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HomeMy WebLinkAboutCFD 03; Opus West Corporation; 2007-0342217; Disclosure AgreementDGC# 2007-0342217 A? \ Recording Requested By and when Recorded Mail to: City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attn: City Clerk MAY 21,2007 9:40 AM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE GREGORY J. SMITH.. COUNTY RECORDER FEES: 0 00 PAGES: 24 COMMUNITY FACILITIES DISTRICT DISCLOSURE AGREEMENT This Agreement entered into as of this 1 1th day of May, 2006 by and between the City of Carlsbad, a municipal corporation ("City") and Opus West Corporation, a Minnesota corporation ("Developer"). WHEREAS, at the request of the Developer among other property owners, the City has formed a community facilities district and designated two improvement areas therein pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982" (California Government Code Section 5331 1 and following), such community facilities district known and designated as COMMUNITY FACILITIES DISTRICT NO. 3 (hereinafter referred to as the "Community Facilities District") and such improvement areas designated as "Improvement Area 1" and "Improvement Area 2"; and WHEREAS, the City has adopted a Council Policy Statement commonly referred to as "Policy 33" relating to the utilization of community facilities district financing which requires Developer to extinguish the special tax lien on any parcel created as a result of the establishment of the Community Facilities District prior to the close of escrow on the sale of such parcel to a purchaser thereof unless the City Council of the City, in its sole discretion, approves the pass through of the special tax obligation to such prospective purchasers; and WHEREAS, the City Council is willing to approve the pass through of the special tax obligation to such purchasers if Developer agrees to establish a disclosure program to provide full and completed disclosure of the existence of the special tax obligation to prospective purchasers pursuant to paragraph 16 of Policy 33; and WHEREAS, the parties hereto desire to enter into this Disclosure Agreement to establish such a disclosure program to include the terms and conditions which must be satisfied by Developer should it desire to allow buyers to take title subject to the special tax obligation established for any parcel or parcels within the Community Facilities District. NOW, THEREFORE, IT IS MUTUALLY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS: Section 1 .The above recitals are all true and correct. 668025.02/LA S7335-4ll/5-lO-06/sjr/jss Section 2. Developer owns property within the boundaries of Improvement Area 1 which is subject to the special tax lien applicable to properties located within Improvement Area 1. Developer's property is described and set forth in the attached, referenced and incorporated Exhibit "A" (the "Property"). Section 3. The escrow for the sale to any buyer of any lot or parcel within the Property shall not close or title to such parcel be otherwise conveyed to such buyer without first causing the special tax lien created as a result of the establishment of the Community Facilities District on such parcel to be extinguished except as provided for herein below. Section 4. A special tax lien on a parcel within the Community Facilities District proposed to be sold by the Developer to a buyer or buyers need not be extinguished prior to the close of the escrow for the sale of such parcel if Developer shall have given such buyer or buyers of such parcel a copy of the Notice of Special Tax and Pre-Payment Option Election applicable to such parcel, the form of which is attached hereto as Exhibit "B" and incorporated herein by this reference, and such Notice shall have been duly executed by such buyer or buyers and deposited into escrow. Section 5. Except as provided in the following sentence, Developer shall list the amount of the maximum special tax applicable to such parcel in all sales brochures, all advertising and all purchase documents and shall clearly disclose the pass-through option in any sales literature. "Advertising" for this purpose shall not be deemed to include media advertising, billboards, signs or other like advertisements. Section 6. The obligations of Developer contained herein shall apply only to the initial sale of a parcel by Developer to a purchaser who is or will be an end user of such parcel or who is purchasing such parcel with the intent to subsequently sell such parcel to such an end user. Section 7. This obligation shall be binding on all heirs, assigns or successors- in- interest of the parties hereto, and the City shall cause a copy of this Agreement to be recorded in the Office of the County Recorder upon its execution. Section 8. Developer shall indemnify and hold harmless the City of Carlsbad from any claims arising out of Developer's failure to adequately perform under the provisions of this Agreement. 668025,02/L A S7335-411/S-IOO6/sjr/jss -2- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written hereinabove. CITY OF State of By: (All signatures must be notarized) OPUS WEST CORPORATION, a Minnesota corporation By: By: By: its Name: Name: 668025.02/LA S7335-41l/5-IO-06/sjr/jss -3- CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of •^'^ ss. On ^ \ V V Date personally appeared _ Name and Title of Officer (e.g., 'Jane Doe, Notary Public^ CommMon*14SlM« NotvyMMe-OMtan Oong*Co** MyComm.ExpkwJurit.2 (s) of Signer(s) ^personally known to me D proved to me on the basis of satisfactory evidence to be the person^) whose nameCs) is/are subscribed to the within instrument and acknowledged to me that he/ahc/thoy-oxecuted the same in his/Re*#befr authorized capacity(rss), and that by his/hor/thoii- signature^ on the instrument the person^), or the entity upon behalf of which the person(^) acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document:. Document Date: x . Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: D Individual D Corporate Officer — Title(s): D Partner — D Limited D General D Attorney-in-Fact D Trustee D Guardian or Conservator D Other: RIGHT THUMBPRINT OF SIGNER Top of thumb here Signer Is Representing:, 8 1999 National Notary Association • 9350 De Solo Ave., P.O. Box 2402 • Chalsvrorth, CA 91313-2402 • www.nationalnotacy.org Reorder: Call Toll-Free 1-800-876-6827 NOTARY SEAL CERTIFICATION (Government Code 27361.7) I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: : «S) Q^<*-> l~Name of the Notary: Commission Number: I t*T ^ I-<• ^ <<? Date Commission Expires:. County Where Bond is Filed:. Manufacturer or Vendor Number: N (Located on both sides of the notary seal border) Signature: Firm Name (if applicable) jVPlace of Execution: <^^ jVa-Y-cosf B- Date ReC. Form #R10 (Rev. 8/13/97) CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of personally appeared ame(s) of Signer(s) 1SHERRY A. FREISINGER Commlwton* 1727064 Notary Public • ColltomKi | San DtogoCounty 1| Place Notary Seal Above B-p£rsonally known to me D (or proved to me on the basis of satisfactory evidence) to be the person^whose name(^ is/^rfe subscribed to the within instrument and acknowledged to me that he/sb6/th^y executed the same in his/her/tj?ieir authorized capacity(ie^), and that by his/h^f/thefr signature^ on the instrument the person(s), or the entity upon behalf of which the person^ acted, executed the instrument. WITNESS my hand and official seal. SignatureL OPTIONAL /- Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Documen Title or Type of Document: « Document Date:. Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: D Individual D Corporate Officer — Title(s): D Partner — D Limited D General D Attorney in Fact D Trustee D Guardian or Conservator D Other: Signer Is Representing: RIGHT THUMBPRINT OF SIGNER Top of thumb here Signer's Name: D Individual D Corporate Officer — Title(s): D Partner — D Limited D General G Attorney in Fact D Trustee D Guardian or Conservator D Other: Signer Is Representing: RIGHT THUMBPRINT OF SIGNER Top of thumb here ©2006 National Notary Association • 9350 De Soto Ave., P.O. Box 2402 • Chatsworth, CA 91313-2402 Item No. 5907 v609 Reorder: Call Toll-Free 1-800-876-6827 EXHIBIT A DESCRIPTION OF SUBJECT PROPERTY THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: Legal Description of Phase One Land LOT 21 OF MAP THEREOF NO. 15013, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON MAY 3, 2005, AS FILE NO. 2005-0371022 OF OFFICIAL RECORDS. Legal Description of Phase Two Property Land LOT 8 OF MAP THEREOF NO. 15013, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON MAY 3, 2005, AS FILE NO. 2005-0371022 OF OFFICIAL RECORDS. 66S025.02/LA EXHIBIT A S7335-4ll/5-IO-06/sjr/jss -1- EXHIBIT B NOTICE OF SPECIAL TAX AND PRE-PAYMENT OPTION ELECTION Community Facilities District No. 3 Improvement Area 1 City of Carlsbad County of San Diego State of California TO: THE PROSPECTIVE PURCHASER OF THE REAL PROPERTY KNOWN AS: Lot Number: Tract Number: Street Address: THIS IS A NOTIFICATION TO YOU PRIOR TO YOUR PURCHASING THIS PROPERTY. This property is within Improvement Area 1 of the above-named Community Facilities District. The property is subject to a special tax of the Community Facilities District which is in addition to the regular property taxes and any other charges and benefit assessments on the property. This special tax may not be imposed on all parcels within the City of Carlsbad or the County of San Diego where the property is located. If you fail to pay the special taxes when due each year, the property may be foreclosed upon and sold. This tax is used to provide public facilities described below that are likely to particularly benefit the property. YOU SHOULD TAKE THIS TAX AND THE BENEFITS FROM THE PUBLIC FACILITIES FOR WHICH IT PAYS INTO ACCOUNT IN DECIDING WHETHER TO BUY THIS PROPERTY. The maximum special tax that may be levied against this property for public facilities is $ during the - tax year. The special taxes will be collected each year on your property tax bill in semi-annual installments until the bonds [issued/to be issued] for the Community Facilities District for Improvement Area 1 are repaid. The special tax will be levied each year until all of the authorized facilities are built and all special tax bonds repaid, but in any case not longer than the tenth Fiscal Year following the final maturity of the bonds issued for Improvement Area 1 which will be the - Fiscal Year or longer than is need to pay for the costs of the construction of the public facilities described in the following paragraph, whichever is later. A copy of the rate and method of apportionment of the special taxes is attached as Attachment A to this notice. 668025.02/LA S7335-4ll/5-IO-06/sjr/jss -1- The authorized public facilities that are being paid for by the special taxes levied within Improvement Area 1 and the money received from the sale of bonds that are being repaid by the special taxes within Improvement Area 1 are: • Roadway improvements to Melrose Drive, Faraday Avenue and Palomar Airport Road generally consisting of grading and paving of streets, installation of curbs, gutters, sidewalks, signing and striping, storm drainage pipelines and other facilities, water, sewer and reclaimed water mains, dry utilities, environmental mitigation, landscaping of medians, parkways and adjacent slopes and other appurtenant works. These facilities may not yet have all been constructed or acquired and it is possible that some of such facilities may never be constructed or acquired. The City of Carlsbad [will/has] issued bonds for the Community Facilities District to finance the acquisition or construction of the facilities described above. The bonds will be repaid from the levy and collection of special taxes on property within Improvement Area 1. Information regarding the principal amount of, interest rates on and term of such bonds may be found in the Official Statement related to such bonds. YOU MAY OBTAIN A COPY OF THE RESOLUTION OF FORMATION WHICH AUTHORIZED CREATION OF THE COMMUNITY FACILITIES DISTRICT, AND WHICH SPECIFIES MORE PRECISELY HOW THE SPECIAL TAX IS APPORTIONED AND HOW THE PROCEEDS OF THE SPECIAL TAX WILL BE USED, OR THE OFFICIAL STATEMENT DESCRIBED IN THE PRECEDING PARAGRAPH FROM THE FINANCE DEPARTMENT OF THE CITY OF CARLSBAD BY CALLING (760) 602 - 2403 OR ON THE CITY WEBSITE AT WWW.CI.CARLSBAD.CA.US. THERE MAY BE A CHARGE FOR THIS DOCUMENT NOT TO EXCEED THE ESTIMATED REASONABLE COST OF PROVIDING THE DOCUMENT. I (WE) ACKNOWLEDGE THAT I (WE) HAVE RECEIVED A COPY OF THIS NOTICE. I (WE) UNDERSTAND THAT I (WE) MAY TERMINATE THE CONTRACT TO PURCHASE OR DEPOSIT RECEIPT AFTER RECEIVING THIS NOTICE FROM THE OWNER OR AGENT SELLING THE PROPERTY. THE CONTRACT MAY BE TERMINATED WITHIN THREE DAYS IF THIS NOTICE WAS RECEIVED IN PERSON OR WITHIN FIVE DAYS AFTER THIS NOTICE WAS DEPOSITED IN THE MAIL BY GIVING WRITTEN NOTICE OF THAT TERMINATION TO THE OWNER OR AGENT SELLING THE PROPERTY. 668025.02/LA S7335-41l/5-IO-06/sjr/jss -2- BUYER Name (Please Print) Signature Date Name (Please Print) Signature Date PLEASE REVIEW THE FOLLOWING PRE-PAYMENT OPTION ELECTION AND COMPLETE THE OPTION ELECTION AND EXECUTE THE ELECTION IN THE SPACE(S) PROVIDED. 668025.02/LA S7335-4ll/5-10-06/sjr/|ss -3- PREPAYMENT OPTION ELECTION Prior to the close of escrow of the purchase of this property, you have the option to elect to either (a) pay the special tax obligation in semi-annual installments ("Option(a)") during the term of the bonds or (b) pre-pay the entire special tax obligation at the close of escrow on the sale of the property to you in order to extinguish the special tax lien ("Option (b)"). If you elect Option (a) the special taxes levied on the property will be collected in semi- annual installments which will be included in the property tax bill for the property. The maximum annual installments that may be levied on the property is $ per year to be collected through tax year - . In the event you elect Option (b), the amount required to pay-off the special tax obligation in order to extinguish the special tax lien may be determined by calling the Finance Department of the City at (760) 602 -2403 prior to the close of escrow and requesting that the City calculate the prepayment amount for your property. RECEIPT, ACKNOWLEDGEMENT AND PRE-PAYMENT OPTION ELECTION By signing this Pre-Payment Option Election, Buyer acknowledges that: 1. The property that Buyer is purchasing is located within the boundaries of Improvement Area 1 of Community Facilities District No. 3. 2. Buyer has had an opportunity to read and review this Pre-Payment Option Election, and has received a copy of this Pre-Payment Option Election prior to opening escrow for the purchase of the property, or, if received after the opening of such escrow, with sufficient time for Buyer to make any reasonable inquiries that Buyer deems necessary regarding the special tax authorized to be levied against the property prior to the close of escrow and the buyer's option to prepay the special tax obligation for the property prior to the close of escrow. 3. Buyer hereby elects the following option (check one): (a) pay the special tax in maximum annual installments of $ per year through the tax year - . (b) pay-off the entire special tax obligation at one time at the close of escrow for the Property. 4. If Buyer elects Option (a), Buyer assumes the special tax obligation against the property, and will be solely responsible for the payment of special taxes for as long as the Buyer owns the property and Seller shall have no liability for such payment. Further Buyer agrees to the amount and purpose of the special taxes on the property and that Buyer forever waives any right of complaint or protest to the City pertaining to the nature, extent, duration and amount of the special tax. Notwithstanding Buyer's election of Option (a) at this time, Buyer may prepay the entire special tax obligation at any time in the future if Buyer so chooses. The future pay-off amount may also include prepayment penalties, interest charges and other charges related to the 668025.02/LA S7335-41l/5-IOO6/sjr/jss -4- calculation and administration of such pay-off. The prepayment formula is set forth in Attachment A to this Pre-Payment Election Option. BUYER Name (Please Print) Signature Date Name (Please Print) Signature Date A COPY OF THIS EXECUTED NOTICE OF SPECIAL TAX AND PRE-PAYMENT OPTION ELECTION SHALL BE PROVIDED TO THE FINANCE DIRECTOR OF THE CITY AT THE CLOSE OF ESCROW. Please mail executed copy to: Finance Director City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008 668025.02/LA S7335-411/5-10-06/sjr/jss -5- Attachment A Rate and Method of Apportionment Improvement Area 1 of Community Facilities District No. 3 WDIVEN\327280.2 A-1- RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX COMMUNITY FACILITIES DISTRICT NO. 3 IMPROVEMENT AREA 1 OF THE CITY OF CARLSBAD A Special Tax shall be levied and collected in Improvement Area 1 ("LA. 1") of Community Facilities District No. 3 (the "CFD No. 3") of the City of Carlsbad each Fiscal Year, in an amount determined by the City Council of the City of Carlsbad acting in its capacity as the legislative body of CFD No. 3 through the application of the procedures described below. All of the real property in IA 1, unless exempted by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms used herein shall have the following meanings: "Acquisition Agreement" means that certain Acquisition/Financing Agreement pursuant to which public improvements, authorized to be financed by CFD No. 3, are acquired by the City from the proceeds of Bonds or Special Taxes, as such agreement may be modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Acreage" or "Acre" of an Assessor's Parcel means (i) prior to the recordation of a Final _ . Subdivision Map that acreage shown on the Assessor's Parcel Map for each such Assessor's Parcel less the acreage, as shown on a tentative map or similar land use entitlement approved by the City, to be owned by, irrevocably offered or dedicated to, or for which an easement for purposes of public right-of-way or other public purpose will be granted to the federal government, the State of California, the County, the City, or any local government or other public agency or designated with specific boundaries and acreage as open space and (ii) after recordation of a Final Subdivision Map that acreage shown on or determined from the applicable Final Subdivision Map for each such Assessor's Parcel. For Condominiums, the Acreage applicable to each Condominium shall be determined by allocating the acreage of the underlying lot on which the Condominiums are or are to be constructed in proportion to each such Condominium's building square footage. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of IA 1, including, but not limited to, the costs of IA 1 of CFD No. 3 Page 1 of 11 September 2, 2005 computing the Special Taxes and of preparing the annual Special Tax collection schedules; the costs of collecting the Special Taxes; the costs of remitting the Special Taxes to the fiscal agent or trustee for any Bonds; the costs of the fiscal agent or trustee (including its legal counsel) in the discharge of the duties required of it under any Indenture; the costs of the City, or designee thereof, in complying with the disclosure requirements of applicable federal and state securities laws and of the Act, including public inquiries regarding the Special Taxes, the costs associated with the release of funds from any escrow account (to the extent not paid from other sources). "Annual Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C and escalated in accordance with Section D that can be levied by the Council in any Fiscal Year on any Assessor's Parcel. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel number. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, secured by the levy of Special Taxes within IA 1. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of Special Taxes. "CFD No. 3" or "District" means Community Facilities District No. 3 of the City of Carlsbad. "City" means the City of Carlsbad, California. "Condominium" means a separate interest or unit meeting the statutory definition of a condominium contained in the California Civil Code, Section 1351, and for which a condominium plan has been recorded pursuant to California Civil Code, Section 1352. "Council" means the City Council of the City, acting as the legislative body of CFD No. 3. "County" means the County of San Diego, California. "Developable Property" means all Taxable Property, exclusive of Final Map Property. IA 1 of CFD No. 3 Page 2 of 11 September 2, 2005 "Exempt Property" means all property located within the boundaries of LA. 1 that is exempt from the Special Tax pursuant Section F below. "Final Map Property" means all Taxable Property included within a Final Subdivision Map which is approved by City Council prior to March 1 of each Fiscal Year. "Final Subdivision Map" means a subdivision of property created by recordation of a final map or parcel map approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.), a lot line adjustment or recordation of a condominium plan pursuant to California Civil Code 1352. "Fiscal Year" means the period starting on each July 1 and ending on the following June 30. "IA 1" or "Improvement Area 1" means Improvement Area No. 1 of the District. "Improvement" or "Improvements" means an improvement or improvements authorized to be acquired by the City pursuant to the terms and conditions of the Acquisition Agreement. "Improvement Costs" means the estimated cost to construct the Improvements as set forth in Exhibit B to the Acquisition Agreement. "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Index" means for the purpose of calculating the escalation of the Annual Maximum Special Tax each Fiscal Year, the lesser of (a) the annual percentage increase, if any, in the "Construction Cost Index for ENR 20 Cities" for the City of Los Angeles as published in the "Engineering News Record" for the twelve-month period ending with the month of March preceding each Fiscal Year or (b) 3%. "Open Space" means property within the boundaries of LA 1 which, prior to March 1st of the preceding Fiscal Year, (a) has been designated with specific boundaries and acreage on a tentative map or Final Subdivision Map as open space, (b) is classified by the County Assessor as open space by the County assigning a zero assessed value, (c) has been irrevocably offered for dedication as open space to the federal government, the State of California, the County, the City, or any other public agency or (d) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space. IA 1 of CFD No. 3 Page 3 of 11 September 2, 2005 "Public Property" means property within the boundaries of IA 1 which prior to March 1st of the preceding Fiscal Year is owned by, irrevocably offered or dedicated by Final Subdivision Map or other recorded document, or for which an easement for purposes of public right-of-way, habitat mitigation preserve, pedestrian trails or other public purpose has been granted to the federal government, the State of California, the County, the City, or any local government or other public agency. Notwithstanding the foregoing, the leasehold interest or other possessory interest granted by any public agency in property owned by such public agency to a private entity or person shall be subject to taxation under Section 53340.1 of the Act and shall be classified as Taxable Property. "Special Tax" means the Special Tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property within a Zone to fund the Special Tax Requirement. "Special Tax Requirement" means: (a) that amount required in any Fiscal Year prior to the issuance of Bonds to: (1) pay the Administrative Expenses; and (2) pay directly for acquisition or construction of the aggregate Improvements in proportion to the allocation of the Improvement Costs to IA 1 specified in Appendix A attached hereto but only to the extent such costs are not expected to be funded with the proceeds of the Bonds; - or (b) that amount required in any Fiscal Year after the issuance of Bonds to: (1) pay the Administrative Expenses, (2) pay debt service on any outstanding Bonds, (3) replenish any reserve funds attributable to IA 1 and established in connection with Bonds, (4) pay the costs of remarketing, credit enhancement and liquidity facility fees (including such fees for instruments that serve as the basis of a reserve fund in lieu of cash related to any Bonds), (5) pay directly for acquisition or construction of the Improvements of IA 1, but only to the extent such costs cannot be funded with the proceeds of Bonds, and IA 1 of CFD No. 3 Page 4 of 11 September 2, 2005 (6) less available funds as directed under the Indenture. "Taxable Property" means all property located within the boundaries of IA 1 that is not Exempt Property. "Zone" means either Zone A or Zone B. "Zone A" means that specific geographic area as depicted on the boundary map for CFD No. 3 and designated as Zone A. "Zone B" means that specific geographic area as depicted on the boundary map for CFD No. 3 and designated as Zone B. B. CLASSIFICATION OF PROPERTY Prior to the beginning of each Fiscal Year, all property within IA 1 shall be classified as either Taxable Properly or Exempt Property. Taxable Property shall be further classified as Final Map Property or Developable Property. C. ANNUAL MAXIMUM SPECIAL TAX The Annual Maximum Special Tax per Acre for Fiscal Year 2005-2006 for all Taxable Property is shown in Table 1 below: Table 1 Annual Maximum Special Tax per Acre For Fiscal Year 2005-2006 Zone A Zone B $15,241.00 $7,265.00 D. ESCALATION OF THE ANNUAL MAXIMUM SPECIAL TAX Each Fiscal Year beginning Fiscal Year 2006-07, the Annual Maximum Special Tax shall escalate at the applicable Index. The escalation shall cease in the Fiscal Year following the earlier of (1) the completion of the construction and acquisition of all of the Improvements pursuant to the Acquisition Agreement or (2) the sale of the final series of Bonds. IA 1 of CFD No. 3 Page 5 of 11 September 2, 2005 E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement. Prior to the issuance of Bonds, the Special Tax shall be levied only on Final Map Property, in equal percentages, as necessary to fund the Special Tax Requirement up to 100% of the applicable Annual Maximum Special Tax. After the issuance of Bonds, the Special Tax shall be levied on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement as follows: First: The Special Tax shall be levied in equal percentages on each Assessor's Parcel of Taxable Property, exclusive of Open Space Property and Public Property, up to 100% of the applicable Annual Maximum Special Tax; and Second: If additional Special Taxes are needed after the first step, the Special Tax shall be levied in equal percentages on each remaining Assessor's Parcel of Taxable Property (i.e., Open Space Property and Public Property which is not exempt from the Special Tax), up to 100% of the applicable Annual Maximum Special Tax. F. EXEMPTIONS The CFD Administrator shall classify the following as Exempt Property: (i) Public Property, (ii) Open Space and (iii) Assessor Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided however, that no such classification shall reduce the sum of all Taxable Property to less than 46.35 Acres for Zone A and 77.49 Acres for Zone B. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than the amounts stated above will be classified as Taxable Property and shall be taxed pursuant to Section E. Exempt status for purposes of this paragraph will be assigned by the CFD administrator in the chronological order in which property becomes Exempt Property. The Annual Maximum Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which is classified as Taxable Property pursuant to the preceding paragraph shall be prepaid in full by the seller pursuant to Section J prior to the transfer/dedication of such property to such public agency. Until the Annual Maximum Special Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Taxable Property. IA 1 of CFD No. 3 Page 6 of 11 September 2, 2005 If the use of an Assessor's Parcel of previously classified Exempt Property changes so that such Assessor Parcel is no longer classified as Exempt Property as defined above, such Assessor Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property. G. TERM The Special Tax may not be levied (a) longer than the tenth Fiscal Year following the final maturity of the last series of Bonds or (b) longer than is needed to pay the cost and incidental expenses of the construction of the Improvements, whichever is later. H. APPEALS Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the Finance Director of the City who shall establish, as part of the proceedings and administration of CFD No. 3, a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment of Special Tax and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. I. MANNER OF COLLECTION The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that the CFD Administrator may directly bill the Special Tax, or may collect Special Taxes at a different time or in a different manner if necessary to meet the financial obligation of CFD No. 3 for LA 1 or as otherwise determined appropriate by the CFD Administrator. IA 1 of CFD No. 3 Page 7 of 11 September 2, 2005 J. PREPAYMENT OF SPECIAL TAX 1. Prepayment in Full The Annual Maximum Special Tax for any Assessor's Parcel may be prepaid and permanently satisfied as described herein, provided that a prepayment may be made only if at the time of the prepayment there are no delinquent Special Taxes with respect to such Assessor's Parcel and all other Assessor's Parcels which are under the same ownership and located within IA 1. An owner of an Assessor's Parcel intending to prepay the Special Tax shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor's Parcel and the date through which the amount any such prepayment shall be valid. The "Prepayment" shall be an amount equal to the sum of (1) Principal, (2) Premium, (3) Defeasance, (4) Fees, and (5) Unfunded Improvements minus the Reserve Fund Credit, as such terms are defined as follows: "Principal" means the principal amount of Bonds to be redeemed from the proceeds of such Prepayment and equals the quotient derived by dividing (a) the applicable Annual Maximum Special Tax for the Assessor's Parcel intending to prepay by (b) the expected aggregate Annual Maximum Special Taxes for all Taxable Property within IA 1 (and excluding from (b) any Annual Maximum Special Taxes for Assessor's Parcels which have fully prepaid the Annual Maximum Special Tax), and multiplying the quotient by the portion of the principal amount of Bonds outstanding. "Premium" means an amount equal to the Principal multiplied by the applicable redemption premium, if any, for the Bonds established pursuant to the Indenture so redeemed with the proceeds of any such Prepayment. "Defeasance" means an amount equal to the amount needed to pay interest on the Principal to be redeemed until the earliest redemption date for the outstanding Bonds permitted under the Indenture less the amount of earnings estimated to be received from the reinvestment of the Prepayment and the Fees to such date. Credit shall also be given for any Special Tax heretofore paid and received by the City which has not yet been utilized to pay the Special Tax Requirement or which is remaining after having paid the Special Tax Requirement. "Fees" equal the fees and expenses of CFD No. 3 directly related to the IA 1 of CFD No. 3 Page 8 of 11 September 2, 2005 Prepayment. "Unfunded Improvements" means an amount equal to the estimated cost of the unfunded Improvements authorized to be financed from the proceeds of the Bonds or Special Taxes allocable to the Assessor's Parcel for which the Prepayment is being calculated and is computed by multiplying the quotient calculated when determining Principal by the Improvement Costs allocable to IA 1, as set forth in the Acquisition Agreement, less the estimated cost of any Improvements financed by previously issued Bonds or the proceeds of Special Taxes. Unfunded Improvements shall equal zero following the issuance of all of the Bonds. "Reserve Fund Credit" shall equal the lesser of (i) the expected reduction in the applicable reserve fund requirement (as defined in the Indenture), if any, following the redemption of Bonds from proceeds of the Prepayment or (ii) the amount derived by subtracting the new reserve fund requirement in effect after the redemption of Bonds from the balance in the reserve fund (as such term is defined in the Indenture) on the prepayment date, but in no event shall such amount be less than zero. The Reserve Fund Credit shall apply only when the Reserve Fund for the Bonds shall at least equal the Reserve Requirement as defined in the Indenture. The sum of the amounts calculated in the preceding steps shall be paid to CFD No. 3 and shall be used to pay and redeem Bonds in accordance with the Indenture and to pay the Fees. Upon the receipt of such Prepayment by CFD No. 3, the obligation to pay the Special Tax for such Assessor's Parcel shall be deemed to be permanently satisfied, the Special Tax shall not be levied thereafter on such Assessor's Parcel, and the CFD Administrator shall cause notice of cessation of the Special Tax for such Assessor's Parcel to be recorded within 30 working days of receipt of the Prepayment and receipt of proof of Special Tax payments made to the County used in the calculation of the Prepayment, if any. 2. Prepayment in Part The Annual Maximum Special Tax for any Assessor's Parcel may be prepaid in part as described herein, provided that such a partial prepayment may be made only if at the time of the .prepayment there are no delinquent Special Taxes with respect to such Assessor's Parcel and all other Assessor's Parcels which are under the same ownership and located within IA 1. An owner of an Assessor's Parcel intending to partially prepay the Special Tax shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD IA 1 of CFD No. 3 Page 9 of 11 September 2, 2005 Administrator shall notify such owner of the prepayment amount for such Assessor's Parcel and the date through which the amount any such prepayment shall be valid. The amount of the prepayment shall be computed pursuant to Section J. 1 above substituting the portion of the Annual Maximum Special Tax to be prepaid for the Annual Maximum Special Tax applicable to the Parcel when computing Principal. The Annual Maximum Special Tax to be prepaid must result in an amount of principal which is an even integral of the denomination of Bonds set forth in the Indenture. If necessary, the prepayment amount shall be rounded up in order to equal an even integral of the denomination of Bonds. The CFD Administrator shall cause a notice of reduction of the Special Tax for such Assessor's Parcel to be recorded within 30 working days of receipt of the prepayment. Notwithstanding the foregoing, no prepayment shall be allowed unless the amount of Annual Maximum Special Taxes that may be levied in IA 1 pursuant to Section E of this Rate and Method of Apportionment of Special Tax after the proposed prepayment is at least the sum of (i) the estimated Administrative Expenses and (ii) one hundred ten percent (110%) of the maximum annual debt service for the Bonds, taking into account the Bonds to remain outstanding after such prepayment. IA 1 of CFD No. 3 Page 10 of 11 September 2, 2005 City of Carlsbad Community Facilities District No. 3 (Faraday/Melrose) Appendix A Prior to the sale of the Bonds based upon the cost estimates at this time, the following provides the construction cost allocation percentage of total funded which will be used to determine the Special Tax Requirement. Construction Costs Allocation Facilities Fund Requirement by Area Melrose Melrose South of PAR Federal Grant (Spread on percent of pad area) Palomar Airport Road PAR Turn Lane to Melrose South Faraday El Fuerte Facilities Total Improvement Area 1 Zone A $5,498,088 $5,498,088 Percent 21.91% ZoneB $4,381,653 $4,381,653 Percent 17.46% Improvement Area 2 IA2 $15,212,644 $15,212,644 Percent 60.63% Total District Total Cost $25,092,385 $4,954,843 $226,716 ($3,000,000) $2,798,853 $100,000 $15,956,550 $4,055,423 $25,092,385 Percent 100.00% Estimate of Bond Sizing Series A Series B Total Facilities Fund Requirement Capitalized Interest (12 months at 7.5%) Cost of Issuance Refund of Formation Deposit Discount of 2% Reserve Fund Requirement (Est @ Max DS) Contingency / Rounding Principal Issued by Improvement Area: $9,879,741 $952,125 $400,000 $133,333 $253,900 $1,074,901 $1,000 $12,695,000 $15,212,644 $1,443,000 $500,000 $66,667 $384,800 $1,629,075 $3,814 $19,240,000 $25,092,385 $2,395,125 $900,000 $200,000 $638,700 $2,703,976 $4,814 $31,935,000 IA 1 ofCFDNo. 3 Page 11 of 11 September 2, 2005