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HomeMy WebLinkAbout03-20 TPFA ResolutionRESOLUTION NO. TPFA 03-20 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY DECLARING ITS INTENTION TO ESTABLISH A COMMUNITY FACILITIES DISTRICT AND TO AUTHORIZE THE LEVY OF SPECIAL TAXES THEREIN - HARVESTON II WHEREAS, under the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "LAW'), this Board of Directors may commence proceedings for the establishment of a community facilities district; and WHEREAS, there have been submitted to this Board of Directors a Petition (Including Waiver) of Harveston, LLC (the "Petition"), requesting the formation by this Board of Directors of a community facilities district under the Law to be known as the Temecula Public Financing Authority Community Facilities District No. 03-06 (Harveston II) (the ~District"); and WHEREAS, under the Law, this Board of Directors is the legislative body for the proposed District and is empowered with the authority to establish the District and levy special taxes within the District; and WHEREAS, this Board of Directors now desires to proceed with the actions necessary to consider the establishment of the District, and to approve an amendment to an Indenture of Trust for outstanding Authority bonds to allow for the issuance of bonds for the District. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Temecula Public Financing Authority as follows: Section 1. This Board of Directors proposes to begin the proceedings necessary to establish the District pursuant to the Law. Receipt of the Petition to form the District is hereby acknowledged. Section 2. The name proposed for the District is Temecula Public Financing Authority Community Facilities District No. 03-06 (Harveston Ii). Section 3. The proposed boundaries of the District are as shown on the map of the District on file with the Secretary, which boundaries are hereby preliminarily approved. The Secretary is hereby directed to record, or cause to be recorded, the map of the boundaries of the District in the office of the County Recorder as soon as practicable after the adoption of this Resolution. Section 4. The type of public facilities (the "Facilities") proposed to be eligible for funding by the District and pursuant to the Law shall consist of those items listed on Exhibit A hereto under the heading "Facilities," which Exhibit is by this reference incorporated herein. The Executive Director is hereby authorized and directed to enter into a joint community facilities agreement with the City of Temecula and any other public entity that will own and/or operate any of the Facilities, such agreements to be in a form provided by Bond Counsel. R:/TPFA Resos 2003/TPFA Resos 03-20 I Section 5. Except to the extent that funds are otherwise available to the District to pay for the Facilities and/or pay the principal and interest as it becomes due on bonds of the District issued to finance the Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in the District, will be levied within the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this Board of Directors or its designee shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within the District, in sufficient detail to allow each landowner within the proposed District to estimate the maximum amount such owner will have to pay, and which specifies the tax year after which no further special tax will be levied on land used for private residential purposes and which otherwise complies with applicable provisions of the Act is described in Exhibit B attached hereto which Exhibit is by this reference incorporated herein. This Board of Directors finds that the provisions of Section 53313.6, 53313.7 and 53313.9 of the California Government Code (relating to adjustments to ad valorem property taxes and schools financed by a community facilities district) are inapplicable to the District. Section 6. It is the intention of this Board of Directors, acting as the legislative body for the District, to cause bonds of the Authority to be issued for the District pursuant to the Law to finance the costs of the Facilities. If so issued, the bonds shall be in the aggregate principal amount of not to exceed $5,500,000, shall bear interest payable semi-annually or in such other manner as this Board of Directors shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance thereof. Section 7. This Board of Directors reserves to itself the right and authority to allow any interested owner of property in the District, subject to the provisions of Section 53344.1 of the California Government Code and such requirements as it may otherwise impose, and any applicable prepayment penalties as prescribed in the indenture or fiscal agent agreement for any bonds of the Authority for the District, to tender to the Treasurer of the Authority in full payment or part payment of any installment of special taxes or the interest or penalties thereon which may be due or delinquent, but for which a bill has been received, any bond or other obligation secured thereby, in the manner described in Section 53344.1 of the California Government Code. Section 8. The levy of said proposed special tax shall be subject to the approval of the qualified electors of the District at a special election. The proposed voting procedure shall be by mailed or hand-delivered ballot among the landowners in the proposed District, with each owner having one vote for each acre or portion of an acre of land such owner owns in the District. Section 9. Except as may otherwise be provided by law or the rate and method of apportionment of the special tax for the District, all lands owned by any public entity, including the United States, the State of California and/or the City of Temecula, or any departments or political subdivisions of any thereof, shall be omitted from the levy of the special tax to be made to cover the costs and expenses of the Facilities, the issuance of bonds by the Authority for the District and any expenses of the District. Section 10. The Director of Public Works of the City of Temecula is hereby directed to study the Facilities and to make, or cause to be made, and file with the Secretary a report in writing, presenting the following: R:/TPFA Resos 2003/TPFA 03-20 2 (a) A brief description of the Facilities. (b) An estimate of the fair and reasonable cost of providing the Facilities, including the incidental expenses in connection therewith, including the costs of the proposed bond financing, any Authority or City of Temecula administrative costs and all other related costs. Said report shall be made a part of the record of the public hearing provided for below. Section 11. Tuesday, November 25, 2003, at 7:00 p.m. or as soon thereafter as the matter may be heard, in the regular meeting place of this Board of Directors, City Council Chambers, Temecula City Hall, 43200 Business Park Drive, Temecula, California, be, and the same are hereby appointed and fixed as the time and place when and where this Board of Directors, as legislative body for the District, will conduct a public hearing on the establishment of the District and consider and finally determine whether the public interest, convenience and necessity require the formation of the District and the levy of said special tax. Section 12. The Secretary is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper published in the area of the District. The publication of said notice shall be completed at least seven days before the date herein set for said hearing. Said notice shall be substantially in the form of Exhibit C hereto. Section 13. The Board of Directors hereby determines that the contemplated formation of a community facilities district and issuance of community facilities district special tax bonds involving the Authority and the District, in accordance with Section 15061(b) of the California Environmental Quality Act (CEQA) Guidelines is not a "Project," as defined in Section 15378 of the CEQA Guidelines, and is therefore exempt from the requirements of CEQA. Pursuant to CEQA Guidelines Sections 15061(d) and 15062, the Secretary is hereby directed to cause a Notice of Exemption to be prepared, executed and filed in regard to the foregoing determination. Section 14. The First Supplemental Indenture of Trust (the "Supplement"), in the form on file with the Secretary, is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Supplement in such form, together with such changes thereto as shall be approved by the Executive Director following consultation with Bond Counsel, the approval of such changes to be conclusively evidenced by the execution of the Supplement by the Executive Director. Section 15. This Board of Directors hereby determines that public convenience and necessity require that territory be added to the District in the future, and that this Resolution shall constitute a resolution of intention to annex territory to the District pursuant to Sections 53339.2 and 53339.3 of the Law. The name for the District is Temecula Public Financing Authority Community Facilities District No. 03-06 (Harveston II). The territory proposed for annexation to the District in the future is as indicated as such on the map of the District described in Section 3 above (the "Annexation Area"); provided that such territory may be annexed to the District only with the unanimous approval of the owner or owners of each parcel or the parcels to be annexed at the time that parcel or those parcels are so annexed. The types of facilities to be provided in the District and in the Annexation Area are the "Facilities" referenced in Section 4 above, and such Facilities shall be shared equally by all parcels to be included in the District and in the Annexation Area. The special taxes which will be levied in the Annexation Area shall be the same as those described in Section 5 above, and there shall be no alteration in the special tax rate levied in the District as a result of the proposed annexation R:/'rPFA Resos 2003/'rPFA 03-20 3 except as may occur by operation of the Rate and Method of Apportionment of Special Tax in Exhibit B solely as a result of additional territory being included within the District. The hearing regarding the proposed annexation described in this Section 15 and required by Section 53339.3(0 of the Law shall be combined with the hearing described in Section 11 above, and the notice described in Section 12 above shall constitute the notice required by Section 53339.4 of the Law. Section 16. This Resolution shall take effect upon its adoption. PASSED, APPROVED AND ADOPTED, by the Board of Directors of the Temecula Public Financing Authority at a meeting held on the 22nd day of October, 2003. ATTEST: etary STATE OF CALIFORNIA ) COUNTYOF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan Jones, Secretary of the Temecula Public Financing Authority, HEREBY DO CERTIFY that the foregoing Resolution No. TPFA 03-20 was duly adopted at a special meeting of the Board of Directors of the Temecula Public Financing Authority held on the 22nd day of October, 2003, by the following vote: AYES: 5 BOARDMEMBERS: Comerchero, Naggar, Pratt, Roberts, Stone NOES: 0 BOARDMEMBERS: None ABSENT: 0 BOARDMEMBERS: None ABSTAIN: 0 BOARDMEMBERS: None ority Seoretary R:/TPFA Resos 2003fTPFA 03-20 4 EXHIBIT A TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-06 (HARVESTON II) DESCRIPTION OF FACILITIES TO BE FUNDED BY THE DISTRICT FACILITIES It is intended that the District will finance all or a portion of the costs of any of the following: The widening of the Ynez Road bridge over San Gertrudes Creek, as further described in Section 6 of the First Operating Memorandum to the Recorded Development Agreement Between Lennar Homes Inc. and Winchester Hills I, LLC and City of Temecula, dated as of April 11, 2003, between Harveston, LLC, and the City of Temecula (the "Memorandum"). Design of and improvements to the Winchester Road/Ynez Road intersection, as further described in Section 3 of the Memorandum. The Facilities shall include the acquisition of right-of-way, the costs of design, engineering and planning, the costs of any environmental or traffic studies, surveys or other reports, the cost of any required environmental mitigation and any required noise mitigation measures, landscaping and irrigation, soils testing, permits, plan check and inspection fees, insurance, legal and related overhead costs, coordination and supervision and any other costs or appurtenances related to any of the foregoing. OTHER The District may also finance any of the following: 1. Bond related expenses, including underwriters discount, financial advisor fees and expenses, appraisal and price point study costs, reserve fund, capitalized interest, bond and disclosure counsel fees and expenses, landowner counsel fees and expenses and all other incidental expenses. 2. Administrative fees of the Authority, the City of Temecula and the Bond trustee or fiscal agent related to the District and the Bonds. 3. Reimbursement of costs related to the formation of the District advanced by the Authority, the City of Temecula, any landowner in the District, or any party related to any of the foregoing, as well as reimbursement of any costs advanced by the Authority, the City of Temecula, any landowner in the District or any party related to any of the foregoing, for facilities, fees or other purposes or costs of the District. EXHIBIT B TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-06 (HARVESTON II) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-06 (HARVESTON II) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax shall be levied and collected on all Taxable Property in the Temecula Public Financing Authority Community Facilities District No. 03-06 (Harveston II) ("CFD No. 03-06") each Fiscal Year in an amount determined by the CFD Administrator through the application of the appropriate Special Tax based on the procedures described below. All of the real property within CFD No. 03-06, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other similar recorded County instrument. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 03-06, including but not limited to: the costs of computing the Special Taxes and of preparing the annual Special Tax collection schedules (whether by the CFD Administrator or designee thereof or both); the costs of collecting the Special Taxes (whether by the Authority, County, City, or otherwise); the costs of remitting the Special Taxes to the Trustee for any Bonds; the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Taxes; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under any Indenture; the costs of the Authority, City or designee in complying with arbitrage rebate and disclosure requirements of applicable federal and State securities laws, the Act and the California Government Code, including property owner inquiries regarding the Special Taxes; the costs associated with the release of funds from any escrow account; the costs of the Authority, City or designee related to an appeal of the Special Tax; and an allocable share of the salaries of the City staff and City overhead expense directly relating to the foregoing. Administrative Expenses shall also include amounts advanced by the City or the Authority for any administrative purposes of CFD No. 03- 06. "Apartment Property" means any Assessor's Parcels of Developed Property for which building permits have been issued for attached residential units which are made available for rental, but not purchase, by the general public. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C below. "Authority" means the Temecula Public Financing Authority. "Backup Special Tax" means the Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C below. "Board of Directors" means the Board of Directors of the Authority, acting as the legislative body of CFD No. 03-06. "Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued or incurred by CFD No. 03-06 under the Act. "CFD Administrator' means the Finance Director of the City, or designee thereof, responsible for determining the Special Tax required and various other amounts described herein for providing for the levy and collection of the Special Taxes. "CFD No. 03-06" means Community Facilities District No. 03-06 (Harveston II) of the Temecula Public Financing Authority. "City" means the City of Temecula. "County" means the County of Riverside. "Developed Property" means all Taxable Property, exclusive of Property Owner Association Property and Public Property, for which (i) a Final Subdivision was recorded prior to the January 1st preceding the Fiscal Year in which the Spedal Tax is being levied and (ii) a building permit was issued after January 1, 2003, but prior to the April 1st preceding the Fiscal Year in which the Special Tax is being levied. "Final Subdivision" means a subdivision of property evidenced by the recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.), or the recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which building permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, trust agreement, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Table 1. "Maximum Special Tax" means the maximum amount of Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel to satisfy the Special Tax Requirement. "Non-Residential Floor Area" means the total floor area of a non-residential building(s) located on an Assessor's Parcel, measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two sides, as determined by reference to the building permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CFD Administrator. "Outstanding Bond(s)" means, as of any date, all Bonds previously issued that are outstanding under the applicable Indenture. "Property Owner Association Property" means any property within the boundaries of CFD No. 03-06 that is owned by, or irrevocably dedicated as indicated in an instrument recorded with the County Recorder, to a property owner association, including any master or sub-association. "Proportionately" means for: (i) Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 03-06, (ii) Undeveloped Property, that the ratio of the actual Special Tax levy per Acre of Undeveloped Property is equal for all Assessor's Parcels of Undeveloped Property, (iii) Taxable Property Owners Association Property, that the ratio of the actual Special Tax levy per Acre of Taxable Property Owners Association Property is equal for all Assessor's Parcels of Taxable Property Owners Association Property, and (iv) Taxable Public Property, that the ratio of the actual Special Tax levy per Acre of Taxable Public Property is equal for all Assessor's Parcels of Taxable Public Property. "Public Property" means any property within the boundaries of CFD No. 03-06 that is used for rights-of-way or any other purpose and is owned by or irrevocably offered for dedication to the federal government, the State, the County, the City or any other public agency. Once a parcel has been designated as Public Property, it shall retain such status permanently. "Residential Floor Area" means all of the square footage within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by the CFD Administrator with reference to the building permit(s) issued for such Assessor's Parcel or other appropriate means selected by the CFD Administrator. Once such determination has been made for a parcel, it shall remain fixed in all future Fiscal Years. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit(s) has been issued for purposes of constructing one or more residential dwelling units. "Service Commercial Property" means all Assessor's Parcels that are south of Ynez Road pursuant to Tract No. 29639-2. "Single Family Property" means all Assessor's Parcels of Residential Property, other than Apartment Property, for which building permits have been issued for detached or attached residential units. "Special Tax" means the Special Tax to be levied in each Fiscal Year on each Assessor's Parcel of Developed Property, Undeveloped Property, Taxable Property Owner Association Property and Taxable Public Property to fund the Special Tax Requirement, and shall include Special Taxes levied or to be levied under Section D, below. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 03-06 to: (a) (i) pay debt service on all Outstanding Bonds for the calendar year that commences in such Fiscal Year; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement, liquidity support and rebate payments on the Bonds; (iii) pay Administrative Expenses; and (iv) pay any amounts required to establish or replenish any reserve funds for any Outstanding Bonds; less (b) a credit for funds available to reduce the annual Special Tax levy under the Indenture, as determined by the CFD Administrator. "State" means the State of California. "Taxable Property" means all of the Assessor's Pamels within the boundaries of CFD No. 03-06 that are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. "Taxable Public Property" means all Assessor's Parcels of Public Properly that are not exempt pursuant to Section E below. "Total Floor Area" means for an Assessor's Parcel, the sum of the Residential Floor Area plus the Non-Residential Floor Area. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Property Owner Association Property or Taxable Public Property. "Update Property" means an Assessor's Parcel of Undeveloped Property for which a building permit has been issued, but which has not yet been classified as Developed Property, Taxable Property Owner Association Property or Taxable Public Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 03-06 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property or Undeveloped Property, and shall be subject to Special Taxes pursuant to Sections C and D below. Developed Property shall be assigned to a Land Use Class as specified in Table 1. The Assigned Special Tax for Single Family Property and Apartment Property shall be based on the number of dwelling units. The Assigned Special Tax for Non-Residential Property shall be based on the Acreage of the Assessor's Parcel. MAXIMUM SPECIAL TAX RATE Developed Property a. Maximum Special Tax The Maximum Special Tax shall be the greater of (i) the amount derived by application of the Assigned Special Tax, or (ii) the amount derived by application of the Backup Special Tax. b. Assigned Special Tax The Assigned Special Tax for Developed Property in each Fiscal Year for each Land Use Class, commencing with Fiscal Year 2004-2005 and for each Fiscal Year thereafter, is shown below in Table 1. TABLE1 Assigned Special Tax Amounts for Developed Property Community Facilities District No. 03-06 Assigned Land Special Tax Per Use Class Description U ni'dAcre 1 Single Family Property $327 per unit 2 Apartment Property $327 per unit 3 Non-Residential Property $2,525 per Acre c. Backup Special Tax The Backup Special Tax for Developed Property in each Fiscal Year, shall be $2,525 per Acre for Residential Property and Non-Residential Property. d. Multiple Land Use Classes In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Assigned Special Tax levied on an Assessor's Parcel shall be the sum of the Assigned Special Tax levies for all Land Use Classes located on that Assessor's Parcel. The Backup Special Tax levied on an Assessor's Parcel shall be the sum of the Backup Special Tax levies that can be imposed on all Land Use Classes located on that Assessor's Parcel. The Maximum Special Tax levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax levies that can be imposed on all Land Use Classes located on that Assessor's Parcel. For purposes of calculating the Backup Special Tax (but not the Assigned Special Tax) for each Land Use Class under such circumstances, the Acreage assigned to each Land Use Class shall be based on the proportion of Residential Floor Area or Non-Residential Floor Area that is built for each Land Use Class as compared with the Total Floor Area built on the Assessor's Parcel. All allocations made under this section shall be determined by the CFD Administrator, and all such allocations shall be final. 2. Undeveloped Property, Taxable Property Owner Association Property and Taxable Public Property a. Maximum Special Tax The Maximum Special Tax for Undeveloped Property shall be $2,525 per Acre. The Maximum Special Tax for Taxable Property Owner Association Property and Taxable Public Property shall be $2,525 per Acre. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each following Fiscal Year, the CFD Administrator shall levy the Special Tax as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement; Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax as needed to satisfy the Special Tax Requirement; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property up to the Maximum Special Tax for Taxable Property Owner Association Property; and Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property up to the Maximum Special Tax for Taxable Public Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property used for private residential purposes be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within CFD No. 03-06. E. EXEMPTIONS No Special Tax shall be levied on up to 107.44 Acres of Property Owner Association Property, Public Property, and Service Commercial Property. The CFD Administrator will assign tax- exempt status to Assessor's Parcels in the chronological order in which such Parcels are known to the CFD Administrator to become Property Owner Association Property, Public Property or Service Commercial Property. Once an Assessor's Parcel of Public Property has been classified as exempt, its tax-exempt status will be permanent, independent of its future uses. Property Owner Association Property or Public Property that is not exempt from Special Tax levies under this section shall be subject to the levy of Special Tax and shall be taxed Proportionately as part of the fourth and fifth steps, respectively, in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property or Taxable Public Property. All Assessor's Parcels that have fully prepaid their Special Tax lien pursuant to Section I are exempt from future Special Tax levies. G. REVIEW AND APPEAL Any taxpayer may file a written appeal of the Special Tax levied on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant's property. No refunds of previously paid Special Taxes shall be made. H. MANNER OF COLLECTION The Special Tax as levied pursuant to Section D above shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; previded, however, that the CFD Administretor may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet the financial obligations of CFD No. 03-06 or as otherwise determined appropriate by the CFD Administrator. I. PREPAYMENT OF SPECIAL TAX The following definition applies to Section I. "Outstanding Prepayment Bonds" means, as of any date, all Bonds previously issued that are anticipated by the CFD Administrator to be outstanding under the applicable Indenture immediately after the first principal payment date for such Bonds following the then current Fiscal Year. 1. Prepayment in Full The Special Tax obligation described in Section D above with respect to any Assessor's Parcel of Developed Property or Update Property may be fully prepaid. In addition, the Special Tax obligation of any Assessor's Parcel of Taxable Public Property and/or Taxable Property Owner Association Property may be prepaid. A prepayment may be made on an Assessor's Parcel only if there are no delinquent Special Tax levies with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge the Assessor's Parcel owner a reasonable fee for providing these figures, which must be paid by the owner of the Assessor's Parcel prior to the calculation of the prepayment amount. Prepayment must be made not less than 15 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. The Prepayment Amount (defined below) for any Assessor's Parcel of Taxable Public Property may be determined by the CFD Administrator as authorized under Sections 53317.3 and 53317.5 of the Act. However, no Special Tax prepayment for any Assessor's Parcel of Taxable Public Property shall be allowed unless the amount of Assigned Special Tax levies that may be imposed on Taxable Property within CFD No. 03-06 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount shall be calculated as follows: ParaRraph No.: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax applicable for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property which ara also classified as Update Property, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. (a) Divide the Assigned Special Tax or Maximum Special Tax computed pursuant to paragraph 2 by the estimated Assigned Special Tax levies for all of CFD No. 03-06 based on the Developed Property Special Tax levies which could be imposed in the current Fiscal Year on all expected development in CFD No. 03-06, excluding any Assessor's Parcels which have been prepaid; and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the estimated Backup Special Tax levies at buildout for all of CFD No. 03-06 using the Backup Special Tax amounts for the current Fiscal Year, excluding any Assessor's Parcels which have been prepaid. 11. 12. 13. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Outstanding Prepayment Bonds, and (if determined necessary by the CFD Administrator to effect the redemption of Bonds with such prepayment) round up to the nearest integral multiple of $5,000 to compute the amount of Outstanding Prepayment Bonds to be retired and prepaid (the "Bond Redemption Amount"). Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Outstanding Prepayment Bonds to be redeemed (the "Redemption Premium"). Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Prepayment Bonds. Determine the amount of the Special Tax levied on the Assessor's Parcel in the currant Fiscal Year which, has not yet been paid. Compute the minimum amount the CFD Administrator reasonably expects to derive from the rainvestment of the Prepayment Amount less the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Prepayment Bonds to be redeemed with the prepayment. Add the amounts computed pursuant to paragraphs 6 and 7 and subtract the amount computed pursuant to paragraph 8 (the "Defeasance Amount"). Verify the administrative fees and expenses of CFD No. 03-06, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). If bond reserve funds for the Outstanding Prepayment Bonds, if any, are anticipated to be at or above 100% of the bond reserve requirement (as specified in the Indenture) immediately after the first principal payment date in the next Fiscal Year, the reserve fund credit shall equal the expected reduction in the bond reserve requirement, if any, associated with the redemption of Outstanding Prepayment Bonds as a result of the prepayment (the "Reserve Fund Credit"). No Reserve Fund Credit shall be granted if bond reserve funds ara anticipated to be below 100% of the bond reserve requirement immediately after the first principal payment date in the next Fiscal Year. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 9 and 10, less the amounts computed pursuant to paragraph 11 (the "Prepayment Amount"). From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to retira Outstanding Prepayment Bonds or make debt service payments, The amount computed pursuant to paragraph 10 shall be retained by CFD No. 03-06. The Prepayment Amount may be insufficient to redeem an integral multiple of $5,000 of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Bonds. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 7 (above), the CFD Administrator shall remove the Special Tax from the current Fiscal Year's levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Board of Directors shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Special Taxes that may be levied on Taxable Property within CFD No. 03-06 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds folowing the proposed prepayment. 2. Prepayment in Part The Maximum Special Tax on an Assessor's Parcel of Developed Property or Update Property may also be partially prepaid. The amount of the prepayment shall be calculated as in Section 1.1; except that a partial prepayment shall be calculated according to the following formula (provided that the partial prepayment must in any event be sufficient to, in addition to payment of all other components of the Prepayment Amount, redeem Bonds in increments of $5,000): PP = ((PE - A) x F) + A These terms have the following meaning: pp = PE = F = the partial prepayment the Prepayment Amount calculated according to Section i. 1 the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Special Tax. the Administrative Fees and Expenses calculated according to Section I. 1 The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, (ii) the percentage by which the Maximum Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. Such fee must be paid prior to the calculation of the Prepayment Amount. With respect to any Assessor's Parcel that is partially prepaid, the CFD Administrator shall (i) distribute the funds remitted to it according to Paragraph 13 of Section 1.1. and (ii) indicate in the records of CFD No. 03-06 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. J. TERM OF SPECIAL TAX The Special Tax shall be levied for a period not to exceed 50 Fiscal Years, commencing with Fiscal Year 2004-2005. EXHIBIT C TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-06 (HARVESTON II) NOTICE OF PUBLIC HEARING Notice is hereby given that on October 22, 2003, the Board of Directors of the Temecula Public Financing Authority adopted a Resolution entitled "A Resolution of the Board of Directors of the Temecula Public Financing Authority Declaring Its Intention To Establish A Community Facilities District And To Authorize The Levy Of Special Taxes Therein - Harveston Il." Pursuant to the Mello-Roos Community Facilities Act of 1982, the Board of Directors of the Authority hereby gives notice as follows: A. The text of said Resolution of Intention is as follows: WHEREAS, under the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Law"), this Board of Directors may commence proceedings for the establishment of a community facilities district; and WHEREAS, there have been submitted to this Board of Directors a Petition (Including Waiver) of Harveston, LLC (the "Petition"), requesting the formation by this Board of Directors of a community facilities district under the Law to be known as the Temecula Public Financing Authority Community Facilities District No. 03-06 (Harveston II) (the "District"); and WHEREAS, under the Law, this Board of Directors is the legislative body for the proposed District and is empowered with the authority to establish the District and levy special taxes within the District; and WHEREAS, this Board of Directors now desires to proceed with the actions necessary to consider the establishment of the District, and to approve an amendment to an Indenture of Trust for outstanding Authority bonds to allow for the issuance of bonds for the District. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Temecula Public Financing Authority as follows: Section 1. This Board of Directors proposes to begin the proceedings necessary to establish the District pursuant to the Law. Receipt of the Petition to form the District is hereby acknowledged. Section 2. The name proposed for the District is Temecula Public Financing Authority Community Facilities District No. 03-06 (Harveston II). Section 3. The proposed boundaries of the Distdct are as shown on the map of the District on file with the Secretary, which boundaries are hereby preliminarily approved. The Secretary is hereby directed to record, or cause to be recorded, the map of the boundaries of the District in the office of the County Recorder as soon as practicable after the adoption of this Resolution. Section 4. The type of public facilities (the "Facilities") proposed to be eligible for funding by the District and pursuant to the Law shall consist of those items listed on Exhibit A hereto under the heading "Facilities," which Exhibit is by this reference incorporated herein. The Executive Director is hereby authorized and directed to enter into a joint community facilities agreement with the City of Temecula and any other public entity that will own and/or operate any of the Facilities, such agreements to be in a form provided by Bond Counsel. Section 5. Except to the extent that funds are otherwise available to the District to pay for the Facilities and/or pay the principal and interest as it becomes due on bonds of the District issued to finance the Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in the District, will be levied within the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this Board of Directors or its designee shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within the District, in sufficient detail to allow each landowner within the proposed District to estimate the maximum amount such owner will have to pay, and which specifies the tax year after which no further special tax will be levied on land used for private residential purposes and which otherwise complies with applicable provisions of the Act is described in Exhibit B attached hereto which Exhibit is by this reference incorporated herein. This Board of Directors finds that the provisions of Section 53313.6, 53313.7 and 53313.9 of the California Government Code (relating to adjustments to ad valorem property taxes and schools financed by a community facilities district) are inapplicable to the District. Section 6. It is the intention of this Board of Directors, acting as the legislative body for the District, to cause bonds of the Authority to be issued for the District pursuant to the Law to finance the costs of the Facilities. If so issued, the bonds shall be in the aggregate principal amount of not to exceed $5,500,000, shall bear interest payable semi-annually or in such other manner as this Board of Directors shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance thereof. Section 7. This Board of Directors reserves to itself the right and authority to allow any interested owner of property in the District, subject to the provisions of Section 53344.1 of the California Government Code and such requirements as it may otherwise impose, and any applicable prepayment penalties as prescribed in the indenture or fiscal agent agreement for any bonds of the Authority for the District, to tender to the Treasurer of the Authority in full payment or part payment of any installment of special taxes or the interest or penalties thereon which may be due or delinquent, but for which a bill has been received, any bond or other obligation secured thereby, in the manner described in Section 53344.1 of the California Government Code. Section 8. The levy of said proposed special tax shall be subject to the approval of the qualified electors of the District at a special election. The proposed voting procedure shall be by mailed or hand-delivered ballot among the landowners in the proposed District, with each owner having one vote for each acre or portion of an acre of land such owner owns in the District. Section 9. Except as may otherwise be provided by law or the rate and method of apportionment of the special tax for the District, all lands owned by any public entity, including the United States, the State of California and/or the City of Temecula, or any departments or political subdivisions of any thereof, shall be omitted from the levy of the special tax to be made to cover the costs and expenses of the Facilities, the issuance of bonds by the Authority for the District and any expenses of the District. Section 10. The Director of Public Works of the City of Temecula is hereby directed to study the Facilities and to make, or cause to be made, and file with the Secretary a report in writing, presenting the following: (a) A brief description of the Facilities. (b) An estimate of the fair and reasonable cost of providing the Facilities, including the incidental expenses in connection therewith, including the costs of the proposed bond financing, any Authority or City of Temecula administrative costs and all other related costs. Said report shall be made a part of the record of the public hearing provided for below. Section 11. Tuesday, November 25, 2003, at 7:00 p.m. or as soon thereafter as the matter may be heard, in the regular meeting place of this Board of Directors, City Council Chambers, Temecula City Hall, 43200 Business Park Drive, Temecula, California, be, and the same are hereby appointed and fixed as the time and place when and where this Board of Directors, as legislative body for the District, will conduct a public hearing on the establishment of the District and consider and finally determine whether the public interest, convenience and necessity require the formation of the District and the levy of said special tax. Section 12. The Secretary is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper published in the area of the District. The publication of said notice shall be completed at least seven days before the date herein set for said hearing. Said notice shall be substantially in the form of Exhibit C hereto. Section 13. The Board of Directors hereby determines that the contemplated formation of a community facilities district and issuance of community facilities district special tax bonds involving the Authority and the District, in accordance with Section 15061(b) of the California Environmental Quality Act (CEQA) Guidelines is not a "Project," as defined in Section 15378 of the CEQA Guidelines, and is therefore exempt from the requirements of CEQA. Pursuant to CEQA Guidelines Sections 15061(d) and 15062, the Secretary is hereby directed to cause a Notice of Exemption to be prepared, executed and filed in regard to the foregoing determination. Section 14. The First Supplemental Indenture of Trust (the "Supplement"), in the form on file with the Secretary, is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Supplement in such form, together with such changes thereto as shall be approved by the Executive Director following consultation with Bond Counsel, the approval of such changes to be conclusively evidenced by the execution of the Supplement by the Executive Director. Section 15. This Board of Directors hereby determines that public convenience and necessity require that territory be added to the District in the future, and that this Resolution shall constitute a resolution of intention to annex territory to the District pursuant to Sections 53339.2 and 53339.3 of the Law. The name for the District is Temecula Public Financing Authority Community Facilities District No. 03-06 (Harveston II). The territory proposed for annexation to the District in the future is as indicated as such on the map of the District described in Section 3 above (the "Annexation Area"); provided that such territory may be annexed to the District only with the unanimous approval of the owner or owners of each parcel or the parcels to be annexed at the time that parcel or those parcels are so annexed. The types of facilities to be provided in the District and in the Annexation Area are the "Facilities" referenced in Section 4 above, and such Facilities shall be shared equally by all parcels to be included in the District and in the Annexation Area. The special taxes which will be levied in the Annexation Area shall be the same as those described in Section 5 above, and there shall be no alteration in the special tax rate levied in the District as a result of the proposed annexation except as may occur by operation of the Rate and Method of Apportionment of Special Tax in Exhibit B solely as a result of additional territory being included within the District. The hearing regarding the proposed annexation described in this Section 15 and required by Section 53339.3(0 of the Law shall be combined with the hearing described in Section 11 above, and the notice described in Section 12 above shall constitute the notice required by Section 53339.4 of the Law. Section 16. This Resolution shall take effect upon its adoption. B. The exhibits to the Resolution which describe the facilities to be funded by, and the rate and method of apportionment of the special taxes for, the district are on file in the office of the Secretary of the Authority. C. The time and place established under said Resolution for the public hearings required under Sections 53321(e) and 53339.3(0 of the Act are Tuesday, November 25, 2003, at the hour of 7:00 p.m. or as soon thereafter as the matter may be heard, in the regular meeting place of the Board of Directors, City Council Chambers, Temecula City Hall, 43200 Business Park Drive, Temecula, California. D. At said hearing, the testimony of all interested persons or taxpayers for or against the establishment of the district, the extent of the district or the furnishing of the specified types of facilities or other specific purposes of the district will be heard. Any person interested may file a protest in writing with the Secretary. If fifty percent or more of the registered voters, or six registered voters, whichever is more, residing in the territory proposed to be included in the district, or the owners of one-half or more of the area of land in the territory proposed to be included in the district and not exempt from the special tax file written protests against the establishment of the district and the protests are not withdrawn to reduce the value of the protests to less than a majority, the Board of Directors shall take no further action to establish the district or levy the special taxes for a period of one year from the date of the decision of the Board of Directors, and if the majodty protests of the registered voters or the landowners are only against the furnishing of a type or types of facilities within the district or a specific purpose of the district, or against levying a specified special tax, those types of facilities, or those specific purposes or the specified special tax will be eliminated from the proceedings to form the district. In addition to the foregoing, at said hearing, the testimony of all interested persons for or against the future annexation of territory to the district (as described in Section 15 of the Resolution) or the levying of special taxes within the territory proposed to be annexed to the district in the future will be heard. E. The proposed voting procedure shall be by special mail or hand-delivered ballot to the property owners within the territory proposed to be included in the district. Dated: November ,2003 /si Susan W. Jones, CMC Secretary, Temecula Public Financing Authority