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Home My WebLink About1997-07-08; City Council; 14257 Exhibit 1; Carlsbad Ranch Assessment Districtt3dhll~1-TL PRiQ,L1S7 __ 3-8-9-j DRAFT PRELIMINARY OFFICIAL STATEMENT CITY OF CARLSBAD CALIFORNIA LIMITED OBLIGATION IMPROVEMENT BONDS (1915 ACT) ASSESSMENT DISTRICT NO. 95-l (Carlsbad Ranch) The date of this Preliminary Official Statement is f@‘#@, 1997. ..:. i........:, . . . . . . . . . .:. ‘Preliminary; subject to change. Official Statement dated ) 1997 New Issue Book-Entry Only Not Rated In the opinion of Bond CounseJ under abting laws, regulations, rulings, and judicial deckions, interest on the Bonds is exempt from State of Califomia perso& income taxes, is excluded from gross income for purposes Of income taxation by the united States of America, and ir not an item of tax preference for purposes of the alternative minimum ta.x imposed by the United States on individuals and corporations, subject to certain qualifications more part&la@ described in the section of this Official statement entitled ~~~~:~~~~~~~~~~~~~ n :-:...:.: :.:.:.:-:.:-:.:.:.t:.:.:.:.:.:.:.:.:.:.:.:.~:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:,:.:.:.:.:.:::::::::::::~.~::: :.:.:.:.:,:,:: :.:.:.:.:.:.:.:.:. ::::::: ,.:.:.:,:.:,:, ~ i,.,.,., COUNTY OF SAN DIEGO STATE OF CALIFORNIA ~~~~~~B :.:.:.:.?:.:.:.:.~~~~~ .::::::s:. ..:.::~::.:.~..:.. _. _, -*:.:::...:.~:.:. CITY OF CARLSBAD LIMITED OBLIGATION IMPROVEMENT BONDS (1915 ACT) ASSESSMENT DISTRICl- NO. 95-1 (Carlsbad Ranch) Dated: July 2, 1997 Due: September 2, as shown below The Bonds are issued pursuant to the Improvement Bond Act of 1915 and are secured by unpaid assessments levied in the assessment proceedings by the City of Carlsbad for Assessment District No. 95-l (Carlsbad Ranch) undertaken pursuant to the Municipal Improvement Act of 1913. Interest due with respect to the Bonds will be payable on March 2 and September 2 of each year, commencing March 2, 1998 (the “Interest Payment Dates”). The principal of the Bonds is payable on the dates set forth below. Principal, redemption premium, if any, and interest are . .,.. ,. . payable directly to Depository Trust Company, New York, N.Y. (“DTC”) by ~~~~~~~~~~~~~~~~~~~ ., . ..(.(_ ,. . . . . ~~ai~~~~~~~~~~~~~~~~, as Paying Agent, under the Bond Inde~~~~~~~~~~~~~~~~~j: ;.:.:.:.:.x.:.:...:.::::.:.: . . . . . . . . . :.:,:.7. .A... :. . . . . . . . . . I .._. . . . . . . . . .._.. . . . . . . . . . . . . . . . . . . . . :. y.ye Upon receipt of payments of pnncipal, redemption premium, if any, and interest, DTC will remit such amounts to DTC Participants and Indirect Participants (as such terms are defined herein) for disbursement to purchasers of beneficial ownership interests in the Bonds, as described herein under the caption “THE BONDS - Book-Entry Only System.” The Bonds are subject to redemption prior to maturity as described herein. ‘Preliminary, subject to change. -i- MATURITY SCHEDULE Serial Bonds Principal Amount Due Interest Principal Sent. 2 Rate Amount 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Due 2 Sept. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Interest Rate 1s % Term Bonds Due September 2,2022 ] m- (Plus accrued interest) The maturity of any Bond may be advanced to any March 2 or September 2 and redeemed prior to its stated maturity date by the City Treasurer if there are sufficient funds available for that purpose. Notice of advanced maturity must be given at least 30 days prior to the date of such . advanced maturity. Upon surrender and cancellation of any such Bond, the Treasurer will pay the principal thereof and the interest accrued thereon to the date of the advanced maturity (unless the . Bond has been sooner surrendered), together with a premium, ]@$i@ as set forth herein. The Bonds are not secured by the general taxing power of the City of Carlsbad, the State of California or any of its political subdivisions. The interest on and principai of the Bonds are payable solely from moneys in the redemption fund established for the Bonds, and are secured by unpaid assessments as more fully described herein. See the section of the Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of special factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. The Bonds are offered, when, as and if issued, subject to the approval of Brown, Diven & Hentschke, San Diego, California, Bond Counsel. It is anticipated that the Bonds will be available for delivery in Los Angeles, California on or about July 22, 1997. . . CITY OF CARLSBAD San Diego County, California CITY COUNCIL ;r~~~~.~~~~~~~~~~~~~ .:;.,,: :.:. .:.:.! :.:. <.‘. :.:., :. ., : . . . :.:.j:.: :: Ann J: Kulchm, Member ~ii~~~~~~~~~~~-~~~~~~ ,...................,.. . . . . . . . . . . . . ...? . . . . .,,. .,., ,, ““““.-i ~~a~~~~~~~~~~~~~~~~~ (,;~,~,.,~,~,~‘,~,~’ ; ,,.,... :.:.:.:.:.:.:.:.:.:.:.:.::.:.:::.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .,.. . . . . . . . . .:.:.:.~:.:.:.:.:.:.:.:.:.~:.:.:.:.:.:.:.;.~ :.:. Matt Hall, Member CITY OFFICL4LS Raymond R. Patchett, City Manager Frank Mannen, Asst. City Manager James F. Elliott, Financial Management Director Martin Orenyak, Community Development Director Lisa Hildebrand, Finance Director Aletha L. Rautenkranz, City Clerk ~~~~~~~~:~~~~~~~ :.:j::.:~x.:.: .,.. “,. ,.:, ..:,: . . . . . .._. . . t:. .: .: .............. . . . . . . . . . . . . . .._ . . . . . \.,.l. :,.,:,:.:,:<.: i,.......; ./.., / Lloyd Hubbs, City Engineer PROFESSIONAL SERVICES Bond Counsel Brown, Diven & Hentschke, San Diego, California ..... ._ .,., .iin.i,.,.i ~~~~~~~~~~~~ .:.:.:.: . ... . . . . . . .,.,.,.,.,.: ............... > ...... > ................. ~ :.:.:. ................ ....... ~~:.:...:.:.:..j:::::::::~:.~:~:~~~~:~~~~~~~~~~~~~~~~~:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ..v: .: ..:.::.: .: ......... ............... ..... .: :::.::::::::::.:::j;,::::::.::,:: ::.:.::,::::.::,:.:: :.:‘.:::::::::: ::: ................ ... ................. t. . ............................. ................ ..... . ... .: ~:.: :.:.:.:.:,: ,.,., : :.:.: : . . :.: ... > :,:,jj:.:,j:.:.,.i_,,., ...... .......... . : ... :.y.:.:.:.>:.;:.: : :.:: :.: ::,::.::.:. ........................... .............. . ..~..~...~..........:.:.:.:.:.:.:.:.:.:.:.:.: ... . ....................................................................................... :. ................................. Assessment Engineer ~~~~~~~~~~~~~~~~~~~~~~~~ .,.,...,,_/,.. 3 . . . . . . . . . . . . . . . . . . . . . . .._................... . . . . . . r .,.(...,...,_.. .,........~.~ . ..~..........‘...:;’ Financial Consultant Kadie-Jensen, Johnson & Bodnar, Municipal Financing Consultants, Inc. San Diego, California Paying Agent and Transfer Agent ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ,):( :.:.: :.:.:.;...:;.;:.:.:.:.~:.:.:.:.:.:.~.~~~:.:.~.:.~.:.~.:.:.:.?:.~~~~ _............. :.:.yy.:.:.~ :.:.: :.>::.:.:.: :.. :.. . . . .._...._...._.................................. :.L:i.,.:.:.;.:.:.:.:.~~ .._. ;;‘;““;‘““‘;“” Corporate Trust Dtvrsron, Los Angeles, California The information contained in this Official Statement was prepared under the direction of the City Council of the City of Carlsbad by Kadie-Jensen, Johnson & Bodnar, Municipal Financing Consultants, Inc., financing consultants in connection with the Bonds. The discussion and information herein relating to the Bonds, the Project, the Assessment District, the Developer, the property owners and the City do not purport to be comprehensive or definitive. All references to the Bonds and the Project are qualified in their entirety by reference . . . - 111 - . to the Engineer’s Report and the City’s resolutions, including the Bond Indenture, setting forth the terms and descriptions thereof. The information contained in this Official Statement has been compiled from sources believed to be reliable. The Official Statement contains estimates and matters of opinion which are not intended as representations of fact. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City of Carlsbad and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation of such by the City. The information and expressions of opinion stated herein are subject to change without notice. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the City, the Project, the Assessment District, the Developer, or major property owners since the date hereof. This Official Statement is, however, final as of its date. THE BONDS WILL NOT BE RATED. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE BOND INDENTURE . BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE BONDS WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL, STATE, OR OTHER GOVERNMENTAL ENTITY OR AGENCY WILL HAVE PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFICIAL STATEMENT OR APPROVED THE BONDS FOR SALE. IN CONNECTION WITH THIS BOND UNDERWRITING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS DESCRIBED HEREIN AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS DESCRIBED HEREIN TO CERTAIN DEALERS AND DEALER BANKS ACTING AS AGENTS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. - iv - . , TABLE OF CONTENTS INTRODUCI’ORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 CONTINUING DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 THE BONDS ............................................................. 3 Description of the Bonds .............................................. 3 Authority for Issuance ................................................. 3 Purpose of the Bonds ................................................. 4 Estimated Sources and Application of Funds ................................ 4 Redemption Provisions ................................................ 5 Notice of Redemption ................................................. 6 Book-Entry Only System ............................................... 7 Disposition of Surplus in the Improvement Fund ............................. 9 Covenants of the City Regarding Arbitrage and Rebate ........................ 9 Estimated Debt Service Schedule ....................................... 10 SECURITY FOR THE BONDS .............................................. 11 Estimated Lien Ratios ................................................ 11 Reserve Fund ...................................................... 14 Covenant for Superior Court Foreclosure ................................. 15 THE ASSESSMENT DISTRICT ............ , ................................. 16 Description of Project ................................................ 16 Location and Terrain ................................................ - 16 Summary of Assessment Procedure ...................................... 16 - Environmental Review ............................................... 17 Method of Assessment ............................................... 18 Land Use and Zoning ............................ . ................... 22 The Acquisition Agreement ............... , ............................ 22 .......... s~~~~~~~~~~~~~~~~~~~~ ............. z .......................... :: ................ . . . :.:. :.:...:.:.:.: .:. ...................................... .................. :...:.:.; .:. .~~~~~~~~~~~~~~...~..:..:‘.. ................................ , ........ 24 ~~~~~~~~~~~~~~.Fuiure..~evelopmen t ................................. 24 Prior Assessments and Community Facilities District Special Taxes ........... , .. 32 Tax Delinquency.. .................................................. 32 Assessment Diagram ................................................. 33 ~~~~~;~~~..Y..................................................... 33 ..,.,..., ,....: .::::‘.: :...:.. ;:.:.:.:,:.:.:.:C.:.: ..,.,_ SPECIAL RISK FACTORS ................................................. 35 City Limited Obligations .............................................. 35 ......................................................... 35 TaxDelinquencies ................................................... 35 Price Realized Upon Foreclosure ....................................... 36 ........ ...... ~~Q~~~~~~~~~~~~~~~~:~~~~~~~~~~ ................................ 37 ...................................................................... . ..................................................................................... :.:.:.:.> ..................................... Bankruptcy and Foreclosure ........................................... 37 Article XIII A of the California Constitution ............................... 39 Future Land Development ............................................ 39 Direct and Overlapping Indebtedness .................................... 41 .............. ............................................................. 41 ................................................................................ Land Values ....................................................... 41 Absence of Market for the Bonds ....................................... 43 -v- - . . - LossofTaxExemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Concentration of Property Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Parity Taxes and Special Assessments . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . 44 .c. ‘I ,‘.,.....C.,.,.,.,.,.,., .,.,.,.,.......,.,....... ~~~~a~~~~~~~~~~~~~~~~~~~~~ . . . . . I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Future Legislation or Ballot Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Enforceability of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . 45 MIS~L~ous ....................................................... 45 No Litigation ...................................................... 45 Approval of Legality .... , ............................................ 45 Tax Exemption .................................................... . 46 No Rating ........................................................ 46 Underwriting .......................................... . ........... 46 Financial Consdtant ................................................. 47 . ............................ .:. ........... . ................................... . ... 47 .... ...................................... ~~~~~~~~~~~~~ation .. - ............................................ 47 APPENDICES Appendix I: The City of Carlsbad, California Appendix II: Assessment Diagram Appendix III: The Appraisal Report Appendix IV: Forms of Issuer Continuing Disclosure Agreement and Developer Continuing Disclosure Agreement Appendix V: Form of Approving Opinion of Bond Counsel INTRODUCTORY STATEMENT This Official Statement is provided to furnish information relating to the City of Carlsbad, California (the “City” and the “State”, respectively) in connection with the issuance of the City’s c$$ P’6!k&&ed $10,379,732’ principal amount of Limited Obligation Improvement Bonds, Assessment ,.; ;;, i,: ::. ::.:.::.:...::::::: Distract No. 95-l (Carlsbad Ranch) (the “Bonds” or “Bond”). The Bonds are being issued pursuant to the Improvement Bond Act of 1915 and the assessment proceedings for Assessment District No. 95-l (the “Assessment District”) are being conducted pursuant to the Municipal Improvement Act of 1913. The proceeds from the sale of the Bonds will be used by the City to fund the acquisition of ........... .......................... .............. ......... ... ....... .............. public works, including tj~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ....... ........ ........................ ....... ................. .............................................................. .:...:..::.::i:~..:::.:.~:.: .... ,.,: :y:..:. ............................. ....~...~.~.........~.~.i t .............. ... .... f .x.; :.:.:.:.:.: .................... ................................................................................................ ................ .t .................. ............ .............. .... ............. ............ ; .. . ....................... :.:.:.:.: ........................ ... * ..... :, _,,: ... .: :...:.: ........ ................... ....... ~R,~~~~~~~together wl~~~~pu.~~~nances.an;i’appurienani.~ori;.~~~~.~~~~~ectii3;..~~.ac~~~re...~~~~~~ ..... :.::. ........................................ . existing assessment liens, to fund a special reserve fund (the “Reserve Fund”), and to pay costs related to the issuance of the Bonds. The Project to be .... consists of ~~~~~~~~~~~~~iimprovernents to and along Cannon ..................................................... .............................. Road, Palomar Airport Road, Armada Drive and Lego Drive, including street improvements, street lighting, landscaping, underground improvements ~~~~~:~~~~~~~~~~~~~~~~~~~~~~~~~ ...................... .2 .............................................................. .E.. ........................................................ .................................................................................... ............ : : ........ ~~~::f~~~~~~~~~~~~~,~~~~~~~~~~~~~~~~~~~~~~~’a’pe’;iest~an’w~ikway,‘i;en~~~tjng -.: .: .. i..:.: ................................................... ........................... . . . . . . . . . ................................ .............. .; ....... ......................................................................... .......................... ?-i;Y-.i6;;;m. .i--fgired..to .ii.t’fi- ..~~ri’si;;a$..~~~~~. .~~~~‘of the city. The Project #@#@the 447.4 acre development of Carlsbad Ranch Company, the major owner .:,:,>:.>;: . . . . . . . . . . . .._.... of land within the Assessment District. The Carlsbad Ranch development is intended to provide a commercial development including hotel and resort facilities, retail sale facilities, IEGOLAND Carlsbad ‘$$$8!:@ park, a nine-hole golf course, research and development facilities and an agriculture area for growing flowers. (See the section entitled “THE ASSESSMENT DISTRICT - Land Ownership and Future Development - The Carlsbad Ranch Company”.) The City and Carl&ad Ranch Company ' ~~~~~~~~~~~~~ have entered into an . . . . . . . . . . . . . . . . ..i....... ,. . . . . . . . . . . . . . . . . . . . . ..i.... ,.,.i.. . . . . . . . ,,.;,,, _, _, _, . agreement (the “Acquisition Agreement”), as provided’for~bythe Municipal Improvement Act of 1913, which provides that upon commencement of construction by the Developer of specified improvements, the City $#&@a initiate proceedings for the acquisition of such improvements and the i.. ..i_.... . . . . . . . . . . . . . . . . Citv has done so. (See the section entitled “THE ASSESSMENT DISTRICT - The Acauisition The Bonds are payable from the annual assessment installments collected on the regular property tax bills sent to owners of property having unpaid assessments levied against land benefitted by the Project. (See the section of the Official Statement entitled “SECURITY FOR THE BONDS.“) In the event of a delinquency in the payment of any installment of an assessment, the City will transfer from the Reserve Fund (established from Bond proceeds) to the extent funds are available in such Fund, to the fund from which principal and interest payments on the Bonds are made (the “Redemption Fund”) the amount necessary to pay the next maturing installment of principal and interest on the Bonds. The Reserve Fund will be established in an amount equal to ten percent (10%) of the original principal amount of the Bonds issued or Maximum Annual Debt Service on the Bonds or 125% of Average Annual Debt Service on the Bonds, whichever is least. ‘Preliminary; subject to change. -l- (See “SECURITY FOR THE BONDS - Reserve Fund.“) Additionally, the City has covenanted under certain circumstances to commence appropriate judicial foreclosure proceedings in the event of delinquencies. (See “SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure.“) As authorized by Section 8769 of the Streets and Highways Code of the State, the City has determined not to obligate itself to advance any available funds from the City Treasury ~~~~~~~~~~ ., ,.,..... ..,:...:,: ..,,: . . . ,.... . ,.... F....,. .,..... .:,. ._......................._ . ...-.../ .A..... . . . . . . . . . . . .( ., :. : . . . . . . . . . . . . . . . :.:.:.:.:.:.:.;.. ;,..:.:.:.:, ..: ~~e~~.f”iifi~~:i~.~~~~~~~~~~~~~~~~~~~~~to cure any deficiency or delinquency which may occur :;::::::: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . ..;‘.. :: . . . . . . . . . . . . . . . . . . . ..i_.......... . . . . .: . . . ..i....i_... ;-” i..: .i... i/.............,.,........ . . . ,... m the Redemption Fund by failure of property owners to pay annual special assessments. The Bonds are not general obligations of the City or of the State or any other political sub- division of the State, and neither the City nor the State has pledged its full faith and credit for the payment thereof. If a delinquency occurs in payment of any assessment installment, the City will have a duty only to transfer into the Redemption Fund the amount of the delinquency out of the Reserve Fund. There is no assurance that sufficient funds will be available from the Reserve Fund for this purpose. The Bonds are not rated and have a substantial degree of risk. See the section of the Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of special factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. CONTINUING DISCLOSURE .,.,.,.,...,.,. .,.,.,.,. . . . . . Both the City of Carlsbad ‘$#$&$&$ Developer have covenanted for the benefit of Bond .~:,~:,:.:.,:.:.~,~:,:,:.:.:.:.~ Owners to provide certain financial information and operating data relating to the Bonds and tfieir operation not later than eight months after the end of the City’s fiscal year each year, commencing . with the fiscal year ending February 28, 1998 (the “Annual Report”), and to provide notices of the .,. .i,.,_,._.,., .~ . . . . . . occurrences of certain enumerated events, if material. The Annual Reports will be filed by ~~~~B~ .i,.,.,.i,.,_. *’ (.,.,... _.......... .,.,.,. .._.,.,. . . . . . . .,.,.,. ~~~~!~~~~~~~a~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~, a :,;,j;j-;:$ >:::..:;:; .,... :.(>...“’ ::--. .A.: .i.. . . . . . ..:. 1 . . . ..i_.. . . . . . .* ._..,. . . . . . . . ..,..,........ ,.,.._.......,__._.__. ,.. ,..... ; ,............,,.,._,..........,...... ti‘ . . . . . ..,..,.._.._ ;‘........; . . . . ii ._,.........; .._._.... ;‘.,.,,. :‘..._.____._............................................, ~.....~,..........~......~ ii..:.: . . . . . . . . .._..... . . . . dissemination agent (the Dlssemmatlon Agent ) which ~111, m turn, file such Annual Reports on behalf of the City and the Developer with each Nationally Recognized Municipal Securities Information Repository and with the appropriate State information depository, if any. The notices of material events will be filed by the Dissemination Agent on behalf of the City and the Developer with the Municipal Securities Rule @king Board (and with the appropriate State information depository, if any). The specific nature of information to be contained in the Annual Reports or the notice of material events is set forth in APPENDIX IV - “FORMS OF CONTINUING DISCLO- SURE AGREEMENTS.” Both the City and the Developer have each previously made a Continuing Disclosure Agreement a required by Securities and &change Commission Rule 15c2-12. ~~~~~~~~~~~~ . . . . . . . . . . ..i... . . . . . . . . . . . . . . ..:.., . . . ;.. . . . . . . . ..___ r . . . . . . .r ..,............... ,.,. ,. ,... ,. . . ,. ,.,. ,. ~~~~~~~~~~~~~~~~~~~~~~~~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ::. :.. :.:.:.:.Y:.:.::‘::::~ : .h. . ../ .A.. :... . . . . . . . . . .,.....,......._.................,.................. .._...,.,.,.,.....................................................................................,................., . . . . ..A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ../........................................ . . . . .._....._............................................ i/,.,.........,....ji,.,,,., _, ,, ,, ., ,.... ,. .,.,., .: :.; ., : . . . . . :.:.:.> ~~~~.~~,:~~ These covenants have been made by the City and the Developer in order to assist the ‘@dhaser of the Bonds in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission. -2- THE BONDS Description of the Bonds The Bonds will be dated July 2, 1997, and will bear interest from that date at the rates and mature in the amounts and on the dates as previously set forth in this Official Statement. The Bonds will be issued as serial and term bonds. The Bonds will be executed and delivered in the principal amount of $10,379,732’. The Bonds will be issued in fully registered form, and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository (the “securities depository”) of the Bonds. Individual purchases of beneficial ownership interests in the Bonds will be made in book-entry form only in denominations of $5,000 or any integral multiple thereof. See the subsection below entitled “Book-Entry Only System.” Interest due with respect to the Bonds will be payable at the interest rates previously set forth in this Official Statement on March 2 and September 2 of each year, commencing March 2, 1998 (the “Interest Payment Dates”). Principal, and premium (if any), due with respect to the Bonds will be payable as set forth below in the subsection entitled “Book-Entry-Only System.” In the event that the Book-Entry Only System described below is no longer used with respect to the Bonds, the principal and redemption price with respect to the Bonds is payable upon surrender thereof at the corporate trust office of the Paying Agent designated by the Paying Agent. Payment of interest with respect to any Bond on any Interest Payment Date or redemption date shall be made to the person appearing on the registration books of the Paying Agent as the Owner thereof as of the Record Date immediately preceding such Interest Payment Date or redemption date,-as the case may be, such interest to be paid by check mailed on the Interest Payment Date by first class mail to such Owner at his address as it appears on such registration books. Payment of interest with respect to Bonds may, at the option of any Owner of at least $l,OOO,OOO principal amount of Bonds (such option to be exercised by the written request of such Owner to the Paying Agent on or before the Record Date), be transmitted by wire transfer to a bank account with% the e@gt&i~r@ United States of Punerica on file with the Paying Agent as of the Record Date befG;e the:.:~~~~~~~~~Interest Payment Date. The principal payable upon maturity or redemption with respect to the Bonds shall be payable in lawful money of the United States of America. The Paying Agent is authorized under the Bond Indenture to pay or redeem the Bonds when duly presented for payment at maturity or upon redemption and to cancel all Bonds upon payment thereof. Authority for Issuance The improvement proceedings for the Assessment District were initiated by adoption of the Resolution of Intention adopted by the City Council of the City of Carlsbad (the “City Council”) on March 25, 1997. The proceedings are being conducted pursuant to Division 12 of the California Streets and Highways Code, the Municipal Improvement Act of 1913 (the “1913 Act”). The Bonds will be secured by unpaid assessments levied against private property in the Assessment District in accordance with the provisions of the 1913 Act, and will be issued pursuant to Division 10 of the California Streets and Highways Code, the Improvement Bond Act of 1915 (the “1915 Act”). (The 1913 and the 1915 Acts are herein together referred to as the “Bond Law”.) The City has adopted a resolution providing for the issuance of the Bonds pursuant to the Bond Law (the “Bond Indenture”). ‘Preliminary; subject to change. -3- ’ . . Purpose of the Bonds The Bonds are authorized for the purpose of providing funds for the acquisition of public improvements to and along Cannon Road, Palomar Airport Road, Armada Drive and Leg0 Drive, including street improvements, street lighting, landscaping, utilities and underground improvements ,.. .,.,..... ..~ ..,...,.. . . . . . .._............. . . . . . . . . . . . . . . . . . . . . . . . . . ._... ;...~ . . . . . . . . . ~ ,..:.:,.. .~ . . . . . . . . . . . . . . . .,. ,. . . . . . . . . .: ,.. ., . . .:. ,.. . . . . . . . . . . . (.. . . . . . . . . . . . . . . . . . . . . ,~~~~~~~~~~~~~~~~,~~~~~~~~i~~~~~~~~~.~~~~~~~~~~~~:~~~~~~~.~~~~~~~~~~~~~~~ ~~~~~~‘.“‘~“.pedest;ianwalkway, and related improvements, . . . . . . . ._....._............... i . . . . ..( :.:.:.:.>:.:.. ,.,....... _ ,.,.,. .,.i,...,.i. together wrth appurtenances and appurtenant work as more fully described in the section entitled “THE ASSESSMENT DISTRICT.” Estimated Sources and Application of Funds As described below, upon the sale of Bonds, a portion of the proceeds will be placed in the Improvement Fund and disbursed therefrom, as provided in the Bond Law, for acquisition and other costs, including planning and engineering work A portion of the Bond proceeds equal to 10% of the principal amount thereof (less the original issue discount, if any) or Maximum Annual Debt Service on the Bonds or 125% of Average Annual Debt Service on the Bonds (as those terms are defined in the section entitled “SECURITY FOR THE BONDS - Reserve Fund”), whichever is least, will be placed in the Reserve Fund. The Bond applied as follows: Sources of Funds* proceeds and funds collected in payment of assessments are estimated* to be Cash Collections Bond Proceeds (Unpaid Assessments) Less Bond Discount (1.75%) TOTAL PROCEEDS ADDkatiOn of Funds* Construction/Acquisition Less Developer Assmt. Deduction Net Construction/Acquisition Engineering, Testing and Inspection Administration and Management Legal and Financing Reserve Fund .,.,._.,.,....., ,.,.,.,. Miscellaneou~~~~~~~ . . . . . . . . . . . . . . . . . . . . . . . . ..C . . . . . . . . . . . . ..i . . . . 0 TOTAL APPLICATION OF FUNDS ‘Preliminary; subject to change. -4- - I Redemption Provisions Development of parcels within the Assessment District could result in Prepaid Assessments. Any such Prepaid Assessments would result in the advanced maturity (i.e. redemption) of Bonds prior to their respective stated maturity dates. 2. and September 2, and on each September 2 thereafter to maturity, by lot, at. a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fared for redemption, without premium, from sinking fund payments as follows: SINKING FUND REDEMPTION SCHEDULE FOR BONDS TERM BONDS MATURING SEPTEMBER 2. Redemption Date Principal Amount (SeDtember 21 To Be Redeemed (Maturity) TERM BONDS MATURING SEPTEMBER 2, Redemption Date Principal Amount LSeDtember 2) To Be Redeemed (Maturity) -5- ~~~~~~~~~~~~~~~~~~~~~~~~~:,~~~~~~~~~~~~~~~~~~:~~~~~~~~~~~~ ,; .;.., ~&:;i:::,.::j-i.~~ j, .:{:iy.<:;:::::::j:::.::::::::?:::.:.:.:.:.. :.:.:.: ..:.:.:.:.:.:.:...:::;:.:.:.::.:<.:.:<.:.: . . . . . . . . . . / . . . ., ,., ;.;..:.,...... . . . . . ,.,., . . ., : . . . . . . : ,. ., . . ::,.:... . . . . . . . . . . . . .,.. . . ,. .,... . . . . . . . . . . . . . ,.. . . : .l . . . . . . . . . . %:.:.:;:.:j. i..?:.:::.:..:::: ..: ._., ,....::,.. ... .:.: ,..., :... ::..:,:::.. . :.:,:.:,;i::.z:< ~~~~~~~~~~l:~~~~~~?~~~~~~~~~~~~~~~~~~.p~~~~;Cta~~si-~~~~~~hsa~~~:.~~~~~~~~~~~~~~p-I.ai:r~~~:~ ,. :..,..:..: j . . .:. :..: .:..: ,,)I :.: . . . . :.: . ...::. . . . ../ . . . ,... ,. . . . . . . . . . . . . .::.:...: ::.: :.:.:.: . . . . :.:~,i::::::::.:...:.:.:.:~:::;:.::: ..:... :.: rFSI’.~:‘~~~~~~~la~~~~~~~~~~~~~~~~~~~~~~~~al- ~~-:~~~l:.~~~~l:j~~~!~~~~~~:‘: S’<’ ,::. :..A..:.. :.j:.:.-?I3.3,._: .,., ::...> . . . . :.:.:.:.:..:.:.:.::.: . . . . . . . . . . . . . . . . . . “.‘.‘.‘.....j/. . . . . . . . .:..i. ). .,.:_... ..:.....:..:.... . . ..: . . . . . :/ : ., . . . . . . . . . . . . . . . . . . . . . :..: . . : :,.. . : :.. :.. . . . :::. ,..:.:>:. ::;; .,.;. .. ..;,; .,.,....: . . . . :.... Fully registered Bonds issued in denominations greater than $5,000 will be subject to redemp- tion and payment in advance of maturity in increments of $5,000. If less than the entire Bond is re- deemed, a Bond representing the unredeemed portion shall be reissued to the registered owner thereof. Determination of which Bond or Bonds are to be redeemed will be made by the City Trea- surer in accordance with the Bond Law. In selecting a Bond for retirement, the City Treasurer shall select Bonds in such a manner that the ratio of outstanding Bonds to issued Bonds shall be approximately the same in each annual maturity and each annual sinking fund payment insofar as possible. Subject to the foregoing, Bonds to be redeemed within an annual maturity shall be selected by lot. Notice of Redemption As long as DTC, or its nominee, is the registered Owner of the Bonds, all notices of redemption will be mailed by the Paying Agent only to DTC or its nominee, as the registered Owner of such Bonds and not to beneficial Owners. Beneficial Owners will receive notification of such redemption as described in the subsection below entitled “Book-Entry Only System.” -6- Book-Entry Only System BENEFICIALOWNERSHIP INTERESTSINTIIEBONDSWILLBEAVAILABLEINBOOK-ENTRYFORM ONLY IN THE PRINCIPAL AMOUNT OF $5,000 OR INTEGRAL MULTIPLES THEREOF. PURCHASERS OF BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS WILLNOT RECEIVE CXRTIFWATES REPRESENTING THEIRINTERESTSINTHEBONDSPURCHASEDANDWILLNOTBEBONDOWNERSOROWNERSOFBOM)SAS DEFINEDINTHEBONDINDENT~. -8- As long as a book-entry only system is used for the Bonds, the Paying Agent will send any notice -of redemption or other Bond owner notices oniy to DTC. Any failure of DTC to advise any Participad, or of any Participant to notib any Benejicial Owner, of any notice and its content or effect will not aflect the validity or su@iency of the proceedings relating to the redemption of the Bonds called for r&mp fion or of any other action premised on such norice. The City and the Paying Agent have no responsibility or liability for any aspects of the records rekting to or payments made on account of Beneficial Ownership, or for maintaining, supervising or reviewing any records relating to Ben&al Ownership of interests in the Bonds. The City and the Paying Agent cannot and do not give ani assurances that DTC will distribute payments to DW Participants or that Participants or others will distribute payments with respect to the Bon& received by 0732 or its nominees as the Owner or any redemption notices or other notices to the Beneficial Owners, or that they will do SO on a timeiy bask, or that DTC will service and act in the manner described in this Oficial Statement. Disposition of Surplus in the Improvement Fund Any surplus remaining in the Improvement Fund after payment in full for the acquisition of the Project (including payment of all claims) may, at the discretion of the City Council, in accordance with the Bond Law and the Bond Indenture: 1. Be transferred to the General Fund of the City if the surplus does not exceed the . lesser of one thousand dollars ($1,000) or five percent (5%) of the total amount expended from the Improvement Fund; 2. Be applied as a credit on the assessment or refunded to the payer if such assessment has been paid in cash; 3. Be utilized for maintenance of the Project; or 4. Be utilized to call and redeem Bonds. Covenants of the City Regarding Arbitrage and Rebate The City has covenanted to take all actions necessary to comply with the provisions of the Internal Revenue Code of 1986, as amended, with respect to arbitrage and rebate of certain investment earnings on the proceeds of the Bonds to the United States of America, all as set forth in the Bond Indenture. -9- . Estimated Debt Service Schedule The following is the estimated debt service schedule for the Bonds. The actual interest rates to be borne by the Bonds and actual debt service on the Bonds will be determined at the time of sale thereof. CITY OF CARLSBAD LIMITED OBLIGATION IMPROVEMENT BONDS ASSESSMENT DISTRICT NO. 95-l (Carlsbad Ranch) ESTIMATED DEBT SERVICE SCHEDULE* Maturity Sentember 2 Princinal Interest’* Debt Service 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Totals ‘Preliminary; subject to change. **Interest from date of the Bonds to March 2, 1998. - 10 - SECURITY FOR THE BONDS The Bonds are secured by unpaid assessments levied against private property within the Assessment District pursuant to the assessment proceedings. Such unpaid assessments (together with interest thereon) and moneys in the Redemption Fund constitute a trust fund for the redemption and payment of the principal of and interest on the Bonds. Principal of and interest on the Bonds are payable exclusively out of the Redemption Fund. The Reserve Fund is also a trust fund for the benefit of the registered owners of the Bonds. (See the subsection entitled “Reserve Fund”.) The Bonds are not secured by the taxing power of the City, or the State or any political sub- division of the State, and neither the City nor the State has pledged its full faith and credit for the payment thereof. Under provisions of the 1915 Act, installments sufficient to meet annual payments of principal and interest on the Bonds are to be collected on the regular property tax bills sent to owners of property against which there are unpaid assessments. These annual installments are to be paid into the Redemption Fund which will be held by the City Treasurer and used to pay the principal of and interest on the Bonds as they become due. The installment billed against each property each year represents a pro rata share of the total principal and interest coming due on all of the Bonds that year. The amount billed against each property is based on the percentage which the unpaid assessment against the property bears to the total of unpaid assessments in the Assessment District. The failure of a property owner to pay an annual assessment installment will not result in an increase in assessment installments against other property in the Assessment District. Although the unpaid assessments constitute liens on assessed parcels, they do not constitute a personal indebtedness of the respective property owners. There is no assurance that propeity owners will be financially able to pay their assessments or that they will pay such assessment . installments even if financially able to do so. In the event of delinquency in the payment of any installment of an unpaid assessment, the City will, to the extent that funds are available therein, transfer from the Reserve Fund to the Redemption Fund the amount necessary to pay the next maturing installment of principal and interest on the Bonds. In the event of delinquency in the payment of any installment of an unpaid assessment, the City also has covenanted to institute superior court foreclosure proceedings to enforce payment of a delinquent assessment installment. As authorized by Section 8769 of the Streets and Highways Code of the State, the City has determined non to obligate itself to advance any available funds from the City Treasury to cover any deficiency or delinquency which may occur in the Redemption Fund by failure of property owners to pay annual special assessments. (This determination by the City does not prevent the City @K&$1 in its sole discretion, from so advancing .* .A.. . . ..i_.. i..,. . . ..:. .A. such funds.) Estimated Lien Ratios Estimated lien ratios for each parcel in the District are set forth in this section in the follow- ing Tables of Assessments and Estimated Appraised Value to Lien Ratios, together with the amount of the appraised value and confirmed assessment for each parcel. The lien ratios are arrived at by dividing the appraiser’s estimated value by the confirmed assessment amount. (For example, a 3:l lien ratio means that the estimated land value is three times the estimated assessment amount.) In all cases the “estimated value” includes the existing improvements to be acquired from Bond proceeds, but does not include, unless otherwise noted, the value of building improvements to be constructed on various parcels in the Assessment District. - 11 - The Appraisal Report, dated March 6, 1997, prepared by Roberts & Roberts, De1 Mar, California, is included as Appendix III to this Official Statement. Supporting documents for the Appraisal Report may be reviewed in the office of the City Clerk. The assessment parcels have been appraised to provide an estimate of value of the parcels in the Assessment District. For purposes of the Appraisal, the condition of the parcels in the District is assumed to be undeveloped vacant land, with the Project improvements installed and undeveloped sites ready for development. (In fact, five assessment parcels have been fully developed or are currently under development and, as shown in the footnote to the following table, these improvements add considerable value to the security for the Bonds.) The parcels are valued at fair market value as of March 1, 1997. The Assessment District consists of 22 assessed parcels of land, 19 of which have been assessed (remaining parcels located within the Assessment District are being devoted to open space and roadways). There are no parcels publicly owned within the boundaries of the District. A Tentative Map for the improvements constituting the Project has been approved by the City and the _.._..........LI... +>... ,.... . . . . Project was $$&&~~&~completed @#@arch $$$1997. .:; :.:,:,,. :.:.:.:+:.:.:.~:.:.::.:.:.:.:.:.:.:.:.:.. All assessed parcels are to be benefitted by . . . . . . . such public rmprovements. Each assessed parcel has a 3:l lien ratio or greater based upon current appraisals. However as discussed below, as development progresses, value to lien ratios will increase. ~~~~~~~~~~~~ @#Lien ratios on the assessed parcels range from @@! to ~#&@$ as shown :‘f”‘t&?%@e%f Assessments and Estimated Appraised Value to Lien Ratios and @@ appraised value to total Assessment District liens is over %@$to 1. ..:.:.:?:.:.:.> . . .._. > There is no assurance that, in the event of a foreclosure sale for a delinquent assessment installment, any bid will be received for such property or that any bid received will be sufficient to . pay such delinquent installment. (See the section entitled “SPECIAL RISK FACTORS”.) Prior Assessments. Special assessment improvements were made to certain parcels in the Assessment District in prior proceedings for Assessment District No. 86 - 1 (Palomar Airport Road) and prior assessments were levied against such benefitted parcels. These presently outstanding 86-l assessment liens are being acquired in these proceedings with Bond proceeds so as to extinguish such liens, with new liens based on ~~~~~~~~~ene~t being assessed a pat of these procee&ngs. >:.>:.x.?..?:.::.> i... “.... .; Consequently, no prior assessments ~111 exrst as to parcels in the Assessment District. See the section of this Official Statement entitled “THE ASSESSMENT DISTRICT - Prior Assessments and Community Facilities District Special Taxes.” Communitv Facilities District Debt, All of the property located within the Assessment District is also located within Community Facilities District (“CFD”) No. 1 of the City of Carlsbad. Consequently, assessed parcels within Community Facilities District boundaries are subject to Mello- - 12 - - CITY OF CARLSBAD LIMITED OBLIGATION IMPROVEMENT BONDS ASSESSMENT DISTRICT NO. 95-1 (Carlsbad Ranch) TABLE OF ASSBSMEN’T-S m mnM,4T’EJ) ~~~~~~~,~~~~~ uy-10~ .:.:.:.: ._.,.............. .:...:...:.x...:.:...:.:.:.: . . . . . :.:.:.:.:.: .,.. :.....: . . . . . . . . . . . :.:.:.: .,.. :...>:.:‘,.:.:.:.: . ...: .)“: Assessment Parcel Numbe$‘@)j Appraised Land Value. f$$ Unpaid Assessments 1 $l,OOO,OOO $34,727.00 28.80: 1 2 6,950,OOO 990,040.00 7.02: 1 3 2,050,OOO 29,434.oo 69.65: 1 4 5,675,OOO 779253.00 7.28: 1 5 1,200,OOO 84,492.OO 14.20: 1 6 2,775,OOO 463,853.OO 5.98: 1 7 2,775,OOO 464,657.OO 5.97: 1 8 2,325,OOO 389,090.OO 5.97: 1 9 1,900,000 318,336.OO 5.96: 1 10 2,375,OOO 579,031.OO 4.1O:l 11 1,925,oOO 200,000.00 9.63: 1 12 L~,~ 487,230.OO 3.70: 1 14 1,625,OOO 268,994.OO 6.04: 1 15 1,650,OOO 274,565.OO 6.00: 1 17 9,200,ooo 1,230,843.00 7.47: 1 18 25,500,OOO 1,769,157.00 14.41: 1 20 4650,000 664J54.00 7.00: 1 22 5,000,000 1.351.776.00 3.69: 1 $80,375,000 $10,379,732.00 fig Does not include value of private construction which has been ~~~~~~ or is underway on Assessment Parcels Nos. 2, 11, 20 and 21. To date building permit5 have been issued for a total value of $20.2 million. Construction is completed on Assessment Parcel Nos. 11 and 21. ,. . . ,. ,.,. ,. Construction is about 25% complete on parcels 2 and 20. ~~~~~~~~~:~~~~~~~~~~~~~~ .........,... . . . . . . . . . .._.... ,.:,.. . . . . . :.:.:.:.::::~:~:.:.:.:.:.:.:.:.:.:.:.:.~:.:.:.:.:.:.:.:.:,:.~:.:. ~~~~~~~~~~~~~~~~~~:~~~~~~~~~~~~~~~~~~~~~~~~ -..:-: ../: ..:.: . . . . . :.:...: >:.:.:.:.:: . . . . . . . ..,.:................./.........................: .:,.... . . . . . . . . . . . .i.._....._....._....._...,....~.......~............... i.., :_...i. ..i..,.......,...,.....:... ,_.,.,...,.l.. . . . . . . . . . . ..i... ..::.:. -._. i.........., A.., . . . . . . . . . . ..i...._./.C............i............. ‘: g$g Does not include special tax liability to be imposed by CFD 1. This CFD was formed as a substitute for the then existing building permit fees. - 13 - Reserve Fund Pursuant to the 1915 Act and the Bond Indenture (and subject to the arbitrage requirements of Section 148 of the Internal Revenue Code of 1986, as amended), a Reserve Fund in an amount equal to the least of ten percent (10%) of the original principal amount of the Bonds or Maximum - Annual Debt Service on the Bonds or 125% of Average Annual Debt Service on the Bonds (as those terms are defined below) will be established from the proceeds of the sale of the Bonds. The Reserve Fund shall be maintained, used, transferred, reimbursed and liquidated as follows: (a) Whenever there are insufficient funds in the Redemption Fund to pay the neti maturing installment of principal of or interest on the Bonds, an amount necessary to make up such deficiency shall be transferred from the Reserve Fund to the Redemption Fund. The amounts so a&an& shall be reimbursed from the procee~~~~~~~of redemption or s& of the parcels for ~~~.X.~.:.:.:.:.:.:.. ..:.?& which payment of delinquent installments of assessments and interest thereon has been made from the Reserve Fund. 09 In the event an unpaid assessment is paid in cash in advance of the final Bond maturity date, the City is required to credit such Prepaid Assessment with a proportionate share of the Reserve Fund, thus reducing the total amount of the Reserve Fund. The amount to be so credited is the original pro rata amount deposited in the Reserve Fund. Cc) In the event that, after completion of the Project and payment of all claims from the Improvement Fund, the City determines to use all or part of any surplus remaining in the Improvement Fund to call Bonds (thereby reducing outstanding assessments and subsequent assessment installments), the City is required to cause the Reserve Fund to be reduced pursuant to - the Bond Law to assure that the Bonds will not become subject to federal income taxation. w Interest earned on permitted investments of Reserve Fund moneys shall remain in . the Reserve Fund to maintain it at an amount equal to the l#&$of (i) the Maximum Annual Debt .:.:.:.:.:.:.:.:.~:.:.:,: Service on the Bonds, (ii) ten percent (10%) of the principal amount of the Bonds outstanding, or (iii) 125% of Average Annual Debt Service on the Bonds (the “Reserve Requirement”). The term “Maximum Annual Debt Service on the Bonds” means the sum of (1) the interest falling due on then outstanding Bonds, assuming that all then outstanding Bonds are retired as scheduled, and (2) the principal amount of then outstanding Bonds falling due by their terms, all as computed for the twelve-month period ending September 2 in which such sum is largest. The term “Average Annual Debt Service on the Bonds” means the average of such sum during the term of the Bonds. The Treasurer shall determine if there is any amount in the Reserve Fund in excess of the amount .,.,.,_.. . . . . . . . .,...,., required tobe maintainedtherein~~~~~.~~~~~~':~~~~~~~~~~d shall transferanysuch exces . . . . _.. . . . . :.. . . . . . . . . . . . . . . . . . . ._. ._. ,. to the Redemption Fund in the manner provided in Part 16 of the 1915 Act. (e) Any excess in the Reserve Fund transferred by the Treasurer to the Redemption Fund shall be used to advance the maturity of Bonds or credited towards unpaid assessments each year during which any part of the Bonds remain outstanding. The auditor’s record prepared pursuant to Section 8682 of the Bond Law shall reflect credits against each of the unpaid assessments in the manner provided in Section 10427.1 of the Bond Law in amounts equal to each assessment parcel’s proportionate share of any Reserve Fund disbursement. 03 Except as provided above, no Reserve Fund disbursement shall be made in any year in excess of the amount which would cause the Reserve Fund to fall below the Reserve Require- ment. - 14 - (8) All sums remaining in the Reserve Fund in the year in which the last installments of the assessments become due and payable shall be credited toward the assessments as follows: Prior to June 30th of the fiscal year next preceding the fiscal year in which the last unpaid assessment installment becomes due and payable, the City shall determine the amount remaining in the Reserve Fund, if any, after all sums advanced and interest thereon have been reimbursed, and shall order same to be distributed and/or credited in the manner set forth in Section 10427.1 of the Bond Law, provided only that where all or any part of such assessments remain unpaid and are payable in installments, the amount apportioned to each parcel shall be credited against the last unpaid assessment installment, then such excess shall be credited against the next to last unpaid assessment installment. The need to make advances from the Reserve Fund may result in its total depletion. prior to reimbursement from resales of property or delinquency redemptions. In that event, there could be a delay in payments to owners of the Bonds. In the event there are insufficient funds to pay in full the amount owing and unpaid upon the Bonds, and the City Council determines that such shortage of funds will, in all likelihood, not be collected (through sale or redemption of property), then the payment of such principal and interest shall be made ratably to the aggregate of such principal and interest then due without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest. Covenant for Superior Court Foreclosure In the event of delinquency in the payment of any installment of an unpaid assessment, the City Council is empowered to order institution of an action in the Superior Court of the State to _ foreclose the lien of such delinquent assessment, as authorized in the 1915 Act. In such action the real property subject to the delinquent unpaid assessment may be sold at judicial foreclosure sale. A judgment debtor (property owner) has 140 days from the date of service of the notice of levy in which to redeem the property to be sold. If a property owner fails to so redeem and the property is sold, his only remedy is an action to set aside the sale which must be brought within 6 months of the date of sale. If, as a result of such an action, a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made. The constitutionality of the aforementioned legislation (which repeals the one-year redemption period) has not been tested and there can be no assurance that, if tested, such legislation will be upheld. Although judicial foreclosure proceedings are not mandatory, pursuant to the Bond Indenture, the City will covenant with the registered Bondowners that it will cause to be commenced, and thereafter prosecuted, court foreclosure proceedings upon any parcel against which there is a delinquent unpaid assessment (plus costs, penalties and interest), as authorized by law. The Covenant provides that such foreclosure proceedings shall be commenced within 150 days following the date of such delinquency and that it will be diligently prosecuted to final judgment and sale. Commencement of such foreclosure proceedings may be deferred by the City, however, if funds are advanced to the Reserve Fund sufficient to maintain the Reserve Fund in amount equal to the Reserve Requirement. In the event a Superior Court foreclosure or foreclosures are necessary, there could be a delay in payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale. It is possible that no bid would be - 15 - received at the foreclosure sale, and in such event there could be additional delay in payment of the principal of and interest on Bonds or such payment may not be made in full. See the section entitled “SPECIAL RISK FACTORS - Price Realized Upon Foreclosure” for a discussion of the certain circumstances under which property to be sold upon foreclosure may be sold for less than delinquent installments of principal and interest of an assessment. THE ASSESSMENT DISTFUCx’ Description of Project The City has undertaken to conduct assessment district proceedings to provide for the acquisition of certain public improvements for the benefit of land within the Assessment District. The public improvements to be financed through these assessment district proceedings are the acquisition and construction of public improvements to and along Cannon Road, Palomar Airport Road, Armada Drive and I-ego Drive, including street improvements, street lighting, landscaping utilities and underground improvements (water, storm drain, sewer, reclaimed water, %%3 . .._............” . . . . . . .4‘ . . . . . . . . . . . .., :.,:: j-y ~~~~~~~~~~~~~~~a:~ electric facilities) and a pedestrian walkway, benefitting the area ::.:.:..,:::::::::: .,., ,__........,._.... ,__.._. .__.. . . . . . i... . . . . . ./.. ..i......( commonly referred to as, Carlsbad Ranch, together with appurtenances and appurtenant work and incidental costs and expenses related thereto (collectively referred to as the “Project”), all as more completely described in the Engineer’s Report. For a more complete description of the work to be acquired constituting the Project, see the section below entitled “Method of Assessment.” The Project is to be acquired pursuant to the Acquisition Agreement. See the subsection entitled “The Acquisition Agreement.” :.:.:.:.:.:o . . . . ..~....,.,.,. Project work ha been accomplished by ,~~~i--~~~~~~ :::::::::::::,:.. . . . ..i....i.... . . . . . . . . . . ~~~~~~~~~~~heDeveloper,Carlsbad Ranch Company,~~~~~~iringvarious manage&$$$&&& . . . . . . ..i..... .:..,.,.:, i..... i... . . . . . . ..,._...:_.. and subcontractors for grading and construction work Project work was substantially completed . ....- on &f&~&@$l997, and has been accepted by the City for acquisition. ..,i.,.,.,. >..:.:.:.:...:.: . . . . . . .,.,. :.&:. ‘Location and Terrain Situated in the ~~~~~~part of the City near the northeast quadrant of the interchange of Interstate 5 and Palomar Airport Road, the Assessment District is irregular in shape and generally bounded to the north by Cannon Road (as extended) and to the south by Palomar Airport Road, to the east by Hidden Valley Road and to the west by Paseo de1 Norte and Car Country Drive. Total Assessment District area is approximately 44$:4 acres, all within the city limits of the City. The Assessment District is somewhat hilly in terrain. .‘. Summary of Assessment Procedure Pursuant to the proceedings being used by the City for formation of the Assessment District, all costs are either estimated or ascertained prior to doing the work or making the acquisition of the improvements or property involved. Under such proceedings, the assessments are then levied, cash collections of the assessments made (the “Cash Collections”) and Bonds sold to represent unpaid assessments. The money obtained from Cash Collections, if any, and Bond proceeds are used by the City to pay for the acquisition of public improvements, for the property or rights of way to be acquired, if any, and for incidental expenses. Proceedings can be initiated by either a petition or by the City Council without a petition. The Assessment District was initiated by a petition of Carlsbad Ranch Company, $@J the ..,.,. . . ,. . . . . . . . . Developer. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e City and the Dev- .:.:.,.: :.:.:.;:.,.:. ..:, : ..:.:.:. ,._.,_,. ., ,.,. .,... .,... . . .,.,.,.,.,.,.,.,.,.,........? . . . . . . . . . . . . . . . . . . . . . . . . ..~ .,...,., eloper ~~~entered in.~~~~‘X~~~~~~:;~~~~~~~~~~~..esiai;i;sfing..iheierms for acquisition of the - 16 - - - - I public improvements by the City. The Developer caused the improvements to be constructed pursuant to the terms of the Acquisition Agreement. After commencement of construction of the improvements constituting the Project, the Assessment Engineer prepared a written report (the “Engineer’s Report”) which contains, among other things, the estimate of Project costs and the assessment for each parcel to be benefitted. The total amount of the proposed assessment was based upon the engineer’s estimated cost of the Project’. The individual assessments were spread among the various parcels of land within the Assessment District on the basis of the special benefit to be derived by each parcel from the Project. (See the “Method of Assessment” herein.) The Engineer’s Report was filed and preliminarily approved by the City Council of the City on March 25, 1997. A Modified Preliminary Engineer’s Report, dated April 4, 1997, was thereafter filed and approved by the City Council on April 15,1997. Thereafter, notice was published in a local newspaper designated by the City Council for that purpose. In addition, notice of the proposed assessment was mailed to each of the owners whose property was proposed to be assessed. The notices advised the property owners of the filing of the preliminary Engineer’s Report, the date, time and place for the public hearing on the Project, the proposed assessments and the right to protest. The mailed notice also advised the property owners of the precise amount proposed to be assessed against their properties, as shown in the preliminary Engineer’s Report. Property owners had the right to file written protests prior to or at the commencement of the hearing and to be heard at the hearing. No written protests were filed by any of the owners of land located within the District. ~~~~~~~ on these matters i$#$&eld by the City Councfi of the City on May I3 and .._............... . . . . . . . . June 3,:“:~~~~~...~~..~~~. conclusion of thi’....~g-.& the city Council, after making any necessaIy modifications, adopted resolutions confirming the assessments, overruling protests and ordering the . work Confirmation and recordation of the Assessment Diagram in the Office of the Superintendent of Streets and filing with the County Recorder have occurred, and the assessments have become liens against the various assessed parcels. The property owners have been given published and mailed . . . . . . . . . . . . . .,./(.,.,.... . . . . . . . . . ,.(. _.. notice of the opportunity to pay all or a portion of the assessment in cash ~~~~~irs~~~(the t i_...,.,., .,_,._., .,. ,. “Cash Collection”)~ ne notice further actvised the property OwnerS that if ;-&y-g~~..~~ not made, Bonds would be sold to represent unpaid assessments. The cash payment period ended @l@ . . . . . . . .._.............. .; ,.......................,.,.. .,. ,.,.............. . . . . . . . . ..(... . . ..(.,...,..... . . . . . . . _............./. . . . . ..(.. g, 1997, ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Any property owner who pair:; _,.,...,.,., .,.,._.,. ,.,.i_,,.i..,_,.,.,.i_.,.....,.,., ,._., .ii,.ij,., assessment during the Cash Collection period was entitled to a reduction in the amount of such assessment equal to that portion of the assessment that would otherwise be used for any underwriter’s discount, and for the funding of the Reserve Fund. Payments (or credits) totalling $ representing partial prepayment of the assessments levied on Assessment Parcels Nos. 2, 11, 18 and20 and full prepayment of the assessment levied $@ Assessment Parcel No. 21 were made during the Cash Collection period and Bonds are being issued in the amount of assessments levied less the amount of such assessment payments reduced by the pro rata amounts which would have been required for discount and Reserve Fund contributions. Environmental Review The land included in the Assessment District was originally included in the City’s Specific Plan 207, adopted by the City Council of the City in 19!Z In 1994, an area in the District was selected for construction of the LEG0 Family Park and Specific Plan 207 was amended by Amendment 207 (A), which authorizes construction of the Project supporting development of the LEG0 Family Park and adjacent parcels in the District. On January 9, 1996, the City Council of the City adopted Resolution No. 96-1, which certified the Environmental Impact Report on the Carlsbad Ranch development and fie EIR became final ~~~~~~~r~~~~~~~~~~~Febrna~ 9, . . . . . . . . . . . . . . . i,.,.i_...i..,.,......, ,._.,.,._C./,.(.,.,...,...........,.,. >:.> . . . . . . . . . . . . :.:...:.:.:.:.:.:.> ,.,.,. :.:.:.:.:.:...: - 17 - - . 1996, all in compliance with the California Environmental Quality Act (“CEQA”) (Public Resources Code, Section 21000 et. seq.), as amended, the State CEQA Guidelines and the City’s own local CEQA guidelines. The Carlsbad Ranch Specific Plan Amendment was approved by the California Coastal Commission on April 11, 1996. The Unit 1 Final Map (Phase 1) was recorded September 11, 1996 and Units 2&3 (Phases II and III) Final Maps were recorded April 1, 1997. Coastal Development Permit No. 6-96-9 Phase I (Unit 1) and Phases II and III issued April 11, 1996 and Notice! of Acceptance occurred August 20, 1996 and March 17, 1997. Method of Assessment The law requires and the statutes provide that assessments, as levied pursuant to the provi- sions of the ~~~~~~~~~~~~~~~~~~~1913, must be based on the special benefits that the :.:.:.;,:,:,:: . . . . . . . . . . ..j......:.... i . . *::.:::: ,. ., ., ,. properties receive..from'ti;;e'w~~~'o'~'~~provement ~di;a~~~~~~~~~~~~~~~~~~~~~~~~~~.f ,.,:.: ,."."". ~ . . . . . . . . . . . . . . . . . . . . . . . . 1 . . . . . . :.:.; _........ .,.,... . . . . ..i .A.... ..I.. .. i:.:.:.:.:. .:.:.:.:.:y..:.:.*.:.:.:...: . .._.. ::. ..:. :.:.:.:.:.:.:.:: .,./ ~..::.‘:.:.:...:.:.:.:.:.:.:.: :.:.: :.>> n~~~~t.~~~~~~~~~~:~~~~~~~ The statute does not specify the method or formula that should be : :.:,:.::. j:.::.~ij;):.))))::: _,...,. I”‘-:.;:.::: ,........ . . . . . ..i_.............. . . . . . . . ..A........ . . . . . . . . .._. i.....v used in any special assessment district proceedings. The initial responsibility for the identification of such method or formula rests with the Assessment Engineer, who is retained for the purpose of making an analysis of the facts and determining the correct apportionment of the assessment obligation. For these proceedings, the City retained Galen N. Peterson, San Diego, California as Assessment Engineer. The Assessment Engineer makes its recommendation at the public hearing on the Assessment District, and the final authority and action rests with the City Council after hearing all testimony and evidence presented at that public hearing. Upon the conclusion of the public hearing, the City Council must take the final action in determining whether or not the assessment spread has been made in direct proportion to the benefits received. Such action has now been taken and the assessment has now been confirmed in these proceedings. In allocating or “spreading” the costs of the Project, it is first necessary to identify the benefit that the public improvementswill render to the properties within the boundaries of the Assessment District. In further making the analysis, it is necessary that the property owners receive a special and direct benefit as distinguished from a benefit to the general public. The overall benefit derived by the properties within the boundary of the Assessment District is construction of the public improvements, which will enable the properties to develop. The public improvements include street improvements, street lighting, landscaping, utilities and underground improvements (j$@@#$water .,:.:.y.:.:.:.: . . . . . . . c’ . . . . . . . . . :.;.:,. . . . . . . .:.... . . . . . ..,..._.... . . ..C ..,.:,._ i.:.>::::;:‘:i’::‘:p:;.yJ:::::::::... , ~~~~~li;it~~~~~~~~storm drain i##: sewer facilities) ~~~~~~~~~~~~~~ . . . . . . . . . . . .p. __....i. .i.. . . . . . . . . . .A.. . . . i..... .L.,.. _... . . . . . .._ I ..n ::,:,.,.,: ~: :..,. ~ . . . . . . . . . . .:.:,..:,: .,: :,.,:,: . . . . . . . . . ,,.. .,. . . . . . ,._.,. ,. ,. .., ~,~~r?~dactr,~~~~ and a public w&way. i~:~~~~f~~~~~:~~~~~~~~~he pr&&&<~&$$~;'the ::::::.: ._.ii,.,.i,.j,.i... . . . . ,.: . . . . . :.::.: .,.,.: : ,., :.:.vw ,...,..... .:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:...:.:.:.: . . . :.:.;.:. .:. .:...:.):.f,.:.:.:(.:...:.~.:.:.:.:.;.:.;.:.,.:.:. Assessment Drstnct boundary are undeveloped. Because of the interrelationship of the various public improvements needed for future development, the assessment district funding and acquisition mechanism is an efficient way to fund, construct and acquire the improvements. The Carlsbad Ranch Specific Plan Amendment defines the allowable type and intensity of land use and provides detailed development and design standards and criteria. The proposed land uses as well as other development criteria, as set forth in the Engineer’s Report, is summarized in the table shown below. - 18 - - Assessment No. t(2) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 ii (2) 21 22 TOTALS R/W for Roads Totals Land Use 42 Retail Golf GM/R&D/Office Golf R&D/Office R&D/Office R&D/Office R&D/Office R&D/Office R&D/Office (NA@U) R&D/Office :@j Street ?~gD,Office R&D/Office Open Space Resort LEGOLAND :$#$$f# Drive .:.:.:,:.:.:.:,:.> . . . . . . . . .._ Retail GIA Hotel/Retail Net Acres 53.80 15.95 45.60 10.87 26.45 5.77 5.78 4.84 4.00 4.95 4.04 3.79 1.97 3.38 3.45 10.00 52.88 128.32 0.88 10.7 17.76 10.47 425.65 21.75 447.40 AD’,- (1) 8,977 0 0 2,395 600 1,443 1,445 1,210 1,000 1,238 1,010 948 0 845 863 0 7,500 8,182 0 6,023 2,305 3,600 49,582 (1) Average Daily Trips (ADT) is from the Final Program EIR and per “Traffic Study for the LEGOIAND Carlsbad” by Kaku Associates, Inc. April 1994. (2) The size of building and amount of ADT was amended and reduced. In addition, the development standards, requirements and policies of the City relating to these improvements were considered. In determining the method of assessment, it is also necessary that property owners in the District receive a special benefit to their property as distinguished from that of the general public. This special benefit is different for most parcels in the Assessment District because of several factors, including location of the parcel in relation to the improvements and whether or not the parcels have direct access to the improvements as well as the development potential of each parcel. Each of these factors has been taken into account in the apportionment of the cost to each parcel in the Assessment District as described below. Benefit Zones. Five zones of benefit have been established to spread costs of similar benefit within each zone. These five benefit zones are shown on the Assessment Diagram and are described as follows: 1. Zone A includes those parcels in the northern portion of the Assessment District that benefit from the Cannon Road improvements. - 19 - . - 2. Zone B includes those parcels in the southern portion of the Assessment District that benefit from the Palomar Airport Road improvements. 3. Zone C includes those parcels in the southern portion of the Assessment District that benefit from the acquisition of the existing liens for previous Assessment District No. 86-l (Palomar Airport Road West). Assessment Number 18 (formerly identified as Assessor’s Parcel Numbers 211-0X-19 and 212-041-05) is not included in this zone since it will be responsible for reimbursement to the City for costs that the City contributed to @!J& No. 86- 1 for that Assessment Number. 4. Zone D includes those parcels in the central portion # the Assessment District that benefit from the Armada Drive and Lego Drive common improvements. The term “common improvements” is used to refer to full width grading of the roadway, the paved inside lanes, the paved outside lanes that are not adjacent to parcels in Zone Dl, median curbs, water, sewer, reclaimed water, and the traffic signal at Cannon and Lego Drive. 5. Zone Dl includes those parcels adjacent to Armada Drive that receive driveway access from Armada Drive and benefit from the Armada Drive frontage improvements. The term “frontage improvements” is used to refer to, the paved outside lanes adjacent to these parcels, outside curb and gutter, sidewalk, street lights, landscaping and irrigation, median landscaping, and other frontage improvements adjacent to these parcels that would normally be required of development projects. The following table summarizes the Assessment Parcel Numbers that are within each - zone identified above. Zone of Benefit- : Assessment Numbers’ in Zone A 3,4,5,6,7,8,16,17,19,21 B 1,2,9,10,11,12,13,14,15,18,20,22 C 1,2,9,10,11,12,13,14,15,20,22 D 4,6,7,8,9,10,11,12,13,14,15,18,21,22 Dl 4,10,11,12,21,22 SDecial Assessment Ctiteria. The specific criteria for spreading the costs of the various improvements with the Assessment District are as follows: 1. Cannon Road. Cannon Road has been constructed to major arterial standards with four traffic lanes and a raised median within a 102 foot right-of-way. Zone A of the Assessment District is within the boundary of a proposed Bridge and Thoroughfare District described in a report titled “Bridge and Thoroughfare Fee Study Report for Cannon Road West”, dated December 11, 1995. This report makes a recommendation to collect a facility fee based on average daily trips (ADT) within the boundary of the Bridge and Thoroughfare District for the “common improvements” as described in the report. The report also recommends that a developer who designs and/or constructs any of the improvements covered by the fee program may be eligible for credit and/or reimbursement, subject to the approval of the City Council. Based on the above, the cost of the Cannon Road improvements will be spread to the benefiting parcels within Zone A as follows: The “common improvements” as described in said Bridge and Thoroughfare District Report will be assessed based on ADT to the parcels - 20 - - - in Zone A. These parcels will receive a credit for the amount of “common improvements” included in the Assessment District. These parcels will pay the remaining fee at the time of obtaining building permits for the remaining costs of Cannon Road “common improvements”. .: ‘* . . .._......................,... * . . . . . . . . . . . . . . . . .._.I.....................i.. :( . . .../.. ~ ~..” ..: /....... .,.......,.....~ .., ..... ..-. . . . . . . . . . . . . . . . . . . . . . . . . . ., ~~~~~~o~~f~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~,:fi~~~~~~i:~~~~~~~ : ~:::::::::::::::::::::g:::.,:.-::.:.: ..‘.:(.) ~ ,.:.. .,.,., . . . . . . . . . . . . . . . / ,.,. . . . . . . . . . . . . . . . . ) . ~~~ii;iit~stas:,a~:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:~:i~~~:~~~~~~~~~~~~~~ :I :..: :..x;.:..:::::i.:::::::: :y:.:::::.::::::: . . . ::::,.:.:.:.:...::.::.:.:::.::.:::::::.:::::::.j:.j:, j:::.;::::::.:::::::: .):.:.,.,.,.,.;,.,.,. ~,. . . ,.... ..,. ~:: . . . . . :...:.:.:.:.:.:.:.y..+$: . . . . :‘.A::. . . . . . . . . . . . . . .._.......: . . . . . . . . . . . .:::.:.:.: . . . . ,:.:.::. .: . . . . . :.:.,.:. ,,,. .,,,. ,, .:..:...:.: :,: .;.:: :.:.. :,+. .:.,.: of “frontage improvements” on the north side of Cannon Road are not assessed since they are the responsibility of adjacent property owners not included in the Assessment District. 2. Palomar Aimort Road. Palomar Airport Road has been widened at intersections and for right turn pockets, a sidewalk constructed, utilities relocated, overhead electric lines located underground, and traffic signals and center medians modified and enhanced. These improvements will be assessed based on ADT to all benefiting parcels in Zone B. 3. Acauisition of SDecial Assessment Liens for A.D. No. 86-l. Assessment District No. 86-l previously financed improvements to Palomar Airport Road. Liens for A.D. No. 86-1 are currently outstanding on several parcels within the boundary of this Assessment District No. 95-l. These existing liens will be acquired in this assessment proceeding from Bond proceeds and assessed to parcels in Zone C based on the ADT of the parcels. 4. Armada Drive and Leao Drive to Roundabout. Armada Drive has been constructed from the Roundabout in Lego Drive to Palomar Airport Road with four traffic lanes, bike lanes, sidewalk, a raised median in some portions of the roadway, water, sewer, reclaimed water and storm drain facilities. Lego Drive, with similar proposed improvements, has been constructed from Cannon Road to Armada Drive. The “common improvements”, as described in Zone D above, will be assessed based on ADT to all benefiting parcels in Zone D. The “frontage improvements”, as described in Zone Dl that are adjacent to parcels in Zone Dl will be assessed based on the number of driveways which provide access to each parcel from Armada . Drive and Lego Drive. The storm drain improvements are assessed separately. 5. Roundabout and Lena Drive (southern Dortion). The cost of the Roundabout improve- ments that pertain to the southern part of Lego Drive and the public portion of the southern part of Lego Drive from Armada Drive to Assessment Parcel No. 18 will be assessed to Assessment Parcel No. 18 since they are of specific benefit to only this parcel. 6. Storm Drain Imm-ovements. Public storm drain improvements are located in Armada Drive and in an easement in the private portion of Lego Drive. These storm drain improvements will benefit all of the parcels, except Assessment Parcel Nos. 2,4 and 20 which are in a separate drainage basin, and will be assessed on the basis of the number of acres in each parcel. The number of acres will be further adjusted for either low runoff or high runoff based on land use as described in the report titled “Master Drainage and Storm Water Quality Management Plan”, dated March 1994. The cost of the improvements to be assessed will not exceed the aggregate cost of the Planned Local Drainage Area fees for these parcels. Parcels not assessed include open space, golf course and agricultural parcels (assessment numbers 1, 3, 5 and 16) and streets (assessment numbers 13 and 19). 7. Exist& Water Line Relocated. An existing water line required relocation during construction of the improvements. The cost of relocating this water line will be assessed to all parcels, except streets and open space, based on the number of acres in the parcel since that is a measure of the amount of water that each parcel benefits from the water line. 8. Pedestrian Wakvav. The pedestrian walkway improvements (wide sidewalk, retaining wall, landscaping and benches) are located along the western side of Armada Drive from - 21 - Assessment Parcel No. 21 to Assessment Parcel No. 22 and continuing in an easement on the western and southern side of Assessment Parcel No. 22 to the southeastern comer of Assessment Parcel No. 22 at Armada Drive. The pedestrian walkway directly benefits those parcels in the immediate vicinity of the walkway. However, the pedestrian walkway will also be used to view The Flower Fields that are grown on Assessment Parcel No. 1 during an eight week period of the year. The land 1% Assessment Parcel No. 1 is restricted for use in perpetuity as agriculture. The attraction of these flower fields and the use of the pedestrian walkway to view these flower fields will also benefit Assessment Parcel Nos. 2,3,4,5, 17, 18 and 20 for an eight week period during the year. Therefore, these proposed pedestrian walkway improvements will be assessed to all parcels in the Assessment District based on the ADT of the parcel further adjusted by a factor of 8/52 times the ADT for Assessment Parcel Nos. 2, 3, 4, 5, 17, I8 9. Nil Assessments. Three Assessed Parcels within the Assessment District have been given a zero assessment. Two of these parcels, Assessment Parcel Nos. 13 and 19, are private streets used for access to adjoining parcels and can not be built upon. The remaining parcel, Assessment Parcel No. 16, is an open space parcel which receives no benefit from the improvements. Incidental expenses, Bond discount and Reserve Fund expenses will be distributed as identified in the preceding paragraphs or prorated to each parcel in accordance with that Assessment Parcel’s share of the total cost. Land Use and Zoning The Assessment District area is covered by the City’s General Plan, and by Specific Plan 207, providing for mixed office, research and development, retail, hotel and agricultural uses. Amendment 207(A) to Specific Plan 207 was adopted by the City in 1994 to include the ~~~&&G@$ Family park use, ::::::::.::.:::::.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:...:.:.:.~:.:. A substantial portion of the land within the Assessment District is unimproved. ~~~~~~~ .,.,.,.,.,. ,., of improvem’~~~~~~~~ The Acquisition Agreement California law authorizes the financing and construction of public improvements by a private party and the acquisition by a public agency ofsuch improvements. ~~~~~~~~~~~~~~~~ ..t . . . . . ...? as the developer in *e Assessment District, in order to proceed in a t;~~~~~~~~~~~~~~~~~structed such public improvements and entered into an Agreement for the Acquisition, Construction and Financing of Certain Public Improvements, Assessment District No. 95-1 (Carlsbad Ranch) on January 15, 1996 with the City (the “Acquisition Agreement”) for purchase by the City of title to all of the improvements constituting the Project, including reimbursement to Carlsbad Ranch Company, L.P. for costs of incidental expenses for preparation of plans and specifications and engineering services. The Project was constructed by or under the direction of Carlsbad Ranch Company, L.P.. - 22 - The Acquisition Agreement further provides that upon sale of the Bonds, proceeds will be paid for the completed Project pursuant to written instructions executed by ~~i~~~t~~~~~~~~~~~~ ~~~~~~~~~.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ tKk/Pibj@6iy; : : (. ... :: ,:i ::‘.:..:::.::..:.:.:...:.:,.:.: i.:.::.::.:::::::::.::.::::.::~ ~.,.,.,.,.: . . . . . . . . . . ( : : . _ ..: :y.: :. .: .,.,, ,:.:. . ..:...::..: :.: The City is required to pay for acquisition of the Project the lesser of the actual cost of the improvement or the amount budgeted therefor in the Acquisition Agreement. Any surplus Bond proceeds existing upon completion of construction of the Project and acquisition thereof by the City may be used and applied by the City to pay Carlsbad Ranch Company, L.P. for any actual cost overruns above the budgeted costs actually incurred and paid by Carlsbad Ranch Company, L.P.. The Acquisition Agreement also requires Carlsbad Ranch Company, L.P. to ~~~~~~~~~~~~~~~ . . . . . . . . . . .._........ . . . . . . . . . . . . . . : . . . . . . . . . . :,, :, : :.. .,., .,. . . . ~~~~~~s~~~~-rii~~~~~~~~~~~~~:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ,,,,: :.:.:,:,: ;,,:. / ,.,.,,,.,.,.,. ~:.~ :.:.,.:.: ,.:: . . . . . ..: . . .: :. . . . i ‘. .A’.‘. .‘.‘.‘.‘.L .::. ::::::.‘.:.:.:.:.:.:.::..:...:.:.:.:.:.: . . . . ,.,.,., ,.... . . . . ,. ,_, ,. . . . . . . .._L... .,:.::.:.:.:.:.:.:.:.:. .+..: . . :.: ,:,.::,. :. : ..: 3: .‘: ::..: .., ;.,, :. : ., ,.:,: ., : : . : ,.,. :.. . . . . . . . ...>..... ,:: . . . . .: >:.:.: 2::.,.: ..,.: .,., ,., The Carlsbad Ranch Agricultural Preserve No. 1 was formed in 1976 pursuant to the Williamson Act, which preserves farmland and prevents the property from tax assessments on any . . . . . . . . . . . .,..... assumed use other than f~~~~~~~~~~~~~~e purpose of the Williamson Act is to help preserve .:.:.:;:.:.:.:.:.:.:.:.: . . . . . . . . . . . . . . . . . . . . . . ../.............. .._..... :.:...:.: :.: . . . . . . agricultural land by allowmg for property tax savings on agricultural land. Under the Williamson Act, landowners within an agricultural preserve can enter into contracts to restrict the use of their land to agricultural or other compatible uses in exchange for their land being assessed at a lower ~~~~~~~~~i::~~~~~~~~~ value for purposes of determining property taxes. . . . . . . . . . . ../... :...: . . . . . . . . . . . .i.. __. ._ . . . .: . . . . . . . . . . . A Williamson Act Contract covering all Carlsbad Ranch properties was entered into on February 17, 1976 (Contract No. 76-Ol), and recorded in the Office of the County Recorder for San Diego County on March 1,1976, as Document No. 76059758 (the “Contract”). On January 9,1996, the Contract was amended to bring it into conformance with the Williamson Act as it currently . relates to the findings required for cancellation and the method for calculating cancellation fees. The landowners filed a Notice of Non-renewal with the City of Carlsbad on September 3, 1991 t .~~~f’Q~~E~~~~~~~~~~~which was recorded in the Office of the County Recorder for .: .: ./.... : ,...: ,. :. ..: .:. . . . . . ..:....... f,.. . . ..: . . . . . ...! ..:....:. i... .i . . . . . i........... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . /,.. /,.,...,............ . . . .._........ . . . . San DiegoCounty on October 4, 1991, with respect to all of the property subject to the Contract. The Notice of Non-renewal put into effect a nine-year phaseout of the Contract such that the Contract will expire on December 31,2000, except with respect to The Flower Fields. The Contract will expire as to The Flower Fields on December 31, 2005, because of a fourteen-year phaseout period. In 1996 the City Council approved the tentative cancellation of the Contract with respect to 179.11 acres of the 328.84 acres subject to the Contract, to allow development prior to the Contgact expiration dates. The Certificate of Tentative Partial Cancellation was recorded in the Office of the County Recorder for San Diego County on March 5, 1996, as Document No. 1996-0107755, describing five (5) separate cancellation areas (Specialty Retail; Research and Development/Office; LEG0 Drive; LEGOLAND; and Resort Cancellation Areas) and setting forth the various conditions to final cancellation, including payment of a cancellation fee. The cancellation fee is calculated .,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . based on 12 In% of the &~@$alue of the Cancellation hea as ~~~~~~~~~~~~~~~~~~:~~ ):.~.:.:.:.:.:.:.:.:.:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..:.\...:..... certi~,ed by the city. ‘Ihe conditions have been satisfied and fi~~~~~~~~~~~~~~..~~..~~~~~~~~.~~.aii . . . . . . ..: ., .,. ,., .,. but the Resort Cancellation hea ~~~~~~~~~~~~~:~~~~~~~~~~pursuant to City Council .:.:.:.:...: .,.,. :.:.)> . . . . :.:::.>:.;.; .,._.,.,.i,.ii,.i,.,.,.,.,,....,.,...,.... ,.L_(/_i,.,.,.,.j,...,.,.,.,.,. .,.,.,.,..: :.: :.:.:.....: .,.,.: :.>:. Resolution Nos. 96-285 and 97-424, approved on August 20, 1996 and April 1, 1997, respectively. The effect of the Contract amendments and cancellations is to permit the development of the Carlsbad Ranch as set forth in the Carlsbad Ranch Specific Plan, as amended. - 23 - ~~~~~ii~~::.~~~~~~~~~~~~~ y.:.:...:...>:.:.:.: .:.,.: :. :.: ..,,. ;‘.:.> ,.,,: . . . . . . . . . . . . . .:. ..,\L . . . . . The California Government Code authorizes local jurisdictions, such as the City, to adopt specific plans as a comprehensive method of implementing its municipal General Plan. The Carlsbad Ranch Specific Plan 207, as amended, serves as a means of managing land use and guiding . development for the mixed-use development, which the Landowner Developer currently anticipates will be developed for agricultural, open space, recreational, theme park and commercial land uses. The Specific Plan is designed to allow agricultural uses to continue operating as a viable business, while permitting a mix of commercial, mixed-use, recreation, and open space uses to develop on the remaining portions of the Project site. The Carlsbad Ranch Specific Plan area has been divided into nine separate segments which have been designated as “Planning Areas.” Each Planning Area has been given a name based on its proposed form of development. Planning Area 1 - Gemological Institute of America (“GIA”), being developed as a vocational campus of GIA. (The northern most lot in Planning Area 1 is currently under a Williamson Act Land Conservation Contract and will not be available for development until after December 31, 2000.) Planning Area 2 - Research and Development uses of approximately 300,000 square feet of office space and 500,000 square feet of research and development space, east of Armada Drive. Planning Area 3 - ................ ......... ~~~~~~~etail development along the southern portion of :::::::::::::+:;:::.;~ ........ ................. ..... I .... ................... Armada Drive, with close proxrmrty to the adjacent Research and Development Area and Palomar Airport Road, including a mix of retail, lodging and office uses. Planning Area 4 - IEGOLAND Carlsbad, consisting of an inner park, outer park, parking and administration areas. Planning Area 5 - Resort, in the northeast comer of Carlsbad Ranch, ~~~~~~~~~~ LEGOLAND Carlsbad. Planning Area 6 - Specialty Retail, located along Paseo De1 Norte, planned as a more traditional automobile-oriented retail center. Planning Area 7 - Flower Fields, located along the western ridge, is to be planted annually as long as economically feasible. Planning Area 8 - Golf Course, a proposed 9-hole course, including a clubhouse and a pro shop with parking lot, providing open space buffer areas between Car Country, the Gemological Institute and the proposed resort. Planning Area 9 - Natural Open Space, consisting of steep slopes covered with native vegetation. Land Ownership and Future Development The following specific information regarding ownership of assessed parcels in the Assessment District and the proposed development of these parcels has been provided by the respective owners of such parcels. This information is included because it may be relevant to an informed evaluation - 24 - ,.,. .: .: . . < 2.’ ,::: :. . :.. . . . ..: )‘.‘... . . .,.,...,, ,~ :,:.: of the Project and the security for the Bon&. ~~~~~~Ri;~~~~~~~~~~~iniay:~~~~~~~~~~ ‘i’ .I.... . . . . . . ..,.. ~~~~~~~~~~~n~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~, . ..“A. .“‘.‘.‘.‘.‘. .:. ::~:;?~ :: :...: :..;::.x’:-$.:: ‘:k:-‘. ..“’ ..’ . . . . -:. :. j :--;.;:::.; .::,::,: ~) ::::, I .:.:::::::,: . . . . . . . :.:.i(::,.:..:i:,:,. :::,: :i’:;:i .:,. ;:::> ;..:... .,:>:. ~~~~~~~~ ~~~~~~~~~~~i’:~~~~~~~~~:~~~.~~~:ifi~~~~~. .:#&$ @w.me;ii,.caq ;p&.~me#j$~~~&. :::.I: . . . . .:.,.,. . . . . . . . ,. . . . . . . .A. :.....:.:. / : :. ~~~~~~~,~~~~~~~~~~.~~~~~~~~~~~~~~~~~~~~~~--L~:a-~~~~~~~~~:~~~~~~~,~~~~~~~~~ :.:.:..:.:.:.:.:.:.:.:.:.:. “I.:.:. .:.:...: . . .:.y+.,::;:.:.:.;:...: . . . . . . . . . . . . . . . . . :\ .,:. . . :.:.:... ::::;:::::::: .A.. :::::..:.:...:.: :<.: .:.:.:. ~ :... . . . . . . . . . . . . ../../ll/..l..’ I :. :.y.. j:.: :: ::: ..: : . . . ‘.:: . . .:.. ..: :.:::.: y:::;..:.: ..:..;:;‘: .:I: : ..:,., ,.. ..,.. ,.,.: .,.,.: .:.:.:.:.::.....:.:.:.:.:.::...: .,., : .: ,. ..::; .:: .; j:: .:,,., :... ., . . . . . . . . . . . . . ~~~h~~~i.k~~~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~.‘t~~~~~~~~~~...of $i” :‘~~~~i:ai:..~t~~~e:m~~B‘.~~~i~~~~ ..‘;;~p~~~~:.....:~~~~ .:.; ):.:.)~.:.>:.:. ., :.,.: ..\.... . . : . . i : / ..- . . . . ..:: ::. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,.,. :.:.: FACTORS - Future Land Development.” This information should not be construed to suggest that the Bonds or the assessments securing the Bonds are personal obligations of the property owners or the developers. The Assessment District is comprised of 22 assessment parcels, $aof which are owned by or under the control of principles of Carlsbad Ranch Company, L.P. (the “Developer”). The other owners are described below. This direct and indirect ownership by Carlsbad Ranch Company, L.P. represents some @% (approximately $S:~~~~~~rnillion) of the @$#@@a assessments levied in the . . . . . . . . . . . . y& . . . . . . . . .._..... Assessment District. See the section of this Official Statement entitled”‘SPECIAL RISK FACTORS - Concentration of Property Ownership” for a discussion of the potential risks resulting from such concentration of ownership. Tite Carlrbad Ranch Lkvelot)ment. The properties in the Assessment District are designated commercial, recreational and professional, including a small agricultural portion. The f@.pgof . . . .,.,. .a:. development is LEGOLAND Carlsbad, a @$i.l$ park, scheduled for completion in the sprincof ):.:.):.:.:.:.:.:.: .,., ..;. 1999. This @J$@park, to be modeled on the original LEGOLAND in Billund, Denmark, which has been in operation for 30 years, will be similar to LEGOLAND Windsor, west of London, England, which opened in March 1996 and received nearly 1.4 million visitors in its first year of operation. LEGOLAND Carlsbad is to be the first United States ~~.~~~~venture for the I$$:@ Group. :&rrounding LEGOLAND Carlsbad will be $@@&@ retail commercial development along . . . . . .............,.,.i_ . . . . . . . . . .._l F.. . . . . . . . . . . . ._.. ~~~~~~~~~~~~,a golf course, resort and hotel/time share properties, the Gemological Institute of .._.. . . . . . . . . . .; . . Amerrca headquarters and school, the industry headquarters of the National Association of Music Merchants (the latter ~0 of which ~~~~~~ completed and $@j$$$ow occupied), research and development sites on Armada Drive ~~~~~~~~~~~~~~~ito t~~.wkst of the development. .:.:.:.:.:.:.:.:-:.:.:.:.:.:.:.:.:.:.:.:.~:.:.:.:.:.:.:.:.:.:.:.:.:.:,: :.:.:.:.:.: j:.:...: The concept underlying the plan for the Carlsbad Ranch is to create a mix of distinctive, complementary and compatible non-residential land uses including offices, research and development, commercial, destination resort, agriculture, golf, education institute and LEGOLAND Carlsbad theme park. The mix of uses is supported by a pedestrian-scale circulation plan that encourages guests, employees, students and visitors to conveniently attend classes, work, shop, dine, exercise, golf and enjoy wholesome entertainment within walking distance. The plan concentrates building development within a limited area so that open space can be preserved and enhanced. Much of the most visible west-facing slope will maintain agricultural use of the site as T@J : : :. ~~~~~:‘~~. A transitional wall will create an edge to ~~~~~~~~~~~~ that will become a +:j: ;_. :.:.:i.:;~~:.:.:.:,.:::.:.:.:.:.:.:.:.:,:.:.:.:~:~ . . ..:.: . . ..i..... ;.‘,‘.:: . . . . >.: . ../ :.-...~..,:...-:.::‘.- . . .._...i. . . . . . . . . . . . . promenade providing scenic vistas of the fields, the city and the ocean. Development will be concentrated within a limited area along the western-most ridge and areas to the east. A hotel/timeshare is planned for a prominent location at the southern end of the site. The use of courtyards, terraces, landscaping, sloping and tiled roofs, distinctive massing and many of the qualities characteristic of Mediterranean buildings are envisioned. The focus of development in the north and central portion of the specific plan will be on biotech, research/corporate users and a vocational campus housing the Gemological Institute of America. The development will be a mix of one, two and three-story buildings. -25- LEGOLAND Carlsbad will be situated in the southeast quadrant of the Carlsbad Ranch. It is planned to consist of parking, an inner park of active and passive clusters, an outer park and service and administration area. All areas of the park will be heavily landscaped. The inner park will also contain water features. All areas of the park will be child and pedestrian oriented. All structures will be designed to blend in with extensive landscaping in garden-like settings. LEG0 models will be featured in LEGOLAND Carlsbad. .,"V _... .,.. A full-sefice destination resort ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ay include up to 700 suites, is proposed to be located on the northeast comer of the Ranch. The , . . . . . . . . . . . . . . . . . . . . ‘...)..:.: ,.... . . . . ,.,.,. .,.,._.,.,. ~~ai~l~~rt~architecture ~~~~~~~jii:~g:be compatible throughout the Ranch and features such .:...:.:.:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . as sloping tile roofs, terraces, arches, elevated walkways connecting the various buildings will be encouraged. A golf course, open to the public, will be situated ~~~~~~~~~~:ii:the resort adding to the .:.:.:...:. . . . ,. . . . . . .::. .,.. . . . . . . . . . open space in the Ranch. The western-most portion of the Ranch below the flower fields and adjacent to Paseo De1 Norte is being developed as a specialty retail center. Buildings have been designed and oriented to allow for views of The Flower Fields to the east. There will be a focus on food service at the end of the pedestrian access to The Flower Fields and ridge promenade. Car&us Com~anylCarltas Develoometi Cumnanv, 5600 Avenida Encinas, Suite 100, Carlsbad, CA, @#&431-5200, Fax @6@431-9020, are the parent companies of Carlsbad Ranch Company, L.P., the I&eloper. Carltas’Conipany was formed in 1959 to consolidate real estate management and landholding operations of the Paul Ecke Family. Today, Carltas Company owns over 1,200 acres of prime, undeveloped, coastal land in North San Diego County and nearly 300,000 square feet of leased commercial and industrial buildings. In addition, the companies manage and handle development responsibility for an additional 600 acres of North San Diego County land, and 300,000 square feet of leased commercial and industrial space. Carltas Company is under common ownership with the Paul Ecke Ranch, leader in the floral industry. (Over 80% of the worldwide Christmas poinsettia crop originates from the Paul Ecke Ranch in Encinitas, California.) Carl&s Development Company (“CDC”), with the Carltas Company as majority owner, was formed in 1987 to act as an operating company for property management, development processing, accounting, and other functions relating to real estate management. With a staff of 12 professionals, CDC is located in Carlsbad, California. Senior management consists of Christopher C. Calkins and John C. White, with other principal managers in the areas of leasing, direct property management, and accounting. (A fourth affiliated company, the American Florist Exchange, owns and operates the Los Angeles Flower Market located adjacent to the garment district in downtown Los Angeles. The market occupies approximately 250,000 square feet and more than one city block) Recent development projects under construction or completed by Carltas Company include the 520,000 square foot Encinitas Ranch Town Center retail center and Encinitas Ranch 18 hole championship golf course. Previously completed projects include the 27-acre Car Country Carlsbad expansion, the 154,000 square foot, 1Zacre San Diego International Floral Trade Center in Carlsbad, the 22-acre Carlsbad Price Club commercial site, and the 250-acre Otay Mesa property exchange, together with several other projects. The Paul Ecke family and its principal companies, which have been located in North San Diego Country since 1926, have a strong civic identity and presence in the communities. Portions of Carlsbad Beach State Park in Carlsbad, Magdalena Ecke Park and the Magdalena Ecke YMCA in Encinitas are the result of the family’s involvement in the North County. Paul Ecke Central - 26 - School, a public elementary school in Encinitas, renamed in the mid-1970’s, reflects the community perception of the family’s positive role in North San Diego County. The Carltas Company is also developing the master-planned community known as Encinitas Ranch, consisting of approximately 830 acres'~~ii~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ .:.. :,... ..y.... . . . . . :.:.y.:.:.y. . . .:.c.. . . . . . . . . . . . . . . . . .j:. . . . ..,.. / ..,.... . . .,..... . . .,.,. ,, ,, . . . . ::.:::(.):.:.:.::.~:.:.:.:... 2. un~tsii:iw!~si.i:i,~~~~~~~~~~~~~~:~~~~~~~~~~~~~~~~~~~~~~~~~"iocated in t'i;e"'%ity".~~"En~~~~tas; ~~i3~~~~ia;'alsoon'the pacific Coast'i$t south ofC~~i~~~~:"E~~initas Ranch is a mixed-use project that incorporates residential, open space, public facilities, recreational, agricultural and commercial uses. Encinitas Ranch is currently the site of the Paul Ecke Ranch, the world’s largest poinsettia producer. Uses proposed by the Developer (and outlined in the Encinitas Ranch Specific Plan) include: open space, golf course, park, residential, commercial, and mixed-use development. As of ,. .,.../,.,.,., May 1, 1997, the ~~~~~~~~~ii~~~~~~~~~shopping center at Encinitas Ranch had been 100% .:.:.: . . . . . . . . . . . . . . . . . . . . . . ..::: ,.i... leased, 189 single-family lots had been sold, 530 single-family lots were in escrow, and 138 multi- family lots were in escrow. Grading had begun on the golf course, which is scheduled to open in March of 1998. Mana ement Pers*nne*. :~~~~ ~~~~~~‘~~~~~~ ~~~~~~ i..... . ..\....../.... . . . . . . ...// . . . . . . ..i.. i _I........\....\/. . . . . . ._ . . . . .._.. ,.,........._...................................................... .._.......,.......,.....,...,.. ._.,. ..,..., .,. . . . . . . . . . ,.....,........_...,.... . . . . . . . . .._. . . . . . . . . . . . . ..:. . . . . . . . . ..,..... 2. Chrisfuoher C. CaZkins. Chris Calkins is the Manager of Carltas Company, a California limited partnership and President of its corporate General Partner, Carltas Management. He is Executive Vice President of Carltas Development Company, its corporate subsidiary, and of _,.. .,_,.. /_. .,. ,.,.,. ‘~~:~~:~~~~~~~~~~~~~~~~~~:~~~~~~~ at C’rlsbad Ranch. Mr. Caltins is also General :.:....-. .A..... ./..L.. . . . . . . . . . . . ..A. ._. ._. ._. ._. _. _. .__, -. Counsel to Paul Ecke Ranch floriculture activities and related businesses. Prior to joining Carltas and Paul Ecke Enterprises in 1986, Mr. Calkins was Partner of Gray, Cary, Ames & Frye (now Gray, Cary, Ware & Freidenrich), a major San Diego law firm. . . . . . . . . . . . . . . . . . . . . . . . . Mr. Calkins was founding director of Scripps Bank, La Jolla, Califormag@@e continues as director . :....n.. and a member of the Compensation, Audit and Nominating Committee of the Board. Mr. Calkins graduated from Occidental College in 1967 (B.A., English Literature) and served as an officer in the U.S. Navy from 1968 to 1970 in Southeast Asia. Mr. Calkins is a 1973 graduate of the School of Law, UC. Berkeley (Boalt Hall). 2. Juhn C. White. John C. White is the President of Carltas Development Company. Mr. White is primarily responsible for company real estate sales and leasing/marketing activities, and also has major responsibilities in development projects and land management. Mr. White began his association with Carltas in May 1987, but has represented the Ecke family in commercial real estate brokerage transactions since 1977. Mr. White started his real estate career with the Carlsbad office of CB Commercial Real Estate in 1976. A 1968 graduate of the University of California at Los Angeles, Mr. White became a licensed California real estate broker in 1976. Mr. White is an active member of the board of managers for the Magdelena Ecke Family YMCA and its past Chairman (1991-1993). Carkbad Ranch ComDanv, L.P., the Developer, 5600 Avenida Encinas, Suite 100, Carlsbad, CA, @@~431-5200, Fax &@431-9020, a California Limited Partnership, is @@affiliate of Carltas >. . . i... . . . _...... ..i .I .._L . . . ..i Development Company. Carlsbad Ranch Company, L.P. was formed to develop the Carlsbad Ranch. Mr. Calkins and Mr. White are directing its operation. The Carlsbad Ranch Financinn Plan. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ,.,.,_i,/_i ...i., ,. .,_,., .,:;:~:~::.:‘::::::‘::.:::$+:.:?:<.::’;: ::‘.:.::~.j::::.~:;~~::~:~::.:::.’:..~,:~~::::~:::::,:::~:~:~:...:.:.:.:.:.:.:::::~,.::.:::::~::~: . . . . . :.:... : . . ~~~~~~~~~:~~~~~~:~~~~~~~~~~~~,~~~~~~,,~~~~~~~~~:~~~~~~~~~~~~~i~~~~~ .,.,, ,.,., . . ,. . . . ,.. . . . . . . . . :... i . . . . . ..L........ ..,._. ,.,...::..:. . . . . . . . . ..? . . . . . . . . . . . . . . . . ,... ..,. :-:... : . . ; . - 27 - 7Iae Other Landowners. The balance of Carlsbad Ranch, as shown on the assessment roll in -28- CITY OF CARLSBAD LIMITED OBLIGATION IMPROVEMENT BONDS ASSESSMENT DISTRICT NO. 95-1 (Carlsbad Ranch) LAND OWNERSHIP AND ASSESSMENTS Assessment No. Owner* Net Acres Confirmed Assessment Percen f of Totai Assessment- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CB Ranch Enterprises Craig Realty Group - Carlsbad, LLC Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. National Assoc. of Music Merch., Inc. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Ranch Co., L.P. Carlsbad Estate Holding, Inc. LEG0 Carlsbad AG a Swiss Corp. LEG0 Carlsbad AG a Swiss Corp. Craig Realty Group - Carlsbad, LLC Gemological Institute of America, Inc. Carlsbad Ranch Co., L.P. TOTALS 53.80 $34,727 .OO 0.25% 15.05 990,040.00 7.22% 45.60 29,434.OO 0.21% 10.87 779,253 .oo 5.68% 26.45 84,492 .OO 0.62% 5.77 463,853 .OO 3.38% 5.78 464,657.OO 3.39% 4.84 389,090 .OO 2.84% 4.00 318,336 .OO 2.32% 4.95 579,031 .oo 4.22% 4.04 507,015 .oo 3.69% 3.79 487J30.00 3.56% 1.97 3.38 268,994 .OO 1.96% 3.45 274,565 .OO 2.01% 10.00 - 52.89 1,230,843 .OO 8.97% 128.32 3,435,873 .OO 25.05% 10.70 664,254 .OO 4.84% 17.76 1,361,644 .OO 9.93% 10.47 1.351.776 .OO 9.86% $13,715,107 .oo 100.00% - Owners as shown in Engineer’s Report. Ownership may be transferred prior to sale and delivery of the Bonds. @$@@#@f?! Gemological Institute of America, Inc. has an option to purchase !&sessment : :.... :.:.:::>:.:.:i::.:::.:<.$;::.:.:.:::.:.>:$ garcel &rmber 4, and Grand Pacific Resorts, Inc., a California corporationj has a&option to purchase Assessment Parcel No. 22. The @@@Landowners have provided the following information concerning themselves and .:.:::::+:.:.::: :::.:.::;:: their development plans: Car&bad Estate Holdinp, Inc., 5600 Avenida Encinas, Suite 130, Carlsbad, CA 92008, (760)438-5570, a California corporation, is planning to develop ~~W~~~~~~~~~~~~~~~~essment Parcel No. 17 .I/\...... < . . . . . . . . .; i... . . . . ..A. .A\.. . . . . . . . . . . .._..... ;., _. ._ ,_. _. __, ._ ._ as a destination resort hotel. Carlsbad Estate Holdmg, Inc. 1s a wholly owned subsidiary of the LEG0 Group, and the resort hotel is planned to be developed ‘~~~~~~~~~~~~~~~~~~~~~ . ..‘i.. :~~~~~~~~~~~LEGo~ND Carlsbad. .:...3; . . .._. .._....... ::::::...:::::.. . . .A,.:.: . . . . . :.:.:.:.:.....,.:.:.:.:.: . . . . . :.::.:,:.:, .:.::. :... :.,.: .:.,.,.; ,..,...,,,,, :::..: . ...:,.:: ::...:.;:.::...:.:.~::::.. - 29 - Crain Realh, G~OUD. Curlsbad. LLC, 1500 Quail Street, Suite !#$Newport Beach, CA 92660, (714)224- 4100, Fax (714)224-4101, a California limited liability company, is developing Assessment Parcel Nos. 2 and 20. Craig Realty Group is a real estate development company grouping together professionals with expertise in particular fields of real estate, whose strategy is to develop and operate architecturally thematic, consumer friendly, high volume outlet projects. Steven L. Craig is the Managing Partner of Craig Realty Group and, as such, oversees the development and operating functions of the company, including site selection/acquisition, governmental entitlement, construction, financing and operations. Mr. Craig was formerly President, Chief Operating Officer and Director of Chelsea GCA Realty, Inc., a New York Stock Exchange REIT. Prior to the formation of Chelsea GCA, Mr. Craig was a principal of its predecessor company, Ginsburg Craig Associates. During his ten year tenure at Chelsea GCA and Ginsburg Craig Associates, he was responsible for the development of 10 centers located in 5 states. He was also involved with all aspects of the shopping centers’ operation. The Group’s Carlsbad Ranch development, known as Carlsbad Company Stores, will be a specialty retail shopping center which will feature a mix of quality, upscale retailers, designers and manufacturers. Groundbreaking on the center took place ~:~~~~:~ 1997. The center will consist .?.I.. . . . . . . . . ..: . ..” of 300,000 square feet of retail space to be delivered in @&$phases. Carlsbad Company Stores is :.:.:.:.:.:.:.:.:.:.:.:.:.:.: scheduled to open i$$#J October of 1997 with $Z&OOO square feet of retail ~~‘fj~~~~~~spac~~ The .::~:i:i:~:i:~~:.-::::~:.:~:~~:::i::::i:?:#: :.:.: (.:.:, ~: . . . . . . . ~ :.:. property will include promenade walkways, display windows”~:f~~~~~~~~~~~~~~~~~~:~~~ The j .(.._.. . . . . . . . . . .,. .., ,.,/ .,. .,_, second phase of the center is %heduled to begin constmctio~~~‘~~~~~~~~~~~~“~~‘~:;;;l’~~ted to ..z be comp,eted in ~~,~~~~~ ~~~a~~~~~~~~~~~~~~~~~~~~~,~~~~~~~~~~~~~~~~~~~~~~~~ .,.,.,_ ..:.....:.:.::.,::::::::;:>;::>;::::’ii . . . . . . . . . . . . ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~....................~............................................. .‘:‘:‘i:.:‘:.:‘:‘:‘:‘: :-:.:‘:.:‘:‘:‘:‘:.:‘:‘:.:.~:.;.:.:’:.:.:’:.:’:.:‘:‘~:.:,:.:.~:’: .:.. ..i_.. ?.. . . . . i.. ..i... _......_......................l...,.................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..i .A.... i....... . . . ._..........._/.~..~.....................~.~.~...~..................~~................~... .._., ‘! Gemloaical Institute ofhmrica. Inc. PGIA”), 5355 Armada Drive, Carlsbad Ranch, California 92068, ~~~~~~~~~ . .,. ,...,.,_,.......__..........L.i..............: .,... :.:.:.:.:, an Ohio non-profit corporation, has substantially developed Assessment Parcel No. 21, with improvements of some 230,000 square feet of space on an estimated 17.76 net acres valued at over $11 million. The site includes a school, museum and international headquarters offices. Construction was completed in .$@$1997. The facility, consisting of three adjacent structures, is f$IJ$ aim .\.... . . .:, .I LEGOLAND Carlsbad Inc., 5600 Avenida Encinas, Suite 130, Car&ad, CA 92800, ~~~~~~~~~~~~ . . . . . . . . .,.. :_............ ..:.:.. .,.: .:. . . . . . . . . . . . :.;:.:.:.. ..:.:.:.:.:.:.:.>: ..: . . . . . . .:.:,..: :: .:.: ::) a California Corporation, ~~~iij~~it~~~.~:~~~~~~~~~ of LEGOLAND Carl&ad, a proposed 128 acre ,...... ::. . . . . . . . . :.:.:.::...:.:.:.:.: ,.::.:.:.:.:. : .,., >)‘( :.., .., _, .::.......... Prior Assessments and Community Facilities District Special Taxes The assessment (and any reassessment) and each installment thereof and any interest and penalties thereon constitute a lien against the lots and parcels of land on which they were imposed until the same are paid. Such lien is subordinate to all fixed special assessment and/or Community . Facilities District special tax liens previously imposed upon the same property, but has priority over all existing and future private liens and over all fved special assessment liens which may thereafter be created against the property. Such lien is coequal to and independent of the lien for general taxes and Community Facilities District special taxes. The City reports that there are no outstanding special assessment liens on parcels in the Assessment District ~~~~bi~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:~~~~~~ :.. ~~~:,d~~. Mell -R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..~ ,.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .._...............~............... i... i.. ;’ . . . . . . . . . . . . ..~.~..~....................._...........~.~.~~.......... y . . . . . . . . . . . . ..i.. i.L.......,.i_.../......... ;“‘;‘;‘;7 o 00s special taxes have previously been levied on property located withm the Assessment District and are included as Liens shown in the Tables of Estimated Values, Liens and Lien Ratios in the section entitled “SECURITY FOR THE BONDS - Estimated Lien Ratios.” The CFD No. 1 special taxes are combined with the assessments levied in these proceedings for Assessment District No. 95-l in calculating the lien ratios on such parcels. Potential future special assessment and Community Facilities District Special Tax debt and the resulting tax liens are discussed in the section of the Official Statement entitled “SECURITY FOR THE BONDS - Estimated Lien Ratios,” and “SPECIAL RISK FACTORS - Parity Taxes and Special Assessments.” Tax Delinquency The San Diego County Tax Collector reports that as of June 1,1997, all property taxes upon land located within the Assessment District had been paid in full and no tax delinquencies existed. - 32 - . . Assessment Diagram II. A copy of the Assessment Diagram for Assessment District No. 95-l is included in Appendix ~~~~~~~~ ., . . . . ., ., ..,. . . The following is a Vicinity Map for the ‘~~~~.:~~~~~~~~~~~~~ The C&&ad Ranch deve,opment j# located within the city limits of ~~~‘~~~~~~~~~~~~~~~~~~~~~~~~~~~~~: - 33 - - n n n n n n n n n n n n n n n l mmmmm n n n n n m.m m q q ms VICINITYMAP SPECIAL RISK FACTORS City Limited Obligations The City’s legal obligations with respect to any delinquent assessment installments are solely (1) advancing available funds from the Reserve Fund to the Redemption Fund, and (2) instituting judicial foreclosure proceedings, all as set forth in Resolutions of the City and in the Bond Indenture ~~~~~~~~~~. ::.: . . . .._................ . . ..~..,.,......... :.:.: . . . . :: . . . . . . . . i As discussed in the “SECURITY FOR THE BONDS” section herein, in the event of a delin- quency in payment of any unpaid assessment installment, the City has no obligation to advance. to the Redemption Fund funds of the City, to purchase land at the delinquent assessment foreclosure sale in the absence of any bidder at a foreclosure sale, or to pay future delinquent installments of ’ assessments or interest thereon. Tax Delinquencies Under provisions of the Improvement Bond Act of 1915, assessment installments from which funds necessary for the payment of annual installments of principal of and interest on the Bonds are derived will be billed to properties against’ which there are unpaid assessments on the regular property tax bills sent to owners of such properties. Such assessment installments are due and payable, and bear the same penalties and interest for nonpayment, as do regular property tax installments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and assessment installment payments in the future. In order to pay debt service on the Bonds, it is necessary that unpaid installments of assessments on land within the Assessment District be paid in a timely manner. Should the - 35 - installments not be paid on time, the City has established a Reserve Fund to cover delinquencies. The assessments are secured by a lien on the parcels of land and the City can institute foreclosure proceedings to sell land in the Assessment District with delinquent installments for the amount of such delinquent installments in order to obtain funds to pay debt service on the Bonds. Failure by owners of the parcels to pay installments of assessments when due, depletion of the Reserve Fund, or the inability of the City to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of assessments levied against such parcels may result in the inability of the City to make full or punctual payments of debt service on the Bonds and Bondowners would therefore be adversely affected. Unpaid assessments do not constitute a personal indebtedness of the owners of the &m a& pmc& within the Assessment District. There is no assurance the owners will be able to pay the assessment instalbnents or that they will pay such installments even though jinancially able to do so. See the sections of the Official Statement entitled “SECURITY FOR THE BONDS”, “Re- serve Fund” and “Covenant for Superior Court Foreclosure”, for provisions which apply, and procedures which the City is obligated to follow, in the event of a delinquency in the payment of assessment installments. Price Realized Upon Foreclosure Amendments to the Bond Law enacted in 1988 and effective January 1, 1989 provide that under certain circumstances property may be sold upon foreclosure at a lesser Minimum Price or without a Minimum Price. “Minimum Price” as used in the Bond Law is the amount equal to the delinquent installments of principal or interest of the assessment or reassessment, together with-all interest penalties, costs, fees, charges and other amounts more fully detailed in the Bond Law. The court may authorize a sale at less than the Minimum Price if the court determines, based on the evidence introduced at the required hearing, any of the following: (1) (2) (3) Sale at the lesser Minimum Price or without a Minimum Price will not result in an ultimate loss to the Bondowners. Bondowners of 75 percent or more of the Outstanding Bonds, by principal amount, have consented to such sale and the sale will not result in an ultimate loss to the nonconsenting Bondowners. Bondowners of 75 percent or more of the Outstanding Bonds, by principal amount, have consented to the petition and all of the following apply: a. By reason of determination pursuant to the Bond Law, the City is not obligated to advance available funds to cure a deficiency (the City made such a determination not to be so obligated with respect to the Bonds). b. No bids equal to or greater than the Minimum Price have been received at the foreclosure sale. C. No funds remain in the Reserve fund. d. The City has reasonably determined that a reassessment and refunding proceeding is not practicable, or has in good faith endeavored to accomplish a reassessment and refunding and has not been successful, or has completed reassessment and refunding arrangements which will, to the maximum extent feasible, minimize the ultimate loss to the Bondowners. e. No other remedy acceptable to Bondowners of 75 percent or more of the Outstanding Bonds, by principal amount, is reasonably available. - 36 - The assessment or reassessment lien upon property sold pursuant to this procedure at a lesser price than the Minimum Price shall be reduced by the difference between the Minimum Price and the sale price. In addition, the court shall permit participation by the Bondholders in its consideration of the petition as necessary to its determinations. Implementation of the above-described’ Minimum Price provision by the court upon foreclosure could result in nonpayment of amounts due to Bondholders who are not in agreement with the 75% of such Bondholders required to approve the sale at less than the Minimum Price. Reference is made to the 1915 Act for a complete presentation of this provision. ..y.Y.,: ..:.:.:.:.:.:.:.:.:.:.-.:‘_... \. . . . . . ~~~:~~~~~~~~~~~~~~~~~~~~~~~ :;:j:::+ :.~.;,.,.;,.,.;~.,.,..., ., ,. .__ .__. ,__ ._, ._. ._,................._.... _I.........i...._ .:.:.:.:.:.:.:C.:.:.:.:.:.:.:.:.~.:.:.:.:.~.:.~.:.:.:.:.:.:.:.:.~.. i... .:.... i. c. ..: . . . . . . . . . . . . . ._. ._. Bankruptcy and Foreclosure The payment of property owners’ assessment installments and the ability of the City to foreclose the lien of a delinquent unpaid assessment, as discussed in the section herein entitled “SECURITY FOR THE BONDS”, may be limited by bankruptcy, insolvency, or other laws generally -ii- ..,.,.,.,...: .,., affecting creditors rights or by the laws of the State relating to judicial foreclosure. ~~~~~~~~~~‘jf~~ :.:.: ,.... :...:.: .,:r.. _.........,.. :....‘....... “‘...‘.:.:.:. .,.:.. ,..... .....,..... . . . . . . . . . . . . . . . . ..y..- *...... :.2:.:.x (,,,,,,,,..._.,_,. ..*:.:.:.:.~:::::.:::::.:~..... . . . ........ ... . ..\ I........... . . . . ~...~.~.~~....... .A.... ‘.‘:.:.:.:.~.:.y .,.,.,... . . . . . . . . . . . .._... /...___i.,_i,/_,...,.,..L.,.,.,.,.,. “” ‘.-.‘.;“..““‘.:.i:.:,:.:.:.:‘:‘::::.::.:,:: ” :y,.: : :::: ~~~~~~t~~~p~~~~~~~~~~~~~~~~.~:~~~~~~~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~y~ r~::~~~~~~~~~~sain ::::::::>: ,...,.,..._/.... .: . . . . . :.:.:.:.:.: ..__._........... The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, reorganization, insolvency or other similar laws affecting ..: . . /... . . the rights of cre&tors generally. ~~:~~~~~~~~~~~~~~~~~~:~~~~~~~~~~~~~~~~,~~~~~~ r~~:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:~~~~~~~~~ ..,, .,., ,.,., .,:.: j :.; .:: ~~~~~~rit~~~~~~~~~~~~~~~~~~~:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:,.~~,~~~ .:.:.:.:.:.:.: . . . . . . . .:.,,.::,:::.::.:,:::,:, :: :...............,., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,: . . . . . . . . . . . . . . I...... .:..:.....: ..:i.., . :...::.. ,.... . . . . . . . . ..,:...:.:...:.:.; __....: :. . . . . . . .?, i. . . . . . . . . . ..,.:. :.: . . . . . . . . .,...: .L ::. . . . . . . . :,.. . . . . . . . . . :. ..,.... .,.. . . . . . . .: ~~.~~~~~ - 37 - Although bankruptcy proceedings would not cause the assessment liens to become extin- guished, bankruptcy of a property owner ~~~~~~~~~~~~~~~~~~~~:~~~~~~~~~~~~~~:~~~~ “....i”...i.,.y . . . . . . . . . . . . . . . . . . . . . . . . . .\.. i . . . . . . . . . . . .._.......i............... ..,,:.;....,. . . . . . . . . .....,..:,.:.,:.:,:.:,~:~ :..:.! could result ik:i,~~~~~~~~~~~oni~~ii-a~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:~~~~~~d~~~~~ . . . .:.L.:(-:.‘-:-:- .:.:.:.:. ::.: :: i’l:::.‘ ,:.:: 5.-i.; : : g::i’ix.; :::.:: jj :i’< ,:, ik;‘;;.,i-l.::.:: ::::.::::..: :::;::‘:-,: .: :. .’ :. . /. .. . . .: ,...: . . . . . . ., :. . . . :.f:... . . . . . . . . .., . . /,. .:... i-:‘ij:> 1::: ‘.‘::.~:::.:::::::::::j.::::::.:::.:::::.: :... . . : :.. : ‘. : :; : .. :-) ,.,.,.;, .., .,. .,. ,.,.,_ ., .,.,., .,.,. :,.,:, ~ ,.,,: :.. :..:-::.:,,,:: ,.,,.. . . . . . ~~~secriti~~~~~~~~:~~~~~~~~~~~~ii~,~eerfi~~~~~~:.~~~el~~,~~~~,~~~~~~~~~~:,~~~~~s~~:qf ,:, ,,) :: ;:.<:::,::-i. ::.;,::g.:j::::::::. ..,. ” ” ‘- : :. j ,. :::.j ;:..::.., ‘.) ~~ :,,...* <. : . . :::::.:::::;::+: ..c..:.:,..:.:::: ,... i .: . . . . . . . . . . . . . . . . . . .‘.I: ::::: :p:: ::: ..: ..: :.:.:,:” : .:.. . . ,.,.,.,. .:.;.: .,.,. ~. . . . . . . . . . . . . . ,. Pi~~~ertyi:,,orvne~~~~~~~~~~L’~~~~~~~and:-~~~d:~~suft’in:i:the~~~bif~~~d~l~~u~~~~~~~~ .:.. ;:,: . .:,.:. .::.:.:.:. .:.)..:.:.:.:.:.:.:.:~::.: . . . . . . . . . . . . . . . . . . . . . . . . . ..y....+.. .:.:.:,: . . . . :.:. . ...: :y:. :..: :...:.:.:.:...:,::.::,:.:::.:::.,::::::::.: .: :;z ..: (-(,.: :. .: .’ :. . . . . . ..‘.‘.‘...‘.........‘...‘.‘.‘.‘.’. :‘:‘:‘:‘:‘:‘:‘-‘-‘.‘.‘.:...: ::.:.: :.:.: : . . .:,: :‘:,:,j-:::i:i:i:‘:I:‘:., j::::i:::.i.i j:::j .:.:.: :,.;::: .:.:,: ,:: ~~~e~~~~:~~~~~~:~~i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*~~.~~~~~~~~~~~~~~~~~~~~~~~,~~u.~~~~~t~~ . . . . . . .~~~ine-~~~~ . . . .-::.:::::.:.: ,... ;:/ i :.:: .:iiil::::::::j:t:j::.::::: .:.i;::::::;:;f.z: ::; :::.y ::::+;:- .:::;:g.;.< i:.~iiii::~i~:~~~~~~,:~ :yy:‘:::’ y>..;.p: :: ;:.i:::: pi;;’ :::: :,..: ;:< iIj,il< il:‘-;:~~:#ii.i:.ii:~:~:~,~.. ..: i,~~j:i :::,: I:::i:::i ::,: ~: .::.:::,: ~:::i ::::: j/: :, I~. ,~ ,::: I dtn~u~~~:i-ass~m.e~~~~.~t~~~~t~~: WU& k: r~.d~d:ild:thaii~~~~~.o~~~:~h~:~~~~~~~~,~~~ ~~t~~~~~~-:~~~~~~~~~~~~~~~~~~~~~~~~~~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:~~~~~~~ :, . . ... ; ,,.:, ( : : ., : : : .CY.’ :\.: :.:... ‘..’ “‘;‘i ‘:.:~:i:i;:i::::::::::::.::.:.~::.:..:.:~:.:~:::~:.: j::::i:::.i.:::::-::::~:‘:’ :.:.:-:-:.:: ‘. .: ., ::j ~.j::::jd:j:i:::ii.‘: j.:.:::::::;:p:. <.:::j.: :. .:, ::::::j .’ .‘... ..: I’+ ..: 5 :.:. <::::: :: :.,,:,:,..: :::::,:. i:;:: ~ :.,.:.,..,.,.:... ., . . . . . . . . . . . . . ..s... _ . . . . . . . . . / ,., .,., _. .: ..: ,..:.:::j:::.::::::: j.;.::: ..:,: :+:...: gyjytrjg: ~,f:~~~:~~lr~~~~.~~~~~~~~:~:~~~~~~~~~~xe~~~~~~~~~~~l~~~~~~l~~~~:,,~~: ff&@.J ,i.,:.i.::..:. :~: :,.,:, ,.. ,:.., j ::j:: ..:.: ::::.:,.::: .:.:.:.:.:. .::.:.&: :::.: :. ~:.A::.:.:... . . . . . . . . :.:.:.:,.:::.: ::,, :.,,: :.:j:: ,.:.,.:. :, . ...:.:.:.:.:.: ,:.:::;: :p:.:::;::::;::::. . . . . . . -2.-.-z.:.:.:...: .A.:. .‘.‘.‘.’ ., ,-, ..,. :...../.i . .._......A. ~:~~~ttfi~~~~~~~~:~~~~~~~:i:-i,~~~~~~~~~~~~t~~~~~~~~.~~~~~~~~~~~~~~~~~~~~~~~~~~ : ) ):: .::.::::, :.:::.:.::::::.: .i_. :..:...., . . . . . . . . :-.:.:... .‘. . . . . . :.. . . . . . . . . . . . . . . . . . . ..:... .A.. . . . . . . . I . . . . . . ..:..: . . . . . . . ..,......... .: :~~~::,a map-. .,~a~~ would increase the li~~~~~,,~“~i”~..~~ial)..~r’de~~uit’in’payment~~~‘ihe principal p:.y .,......, .$x~ _...,....,.... a . . . . of and’~~r;;i~~~~~onti;e’Bonds, and the possibility of delinquent assessment installments not being paid ..: in full. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~,~~~~~~~~:~~~~:~~~~~~~~~ I . . . . . . . . . . . . . .._.. . . . . . . . . . . . . . . . . . . ../................................... .i(._i_.,.i,.,./..,........ \ .,. _ _ ., .‘~‘~‘~~~‘~‘;.‘.:.:.:.:.:.:.:.~.:::::::.:::::::::::::::.j::::~:::::~::::_:~:~:,:~:,:,:,:,:,:~:~:, ,.:.i:.:.;, ~~~~~~~~~~~~~~~~~~~~:~~~~~~~~~~~:~:~~~~~~~:~~~~~~~~ . . . . . . . . . . >: :.y.: ?>:. :: :.:.:.:.:.:.: . . . . . ..(...,. . . . ., i,.,.,.,.,.j,. x .,._ ,., .,. ,.,.,. ,., . . . / : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .._.. . . . . . . . . . . . . . . . . . . . . . . . :.... .\....._.. i... . . . . . . . . . . . . . . . . . . . . . . . . . . . . _............ . . . . .._...... ,.,.,.,.,.. _, .t The ability of the City to foreclose upon the lien relating to property on which assessments have not been paid may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”) has an interest. ~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ protides, in part, that ~~ed::~~~~~~~~~~.~~“ij;e”~~‘iC; . . . . . . . . . . . . . . . . . ../................. . . . . . . . . . _. _. _. ._. ,_, i....... . . . . . . . ..i....... . . . . . . . . . ..i.i.. L... is’s~~~ect.to.state.an’;i’.~~~.i”reai..property.taxes if those taxes are assessed according to the property’s value, and that the FDIC is immune from ad valorem real property taxes assessed on other bases. The Policy Statement also provides that the FDIC will pay its proper tax obligations when they become due and will pay claims for delinquencies as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC interest in the property is appropriate. It further provides that the FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law. The FDIC will not pay for any amounts in the nature of fines or penalties and will not pay nor recognize liens for such . amounts. The Policy Statement also provides that 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. No property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, a lien for taxes and interest may attach, but 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 City is unaware of any parcels in the Assessment District in which @@ FDIC has any current interest. Such an interest could, however, arise in the future. The City i<kable to predict what effect, if any, the application of the Policy Statement will have in the event of a delinquency in the payment of assessments relating to a parcel within the Assessment District in which the FDIC .... ............... ........... .................................... ............. .............. ........ ...................................... .......................................... i.. ............... y ........ has ~~::s~~~~~i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.~~~~~~~:~~~~~~:~~~~~~~ ................... ... ...................... . ......... ........................................... ..... , .. ~~~~los,lc~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ................... ....... .. .: ::: ::: : ,: ::: :: :.: :.:: .... .:...:.: .......... . . . ::.y .x.):.:.:.:.:.:.:.:.:.~ ..... ..:i:-.::::::::.::::: :.:.: :::::.:::.:::::::::.;.j:::::....:.: ............... ...... ..... . .:,:, .: :,::;:.::: ~~rectosu~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~the;Re;~~~~~~~~~~l~~rh~~~~~~~~l~~ : .: ...... :.: .... 1.: : j::.: :.:...:. :.:.y. .............................................. ................... .:.: .,.,.: ....................... .: ........................................................ ........................................................ ..::...:.:.:.:(.::.::...:.:.:.:.: .: .... :.:...:.:...:.:.::. .................................. .............. ....... ....... tl::~~~~:~l~iI~~~~~~~~~~~~~,~~~ ~~~~~‘.~i~~“is”una~ie”t6”.‘~~edict”whai &f~;~~(~~liyl’~h’~ .......... .................. application of the Policy Statement will have on the payment of the principal of, and interest on, the Bonds. - 38 - Article XIII A of the California Constitution Enactment of Article XIII A of the California Constitution and subsequent legislation effec- tively repealed the otherwise mandatory duty of an issuer of bonds pursuant to the Improvement Bond Act of 1915, to levy and collect a special tax in an amount necessary to pay delinquent assessment installments, but not to exceed $.lO on each $100 of assessed valuation of taxable property within the jurisdiction of the issuer of Bonds in any year, if surplus funds are not available to cover such delinquencies. Future Land Development The information regarding ownership and private development of assessed parcels in the Assessment District as contained in this Official Statement has been provided by the respective owners of such parcels. This information is included because it may be relevant to an informed evaluation of the Project and the security for the Bonds. However, rw arsurunce can be given rhat - 39 - ownership of one or more of such parcels will not be changed or that the projects planned by such owner will occur. This information should not be construed to suggest that the Bonds or the assessments securing the Bonds are personal obligations of the property owner or the developer. See the section entitled THE ASSESSMENT DISTRICT - Land Ownership and Future Development.” The development proposed for the lands located in the Assessment District may be affected by changes in general economic conditions, fluctuations in the real estate market, changes in the ownership of the land, and other factors. In addition, any proposed development is subject to existing and future federal, state and local regulations. Approval may be required from various public agencies in the connection with the design, nature and extent of the required public improvements, or such matters as land use and zoning. Although no delays are anticipated, failure to meet any such future regulations or obtain any such approvals in a timely manner could delay or adversely affect any proposed development of the parcels of land in the Assessment District. The land within the Assessment District is subject to a number of contingencies which could slow or prevent future development of the undeveloped land. Consequently, no assurance can be given that such development will be partially or fully completed, and in assessing the investment quality of the Bonds, prospective purchasers should evaluate the risks of noncompletion. First, undeveloped land is less valuable than such land in a developed condition and provides less valuable security to the Bondowners should it be necessary for the City to foreclose due to the nonpayment of assessment installments. Second, if much of the land in the Assessment District remains undeveloped, the number of likely purchasers at the foreclosure sale, in the event the City forecloses the lien of delinquent unpaid assessment installments, is likely to be reduced. See “Bankruptcy and Foreclosure” herein. Third, in addition to potentially reducing the ability and willingness of the landowners to pay assessment installments, a slowdown of the economic development process in the region could adversely affect land values and reduce the proceeds received at a foreclosure sale in the event assessment installments are not paid when due. There can be no assurance that land development operations within the Assessment District will not be adversely affected by future government policies, including, but not limited to, governmental policies to restrict or control development. Currently, the City has in effect a policy which will impose a moratorium upon future growth if certain threshold factors, such as traffic generation, emergency response time, water, sewer, school, air quality, drainage, and police and fire services, occur. The moratorium would remain in effect until such factors had been successfully mitigated. During the past years, citizens of a number of local communities in Southern California, including citizens of the County of Riverside, the County of Orange and the County of San Diego, have placed measures on the ballot designed to control the rate of future growth in those areas. Although none of those measures affected the Assessment District, it is possible that future initiatives applicable to the Assessment District could be enacted and could negatively impact the ability of the property owners to further develop their land. Bondowners should assume that any event that significantly impacts the ability to develop land in the Assessment District could cause the land values within the Assessment District to decrease substantially and could affect the willingness and ability of the owners of land to pay the assessments when due. In evaluating the investment quality of the Bonds, investors should assume that the possible enactment of restrictive land use regulations, by the City or by voter initiative, presents a substantial - 40 - risk to the timely construction and completion of development of the property with the Assessment District. Direct and Overlapping Indebtedness The ability of an owner of land within the Assessment District to pay assessment installments could be affected by the existence of other taxes and assessments imposed upon the land. In addition, other public agencies whose boundaries overlap those of the Assessment District could, without the consent of the City, and in certain cases without the consent of owners of the land within the Assessment District, impose additional taxes or assessment liens on the property within the iand Values Reference is made to Appendix III which contains the Appraisal Report summarizing the Appraiser’s opinion with respect to the value of the parcels located in the Assessment District. The valuation of the land discussed in the Appraisal Report assumes the Project is completed and all parcels are capable of development. Based upon the analysis set forth therein, the value of each parcel of land will exceed the amount of the full assessment lien against it by at least three times. However, there is no assurance that in the event of a foreclosure sale for a delinquent assessment installment any bid will be received for such property or that any bid received or resale price will be sufficient to pay such delinquent installments (plus costs and penalties). The 1915 Act requires that a parcel be sold for only the delinquent amount (plus costs and penalties) and not the entire outstanding assessment. The Appraiser has made various assumptions in order to derive the valuation estimates of the assessed parcels. See Appendix III for an explanation of methodology and a statement of limiting conditions and assumptions used by the Appraiser to derive the value of each parcel. Although these limiting conditions and assumptions were considered reasonable by the Appraiser based on information available to the Appraiser, neither the Appraiser nor the City can give any assurance that any parcel will be developed in accordance with the uses that the Appraiser has projected. The actual value of the property is subject to future events such as a downturn in the economy, occurrences such as earthquakes, droughts or floods or other events, all of which could - 41 - - ,- . adversely impact the value of the land in the Assessment District which is the security for the Bonds. As discussed herein, many factors could adversely affect property values or prevent or delay land development within the Assessment District. Geologic, Topograp hit and Clint a tic Conditions. The market value of the parcels can be adversely affected by a variety of factors, particularly those which may affect infrastructure and other public improvements and private improvements of the parcels and the continued habitability and enjoyment of such public and private improvements. Such additional factors include, without limitation, geologic conditions (such as earthquakes), topographic conditions (such as earth movements and floods) and climatic conditions (such as droughts and tornadoes). Some of these factors have been taken into account, to a limited extent, in the design of the public improvements and have or will be taken into account, to a limited extent, in the design of other infrastructure and public improvements, the design of which must be approved by the City. Further, building codes require that some of these factors be taken into account, to a limited extent, in the design of private improvements of the parcels. The City is aware that some of these factors may also be taken into account, to a limited extent, in the design of other infrastructure and public improvements neither designed nor subject to design approval by the City. Design criteria in any of these circumstances are established upon the basis of a variety of considerations and may change, leaving previously-designed improvements unaffected by more stringent subsequently established criteria. In general, design criteria reflect a balance at the time of protection and the future costs of lack of protection, based in part upon a present perception of the probability that the condition will occur and the seriousness of the condition should it occur. Consequently, neither the absence of nor the establishment of design criteria with respect to any particular condition means that the City has evaluated the condition and has established design criteria in the situations in which such criteria are needed to preserve value, or has established such criteria at levels that will preserve value. To the contrary, the City expects that one or more of such conditions may occur and may result in damage to improvements of varying seriousness, that the damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost of because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the actual value of the parcels and the possessory interests may well depreciate or disappear, notwithstanding the establishment of design criteria for any such condition. Hazardous Substance. While governmental taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to pay the assessment 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 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 “Super-fund 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 parcels be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the . . . . . . . . . . . . . . :.:: ‘.. . . . . . . . . . . . . . .,..:.:.~.‘...:.):.: .i. X.:.:.:.:.:.:.:.:.:.:.:.:.:.. /- .w..... ..:.. . . . . . . . condition just as the seller ~~~uc~~~~~&I:1~~~~:~~~~~~~~~ .,, . . . . . ,., .,. ,.,., The value of the land within the Assessment District does not take into account the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the parcel. The City has not independently verified, and is not aware, that %&$wner (or operator) of any parcel - 42 - within the Assessment @strict has such a current liability with respect to such parcel, however, it is possible that such liabilities do currently exist and that the City is not aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the land within the Assessment District resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel that is realizable upon a delinquency. Absence of Market for the Bonds No application has been made for a credit rating for the Bonds, and it is not known whether a credit rating could be secured either now or in the future for the Bonds. There can be no assurance that there will ever be a secondary market for purchase or sale of the Bonds and from time to time there may be no market for them, depending upon prevailing market conditions, the financial condition or market position of firms who may make the secondary market and the financial condition and the proposed development of the parcels within the Assessment District. Nij - .,.,., .,., ., ,.. .,.,. . . ._,. .., ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ifiPc~~~~~~~~~~~~~~~~~~~~~~~~~~ .//\ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .._................ . . ~~~,;:.:.I:..:.:.~:.:.:.:.:.:.::.:.:.~i~.:.:.:.:.::.:...:.:..::...:.:.:.:.::...: ..z.: . . . . :.:.: :.. :-:-:.:.:.:.:.:.:I:.. :: . . . . . . . . . . . . . . . . . . . . . ,. . . . ..>.....:. ., ., :.:.:.::.:;:>:.:>:;:...:.:.:.>:.:.:.:I.;_.> .._........ ,._...,.,................................,.,.........,. . . . . . . . . . . . . . . . ._. ..:::.::::::_:.> ::.:.,:.:::+::; ._,:, :. Loss of Tax Exemption In the opinion of Bond Counsel, the Bonds constitute governmental obligations under the Internal Revenue Code of 1986, as amended (the “Code”). The City has covenanted to comply with . Code restrictions (relating to use of Bond proceeds, reserve fund funding requirements, investment yield limitations and rebate requirements, federal guarantee prohibitions and registration require- ments) so that interest on the Bonds is excludable from gross income for federal income tax purposes. However, in the event the City fails to comply with any of these covenants, interest on the Bonds would be includable in gross income for federal income tax purposes retroactive to the ., ., . . ..,.,.,.,.j,.,.,.i,.,.,.,.,.,.,.,. ._,.,.,. .,.,.,.,.,.,.,. .,.,.,.,.,. .,.,.,.,.,.j,. *.:.:.:.:.:...... i..... :.:.:.:.:.:.:.: date of Bond issuance. ~jtj;~~~~~~~.~~~~~~~~~~~~~i~~:‘~~~:~~~.~~~~:~~~~~~~~~~:~~~~~~~~~~~~~~~ .,.,.,..;: :.: .:.:+:..:..: . . . . c. .,... . . . . . . . k . . . . . . . . . . . . . . . . . . . . . . . ../..i....i........ _ ,...,.,...,.,.,.,.,.,.,.,.,.,.,.,.,.,.,., .:: .:.:j.:.:::.:.:,:i:.::::::i-:.-,:.::’ :. :-::-:-:::::.:i-:::-- .:,.: j: :: .: ‘. .: < .< ,:.:.‘.::::‘j:~j:;:,~,:.:.:: ., . . . . . ,.,., .,.. . . . . . . .,.,..., .,. ,. ,. : ,: ,., ,.,.,.,., ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ .:::.... . . . ,.,..... :...:.:.: ..,.. :.:.:.‘:.:f:I::i:::#:!i:i:i:!i:::~:~::~:~:~~~:~ j .:.: i:..::::-:-:::i:ji:..:‘:...::::::::::::. ..:,:,:.:, ~ :,:,:,:., :, ~. .~i .::.: :: .:. i:: .::: .: .j ,:. j :: . . ..i ~~~~~~~~~~~~~~~~:~~~~~~~d~~~~~~~~~~I~d~~t~r~~ . ..I i . . . ./....L............................... :.. . . . . . . . . . . ..\...i......_L............. . .\.......... .L.......... . . . . ..i. . . . _L........ i... ..i..... . . . . ..i.. ..i_ ._.,_,.,.jj,. .,..._.,.,.,. . ,....,.,.,.,.,.,...,.,.,.,.,_.,.,.,...,.,._ ~:.;:.:.:.:.:.:.):.:.:.~:.:.~:.~~:.~.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.~.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:...:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.: .i,.,.ij,.,., ,. .,.,.,., ,., ,. : .,,: Concentration of Property Ownership Until further subdivision and/or development and sales of parcels occur within the Assessment District, payment of approximately 40% of the confirmed assessment installments is dependent upon timely payment by Carlsbad Ranch Company, L.P. the owner, directly or indirectly, of much of the land located in the Assessment District. See the section entitled “THE ASSESS- MENT DISTRICT - Land Ownership and Future Development.” Failure by Carlsbad Ranch Company, L.P. to successfully sell and/or develop its projects proposed for the land within the District would increase the likelihood of failure to pay assessment installments applicable to its properties when due, therefore resulting in the rapid depletion of the Reserve Fund prior to reimbursement from the resales of property or delinquent reductions. In that event, there could be a default in the payment of the principal of and interest on the Bonds. - 43 - - ’ . Parity Taxes and Special Assessments The City has limited control over the amount of additional debt payable from taxes or assess- ments on all or a portion of the property within the Assessment District that may be issued in the future by other governmental entities or districts, including but not limited to water districts or any . other district having jurisdiction over all or a portion of the land located within the Assessment District. To the extent such indebtedness is payable from special taxes or taxes, such special taxes and taxes will have a lien on the property within the Assessment District on a parity with the lien of the special assessments levied in this proceeding. Accordingly, the debt on the property within the Assessment District could increase, without any corresponding increase in the value of the property within the Assessment District, and thereby reduce the ratio that exists at the time the Bonds are issued between the value of the property and the debt secured by the taxes and assessments thereon. The imposition of such additional indebtedness could also reduce the willingness and ability of the property owners within the Assessment District to pay the assessments when due. In the event of a delinquency in the payment an assessment, no assurance can be given that the proceeds of any foreclosure sale would be sufficient to pay the delinquent assessment and any other delinquent assessments, special taxes, or taxes. See the sections entitled “Price Realized Upon Foreclosure” above, and “SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure.” ......... -. ............ ......................................................... ..>.. ............ i.il~ilii~~~~~~~~l~~~~~~~~~~~~~~~~~~~~,:~~~~~~~~~~~tii~,,~~~8Cs~~~~~~~~~~~l~~~~~~~~~ :,:. .:(.),(.:.:.:.:.:.:,:.~.~.~.~,~.~.~.~.~.~.: :...:.:...: ........ . . ... :...: .: :.:.:. ;~~ii:~i:::~idl:ij~~:~~~~~~::.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.: ........................................................................................................................ :.:.:. :.i: .. :: .: .::.::. .:.:.: .. ..:.:.: ... . :.:.: :.:.:.:.:.:.:.:.:...:...::..:..:.:: ..: .. :.:j ,:.:.::::y ‘.‘.‘.-.‘.‘-.‘.:.‘:.:.:.:.‘.:.i’:i’i~ j ..... .._ :. ii::.j:jj.:.:.:.:.‘.: :.:.: (,., :.:.:. :~:l:::i3i:i::.::~:~~:::l:,:i:::::.::’, ....... ... ...,:.: ... :‘.:;‘:! .. .......... ......... .:...:::::: ~~.~~~~aa:~~~~i~~~v~~:~~~e~~~~.~~~~~~e~~:r~~,i~~:mfl~~:SjlFi:i:~~.th.eil~~~~~i:~~~~~~~~~~~~~~~~tl~l~ )' ............................................ .. ... ......................................... : .: .... : ... :: ......... ..::..::.:.:. :::::,: j:::..:::.:...: .. $ ~~~~~~~~~~~~~~~~~~~~~~~~~~l~~~~~~~~~~~~~~~~~~~~d~~~~~~~~~~~~~~~~~~~l~ ................................... ............ ~i3k: .~...:.“.:.: ..................... ................ . ............ .................... ........... . . . . . . .a: ..... :.::.:::::::.:.:j::::: ..: :.:. .:-i:.’ :. ::.:. ,:::: :, “j .~~~~~~~,m~~~~~~~~~~~~~~~~~~~~~~~~~~ati~~l.i~~~~~~~~~~~~~~~~~~~~~~~~taiilh e. ..:: . .... :::.::::::.:.:.:.:.:...j.:::; ........ ...: .: :.: .‘:‘:‘: :‘:-:-:” :‘:‘:‘:‘:‘:?:-:‘:‘: .: ........... . ...... :-:.-‘--3:.: ..... . ......................................................... ...................................................... ... .................................. ............... -.-5: .:::+:. :::. <: ::‘~~~~~~~~~~~~~~~~~~ ~di:~~~~~~l~~~~~~~~~~~~~ .:.,.B; .:. .:.:. .: .. ,: .: ............... :. ........... .. .................... ............ ................. , ............. .; ........ ::..:::.::.::..:...:. ...:. ::, ... . . . . . . .: f@Jj$j ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Pl~~~jii~~~~~Slf:~~::.uitte~.retattanj, qpd ....................... ............. ................ .................................................................... . .............................. - 44 - MISCELLANEOUS No Litigation There is no known controversy or litigation of any nature now pending to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or in any way contesting or affecting the validity of the Bonds, the proceedings of the City taken with respect to the issuance or sale thereof, the existence or powers of the City or the title of any officers of the City to their respective positions. Approval of Legality All legal matters related to the authorization, issuance, sale and delivery of the Bonds are subject to the approval of Brown, Diven & Hentschke, San Diego, California, Bond Counsel. The unqualified opinion of Bond Counsel approving the validity of the Bonds will be supplied free of : : ./,. . . . charge to the original purchaser of the Bonds and will be printed on each Bond. ““““““““““~~~~~~~~~ ~~l~~~~~~~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:~~~~~~~~~~~~~~::~~..l~~ : : : .: .+~,~,.;~ ,, +.. >::.: ..::.y.... ..j .; . . . . . : : .~ : .: . . : . .. : . _ .,. ._, . . . . . _ .::. ::::..::.. :... ..... . . . ., . - 45 - - l I . Tax Exemption In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial deci- sions, interest on the Bonds is exempt from personal income taxes imposed by the State of CaMor- nia, is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and cor- porations. However, Bond Counsel notes that with respect to corporations (as defined for federal income tax purposes) interest on the Bonds will be included in determining corporate adjusted current earnings, a portion of which may increase the alternative minimum taxable income of such corporations. Bond Counsel’s opinion as to the exclusion from gross income of interest on the Bonds is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), which must be satisfied subsequent to the issuance of the Bonds to assure that such interest will not become includable in gross income for federal income tax pur- poses. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City has covenanted to comply with all such requirements. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken on (or not taken) or events occurring after the date of issuance of the Bonds may affect the tax status of interest on the Bonds. Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax conse- quences will depend upon the recipient’s particular tax status and other items of income or deduc- tions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors before buying any of the Bonds. . No Rating No rating has been sought or obtained for the Bonds. Underwriting The initial purchaser of the Bonds intends to offer the Bonds to the public initially at such prices and/or yields as it determines plus accrued interest from the date of the Bonds, which price or yield may subsequently change without any requirement of prior notice. The initial purchaser reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The initial purchaser may offer and sell Bonds to certain dealers (including depositing Bonds into investment trusts) at a price lower than the public offering price, and such dealers may allow any such discounts on sales to other dealers. In reoffering Bonds to the public, the initial purchaser may over allot or effect transactions which stabilize or maintain the market price for Bonds at levels above those which might otherwise prevail. Such stabilization, if commenced, may be discontinued at any time. - 46 - Financial Consultant Kadie-Jensen, Johnson & Bodnar, Municipal Financing Consultants, Inc. has acted as finan- cial advisor to the City in connection with the formation of the Assessment District and the issuance of the Bonds. . Additional Information Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Bonds. Copies of the documents referred to herein are available for inspection at the Office of the City Clerk. This Official Statement was duly authorized June @, 1997 by the City pursuant to a ratifying Resolution adopted by the City Council. Concurrently with the delivery of the Bonds, the City will - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . furnish a certificate executed on behalf of the City by its City &@.$a&@o the effect that this Official . ..: . . . . . . . . . . . . ..A....._.. . . i..... I.... Statement, as of its date and as of the date of delivery of the Bonds, has been diligently reviewed and to the best knowledge and belief of the City and its officials does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading and that this Official Statement is final as of its date. The execution and delivery of this Official Statement have been duly authorized by Resolution of the City Council of the City. CITY OF CARISBAD, CALIFORNIA By /St RAYMOND R. PA~CHETT City Manager - 47 - 3 . , APPENDICES , Appendix I: The City of Carlsbad, California Appendix II: Assessment Diagram Appendix III: The Appraisal Report Appendix IV: Form of Issuer’s Continuing Disclosure Agreement and Developer Continuing Disclosure Agreement Appendix V: Form of Approving Opinion of Bond Counsel