on the issuance of building permits. The City would consider whether such a planned slowdown should acknowledge and give priority to marketing studies and baseline development that was projected in connection with the issuance of bonds by assessment districts formed by the City. No assurance can be given that such priority will be established. A development slowdown or moratorium on development could adversely impact the rate of development in the District and presents certain risks to the owners of the Bonds. See "SPECIAL RISK FACTORS - Failure to Develop Properties" and "- Future Land Use Regulations and Growth Control Initiatives." Investors should note that, in particular, the City may amend its Growth Management Ordinance from time to time and no assurance can be given that its terms will not be more restrictive on development than those currently in effect. Otay Ranch SPA One Public Facilities Finance Plan ("PFFP"). The PFFP is intended "to ensure that the phased development of the property within Sectional Planning Area One of the Otay Ranch ("Spa One") is consistent with the overall goals and policies of the City's General Plan, Growth Management Program and the Otay Ranch General Development Plan and to ensure that the development of the project will not adversely impact the City's Quality of Life Standards." The PFFP addresses the eleven public facility and service areas identified in the City's Growth Management Program and Implementation Ordinance No. 2448 (the "Growth Management Ordinance"), for phased development of SPA One, which includes the District. The City may prevent the recordation of f'mal maps and the issuance of building permits for any of the phases of development within SPA One if the required facilities as identified in the PFFP, as amended from time to time, are not completed or if the standards required by the Threshold Policy are not satisfied. Development within SPA One must comply with the Growth Management Ordinance and the PFFP as amended from time to time. DOCSOC\836206v5~22245 0120 ~ EXHIBIT 9 Certain Limitations on Development Phasing Development within Village One, Village One West and Village Five is restricted by ce _rtain significant tentative map conditions, the 9__~y Ranch General Development Plan, Sectional Plam2ing Area One (SPA One) and the Planned Community District Regulations for SPA One, the PFFP for SPA One and the City's Growth Management Ordinance. The most significant restrictions on the issuance of building permits for the development of the property in the District are the requirements for the construction of schools, parks and regional roads. The foregoing documents are available for review in the office of the City's Planning Department. Tentative Map Conditions. All property within the District that is not fully entitled is included within approved tentative maps. Set forth below are certain selected excerpts from the City's Tentative Map Conditions for property within the District. The sections below are not an exhaustive list, but merely the broadest of the City's potential powers to restrict development. · If any of the terms, covenants or conditions contained in the Tentative Map shall fail to occur or if they are, by their terms, to be implemented and maintained over time, if any of such conditions fail to be so implemented and maintained according to their terms, the City shall have the right to revoke or modify all approvals granted including issuance of building permits, deny, or further condition the subsequent approvals that are derived from the approvals granted, institute and prosecute litigation to compel their compliance with said conditions or seek damages for their violation. · The City may withhold building permits for the subject subdivision if any one of the following occur: 1. Regional development threshold limits set by the adopted East Chula Vista Transportation Phasing Plan have been reached. 2. Traffic volumes, levels of service, public utilities and/or services exceed the threshold standards in the then effective Growth Management Ordinance. 3. The applicant does not comply with the terms of the Reserve Fund Program, which requires the payment ora $124 fee per building permit to the City. · The City may withhold building permits for any of the phases of development identified in the PFFP for Otay Ranch SPA One if the required facilities, as identified in the PFFP or as amended by the Annual Monitoring Program, have not been completed. · The PFFP or revisions thereto shall be adhered to for SPA One and the tentative map with improvements installed in accordance with said plan or as required to meet threshold standards adopted by the City. The PFFP identifies a facility phasing plan based upon a set of assumptions concerning the location and rate of development within and outside of the project area. Throughout the build-out of SPA One, actual development may differ from the assumptions contained in the PFFP. Neither the PFFP nor any other SPA One document grant the property owners within SPA One an entitlement to develop as assumed in the PFFP, or limit the SPA One's facility improvement requirements to those identified in the PFFP. Compliance with the City's threshold standards, based on actual development patterns and updated forecasts in reliance on changing entitlements and DOCSOC\836206v5~22245.0120 [ EXHIBIT 9 market conditions, shall govern SPA One development patterns and the facility improvement requirements to serve such development. In addition, the sequence in which improvements are constructed shall correspond to any future Eastern Chula V. ista Transportation Phasing Plan _or__amendment to the Growth Management Program_and Ordinance adopted by the City. The City Engineer may modify the sequence of improvement construction should conditions change to warrant such a revision. · The Developer shall comply with the City's Growth Management Ordinance as may be amended from time to time by the City. · The City's Growth Management Ordinance establishes provisions necessary to ensure compliance with adopted threshold standards (particularly traffic) prior to construction of State Route 125. Said provisions will require the demonstration, to the satisfaction of the City Engineer, of sufficient street system capacity to accommodate a proposed development as a prerequisite to final map approval for that development. The foregoing conditions are without limitation, other than as specifically recited above, and may be implemented by the City at any time. Investors should note that, in particular, the City may amend its Growth Management Ordinance from time to time and no assurance can be given that its terms will not be more restrictive on development than those currently in effect. Roadway lmprovements Agreement. To implement certain provisions of the PFFP, the City, the Developer and McMillin Otay Ranch LLC, a Delaware limited liability company ("McMillin"), have entered into an Agreement for Financing and Construction of Olympic Parkway and Related Roadway Improvements (the "Roadway Improvements Agreement"). McMillin is the developer of approximately 293 acres adjacent to and immediately east of the Village One portion of the District. The land being developed by McMillin is within SPA One and McMillin has sold portions of the land to other builders. The purpose of the Roadway Improvements Agreement is to establish a system for the financing and construction of Olympic Parkway and related transportation improvements required by the PFFP. Performance under the Roadway Improvements Agreement is a precondition to the recording of additional final maps for the land within Village One, Village One West and Village Five. The Roadway Improvements Agreement requires the Developer to grade and construct Phases One, Two and Three of Olympic Parkway (other than a portion of Phase One which is to be graded by McMillin) and two additional roadways knows as "Paseo Ranchero" and "East Palomar Road" and requires McMillin to grade a portion of Olympic Parkway located pr/madly on its property within SPA One and to construct La Media Road from Olympic Parkway to East Palomar Road. The total cost of these improvements is approximately $59,500,000 with the total for Olympic Parkway of $48,940,000. A failure of the Developer or McMillin to perform their obligations under the Roadway Improvements Agreement related to the construction of the roadways will prevent the Developer and McMillin from receiving an allocation of final map EDUs in accordance with the schedule set forth in the Roadway Improvements Agreement. The Roadway Improvements Agreement assigns approximately 25% of the cost of Olympic Parkway (approximately $12,240,000) to McMillin. The remaining approximately 75% of the cost of Olympic Parkway (approximately $37,260,000) and all of the cost of East Palomar Road and Paseo Ranchero Road (approximately $8,950,000) are obligations of the Developer. The Developer expects to fund approximately $25,980,000 of its share of Olympic Parkway, East Palomar Road and 50 DOCSOC\836206vS~22245 0120 EXHIBIT 9 Paseo Ranchero Road with proceeds of the Bonds and the balance with approximately $10,230,000 of its own funds and $10,000,000 of other funds contributed by the City. See "THE COMMUNITY FACILITIES DISTRICT- Status of COnstruction." The Roadway Improvements Agreement requires the Developer to provide the C..ily with a cash payment of $17,200,000 on or before January 1, 2000, unless such date is extended due to events which prevent the City from obtaining the necessary permits to construct Olympic Parkway. Proceeds from the 1999 Bonds satisfied this requirement. The Developer and McMillin have agreed to an allocation of the final map equivalent dwelling units available under the Roadway Improvements Agreement. The Developer and McMillin have satisfied the improvement security obligation for Improvement Stage 7 other than certain landscaping work expected to be completed by November 2001. A default under the Roadway Improvements Agreement by the Developer or McMillin gives the City the right to revoke all previously allocated equivalent dwelling units ("EDUs") for which a final map has not been recorded and to cease issuing building permits for all property subject to the Roadway Improvements Agreement. 51 ~ DOCSOC\836206v5L22245.0120 et EXHIBIT 9 Table 11 below summarizes the Improvement Stages 5, 6 and 7 under the Roadway Improvements Agreement. Other than certain landscape work expected to be completed by November 2001, the Developer and McMillin have met Improvement Stage 7 obligations. TABLE 11 ROADWAY IMPROVEMENTS AGREEMENT PHASING PLAN Threshold by Phase Maximum Improvement EDU Otay Stage Improvements and Other Requirements Limits' McMillin Ranch 5 Improvement Plans for Pasco Ranchero from East 436 0 436 Palomar to Olympic Parkway and Olympic Parkway from 1-805 to Pasco Ranchero are approved and security received by the City which for Olympic Parkway must be in the form ora cash payment. Upon completion of stage 5 requirements, City 3,126 1,338 1,788 Council can approve final maps with EDU(s) not exceeding: 6 Improvement Plans for La Media, East Palomar and 2,303 0 2,303 Olympic Parkway from Pasco Ranchero to East Palomar are approved and security received in the form of cash payment by the City. Upon completion of stage 6 requirements, City 5,429(~)(2) 1,338 4,091 Council can approve final maps with EDU(s) not exceeding: 7 Improvement Plans for Olympic Parkway to eastern Otay Ranch boundary are approved and security received by the City. Upon completion of stage 7 requirements, City Full Full Full Council can approve final maps with EDU(s) not Buildout of Buildout Buildout exceeding: SPA One (~) Improvements shall be fully secured or all requirements must be satisfied before the maximum EDU limits are reached. Commercial umts at the rate of 25 per acre are counted toward the mx/mm EDU when a building permit is issued for commercial development, or starting at Improvement Stage 6, whichever occurs first. Source: The City These max/mum EDU limits do not supersede other requirements contained in the PFFP, approved Tentative Map and Final Map a~eements. 52 DOCSOC\836206vS~22245.0120 EXHIBIT 9 Table 12 below summarizes the current status of the roadway segments in Improvement Stages 5, 6 and 7: __TABLE 12 OLYMPIC PARK3VAY AND RELATED ROADWAY IMPROVEMENTS STREET IMPROVEMENT PLAN STATUS (JULY 30, 2001) Estimated Estimated Improvement Approval Improvement Stage Facility Plan Status Date Bond Amount Developer Obligations 5 Olympic Parkway Phase I Complete approved $7,597,4000~ 5 Paseo Ranchero Complete approved 1,683,500® 6 Olympic Parkway Phase 2 Complete approved 4,594,343 6 Paloma Village One West Complete approved 2,744,762 6 Palomar Village Five Complete approved 648,899 7 Olympic Parkway Phase 3 3~a plan check(21 10/30/01 2,002,512 McMillin Obligations 6 La Media Phase 2 Complete approved 2,173,5380) 6 Olympic Parkway Phase 2 Complete approved 1,958,101® (~) Amount is actual City approved improvement bond requirement. (2) Remaining work consists primarily of landscaping. Source: The Developer Environmental Constraints. The City performed an Environmental Initial Study ("EIS") for construction of Olympic Parkway dated February 1999. The EIS provided a summary of conclusions and mitigation measures contained in prior Environmental Impact Reports ("E1Rs") for the Sunbow General Development Plan, the Otay Ranch Development Plan, the Otay Ranch Sectional Planning Area One Plan and the Eastlake Greens/Trails Replarming Program. The environmental impacts associated with construction of Olympic Parkway were addressed in these prior EIRs, however Olympic Parkway was never addressed as an independent project. Based on the conclusions and recommendations of the EIS, the City processed a Mitigated Negative Declaration as Case No. IS-99-00, which was adopted by the City Council on April 13, 1999. Construction of Olympic Parkway and the necessary borrow sites for fill material create a need to mitigate the impacts to Coastal Sage Scrub. In order to accomplish this mitigation pursuant to Rule 4(d) under the Endangered Species Act (the "Rule"), the City obtained from the County of San Diego sufficient take allocation under the Rule (the "4d Take") to proceed with issuance of the 4(d) permit. Since the proposed Olympic Parkway alignment is located within the existing Poggi Canyon drainage, impacts to jurisdictional and non-jurisdictional "waters of the United States" have been identified. In addition, alteration of an existing streambed has occurred. Accordingly, a permit has DOCSOC\836206vSX22245.0120 EXHIBIT 9 been issued to the City under Section 404 of the Clean Water Act by the U. S. Corps of Engineers (the '~404 Permit"), under Section 401 of the Clean Water Act with the Regional Water Quality Control Board (the "401 Certification") and under Section 1600 et seq. of the California Fish and Game Code with the California Department_of Fish and Game (the "1603 Agreement," and together with the 404 Permit and the 401 Certification, the "Permits"). Appraisal Original Appraisal. As described below, the Appraisal valued property within the District owned by individual homebuyers, merchant builders and the Developer, respectively, as of April 2, 200 I. The Appraisal values homes which have closed escrow to individual homebuyers. A minimum value of such homes is reported in the Appraisal. Such minimum value takes into account the concluded lowest base price for the project in which the homes am built times the number of units that have closed escrow within such project. Such value is considered a minimum value and not a market value as each home is not individually appraised in the Appraisal. The Appraisal values the individual homes within the District at $175,565,000· The Appraiser valued the property within the District owned by merchant builders based upon a sales comparison approach to value and the property within the District owned by the Developer based upon a discounted cash flow analysis. The Appraiser arrived at the value based upon a number of assumptions and limiting conditions contained in the Appraisal and set forth in Appendix C. The sales comparison approach to value is the process in which a market value estimate is derived by analyzing the market for similar properties and comparing these properties to the parcels to be appraised. Under the discounted cash flow analysis, the Appraisal takes into account the revenues to be derived by the sale of land to builders, the absorption time needed to sell these properties to builders and the costs associated with developing the property. The resulting cash flow of land sale revenues and expenses is then discounted based on a discount rate which takes into account the time value of money, the risk associated with the development and a profit due to the Developer. This calculation results in a net present value for the land which is the subject of the discounted cash flow analysis, assuming that it is all under a single ownership. The value of the land concluded by the Appraiser takes into account all existing special assessments and special tax liens as well as the proposed Special Taxes to be levied by the District. The Appraisal values the planning areas owned by merchant builders. For each of these planning areas, the Appraiser has assigned a finished lot value and then deducted the remaining costs to complete the finished lots, excluding any of the finishing costs which are to be paid for with Bond proceeds, and added any improvements made by the merchant builder which improve the property beyond a finished lot condition. The Appraisal values the planning areas owned by merchant builders at $148,690,000. The Appraisal is based on the assumption that the Developer owns parcels upon which 863 singlc family residential units, 747 multifamily units, one 3.4-acre parcel zoned for commercial development and three community purpose facility parcels totaling 11.3 acres may be developed· For purposes of the discounted cash flow analysis, the Appraisal arrives at a retail value for the Developer's parcels of $107,795,972 and concludes that the cost to finish the residential lots and bring the non-residential sites to a superpad condition will be $38,409,279· To these direct costs the Appraiser has added indirect costs for administration and contingency, sales and marketing and taxes. DOCSOC/836206v5',22245.0120 ,? EXHIBIT 9 · . In calculating the estimated retail values, the Appraiser assumes that prices on the lots will appreciate ! 4% annually and that costs will increase 4% annually~ In computing the discounted cas~h__.flow, the Appraiser has determined an absorption period for the Developer's property based upon a review of the Market Absorption Study, current escrows and negotiations by the Developer, and the Olympic Parkway Agreement. The Appraisal concludes that absorption for land sales to builders will be complete by the first quarter of 2003. The Appraisal uses a discount rate of 22.5% in arriving at the percent value of the cash flow from the Developer's property. The Appraiser selected the 22.5% figure based upon interviews with developers, a review of current market conditions, the risk associated with the current condition of the properly including the remaining development needed to construct backbone infiastructure, the profit due to the Developer and existing sales to merchant builders and discussions for future sites. The Appraiser's opinion as to the discount rate was formed assuming that environmental conditions would not thwart development. Applying the discounted cash flow analysis, the Appraisal estimates a value for the Developer-owned property of $56,450,000, which when added to the $175,565,000 for the individual owned homes and the $148,690,000 for the merchant builder parcels results in a total appraised value of $380,705,000 for the District. These values assume that $14,011,106 of improvements are paid for from Bond proceeds. In arriving at its statement of value, the Appraisal makes a special assumption that no environmental issues will slow or thwart development of the land within the District to its highest and best use. In addition, the Appraisal assumes that no growth moratoriums will affect the District's development. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Potential Limitations on Development." Certain of the other assumptions in the Appraisal are that there are no hidden or unapparent conditions of the property or subsoil that render it more or less valuable, that all required licenses, certificates of occupancy or other legislative or administrative authorizations from governmental agencies or private entities or organizations have been or can be obtained, that no hazardous waste and/or toxic materials are located on the property within the District that would affect the development process, that the improvements to be funded with the proceeds of the Bonds are completed and that the costs to complete provided by the Developer are accurate and have been properly allocated to each Planning Area. See "- Potential Limitations on Development" above. No assurance can be given that the assumptions made by the Appraiser will, in fact, be realized, which is one reason that no assurance can be given that the property within the District could be sold at the appraised value. See "SPECIAL RISK FACTORS -- Land Values." Limited Appraisal. The Appraiser delivered to the City a Limited Summary Appraisal Report (the "Limited Appraisal") dated as of September 1, 2001, the purpose of which was to determine a "not less than value" with respect to property within the District. The Limited Appraisal is intended to be read in conjunction with the Appraisal. While the Limited Appraisal did not conclude a new value for the property within the District, the Appraiser did conclude that such value was, as of September 1, 2001, not less than the value concluded in the Appraisal. In addition, the Limited Appraisal sets forth that since the date of the Appraisal, the Developer has expended an additional $5,000,000 on development within the DOCSOC\836206vS~22245 0120 EXHIBIT 9 District. The Limited Appraisal, along with the Appraisal, is attached to this Official Statement as Appendix C. Market Absorption Study __ _ The Market Absorption Study for the District dated June 7, 2001 has been prepared by the Market Absorption Consultant. A synopsis and summary of the Market Absorption Study is included herein as Appendix B. The Market Absorption Consultant has estimated, based upon the analysis of relevant demographic and economic conditions in the San Diego County area the number and proportion of housing units in the District that can be expected to be sold annually using the estimated absorption schedules for each of the product types. The Market Absorption Study projects annual absorption within the District as set forth in Table 13 below. Given that the Market Absorption Study is based on sales in the case of for sale units, actual escrow closings and move-ins for the units will occur later than the projected sales dates. TABLE 13 PROJECTED ABSORPTION OF UNITS WITHIN VILLAGE ONE Year For Sale Units Apartments Total 2001 388 165 553 2002 104 652 756 2003 0 353 353 Total 492 1,170 1,662 PROJECTED ABSORPTION OF UNITS WITHIN VILLAGE FIVE Year For Sale Units Apartments Total 2001 290 0 290 2002 341 120 461 2003 113 60 173 Total 744 180 924 PROJECTED ABSORPTION OF UNITS WITHIN VILLAGE ONE WEST Year For Sale Units Apartments Total 2001 157 0 157 2002 250 0 250 2003 262 0 262 2004 176 0 176 Total 745 0 745 Source: The Meyers Group DOCSOC\836206v5~22245.0120 ~ EXHIBIT 9 The Market Absorption Study concludes that the for-sale absorption of units within Village One (including the portions not within the District), X(illage One West and Village Five is well within the annual absorption levels achieved at other well-segmented master-planned communities. The conclusion is based on the assumption tha~ future products will be competitively priced given_the housing market conditions at the time of project opening. The Market Absorption Study assumes that the developers will maximize the market potential to bring residential product into an accelerated market with strict product differentiation, appropriate pricing with other competitive products, a smooth schedule of approvals processing, home construction and infrastructure completion (no delays due to weather, construction worker shortages or City delays in processing final maps, reviewing plans or approving any product plans). The Market Absorption Study also assumes no development slowdown due to growth moratoriums initiated by the City. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Potential Limitations on Development." The actual absorption of units could be adversely affected if one or more of the foregoing assumptions is not realized. See APPENDIX B - "SLrMMARY OF MARKET ABSORPTION STUDY." SPECIAL RISK FACTORS The purchase of the Bonds involves a high degree of investment risk and, therefore, the Bonds are not appropriate investments for many types of investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the City to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See "Land Values" and "Limited Secondary Market" below. Concentration of Ownership Other than the individual owned homes within the District, all of the land within the District is currently owned by 18 landowners, several of which have overlapping ownerships. Based on current ownerships and land use status, approximately 33.4% of the projected 2001-02 Special Tax levy is to be paid by the Developer, and an additional 10.35% by entities affiliated with the Developer. See "THE COMMUNITY FACILITIES DISTRICT -- Principal Taxpayers." Until the sale of additional parcels, the receipt of the Special Taxes is dependent on the willingness and the ability of the current landowners to pay the Special Taxes when due. Failure of the current landowners, or any successor, to pay the annual Special Taxes when due could result in a default in payments of the principal of, and interest on, the Bonds, when due. See "- Failure to Develop Properties" below. No assurance can be made that the Developer, or its successors, will complete the intended construction and development in the District. See "SPECIAL RISK FACTORS - Failure to Develop Properties" below. As a result, no assurance can be given that the Developer and the other DOCSOC\836206v5~22245 0120 EXHIBIT 9 landowners within the District will continue to pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See "SPECIAL RiSK FACTORS - Bankruptcy and Foreclosure" below, for a discussion of certain limitations on the District's ability to pursue judicial proceedings with respect to delinqu~ent parcels. Limited Obligations The Bonds and interest thereon are not payable from the general funds of the City. Except with respect to the Special Taxes, neither the credit nor the taxing power of the Disthct or the City is pledged for the payment of the Bonds or the interest thereon, and, except as provided in the Indenture, no Owner of the Bonds may compel the exercise of any tax/ng power by the District or the City or force the forfeiture of any City or District property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City's or the District's property or upon any of the City's or the District's income, receipts or revenues, except the Special Taxes and other amounts pledged under the Indenture. Insufficiency of Special Taxes Under the Rate and Method, the annual amount of Special Tax to be levied on each taxable parcel in the District will generally be based on whether such parcel is categorized as Undeveloped Property or as Developed Property and on the zone and land use class to which a parcel of Developed Property is assigned. See APPENDIX A - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES" and "SOURCES OF PAYMENT FOR THE BONDS - Method of Apportionment of Special Tax." The Rate and Method governing the levy of the Special Tax expressly exempts up to 517.5 acres of property owned by public agencies or a property owners association. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government, another public agency or a religious organization, subject to the limitations of the maximum authorized rates, the Special Tax will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the ability and willingness of the owners of such property to pay the Special Tax when due. Moreover, if a substantial portion of land within the District became exempt from the Special Tax because of public ownership, or otherwise, the maximum Special Tax which could be levied upon the remaining property within the District might not be sufficient to pay principal of and interest on the Bonds when due and a default could occur with respect to the payment of such principal and interest. Tax Delinquencies of Developer Affiliates and Other Matters There are no parcels in the District that are currently delinquent in the payment of ad valorem tax installments. However, historical delinquencies of the prior owner, an affiliate of which is a member of Otay Project LLC, occurred in the payment of ad valorem taxes with respect to the property now located within the boundaries of the District. In the Village One area, $472,096 of such delinquent taxes were brought current in August of 1997; $446,912 of delinquencies with respect to the land located in Village 13 are being paid by the Developer on an installment plan; and 58 DOCSOC\836206v5x22245.0120 ~"~ / ~ ¢ EXHIBIT 9 the balance of the Otay Ranch property was responsible for $1,339,333 delinquent ad valorem taxes which were brought current in August of 1997. Otay Ranch Development LLC, _on~_e of the entities constituting the Developer, is owne~ by the family interests of James and Alfred Baldwin. Entities that are or were controlled by James and Alfred Baldwin and their families, including Baldwin Builders, Inc., Baldwin Building Contractors, Ltd., Tiger Two Development, Carmel Valley Parmers, Calabasas, LLC and Marlin Development (formerly Village Development, formerly Village Properties) have been responsible for significant delinquencies in the payment of Mello-Roos community facilities district special taxes and. ad valorem taxes with respect to properly in various developments in California, as discussed below. Marlin Development ("Marlin") is a California general partnership, which was formed in 1974 under the name "Village Properties." Village Properties changed its name in June, 1995 to "Village Development" and subsequently changed its name again in November, 1996 to "Marlin Development." The general partners of Marlin are James P. Baldwin and Alfred E. Baldwin. Marlin has been in the development business for over 25 years. Marlin Development was delinquent in the payment of Mello-Roos special taxes on property located in San Marcos and Portola Hills, California; however, all delinquent special taxes with respect to those properties have now been paid. Calabasas, LLC owned property in Calabasas, California and was delinquent in the payment of Mello-Roos special taxes and ad valorem taxes on this property. On November 18, 1998, the County of Los Angeles was granted a Judgment of Foreclosure against Calabasas, LLC for the delinquent taxes, and moved to enforce the judgment by filing Notices of Levy against the property. Calabasas, LLC sold this property and funds were withheld from the sales proceeds for the full amount of special and ad valorem taxes. Marlin transferred ownership of its Calabasas property to Calabasas Development, LLC, an entity owned by entities controlled by James and Alfred Baldwin. On October 4, 2000, the County of Los Angeles filed a Complaint in Foreclosure against Calabasas Development, LLC for the collection of $554,946 of special taxes plus interest, penalties and other costs due for December 10, 1998 and subsequent periods. In addition, Calabasas Development, LLC was delinquent in the payment of ad valorem taxes of approximately $172,869. On June 27, 2001, the Complaint in Foreclosure was dismissed. Calabasas Development, LLC has paid all current year property taxes and entered into an installment plan for $626,104 of delinquent property taxes. In July 1995, Baldwin Builders, Inc. a corporation owned by James and Alfred Baldwin, and Baldwin Building Contractors, Ltd., a partnership owned 97% by Baldwin Builders, Inc. (the "Baldwin Company") filed for reorganization under Chapter 11 of the Bankruptcy Code. In February 1996, in order to obtain new financing for the Baldwin Company, James and Alfred Baldwin personally contributed land they owned with an estimated value of over $30 million and agreed to transfer control of the Baldwin Company to a trustee selected by the new lenders. Pursuant to an agreement approved by the bankruptcy court, James and Alfred Baldwin and their affiliates exchanged mutual full releases of all claims with the Baldwin Company. Baldwin Building Contractors, Ltd. has since had a plan of reorganization approved and has emerged from bankruptcy under the name "New Millennium Homes." James and Alfred Baldwin are not involved in the management of New Millennium Homes and have a de minimis ownership interest in that company. James and Alfred Baldwin and certain of their affiliated entities, not including any entities involved with the Developer (collectively, the "Baldwins"), were plaintiffs and defendants in various lawsuits with New Millennium relating to alleged purchase options and related matters for two parcels of land owned by the Baldwins. On June21, 1999, the Baldwins and New Millennium entered into a DOCSOC\836206v5~22245.0120 i/ ;f ~' EXHiBIT 9 "Settlement Agreement and Mutual Release" which settled all litigation between the parties and provided for full and complete releases of all claims against, each other. New Millennium Homes was de~n~.quent in the payment of special and ad valorem taxes on all of its properties, including special taxes on properties located in Calabasas (Los Angeles, CFD No. 4), Anaheim Hills (City of Anaheim, CFD No. 88-1, and Orange Unified School District CFD No. 89-2), and Portola Hills (Santa Ana Mountains Water District CFD No. 2 and County of Orange CFD No. 87-2). As part of its plan of reorganization, New Millennium Homes has either paid or entered into payment plans with respect to all of its delinquent special and ad valorem taxes. New Millennium Homes currently does not own any property within the District. Failure to Develop Properties Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Bondowners should it be necessary for the District to foreclose on the property due to the nonpayment of Special Taxes. The failure to complete development of the required infrastructure for development in the District as planned, or substantial delays in the completion of the development or the required infraslructure for the development due to litigation or other causes may reduce the value of the property within the District and increase the length of time during which Special Taxes will be payable from undeveloped property, and may affect the willingness and ability of the owners of property within the District to pay the Special Taxes when due. Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such governmental requirements would adversely affect planned land development. Finally, development of land is subject to economic considerations. Additionally, memhant builders may need to obtain financing to complete the development of the units that they are developing. No assurance can be given that the required funding will be secured or that the proposed development will be partially or fully completed, and it is possible that cost overruns will be incurred which will require additional funding beyond what the Developer has projected, which may or may not be available. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP - Estimated Sources and Uses of Funds and Projected Cash Flow" herein. The future development of the vacant land within the District may be adversely affected by existing or future governmental policies, or both, restricting or controlling the development of vacant land in the District. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP - Proposed Development and Developer's Pro Forma" and "- Certain Limitations on Development Phasing" for a discussion of certain significant limitations on the ability of the Developer and merchant builders to complete the projected development of Village One, Village One West and Five, as well as the remaining Otay Ranch Project. Specifically, investors should consider the broad power of the City to halt or delay "B" map approval under its Growth Management Ordinance and the Roadway Improvements Agreement. There can be no assurance that the owners of the vacant land in the District will be able to secure the necessary discretionary approvals if they choose to develop their properties. See also "- Future Land Use Regulations and Growth Control Initiatives" below. 60 DOCSOC\836206vSL22245.0120 EXHIBIT 9 There can be no assurance that land development operations within the District will not be adversely affected by a future deterioration of the real estate market and economic conditions or future local, State and federal governmental-policies relating to real estate development, the incgme tax treatment of real property ownership,_a__war or hostilities in this country or abroad, or the national economy. A slowdown of the development process and the absorption rote could adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special Taxes. In that event, there could be a default in the payment of principal of, and interest on, the Bonds when due. Bondowners should assume that any event that significantly impacts the ability to develop land in the District would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the Special Taxes when due. The payment of principal of and interest on the Bonds depends upon the receipt of Special Taxes levied on undeveloped property. Undeveloped property is less valuable per unit of area than developed land, especially if there are no plans to develop such land or if there are severe restrictions on the development of such land. The undeveloped property also provides less security to the Bondowners should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of the Special Taxes. Furthermore, an inability to develop the land within the District as currently proposed will make the Bondowners dependent upon timely payment of the Special Taxes levied on undeveloped property for a longer period of time than projected. Because all of the land within the District is currently owned by just eight owners, several of which are affiliated, the timely payment of the Bonds depends upon the willingness and ability of such owners to pay the Special Taxes levied on the undeveloped property when due. See "- Concentration of Ownership" above. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of such owners to make Special Tax payments on undeveloped property and could greatly reduce the value of such property in the event it has to be foreclosed upon. See "-Land Values" below. Future Land Use Regulations and Growth Control Initiatives The Developer and the City have entered into a Development Agreement dated as of May 12, 1997 (the "Development Agreement") which provides that the Developer is entitled to proceed with development within the District based upon the laws and regulations existing as of the date of the Development Agreement. Notwithstanding the terms of the Development Agreement, it is possible that future growth control initiatives could be enacted by the voters or future local, state or federal land use regulations could be adopted by govermnental agencies and be made applicable to the development of the vacant land within the District with the effect of negatively impacting the ability of the owners of such land to complete the development of such land if they should desire to develop it. Development could also be delayed or prohibited under the City's existing Growth Management Ordinance in the event essential infrastructure such as the proposed Olympic Parkway is not timely completed to serve the growing population of the area. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP - Certain Limitations on Development Phasing" for a discussion of some of the risks to the timely completion of needed infrastructure to serve the District and surrounding properties. See also "--Endangered Species" below. This possibility presents a risk to prospective purchasers of the Bonds in that an inability to complete desired development increases the risk that the Bonds will not DOCSOC\836206v5~22245.0120 ~ ~ EXHIBIT 9 be repaid when due. The owners of the Bonds should assume that any reduction in the permitted density, significant increase in the cost of development of the vacant land or substantial delay in development caused by growth and building permit restrictions or more restrictive land _use regulations would cause the values of such_vacant land within the District to decrease. A reduction in land values increases the likelihood that in the event of a delinquency in payment of Special Taxes a foreclosure action will result in inadequate funds to repay the Bonds when due. Completion of construction of any proposed structures on the vacant land within the Disthct is subject to the receipt of approvals from a number of public agencies concerning the layout ~nd design of such structures, land use, health and safety requirements and other matters. The failure to obtain any such approval could adversely affect the planned development of such land. Under current State law, it is generally accepted that proposed development is not exempt from future land use regulations until building permits have been issued and substantial work has been performed and substantial liabilities have been incurred in good faith reliance on the permits. There is no case law precedent on the issue of whether a statutory development agreement, such as the Development Agreement, wilt exempt development within the District from future land use regulations. Because future development of vacant property in the District could occur over many years, if at all, the application of future land use regulations to the development of the vacant land could cause significant delays and cost increases not currently anticipated, thereby reducing the development potential of the vacant property and the ability or willingness of owners of such land to pay Special Taxes when due or causing land values of such land within the District to decrease substantially from those in the Appraisal. Endangered Species In recent years there has been an increase in activity at the State and federal levels related to the possible listing of certain plant and animal species found in the southern San Diego County area as endangered species. An increase in the number of endangered species could curtail development in the southern San Diego County area. Any action by the State or federal governments to protect species located on or adjacent to the property within the District could negatively impact the ability of the owners of that land to develop it. This, in turn, could reduce the likelihood of timely payment of the Special Taxes levied against such that land and would likely reduce the value of such land and the potential revenues available at the foreclosure sale for delinquent Special Taxes. See "- Failure to Develop Land" above. Construction of Olympic Parkway impacts approximately 7.9 acres of wetlands. The City has caused creation of 10.8 acres of wetlands within the project site as mitigation. In addition, the conditions of the 404 Permit issued for the Olympic Parkway construction calls for an additional purchase of 4.29 acres of off-site mitigation. The Quino Checkerspot Butterfly was recently listed as an endangered species. The butterfly has been spotted on portions of the 23,000 acres historically known as the "Otay Ranch" but not on any of the property within the District. The Developer's property within the District was surveyed for this butterfly during the spring of 1999 and none were found to be inhabiting property within the District. 62 DOCSOC\836206v5'22245.0120 EXHIBIT 9 Natural Disasters The District, like all California Communities, may be subject to unpredictable seis~mic activity, fires, flood, or other natural di_sa_.sters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. In the event of a severe earthquake, fire, flood or other natural disaster, there max be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes. Hazardous Substances One of the most serious risks in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well- known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy thc condition just as is the seller. Further, it is possible that liabilities may arise in the future with respect to any of the parcels resulting from the existence, currently, on the parcel ora substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but fi-om thc method of handling it. All of these possibilities could significantly affect the value of a parcel that is realizable upon a delinquency. Neither thc City nor the Developer has knowledge of any hazardous substances being located on the property within the District. Parity Taxes, Special Assessments and Land Development Costs Property within the District is subject to the lien of several overlapping districts and several other community facilities districts are planned for portions of the District. See "THE COMMUNITY FACiLITIES DISTR/CT - Estimated Direct and Overlapping Indebtedness." DOCSOC\836206v5k22245.0120 : EXHIBIT 9 The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed unti! they are paid. Such lien is on a parity with all special taxes and special assessments levied by the City and other agencies and is co-equal to_and independent of the lien for general properJy__taxes regardless of when they are imposed upon the some property. The Special Taxes have priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See "- Bankruptcy and Foreclosure" below. Development of land within the District is contingent upon construction or acquisition of major public improvements such as arterial streets, water distribution facilities, sewage collection and transmission facilities, drainage and flood protection facilities, gas, telephone and electrical facilities, schools, parks and street lighting, as well as local in-tract improvements and on-site grading and related improvements. Certain of these improvements have been acquired and/or completed; however, there can be no assurance that the remaining improvements will be constructed or will be constructed in time for development to proceed as currently expected. The cost of these additional improvements plus the public and private in-tract, on-site and off-site improvements could increase the public and private debt for which the land within the District is security. This increased debt could reduce the ability or desire of the property owners to pay the annual Special Taxes levied against the property. In that event there could be a default in the payment of principal of, and interest on, the Bonds when due. Neither the City nor the District has control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property within the District. In addition, the landowners within the District may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes or assessments. Any such special taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated value-to-lien ratios for property within the ~)istrict described herein. Disclosures to Future Purchasers The willingness or ability of an owner of a parcel to pay the Special Tax even if the value of the parcel is sufficient may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special Tax lien to be recorded in the Office of the Recorder for the County against each parcel. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within the District or lending of money thereon. The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutohly prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or DOCSOC\836206v5~22245 0120 , EXHIBIT 9 understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due. Special Tax Delinquencies ~_ _ Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, are customarily billed to the properties within the District on the ad valorem property tax bills sent to owners of such properties. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments. See "SOURCES OF PAYMENT FOR THE BONDS - Proceeds of Foreclosure Sales," for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Indenture, in the event of delinquencies in the payment of Special Taxes. See" Bankruptcy and Foreclosure" below, for a discussion of the policy of the Federal Deposit Insurance Corporation (the "FDIC") regarding the payment of special taxes and assessment and limitations on the District's ability to foreclosure on the lien of the Special Taxes in certain circumstances. Non-Cash Payments of Special Taxes Under the Act, the City Council as the legislative body of the District may reserve to itself the right and authority to allow the owner of any taxable parcel, to tender a Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the Special Taxes applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the District to make payments with respect to other Bonds then outstanding; and, unless the practice was limited by the District, the Special Taxes paid in cash could be insufficient to pay the debt service due with respect to such other Bonds. In order to provide some protection against the potential adverse impact on cash flows which might be caused by the tender of Bonds in payment of Special Taxes, the Indenture includes a covenant pursuant to which the District will not authorize owners of taxable parcels to satisfy Special Tax obligations by the tender of Bonds unless the District shall have first obtained a report of an Independent Financial Consultant certifying that doing so would not result in the District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds and any Parity Bonds when due. Payment of the Special Tax is not a Personal Obligation of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the District has no recourse against the owner. Land Values The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the District's only remedy is to commence foreclosure proceedings in an attempt to obtain funds to pay 65 · DOCSOC\836206vS~22245.0120 ~ EXHIBIT 9 the Special Taxes. Reductions in property values due to a downturn in the economy, a war or hostilities in this country or abroad, physical events ~uch as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See "THE COMMU~i.TY FACILITIES DISTRICT -- Estimated Value-to-Lien Ratios" herein. The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price ofa pamel when acquired by its current owner, adjusted annually by an amount determined by the San Diego County Assessor, .not to exceed an increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed value. The Appraiser has estimated, on the basis of certain definitions, assumptions and limiting conditions contained in the Appraisal, that as of April 2, 2001 the value of the land within the District is $380,705,000. The Appraisal is based on the assumptions as stated in Appendix C "APPRAISAL REPORT." The Appraisal does not reflect any possible negative impact which could occur by reason of futura slow or no growth voter initiatives, any potential limitations on development occurring due to time delays, an inability of the Developer to obtain any needed development approval or permit, the presence of hazardous substances with/n the District, the listing of endangered species or the determination that habitat for endangered or threatened species exists within the District, or other similar situations. The Appraiser has conditioned the Appraisal on a specific condition in addition to the typical list of assumptions and limiting conditions which is that there are no environmental issues which would slow or thwart development of the District to its highest and best use. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP - Potential Limitations on Development." Prospective pumhasers of the Bonds should not assume that the land within the District could be sold for the appraised amount described above at a foreclosure sale for delinquent Special Taxes. In arriving at the estimates of value, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a foreclosure sale. See APPENDIX C for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, ifa bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See "SOURCES OF PAYMENT FOR THE BONDS - Special Tax - Proceeds of Foreclosure Sales." Electricity Supply in California The State is currently experiencing a disruption in the supply and pricing of electricity. There have been substantial increases in the costs of electricity to retailers and consumers, and periodic electrical blackouts have occurred throughout the State. Further outages have been predicted for the months when demand increases. The electrical service for the property in the District is provided by San Diego Gas & Electric. Under the terms of State regulations, San Diego Gas & Electric has not been able to pass through significant portions of the substantial increase in the wholesale cost of electricity to its customers. San Diego Gas & Electric has announced that, as a result, it has experienced a significant cash crisis. The effect of the electricity crisis on the San Diego Gas & Electric's ability to provide electrical service cannot be predicted. Furthermore, the effect of 66 / DOCSOC\S36206vS~22245 0120 EXHIBIT 9 the disruptions in the electricity market on the local or State economy or on the demand for housing and industrial/commercial space cannot be predicted. It is possible the disruptions in electricity supply and the increasing cost could result in a slower rate of absorption and a reduced value of property within the District and affect the.~ah/lity of property owners to pay Special Taxes when dlJe. FDIC/Federal Government Interests in Properties The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC") has an interest. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy 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 rote provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello-Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The FDIC has filed claims against the County of Orange, California in the United States 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 receivership. The Bankruptcy Court ruled in favor of the FDIC's positions and, on March 22, 1999, the United States Bankruptcy Appellate Panel of the Ninth Circuit affirmed the decision of the Bankruptcy Court. In August, 2001, the United States Court of Appeals for the Ninth Circuit affirmed the Bankruptcy Appellate Panel decision. The FDIC does not currently own any of the property in the District nor have any FDIC-insured institutions made loans on property in the District. 67 DOCSOC\836206v5~22245.0120 EXHIBIT 9 The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of'Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be forecl6sed out at a judicial foreclosure sale could re~tu-6e or eliminate the number of persons willing to purc~iase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Account and perhaps, ultimately, a default in payment on the Bonds. Bankruptcy and Foreclosure Bankruptcy, insolvency and other laws generally affecting creditors rights could adversely impact the interests of owners of the Bonds in at least two ways. First, the payment of property owners' taxes and the ability of the District to foreclose the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure proceedings may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed due to many reasons, including crowded local court calendars or lengthy procedural delays. Second, the Bankruptcy Code might prevent moneys on deposit in the funds and accounts created under the Indenture fi.om being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against the Developer and if the court found that the Developer had an interest in such moneys within the meaning of Section 541(a)(1) of the Bankruptcy Code. Although a bankruptcy proceeding would not cause the Special Taxes to become extinguished, the amount of any Special Tax lien could be modified if the value of the property falls below the value of the lien. If the value of the property is less than the lien, such excess amount could be treated as an unsecured claim by the bankruptcy court. In addition, bankruptcy of a property owner could result in a delay in prosecuting Superior Court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of delinquent Special Tax installments and the possibility of delinquent Special Tax installments not being paid in full. On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glaspl¥ Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankraptcy were not entitled to priority over a secured creditor with a prior lien on the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed after the filing of the banlffuptcy petition were declared to be "administrative expenses" of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre-petition taxes. The Bankruptcy Reform Act of 1994 (the "Bankruptcy Reform Act") included a provision which excepts fi.om the Bankruptcy Code's automatic stay provisions, "the creation of a statutory lien for an ad valorem property tax imposed by... a political subdivision of a state if such tax comes due after the filing of the petition [by a debtor in bankruptcy court]." This amendment effectively makes the Glasplv holding inoperative as it relates to ad valorem real property taxes. However, it is possible that the original rationale of the Glasply ruling could still result in the treatment of post- petition special taxes as "administrative expenses," rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings. DOCSOC\836206v5~22245.0120 EXHiBIT 9 According to the court's ruling, as administrative expenses, post petition taxes would be paid, assuming that the debtor had sufficient assets to do 'so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the property is transferred out o£the bankruptcy estate (through foreclosure of o-Iherwise), it would at that time become subject to cuffent ad valorem taxes. The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how a bankruptcy court would treat the lien for Special Taxes levied after the filing of a petition in bankruptcy. Glasply is controlling precedent on bankruptcy courts in the State. If the Glaspl¥ precedent was applied to the levy of the Special Taxes, the amount of Special Taxes received from parcels whose owners declare bankruptcy could be reduced. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal nistruments, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. No Acceleration Provision The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the Bonds or the Indenture. Loss of Tax Exemption As discussed under the caption "TAX MATYERS," the interest on the Bonds could become includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds as a result ora failure of the District to comply with certain provisions of the Internal Revenue Code of 1986, as amended. Should such an event of taxability occur, the Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the optional redemption provisions of the Indenture. Limitations on Remedies Remedies available to the owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of the Bonds. Bond Counsel has limited its opinion as to the enfomeability of the Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditors' rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the fights of the owners of the Bonds. Limited Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the District and the Developer have committed to provide certain financial and operating information on an DOCSOC\836206v5L22245.0120 EXHIBIT 9 annual basis, there can be no assurance that such information will be available to Bondowners on a timely basis. See "CONTINUING DISCLOSURE." The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of~eneral market conditions, lack of current informatiori, or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original pumhase price. Proposition 218 An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes and property-related assessments, fees and charges." The provisions of the Initiative have not yet been interpreted by the courts, although several lawsuits have been filed requesting the courts to interpret various aspects of the Initiative. The Initiative could potentially impact the Special Taxes available to the City to pay the principal of and interest on the Bonds as described below. Among other things, Section 3 of Article XIII states that "... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure which includes notice, heating, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that: "Section 3 of Article XIIIC of the California Constitution, as adopted at the November5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the r/sk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual tights protected by Section 10 of Article I of the United States Constitution." Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the Bonds. It may be possible, however, for voters or the City Council acting as the legislative body of the District to reduce the Special Taxes in a mariner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the District has covenanted that it will not initiate proceedings under the Act to reduce the DOCSOC\836206v5~22245.0120 ,, ' ~ }"i) :¢' EXHIBIT 9 maximum Special Tax rates on parcels within the District to less than an amount equal to 110% of Maximum Annual Debt Service on the Outstanding Bonds and Parity Bonds. In connection with the foregoing covenant, the District has made a legislative finding and determination that any elimination or reduction of Special Taxes below the foregoing level would interfere with the timely retireme_nt of the Bonds. The District also has covenanted that, in the event an initiative is adopted which purports to alter the Rate and Method of Apportionment of Special Tax, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants. The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS - Limitations on Remedies." Ballot Initiatives Article XIII A, Article XIII B and Proposition 218 were adopted pursuant to measures qualified for the ballot pursuant to California's constitutional initiative process. On March 6, 1995 in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the City or local districts to increase revenues or to increase appropriations or on the ability of the landowners within the District to complete the remaining proposed development. See "SPECIAL RISK FACTORS - Failure to Develop Properties" herein. CONTINUING DISCLOSURE Pursuant to a Continuing Disclosure Agreement with the Fiscal Agent, as dissemination agent (the "Disclosure Agreement"), the District, has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission (each, a "Repository") certain annual financial information and operating data concerning the Dis~ct. The Annual Report to be filed by the District is to be filed not later than February 1 of each year, beginning February 1, 2002, and is to include audited financial statements of the City. The requirement that the City file its audited financial statements as a part of the Annual Report has been included in the Disclosure Agreement solely to satisfy the provisions of Rule 15c2-12. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the City other than as described hereinabove. See "SOURCES OF PAYMENT FOR ~ BONDS" and "SPECIAL RISK FACTORS - Limited Obligations." The City has never failed to comply in all material respects with any previous undertakings with regard to Rule 15c2-12 to provide annual reports or notices of mater~al events. The full text of the Disclosure Agreement is set forth in Appendix G. To assist the Underwriter in complying with Pule 15c2-12(b)(5), the Developer will enter into a certain Continuing Disclosure Agreement (the "Developer Disclosure Agreement") covenanting to provide an Annual Report not later than February 1 of each year beginning February I, 2002. The Annual Report provided by the Developer is to contain the unaudited 71 DOCSOC\836206v5~22245.0120 ; EXHIBIT 9 financial statements of the Developer and, if available, audited financial statements, and the additional financial and operating data outlined in Section 4 of the Developer Disclosure Agreement attached in Appendix G. The Developer's obligations und[~-~he Developer Disclosure Agreement will terminate u-pon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the Bonds; (b) the date on which the Developer and all affiliates of the Developer are no longer responsible for the payment of more than 20 percent of the annual Special Tax levy; or (c) the date on which the Developer delivers to the City an opinion of nationally-recognized bond counsel to the effect that the continuing disclosure is no longer required under the Rule. The Developer has ~lso agreed that if it sells or transfers an ownership interest in any property in the District which will result in the transferee becoming responsible for the payment of 20 pement of the annual Special Tax levy in the fiscal year following such transfer, the Developer will cause any such transferee to enter into a disclosure agreement described in Section 12 of the Developer Disclosure Agreement attached hereto in Appendix G. ~ The Developer Disclosure Agreement will inure solely to the benefit of the District, any Dissemination Agent, the Underwriter and owners or beneficial owners fi'om time to time of the Bonds. TAX MATTERS In the opinion of Best Best & Krieger LLP ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded fi.om gross income for federal income tax 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, although Bond Counsel observes that such interest is included in adjusted current earmngs when calculating federal corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix H hereto. The Code imposes various restrictions, conditions and requirements relating to the exclusion fi.om gross income for federal income tax purposes of interest on obligations such as the Bonds. The City has covenanted to comply with certain restrictions designed to insure that interest on the Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Bonds being included in federal gross income, possibly fi.om the date of original issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after 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. DOCSOC\836206v 5522245.0120 ~ EXHIBIT 9 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 subjec_t to the terms and conditions set forth in such~ d__ocuments. Bond Counsel expresses no opinion as to_any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of Bond Counsel other than itself. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a bondholder's federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder's other items of income or deduction, and Bond Counsel expresses no opinion regarding any such other tax consequences. LEGAL MATTERS Certain legal matters incident to the issuance of the Bonds are subject to the approving legal opinion of Best Best & K~eger LLP, San Diego, California ("Bond Counsel"). A copy of the proposed form of opinion of Bond Counsel is set forth in Appendix H hereto. The opinion of Bond Counsel will be qualified as to the enforceability of certain of the proceedings by limitations imposed by bankruptcy, insolvency, moratoria and other similar laws affecting creditors' rights, heretofore or hereafter enacted, and by the exercise of judicial discretion in accordance with general pr/nciples of equity. Bond Counsel has reviewed the cover page of this Official Statement and the portions hereof under the captions "INTRODUCTION," "THE BONDS," "SOURCES OF PAYMENT FOR THE BONDS" "TAX MATTERS" and in Appendices E and H, insofar as such portions purport to summarize certain provisions of the Bonds, the Indenture, the legal procedures required for the authorization of the Bonds, and the opinion of Bond Counsel concerning the exclusion of interest on the Bonds from gross income, but Bond Counsel has not assisted in the preparation of or reviewed the remainder of this Official Statement, and accordingly Bond Counsel expresses no opinion as to the accuracy or sufficiency of any statements, material or financial information contained in the remainder of this Official Statement. Certain legal matters will be passed upon for the City and the District by the City Attorney and for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Stradling"). Although it serves as counsel to the Underwriter in connection with the issuance and sale of the Bonds, Stradling represents the City in connection with other financings. LITIGATION No litigation is pending or threatened concerning the validity of the Bonds or the pledge of Special Taxes to repay the Bonds and a certificate of the District to that effect will be furnished to the Underwriter at the time of the original delivery of the Bonds. The District is not aware of any DOCSOC\836206v5L22245.0120 EXHIBIT 9 litigation pending or threatened which questions the existence of the District or contests the authority of the District to levy and collect the Special Tgxes or to issue and retire the Bonds. --NO RATING The District has not made and does not contemplate making application to any rating agency for the assignment ora rating of the Bonds. UNDERWRITING The Bonds are being purchased by Stone & Youngberg LLC (the "Underwriter"). The Underwriter has agreed to purchase the Bonds at a price of $ (being $ aggregate principal amount thereof, less Underwfiter'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 pumhase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions. The UnderWriter may offer and sell the Bonds to certain dealers and others at prices lower than the offering price stated on the cover page hereof. The offering price may be changed from time to time by the Underwriter. FINANCIAL INTERESTS The fees being paid to the Financial Advisor, Underwriter, Underwriter's Counsel and Bond Counsel are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel represents the Underwriter on matters unrelated to the Bonds and Underwriter's Counsel represents the City on matters unrelated to the Bonds. PENDING LEGISLATION The District is not aware of any significant pending legislation which would have material adverse consequences on the Bonds or the ability of the District to pay the principal of and interest on the Bonds when due. DOCSOC\836206v5L22245.0120 ' EXHIBIT 9 ADDITIONAL INFORMATION The purpose of this Official Statement is to ~upply information to prospective buyers of the Bonds. Quotations and summaries and e_~anations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for-full and complete statements and their provisions. The execution and delivery of this Official Statement by the Director of Finance of the City has been duly authorized by the City Council acting in its capacity as the legislative body of the District. CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) By: Director of Finance DOCSOCX836206vSk22245.0120 ; EXHIBIT 9 APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 99-I (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) A Special Tax as hereinafter defined shall be levied on all Taxable Property within the City of Chula Vista Community Facilities District No. 99-1 ("CFD No. 99-1") and collected each Fiscal Year commencing in Fiscal Year 2000-2001, in an amount determined by the City Council through the application of the appropriate Special Tax for "Developed Property," "Taxable Property Owner Association Property," and "Undeveloped Property" as described below. All of the real property in CFD No. 99-1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps are not available, the Acreage shall be determ/ned by the City Engineer. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonable estimated costs directly related to the administration of CFD No. 99-1, including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 99-1 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 99-1 or any designee thereof of complying with City, CFD No. 99-1 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 99-1 or any designee thereof related to an appeal of the Special Tax; the costs of any credit enhancement obtained by the City or CFD No. 99-1 (but excluding the costs of any credit enhancement required to be provided by the Master Developer or any other owner of property within CFD 99-1), and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 99-1 for any other administrative purposes of CFD A-1 DOCSOC\836206v5~2245 0120 [ EXHIBIT 9 No. 99-1, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Spefial Taxes. "Annexation Parcels" means th_os..._e specific Assessor's Parcels that are subject to future annexation into CFD No. 99-1 as depicted in Exhibit B attached herein. Any Annexation Parcels that annex to CFD No. 99-1 will be subject to the Maximum Annual Special Tax and the Backup Special Tax of the zone of CFD 99-1 within which such Annexation Parcel is located and the appropriate land use category of CFD No. 99-1 to which such Annexation Parcel. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Available Funds" means the balance in the reserve fired established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, delinquent special tax payments, foreclosure proceeds, the portion of proceeds of Backup Special Tax payments and Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in sucrt Indenture. "Backup Special Tax" means the Special Tax that is required to be paid as a condition precedent to the issuance of building permits or recordation of final maps, as determined in accordance with Section E below. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD No. 99-1 under the Act and secured by the levy of the Special Taxes. "CFD Administrator" means an official of the City acting for and on behalf of CFD 99-1, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD No. 99-1" means City of Chula Vista Community Facilities District No. 99-I (Otay Ranch SPA One - Portions of Village One, Village Five, and Village One West), as depicted in Exhibit A. "City" means City of Chula Visa. "Commercial Property" means all Assessor's Parcels of Developed Property for which a building permit(s) was issued for a non-residential use, excluding Community Purpose Facility Property. "Community Purpose Facility Property" means all Assessor's Parcels of Developed Property, which are classified as community purpose facilities and meet the requirements of City of Chula Visa Ordinance No. 2452. "Council" means the City Council of the City, acting as the legislative body of CFD No. 99-1. DOCSOC\836206v5\22245.0120 ~ ~ EXHIBIT 9 "County" means the County of San Diego. "Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Taxable Property Owner Assoc~iat_._ion Property, for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year. "Development Projection" means an annual calculation for each Planning Area of CFD No. 99-1 off (i) the number and total Residential Floor Area of existing dwelling units of Residential Property, the number of existing Acres of Commercial Property, and the number of existing Acres of Community Purpose Facility Property, and (ii) a projection of all future development, including the acreage, projected number of residential dwelling units, projected Residential Floor Area, projected Commercial Property Acres, projected Community Purpose Facility Property Acres, and an absorption schedule for all future development within CFD No. 99-1. The Development Projection shall be dated as of March 1 and prepared each Fiscal Year by the Master Developer. Upon submittal, the CFD Administrator shall review, modify if necessary, and approve the Development Projection. If the Development Projection is not received by the CFD Administrator on or before April 1 of each year, the CFD Administrator shall then prepare or cause to be prepared a Development Projection. "Final Residential Subdivision" means a subdivision of property created by recordation of a final map or parcel map, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.), recordation of a lot line adjustment approved by the City which cremes a parcel for which a building permit may be issued or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which residential building permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Tables 1, 2, and 3 of Section C. "Master Developer" means the owner or owners of the predominant amount of Undeveloped Property in CFD No. 99-1. "Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C below, that may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Occupied Residential Property" means all Assessor's Parcels of Residential Property, which have closed escrow to an end user. "Outstanding Bonds" means all Bonds, which remain outstanding. "Planning Areas" means those areas shown on Exhibit C. Minor adjustments in the boundaries of the Planning Areas may be made by the CFD Administrator to conform to the tentative and final maps, lot line adjustment or other property line adjustment approved by the City for these areas. The Planning Areas in Exhibit C existing at the time of formation of CFD No. 99-1 may be expanded to include Annexation Parcels from time to time or additional Planning Areas may be established to include Annexation Parcels from time to time. _ -- "Property Owner Association Property" means any property within the boundaries of CFD No. 99-1 owned by or dedicated to a property owner association, including any master or sub-association. "Proportionately" means for Developed Prope~:y that the ratio of the actual Special ~i'ax levy to the Maximum Annual Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 99-1. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property within CFD No. 99-1. "Public Property" means any property within the boundaries of CFD No. 99-1 that is used for rights-of-way or any other purpose and is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by reference to appropriate records kept by the City's Building Department. Residential Floor Area will be based on the building permit(s) issued for each dwelling unit prior to it being classified as Occupied Residential Property, and shall not change as a result of additions or modifications made after such classification as Occupied Residential Property. "Special Tax" means the: (i) annual special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement pursuant to Section D, and (ii) the Backup Special Tax required to be paid as a result of changes in development. "Special Tax Requirement" means that amount requh-ed in any Fiscal Year for CFD No. 99-1 to: (i) pay annual debt service on all Outstanding Bonds as defined in Section A; (ii) pay periodic costs on the Bortds, including but not lim/ted to, credit enhancement and rebate payments on the Bonds; (iii)pay Administrative Expenses; (iv)pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; (v) and pay directly for acquisition and/or constxuction of facilities, which are authorized to be financed by CFD No. 99-1; (vi) less a credit for Available Funds. "State" means the State of California. "Taxable Property" means alt of the Assessor's Parcels within the boundaries of CFD No. 99-1 which are not exempt from the Special Tax pursuant to law or the provisions of Section F below. DOCSOC\836206v5~22450120 EXHIBIT 9 "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not e~cmpt pursuant to the provisions of Section F below. "Trustee" means thc trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means, for each Fiscal year, all Taxable Property not classified as Developed Property or Taxable Property Owner Association Property. "Zone A" applies only to Developed Property, and means a specific geographic location known as the Village One area as depicted in Exhibit A attached herein. "Zone B" applies only to Developed Property, and means a specific geographic location known as the Village Five area as depicted in Exhibit A attached herein. "Zone C" applies only to Developed Property, and means a specific geographic location known as the Village One West area as depicted in Exhibit A attached herein. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 99-1 shall be classified as Developed Property, Taxable Property Owner Association Property, or Undeveloped Property, and shall bc subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Developed Property shall further bc assigned to Zone A, Zone B, or Zone C. The Maximum Annual Special Tax for an Assessor's Parcel of Residential Property shall be based on the Residential Floor Area and the number of the dwelling units located on such Assessor's Parcel. The Maximum Annual Special Tax for an Assessor's Parcel of Commercial Property and Community Purpose Facility Property shall be based on the Acreage of such Assessor's Parcel. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Land Use Class of Developed Property within Zone A, Zone B, or Zone C shall be the applicable amount shown on Tables 1, 2, and 3 below. The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property shall equal the specified amount per dwelling unit times the number of dwelling units on such Assessor's Parcel plus the specified amount per square foot times the square footage of Residential Floor Area on such Assessor's Parcel. A-5 ~/-~ _.~/¢~/~ '~ DOCSOC\836206v5\22245.0120 · EXHIBIT 9 TABLE 1 Maximum Annual Special Tax for Developed Property in Zone A (Village One) Communi.t2y,Facilities District No. 99-1 Land Use Maximum Class Description 1 Residential Property $0 per dwelling unit + $.28 per square foot of Residential Floor Area 2 Commercial Property $1,600 per Acre 3 Community Purpose Facility $400 per Acre Property TABLE 2 Maximum Annual Special Tax for Developed Property in Zone B (Village Five) Community Facilities District No. 99-1 Land Use Maximum Annual Special Tax Class Description 1 Residential Property $400 per dwelling unit +$.29 : per square foot of Residential Floor Area 2 Commercial Property $3,717 per Acre 3 Community Purpose Facility Property $929 per Acre TABLE 3 Maximum Annual Special Tax for Developed Property in Zone C (village One West) Community Facilities District No. 99-1 Land Use Maximum Annual Special Tax Class Description 1 Residential Property $400 per dwelling unit + $.44 per square foot of Residential Floor Area 2 Commercial Property $4,266 per Acre 3 Community Purpose Facility Property $1,066 per Acre 2. Undeveloped Property and Taxable Property Owner Association Property The Maximum Annual Special Tax for each Assessor's Parcel classified as Undeveloped Property and Taxable Property Owner Association Property shall be $8,864 per Acre. A-6 DOCSOC\836206vSL22245.0120 / EXHIBIT 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 1999-2000 a~d for each following Fiscal Year, the Cou_ncil shall determine or cause to be de_te~rmined the Special Tax Requirement and shall deterv3_ine or cause to be determined the applicable annual Special Tax so that the amount of Special Taxes equals the Special Tax Requirement for such Fiscal Year. The annual Special Tax shall be calculated and levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property within Zone A, Zone B, or Zone C at up to 100% of the applicable Maximum Annual Special Tax to satisfy the Special Tax Requirement. Second: If additional moneys are needed to satisfy the Special Tax Requirement afier the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first lwo steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property and Public Property, if applicable, as provided for in Section F at up to the Maximum Annual Special Tax for Taxable Property Owner Association Property and Public Property, it' applicable. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Occupied Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Assessor's Parcel of CFD No. 99-1. E. BACKUP SPECIAL TAX The following definitions apply to this Section E: "Actual Average Special Tax Per Unit" means, for each Planning Area, the Actual Special Tax Revenue divided by the sum of the number of units included in any current building permit application(s) plus the number of units within such Planning Area for which building permits have previously been issued. Any Residential Floor Area created by building permits issued after an Assessor's Parcel has been classified as Occupied Residential Property shall not be included in determining the Actual Average Special Tax Per Unit. "Actual Special Tax Revenue" means, for each Planning Area, the sum of the total Residential Floor Area shown on any current building permit application(s) plus the total Residential Floor Area fi-om any previously issued building permits within the Planning Area multiplied by the applicable Maximum Annual Special Tax. Any Residential Floor Area created by building permits issued after an Assessor's Parcel has been classified as Occupied Residential Property shall not be included in determining the Actual Special Tax Revenue. "Backup Special Tax Fund" means, for each Planning Area, the fund or account identified in the Indenture to hold Backup Special Tax payments received from property owners within such Planning Area. DOCSOC\836206v5~222 45 0120 ~ EXHIBIT 9 "Expected Special Tax Revenue" means, with respect to each Planning Area, the amount shown in the column so labeled in Tables 4, 5~ and 6. "Required Average Special Tax Per UnitIAcre' means, for each Planning Area,-the Expected Special Tax Revenue aiv-'~ded by the total expected number of dwelling unifs or non-residential Acres (as applicable) expected to be developed within the Planning Area, as determined by the CFD Administrator based on tentative maps, Final Residential Subdivision maps, the Development Projection, and all other relevant information available to the CFD Administrator. In cases where residential and non-residential property are both included within a Planning Area, the CFD Administrator may adjust the Required Average Spe~cial Tax Per UniffAcre as necessary. "Share of Annual Debt Service" means, for each Planning Area, the maximum annual debt service on the Bonds multiplied by that Planning Area's percentage of the total Special Tax revenue, as shown in Table 4, 5, and 6 below. A Planning Area's Share of Annual Debt Service shall be adjusted to reflect any prepayments within that Planning Area. 1. Expected Development and Special Tax Revenues Tables 4, 5, and 6 below identify the amount of development and Special Tax revenue that is currently expected from each Planning Area in Zon:; A, Zone B, or Zone C. Tables 4, 5, and 6 may be revised by the CFD Administrator if the Planning Area boundaries are modified as a result of the annexation of Annexation Parcels to CFD 99-1 or otherwise. The owner of the Annexation Parcels, upon such annexation, shall provide the CFD Administrator the total number of residential units or the total number of non- residential Acres, and the total Residential Floor Area expected to be developed within the land area of such Annexation Parcels. The CFD Administrator shall utilize this information to modify Tables 5 and 6 to include the additional Expected Special Tax Revenue, and to recalculate the percent of total revenue for each Planning Area. / ~ EXHIBIT 9 DOCSOC\836206vSk22245 0120 ~ TABLE 4 Expected Development and Specia! Tax ReCenue by Planning Area within Zone A Communil~'acilifies District No. 99-1 EXPECTED NUMBER TOTAL SPECIAL PERCENT PLANNING EXPECTED OF UNITS/ ILESIDENTIAL TAX OF TOTAL AREA PRODUCT TYPE ACRES FLOOR AREA REVENUE REVENUE R-6 Residential Property 77 units 179,872 50,364 5.09% R-7 Residential Property 131 units 411,078 115,102 11.64% R-9 Residential Property 74 units 182,928 51,220 5.18% R-10 Residential Property 123 units 324,351 90,818 9.18% R-12 Residential Property 83 units 168,988 47,317 4.78% R-13 i Residential Property 88 units 146,256 40,952 4.14% R-14 ! Residential Property 139 units 215,589 60,365 6.10% R-15 Residential Property 464 units 464,000 129,919 13.13% R-16 ! Residential Property 115 units 178,365 49,942 5.05% R-17 Residential Property 98 units 199,528 55,868 5.65% R-18 Residential Property 74 units 122,988 34,437 3.48% R-19 Residential Property 204 units 204,000 57,120 5.77% R-20 I Residential Property 160 units 160,000 44,800 4.53% R-21 Residential Property 168 units 168,000 47,040 4.76% R47 Residential Property 174 units 156,600 43,848 4.43% R48 Residential Property 96 units 195,456 54,728 5.53% C-1 Commercial Property 8.1 acres N/A 12,960 1.31% CPF-1 Community Purpose 1.5 acres N/A 600 0.06% Facility Property CPF-2 Community Purpose 4.5 acres N/A 1,800 0.18% Facility Property TOTAL 2,268 units $989,200 100.00% A-9 q-, / DOCSOC\836206v5~22145.0120 EXHIBIT 9 TABLE5 Expected Development and Speciat Tax Revenue by Planning Area within Zone B Community~lZacilifies District No. 99-1 _ EXPECTED NUMBER TOTAL SPECIAL PERCENT PLANNING EXPECTED OF UNITS/ RESIDENTIAL TAX OF TOTAL AREA PRODUCT TYPE ACRES FLOOR AREA REVENUE REVELNrUE R-25 Residential Property 56 units 182,000 $75,180 5.49% R-26A Residential Property 29 units 88,146 37,162 2.71% R-26B Residential Property 34 units 95,200 41,208 3.01% R-27 Residential Property 69 units 136,517 67,190 4.91% R-28 Residential Property 73 units 119,355 63,813 4.66% R-29 ,Residential Property 83 units 128,733 70,533 5.11% R-30A Residential Property 247 units 247,000 170,430 12.45% R-30B Residential Property 326 units 326,000 224,940 16.43% R-31 Residential Property 85 units 168,810 82,955 6.06% R-32A Residential Property 61 units 143,899 117,272 4.83% R-32B Residential Property 57 units 114,884 117,272 4.10% R-33 Residential Property 42 units 117,600 54,742 3.72% R-34 Residential Property 35 units 92,295 40,766 3.03% R-35 Residential Property 36 units 112,968 47,161 3.44% R-36 Residential Property 62 units 153,264 69,247 5.06% R-37 Residential Properly 60 units 99,720 52,919 3.87% R-38 Residential Property 43 units 87,548 42,589 3.11% R-39 Residential Property 122 units 193,004 104,770 7.65% CPF-5 Community Purpose 5.3 acres N/A 4,924 0.36% Facility Property TOTAL 1,520 units $1,369,123 100.00% A-10 ? [ f DOCSOC\836206v5L22245.0120 ~ EXHIBIT 9 TABLE 6 Expected Development and Special Tax Re,~enue by Planning Area within Zone C CommuniW~_Facilifies District No. 99-1 EXPECTED NUMBER TOTAL SPECIAL PERCENT PLANNING EXPECTED OF UNITS/ RESIDENTIAL TAX OF TOTAL AREA PRODUCT TYPE ACRES FLOOR AREA REVENUE REVENUE R-49A/B Residential Property 116 units 242,962 $ 153,303 11.51% R-50 Residential Prope~y 84 units 207,606 124,947 9.38% R-51A/B ResidentialProperty 89 units 225,081 134,636 10.11% R-52A/B Residential Property 75 units 253,688 141,623 10.63% R-53 Residential Property 36 units 121,770 67,979 5.10% R-54 Residential Property 38 units 89,300 54,492 4.09% R-55 Residential Property 87 units 278,400 157,296 11.81% R-56 Residential Property 75 units 195,000 115,800 8.70% R-57 Residential Property 94 units 216,200 132,728 9.97% R-58 Residential Property 60 units 192,000 108,480 8.15% R-59 Residential Property 91 units 236,600 140,505 10.55% TOTAL 845 units $1,331,788 100.00% 2. Calculation of Required Average Special Tax Per Unit/Acre At the time the first building permit application for a Planning Area is submitted to the City, the CFD Administrator shall calculate the Required Average Special Tax Per Unit/Acre. 3. Backup Special Tax due to Loss of Units/Acres If at any time after the Required Average Special Tax Per UniffAcre has been calculated initially for a Planning Area, the CFD Administrator determines that based on tentative maps, Final Residential Subdivision maps, the Development Projection, and any other available information there has been a reduction in the total expected number of dwelling units or non-residential Acres within that Planning Area, then a Backup Special Tax payment shall be required for each lost unit or Acre prior to the issuance of any additional building permits or the recordation of any additional final maps for such Planning Area. 4. Backup Special Tax due to Loss of Residential Floor Area For Planning Areas that include Residential Property, before each building permit (or group of permits) is issued, the CFD Administrator shall calculate the Actual Average Special Tax Per Unit for the Planning Area. If the Actual Average Special Tax Per Unit is less than the Required Average Special Tax Per Unit then a Backup Special Tax payment will be required prior to issuance of the building permit(s) included within the calculation. A-11 DOCSOC\g36206vSL222450120 EXHIBIT 9 5. Calculation of Backup Special Tax The Backup Special Tax payment amount will be calculated using the prepayn3ent formula described in Semi_on 1.1, with the following exceptions: (i)if the Backup Special Tax is required as a result of Section E.3, then the amount used in Paragraph No. I of the prepayment formula described in Section 1.1 shall equal the number of lost units or Acres, as applicable, times the Required Average Special Tax Per UniffAcre. In the event Residential Prope~y as identified in Tables 4, 5, and 6 is rezoned in whole or part to non-residential property, the CFD Administrator shall determine the Maximum Annual Special Tax revenue by using the Developed Property rates applicable to such non-residential property and the amount so derived shall be applied as a reduction to the amount determined in the preceding sentence; (ii) if the Backup Special Tax is required as a result of Section E.4, then the amount used in Paragraph No. 1 of the prepayment formula described in Section 1.1 shall equal the difference between the Actual Avgrage Special Tax Per Unit and the Required Average Special Tax Per Unit times the sum of the number of units for which permits are being issued plus the number of units within the Planning Area for which building permits have previously been issued. The amount determined pursuant to the preceding sentence shall be reduced by the balance in the Backup Special Tax Fund that has been established for such Planning Area; (iii) in Paragraph No. 7 of the prepayment formula described in SecfionI. 1, compute the amount needed to pay interest on the Bond Redemption 'Amount until the first re&nnption date that occurs after five years from the date of the first Backup Special Tax payment in the Planning Area; (iv) any Backup Special Tax payments received for a Planning Area (less Administrative Fees and Expenses) shall be deposited into the Backup Special Tax Fund for that Planning Area and disbursed pursuant to the Indenture; and (v) the Maximum Annual Special Taxes applicable to property within a Planning Area shall not be reduced or relieved as a result of payment of the Backup Special Tax. 6. Use/Release of Backup Special Tax Payments When a Planning Area reaches full buildout (i.e., all expected building permits have been issued), the CFD Administrator shall calculate the actual Developed Property Maximum Annual Special Tax revenues that will be generated from such Planning Area. If the actual Developed Property Maximum Annual Special Tax revenues are greater than or equal to 1.1 times that Planning Area's Share of Annual Debt Serv/ce, the balance in the Backup Special Tax Fund shall be returned to the payer. If Backup Special Taxes have been paid by more than one entity, the amount of Backup Special Taxes returned to each payer shall be in proportion to the amount paid by each entity. If the actual Developed Property Maximum Annual Special Tax revenues are less than 1.1 times that Planning Area's Share of Annual Debt Service, then to the extent necessary to generate 110% coverage, the balance in the Backup Special Tax Fund shall be used to redeem bonds on the next available redemption date. Any moneys remaining in Backup Special Tax Fund shall be returned to the payer. If a Planning Area has not reached full buildout within five years after the first payment of Backup Special Taxes for such Planning Area, then all moneys in the Backup Special Tax Fund shall be used to redeem bonds on the next available redemption date. A-12 (.~ , DOCSOC\836206vS~_2245.0120 EXHIBIT 9 F. EXEMPTIONS No Special Tax shall be levied on: up to 517.5 Acres of Property Owner Associalion Property and Public Property. Tax_:exempt status will be irrevocably assigned by the C_FD Administrator in the chronological order in which property becomes Property Owner Association Property or Public Property. After the limit of 517.5 exempt Acres has been reached, the Maximum Annual Special Tax obligation for any additional Public Property shall be prepaid in full pursuant to Section J. 1, prior to the transfer/dedication of such property. Until the Maximum Annual Special Tax obligahon for any such property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Undeveloped Property. Taxable Property Owner Association Property shall be subject to the levy of the Special Tax Underdeveloped Property and shall be taxed Proportionately as part of the third step in Section D above, at up to 100% of the Maximum Annual Special Tax for Taxable Property Owner Association Property. G. REVIEW/APPEAL COMMITTEE The Council shall establish as part of the proceedings and administration of CFD No. 99-1 a special three-member Review/Appeal Committee. Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error may file a written notice with the Review/Appeal Committee appealing the amount of the Special Tax levied on such Assessor's Parcel. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of thc Special Tax and any landowner or resident appeals as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. H. MANNER OF COLLECTION The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 99-1 may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Assessor's Parcels, which are delinquent in the payment of Special Taxes. Tenders of Bonds may be accepted for payment of' Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. I. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section I: "CFD Public Facilities means either $31.6 million 1999 dollars, which shall increase by the Construction Inflation Index on July 1, 2000, and on each July 1 thereafter, or such lower number as (i)shall be determined by the CFD Administrator as sufficient to provide the A-13 ,~ , r ~' DOCSOC\836206vS~22245 0120 EXHIBIT 9 public facilities under the authorized bonding program for CFD No. 99-1, or (ii) shall be determined by the Council concurrently with g covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. __ "Construction Fund" means an account specifically identified in the Indenture to hold funds that are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the annual pementage change in the Engineering News-Record Building Cost Index for the City of Los Angeles, measured as of the calendar year, which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering New-Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds as de£med in Section A, minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment, and minus public facilities costs paid directly with Special Taxes. "Outstanding Bonds" means all previously issued Bonds, which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayment of Maximum Annual Special Taxes. 1. Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied by an Assessor's Parcel of Developed Property, Undeveloped Property for which a building permit has been issued, or Public Property. The Maximum Annual Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the th-ne of prepayment. An owner of an Assessor's Parcel intending to prepay the Maximum Annual Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. DOCSOC\836206v5L22245.0120 ~ EXHIBIT 9 The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Red_em__ption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: 1. For Assessor's Parcels of Developed Property, compute the Maximum Annual Special Tax for the Assessor's Parcels to be prepaid. For Assessor's Parcels of Undeveloped Property to be prepaid, compute the Maximum Annual Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit, which has already been issued for that Assessor's Parcel. For Assessor's Parcels of Public Property to be prepaid, compute the Maximum Annual Special Tax for that Assessor's Parcel. 2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Special Tax revenues in Tables 4, 5, and 6 in Section E, excluding any Assessor's Parcels, which have been prepaid. 3. Multiply the quotient computed pursuant to paragraph 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount "). 4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium "). 5. Compute the Future Facilities Costs. 6. Multiply the quotient computed pursuant to paragraph 2 by the amount determined pursuant to paragraph 5 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount "). 7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 8. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. A-15 DOCSOC\836206vS~22245.0120 EXHIBIT 9 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year, which have not yet been paid.. 10. Compute the minimum a..m_.qount the CFD Administrator reasonably expects to d~rive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. I 1. Add the amounts computed pursuant to paragraphs 7 and 9, and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount "). 12. Verify the administrative fees and expenses of CFD No. 99-1, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs · of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses "). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirements (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 2 by the expected balance in the capitalized interest fund after such flint interest and/or principal payment (the "Capitalized Interest Credit "). 15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 6, 11, and 12, less the amounts computed pursuant to paragraphs I3 and 14 (the "Prepayment Amount"). 16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 11, 13, and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 6 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 99-1. The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special A-16 (i~ DOCSOC\$36206vS~222aS.0120 EXH1BIT 9 Tax levy for such Assessor's Parcel fi.om the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Board.shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release o£the Special Tax lien on such Assess~r'_~s Parcel, and the obligation of such Assessor's Parc~l to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within CFD No. 99-1 both prior to and after the proposed prepayment is at least 1.I times _the maximum annual debt service on all Outstanding Bonds. Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. 2. Prepayment in Part The Maximum Annual Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section 1.1; except that a partial prepayment shall be calculated according to the following formula: PP=PsxF These terms have the following meaning: PP = the partial prepayment Ps = the Prepayment Amount calculated according to Section I. 1. F -- the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by which the Maxtmum Annual Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Annual Special Tax for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Paragraph 16 of Section 1.1, and (ii) indicate in the records of CFD No. 99-1 that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. DOCSOC\836206v5L22245.0120 '~ EXHIBIT 9 J. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 1999-2009 to the extent necessary to fully satis~y_~he Special Tax Requirement for a period no longer t_han the 2034-2035 Fiscal Year. DOCSOC\836206v5~_22450120 / *1' EXHIBIT 9 APPENDIX B SUMMARY OF MARKET 3~BSORPTION STUDY DOCSOC\836206v5E22245.0120 [ EXHIBIT 9 APPENDIX C APPRAISAL REPORT DOCSOC\g36206vS~22245,0120 C-1 C~ f~t EXHIBIT 9 APPENDIX D INFORMATION REGARDING THE CITY OF CHULA VISTA GENERAL INFORMATION This appendLr sets forth general information about the City of Chula Vista ("Chula Vista ') including information with respect to its finances. The following information concerning Chula Vista, the County of San Diego (the "County"), the State of California (the "State") and the United States of America (the "United States '') are included only for general background purposes. General Description Chula Vista is located on the 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 has a Mediterranean climate with temperatures in the high 80's in the summer months and mid 70's in the winter months. Chula Vista was incorporated March 17, 1911 and became a chartered city in 1949. Chula Vista operates under a Council-Manager form of government and provides the following services: public safety, community services, engineering services, planning services, public works, general admimstrative services and capital improvements. With a January 2001 estimated population of 183,300, Chula Vista is the second largest city in the County. Population The historic population of Chula Vista, the County and the State is shown below. City of Chula Vista, County of San Diego and State of California Population Estimates Year City of Chula Vista County of San Diego State of Califomia 1995 149,800 2,658,600 31,910,000 1996 152,700 2,682,100 32,223,000 1997 156,400 2,729,100 32,670,000 1998 162,100 2,795,800 33,226,000 1999 167,100 2,855,900 33,766,000 2000 174,400 2,835,400 34,207,000 2001 183,300 2,883,600 34;818,000 Note: Years 1995 through 1999 population estimates were calculated with 1990 U.S. Census data and Years 2000 and 2001 population estimates were calculated with 2000 U.S. Census data. Source: California State Department of Finance, Historical City/County Population Estimates 1991-2000, with 1990 Census Counts and E-1 City/County Population Estimates, with Annual Percent Change, January 1, 2000 and 2001. D-1 t t DOCSOC\836206v5\22245.0t 20 EXHIBIT 9 Building Activity Residential building activity for the past five calendar years for Chula Vista is shown in the folio_wing tables. City of Chula Vista New Housing Units Building Permits 1996 1997 1998 1999 2000 2001 m Single Family Units 871 927 1,180 1,796 1,776 1,240 Multifamily Units 77 123 166 750 864 547 Total Un/ts 948 1,050 1,346 2,546 2,640 1,787 o) Figures are through June, 2001. Source: Construction Industry Research Board. City of Chula Vista Building Permit Valuations (Dollar Volume in O00's) 1996 1997 1998 1999 2000 2001°) Residential New Single Family $145,991 $155,849 $214,986 $307,653 $319,086 $233,327 New Multifamily 7,093 11,075 11,452 53,470 74,634 47,187 Res. Alt. & Adds 5,744 6,439 5,391 5,085 4,863 3,519 Total Residential 158,829 173,364 231,829 366,209 398,583 283,972 Nonresidential NewConmqercial $ 747 $ 10,954 $ 17,432 $ 11,213 $ 17,916 8 12,946 New Industrial 142 0 5,581 7,909 17,418 1,709 New Other12) 2,165 6,104 11,483 5,840 17,890 6,265 Alters. & Adds. 7,868 9,036 12,783 13,552 10,527 6,715 Total Non- 10,923 26,095 47,280 38,516 63,752 27,635 Residential Total All Building $169,753 $199,459 $279,110 $404,725 $462,335 $311,606 Figures are through June, 2001. Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and no-residential alterations and additions. Note: "Total All Building" is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sums because of independent rounding. Source: Construction Industry Research Board. D-2 d?~./ EXHIBIT 9 DOCSOC\836206v5L22245.0120 Employment The following table summarizes the l~bor force, employment and unemployment figures over-the period 1996 through 2000 for Chula Vista, theGoun~y, the State and the Umted States. - Chula Vista, County of San Diego, State of California and United States Labor Force, Employment and Unemployment Yearly Average Civilian Civillan Civilian Civilian Year and Area Labor Force Employment{~ Unemployment(2~ Unemployment Ra~e13~ 1996 Chula Vista 65,090 61,470 3,620 5.6% County 1,241,300 1,I 75,900 65,400 5.3% State 15,511,600 14,391,500 1,120,100 7.2% United States 133,943,000 126,708,000 7,236,000 5.4% 1997 Chula Vista 67,340 64,340 3,010 4.5% County 1,285,100 1,230,800 54,300 4.2% State 15,947,300 14,942,500 1,004,700 6.3% United States{4> 136,297,000 129,558,000 6,739,000 5.0% 1998 Chula Vista 69,200 66,630 2,570 3.7% County 1,321,000 1,274,600 46,400 3.5% State 16,323,900 15,355,600 968,200 5.9% United States® 137,673,000 131,463,000 6,210,000 4.5% 1999 Chula Vista 71,300 68,980 2,320 3.3% County 1,361,600 1,319,600 42,000 3.1% State 16,585,900 15,721,700 864,200 5.2% United States14~ 139,368,000 133,488,000 5,580,000 4.2% 2000 Chula Vista 73,570 71,240 2,330 3.2% County 1,4IM, 100 1,362,100 42,000 3.0% State 17,090,800 16,245,600 845,200 4.9% United States(sI 140,863,000 135,208,000 5,655,000 4.0% Includes persons involved in labor-management trade disputes. 12) Includes ail persons without jobs who are actively seeking work. 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. (5/ Beginning in January 2000, data are not strictly comparable with data for 1999 and earliex years because of the revisions in the population con~-ols used m the household survey. Source: California Employment Development Department, based on March 2000 benchmark and U.S. Depam-nent of Labor, Bureau of Labor Statistics. DOCSOC\836206v5N22245 0120 EXHIBIT 9 San Diego Metropolitan Statistical Area ("MSA"), which includes Chula Vista, civilian labor force and wage and salary employment figures for calendar years 1996 through 2000 are shown in the following table. These figares are county-wide statistics and may not necessarily accurately reflect employment trends_ in Chula Vista. San Diego MSA Civilian Labor Force, Employment and Unemployment Annual Averages, March 2000 Benchmark 1996 1997 1998 1999 2000 - Civilian Labor Force°) 1,241,200 1,285,100 1,321,000 1,361,600 1,404,900 Employment 1,175,000 1,230,800 1,274,600 1,319,600 1,362,900 Unemployment 65,300 54,300 46,400 42,000 42,000 Unemployment Rate 5.3% 4.2% 3.5% 3.1% 3.0% Wage & Salary Employment® Total, All Industries 1,017,200 1,065,000 1, I 16,100 1,164,100 1,208,300 Agricultural, Forestry, and 11,000 10,800 10,600 I 1,200 11,900 Fisheries Non-Agricultural 1,006,200 1,054,200 1,105,500 1,152,900 1,196,500 Mining 400 400 300 300 400 Construction 45,500 53,000 61,800 67,000 70,400 Manufacturing 117,500 123,100 127,600 128,100 129,700 Transportation & public utilities 38,300 41,600 47,000 51,300 50,900 Wholesale trade 42,700 45,600 48,300 50,300 52,300 Retail trade 193,200 198,400 20 I, 100 206,100 215,500 Finance, insurance & real estate 57,400 60,900 65,300 68,700 69,800 Services 321,200 339,300 359,600 381,700 400,600 Government 190,100 192,000 194,500 199,300 206,800 Note: The "Total, All Industries" data is not directly comparable to the employment data found herein. o) Based on place of residence. (21 Based on place of work. Source: State of California, Employment Development Department, San Diego MSA Annual Average Labor Force and Industry Employment, March 2000 Benchmark. D-4 DOCSOC\836206vS~22245.0120 EXHIBIT 9 The following listings set forth Chula Vista's Major Employers by Business Industrial/Office, Government and Retail based industries: Chula Vi~ta's Major Employers (Businesses-with 150 or more Employees) - Business Industrial/Office No. of Name Type of Business Employees BF Goodrich Aerospace Aerostructures Group Aerospace Manufacturer 2,075 Sharp Chula Vista Medical Center Hospital 800 Scripps Memorial Hospital Hospital 650 White Water Canyon Amusement Park 500 American Fashion Inc. Clothing Manufacturer 500 Sunrise Medical lnc. Medical Offices 450 Eco Building Systems Modular Building Manufacturer 210 American Manufacturing Concepts Clothing Manufacturer 200 Coastal Embroidery Specialty Manufacturer 200 Sharp Rees-Stealy Medical Group Medical Offices 200 Fredericka Manor Care Center Day Care Service 200 MDI Interviewing Services Inc. Management Consulting Service 200 Pacific Waste Services Inc. Sanitary Waste Service 200 Hyspan Precision Products Inc. Fabricated Metal Manufacturer 200 Raytheon Systems Electrical Manufacturer 200 Fmdericka Manor Retirement Community Elderly Care Facility 171 South Bay Community Services Social Service Agency 160 Crower Cams & Equipment Inc. Motor Vehicle Part Manufacturer 160 Navcare Hospital 150 Community Health Group Medical Offices 150 Government No. of Name Type of Business Employees United States Border Patrol Government Agency 2,700 Southwestern Community College Community College 1,100 City of Chula Vista Municipal Government 825 Department of Social Services Social Service Agency 300 Sweetwater Union High School District Secondary School District 260 United States Postal Service Government Agency 150 Feaster Edison Charter School Elementary School 150 Chula Vista Elementary School District Elementary School District 150 Retail No. of Name Type of Business Employees Sears Department Store 360 Price Costco General Merchandise 250 Macy's Department Store 250 Big Kmart General Merchandise 200 Fuller Honda Automotive Retailer 200 Target Stores General Merchandise 180 J C Penney Department Store 150 Vons Grocery Store 150 Fuller Ford Automotive Retailer 150 Source: City of Chula Vista DOCSOC\836206v5~22245.0120 EXHIBIT 9 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 "~ft~r-mx" income. Personal income is the aggregate of wagas-and salaries, othe~ than labor-related income (such as employer con~butions to private pension funds), proprietor's income, rantal income (which includes imputed rental income of owner-occupants of non-froTh dwellings), dividends paid by corporations, interest income from all sources and txansfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax payments, fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." Chula Vista, County of San Diego and State of California Effective Buying Income(t) Median Effective Per Capita Household Percent of Buying Effective Effective Households lncomem Buying Income Buying Income over $50,000 1996 Chula Vista $ 2,092,373 $I3,201 $32,128 26.9 County 40,913,543 14,975 34,445 29.9 State 492,516,991 15,068 35,216 31.7 1997 Chula Vista $ 2,217,170 $13,762 $33,267 28.9 County 43,212,824 15,619 35,725 31.7 State 524,439,600 15,797 36,483 33.5 1998 Chula Vista $ 2,408,888 $14,187 $33,911 30.1 County 46,056,143 16,101 36,296 32.8 State 551,999,317 16,299 37,091 34.6 1999 Chula Vista $ 2,629,899 $15,776 $37,725 35.4 County 49,907,828 17,270 39,213 37.4 State 590,376,663 17,245 39,492 38.3 o) 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 Buy/ng Power," Sales & Marketing Management Magazine, dated 1997, 1998, 1999 and 2000. Sales Taxes The following table shows taxable transactions in Chula Vista by type of business during calendar years 1995 through the second quarter of 2000. As indicated below, total retail sales for Chula Vista in 1996 increased by approximately 6.5% over the 1995 level, in 1997 increased by approximately 7.1% over the 1996 level, in 1998 increased by approximately 8.8% over the 1997 level, and in 1999 increased approximately 10.3% over the 1998 level. DOCSOC\836206vS'~2245 0120 EXHIBIT 9 A summary of historic taxable transactions for Chula Vista is shown in the folloxving table. CiD' of Chula Vista Taxable Transactions (15o~llars in thousands) Retail Stores Total Outlets Calendar Year Permits Taxable Transactions pernuts Taxable Transactions 1995 1,553 $ 928,341 3,364 $1,063,911 1996 1,594 987,211 3,40I 1,133,092 - 1997 1,643 1,042,195 3,507 1,213,423 1998 1,644 1,120,534 3,535 1,320,195 1999 1,738 1,240,992 3,619 1,456,388 2000(~) 1,781 647,278 3,640 747,888 (~> Figures are as of the Second Quarter of 2000. Source: California State Board of Equalization. Education Public educational instruction fi.om kindergarten through high school is prov/ded by the Chula Vista Elementary School District and Sweetwater Union High School District. These districts administer twenty-six elementary schools, nme junior high schools and eight senior high schools. Southwestern College, a two year Community 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 fi.om 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 die Olympic Training Center. Community Facilities There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doctors and allied professionals in Chula Vista. There are two daily, one weekly and one semi-weekly newspapers published and circulated in Chula Vista. Chula Vista has one main public library and two branch libraries. Recreational facilities within or near Chula Vista include twenty-four parks, four community centers, six "tot lots," two ball fields, twenty-eight tennis courts, three golf courses, four municipal swimming pools, two gymnasiums and boat launching facilities. Chula Vista's bayfi-ont area contains two harbor marinas which houses 552 boats and miles of public beaches. Chula Vista also provides many miles of pedestrian, biking and equestrian trails. Chula Vista is also the home of the ARCO Olympic Training Center, the nation's first warm-weather, year round permanent Olympic Center. This is the third such training center in the nation and the only year round training facility. The center is located on a 150-acm site donated by EastLake Development Company adjacent to the Otay Lake reservoir. Chula Vista is also the home to the Coors Amplfitheatre. The Coors Amphitheatre is located just 17 minutes from downtown San Diego and is the area's first major concert facility designed specifically for music. Coors Amphitheatre is an outdoor performing arts theatre with reserved seating for 10,000 and addihonal seating for 10,000 on an attractively landscaped lawn. Chula Vista has more than sixty churches and nearly I00 service, fi.atemal and civic organizations. DOCSOC\836206v5~22245.0120 ~ EXHIBIT 9 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 l~iego Trolley, a light mil system started m 1981 an3 e~Ieven bus mutes serve Chula Vista. Daily bus connections serve Chula Vista, and Southern Pacific Railway and San Diego's Lindbergh International Airport are fifteen minutes to the north of Chnla Vista. Utilities Electric power and natural gas are provided by San Diego Gas and Electric. Pacific Bell provides telephone service to the area. Otay Water District and Sweetwater Water District provide water service and Chula Vista provides sewer service. D-8 DOCSOC\836206vS~22245 0120 EXHIBIT 9 APPENDIX E SUMMARY OF INDENTURE DOC SOC\836206v5L22245.0120 ~ EXHIBIT 9 APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF TIlE DISTRICT This Continuing Disclosure Agreement dated as of (the "Disclosure Agreement") is executed and delivered by the City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "Issuer") and , as fiscal agent (the "Fiscal Agent") and as dissemination agent (the "Dissemination Agent"), in connection with the issuance and delivery, by the Issuer of its $ 2001 Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of (the "Indenture"), by and between the Issuer and the Fiscal Agent. The Issuer, the Fiscal Agent and the Dissemination Agent covenant as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer, the Fiscal Agent and the Dissemination Agent, for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes. "Disclosure Representative" shall mean the Director of Finance of the City of Chula Vista or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time. "Dissemination Agent" shall mean, initially, U.S. Bank Trust National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designed in writing by the Issuer and which has been filed with the then current Dissemination Agent a written acceptance of such designation. "Listed Events" shall mean any of th6 events listed in Section 5(a) of this Disclosure Agreement. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purpose of the Rule. "Official Statement" shall mean the Official Statement, dated , relating to the Bonds. DOCSOC\836206v5~22245.0120 ' EXHIBIT 9 "Participating Underwriter" shall mean Stone & Youngberg LLC, whose address for purposes of this Agreement is 50 California Street,. Suite 3500, San Francisco, California 94111, Attention: Research Department. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by 'the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. "Tax-exempt" shall mean that interest on the Bonds is excluded from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preferences or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax. SECTION 3. Provision of Annual Reports. (a) The Issuer shall, or shall cause the Dissemination Agent by written direction to such Dissemination Agent to, not later than February 1 after the end of the Issuer's fiscal year (which currently ends on June 30), commencing with the report due by February I, 2002, provide to each Repository and the Participating Underwriter an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report. An Annual Report shall be provided at least annually notwithstanding any fiscal year longer than 12 calendar months. The Issuer's fiscal year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The Issuer will promptly notify each Repository or the Municipal Securities Rulemaking Board and, in either case, the Fiscal Agent and the Dissemination Agent of a change in the fiscal year dates. (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Issuer shall provide the Annual Report to the Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the Dissemination Agent). If by fifteen (15) Business Days prior to such date the Fiscal Agent has not received a copy of the Annual Report, the Fiscal Agent shall contact the Issuer and the Dissemination Agent to determine if the Issuer is in compliance with subsection (a). The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Fiscal Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report. F-2 fi~ DOCSOC\836206vS~22245 0120 ~ EXH1B IT 9 (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and (ii) promptly after receipt of the Annual Report, file a report with the Issuer and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The initial Annual Report due by February 1, 2000 shall include only a copy of the Official Statement and the audited financial statements of the Issuer described in Section 4(a) below. Thereafter, the Issuer's Annual Report shall contain or include by reference: (a) Financial Statements. The audited financial statements of the Issuer for the most recent fiscal year of the Issuer then ended. If the Issuer prepares audited financial statement and if the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the Issuer in a format similar to the financial statements, and the audited financial statements shall be filed in the same manner as the Aimual Report when they become available. Audited financial statements of the Issuer shall be audited by such auditor as shall then be required or permitted by State law or the Indenture. Audited financial statements, if prepared by the Issuer, shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that the Issuer may from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the Issuer shall modify the basis upon which its financial statements are prepared, the Issuer shall provide a notice of such modification to each Repository, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis. (b) Financial and Operatin~ Data. The Annual Report shall contain or incorporate by reference the following information: (i) the principal amount of Bonds outstanding as of the September 2 preceding the filing of the Annual Report; (ii) the balance in each fund under *.he Indenture and the Reserve Requirement as of the September 2 preceding the filing of the Annual Report; (iii) an update on the status of construction of the public improvements to be constructed with the proceeds of the Bonds, which shall include an update of Table 1 in the Official Statement; DOCSOC\836206v5L22245 0120 ~ ~ EXHIBIT 9 (iv) any changes to the Rate and Method of Apportionment of the Special Taxes approved or submitted to the qualified electoys for approval prior to the filing of the Annual Report and a description of any parcels for which the Special Taxes have been prepaid irt the Fiscal Year for which the Annual_R_.eport is being prepared; (v) an update of the estimated assessed value-to-lien ratios within the District substantially in the form of Table 6 in the Official Statement based upon the most recent Special Tax levy preceding the date of the Annual Report and on the assessed values of property for the current fiscal year; provided, however, that all parcels which constitute Developed Property may be grouped as a single category; (vi) an update of Table 2 in the Official Statement, including a list of all taxpayers within the District which own property in the District upon which 5% or more of the total Special Taxes for the current fiscal year have been levied, and a statement as to whether any of such taxpayers is delinquent in the payment of Special Taxes; (vii) any event known to the Issuer which reduces or slows the number of residential units permitted to be constructed within the District or which results in a moratorium on future building within the District; (viii) the status of any foreclosure actions being pursued by the Issuer with respect to delinquent Special Taxes; (ix) the total Special Taxes levied and the total Special Taxes collected for the prior fiscal year and the total Special Taxes that remain unpaid for each prior fiscal year in which Special Taxes were levied; and (x) any information not already included under (i) through (ix) above that the Issuer is required to file in its annual report to the California Debt and Investment Advisory Commission pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended. (c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been subrrfitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) principal and interest payment delinquencies. (2) an event of default under the Indenture other than as described in (1) above. DOCSOC\836206v5~22245 0120 / ~ · EXHIBIT 9 (3) unscheduled draws on the Reserve Fund reflecting financial difficulties. (4) unschedul_ed__draws on any credit enhancements securing the B~_nds reflecting financial difficulties. (5) any change in the provider of any letter of credit or any municipal bond insurance policy securing the Bonds or any failure by the providers of such letters of credit or municipal bond insurance policies to perform on_the letter of credit or municipal bond insurance policy. (6) adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds. (7) modifications to the rights of Bond Owners. (8) unscheduled redemption of any Bond. (9) defeasances. (10) any release, substitution, or sale of property securing repayment of the Bonds. (11) rating changes. (b) The Fiscal Agent shall, promptly upon the obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Issuer pursuant to the Indenture, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f). For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by the officer at the corporate trust office of the Fiscal Agent with regular responsibility for the administration of matters related to the Indenture. (c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Fiscal Agent pursuant to subsection (b) or otherwise, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If the Issuer has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). (e) If in response to a request under subsection (b), the Issuer determines that the Listed Event would not be material under applicable federal securities laws, the Issuer shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f). (f) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with (i) the Municipal Securities Rulemaking Board or (ii) each National Repository, and in either case, to each F-S ) DOCSOC\836206v5~22245.0120 f EXHIBIT 9 State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affe~ed Bonds pursuant to the Indenture. In each case of_the Listed Event, the Dissemination Agent ~s!3~ll not be obligated to file a notice as required in_this subsection (f) prior to the occurrence of such Listed Event. (g) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Issuer and that the Fiscal Agent or the Dissemination Agent shall not be responsible for determining whether the Issuer's instructions to the Dissemination Agent under ~his Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. The obligation of the Issuer, the Fiscal Agent and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5. SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Fiscal Agent shall be the Dissemination Agent. The initial Dissemination Agent shall be U.S. Bank Trust National Association. The Dissemination Agent may resign by providing (i) thirty days written notice to the Issuer and the Fiscal Agent and (ii) upon appointment of a new Dissemination Agent hereunder. SECTION 8. Amendment. (a) This Disclosure Amendment may be amended, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law (including rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of the Issuer or the type of business conducted thereby, (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (3) the Issuer shall have delivered to the Fiscal Agent an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the Issuer and the Fiscal Agent, to the same effect as set forth in clause (2) above, (4) the Issuer shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the Issuer, to the effect that the amendment does not materially impair the interests of the Owners or Beneficial Owners, and (5) the Issuer shall have delivered copies of such opinion and amendment to each Repository. (b) This Disclosure Agreement may be amended, by written agreement of the parties, upon obtaining consent of Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of the Owners of the Bonds, provided that the conditions set forth in Section 8(a)(1), (2) and (3) have been satisfied. (c) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the DOCSOC\836206v5~22245.0120 ~ ~EXHIBIT 9 · first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change. (d) If an amendment is made.to__the basis on which financial statements are prepared,-the · Annual Report for the year in which the change is made shall present a comparison between-the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation, of the financial information. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice if occurrence of a Listed Event. The Issuer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Issuer under such laws. SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Participating Underwriter or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer or the Fiscal Agent to comply with this Disclosure Agreement shall be an action to compel performance. SECTION 11. Duties, Immunities and Liabilities of Fiscal Agent and Dissemination Agent Article VII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture and the Dissemination Agent and the Fiscal Agent shall be entitled to the same protections, limitations from liability and indemnification hereunder as are afforded the Fiscal Agent thereunder. The Dissemination Agent and the Fiscal Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and the Fiscal Agent and their respective officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or the Fiscal Agent's respective negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule DOCSOC\g36206vSX22245.0120 } EXHIBIT 9 of fees as amended from time to time and all expenses, legal fees and advances made or incurred by · the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Fiscal Agent shall have no duty or obligation to review any information provided to them hereunder. The obligations of the Issuer_!~der this Section shall survive resignation or removal of the Dissemination Agent and Fiscal Agent and payment of the Bonds. No person shall have any right to commence any action against the Fiscal Agent or the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent and the Fiscal Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Agreement. SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 13. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing. Disclosure Representative: Director of Finance City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Dissemination Agent: Fiscal Agent: F-8 DOCSOC\836206vSL22245.0120 ~ EXHIBIT 9 SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) By: Director of Finance U.S. BANK TRUST NATIONAL ASSOCIATION, as Fiscal Agent and Dissemination Agent By: Authorized Officer F-9 DOCSOC\836206vS~22245.0120 EXHIBIT 9 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One Wes0 Name of Bond Issue: City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One W~st) $ 2001 Special Tax Bonds Date of Issuance: August __, 2001 NOTICE IS HEREBY GIVEN that the City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) located in the City of Chula Vista, California (the "District") has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement, dated as of , by and between the District and U.S. Bank Trust National Association, as fiscal agent and dissemination agent. [The District anticipates that the Annual Report will be filed by .] Dated: U.S. Bank Trust National Association, as Dissemination Agent cc: City of Chula Vista Stone & Youngberg LLC F-10 DOCSOC\836206v5k22245.0120 EXHIBIT 9 APPENDIX G CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER This Continuing Disclosure Agreement (the "Disclosure Agreement") dated as of is executed and delivered by Otay Project L.P., a California limited partnership, and Otay Project, LLC, a California limited liability company (collectively, the "Developer"), and U.S~ Bank Trust National Association, as fiscal agent (the "Fiscal Agent") and as dissemination agent (the "Dissemination Agent"), in connection with the execution and delivery by City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) (the "District") $ aggregate principal amount of its 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 (the "Bonds"). The Bonds are being executed and delivered pursuant to an Indenture dated as of by and between the District and U.S. Bank Trust National Association, as Fiscal Agent (the "Agreement"). The Developer covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Developer for the benefit of the Bondowners and Beneficial Owners and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Pursuant to this Disclosure Agreement, the Developer agrees to provide the information required to be provided by the Developer under the Rule at the time and in the manner required by the Rule. This Disclosure Agreement does not address additional undertakings, if any, by or with respect to persons other than the Developer who may be considered obligated persons or purposes of the Rule, which additional undertakings, if any, may be required for the Participating Underwriter to comply with the Rule. SECTION 2. Definitions. In addition to the definitions set forth in the Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Affiliate" shall mean, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially or as an agent, guardian or other fiduciary, twenty-five percent (25%) or more of any class of Equity Securities of such Person, (b) each Person that controls, is controlled by or is under common control with such Person, or (c) each of such Person's executive officers, directors, joint venturers and general partners; provided, however, that in no case shall the District be deemed to be an Affiliate of the Developer for purposes of this Agreement. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. "Annual Report" shall mean any Annual Report provided by the Developer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). DOCSOC\836206v5L22245.0120 EXHIBIT 9 "Dissemination Agent" shall mean U.S. Bank Trust National Association, acting in its capacity as Dissemination Agent hereunder, or any. successor Dissemination Agent designated in writing by the Developer and which has filed with the Developer and the City a written acceptance of such designation. "District" shall mean City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West). "Equity Securities" of any Person shall mean (a)all common stock, preferred stock, participations, shares, general parmership interests or other equity interests in and of such per'son (regardless of how designated and whether or not voting or non-voting) and 0o) all warrants, options and other rights to acquire any of the foregoing. "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30. "Govemment Authority" shall mean any national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Official Statement" shall mean the Official Statement, dated , relating to the Bonds. "Participating Underwriter" shall mean Stone & Youngberg LLC, the original underwriter of the Bonds, whose address for purposes of this Agreement is 50 California Street, Suite 3500, San Francisco, California 94111, Attention: Reseamh Department, and any other underwriting firm that provides written notice to the Developer that it is required to comply with the Rule in connection with the offering of the Bonds. "Person" shall mean any natural person, corporation, limited liability company, partnership, firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity. "Repository" shall mean each National Repository and the State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of California. "State Repository" shall mean any public or private repository or entity designed by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. DOCSOC\836206v5k22245.0120 EXH1BIT 9 SECTION 3. Provision of Annual Reports~. (a) The Developer shall, or shall cause the Dissemination Agent to, not later Ihan Febmary 1 of each year, commencing Feb__maW 1, 2002, provide to each Repository, the District_and to Stone & Youngberg LLC an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement provided that the audited financial statements, if any, of the Developer may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report if they are not available by that date. (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Developer shall provide the Annual Report to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Developer is preparing, or causing to be prepared, the Annual Report and the date which the Annual Report is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Annual Report or notification as described in the preceding sentence, the Dissemination Agent shall contact the Developer to determine if the Developer is in compliance with the first sentence of this subsection (b). (c) If the Dissemination Agent is unable to provide an Annual Report to Repositories by the date required in subsection (a) or to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and the State Repository, if any; and (ii) file a report with the Developer and the District certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Report. The Developer's Annual Report shall contain or include by reference the information which is available as of April 1 of each year relating to the following: a. An update to the section in the Official Statement entitled "THE DEVELOPMENT AND PROPERTY OWNERSHiP" (excluding the subsections entitled "Appraisal" and "Market Absonption Study") including an update of the tables therein and a discussion of the sources of funds to finance development relating to its property within the District, and whether any material defaults exist under any loan arrangement related to such financing. b. A summary of development activity within the District, including the number of parcels for which building permits have been issued, the number of parcels for which certificates of occupancy have been issued, the number of parcels for which sales G-3 '? DOCSOC\836206v5~22245.0120 ~ EXHIBIT 9 have closed, and land or lot sales including the amount of land or lots sold and the name of the purchaser of lots to be deyeloped. c. Status of any material go, e__mmentally-imposed preconditions for commencement or continuation of development of the undeveloped parcels within the District known to the Developer. d. Status of any material legislative, administrative and judicial challenges known to the Developer to or affecting the construction of the development or the time for construction of any public or private improvements to be made by the Developei' or any of its Affiliates within the District, other than the public improvements described in (e) below (the "Developer Improvements"). e. Status of completion of the public improvements financed by the Bonds and any material legislative, administrative and judicial, challenges known to the Developer to or affecting the construction of such public improvements (the "District Improvements"). f. Any material amendments to land use entitlements with respect to undeveloped parcels within the District that are known to the Developer, including an update of the total acres subject to the levy of Special Taxes if the amendment affects the total number of acres subject to the levy of the Special Taxes. · g. Until such time as the Developer and its Affiliates no longer own land within the ~ District which is responsible for 20% or more of the annual Special Tax levy, unaudited financial statements of the Developer and its Affiliates and, if prepared, audited financial statements of each of such entities for its most recently completed fiscal year (which currently ends on each December 31), prepared in accordance with generally accepted accounting principles as promulgated to apply to private entities fi.om time to time by the Financial Accounting Standards Board. If the Developer has audited financial statements prepared and the audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements for the preceding year, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. h. The filing of any lawsuit against the Developer or otherwise known to the Developer which will materially adversely affect the completion of the District Improvements, the Developer Improvements or the development of undeveloped parcels within the District, or litigation which would materially adversely affect the financial condition of the Developer or its Affiliates that own property within the District. i. Material payment default by the Developer on any loan of the Developer (whether or not such loan is secured by property within the District) which is beyond any applicable cure period in such loan. Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to each of the DOCSOC\836206v5~22245.0120 ¢ ' EXHIBIT 9 Repositories or the Securities and Exchange Commission. If the document included by reference is a · final official statement, it must be available fi:om th~ Municipal Securities Rulemaking Board. The Developer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Developer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material under clauses (b) and (c): 1. Failure to pay any real property taxes, special taxes or assessments (including any assessment installment) levied within the District on a parcel owned by the Developer or any of its Affiliates; 2. Material payment default by the Developer or any Affiliate on any loan secured by property within the District owned by the Developer or any of its Affiliates which is beyond any applicable cure period in such loan; 3. The filing of any proceedings with respect to the Developer or any of its Affiliates, in which the Developer or any of its Affiliates that own property within the District may be adjudicated as bankrupt or discharged from any or all of their respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts; and (b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable federal securities laws· (c) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Developer shall promptly file a notice of such occurrence with the Dissemination Agent which shall then distribute such notice to the Mun/cipal Securities Rulemaking Board and each State Repository, with a copy to the District and the Participating Undenvriter. SECTION 6. Termination of Reporting Obligation. The Developer's obligations under this Disclosure Agreement shall terminate upon any of the following events: (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, (b) if as of the date for filing the Annual Report the Developer and its Affiliates own property within the District which is responsible for less than twenty pement (20%) of the Special Taxes levied in the Fiscal Year for which the Annual Report is being prepared, and the Developer Improvements and any District Improvements to be constructed by the Developer have been completed, or (c) upon the delivery by the Developer to the District and the Participating Underwriter of an opinion of nationally recognized bond counsel to the effect that the information required by this Disclosure Agreement is no longer required. Such opinion shall be based on information publicly provided by the Securities and Exchange Commission or a private letter ruling obtained by the Developer or a private letter ruling obtained by a similar entity to the Developer. If such termination DOCSOC\836206v5~22245.0120 EXHIBIT 9 occurs prior to the final maturity of the Bonds, the Developer shall give notice of such termination in the same manner as for an Annual Report hereunder.. SECTION 7. Dissemination Age~nt. The Developer may fi;om time to time, appoin_'t or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without, appointing a successor Dissemination Agent. If the Dissemination Agent is not the Developer, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Developer pursuant to this Disclosure Agreement. The Developer has initially appointed U.S. Bank Trust National Association as the Dissemination Agent hereunder. SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Developer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in cimumstances that arises fi;om a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; Co) This Disclosure Agreement, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel addressed to the District, the Fiscal Agent and the Participating Underwriter, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (c) The amendment or waiver either (i)is approved by the Bondowners in the same manner as provided in the Agreement for amendments to the Agreement with the consent of Bondowners, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the City and the Fiscal Agent, materially impair the interests of the Bondowners or Beneficial Owners of the Bonds; and (d) The Developer, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (b) and (c) above. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Developer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Developer. In addition, if the amendment relates to the accbunting principles to be followed in preparing financial statements, (i) notice of such change shall be given to the Municipal Securities Rulemaking Board, the State Repository, if any, and the Repositories, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison of financial data described in clause (ii) of the preceding sentence shall be provided at the time financial statements, if any, are filed under Section 4(g) hereof. G-6 ,, DOCSOC\836206v5L22245 0120 EXHIBIT 9 SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure -Agreement or any other means of communication, or including any other information in any _An~nual Report or notice of occurrence of a Listed Even_t, in addition to that which is required by this Disclosure Agreement. If the Developer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Developer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION t0. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Agreement, any Participating Underwriter or any Bondowner or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer or the Dissemination Agent to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Developer to comply with this Disclosure Agreement shall be an action to compel specific performance. SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement and the Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of theirs powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Developer, the Participating Underwriter, Bondowners or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon a direction from the Developer or an opinion of nationally recognized bond counsel. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent will not, without the Developer's prior written consent, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification may be sought hereunder unless such settlement, compromise or consem includes an unconditional release of the Developer and its controlling persons from all liability ar/sing out of such claim, action or proceedings. If a claim, action or proceeding is settled with the consent of the Developer or if there is a final judgment (other than a stipulated final judgment without the approval of the Developer) for the plaintiff in any such claim, action or proceeding, with or without the consent of the Developer, the Developer agrees to indemnify and hold harmless the Dissemination Agent to the extent described herein. SECTION 12. Reporting Obligation of Developer's Transferees; Covenant Running With Land. The Developer shall, in connection with any sale or transfer of ownership of land within the District which will result in the transferee (which term shall include any successors and assigns of the Developer) becoming responsible (i) for the payment of more than 20 percent of the Special Taxes G-7 ~ +' };? O'7' EXHIBIT9 DOCSOC\836206v5~22245.0120 levied on property within the Dis~ict in the Fiscal Year following such transfer and (ii) for the construction and/or installation of some or all of the improvements needed to bring such sold or transferred land to finished lot condition, cause such transferee and any Affiliate of the transferee to enter into a disclosure agreement with t_e~rms substantially similar to the terms of this Disclosure Agreement, whereby such transferee agrees to be bound by the obligations of the Developer under this Disclosure Agreement as an additional obligated party. Additionally, the Developer shall, in connection with any sale or transfer of ownership of land within the District which will result in the transferee and any Affiliate of the transferee becoming responsible for the payment of more than 20 percent of the Special Taxes levied on property within the District in the Fiscal Year following such transfer, which sale or transfer occurs before such sold or transferred land is in finished lot condition, and the transferee is not responsible for the construction or installation of some or all of the infrastructure needed to bring such land to finished lot condition, cause such transferee to enter into a disclosure agreement with terms substantially similar to the terms of this Disclosure Agreement, whereby such transferee agrees to provide the information of the type described in Section 4(b), (c), (d) and (0 of this Disclosure Agreement with respect to its property; provided that such transferee's obligations under such disclosure agreement shall terminate upon the transferee and any Affiliate of the transferee becoming responsible for the payment of less than 20 percent of the annual Special Taxes. The Developer agrees that its obligations pursuant to this Disclosure Agreement shall be a covenant running with the land owned by the Developer within the District such that its obligations pursuant to this Disclosure Agreement shall be binding upon all such transferees described above as though the obligations of the Developer and such transferees were expressly set forth in the grant deeds whereby such transferees obtain tire to or an estate in such land fi.om the Developer as provided in Sections 1460 through 1470 of the Civil Code of the State of California. A memorandum regarding the Developer's obligations under this Disclosure Agreement and of the covenant running with the land created hereby shall be recorded in the Official Records in the office of the County Recorder of the County of San Diego. SECTION 13. Developer as Independent Contractor. In performing under this Disclosure Agreement, it is understood that the Developer is an independent contractor and not an agent of the City of Chula Vista or the District. SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Developer, the City, the Dissemination Agent, the Participating Underwriter and Bondowners and Beneficial Owners from time to time of the Bonds, and shall create no fights in any other person or entity. G-8 DOCSOC\836206v5~2245.0120 ~ EXHIBIT 9 SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and. all of which shall constitute 6ne and the same instrument. OTAY PROJECT L.P., a California limited partnership By: OTAY PROJECT, LLC, a California limited liability company By: OTAY RANCH DEVELOPMENT, LLC, a Delaware limited liability company, Authorized Member By: Kent Aden, Vice President OTAY PROJECT LLC, a California limited liability company By: OTAY RANCH DEVELOPMENT COMPANY, a Delaware limited liability company, Authorized Member By: Kent Aden, Vice President U.S. BANK TRUST NATIONAL ASSOCIATION, as Dissemination Agent By: Authorized Officer DOCSOC\836206v5~22245 0120 ~ [ EXHIBIT 9 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of the Issuer: City of Chula Vista Community Facilities District No. 99-I (Otay Ranch Spa One - Portions of Village One, Village Five and Village One West) City of Chula Vista, California Name of Bond Issue: 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 Date of Issuance: NOTICE IS HEREBY GIVEN that has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement. [The Developer anticipates that such Annual Report will be filed not later than Dated: U.S. BANK TRUST NATIONAL ASSOCIATION By: cc: City of Chula Vista, California Stone & Youngberg LLC DOCSOC\836206v5~22245.0120 EXHIBIT 9 APPENDIX H FORM OF OPINION O1~ BOND COUNSEL DOCSOC\836206v5522245.0120 EXHIBIT 9 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE-PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST), AUTHORIZING AND PROVIDING FOR THE iSSUANCE OF A SECOND SERIES OF SPECIAL TAX BONDS OF THE DISTRICT, APPROVING THE FORM OF THE FIRST SUPPLEMENTAL RESTATED BOND INDENTURE, BOND PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT, CONTINUING DISCLOSURE AGREEMENT AND OTHER DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS. WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA (the "City Council"), did previously conduct proceedings to form and did form a community facilities district pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the "Act") and the City of Chula Vista Community Facilities District Ordinance enacted pursuant to the powers reserved by the City of Chula Vista under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California (the "Ordinance") (the Act and the Ordinance may be referred to collectively as the "Community Facilities District Law"), said Community Facilities District designated as COMMUNITY FACILITIES NO. 99-1 (OTAY RANCH SPA ONE-PORTIONS OF VILLAGE ONE, VILLAGE F1VE AND VILLAGE ONE WEST) (the "District") for the purpose of financing the acquisition of certain public improvements; and, WHEREAS, this City Council has previously declared its intention to issue bonds to finance the acquisition of such improvements, such bonds be issued pursuant to the terms and provisions of the Comnmnity Facilities District Law and the City of Chula Vista Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts, as amended to date (the "Goals and Policies"); and, WHEREAS, this City Council previously authorized the issuance of the $23,000,000 City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One Portions of Village One, Village Five and Village One West) Special Tax Bonds, Series 1999 (the "Series 1999 Bonds") and approved a Bond Indenture, dated as of December 1, 1999 (the "Bond Indenture"), by and between the District and U.S. Bank Trust National Association, as fiscal agent (the "Fiscal Agent"), to establish the terms and conditions pertaining to the issuance, sale, delivery and administration of the Series 1999 Bonds; and WHEREAS, subsequent to the issuance of the Series 1999 Bonds, this City Council approved a First Supplemental Bond Indenture, dated as of February 1, 2000 (the "First Supplement Bond Indenture"), by and between the District and the Fiscal Agent to amend the Bond Indenture; and WHEREAS, subsequent to the approval of the First Supplemental Bond Indenture, this City Council approved a Restated Bond Indenture, dated February 15, 2000 and effective as of March 1, 2000 (the "Restated Bond Indenture"), by and between the District and the Fiscal Agent, to consolidate the Bond Indenture and the First Supplemental Bond Indenture into a single document and to further amend such document; and WHEREAS, the provisions of the Restated Bond Indenture establish the terms and conditions pursuant to which the District may authorize the issuance of Parity Bonds (as such term is defined in the Restated Bond Indenture); and WHEREAS, at this time this City Council desires to set forth and establish the terms and conditions pertaining to the issuance, sale, delivery and administration of the Series 2001 Bonds (as defined below); and, WHEREAS, in order to implement the issuance, sale, delivery and administration of the Series 2001 Bonds, the forms of the following documents have been presented to and considered for approval by this City Council: A. First Supplemental Restated Bond Indenture by and bet~veen the District and the Fiscal Agent amending the Restated Bond Indenture to establish the terms and conditions relating to the issuance, sale, delivery and administration of the Series 2001 Bonds on a parity with the Series 1999 Bonds (the "First Supplemental Restated Bond Indenture"); B. Bond Purchase Agreement authorizing the sale of the Series 2001 Bonds to Stone & Youngberg LLC, the designated underwriter (the "Bond Purchase Agreement"); C. Preliminary Official Statement containing information including but not limited to the District and the Series 2001 Bonds, including the terms and conditions thereof (the "Preliminary Official Statement"); and D. Continuing Disclosure Agreement by and between the District and U.S. Bank Trust National Association, as dissemination agent (the "Dissemination Agent"), pursuant to which the District will be obligated to provide ongoing annual disclosure relating to the Series 2001 Bonds (the "Continuing Disclosure Agreement"); and WHEREAS, this City Council, with the aid of City staff, has reviewed and considered the First Supplemental Restated Bond Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement and the Preliminary Official Statement and finds those documents suitable for approval, subject to the conditions set forth in this resolution; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Series 2001 Bonds as contemplated by this resolution and the documents referred to herein exist, have happened and have been performed or shall, by the adoption of this resolution, been ordered to have been preformed in due time, form and manner as required by the laws of the State of California, including the Community Facilities District Law and the Goals and Policies. NOW, THEREFORE, iT IS HEREBY RESOLVED AS FOLLOWS: SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Determinations. This legislative body hereby makes the following determinations pertaining to the proposed issuance of the Series 2001 Bonds (as defined below): A. The value of the property within District which ~vill be subject to the special tax to pay debt service on the Bonds will be at least 4 times the principal amount of the Series 1999 Bonds, the Series 2001 Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on property within the District or a special assessment levied on property within the District (collectively, "Land Secured Bonded Indebtedness"). The value of certain properties to be developed is, however, is less than 3 times the Land Secured Bonded Indebtedness allocable to such property. The foregoing determinations are based upon the full cash value of such properties as shown upon an appraisal of the subject properties prepared by Bruce W. Hull & Associates, a state certified real estate appraiser, as defined in Business and Professions Code Section 11340(c). Such determination was made in a manner consistent with the Goals and Policies. B. The Goals and Policies generally require that the full cash value of the properties within the District subject to the levy of the special taxes must be at least 4 times the Land Secured Bonded Indebtedness allocable to such properties. Based upon the appraised values of these properties, this provision of the Goals and Policies has been satisfied. The Goals and Policies further provide that the full cash value of each development area for which no final subdivision maps have been filed must also be at least 4 times the Land Secured Bonded Indebtedness allocable to each such property. As stated in (a) above, the full cash value of certain of the development areas is less than 4 times the Land Secured Bonded Indebtedness allocable to such properties but greater than 2.9 times such amounts. Pursuant to the Goals and Policies, the City Manager has determined, after consultation with the Assistant City Manager, the City's bond counsel, the City's financial advisor and Stone & Youngberg, LLC, the proposed under~vriter of the Series 2001 Bonds (the "Underwriter"), that the value-to-debt ratio for such properties is financially prudent under the circumstances of the District. Based upon the determination of the City Manager that is set forth in the staff report related to this matter, this City Council approves the issuance of the Series 2001 Bonds. C. The terms and conditions of the Series 2001 Bonds as contained in the Restated Bond Indenture, as amended by the First Supplemental Restated Bond Indenture to provide for the issuance of the Series 2001 Bonds, are consistent with and conform to the Goals and Policies. D. As a result of the current status of development of the property within the District and the relative overall lack of diversity of ownership of property within a significant portion the District, the private sale of the Series 2001 Bonds to the Underwriter will result in a lower overall cost to the District. SECTION 2. Series 2001 Bonds Authorized. Pursuant to the Community Facilities District Law, this Resolution and the First Supplemental Restated Bond Indenture and the Restated Bond Indenture, special tax bonds of the District designated as "City of Chula Vista Community Facilities District No. 99-1 (Otay Ranch Spa One-Portions Of Village One, Village Five And Village One West) Special Tax Bonds, Series 2001" (the "Series 2001 Bonds") in an aggregate principal amount not to exceed $20,000,000 are hereby authorized to be issued on a parity with the Series 1999 Bonds subject to the satisfaction of the conditions provided for in the Restated Bond Indenture for the issuance of Parity Bonds. The date, manner of payment, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption and other terms, covenants and conditions of the Series 2001 Bonds shall be as provided in the Restated Bond Indenture, as amended by the First Supplemental Restated Bond Indenture. SECTION 3. Authorization and Conditions. The Assistant City Manger and such other official or officials of the City as may be designated by this City Council to act for and on behalf of the District (an "Authorized Officer") are each hereby individually authorized and directed to execute and deliver the final form of the various documents and instruments described in this Resolution, with such additions thereto or changes therein as such Authorized Officer may deem necessary and advisable provided that no additions or changes shall authorize an aggregate principal amount of Series 2001 Bonds in excess of $20,000,000, an annual interest rate on the Bonds in excess of seven percent (7.00%) per year and a purchase price for the Bonds not less than ninety-eight and twenty five hundredths percent (98.25%) of the par amount of the Series 2001 Bonds (excluding original issue discount, if any). The approval of all such additions or changes shall be conclusively evidenced by the execution and delivery of such documents or instruments by an Authorized Officer, upon consultation with and review by the City Attorney and Best Best & Krieger LLP, the District's bond counsel. SECTION4. First Supplemental Restated Bond Indenture. The form of First Supplement Restated Bond Indenture with respect to the Series 2001 Bonds as presented to this City Council and on file xvith the City Clerk is hereby approved. An Authorized Officer is hereby authorized and directed to cause the same to be completed and executed on behalf of the District, subject to the provisions of Section 3 above. SECTION 5. Official Statement and Continuing Disclosure Agreement. The City Council hereby approves the form of the Preliminary Official Statement as presented to this City Council and on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by the Assistant City Manager or, in the absence of the Assistant City Manager, another Authorized Officer. Pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") the Assistant City Manager or, in the absence of the Assistant City Manager, another Authorized Officer is authorized to determine when Preliminary Official Statement is deemed final, and the Assistant City Manager or such other Authorized Official is hereby authorized and directed to provide written certification thereofi The execution of the final Official Statement, which shall include such changes and additions thereto deemed advisable by the Assistant City Manager or, in the absence of the Assistant City Manager, another Authorized Officer pursuant to the Rule, shall be conclusive evidence of the approval of the final Official Statement by the District. The City Council hereby authorizes the distribution of the final Official Statement by the Underwriters (as defined below) as the initial purchasers of the Series 200l Bonds. The form of Continuing Disclosure Agreement by and between the District and the Dissemination Agent as presented to this City Council and on file with the City Clerk is hereby approved. An Authorized Officer is hcrcby authorized and directed to cause the same to be completed and executed on behalf of the District, subject to the provisions of Section 3 above. SECTION 6. Sale of Series 2001 Bonds. This City Council hereby authorizes and approves the negotiated sale of the Series 2001 Bonds to the Underwriter. The form of the Bond Purchase Agreement is hereby approved and an Authorized Officer is hereby authorized and directed to execute the Bond Purchase Agreement on behalf of the District upon the execution thereof by the Underwriter, subject to the provisions of Section 3 above. SECTION 7. Series 2001 Bonds Prepared and Delivered. Upon the execution of the Bond Purchase Agreement, the Series 2001 Bonds shall be prepared, authenticated and delivered, all in accordance with the applicable terms of the Act and the Restated Bond Indenture, as amended by the First Supplemental Restated Bond Indenture, and any Authorized Officer and other responsible City officials, acting for and on behalf of the District, are hereby authorized and directed to take such actions as are required under the Bond Purchase Agreement and the Restated Bond Indenture, as amended by the First Supplemental Restated Bond Indenture, to complete all actions required to evidence the delivery of the Series 2001 Bonds upon the receipt of the purchase price thereof from the Underwriter. SECTION 8. Actions. All actions heretofore taken by the officers and agents of the City, acting for and on behalf of the District, with respect to the issuance, sale and delivery of the Series 2001 Bonds are hereby approved, confirmed and ratified, and the proper officers of the City, acting for and on behalf of the District, are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements, contracts, and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Series 2001 Bonds in accordance with the Community Facilities District Law, this Resolution, the Restated Bond Indenture, as amended by the First Supplemental Restated Bond Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement, and any certificate, agreement, contract, and other document described in the documents herein approved. SECTION 9. Effective Date. This resolution shall take effect from and after its adoption. Presented by Approved as to form by John P. Lippitt, John Kaheny, u - ~ Public Works Director City Attorney RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING ~ FORM OF THE SECOND AMENDMENT TO THE ACQUISITION/FINANCING AGREEMENT FOR COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA, pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, has undertaken proceed'mgs to form and has formed a community facilities district for the purpose of financing the acquisition of certain works of improvement, together with appurtenances, such special assessment district known and designated as COMMUNITY FACILITIES DISTRICT NO. 99-1 (OTAY RANCH SPA ONE - PORTIONS OF VILLAGE ONE, VILLAGE FIVE AND VILLAGE ONE WEST) (the "Community Facilities District"); and, WHEREAS, the City Council did previously approve an Acquisition/Financing Agreement by and between the City of Chula Vista and Otay Project L.P. (the "Developer") and a First Amendment to Acquisition/Financing Agreement (collectively, the "Acquisition/Financing Agreement") by and between the same parties to establish the terms and conditions upon which the Improvements (as defined in the Acquisition/Financing Agreement) would be acquired by the City; and WHEREAS, the City and the Developer desire to amend the Acquisition/Financing Agreement by entering into the Second Amendment to the Acquisition/Financing Agreement, the form of which has been presented to the City Council (the "Second Amendment"). NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: SECTION 1. The above recitals are all true and correct. SECTION 2. The form of Second Amendment to the Acquisition/Financing Agreement, herewith submitted, is approved substantially in the form submitted. The Mayor is hereby authorized to execute the final form of such amendment on behalf of the City. The City Manager, subject to the review of the City Attorney and Bond Counsel, is authorized to approve changes in such amendment deemed to be in the best interests of the City, approval of such changes to be evidenced by the execution of such amendment. PREPARED BY: APPROVED AS TO FORM BY: John P. Lippitt John Kaheny Director of Public Works City Attorney COUNCIL AGENDA STATEMENT Item Meeting Date 9/18/01 ITEM TITLE: Resolution Waiving the consultant selection policy and approving an agreement with Timothy Stanton for water related services and appropriating $50,000 from the available fund balance of the General Fund SUBMITTED BY: Director of'Public Works ,~v~~qL' REVIEWED BY: City Manager 5'''~ (4/5ths Vote: Yes X No__) In December 1995, Chula Vista entered into an agreement ~vith Otay Water District for the provision of water service to a portion of the City of Chula Vista. This agreement was the result of a study that the City conducted to deter~nine if it would be feasible for Chula Vista to provide ~vater to the new Otay Ranch. There were many provisions in the agreement that Otay was to follow. However, since January 2001, the Board of Directrrs is new and many high-level staff members have left the District. Chula Vista wants to be assured that Otay is following all the provisions in the agreement. RECOMMENDATION: Approve the resolution to waive the consultation selection process of Municipal Code 2.56.070 and retain the services of Timothy Stanton and appropriate $50,000 fi-om the available fund balance reserves of the General Fund. BOARDS/COMMISSION: Not applicable DISCUSSION: The City Council and staff have concerns about new policies and procedures that the Board may have adopted that would affect Chula Vista citizens or developers. At this time, it is in the City's best interest to review the agreement in detail to determine the impact of the recent changes at the District on the agreement. As you may recall, last year the City and Otay jointly paid for an engineering finn to do a management audit on the District. The conclusion was that, at that time, Otay was doing an adequate job in managing the District. Since the new Board went into office, they reduced their reserves by giving a sizeable rebate to customers, leaving no reserve for rate stabilization. Chula Vista, a separate governmental agency, may be able to impact the actions of the District through the provisions of this existing agreement (Attachment A). It is proposed that Council xvaive the consultant selection policy and retain Timothy Stanton, (former chief Engineer for Otay Water District) to review the contract to determine Otay's level of compliance. Mr. Stanton is uniquely qualified to pert'otto these services. He was instrumental in a group effort Page 2, Item /~ Meeting Date 9/18/01 between Chula Vista and Otay management, legal and engineering staffs to develop the agreement under review. Mr. Stanton was employed by Otay Water District for 7 years. He is fa.miliar with the previous and existing policies and procedures at the District. City staff has interviewed him and believes he has a unique background to perform this study that other consultants do not possess. The agreement requiring review has 20 sections relating to different areas of Otay Water operations and the provision of water services within a portion of the City. Some of the more pertinent include: City Agrees that Otay will be the provider of water service. "Otay shall be responsible by law and this agreement to provide water service as needed to the inhabitants of such territories in a cost effective and reliable manner." Water rates will be fair and reasonable and will not discriminate against Chula Vista customers. Otay will adopt a master plan of facilities within two years and will change their storage requirements by having up to five days of treated storage and not less than 5 days of open storage. Prior to adopting or changing its annual capital improvement plan Otay staff shall contact and meet with city staff for comments. City staff shall give Otay growth projections. Otay agrees with the concept of joint use of facilities and will meet with city staffto discuss city proposals. o Otay agrees to continue to provide sewer billing for the city for customers in Otay's district. Otay agrees to buy and distribute reclaimed water from Chula Vista or its designee to serve the needs in Chula Vista. Otay agrees to construct water lines, where feasible, in City streets, and will relocate those facilities in if the proposed grades or alignment of the street dictates. The task of thc consultant will be to review the agreement section by section and make a determination of compliance, including recommendations on how to achieve compliance, and if appropriate, any other steps to ensnre the most cost effective and mtiable provision of water services to the citizens of Chula Vista. The contract will also provide that the City Manager can authorize other tasks at his request providing the total contract does not exceed $50,000 without further Council approval. FISCAL IMPACT: Approval of this item will result in an expenditure of $50,000 fi-om'the available fund balance of the General Fnnd. Attaclmnent A - Otay Water Sewer Agreement dated 12/5/95 AGR~RMENT BETWEEN TIlE CitY OF CHULA VISTA AND TFIE OTAY WATER DISTRICT FOR TIlE PROVISION OF WATER SERVICE IN A PORTION OF TYIE CiTY OF CHULA VISTA This agreement entered into by a.nd between the City of Chula Vista ("City"), a charter city, and Otay Water District ("Otay") a public entity established under the Municipal Water District Law of 1911 sets forth certain terms and conditions under which the Otay Water District shall be the provider of retail water services within a portion of the City of Chula Vista. RECITALS A. Otay is an independently governed public agency which is responsible by law and this agreement to provide water service as needed to inhabitants within its boundaries in a cost-effective and reliable manner. Otay recognizes, through this agreement that City seeks to coordinate the provision of governmental services to its inhabitants. B. City and Otay desire a cooperative relationship so that their respective plann/ng efforts wikl not conflict witkin the City's planning area. C. Otay desires to have a stable planning environment so that its efforts to provide water service to its customers through regional facilities can go forward. D. City and Otay agree that a long-term agreement is desirable to fix the responsibilities of City and Otay with respect to the provision of water serv/ces to current and future areas of City which will be served by Otay. In consideration of which, the parties do hereby agree as follows: 1. Recitals. The recitals listed above are correct and axe incorporated herein by reference. 2. Water Provider. City agrees that Otay will be the water supplier for the purpose of furnishing the City or its inhabitants with retail water service for those parts of the City which are within Otay's jurisdiction, and for such future areas currently outside Otay's jurisdiction which are annexed to the City along its eastern boundaries, except areas within Sweetwater Authority's jurisdiction. Otay shall be responsible by law and t/tis agreement to provide water service as needed to the inhabitants of such territories in a cost- effective and reliable manner. 3. Term; Termination. The t~rm of this agreement shall be 20 years from the date of signature by the City. This agreement may be terminated earlier only as provided pursuant to para~m'aphs 5 or t4, hereof. Upon termination or expiration of this agreement, Otay shall then have the right to continue to serve water unde[ the powers of a municipal water district, and City shall then have the fight to adopt any law or ordinance within its authority. 4. ~. Otay agrees that the water rates k charges within the City shall be fair and reasonable, and shall not discriminate against customers within City, as compared to customers outside the City's jurisdiction. 5. Master Plan. Otay agrees that k shall adopt, within 2 years of the effective date of this agreement, a final Master Plan for the provision of water facilities within the City which is substantially similar to the Montgomery Watson draft Master Plan, dated April 1995, entitled, "Otay Water District Water Resources Master Plan" hereinafter the "draft Master Plan.' City believes that the draft Master Plan represents a prudent and good faith effort to plan for the future water facility needs o.f City's inhabitants. The final Master Plan shall be considered to be substantially similar to the dm_fl Master Plan so long as it provides for: (I) the acquisition or development of not less than 5 Average Days of open storage capacity and not more than 5 Average Days of total filtered water storage, including terminal storage, emergency storage, operational storage, and fire storage; (2) a total, reasonably estimated cost, based on a LA-ENR index of 6500, for the Central Area of Otay (as described in the draft Master }lan and including the western parcel of the Otay Ranch Development) which shall not exceed $55,566,000 for future filtered water storage, and $6,132,000 for pump stations to serve the Central Area, exclusive of any financing expenses, all as described in the draft Master Plan; and (3) the development of water supplies from neighboring public water suppliers, such as the City of San Diego ("San Diego"), Helix Water District and Sweetwater Authority. For the purposes of this agreement, an "Average Day" of storage shall be as defined in the draft Master Plan, using the water generation factors, peaking factors and assumptions regarding emergency water conservation and alternative supply developments found therein. In the event Otay does not, within 2 years, approve such a final Master Plan, notwithstanding any other provision of this agreement, the City shall have the right, following a public hearing held upon 30 days notice to Otay, at which protests may be heard, to terminate this agreement; provided that the 2-year period shall be tolled during the pendency of any suit brought against Otay challenging its adoption of a final Master Plan. Any public hearing notice to be given by City to Otay under this paragraph shall be given within 90 days of the date City receives notice from Otay that: (1) Otay has approved the final Master Plan; and (2) any suit brought against Otay challenging its adoption of a final Master Plan ~as been finally resolved, whichever is later. After adoption of a final Master Plan, Otay shall use its best efforts to imprement such plan. Any subsequently-enacte~ or a~ended Master Plan shall be submitted to [he City for review and comment. Omy will provide specific, detailed responses to all comments made by the City. 6. Land Use Policy. Otay recognizes that City is the authority for setting land use policy within its planning area. Otay agrees that it w~l not set or use water rates, water permitting authority, or other aspects of water policy for the primary purpose of regulating land use within the City, except ms required by State law as to matters of statewide COnCCITIo 7. Coot~ration and Planning. Prior to adopting its annual Capital hnprovement Program CCIP') Otay will contact and meet with City Staff. City Staff will provide Otay with City's late.st growth projections so that this information can be incorporated into Otay's CIP. Otay will reasonably plan and construct those water facilities necessary to meet anticipated demand in City. Otay will apply its best efforts consistent with San Diego County Water Authority policy to assure adequate water supply to meet City's demands. 8. Storage. Otay agrees to apply its best efforts to pursue cost effective storage and, in particular, to seek open storage in Otay Lake or similar open reservoir storage through an agreement with the City of San Diego, or other public water supplier or suppliers which is designed to implement the draft Master Plan provisions regarding cost~ effective storage for the City and its inhabitants, and to avoid any need for the development of more than 5 Average Days of filtered storage. Otay agrees that filtered storage is an undesirably costly method of providing water storage for more than 5 Average Days; wkile up to 3 Average Days of filtered water storage is a reasonable method of providing such storage for the Central Area. In the event Otay fails to diligently pursue such an agreement, City shall have the right to terminate this agreement pursuant to paragraph 14. 9. Joint Use. Otay generally agrees with the joint use of facilities. Otay agrees to meet and confer with City regarding any joint use proposals proposed by the City on reservoir sites. i0. Public Debt. Otay agrees that it will not place debt on private property for the construction of water facilities through an assessment and/or improvement district in excess of $.10 for every $100 in assessed valuation within City. 11. Sewer Billing. Otay agrees to continue to provide the existing sewer billing service to the City that it has historically provided on the same terms and conditions with reasonable in~ allowed so that Otay can recover its costs. 12. Reclaimed Water. Otay will buy from City, or City's designee, as much reclaim_ed water as the Otay Ranch area needs and is available from any City water reclamation facility or raw or reclaimed water obtained by City from San Diego. After considering incentives or rebates from others which are paid to Otay or City, and the cost of distribution paid by Otay, the cost of purchasing such water from City or City's designee shall-not cause the price of reclaimed water together ~e City's inhabitants or Otay's customers to increase over the price that would _have been charged had Otay supplied to those inhabitants or customers, raw water purchased from and delivered to Otay by the San Diego County Water Authority. Since this paragraph is premised upon the current pricing structure in wh/ch raw water is a substitute for reclaimed water in this f. ounty, in the event the price of reclaimed water produced by San Diego and available to City is not based upon the San Diego County Water Authority's pr/ce of raw water, City shall have the right to demand renegotiation of the provisions of rids paragraph regarding the price to be paid by Otay for City's reclaimed or raw water supplies. 13. Water Facility Installa~ons and Alterations. As to Otay's operations within the boundaries of City, Otay agrees to coordinate the actual installation and alteration of its facilities within City to the extent required by law. In addition, upon demand Otay will: (a) repair or pay to City the reasonable cost of repairs to City property resulting from operations of Otay within City; (b) remove and relocate without expense to City, any of Otay's fac/I/ties within City, if and when made necessary by any lawful change of grade, alignment or widening of any public street, way, alley, or place, including the construction of any subway or viaduct, unless Otay's facility is located within an easement granted to Otay prior in ' ,~, Um..o City's fights in such property. In such instances, as to any of Otay's facilities to be constructed within an easement with such prior rights, Otay shall meet with City and use its best efforts to seek agreement regarding the location and design of the facilities which will minimize the liketihood and cost of their future relocation or removal. It is the intent of the parties that Otay's facilities be located within existing or planned public rights of way whenever feasible; that the acquisition of easements for Otay's facilities occur only when strictly necessary; and that future private developments not be relieved from utility relocation costs under this paragraph. Therefore, it is further agreed that: (1) Otay shall use its best efforts to locate its facilities within existing or planned City fights of way or other public places, rather than within any easement; and (2) City shall use its best efforts to condition future private developments which necessitate the relocation or removal of Otay's facilities to bear the costs of such relocation or removal. (c) indemnify and hold City harmless from liability for damages resulting from Otay's operations. (a) In the event of any dispute or controversy between the parties hereto regarding the provision_of water service within City's current or potential future boundaries, the parties shall make a good faith effort to resolve such controversy or dispute in the first instance through mediation. The subjects of such mediation may include any matter addressed in this agreement, or any other matter pertaining to the provision of water service, including, but not llmited to implementation of state laws req~-n-ing i~'ect access, aggregation of accounts or wheeling of water for the benefit of City inhabitants. Upon written demand by either party, a mutually agreeable mediator will be selected t(~ assist the parties in resolving as much of the dispute or conl~oversy as posm'ble. The costs of mediation shali be divided equally. Notwithstanding any other provision of this agreement, this subparagraph (a) shall riot affect, nor shall it be considered in the construction or interpretation of, the scope of paragraphs 16 and 17 of this agreement. (b) V~henever a dispute arises as to the way Otay carries out its obligations under tiffs agreement, as to which mediation ha~ been unsuccessful, the City slmll have the right to submit the dispute to arbitration. The arbiWators shall determine whether Otay acted reasonably in carrying out its responsibilities. If the arbiWators finds that Otay has not anted re~onably, the arbitrators shall have the authority to make such an order as is necessary to requ/re Otay to come into compliance with the agreement. If Otay fails to do so, the City shall have the right to terminate this agreement. If the arhilrators find that Otay h~s acted reasonably, the agreement shall remain in full force mad effect. Arbitration shall be instituted by the City notifying Otay of its choice of arhitmtor. Within 15 days, Otay shall notify the City of its choice of afoiWator and the two arbitrators shv.ll thereafter pick a third arbitrator. Any decision in arbitration must be supported by a minimum of two votes. 15. Nofice~. All notices sba/1 be in writing and shall be deemed to have been duly delivered upon persortal del/very or a~ of the thkd business day after mnillng by United States Mail, certified and registered, return receipt requested, postage prepaid, addressed as follows: If to City: City of Chnla Vista Attn: City Manager 276 Fourth Avenue Chula Vista, CA 91910 If to Otay: Otay Water District Attn: General Manager 2554 Sweetwater Springs Boulevard Spring Valley, CA 91977 16. ~. This agreement constitutes the entire agreement between the parties hereto pemining to the subject matter hereof and all prior mad contemporaneous agreements, representations and understandings of the pan/es hereto, oral or written, are hereby superseded and merged herein. No supplement, modification or amendment of_this agreement shall be binding unless in writing and executed by the parties hereto. 17. Attorneys' Fees. In the event any action shall be instituted in conn~ctidn with this agreement, the party preva~l~ngre'--such action shall be entitled to recover from the other party all of its costs of action, including reasonable attorneys' fees as fixed by the arbitrator. 18. Sevembility. In the event that any phrase, clause, sentence, paragraph, section, article or other portion of th~ agreement shall becom~ illega/, null or void as against public policy, the remaining portions of this agreement shall not be affected thereby, provided that the purpose and intent of the agreement can be reasonably carried out without the unenforceable or ineffectua/portion. 19. ' n~i~J~.~Q. Otay supports the sphere of influence amendment for the City of Chula Vista which is currently pending before LAFCO with respect to all items as to which there is no dispute between the County and the City of Chula Vista, including, but not limited to the designation of Otay as the prefexred water provider to the western parcel of Otay Ranch. Otay shall withdraw any opposition to pending proposals for, and shall not oppose future plans for, annexation of territory within the current or future boundaries of Otay to the City, including, but not limited to, the annexation of all or any portion of the western parcel of the Otay Ranch. 20. ~ City may impose a' utility user fee in such amount as City determines appropriate. Any such fee may, at Otay's option, be reflected and identified on the water bills of customers as a sepaxate line item. IN WITNESS wiq~.REOF, the parties have executed this agreement as of the date shown below. OTAY WATER DISTRICT Title CITY OF CHULA VISTA Title RESOLUTION NO. 2001- RESOLUTION OF THE CITY COUi~CIL OF THE CITY OF CHULA VISTA WAIVING THE CONSULTANT SELECTION POLICY AND APPROVING AN AGREEMENT WITH TIMOTHY STD. NTON FOR WATER RELATED SERVICES AND APPROPRIATING $50,000 FROM THE AVAILABLE FUND BALANCE OF THE GENEPJtL FI/ND WHEREAS, in December 1995~ Chula Vista entered into an agreement with Otay Water District for the provision of water service to a portion of the City of Chula Vista; and WHEREAS, this agreement was the result of a study that the City conducted to determine if it would be feasible for Chula Vista to provide water to the ne~ Otay Ranch; and WHEREAS, there were many provisions in the agreement that Otay Water District was to follow; and WHEREAS, since January 2001, the Board of Directors is new and many high-level staff members have left the District; and WHEREAS, Chula Vista wants to determine Otay's level of compliance with the provisions in the agreement; and WHEREAS, Council waives the consultant selection process in light of Mr. Stanton's experience and familiarity with Otay's policies and procedures and his previous service in developing the agreement under review. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby waive the consultant selection policy and approves the agreement with Timothy Stanton for water related services. BE IT FURTHER RESOLVED the City Council does hereby appropriate $50,000 from the available fund balance of the General Fund. Presented by Approved as to form by John P. Lippitt Jc~n M. Kahe~ Director of Public Works City Attorne~ J: ~Attorney~Reso~Stanton 2 Agreement Between City Of Chula Vista And Timothy Stanton For Water Consultant Services This agreement ("Agreement"), dated for the purposes of reference only, and effective as of the date last executed unless another date is otherwise specified in Exhibit A, Paragraph 1 is between the City-related entity as is indicated on Exhibit A, paragraph 2, as such ("City"), whose business form is set forth on Exhibit A, paragraph 3, and the entity indicated on the attached Exhibit A, paragraph 4, as Consultant, whose business form is set forth on Exhibit A, paragraph 5, and whose place of business and telephone numbers are set forth on Exhibit A, paragraph 6 ("Consultant"), and is made with reference to the following facts: Whereas, City and Otay entered into an agreement in 1995 regarding the provision of retail water services; and Whereas, recent changes in the Otay Board of Directors and District staff have led to numerous policy and procedure changes at the District; and Whereas, City requires the assistance of a consultant to determine whether these new policies and procedures are in compliance with the City's 1995 agreement; and Whereas, Consultant as a former employee of the Otay Water District and an expert in the policies and procedures of the District is uniquely qualified to perform these tasks for the City; and Whereas, Council has approved the waiver of the consultant selection process; and. Whereas, Consultant warrants and represents that they are experienced and staffed in a manner such that they are and can prepare and deliver the services required of Consultant to City within the time frames herein provided all in accordance with the terms and conditions of this Agreement; (End of Recitals. Next Page starts Obligatory Provisions.) Page 1 Obligatory Provisions NOW, THEREFORE, BE IT RESOLVED that the City and Consultant do hereby mutually agree as follows: 1. Consultant's Duties A. General Duties Consultant shall perform all of the services described on the attached Exhibit A, Paragraph 7, entitled "General Duties"; and, B. Scope of Work and Schedule In the process of performing and delivering said "General Duties", Consultant shall also perform all of the services described in Exhibit A, Paragraph 8, entitled" Scope of Work and Schedule", not inconsistent with the General Duties, according to, and within the time frames set forth in Exhibit A, Paragraph 8, and deliver to City such Deliverables as are identified in Exhibit A, Paragraph 8, within the time frames set forth therein, time being of the essence of this agreement. The General Duties and the work and deliverables required in the Scope of Work and Schedule shall be herein referred to as the "Defined Services". Failure to complete the Defined Services by the times indicated does not, except at the option of the City, operate to terminate this Agreement. C. Reductions in Scope of Work City may independently, or upon request from Consultant, from time to time reduce the Defined Services to be performed by the Consultant under this Agreement. Upon doing so, City and Consultant agree to meet in good faith and confer for the purpose of negotiating a corresponding reduction in the compensation associated with said reduction. D. Additional Services In addition to performing the Defined Services herein set forth, City may require Consultant to perform additional consulting services related to the Defined Services ("Additional Services"), and upon doing so in writing, if they are within the scope of services offered by Consultant, Consultant shall perform same on a time and materials basis at the rates set forth in the "Rate Schedule" in Exhibit A, Paragraph 1 t (C), unless a separate fixed fee is otherwise agreed upon. All compensation for Additional Services shall be paid monthly as billed. Page 2 E. Standard of Care Consultant, in performing any Services under this agreement, whether Defined Services or Additional Services, shall perform in a manner consistent with that level of care and skill ordinarily exercised by members of the profession currently practicing under similar conditions and in similar locations. F. Business License Consultant agrees to obtain a business license from the City and to otherwise comply with Title 5 of the Chula Vista Municipal Code. 2. Duties of the City A. Consultation and Cooperation City shall regularly consult the Consultant for the purpose of reviewing the progress of the Defined Services and Schedule therein contained, and to provide direction and guidance to achieve the objectives of this agreement. The City shall permit access to its office facilities, files and records by Consultant throughout the term of the agreement. In addition thereto, City agrees to provide the information, data, items and materials set forth on Exhibit A, Paragraph 10, and with the further understanding that delay in the provision of these materials beyond 30 days after authorization to proceed, shall constitute a basis for the justifiable delay in the Consultant's performance of this agreement. B. Compensation Upon receipt of a properly prepared billing from Consultant submitted to the City periodically as indicated in Exhibit A, Paragraph 18, but in no event more frequently than monthly, on the day of the period indicated in Exhibit A, Paragraph 18, City shall compensate Consultant for all services rendered by Consultant according to the terms and conditions set forth in Exhibit A, Paragraph 11, adjacent to the governing compensation relationship indicated by a "checkmark" next to the appropriate arrangement, subject to the requirements for retention set forth in paragraph 19 of Exhibit A, and shall compensate Consultant for out of pocket expenses as provided in Exhibit A, Paragraph 12. All billings submitted by Consultant shall contain sufficient information as to the propriety of the billing to permit the City to evaluate that the amount due and payable thereunder is proper, and shall specifically contain the City's account number indicated on Exhibit A, Paragraph 18 (C) to be charged upon making such payment. Page 3 /:¢ 3. Administration of Contract Each party designates the individuals ("Contract Administrators") indicated on Exhibit A, Paragraph 13, as said party's contract administrator who is authorized by said party to represent them in the routine administration of this agreement. 4. Term. This Agreement shall terminate when the Parties have complied with all executory provisions hereof. 5. Liquidated Damages The provisions of this section apply if a Liquidated Damages Rate is provided in Exhibit A, Paragraph 14. It is acknowledged by both parties that time is of the essence in the completion of this Agreement. It is difficult to estimate the amount of damages resulting from delay in performance. The parties have used their judgment to arrive at a reasonable amount to compensate for delay. Failure to complete the Defined Services within the allotted time period specified in this Agreement shall result in the following penalty: For each consecutive calendar day in excess of the time specified for the completion of the respective work assignment or Deliverable, the consultant shall pay to the City, or have withheld from monies due, the sum of Liquidated Damages Rate provided in Exhibit A, Paragraph 14 ("Liquidated Damages Rate"). Time extensions for delays beyond the consultant's control, other than delays caused by the City, shall be requested in writing .to the City's Contract Administrator, or designee, prior to the expiration of the specified time. Extensions of time, when granted, will be based upon the effect of delays to the work and will not be granted for delays to minor portions of work unless it can be shown that such delays did or will delay the progress of the work. 6. Financial Interests of Consultant A. Consultant is Besignated as an FPPC Filer. If Consultant is designated on Exhibit A, Paragraph 15, as an "FPPC filer", Consultant is deemed to be a "Consultant" for the purposes of the Political Reform Act conflict of interest and disclosure provisions, and shall report economic interests to the City Clerk on the required Statement of Economic Interests in such reporting categories as are specified in Paragraph 15 of Exhibit A, or if none are specified, then as determined by the City Attorney. Page 4 B. Decline to Participate. Regardless of whether Consultant is designated as an FPPC Filer, Consultant shall not make, or participate in making or in any way attempt to use Consultant's position to influence a governmental decision in which Consultant knows or has reason to know Consultant has a financial interest other than the compensation promised by this Agreement. C. Search to Determine Economic Interests. Regardless of whether Consultant is designated as an FPPC Filer, Consultant warrants and represents that Consultant has diligently conducted a search and inventory of Consultant's economic interests, as the term is used in the regulations promulgated by the Fair Political Practices Commission, and has determined that Consultant does not, to the best of Consultant's knowledge, have an economic interest which would conflict with Consultant's duties under this agreement. D. Promise Not to Acquire Conflicting interests. Regardless of whether Consultant is designated as an FPPC Filer, Consultant further warrants and represents that Consultant will not acquire, obtain, or assume an economic interest during the term of this Agreement which would constitute a conflict of interest as prohibited by the Fair Political Practices Act. E. Duty to Advise of Conflicting Interests. Regardless of whether Consultant is designated as an FPPC Filer, Consultant further warrants and represents that Consultant will immediately advise the City Attorney of City if Consultant learns of an economic interest of Consultant's which may result in a conflict of interest for the purpose of the Fair Political Practices Act, and regulations promulgated thereunder. F. Specific Warranties Against Economic Interests. Consultant warrants and represents that neither Consultant, nor Consultant's immediate family members, nor Consultant's employees or agents ("Consultant Associates") presently have any interest, directly or indirectly, whatsoever in any property which may be the subject matter of the Defined Services, or in any property within 2 radial miles from the exterior boundaries of any property which may be the subject matter of the Defined Services, ("Prohibited Interest"), other than as listed in Exhibit A, Paragraph 15. Consultant further warrants and represents that no promise of future employment, remuneration, consideration, gratuity or other reward or gain has been Page 5 made to Consultant or Consultant Associates in connection with Consultant's performance of this Agreement. Consultant promises to advise City of any such promise that may be made during the Term of this Agreement, or for 12 months thereafter. Consultant agrees that Consultant Associates shall not acquire any such Prohibited Interest within the Term of this Agreement, or for 12 months after the expiration of this Agreement, except with the written permission of City. Consultant may not conduct or solicit any business for any party to this Agreement, or for any third party which may be in conflict with Consultant's responsibilities under this Agreement, except with the written permission of City. 7~ Hold Harmless Consultant shall defend, indemnify, protect and hold harmless the City, its elected and appointed officers and employees, from and against all claims for damages, liability, cost and expense (including without limitation attorneys' fees) arising out of the conduct of the Consultant, or any agent or employee, subcontractors, or others in connection with the execution of the work covered by this Agreement, except only for those claims arising from the sole negligence or sole willful misconduct of the City, its officers, or employees. Consultant's indemnification shall include any and all costs, expenses, attorneys' fees and liability incurred by the City, its officers, agents, or employees in defending against such claims, whether the same proceed to judgment or not. Further, Consultant at its own expense shall, upon written request by the City, defend any such suit or action brought against the City, its officers, agents, or employees. Consultants' indemnification of City shall not be limited by any prior or subsequent declaration by the Consultant. 8. Termination of Agreement for Cause If, through any cause, Consultant shall fail to fulfill in a timely and proper manner Consultant's obligations under this Agreement, or if Consultant shall violate any of the covenants, agreements or stipulations of this Agreement, City shall have the right to terminate this Agreement by giving written notice to Consultant of such termination and specifying the effective date thereof at least five (5) days before the effective date of such termination. In that event, all finished or unfinished documents, data, studies, surveys, drawings, maps, reports and other materials prepared by Consultant shall, at the option of the City, become the property of the City, and Consultant shall be entitled to receive just and equitable compensation for any work satisfactorily completed on such documents and other materials up to the effective date of Notice of Termination, not to exceed the amounts payable hereunder, and less any damages caused City by Consultant's breach. Page 6 9. Termination of Agreement for Convenience of City City may terminate this Agreement at any time and for any reason, by giving specific written notice to Consultant of such termination and specifying the effective date thereof, at least thirty (30) days before the effective date of such termination. In that event, all finished and unfinished documents and other materials described hereinabove shall, at the option of the City, become City's sole and exclusive property. If the Agreement is terminated by City as provided in this paragraph, Consultant shall be entitled to receive just and equitable compensation for any satisfactory work completed on such documents and other materials to the effective date of such termination. Consultant hereby expressly waives any and all claims for damages or compensation arising under this Agreement except as set forth herein. 10. Assignability The services of Consultant are personal to the City, and Consultant shall not assign any interest in this Agreement, and shall not transfer any interest in the same (whether by assignment or novation), without prior written consent of City. City hereby consents to the assignment of the portions of the Defined Services identified in Exhibit A, Paragraph 17 to the subconsultants identified thereat as "Permitted Subconsultants". 11. Ownership, Publication, Reproduction and Use of Material All reports, studies, information, data, statistics, forms, designs, plans, procedures, systems and any other materials or properties produced under this Agreement shall be the sole and exclusive property of City. No such materials or properties produced in whole or in part under this Agreement shall be subject to private use, copyrights or patent rights by Consultant in the United States or in any other country without the express written consent of City. City shall have unrestricted authority to publish, disclose (except as may be limited by the provisions of the Public Records Act), distribute, and otherwise use, copyright or patent, in whole or in part, any such reports, studies, data, statistics, forms or other materials or properties produced under this Agreement. 12. Independent Contractor City is interested only in the results obtained and Consultant shall perform as an independent contractor with sole control of the manner and means of performing the services required under this Agreement. City maintains the right only to reject or accept Consultant's work products. Consultant and any of the Consultant's agents, employees or representatives are, for all purposes under this Agreement, an independent contractor and shall not be deemed to be an employee of City, and none of them shall be entitled to any benefits to which City employees are entitled including but not limited to, overtime, retirement benefits, worker's compensation benefits, injury leave or other leave benefits. Therefore, City will not withhold state or federal income tax, social Page 7 security tax or any other payroll tax, and Consultant shall be solely responsible for the payment of same and shall hold the City harmless with regard thereto. 13. Administrative Claims Requirements and Procedures No suit or arbitration shall be brought arising out of this agreement, against the City unless a claim has first been presented in writing and filed with the City and acted upon by the City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by the City in the implementation of same. Upon request by City, Consultant shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. No suit or claim shall be brought against the Consultant unless a claim has first been presented in writing by certified mail to the Consultant. 14. Attorney's Fees Should a dispute arising out of this Agreement result in 'litigation, it is agreed that the prevailing party shall be entitled to a judgment against the other for an amount equal to reasonable attorney's fees and court costs incurred. The "prevailing party" shall be deemed to be the party who is awarded substantially the relief sought. 15. Statement of Costs In the event that Consultant prepares a report or document, or participates in the preparation of a report or document in performing the Defined Services, Consultant shall include, or cause the inclusion of, in said report or document, a statement of the numbers and cost in dollar amounts of all contracts and subcontracts relating to the preparation of the report or document. 16. Miscellaneous A. Consultant not authorized to Represent City Unless specifically authorized in writing by City, Consultant shall have no authority to act as City's agent to bind City to any contractual agreements whatsoever. B. Consultant is Real Estate Broker and/or Salesman If the box on Exhibit A, Paragraph 16 is marked, the Consultant and/or their principals is/are licensed with the State of California or some other state as a licensed Page 8 real estate broker or salesperson. Otherwise, Consultant represents that neither Consultant, nor their principals are licensed real estate brokers or salespersons. C. Notices All notices, demands or requests provided for or permitted to be given pursuant to this Agreement must be in writing. All notices, demands and requests to be sent to any party shall be deemed to have been properly given or served if personally served or deposited in the United States mail, addressed to such party, postage prepaid, registered or certified, with return receipt requested, at the addresses identified herein as the places of business for each of the designated parties. D. Entire Agreement This Agreement, together with any other written document referred to or contemplated herein, embody the entire Agreement and understanding between the parties relating to the subject matter hereof. Neither this Agreement nor any provision hereof may be amended, modified, waived or discharged except by an instrument in writing executed by the party against which enforcement of such amendment, waiver or discharge is sought. E. Capacity of Parties Each signatory and party hereto hereby warrants and represents to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions or other actions have been taken so as to enable it to enter into this Agreement. F. Governing Law/Venue This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action arising under or relating to this Agreement shall be brought only in the federal or state courts located in San Diego County, State of California, and if applicable, the City of Chula Vista, or as close thereto as possible. Venue for this Agreement, and performance hereunder, shall be the City of Chula Vista. [end of page. next page is signature page.] Page 9 Signature Page to ~ Agreement between City of Chula Vista and Timothy Stanton for Water Consultant Services IN WITNESS WHEREOF, City and Consultant have executed this Agreement thereby indicating that they have read and understood same, and indicate their full and complete consent to its terms: Dated: ,200__ City of Chula Vista by: Shirley Horton, Mayor Attest: Susan Bigelow, City Clerk Approved as to form: John M. Kaheny, City Attorney Dated: Timothy Stanton By: Timothy Stanton Exhibit List to Agreement (x) Exhibit A. Page 10 Exhibit A to Agreement between City of Chula Vista and Timothy Stanton 1. Effective Date of Agreement: September 18, 2001 2. City-Related Entity: (X) City of Chula Vista, a municipal chartered corporation of the State of California ( ) Redevelopment Agency of the City of Chula Vista, a political subdivision of the State of California ( ) Industrial Development Authority of the City of Chula Vista, a ( ) Other: business form] , a [insert ("City") 3. Place of Business for City: City of Chula Vista, 276 Fourth Avenue, Chula Vista, CA 91910 4. Consultant: Timothy Stanton 5. Business Form of Consultant: ( X ) Sole Proprietorship ( ) Partnership ( ) Corporation 6. Place of Business, Telephone and Fax Number of Consultant: 3740 Hidden Ridge Road Jamul, CA 91935 Voice Phone (619) 669-0575 Page 11 f 7. General Duties: Consultant to provide as needed services in support of the City of Chula Vista in addressing Otay Water District's compliance with the terms and conditions of the "Agreement Between The City of Chula Vista and the Otay Water District for the Provisions of Water Service in a Portion of the City of Chula Vista". In addition, Consultant shall address the possible creation of a City Water Department to operate the water system in Chula Vista. 8. Scope of Work and Schedule: A. Detailed Scope of Work: 1. To review the "Agreement Between The City of Chula Vista and the Otay Water District for the Provisions of Water Service in a Portion of the City of Chula Vista" for compliance to the recitals, terms and conditions. 2. Prepare written report detailing findings of review and, if appropriate, prepare draft complaint calling for mediation of grievances. 3. Review and evaluate any additional information deemed relevant by the City to assess the most cost effective and reliable way to secure water services for the residents of Chula Vista. 4. Perform any reasonably related additional tasks as requested by City. B. Date for Commencement of Consultant Services: ( X ) Same as Effective Date of Agreement ( ) Other: C. Dates or Time Limits for Delivery of Deliverables: Deliverable No. 1: Report for Task 1 shall be delivered to City staff within 60 days of the Notice to Proceed. Page 12 9. Insurance Requirements: Statutory Worker's Compensation Insurance Employer's Liability Insurance coverage: $1,000,000. Commercial General Liability Insurance: $1,000,000. Errors and Omissions insurance: None Required (included in Commercial General Liability coverage). Errors and Omissions Insurance: $250,000 (not included in Commercial General Liability coverage). (x) General Automobile Liability coverage: $100,000-$300,000 10. Materials Required to be Supplied by City to Consultant: Agreement between the City of Chula Vista and Otay Water District for the Provision of Water Services in a Portion of the City of Chula Vista dated December 5, 1995. 11. Compensation: A. ( ) Single Fixed Fee Arrangement. For performance of all of the Defined Services by Consultant as herein required, City shall pay a single fixed fee in the amounts and at the times or milestones or for the Deliverables set forth below: Single Fixed Fee Amount: ., payable as follows: Milestone or Event or Deliverable Amount or Percent of Fixed Fee ( ) 1. Interim Monthly Advances. The City shall make interim monthly advances against the compensation due for each phase on a percentage of completion basis for each given phase such that, at the end of each phase only the compensation for that phase has been paid. Any payments made hereunder shall be considered as interest free loans which must be returned to the City if the Phase is not satisfactorily completed. If the Phase is satisfactorily completed, the City shall receive credit against the compensation due for that phase. The retention amount or percentage set forth in Paragraph 19 is to be applied to each interim payment such that, at the end of the phase, the full retention has been held back from the compensation due for that phase. Percentage of completion of a phase shall be assessed in the sole and unfettered discretion by the Contracts Administrator designated herein by the City, or such other person as the City Manager shall designate, but only upon such proof demanded by the City that has been provided, but in no event shall such interim advance payment be made unless the Contractor shall have represented in writing that said percentage of completion of the phase has been performed by the Contractor. Page 13 The practice of making interim monthly advances shall not conver~ this agreement to a time and materials basis of payment. B. ( ) Phased Fixed Fee Arrangement. For the performance of each phase or portion of the Defined Services by Consultant as are separately identified below, City shall pay the fixed fee associated with each phase of Services, in the amounts and at the times or milestones or Deliverables set forth. Consultant shall not commence Services under any Phase, and shall not be entitled to the compensation for a Phase, unless City shall have issued a notice to proceed to Consultant as to said Phase. Phase Fee for Said Phase 1. $ 2. $ 3. $ ( ) 1. Interim Monthly Advances. The City shall make interim monthly advances against the compensation due for each phase on a percentage of completion basis for each given phase such that, at the end of each phase only the compensation for that phase has been paid. Any payments made hereunder shall be considered as interest free loans which must be returned to the City if the Phase is not satisfactorily completed. If the Phase is satisfactorily completed, the City shall receive credit against the compensation due for that phase. The retention amount or percentage set forth in Paragraph 19 is to be applied to each interim payment such that, at the end of the phase, the full retention has been held back from the compensation due for that phase. Percentage of completion of a phase shall be assessed in the sole and unfettered discretion by the Contracts Administrator designated herein by the City, or such other person as the City Manager shall designate, but only upon such proof demanded by the City that has been provided, but in no event shall such interim advance payment be made unless the Contractor shall have represented in writing that said percentage of completion of the phase has been performed by the Contractor. The practice of making interim monthly advances shall not convert this agreement to a time and materials basis of payment. Page 14 C. (x) Hourly Rate Arrangement For performance of the Defined Services by Consultant as herein required, City shall pay Consultant for the productive hours of time spent by Consultant in the performance of said Services, at the rates or amounts set forth in the Rate Schedule hereinbelow according to the following terms and conditions: (1) ( ) Not-to-Exceed Limitation on Time and Materials Arrangement Notwithstanding the expenditure by Consultant of time and materials in excess of said Maximum Compensation amount, Consultant agrees that Consultant will perform all of the Defined Services herein required of Consultant for $ including all Materials, and other "reimbursables" ( Max'mum Compensation"). (2) (x) Limitation without Further Authorization on Time and Materials Arrangement At such time as Consultant shall have incurred time and materials equal to $50,000 ("Authorization Limit"), Consultant shall not be entitled to any additional compensation without further authorization issued in writing and approved by the City. Nothing herein shall preclude Consultant from providing additional Services at Consultant's own cost and expense. Rate Schedule Category of Employee Hourly of Consultant Name Rate Consultant Timothy Stanton $120 12. Materials Reimbursement Arrangement For the cost of out of pocket expenses incurred by Consultant in the performance of services herein required, City shall pay Consultant at the rates or amounts set forth below: (x) None, the compensation includes all costs. Cost or Rate ( ) Reports, not to exceed $ ( ) Copies, not to exceed $ ( ) Travel, not to exceed $ ( ) Printing, not to exceed $ Page 15 ( ) Postage, not to exceed $ ( ) Delivery, not to exceed $ ( ) Long Distance Telephone Charges, not to exceed $ ( ) Other Actual Identifiable Direct Costs: not to exceed $ 13. Contract Administrators: City: John Lippitt Consultant: Timothy Stanton 14. Liquidated Damages Rate: N/A ( ) $ per day. ( ) Other: 15. Statement of Economic Interests, Consultant Reporting Categories, per Conflict of Interest Code: (x) Not Applicable. Not an FPPC Filer. ( ) FPPC Filer Category No. 1. Investments and sources of income. Category No. 2. Interests in real property. Category No. 3. Investments, interest in real property and sources of income subject to the regulatory, permit or licensing authority of the department. Category No. 4. Investments in business entities and sources of income which engage in land development, construction or the acquisition or sale of real property. Category No. 5. Investments in business entities and sources of income of the type which, within the past two years, have contracted with the City of Chula Vista (Redevelopment Agency) to provide services, supplies, materials, machinery or equipment. Category No. 6. Investments in business entities and sources of income of the type which, within the past two years, have contracted with the designated employee's department to provide services, supplies, materials, machinery or equipment. ( Category No. 7. Business positions. Page 16 ( ) List "Consultant Associates~' interests in real property within 2 radial miles of Project Property, if any: 16. ( ) Consultant is Real Estate Broker and/or Salesman 17. Permitted Subconsultants: None 18. Bill Processing: A. Consultant's Billing to be submitted for the following period of time: (x) Monthly ( ) Quarterly ( ) Other: B. Day of the Period for submission of Consultant's Billing: ( ) First of the Month ( ) 15th Day of each Month (x) End of the Month ( ) Other: C. City's Account Number: 19. Security for Performance ( ) Performance Bond, $ ( ) Letter of Credit, $ ( ) Other Security: Type:. Amount: $ (x) Retention. If this space is checked, then notwithstanding other provisions to the contrary requiring the payment of compensation to the Consultant sooner, the City shall be entitled to retain, at their option, either the following "Retention Percentage" or "Retention Amount" until the City determines that the Retention Release Event, listed below, has occurred: (x) Retention Percentage: 10% ( ) Retention Amount: $ Retention Release Event: (x) Completion of Ail Consultant Services ( ) Other: J;\EngAdmin\stanton2 doc Page 17