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HomeMy WebLinkAbout081302 CC AgendaIn compliance with the Americans with Disabilities Act, if you need special assistance to padicipate in this meeting, please contact the office of the City Clerk (909) 694-6444. Notification 48 hours prior to a meeting will enable the City to make reasonable arrangements to ensure accessibility to that meeting [28 CFR 35.102.35.104 ADA Title II] AGENDA TEMECULA CITY COUNCIL A REGULAR MEETING CITY COUNCIL CHAMBERS 43200 BUSINESS PARK DRIVE AUGUST 13, 2002 -7:00 P.M. At approximately 9:45 P.M., the City Council will determine which of the remaining agenda items can be considered and acted upon prior to 10:00 P.M. and may continue all other items on which additional time is required until a future meeting. All meetings are scheduled to end at 10:00 P.M. 5:30 P.M. - Closed Session of the City Council pursuant to Government Code Sections: Conference with City Attorney and legal counsel pursuant to Government Code Section 54956.9(a) with respect to two matters of existing litigation involving the City. The following cases will be discussed: City of Temecula v. County of Riverside (Domenigoni-Barton) and City of Temecula v. County of Riverside (Tucalotta Hills). Conference with City Attorney pursuant to Government Code Section 54957 and. 54957.6 with respect to City Manager's Evaluation. Public Information concerning existing litigation between the City and various parties may be acquired by reviewing the public documents held by the City Clerk. CALL TO ORDER: Prelude MusiC: Invocation: Flag Salute: ROLL CALL: Mayor Ron Roberts Jonathan Santos, Jr. Pastor Ted Miller, Crossroads Cub Scout Pack 301 Comerchero, Naggar, Pratt, Stone, Roberts .Next in Order: Ordinance: No. 2002-04 Resolution: No. 2002-68 R:~Agenda\081302 1 PRESENTATIONS/PROCLAMATIONS Good Neiqhbor Award - David and Denise Guinn Safety-T (Rape Crisis Center) My Community - Our Earth Proiect - GIS - John De Ganqe and James Bauman PUBLIC COMMENTS A total of 30 minutes is provided so memb3rs of the public may address the Council on items that appear within the Consent Calendar or ones that are not listed on the agenda. Speakers are limited to two (2) minutes each. If you des[re to speak to the Council on an item which is listed on the Consent Calendar or a matter not listed on the agenda, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all Public Hearing or Council Business matters on the agenda, a "Request to Speak" form must be filed with the City Clerk prior to the Council addressing that item. There is a five (5) minute time limit for individual speakers. CITY COUNCIL REPORTS Reports by the members of the City Council on matters not on the agenda will be made at this time. A total, not to exceed, ten (10) minutes will be devoted to these reports. CONSENT CALENDAR NOTICE TO THE PUBLIC All matters listed under Consent Calendar are considered to be routine and all will be enacted by one roll call vote. There will be no discussion of these items unless Members of the City Council request specific items be removed from the Consent Calendar for separate action. 1 Standard Ordinance and Resolution Adoption Procedure RECOMMENDATION: 1.1 Motion to waive the reading of th,~ text of all ordinances and resolutions included in the agenda. 2 Approval of Minutes RECOMMENDATIQN: 2.1 Approve the minutes of June 25, 2002. R:~Agenda\081302 2 3 4 5 6 7 8 Resolution Approving List of Demands RECOMMENDATION: 3.1 Adopt a resolution entitled: RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A City Treasurer's Report as of June 30, 2002 RECOMMENDATION: 4.1 Receive and file the City Treasurer's Report as of June 30, 2002. City Council Meetinq Schedule - September 2002 RECOMMENDATION: 5.1 Direct the City Clerk to re-schedule the September 10, 2002 City Council Meeting to September 17, 2002, and to perform the appropriate postings and noticing requirements of the Government Code. Riverside County Library Contract Amendment No. 5 RECOMMENDATION: 6.1 Approve Amendment No. 5 to the agreement to provide library services (additional staff). 6.2 Authorize the expenditure of an amount not to exceed $150,000 to fund the Temecula Library Volunteer Coordinator half-time position and to subsidize funding to maintain the Senior Reference Librarian and Reference Librarian positions for fiscal year 2002-03. Arts Council of Temeeula Valley Special Events Community Grant Aqreement RECOMMENDATION: 7.1 Approve a Special Events Community Grant Agreement between the City of Temecu~a and the Arts Council of Temecula VaIley in the amount of $34,000. Review of City Conflict of Interest Code RECOMMENDATION: 8.1 Adopt a resolution entitled: R:~Agenda\081302 3 9 RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING THE CITY'S CONFLICT OF INTEREST CODE Subdivision Improvement Aqreement and Bonds for TM 29639 Harveston Offsite Improvements - Winchester Road Wideninq at Marqarita Road RECOMMENDATION: 9.1 Accept the Subdivision Improvement Agreement for the offsite improvements required of the Harveston Project Developer, Lennar Communities; 9.2 Accept the Subdivision Faithful Performance and Labor and Materials Bond as security for the improvements and as a source for claims against labor and materials, respectively; 9.3 Direct the City Clerk to so advise the developer and surety. 10 Temporary Street Closure of Main Street between Old Town Front Street and the Murrieta Creek Bridqe for the inauqural event Temecula Onsta.qe scheduled for August 31,2002 and Deleqate Authority to Issue Special Events/Street Closures Permit to Director of Public Works/City Enqineer RECOMMENDATION: 10.1 Adopt a resolution entitled: RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA, AUTHORIZING TEMPORARY STREET CLOSURE OF MAIN STREET BETWEEN OLD TOWN FRONT STREET AND MURRIETA CREEK BRIDGE FOR THE INAUGURAL EVENT TEMECULA ONSTAGE SCHEDULED FOR AUGUST 31, 2002 AND AUTHORIZING THE DIRECTOR OF PUBLIC WORKS/CITY ENGINEER' TO ISSUE SPECIAL EVENTS PERMIT INCLUDING STREET CLOSURES 11 First Street Extension Environmental Mitiqation - Project No. PW01-08 RECOMMENDATION: 11.1 Reject all bids received on June 6, 2002 for the First Street Extension Environmental Mitigation, Project No. PW01-08. R:~Agenda\081302 4 12 Award of Construction Contract for the'i~lercant le Buildin.q Seismic Retrofit Project, Proiect No. PW01-20 RECOMMENDATION: 12.1 Award a construction contract for the Mercantile Building Seismic Retrofit Project, Project No. PW01-20 to 2H Construction, Inc. in the amount of $332,467.00 and authorize the Mayor to execute the contract; 12.2 Authorize the City Manager to approve change orders not to exceed the contingency amount of $49,870.05, which is equal to 15% of the contract amount; 12.3 Approve an appropriate in the amount of $155,000.00 from the Redevelopment Agency bond proceeds. 13 Resolution of Support - AB 415 (Runner) EmerRency Alert System 14 RECOMMENDATION: 13.1 Adopt a resolution entitled: RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA SUPPORTING ~B415 (RUNNER) WHICH WOULD CREATE A STATEWIDE PLAN TO USE THE EMERGENCY ALERT SYSTEM AS "AMBER ALERTS" TO INFORM THE PUBLIC OF KIDNAPPINGS Contract for Cost of Service (User Fee) Study'and Development Impact Fee Study RECOMMENDATION: 14.1 Approve the agreement with Maximus (formerly David M. Griffith & Associates) to conduct a cost of service (user fee) and development impact fee analysis in an amount of $60,000; 14.2 Approve a contingency of 10% in an amount not to exceed $6,000. RECESS CITY COUNCIL MEETING TO SCHEDULED MEETINGS OF THE TEMECULA COMMUNITY SERVICES DISTRICT THE CITY OF TEMECULA REDEVELOPMENT AGENCY THE TEMECULA PUBLIC FINANCING AUTHORITY AND THE WINCHESTER HILLS FINANCING AUTHORITY R:~Agenda\081302 5 TEMECULA COMMUNITY SERVICES DISTRICT MEETING Next in Order: Ordinance: No. CSD 2002-01 Resolution: No. CSD 2002-08 CALL TO ORDER: President Jeff Stone ROLL CALL: DIRECTORS: Comerchero, Naggar, Pratt, Roberts, Stone PUBLIC COMMENTS A total of 15 minutes is provided so me,rnbers of the public may address the Board of Directors on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item not on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City Clerk. When you are called to speak, please come forward and state your name and address for the record. CONSENT CALENDAR Acceptance of Landscape Bonds and Aqreements for Tract No. 23209, Shea Homes Limited Partnership RECOMMENDATION: 1.1 Accept the agreement and surety bonds from Shea Homes Limited Partnership to improve the perimeter slopes and parkways within Tract No. 23209; 1.2 Accept the agreement and surety bonds from Shea Homes Limited Partnership to improve the landscaped medians on Butter[ield Stage Road within Tract No. 23209; 1.3 Accept the agreement and surety bonds from Shea Homes Limited Partnership to construct a 3.25 acre public park on La Serena and Butterfield Stage Roads within Tract No. 23209. R:~Agenda\081302 6 PUBLIC HEARING Any person may submit written comments to the Community Services District before a public Hearing or may appear and be heard in support of or in opposition to the Approval of the project(s) at the time of the hearing. If you challenge any of the project(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing or in written correspondence delivered to the City Clerk at, or prior to, the public hearing. 2 Tract Map No. 23209- Service Level BI Residential Street Liqhtinq; Service Level C, Perimeter Landscaping and Slope Maintenance and Service Level D, Trash and Recyclinq Collection Services Rates and Charges RECOMMENDATION: 2.1 Adopt a resolution entitIed: RESOLUTION NO. CSD 02- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA COMMUNITY SERVICES DISTRICT ORDERING, CALLING AND GIVING NOTICE OF AN ELECTION TO BE HELD ON SEPTEMBER 30, 2002 REGARDING SERVICE LEVEL B AND SERVICE LEVEL C RATES AND CHARGES FOR TRACT MAP NO. 23209 BEGINNING FISCAL YEAR 2003- 2004 PURSUANT TO ARTICLE XlID, SECTION 6 OF THE CALIFORNIA CONSTITUTION 2.2 Approve the Election Notice, Ballot, and Procedures for the Completion, Return and Tabulation of the Ballots;' 2.3 Authorize staff to mail the ballots to the affected property owners pursuant to the aforementioned process. DIRECTOR OF COMMUNITY SERVICES REPORT GENERAL MANAGER'S REPORT BOARD OF DIRECTORS' REPORTS ADJOURNMENT Next regular meeting: Tuesday, August 27, 2002, 7:00 PM, City Council Chambers, 43200 Business Park Drive, Temecula, California. R:~Agenda\081302 7 TEMECULA REDEVELOPMENT AGENCY MEETING Next in Order: Ordinance: No. RDA 2002-01 Resolution: No. RDA 2002-09 CALL TO ORDER: Chairperson Jeff Comerchero ROLL CALL AGENCY MEMBERS: Naggar, Pratt, Stone, Roberts, Comerchero PUBLIC COMMENTS A total of 15 minutes is provided so members of the public may address the Redevelopment Agency on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item no.._~t on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City Clerk. When you are called to speak, please come forward and state your name and address for the record. CONSENTCALENDAR 1 Minutes RECOMMENDATION: 1.1 Approve the minutes of July 23, 2002. EXECUTIVE DIRECTOR'S REPORT AGENCY MEMBERS'REPORTS ADJOURNMENT Ne~regularme~ing:Tuesday, August27,2002, CityCouncilChambers, 43200BusinessPark Drive, Temecula, California. R:~Agenda\081302 8 TEMECULA PUBLIC FINANCING AUTHORITY Next in Order: Ordinance: No. TPFA 2002-02 Resolution: No. TPFA 2002-07 CALLTO ORDER: Chairperson Ron Roberts ROLL CALL AGENCY MEMBERS': Comerchero, Na'ggar, Pratt, Stone, Roberts PUBLIC COMMENTS A total of 15 minutes is provided so members of the public may address the Temecula Public Financing Authority on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item not on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City Clerk. When you are called to speak, please come forward and state your name and address for the record. CONSENT CALENDAR 1 Minutes RECOMMENDATION: 1.1 Approve the minutes of April 9 2002; AUTHORITY BUSINESS 2 Issuance of Bonds for Temecula Public Financinq Authority Community Facilities District No. 01-2 (Harveston/ RECOMMENDATION: 2.1 Adopt a resolution entitled: R:~Agenda\081302 9 RESOLUTIQN NO. TPFA 02- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS OF THE TEMECULA PUBLIC FINANCING AUTHORITY FOR TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON), APPROVING AND DIRECTING THE EXECUTION OF AN INDENTURE OF TRUST AND APPROVING OTHER RELATED DOCUMENTS AND ACTIONS EXECUTIVE DIRECTOR'S REPORT BOARD MEMBERS' REPORTS ADJOURNMENT R:~Agenda\081302 10 WINCHESTER HILLS FINANCING AUTHORITY CALLTO ORDER: Chairperson Ron Roberts ROLL CALL AGENCY MEMBERS; PUBLIC COMMENTS Next in Order: Ordinance: No. WHFA 2002-01 Resolution: No. WHFA 2002-02 Comerchero, Naggar, Pratt, Stone, Roberts A total of 15 minutes is provided so members of the public may address the Winchester Hills Financing Authority on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item no.~t on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When'you are called to speak, please come forward and state your name for the record. For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City. Clerk. When you are called to speak, please' come forward and state your name and address for the record. AUTHORITY BUSINESS Amendment to Fiscal Aqent Aqreement and Defeasance of Bonds - Community Facilities District No. 98-1 (Winchester Hills) Special Tax Bonds, 1998 Series A RECOMMENDATION: 1.1 Adopt a resolution entitled: RESOLUTION NO. WHFA 02- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE WINCHESTER HILLS FINANCING AUTHORITY APPROVING AND DIRECTING THE EXECUTION AND DELIVERY OF A SUPPLEMENTAL AGREEMENT NO. 2 TO FISCAL AGENT AGREEMENT AND AN ESCROW AGREEMENT R:~Agenda\081302 11 RECONVENE TEMECULA CiTY COUNCIL PUBLIC HEARING Any person may submit written comments to the City Council before a public Hearing or may appear and be heard in support of or in opposition to the Approval of the project(s) at the time of the hearing. If you challenge any of the project(s) in court, you may be limited to raising only those issues you o1: someone else raised at the public hearing or in written correspondence delivered to the City Clerk at, or prior to, the public hearing. 15 Villaqes of Temecula - General Plan Amendment (PA00-0138); Chan.qe of Zone (PA00- 0139); Development Plan (PA00-0140); Tentative Parcel Map No (PA00-0152) (Continued from the meeting of June 25, 2002) RECOMMENDATION: 15.1 Continue the public hearing to the meeting of September 17, 2002. COUNCIL BUSINESS 16 Formation of Temecula/Murrieta Subcommittee RECOMMENDATION: 16.1 Appoint two members to serve on the joint Temecula/Murrieta Subcommittee. 17 Presentation and Update on Me.qan's Law RECOMMENDATION: 17.1 Receive and file report. 18 Ninety-Day Emer.qency Traffic Plan (Placed on the agenda at the request of Councilman Pratt) RECOMMENDATION: 18.1 Oral Presentation by Councilman Pratt. CITY MANAGER'S REPORT CITY A~I'ORNEY'S REPORT ADJOURNMENT Next regular meeting: City Council, Tuesday, August 27, 2002, at 7:00 P.M., City Council Chambers, 43200 Business Park Drive, Temecula, California. R:~Agenda\081302 12 PROCLAMATIONS AND PRESENTATIONS ITEM 1 ITEM 2 MINUTES OF A REGULAR MEETING OF THE TEMECULA CITY COUNCIL JUNE 25, 2002 After the Closed Session that convened at 5:30 P.M., the City Council convened in Open Session at 7:00 P.M., on Tuesday, June 25, 2002, in the City Council Chambers of Temecula City Hall, 43200 Business Park Drive, Temecula, California. Present; Councilmembers: Comerchero, Naggar, Pratt, Roberts Absent: PRELUDE MUSIC Councilmember: Stone The prelude music was provided by Melanie Hope. INVOCATION The invocation was given by Pastor Ron Alsobrooks of New Covenant Fellowship Center. ALLEGIANCE The flag ceremony was presented by Cub Scout Troop No. 337. PRESENTATIONS/PROCLAMATIONS ICMA Certification to Assistant City Manager O'Grady Commending Assistant City Manager O'Grady on his accomplishments, City Manager Nelson presented to Mr. O'Grady the ICMA Certification, noting that Mr. O'Grady was one of five individuals, in the State of Califomia, to receive the designation of credentialed City Manager through the International City/County Management Association. Accepting the Certification, Assistant City Manager O'Grady thanked the City Council for its support to the employees to pursue professional development and thanked City Manager Nelson, as well, for his support and leadership. Receipt of Gift - Sectional Map of Southern California On behalf of the City Council, Councilman Comerchero thanked Mr. David Lowry for his generous donation of an antique map of Southern California, pdnted in the late 1800s, which depicted Temecula. PUBLIC COMMENTS A. Mayor Roberts informed the public that the public hearing for the Appeal of Mitigated Negative Declaration, Tentative Parcel Map, and Development Plan for Temecula Creek Villages on High 79 South (Planning Application Nos. 01-0610 & 01-0611 - Agenda Item No. 20) has been withdrawn and that a settlement has been reached. With regard to the public hearing for Villages of Temecula - General Plan Amendment (PA00-0138); Change of Zone (PA00-0139); Development Plan (PA00-0140); Tentative Parcel Map R:\Minutes\062502 1 (PA00-0152 - Agenda Item No. 21) will be continued to the August 13, 2002, City Council meeting (see page 8). B. Ms. Nancy Randolph, 2270 Trumble Road, City of Perris, Assistant Public Affairs Officer representing Eastern Municipal Water District, introduced herself to the City Council and residents. C. Thanking those residents who had contacted the County Board of Supervisors and relayed their opposition to the hyper Wal-Mart on SR 79 south, Ms. Michelle Anderson, 43797 Barletta Street, noted that these efforts assisted in delaying a vote at the public hearing in order to reconfigure the shopping center with a scaled down Wal-Mart. Ms. Anderson requested that the City Council support the opposition to a hyper Wal-Mart and briefly commented on the impacts from the newly constructed Pechanga Casino. CITY COUNCIL REPORTS A. Councilman Naggar requested that City staff analyze the potential traffic impacts on Winchester Road as a result of the upcoming recreation at Diamond Valley Lake. B. Councilman Pratt commented on the movie Windtalkers; relayed a quote with regard to public transportation; and advised that between 1980 and 1990 the Nation's population grew by 9 million people and that automobile registration grew by 20 million. With regard to City Council Action of June 11, 2002, Councilman Pratt requested that it corrected to reflect that he had approved the budget with the exception of the Cimulation Element, noting that it would be his opinion that the CIP approval be withheld until an EIR has been circulated and approved. C. Having attended the American Public Transportation Agency Commuter Rail Conference in Baltimore, Mayor Roberts advised that he had been requested to serve on a panel which has been given the function to create a commuter rail system; noted that he currently serves on the Southern California Regional Rail Authority; informed the public that Amtrak may commence its operations; and stated that he has been appointed to serve a second year as Chairman of the Transportation Communication Committee of SCAG. CONSENT CALENDAR Standard Ordinance and Resolution Adoption Procedure RECOMMENDATION: 1.1 Motion to waive the reading of the text of all ordinances and resolutions included in the agenda. 2 Approval of Minutes RECOMMENDATION: 2.1 Approve the minutes of May 28, 2002. R:~Minutes~062502 2 3 Resolution Approvin.q List of Demands RECOMMENDATION: 3.1 Adopt a resolution entitled: RESOLUTION NO, 02-54 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A 4 Contract Inspection Services for Build n.q and Safety RECOMMENDATION: 4.1 Approve an agreement for Consultant Services with P & D Consultants in an amount not to exceed $112,666.00, to provide supplemental building inspection services to the Building and Safety Department. 5 Fourth Amendment to ARreement for Law Enforcement Service,~ RECOMMENDATION: 5.1 Approve the fourth amendment to the agreement for Law Enforcement Services between the County of Riverside and the City of Temecula to include the hidng of five sworn officers. 6 Authorize Temporary Street Closure of Pauba Road between Mar,qarita Road and Yne;, Road for the July 4, 2002, Fireworks Show and dele,qate authority to issue Special Events/Street Closures Permit to Director of Public Works/City En,qineer RECOMMENDATION: 6.1 Adopt a resolution entitled: RESOLUTION NO. 02-55 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AUTHORIZING TEMPORARY STREET CLOSURE OF PAUBA ROAD BETWEEN MARGARITA ROAD AND YNEZ ROAD FOR THE JULY 4, 2002, FIREWORKS SHOW AND AUTHORIZING THE DIRECTOR OF PUBLIC WORKS/CITY ENGINEER TO ISSUE SPECIAL EVENTS PERMIT INCLUDING STREET CLOSURES R:\Minutes\062502 3 7 Authorize Temporary Street Closure of Old Town Front Street between Moreno Road and Second Street; Main Street from the brid.qe to Old Town Front Street; Second Street; Third Street; Fourth Street; Fifth Street; and Sixth Street for the Star Spanq ed Fourth of July Parade and delegate authority to issue Special Events/Street Closures Permit to Director of Public Works/City Engineer RECOMMENDATION: 7.1 Adopt a resolution entitled: RESOLUTION NO. 02-56 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AUTHORIZING TEMPORARY STREET CLOSURE OF OLD TOWN FRONT STREET BETWEEN MORENO ROAD AND SECOND STREET; MAIN STREET FROM THE BRIDGE TO OLD TOWN FRONT STREET; SECOND STREET; THIRD STREET; FOURTH STREET; FIFTH STREET; AND SIXTH STREET FOR THE STAR SPANGLED FOURTH OF JULY PARADE AND AUTHORIZING THE DIRECTOR OF PUBLIC WORKS/CITY ENGINEER TO ISSUE SPECIAL EVENTS PERMIT INCLUDING STREET CLOSURES Tract Map No. 29928-1 - Harveston Erosion Control A.qreement and Bond (located south of Mar.qarita Road, west of Harveston School Road, and north of Harveston Ddve and Ysabel Barnett Elementary School) RECOMMENDATION: 8.1 Accept the Erosion Control Agreement for Tract Map No. 29928-1 and the Erosion Control Bond collected to secure erosion control improvements. 9 Tract Map No. 29929-1 - Harveston Erosion Control A.qreement and Bond (located north of the proposed lake, west of Villa,qe Road, east of Harveston Drive, and south Ysabel Barnett Elementary School) RECOMMENDATION: 9.1 Accept the Erosion Control Agreement for Tract Map No. 29929-1 and the Erosion Control Bond collected to secure erosion control improvements. 10 Substitute A.qreements and Bonds for Public Improvements in Tract Map No. 23143-7 (located east of Butterfield Sta.qe Road and Crowne Hill Drive, south of Pauba Road, and north of Old Kent Road RECOMMENDATION: 10.1 Accept the Substitute Subdivision Improvement Agreement and Subdivision Faithful Performance and Labor and Materials Bonds as security for improvements and labor and materials for Tract Map No. 23143-7; 10.2 Accept the Substitute Monument Agreement and Subdivision Monument Bond as security for monumentation for Tract Map No. 23143-7; R:~Minutes\062502 4 10.3 Acknowledge that odginal bonds collected by the original subdivider will be released once transfer of title ownership to the new subdivider is completed; 10.4 Direct the City Clerk to so advise the developer and surety. 11 Substitute A,qreements and Bonds for Public Improvements in Tract Map No. 23143 9 (located east of Butterfield Sta.qe Road, south of Royal Crest Place, and west of Crewnn Hill Drive) RECOMMENDATION: 11.1 Accept the Substitute Subdivision Improvement Agreement and Subdivision Faithful Performance and Labor and Materials Bonds as security for improvements and labor and materials for Tract Map No. 23143-9; 11.2 Accept the Substitute Monument Agreement and Subdivision Monument Bond as secudty for monumentation for Tract Map No. 23143-9; 11.3 Acknowledge that original bonds collected by the original subdivider will be released once transfer of title ownership to the new subdivider is completed; 11.4 Direct the City Clerk to so advise the developer and surety. 12 Public Works Fiscal Year 2002-2003 Annual Maintenance A,qreements RECOMMENDATION: 12.1 Approve the minor annual maintenance and construction contracts for Fiscal Year 2002-2003 with: 1. Becker Engineering in an amount not to exceed $100,000.00 2. Imperial Paving Company, Inc. in an amount not to exceed $100,000.00 3. Minnesang Pest Specialists in an amount not to exceed $100,000.00 4. Monteleone Contractors, Inc. in an amount not to exceed $100,000.00 5. Murrieta Development Co. in an amount not to exceed $100,000.00 6. NPG, Inc. (Nelson Paving & Sealing) in an amount not to exceed $100,000.00 7. Pacific West Construction in an amount not to exceed $100,000.00 8. Rene's Commercial Management in an amount not to exceed $100,000.00 9. Toran Development & Construction in an amount not to exceed $100,000.00. R:\Minutes\062502 5 13 Award the Construction Contract for Project No. PW02-03 - Pavement Rehabilitatio. Pro,qram - Rancho California Road RECOMMENDATION: 13.1 Award a construction contract for Project No. PW02-03 - Pavement Rehabilitation Program - Rancho California Road to R.J. Noble Company in the amount of 593,194.85 and authorize the Mayor to execute the contract; 13.2 Authorize the City Manager to approve change orders not to exceed the contingency amount of $59,319.49 which is equal to 10% of the contract amount. 14 Completion and Acceptance for Citywide Asphalt Concrete Repairs for FY2000-2001 Project No. PW01-01 RECOMMENDATION: 14.1 Accept the Citywide Asphalt Concrete Repairs for FY2000-2001 - Project No. PW01-01- as complete; 14.2 File a Notice of Completion, release the Performance Bond, and accept a one-year Maintenance Bond in the amount of 10% of the contract; 14.3 Release the Materials and Labor Bond seven (7) months after filing of the Notice of Completion, if no liens have been filed. 15 Resolution of Support for the creation of a Federal Cabinet leve aqency to oversc~ Homeland Security (Placed on the agenda at the request of Councilman Comerchero) RECOMMENDATION: 15.1 Adopt a resolution entitled: RESOLUTION NO. 02-57 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA SUPPORTING THE CREATION OF A CABINET LEVEL AGENCY TO OVERSEE HOMELAND SECURITY 16 Lease A,qreement with County of Riverside for property at Redhawk Parkway and Overland Trail (Interim Fire Station No. 92) RECOMMENDATION: 16.1 Approve the lease agreement. R:\Minutes\062502 6 17 City Attorney Services Contract Amendment No. 3 RECOMMENDATION: 17.1 Approve Amendment No. 3 to the agreement with Richards, Watson, and Gershon, Attomeys at Law, to increase the hourly rates for City Attorney services provided. 18 First Amendment to the Facility Alarm Systems Service and Monitorinq Aqreement with Computer Alert Systems for FY 2002-03 RECOMMENDATION: 18.1 Approve the first amendment to the Facility Alarm Systems Service and Monitoring Agreement with Computer Alert Systems, Inc. to extend the term of the agreement to June 30, 2003; 18.2 Authorize the expenditure of funds in the amount of $25,000.00 for alarm monitoring and repair services; 18.3 Approve a 10% contingency in the amount of $2,500.00. 19 Fire/EMS Protection A.qreement for Fiscal Year 2002-03 RECOMMENDATION: 19.1 Approve the three-year contract for Fire/EMS protection including Exhibit A for the cost of services for Fiscal Year 2002-03. MOTION: Councilman Comerchero moved to approve Consent Calendar Item Nos. 1 - 19. The motion was seconded by Councilman Naggar and voice vote reflected approval with the exception of Mayor Pro Tern Stone who was absent. At 7:28 P M., the City Council convened as the Temecula Community Services District and the Temecula Redevelopment Agency. The City Council Meeting resumed at 7:33 P.M. PUBLIC HEARING 20 Appeal of Miti,qated Ne!:lative Declaration, Tentative Parcel Map, and Development Plan for Temecula Creek Villa.qes on Hi.qhway 79 South (Plannin.q App cation Nos. 01-0610 & 01- 0611) RECOMMENDATION: 20.1 Adopt a resolution entitled: R:\Minutes\062502 7 RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ADOPTING A MITIGATED NEGATIVE DECLARATION, AND APPROVING PLANNING APPLICATION 01-06t0, A 14-LOT TENTATIVE PARCEL MAP AND 01- 0611, A DEVELOPMENT PLAN FOR THE DESIGN, CONSTRUCTION AND OPERATION OF A 400-UNIT MULTI- FAMILY RESIDENTIAL APARTMENT COMPLEX; t08,t00 SQUARE FEET OF RETAIL/OFFICE USES; AND A 15,000 SQUARE-FOOT CHILD CARE CENTER, GENERALLY LOCATED ON THE SOUTH SIDE OF HIGHWAY 79 SOUTH, BETWEEN JEDEDIAH SMITH ROAD AND AVENIDA DE MISSIONES, KNOWN AS ASSESSOR PARCEL NUMBER 961- 010-006, AND DENYING AN APPEAL OF THE PLANNING COMMISSION'S DECISION It was noted by Mayor Roberts that a settlement agreement had been reached and appeal had been withdrawn. that the 21 Villa.qes of Temecula - General Plan Amendment (PA00-0138); Chan.qe of Zone (PA00 0139); Development Plan (PA00-0140); Tentative Parcel Map (PA00-0152) RECOMMENDATION: 21.1 Continue this public hearing to either the July 23, or August 13, 2002, City Council meeting. Mayor Roberts opened the public hearing. MOTION: Councilman Comerchero moved to continue this public headng to the August 13, 2002, City Council meeting. The motion was seconded by Councilman Naggar and voice vote reflected approval with the exception of Mayor Pro Tem Stone who was absent. COUNCIL BUSINESS 22 Pala Road Name ChanRe RECOMMENDATION: 22.1 Approve a name change for Pala Road to either Pechanga Road or Pechanga Parkway; 22.2 Adopt a resolution entitled: RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA CHANGING THE STREET NAME OF PALA ROAD TO PECHANGA ROAD OR R:\Minutes\062502 8 RESOLUTION NO. 02-58 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA CHANGING THE STREET NAME OF PALA ROAD TO PECHANGA PARK~NAY Building and Safety Director Elmo reviewed the staff report (as per agenda material), noting that, if the name change were approved, it would be effective immediately but that it would take approximately 30 to 45 days to obtain the new street signs. For Mayor Roberts, Mr. EImo advised that staff is proceeding with the proposed name change for SR 79 north and that information will be forwarded to the City Council. In response to Councilman Comerchero, it was noted that notification of the proposed name change was sent to approximately four homeowner associations, which equates to approximately 1,000 homes. For Councilman Pratt, City Manager Nelson advised that the proposed name change would only rename Pala Road to the City boundary. Although he would support whatever the majority of the City Council would support, Councilman Pratt questioned the need for the name change as well as its impacts on the Pala Indian Reservation. Having met with the Tribal Chief of Pechanga, Councilman Comerchero provided a brief overview as to the building and naming of Pala Road (built in 1928), noting that it was originally named Pala/Temecula Road and that years ago the words Temecula were dropped. Commenting on the appropriateness of honodng the Pechanga Band of the Luiseno Indians, Mr. Dennis Frank, 37820 Spring Valley Road, Temecula, provided a detailed historical overview of the Pechanga Band, its contributions to this City, and as well presented to the City Council a letter of support from Ms. Joan Sparkman. Mr. Wayne Hall, 42131 Agena Road, Temecula, advised that the Pala/Temecula Road ends at the Pala Indian Reservation; that the Pechanga Indians were first to settle in this area; and that he would prefer Pechanga Parkway. Reiterating his support of the name change, Councilman Comerchero relayed his preference for Pechanga Parkway and as well commented on the contributions the Pechangas have made to the City and, therefore, offered the following motion: MOTION: Councilman Comerchero moved to adopt Resolution No. 02-58, thereby changing the street name of Pala Road to Pechanga Parkway. The motion was seconded by Mayor Roberts and voice vote reflected approval with the exception of Mayor Pro Tern Stone who was absent. 23 Consideration of Sponsorship Request for The Great Tractor Race RECOMMENDATION: 23.1 Consider the sponsorship request for The Great Tractor Race. Assistant City Manager O'Grady presented the staff report (of record). R:\Minutes\062502 9 The following individuals spoke in support of the City Council approving The Great Tractor Race: · Mr. Dave Johnson 38330 Camino Cinife, Murrieta · Mr. JackKay 40200 Paseo Sereno, Temecula · Ms. Judi Steffen 28475 - B Front Street, Temecula · Ms. Sharon Johnson 38330 Camino Cinife, Murdeta · Ms. MissiKay 40200 Paseo Sereno, Temecula · Mr. Tom Parnakian 40224 Pseo Sereno, Temecula · Mr. Chds Barrt 43280 Via Bolero, Temecula The above-mentioned individuals spoke in support of The Great Tractor Race for the following reasons: · Old tradition/City history · Availability of multi-faceted events Noting that Southwest Events donates its profits to charity, Mayor Roberts suggested that the organization retain a portion of its profits as seed money for next year's event. Although his wife provides CPR services to Rancho Damacitos, City Attorney Thorson noted that Councilman Naggar may vote on this matter. Supporting this event, Councilman Naggar encouraged the organization to increase its promotion of the event. Clarifying the role of the Economic Development Subcommittee, comprised of Mayor Roberts and Councilman Comerohero, Mr. Comerchero noted that this particular event would not be viewed as an economic development type of event and, therefore, the subcommittee could not make the recommendation of support. If approved by the City Council, Councilman Comerchero noted that it would be based on the City wanting to support traditional City events but not because the event would further the efforts of economic development. In closing, Councilman Comerchero relayed his support of the event. MOTION: Councilman Naggar moved to approve the sponsorship request for The Great Tractor Race. The motion was seconded by Councilman Comerchero and voice vote reflected approval with the exception of Mayor Pro Tem Stone who was absent. 24 PianninR Commission Appointment RECOMMENDATION: 24.1 Appoint one applicant to serve on the Planning Commission for a full three-year term through June 4, 2005. R:\Minutes\062502 10 Because of traveling demands, Mayor Roberts relayed his appreciation to Councilman Naggar for contacting the applicants and advised that he would be recommending the reappointment of Planning Commissioner Mathewson. Commenting on the difficulty of the selection process, Councilman Naggar noted that the Planning Commission is properly functioning and, therefore, would as well recommend the reappointment of Planning Commissioner Mathewson. Councilman Comerchero as well relayed his support of the reappointment of Planning Commissioner Mathewson. Having applied twelve times to the Planning Commission, Councilman Naggar encouraged individuals to keep applying and to stay involved. MOTION: Councilman Naggar moved to reappoint Planning Commissioner Mathewson. The motion was seconded by Councilman Pratt and voice vote reflected approval with the exception of Mayor Pro Tem Stone who was absent. 25 Con.qest on Mana.qement Pro,qram Update (Placed on the agenda by Councilman Pratt) RECOMMENDATION: 25.1 Discuss the matter and receive and file. Deputy Director of Public Works Parks reviewed the staff report (as per wdtten material), noting the following with regard to the Congestion Management Program: · Enacted in 1990 by Proposition No. 111 (County issue - State Highways) · Each County agency developed a Congestion Management Program (CMP) Riverside County Transportation Committee designated as the congestion management agency for Riverside County and, therefore, responsible for preparing the updates and consultation with the technical advisory committee of the RCTC When a freeway/highway is designated as a Congestion Management System roadway, if the designated freeway/highway were to reach a Level of Service (LOS) F, a deficiency plan must be prepared in order to mitigate the deficiency; that the City of Temecula has three roads on the designated system - interstate 15, SR 79 north, and SR 79 south - all of which have been determined to meet the intent of the Congestion Management Program · Last Congestion Management Program was approved in December 2001 · That LOS relates to the links of the roads, not intersection, and measure volume of traffic by the number of lanes. In response to the staff report, Councilman Pratt noted the following: · That the intent of the CMP has not been executed in over 12 years since incorporation in light of the unbalanced growth R:\Minutes\062502 11 Dangers to the health, safety, economic welfare, and image of the City caused by increasing traffic congestion and lack of affordable public transportation resulted in not interpreting the goals of the CMP Requested City Council approval, at the July 9, 2002, City Council meeting, for a Special Election, in order to poll the residents and to determine whether or not they are satisfied with the existing traffic and public transportation · Requested approval of a 90-day emergency traffic mitigation plan · Requested approval of a five-year intedm traffic mitigation public transportation plan as previously submitted by Councilman Pratt. In closing, Councilman Pratt noted that, in his opinion, the $240 million of proposed circulation improvements will only exacerbate the present traffic congestion and that it provides for no public transportation. In response to Councilman Pratt's comments, Deputy Director of Public Works Parks pointed out that the City's General Plan goals of LOS D at its intersections far exceeds the requirements of the CMP; that only three roads, traveling through the City of Temecula, are affected by the RCTC interpretation; that all State requirements are met; that the City's General Plan designations and policy far exceed these requirements and, therefore, the City is enforcing a stronger intent of the CMP. City Attorney Thorson advised that Councilman Pratt had previously presented the Traffic Mitigation Plan to the City Council; advised that the Council's calling for a Special Election, as requested by Mr. Pratt, would have to accomplished by an advisory vote unless the City Council could address the issue by way of a telephone survey which had previously been completed and had addressed the traffic issues; and noted that the City's General Plan does address some of the issues required by the CMP. Deputy City Manager Thomhill noted that the City is currently reviewing its General Plan and that it would be appropriate to review traffic issues dudng that process. Mr. Thomhill briefly commented on the externalities this City has to deal with as it relates to traffic. Confirming City Attorney Thorson's comment with regard to the survey, City Manager Nelson advised that it was completed 11/2 years ago; that public transportation and traffic circulation issues were part of the survey; that traffic circulation has been top pdority for this City Council, commenting on measures undertaken to ensure traffic mitigation but as well commenting on traffic impacts as a result of development occurring outside of the City; and reiterated that mass transit is related to the General Plan update as well as efforts undertaken with regional organizations, noting that public transportation issues are regional issues and not just local issues. Councilman Pratt relayed his opposition to the comments made with regard to this request. By way up the quarterly newsletter, Councilman Naggar suggested that the public be apprised of significant projects, as it relates to road improvements, which have been approved in the Capital Improvement Plan (ClP) and are to be implemented this next fiscal year. Commenting on the Winchester Road improvements, Mayor Roberts concurred with Councilman Naggar's suggestion. R:\Minutes\062502 12 Relaying his objection to Councilman Pratt's comment that the City has made no progress as it relates to circulation in the last 10 to 12 years is inaccurate, Councilman Comerchero noted that the City has grown from 26,000 since incorporation to currently 72,000 and that traffic is running more smoothly today compared to City incorporation. Pdor to agendizing Councilman Pratt's request, Mayor Roberts requested that Councilman Pratt present his request to the City Council in written form in order to allow for review. City Manager Nelson suggested that Councilman Pratt and he meet to discuss his request; to put his request in writing; and to then forward the information to the City Council. MOTION: Councilman Pratt moved to receive and file the report and to meet with the City Manager's Office to review the proposal, and to provide, in written form, the discussed information to the City Council for review at which time the matter could be agendized. The motion was seconded by Councilman Comerchero and voice vote reflected approval with the exception of Mayor Pre Tern Stone who as absent. 26 CalPERS Contract Amendment - Fourth Level of 1959 Survivor Benefits RECOMMENDATION: 26.1 Adopt a resolution entitled: RESOLUTION NO. 02-59 A RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA TO APPROVE AN AMENDMENT TO THE CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL OF TEMECULA 26.2 Introduce and read by title only: ORDINANCE NO. 02-03 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL CITY OF TEMECULA Assistant to the City Manager Yates provided an overview of the staff report (of record), noting that the second reading of this ordinance would not be until July 23, 2002. MOTION: Councilman Comerchero moved to adopt Resolution No. 02-59. The motion was seconded by Councilman Naggar and voice vote reflected approval with the exception of Mayor Pro Tern Stone who was absent. At this time, City Attorney Thorson introduced the proposed Ordinance. MOTION: Councilman Comerchero moved to introduce Ordinance No. 02-03 for first reading. The motion was seconded by Councilman Naggar and voice vote reflected approval with the exception of Mayor Pro Tern Stone who was absent. R:\Minutes\062502 13 DEPARTMENTAL REPORTS There were no additional comments. CITY MANAGER'S REPORT City Manager Nelson invited the public to the upcoming Fourth of July Festivities. CITY ATTORNEY'S REPORT City Attorney Thorson noted that there were no reportable actions from Closed Session. ADJOURNMENT At 8:34 P.M., the City Council meeting was formally adjourned to Tuesday July 9, 2002, at 7:00 P.M., in the City Council Chambers, 43200 Business Park Drive, Temecula, Califomia, for the purpose of a Budget Workshop ATTEST: Ron Roberts, Mayor Susan W. Jones, CMC City Clerk [SEAL] R:\Minutes\062502 14 ITEM 3 RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A THE CITY COUNCIL OF THE CITY OF TEMECULA DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. That the following claims and demands as set forth in Exhibit A, on file in the Office of the City Clerk, have been audited by the City Manager, and that the same are hereby allowed in the amount of $3,221,138.86. Section 2. The City Clerk shall certify the adoption of this resolution. PASSED, APPROVED AND ADOPTED, this 13th day of August, 2002. ATTEST: Ron Roberts, Mayor Susan W. Jones, CMC City Clerk [SEAL] R:/Resos2002/Resos 02- 1 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE) ss CITY OF TEMECULA ) I, Susan W. Jones, CMC, City Clerk of the City of Temecula, hereby do certify that the foregoing Resolution No. 02- was duly adopted at a regular meeting of the City Council of the City of Temecula on the 13th day of August, 2002 by the following roll call vote: AYES: NOES: ABSENT: COUNCILMEMBERS: COUNCILMEMBERS: COUNCILMEMBERS: Susan W. Jones, CMC City Clerk R2Resos2002/Resos 02- 2 CITY OF TEMECULA LIST OF DEMANDS 07/18/02 TOTAL CHECK RUN: 07/25/02 TOTAL CHECK RUN: 08/01/02 TOTAL CHECK RUN: 07/18~)2 TOTAL PAYROLL RUN: 08/01/02 TOTAL PAYROLL RUN: TOTAL LIST OF DEMANDS FOR 08/13/62 COUNCIL MEETING: DISBURSEMENTS BYFUND: CHECKS: 001 GENERAL FUND 166 RDA DEV-LOW/MOD SET ABIDE 19o COMMUNITY SERVICES D~STRICT 192 TCSD SERVICE LEVEL B 193 TCSD SERVICE LEVEL C 194 TCSD SERVICE LEVEL D 210 CAPFrAL IMPROVEMENT PROJ. FUND 280 REDEVELOPMENT AGENCY-ClP 300 INSURANCE FUND 320 INFORMATION SYSTEMS 330 SUPPORT SERVICES 340 FACILITIES 380 RDA- DEBT SERVICE 100 GENERAL FUND 165 RDA-LOW/MOC SET ASIDE 190 COMMUNITY SERVICES DISTRICT 192 TCSD SERVICE LEVEL S 193 TCSD SERVICE LEVEL C 194 TCSD SERVICE LEVEL D 280 REDEVELOPMENT AGENCY-CIP 300 INSURANCE FUND 320 INFORMATION SYSTEMS 330 SUPPORT SERVICES 340 FACILITIES TOTAL BY FUND: b~{AWN NELSON, CITy MANAGER $ 769,892.41 305,803.90 303,266.31 $ 3,221,138.86' 1.204,489.28 338,399.55 226,158.31 39,092.29 77,210,83 2,290.12 269,522.11 13,164.96 5,671.31 72,190.54 26,310.22 318,508.13 391,004.81 10.693.10 159,523.99 159.53 9,724.59 4,470.53 15,234.83 4,175.85 $ 2,612,068.65 609,070.21 , HEREBY CERTIFY THAT THE FOLLOWING IS TRUE AND CORRECT. HEREBY CERTIFY THAT THE FOLLOWING IS TRUE AND CORRECT. apChkLst 08/01/2002 2:23:23PM Bank: union UNION BANK OF CALIFORNIA Check # Dat~ 19 7/31/2002 20 7/31/2002 21 8/1/2002 22 8/1/2002 23 8/1/2002 24 8/1/2002 25 8/1/2002 26 8/1/2002 78344 8/1/2002 78345 8/1/2002 78346 8/1/2002 78347 8/1/2002 78348 8/1/2002 78349 8/1/2002 78350 8/1/2002 78351 8/1/2002 78352 8/1/2002 78353 8/1/2002 78354 8/1/2002 78355 8/1/2002 78356 8/1/2002 Final Check List Page: 1 City of Temecula Vendor Description 003228 USBANKTRUSTNATIONALAS RDADebtServicePmt 004236 WASHINGTON MUTUAL BANK 000283 INSTATAX (IRS) 000444 INSTATAX (EDD) Mission Village Pledge Fund Pmt Employees fed pr taxes Employees fed pr taxes 000246 PERS(EMPLOYEES'RETIREME Employees state retirament 000245 PERS (HEALTH INSUR, PREMIU Employees heagh insurance 000642 TEMECULA CITY FLEXIBLE 000444 INSTATAX (EDD) 003552 AFLAC 004148 AT&T 000745 A T & T WIRELESS SERVICES 001281 ALHAMBRA GROUP 003706 AMBIENT AVL INC Employee contribution to flex Employees UI & ETr state pr taxes Supplemental std & cancer insurance Long distance svcs: P.D. Cellular phone svcs:police Jan design svc:Twn Ctr Median 4th of July Productk)n svcs 002187 ANIMAL FRIENDS OF THE VALL June Animal control services 004482 ANSWER, THE 000101 APPLE ONE, INC. Summer Concert Series Entertainm Delarm temp help w/e 07/13 002541 BECKER CONSTRUCTION SRV R&R damaged pedestrian barricade 003126 BOOMGAARDEN, DENNIS 005055 BROWN, STEVE 003549 CALIFASSN OF MUSEUMS TCSD instructor earnings Reimb:APA Nat'l Conf:4/13-17 Annual membership:Parker, Herman 000638 CALIF DEPT OF CONSERVATIO 2002 2nd Qtr prat:strong mot[on 78357 8/1/2002 001590 CALIF REDEVELOPMENT ASSN Calif RDA Association Annual Dues Amount Paid Check Total 318,508.13 318,508.13 305,000.00 305,000.00 57,765.16 57,765.16 13,058.55 13,058.55 43,296.53 43,296.53 · 34,973.06 34,973.06 5,364.36 5,364.36 3,549.90 3,549.90 1,633.04 1,633.04 184.65 184.65 248.14 248.14 250.00 250.00 964.00 964.00 5,670.59 5,670.59 800.00 800.00 1,160.55 1,160.55 1,885.00 1,885.00 274.40 274.40 653.40 653.40 100.00 100.00 2,677.35 2,677.35 3,970.00 3,970.00 Page~ apChkLst 08/01/2002 2:23:23PM Bank: union UNION BANK OF CALIFORNIA Check # Date 78358 6/1/2002 78359 8/1/2002 78360 8/1/2002 78361 8/1/2002 78362 8/1/2002 78363 8/1/2002 78364 8/1/2002 78365 8/1/2002 78366 8/1/2002 78367 8/1/2002 78368 8/1/2002 78369 8/1/2002 78370 8/1/2002 78371 8/1/2002 78372 8/1/2002 78373 8/1/2002 78374 8/1/2002 78375 8/1/2002 78376 8/1/2002 78377 8/1/2002 78378 6/1/2002 78379 8/1/2002 78380 8/1/2002 Final Check List City of Temecula (Continued) Vendor Deecriptlon 003554 CANADA LIFE ASSURANCE CO Life insurance premium 004971 CANON FINANCIAL SERVICES, I Copier contract for City Fac 004837 CHERRY VALLEY FEED & PET 5 K-9 food and supplies:Police dept 001139 CHIPMORTON PHOTOGRAPHY Photography svcs for advertising 003021 ClNGULAR WIRELESS (CELL PI- 6/9-7/8 cellular phone svcs 004405 COMMUNITY HEALTH CHARI Employees Charities contributions 002147 COMPLIMENTS COMPLAINTS & Summer Concert Series Entertainm Amount Paid 1,123.75 19,748.43 59.80 1,507.69 6,049.98 136.50 1,000.00 004123 D L PHARES & ASSOCIATES 005200 DALY, CONNIE 001393 DATA TICKET INC 004294 DIVERSIFIED LANDSCAPE CO. Rel retention for PW97-15 Pala Rd Br 002390 EASTERN MUNICIPAL WATER E Engineer prjt drawing request Engineer prjt drawing request 005115 ENTERPRISE RENT A CAR INC Vehiclerantal:SMARTPgrm July lease agrmnt :Old Twn sub-stn Refund:Sports-BB Fund-Beg Citations processing for May 2002 1,849.64 40.00 125.38 12,590.71 25~34 11.64 79.74 002832 FENCE BUILDERS 002372 HARMON, JUDY 005199 HAZEN, DON 000116 HEALTH NET DENTAL AND VI 002107 HIGHMARK INC 000963 HOGAN, DAVID 005201 HUDSON, MICHAEL 003622 I C M A - MEMBERSHIP Res impr prgm: Sanchez, R & A TCSD instructor eamings Reimb:Planner's Conf:3/20-22/02 Premium for ee vision plan City life ins policy premium Reimb:AEP Conf:4/18-20/02 EE Computer Loan Prgm:M. Hudson Employee retirement trust 457 002140 JAGUAR COMPUTER SYSTEMS Network equipment mntc/repaim 000548 KIPLINGER CALIFORNIA LETTE News letter subscription 2,450.00 324.00 2.00 897.05 567.70 76.63 1,724.56 7,545.62 1,395.92 Page: 2 Check Total 1,123.75 19,748.43 59,80 1,507.69 6,049.98 136.50 1,000.00 1,849,64 40,00 125.38 12,590.71 36.98 79.74 2,450.00 324.00 2.00 897.05 567.70 76.63 1,724.56 7,545.62 1,395.92 48.00 Page2 apChkLst Final Check List Page: 3 08/01/2002 2:23:23PM City of Temecula Bank: union UNION BANK OF CALIFORNIA Check # Dab~ Vendor 78381 8/1/2002 78382 8/1/2002 78383 8/1/2002 78384 8/1/2002 (Coatinued) Description 78385 8/1/2002 78386 8/1/2002 78387 5/1/2002 78388 8/1/2002 78389 8/1/2002 78390 8/1/2002 78391 8/1/2002 78392 8/1/2002 78393 8/1/2002 78394 8/1/2002 78395 8/1/2002 78396 8/1/2002 78397 8/1/2002 78398 8/1/2002 78399 8/1/2002 78400 8/1/2002 78401 8/1/2002 78402 8/1/2002 004978 LOS ANGELES TIMES Ad in Southland fun book 003782 MAIN STREET SIGNS Various Street Signs:PW Maint 001967 MANPOWER TEMPORARY SER Temp help w/e 5/19 Savage 003448 MELODYS AD WORKS Reimb:Hot Summer Nights Promos 003076 MET LIFE INSURANCE COMPAN City dental insurance 001384 MINUTEMAN PRESS Business Cards: BIdg & Safety 001868 MIYAMOTO-JURKOSKY, SUSAN TCSD INSTRUCTOR EARNINGS 004534 MOBILE SATELLITE VENTURES 7/14-8/13 EOC Satellite Stn Phone Sv( Amount Paid Check Total 004162 MONSTER.COM 000437 MORELAND & ASSOCIATES 001986 MUZAK INC Intemet Recruitment Ads for HR Govt Acct Training:P.Brown.:8/08/02 Aug Music Broadcast in Old Town 000718 NATIONAL RECREATION/PARK. NRPA Expo 2002:Parker:10/15-19/02 004191 NORTH COUNTY TIMES-PMT P 7/24-01/23/03 subscdption:PW 002105 OLD TOWN TIRE & SERVICE City vehicle maint & repair svcs 002256 P & D CONSULTANTS INC 5/31-6/28 Temp Bldg Inspection Svcs 003762 P M X MEDICAL Misc Paramedic Supplies Paramedic supplies Misc Paramedic Supplies Misc Paramedic Supplies 004805 PEACOCK ENTERPRISES INC HP LASER JET 4100N C8050A HP Procurve Switch 4000M (J4121A) 005202 PENFOLD, LADD L. ReimbAgreement:Development Fees 001958 PERS LONG TERM CARE PROG Employee benefits 000249 PETTY CASH Petty cash reimbursement Petty cash reimbursement 001999 PITNEY BOWES Offica Supplies for Copy Center 000254 PRESS ENTERPRISE COMPAN Advertising for the SMART prgm Jun var. recruitment ads for HR 5,075.00 5,075.00 514.51 514.51 605,29 605.29 226.53 226.53 5,720.85 5,720.85 42.83 42.83 576.00 576.00 69.00 69.00 3,090.00 3,090.00 125.00 125.00 59,50 59.50 320.00 320.00 61.00 61.00 20,022.70 20,022.70 2,067.06 336.11 168.61 82.92 2,654.70 5,608.39 5,075.03 10,683.42 7,819.60 7,819.60 83.99 83.99 373.74 40.75 414.49 629.76 629.76 3,990.89 620.44 4,611.33 Page3 apChkLst Final Check List Page: 4 08/01/2002 2:23:23PM City of Temecula Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Deccrlptlon 78403 8/1/2002 000254 PRESS ENTERPRISE COMPAN 6/01-7/30/03 subscription:PW Amount Paid 150.80 1,301.62 2,371.60 277.20 2,173.43 78404 8/1/2002 001416 QUICK CRE-I'E PRODUCTS INC Var. parks recycling containers 78405 6/1/2002 000635 R & J PARTY PALACE Equip rental:St. Fest/Grt Race 78406 8/1/2002 000879 RADISSON HOTEL HtI:CMBTA Cf:Z.Smith:#159190:10/1 78407 8/1/2002 002841 RAIN FOR RENT In'igatien rental for 4th of July 78408 8/1/2002 78409 8/1/2002 78410 8/1/2002 000262 RANCH ~O CALIF WATER DIST 004584 REGENCY LIGHTING Jul 01-99-02003-0 Floating Mtr Jul 02-79-10100-1 NW Spo~ts Park CRC Electrioai Supplies CRC Electrical Supplies Parks Electrical Supplies Parks Electrical Supplies Credit: Item retum~i/ref #016374 Credit:Item Retumed:#O03825 Credit:Items Retumed:ref #019549 003773 REUBEN H FLEET SCIENCE CE SMART Excursion:7/19/02 720.77 70.59 411.61 301.70 15.06 9.68 -9.68 -15.06 -411.61 168.80 78411 8/1/2002 78412 8/1/2002 000266 RIGHTWAY 6/28-8/16 equip rental:SMART Prgm 7/08-8/04 equip rental:Long Cyn Pk Emergency work:Old Town 001365 RIVERSIDE CO ENVIRONMENT/ Apr-Jun 02 Vector Control Svcs 318.51 162.91 127.50 112.00 78413 6/1/2002 78414 6/1/2002 000955 RIVERSIDE CO SHERIFF SW ST May 2002 Stop Light Abuser Prgm Frontier Days Patrol Svcs:6/26/02 Great Race Patrol Svcs:6/22~2 Jun 2002 Stop Light Abuser Prgm May 2002 Bike Patrol/High Visibility Soccer Tournament Patrol Svcs:6/22/ Concert/Greens Patrol Svcs:5/19/02 Temecula Rodeo Patrol Svcs:5/25/02 000406 RIVERSIDE CO SHERIFFS DEP 6/02-29/02:Law Enfomement 6,965.08 6,218.44 6,218.44 5,694.08 5,592.40 3,202.92 508.40 101.68 600,729.16 78415 6/1/2002 003587 RIZZO CONSTRUCTION INC Tenant Imprv:Copy Center 4,618.00 78416 6/1/2002 001097 ROADLINE PRODUCTS INC Misc. Parts & Supplies for Public Work 338.54 78417 6/1/2002 78418 6/1/2002 000277 S & S ARTS & CRAFTS iNC 004598 S T K ARCHITECTURE INC Day Camp Rec Supplies Recreation Supplies/Family Fun Night Jun dsgn svcs:Wolf Creek Stn 700.57 194.13 3,899.57 78419 8/1/2002 001053 SAN DIEGO ICE ARENA SMART Excumion:7/10/02 Check Total 150.80 1,301.62 2,371.60 277.20 2,173.43 791.36 301.70 168.80 608.92 112.00 34,501.44 600,729.16 4,618.00 338.54 894.70 3,899.57 90.00 Page~ apChkLst Final Check List Page: 5 08/01/2002 2:23:23PM City of Temecula Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Dote Vendor 78420 8/1/2002 005198 SMITH, PHIL Description Amount Paid Reimb:lCBO Certification 78421 8/1/2002 78422 8/1/2002 78423 8/1/2002 000537 SO CALIF EDISON 000305 TARGET STORE 001547 TEAMSTERS LOCAL 911 Jul 2-00-397-5042 City Hall Jul 2-02-351-4946 6th St Jul 2-18-937-3152 Museum Jul 2-00-397-5067 various mtrs Jul 2-23-365-5992 Stn 92 Jul 2-20-817-9929 P.D./Front St. Jul 2-11-O07-0455 6th St. Jul 2-18-049-6416 Front St Peal Jul 2-21-911-7892 So. Side Prk Lot Jul 2-19-171-8568 Wed Chpl Jul 2-21-981-4720 Hwy 79S Jut 2-18-528-9980 Santiago Rd Jul 2-22-057-2226 6th St. Jul 2-22-496-3439 Winchester Rd Jul 2-23-693-2810 Jul 2-14-204-1615 Front St Rdio SMART Prgm Supplies SMART Prgm Supplies Aquatic Supplies 4th of July Supplies Day Camp Rec Supplies Employee's union 8,338.73 1,749.03 1,130.64 928,21 540.83 472.53 445.68 300.70 164.34 143.69 73.09 52.85 45,63 44.93 36.25 25.76 372.24 249.11 165.05 67.59 52.57 2,212.50 78424 8/1/2002 003673 TECH 101 ARCUS INC Misc Computer Supplies 101.90 78425 8/1/2002 003677 TEMECULA MOTORSPORTS LL Repair/Maint of P.D. Motomycles 182.00 78426 8/1/2002 78427 8/1/2002 004541 TEMECULA RADIATOR/AUTO R Repair/Maint Fire Prev vehicles Repairs/Maint:Medic Squad 84/73 000307 TEMECULA TROPHY COMPAN Wtr/Spr Softball Awards 1,194.74 66.08 587.24 78428 8/1/2002 000515 TEMECULA VALLEY CHAMBER ~ FY 02/03 I st qtr funding payment 37,000.00 138.23 124.80 298.00 17,249.55 4,817.84 78429 8/1/2002 000306 TEMECULA VALLEY PIPE & SU HardwareJMaint Supplies:TCSD 78430 8/1/2002 003140 TEMECULA VALLEYTAEKWON TCSD INSTRUCTOR EARNINGS 78431 8/1/2002 001022 THOMPSON PUBLISHING GRO Fair Labor Std Handbook 78432 8/1/2002 001065 U S C M WEST (DEF COMP) Employee def comp plan 78433 8/1/2002 000389 U S C M WEST (OBRA) P/T EE retirement Check Total 14,492,29 906.56 2,212.50 101.90 1,260.82 587.24 37,000.00 138.23 124.80 298.00 17,249,55 4,817.84 Page5 apChkLst Final Check List Page: 6 {~/01/2002 2:23:23PM City of Temecuts Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description 78434 8/1/2002 004846 UNITED GREEN MARK INC Amount Paid Irrigation Supplies:TCSD 159.36 Check Total 159.36 78435 8/1/2002 000325 UNITED WAY Employee contributions 255.80 78436 8/1/2002 004819 UNUM LIFE INS. CO. OFAMERI Employee group health pmt 5,670.86 5,670.86 78437 8/1/2002 004504 VAIL RANCH SELF STORAGE Jul Off-Sita Storage:Record Mgrnt 78438 8/1/2002 78439 8/1/2002 004261 VERIZON CALIFORNIA JUL XXXo2626 PD TARGET STOREF[ JUL XXX-9897 GENERAL USAGE JUL XXX-3526 GENERAL USAGE JUL XXX-2676 GENERAL USAGE 004848 VERIZON SELECT SERVICES I Jul long distance phone svcs 219.81 89.59 8345 28.68 1,247.33 421.23 1,247.33 78440 8/1/2002 004916 WALTERS WHOLESALE ELEC Sports Park Prk Lot Lights Base Cover 579.05 579.05 78441 8/1/2002 78442 8/1/2002 003730 WEST COAST ARBORISTS INC TCSD tree maint, services Tree Maint Services 002109 WHITE CAP INDUSTRIES INC Maint supplies for PW Maint 7,365.00 812.80 664.79 8,177.80 664.79 78443 8/1/2002 003756 WHITE HOUSE SANITATION Jul Cleaning Svcs:Butterfield Stage 50,00 50.00 78444 8/1/2002 005125 WINDSHIELD PROS NEW WINDSHIELD:MS 73 258.17 258.17 78445 8/1/2002 78446 8/1/2002 78447 8/1/2002 004774 WOODCREST UNIFORMS Uniforms for CAP Prgm:Spell:P.D. Uniforms for CAP Prgm:Spell:P.D. Uniforms for CAP Prgm:Rager:P.D. Uniforms for CAP Prgm:Galvin, M:P.D Uniforms for CAP Prgm:Galvin, J:P.D. Uniforms for CAP Prgm:Rager:P.D. 000345 XEROX CORPORATION BILLIN Fax Supplies-Finance/City Receptieei Jun Base Charge:5830 Copier Credit:items returned 003607 XPECT FIRST AID First Aid Supplies for PW Maint City Hall First Aid Kit Supplies 80.53 80.27 ~.W ~.W 75.~ 51.71 ~9.~ ~.31 -2~.~ 46.23 634.81 80.66 Sub total for UNION BANK OF CALIFORNIA: 1,676,271.08 Page~ apch~d.st Final Check List 07/25/2002 3:07:21PM City of Temecula Bank: union UNION BANK OF CAUFORNIA Check # Data 78224 7/25/2002 78225 7/25/2002 · 78226 7/25/2002 78227 7/25/2002 78228 7/25/2002 78229 7/25/2002 78230 7/25/2002 78231 7/25/2002 78232 7/25/2002 78233 7/25/2002 78234 7/25/2002 78235 7/25/2002 78236 7/25/2002 78237 7/25/2002 78238 7/25/2002 78239 7/25/20~2 78240 7/25/2002 78241 7/25/2002 78242 7/25/2OO2 78243 7/25/2002 78244 7/25/2002 78245 7/25/2002 Vendor DeccHptlon Amount Paid 000745 A T & T WIRELESS SERVICES 002733 ALBAO, NANCY Cellular Phone Svcs:Hafeli, T. TCSD Instructor Earnings W/E:07/13 003810 AMERICAN ASSOCIATION OF M Membership Renewal:Museum Mgr 004022 AMERICAN MINI STORAGE, TE 000101 APPLE ONE, INC. 005174 ASHLEY, DEBRA 005191 AZIZ, CAWA 004855 BABER, GABRIELE 005175 BAILEY, CONSTANCE 005171 BAYLOR, ROSINA 004040 BIG FOOTGRAPHICS 004262 BIO-TOX LABORATORIES 005176 BOHMER, WILLIAM Jul/Aug Storage Unit 111 Rental Delarm Ternp Help W/E:07/05/02 Acosta Temp Help W/E:7/6/02 Refund:Swim Lessons:5102.211 Refund:Swim Lessons:5108.314 TCSD Instmc{or Earnings Refund:Swim Lessons:5106.305 Refund:Cleaning Dep:MS02-1451 Refund:Sports-SB Mens League:4418. Drug/Alcohol Screening:Police Dept Drag/Alcohol Screening:Police Dept Refund:Sports-BB Mens League:4418. 004176 BROADWING TELECOMMUNIC,~ Long Distance & Intemet Svcs:lS 005177 BUAN, DEUA 005153 C & H OFFICE SPECIALTIES IN 000901 C P R S DISTRICTXI 000128 CALSURANCEASSOCIATES I 003549 CALIF ASSN OF MUSEUMS Refund:Arts/Crafts-Cartooning:0113.1 Refund Dep:Land Malnt:PA98-0469 Turf Mgmt Seminar:TCSD Maint Policy RenewaVBmker Fee:7/1/02-7/1 CAM Membership:Ott, Wendell 000152 CALIF PARKS & RECREATION S Membership 8/1/02-7/31/03:Parker, H. 001374 CALIF SECRETARY OF STATE 2002 Public Fac Finance Corp Filing F 005192 CARRASCO, CASSANDRA Refund:Swim Lessons:5101.312 54.99 1,388.00 174.55 270.00 457.60 442.25 27.00 55.00 489.60 25.00 100.00 40.00 902.10 500.00 40.00 1,195.00 23.00 5,244.00 275.00 3,607.00 100.00 415.00 20.00 25.00 Page: I Check Total 54.99 1,386.00 174.55 270.00 899.85 27.00 55.00 489.60 25.00 100.00 40.00 1,402.10 1,195.00 23.00 5,244,00 275.00 3,607.00 100.00 415.00 20.00 25.00 Page~ apChkl.st ! ) Final Check List l } Page: 2 07/2~ 3:07:21 PM City of Temecula Bank: union UNION BANK OF CALIFORNIA Che~k # Date Vendor 78246 7125/2002 78247 7/25/2002 78248 005178 CARRENDER, UNDA 003940 CHESHERS CUSTOM EMBROI 7/25/2002 ' 003735 CINGULARWIRELESS (EQUIP 78249 7/25/2002 78250 7/25/2002 78251 7/25/2002 005155 CLARK, JUDY 004811 COMPAQ COMPUTER CORPOR 000442 COMPUTER ALERT SYSTEMS 78252 7/25/2002 78253 7/25/2002 78254 7/25/2002 78255 7/25/2002 782.56 7/25/2002 78257 7/25/2002 78258 7/25/2002 78259 7/25/2002 78260 7/25/2002 003739 Co'crON BELAND ASSOCIATE 001014 COUNTRY SIGNS & DESIGNS 002631 COUNTS UNLIMITED INC 002413 DALEY& HEFT 005173 DELGADO, IRENE 004192 DOWNS COMMERCIAL FUELI 003754 DOWNTOWN IDEA EXCHANGE 001669 DUNN EDWARDS CORPORATI 001380 E S I EMPLOYMENT SERVICES 78261 7/25/2002 003223 EDAW INC 78262 7/25/2002 004990 ELEMENT K JOURNALS (Continued) Description Refund:Swim Lesso~:5103.312 Uniform Staff Jackets w/Logos: Misc PCS Phone Equipment:IS Cell Phones/Svc:SMART P~gm Credit:Sales Tax Charged Twice Refund:Summer Day Camp:0405.202 PROLIANT DL360 G2 SERVER- Jul/Aug/Sept:Alarm Monitor:TCC Jul/Aug/Sept:Alarm Monitor:CRC Jul/Aug/Sept:Alarm Monitor:Child Mus( Jul/Aug/Sept:Alarm Monitor. C.H. Jul/Aug/Sept:Alarm Monitor:.Sr Ctr Jul/Aug/Sept:Alarm Monitor:Maint Fac Jul/Aug/Sept:Alarm Monitor. Museum Jul/Aug/Sept:Alarm Monitor. Wed Chpl Jul/Aug/Sept:Alarm Monitor. o"th St Prof Svcs:Gen Plan:5/25/02-7/5/02 Prof Svcs Apr 27-May 24:Temecula GE Relmb:Bldg Permit:Old Town Salon/D Citywtde Traffic Data Collection Jun 2002 legal services Refund:Sec. Deposit:MS02-0425 Refund:Sec, Depoelt:MS02-0425 Fuel for City Vehicles:TCSD Annual Subscription:Meyer, J. Pelnt/Supplies-Graffitl Removal Paint/Supplies-Graffiti Removal Hansen Temp Help W/E:07/12/02 Temp Help W/E: 07/12/02 Heer Bragg Temp Help W/E:07/12/02 Marticez Temp Help W/E:07/12/02 Temp Help W/E:06-28-02:WytP/kus, L Rosa Temp Help W/E:07/12/02 Jun Biological svcs:Pala Bridge Windows Prof Subscription 1 yr:Hafeli ,N~ount Paid 25.00 732.70 565.69 385.88 -92.99 585.00 9,482.00 246.00 246.00 246.00 210.00 165.00 135.00 135.00 111.00 75.00 6,253:80 3,946.60 77.75 1,426.75 349.00 100.00 137.83 456.99 40.67 2,327.30 2,057.76 1,726.20 1,176.00 1,070.83 1,004.50 836.25 99.00 Check Total 25.00 732.70 858,58 585.00 9,482.00 1,569.00 10,200.40 77.75 2,700.00 1,426.75 449.00 137.83 497.66 9,362.59 836.25 99.00 Page2 8pChkL.st [ i; Final Check List 07/25~2 3:07:21 PM City of Temecula Bank: union UNION BANKOF CAUFORNIA Check # Date Vendor (Continued) Description Amount Paid 78263 7/25/2002 003665 EMERITUS COMMUNICATIONS June Long Distance Phone Svcs 78264 7/25/2002 005115 ENTERPRISE RENT A CAR INC Vehicle Rental:SMART Prgm:7/10 78265 7/25/2002 78266 7/25/2002 78267 7/25/2002 78268 7/26/2002 78269 7/25/2002 78270 7/25/2002 78271 7/25/2002 78272 7/25/2002 78273 7/25/2002 78274 7/25/2002 78275 7/25/2002 78276 7/25/2002 78277 7/25/2002 78278 7/25/2002 78279 7/25/2002 78280 7/25/2002 78281 7/25/2002 78282 7/25/2002 000164 ESGIL CORPORATION 005184 ESTRADA, HORTENCIA 001056 EXCEL LANDSCAPE 002797 EXPERTEES 002832 FENCE BUILDERS Jun B&S Plan Check Svcs Refund:Cleaning Dep:MS02-0415 Spor~ Park Tot Lot Ldscp Maint Polo Shirts/Embmidery:Promo Prgm Residential Improv Prgm:Rores, M. Res Improv Prgm:Bidwell 001511 FIELDMAN ROLAPP & ASSOCIA Professional Svcs: Wolf Creek CFD 000170 FRANKLIN QUEST COMPANY I Daytimer Supplies - Planning 000795 FRED PRYOR SEMINARS/CARE NM/Excalllng Sem:7/11:Hards 003946 G T ENTERTAINMENT 002528 GLASS BLASTERS INC Announcer-4th of July Parade EE Glass Mugs:Human Resources 004607 GRACE BUILDING MAINTENAN(; Custodial Svcs:TES Pool 005156 GREENAWAY, STACI 005157 GUERRIERO, RON 005180 HART, FLOYD 002906 HEMET FENCE COMPANY 005181 HUGHES, RYAN Refund:Dog Obedience:2033.201 Refund:APA Nat Conf Apr Refund:Spods-BB Mens League:4418. Res Improv P~gm:Biddings Refund:Sports-BB Mens League:4418. 001351 INLAND EMPIRE ECONOMIC PA Film Corem Membemhip:Wolnick. G. 001573 INLAND EMPIRE TOURISM COU ToufismCounclIMembership:Wolnic 78283 7/25/2002 001407 INTER VALLEY POOL SUPPLY I Aquatic Pool Sanitizing Chemicals Aquatic Pool Sanitizing Chemicals 78284 7/25/2002 000501 INTL INSTITUTE OF MUNICIPAL Yrty Membemhip:Jones/Ballmich 78285 7/25/2002 000750 INTOXIMETERS INC Repair Alcohol Sensom:Police Traffic 506.31 79.74 2,352.70 100.00 1,540.00 1,152.04 2,412.00 t ,480.00 3,074.20 92.87 149.00 100.00 48.49 3,925.00 68.00 489.37 860.00 40.00 2,000.00 1,000,00 362.36 305.15 215.00 665.70 Page: 3 Check Total 506.31 79.74 2,352.70 100.00 1,540.00 1,152.04 3,892,00 3,074.20 92.87 149.00 100.00 48.49 3,925.00 489.37 860.00 40,00 2,OOO.O0 1.000.00 667.51 215.00 665.70 Page3 3:07:21 PM Bank: union UNION BANK OF CALIFORNIA Check # Date Vendor 78286 7/25/2O02 78287 7/25/2002 78288 7/25/2002 78289 7/25/2002 78290 7/25/2002 78291 7/25/2002 78292 7/25/2002 78293 7/25/2002 78294 7/25/2002 78295 7/25/20~2 78296 7125/2002 78297 7/25/20~2 78298 7/25/2002 78299 7/25/2002 78300 7/25/20O2 78301 7/25/2002 78302 7/25/2002 78303 7/25/2002 78304 7/25/2002 78305 7/25/2002 78306 7/25/2002 78307 7/25/2002 Final Check List City of Temecula (C4~ntlnued) 001186 IRWIN, JOHN 005182 JOHNSON, DEBRA 005183 JOHNSON, MIKE 003046 K F R O G 95.1 FM RADIO 005074 KING, DON 001282 KNORR SYSTEMS INC 005172 LOPEZ, GLORIA 001865 M C I 005167 MAHAN, KELLY 004068 MANALILI, AILEEN 005188 MANNING & MARDER 002011 MARTIN, KATHARINA E. 002693 MATROS, ANDREA 005132 MCMILLIN COMPANIES LLC 003448 MELODYS AD WORKS 004894 MICHAEL BRANDMAN ASSOClA 001892 MOBILE MODULAR 005187 NASH, FLORENCE M. 005189 NCNIES, INC 004512 NINYO & MOORE 005166 O'HARA, SUSANNE 002105 OLD TOWN TIRE & SERVICE Description DJ Svcs:Sock Hop Dance:7/26 Refund:Swire Lessons:5102.212 Refund:Sports-BB Mens League:4418. Broadcasting:Summer Nights 07/05/0 Bmadcesting:Summer Nights 7/5/02 Summer Nights Entertainment:7/5 Aquatic - Pool Maintenance supplies Refund:Sec. Deposit:MS02-0512 Refund:Sec. Deposit:MS02-0512 Jul xxx-1603 City Hall Refund:Summer Day Camp TCSD iNSTRUCTOR EARNINGS Police IJability Trends:8/22:Burch TCSD Instructor Eamings TCSD INSTRUCTOR EARNINGS Refund:Ovrpmt:Bldg Permits Refund:Ovrpmt:Bldg Permit Reimb. F_.xpenses:St. Fest/Grt Race Credit:Billing Error 4/27-5~31/02 Prof Svcs:Pala Rd Ph II 7/4-8/3:Modular BIdg rental:Sin 92 Refund:Sec. Deposit Sex Offender Cf:9/21-25:Pingel Jun Material Test Svcs:Chaparral Apr Material Test Svcs:Chapperral Refund:Swim lessons City vehicle maint/repair svcs City vehicle maint/repalr svcs City vehicle maint/repair s',~'s Amount Paid 106.00 100.00 500.00 46.00 432.00 100.00 14.09 155.00 406.00 75,oo 326.40 211.20 19.28 0.62 255.77 -7.03 15,754.47 1,234.75 642.00 303.73 204.40 19.19 Page: 4 Check Total 206.00 500.00 46.00 532.00 14.09 155.00 406.00 75.00 326.40 211.20 19.90 248.74 15,754.47 777.95 100.00 348.00 1,876.75 527,32 Page~ 3:07:21PM Final Cheek List City of Temeeula Bank: union UNION BANK OF CAUFORNIA (Continued) Check # Date Vendor Deeerlptlon 78308 7/25/2002 005039 P A THOMPSON ENGINEERING Install phone/cab;e outlets:Chaparral 78309 7/25/2002 005162 PAGAN, MARSHALL 78310 7/25/2002 005161 PAGEL, TERESA 78311 7/25/2002 004805 PEACOCK ENTERPRISES INC 78312 7/25/2002 000249 Pt='~ I'¥ CASH 78313 7/25/2002 005169 POWER FABRICATING, INC. 78314 7/25/2OO2 78315 7/25/2002 78316 7/25/2002 78317 7/25/2002 78318 7/25/20O2 78319 7/25/'2002 78320 7/25/2002 78321 7/25/2002 78322 7~5/2002 78323 7/25/2002 78324 7/25/2002 78325 7/25/2002 78326 7/25/2002 78327 7/25/2002 78328 7/25/2002 Refund:Sports. BB Mens League Refund:Sports-BB Mens League Infocus LP530 Projector 2000 Lumen Computer memory kit Petty cash reimbursement Petty cash reimbursement Refund:Tr 23371 -F/Lot 65/70 000254 PRESS ENTERPRISE COMPAN Jun var. public notices:Ctiy Clerk 005186 PUTNAM, CAROLYN 001364 R C P BLOCK & BRICK INC 000262 RANCHO CALIF WATER DIST 000947 RANCHO REPROGRAPHICS Refund:Sec. Deposit Graffiti Rerc~ver for PW Malnt 5/12-7/10/02 various water meters 6/07-7/05/02 vadous water meters Dupl. Bluepdnts:Pala Rd Imprv 003591 RENES COMMERCIAL MANAGE Citywlde Weed Abatement & Trash Pic 004964 RHYTHM & BREWS 000266 RIGH TWAY 005168 RIOS, SONIA 000873 ROBERTS, RONALD H. 005193 SiLVERTHORN, SUNYA Refreshments:G,'t Race:6/22/02 7/15-5/11 equip rentaI-RIverton Pk 7/15-8/11 equip rental.Veteran's Pk Refund:Toddler Swim Lessons Relmb:Sister Cities Expanse:5/28/02 Refund:level 3 swim lessons 003804 SKYHAWKS SPORTS ACADEM TCSD Instructor Earnings 005190 SLOCUM, SUSAN Relmb:Explorer Tm:7/17/02 000645 SMART & FINAL INC 000537 SO CALIF EDISON Recreation Supplies for MPSC Recreation Supplies for MPSC don 2-00-397-5059 various mbs Jul 2-19-999-9442 Jut 2-22-891-0550 vad~us mtrs Credit:late charge:2-00-397-5059 Amount Paid 1,977.92 3,351.03 1,054.87 282.90 72.05 100.00 43.50 100.00 607,71 10,923.09 9,837.78 119.28 70,89 54.39 25.00 22.00 1,592.00 59.95 117.76 43.27 5,732.09 1,973.15 252.98 -84.31 Page: 6 Cheek Total 1,977.92 4,405.~0 354.95 100.00 100.00 607.71 20,760.87 119.28 125.28 26.00 98.36 22.00 1,592.00 59.95 161.03 7,873.91 Pages apOhk~t '~')/'-" ~ Fl"al Cheok ~ 07~ ~:07:21PM O#y of Temeoula Bank: union UNION BANK OF CAUFOFINIA (Continued) Cheek~. Date . Vendor De~orlptlon 78329 7/25/2002 005,160 ~OUD INTEGRATION REPERTO Refund:$po~s-BB Mens League 78330 7/25/2002 004163 SPORTS CHALET Softball., for Sports Prgm 78332 7/25/2002 003673 TECH 101 ARCU8 INC 005185 TEUERLE, DARREN (9) COMPUTER WORKSTATION8 Mlso Computer 8upplles M~so Computer 8upp~lns Refund:level 3 swim lessons 78333 7/25/2002 78334 7/25/20O2 OO3833 TOLL ROADS, THE 005164 TOSTADO, EVA Toll roads usage:v~ del)ts Toll Roads Usage Refund:level 1 sw~11 lessons 78335 7/25/20O2 78336 7/25/2002 78337 7/25/2002 005158 TURNER, CRAIG J. 004261 VERIZON CALIFORNIA 004200 VERIZON WIRELESS I.LC Refund:Ovq:~t:Bldg pmmlt Refund:Owpmt:Bldg Permit JUL XXX-5072 GENERAL USAGE JUL XXX-0073 GENERAL USAGE Jul xxx-8983 general usage Jul xxx-0074 genefld usage JUL)0(X-1603 GENERAL USAGE Jul ~o~-3564 general t~age JUL )00(-8573 GENERAL USAGE JUL )00(3923 GENERAL USAGE Shipping & Handling 78338 7~ 005165 VERKOUTERN, PAM Refund:levol 2 swim lessons 78339 7/25/2002 005159 WELLS, DERIC Refund:Sports-BB Mens League 78340 7/25/2002 005170 WHITE, KENNETH Refund:PIonlo Shelter 78341 7/25/2002 005194 WICKES, MICHEM.E Refund:Sci Adv Camp-Far Out Phys 78342 7/25/2002 005163 YAMBAO, NOVA Refund:level 1 swim lessons 78343 7/26/2002 000348 ZIGLER, GAlL Reimb:Team Pace Event:7/26/02 Amount Paid Cheek Total · 40.00 40.00 2,194.87 2,194.87 24.50 Sub total for UNION BANK OF CAUFORNIA: 165,905.16 Page8 apChkl..st 07119/2002 9:00:18AM Bank: union UNION BANK OF CALIFORNIA Check # Date 16 07/18/2002 17 07/18/2002 18 07/18/2002 78084 07/18/2002 78085 07/18/2002 78086 07/18/2002 78087 07/18/2002 78088 07/18/2002 78089 07/18/2002 78090 07/18/2002 78091 07/18/2002 78092 07/18/2002 78093 07/18/2002 Final Check List City of Temecula Vendor Description 000246 PERS (EMPLOYEES' RETIREME Employees state retirement 000444 INSTATAX (EDD) 000283 INSTATAX (IRS) 004973 ABACHERLI, LINDI 003304 ADAMS ADVERTISING INC 005147 ALPHA OMEGA Employees fed pr taxes Employees fed pr taxes TCSD instructor eamlngs Billboard adve~sing for Old Twn Refund: Secudty deposit 004240 AMERICAN FORENSIC NURSES Blood draws for Police Dept Blood draws for Police Dept 000936 AMERICAN RED CROSS 003285 AMERIPRIDE UNIFORM SERVI 000101 APPLE ONE, INC. 003203 ARTISTIC EMBROIDERY 005023 ARTISTIC PAINT COMPANY 003485 AUDIO VIDEO SUPPLY INC 78094 07/18/2002 004546 AUNTKIZZYZBOYZ 78095 07/18/2002 004206 BANUELOS, TERESA 78096 07/18/2002 003465 BASKET & BALLOONS TOOl Aquatic supplies:TCSD Floor mats/towels rental:CRC Acosta temp help w/e 06/29 Staff shir~s:Finance dept Res Impr prgm: Bidwell, D. Council Chambers audio supplies Entertainment: Summer Ntghts 7/5/02 TCSD instructor earnings PromoUon Baskets for Eco Devel 78097 07/18/2002 002541 BECKER CONSTRUCTION SRV Concrete Ribbon Gutter- R.Cal Rd R&R handicap ramp in Old Twn 78098 07/18/2002 005145 BLUE FOUNTAIN POOLS, INC Refund: Pool Permit Refund: Pool Permit 78099 07/18/2002 005142 BUCKLEY, TIMOTHY Refund:SCLS recert class-Fire 78100 07/18/2002 002208 BUSINESS PRESS, THE Newspaper ad:Eco Dev 78101 07/18/2002 005143 BUTLER, JEAN Refund:Arts/Crofts-Cartooning 78102 07/18/2002 004621 C-181NC Street rest~pe prJt dtywlde Amount Paid 43,135.33 13,717.65 59,381.01 348.52 2,000.00 100.00 105,00 105.00 167.00 560,04 1,182.00 334.00 1,680.00 2,496.53 500.00 170.00 64.12 9,315.00 1,900.00 197.20 0.71 54.00 735.00 23.00 24,185.86 Page: Check Total 43,135.33 13,717.65 59,381.01 348.52 2,000.00 100.00 2t0.00 167.00 560.04 1,182.00 334.00 1,680.00 2,496.53 500,00 170,00 64.12 11,215.00 197.91 54.00 735.00 23.00 24,185.86 Page~ apChklLat '~ 0711912002 9:00:18AM Bank: union UNION BANK OF CALIFORNIA Check # Date 78103 07/18/2002 78104 07/18/2002 78105 07/18/2002 78106 07/18/2002 78107 07/18/2002 78108 07/18/2002 78109 07/18/2002 78110 07/18/2002 78111 07/18/2002 78112 07/18/2002 78113 07/18/2002 78114 07/18/2002 78115 07/18/2002 Vendor 003138 CAL MAT 003138 CAL MAT 001054 CALIF BUILDING OFFICIALS 004093 CARDIO CARE PLUS 000131 CARL WARREN & COMPANY I 002534 CATERERS CAFE 000137 CHEVRON U S A INC 005149 COLE, TERRY 004405 COMMUNITY HEALTH CHARI 005146 CONTRERAS, SYLVIA 002900 DANIEL MANN JOHNSON 001716 DANS ROOFING Final Check List City of Temecula (Continued) Description PW patch truck asphalt materials PW patch track asphalt materials Safety Assessment TCSD instructor earnings Claim adjuster services Refshmnts: museum excumlons Fuel expense fur city vehicles Reimb:MPSC supplies Employees Charities conbibu~ons 002147 COMPLIMENTS COMPLAINTS & Entertainment: Summer nights 7/5/02 Refund: Event cancelled Refund: Event cancelled Design Svcs:Pala Rd Impr Phase II Credit:No agrmnt to pay prgt mgr Refund: owpmt of fees Refund: ova)mt of fees Amount Paid 1,414.30 467.53 405.00 307.00 181.07 78.12 190.39 120.73 136.50 250.00 328.00 100.00 4,054.95 -1,521.48 63.00 1.13 78116 07/18/2002 004810 DAVID-RICHARDS ELECTRIC I 78117 07/18/2002 002701 DIVERSIFIED RISK 78118 07/18/2002 003610 DOMENOE, JIM 78119 07/18/2002 005144 DOTTS, MARILYN Design svcs:Emerg Generator Enclosu June special events premiums Relmb compute~ software fur police d Refund:MCP Picnic Shelter Rental 23,740.00 787.12 19§.00 25.00 Page: 2 Check Total 1,414.30 467.53 405.00 307.00 181.07 78.12 190.39 120.73 136.50 250.00 428.00 2,533.47 64.13 23,740.00 787.12 195.00 26.00 Page2 epChkLst 0711912002 9:00:18AM Final Check List City of Temecula Page: 3 Bank: union UNION BANK OF CALIFORNIA (~ntinued) Check # Date Vendor 78120 07/18/2002' 001380 E S I EMPLOYMENT SERVICES I 78121 07/18/2002 000523 EASTERN MUNICIPAL WATER E Desc~ption Naaseh-Shahry temp help w/e 06~28 Rush temp help w/e 06/28 Haesen, D temp help w/e 06/28 McClanahan temp help w/e 06/14 Ebon temp help w/e 06~28 Heer temp help w/e 06/28 McClanahan temp help w/e 06/28 Kanigowski temp help w/e 06/28 Rosa temp help w/e 06/28 Martinez temp help w/e 06/28 Cammamta temp help w/e 06/28 Bragg temp help w/e 06/28 Cradtt:owchged 1 hour for McClanaha 95366-02 Dingo Dr Ldscp Amount Paid Check Total 6,236,00 2,620.89 2,478.26 2,151.76 2,146.68 1,829.12 1,535.19 1,258.40 1,119.30 1,058,40 923.37 863.10 -13.62 24,206.85 469.98 469.98 78122 07/18/2002 003223 EDAW INC Biological Svcs:Long Canyon Basin 717.16 717.16 78123 07/18/2002 78124 07/16/2002 000161 EDEN SYSTEMS INC 003171 EMPIRE ECONOMICS LLC Ink)mm gold upgrade:Exp reimb. Inforum gold upgrade:Data Conversio Infomm gold upgrade: P~jt Mgmt Consultant:WoE Creek 1,633.23 1,562.50 875.00 4,070.73 1,000.00 1,000.00 78125 07/18/2002 78126 07/18/2002 78127 07/16/2002 002438 ENGEN CORPORATION 002060 EUROPEAN DELI & CATERING 003959 EVERETT & EVERETT PAINTI Geotech svcs:Pavement Rehab P~gm Geotech svcs:Margadta Rd Widening I Geotech sves:Margadta Rd Widening I Geetech svcs:Margadta Rd Widening I Re~shmnts:General Plan Goals Mtg Ref~shmnts:Comm mtg Res impr prgm: Naranjo 4,784.50 2,495.00 855.00 572.50 8,707.00 167.77 t5.51 183.28 1,900.00 1,900.00 78128 07/18/2002 · 78129 07/18/2002 001056 EXCEL LANDSCAPE 002037 EXPANETS Idscp mntc:Neighborhood prks March Idscp impr:Riverton Prk June Idscp Impr:Vail Ranch Fire Stn April Id~cp impr:Vail Ranch April Idscp impr:Fire Stn Apdl Idscp impr;Rancho Vista Apdl Idscp impr:Pala Park Apdl Idscp impr:Meadows Park Apdl Idscp impr:.Counby Glen k~3y Idscp impr:Fire Stn April Idscp Impr:Paseo Pad( Phone mntc & repairs:City Hall 92,345.00 282.94 225.00 210.17 175.91 174.57 168.66 130.08 63.36 52.62 50.60 3,461.85 93,858.31 3,461.85 78130 07/16/2002 004464 EXXONMOBIL CARD SERVICES Fuel expense for City vehicles 213.98 213.98, Page3 apChkLst ~ ~ Final Check List ~ ) Page: 4 0711912002 9:00:18AM City of Temecula Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor 78131 07/18/2002 000478 FAST SIGNS Descdptlon 4th of July Parade Signs 78132 07/18/2002 000165 FEDERAL EXPRESS INC 78133 07/18/2002 000166 FIRST AMERICAN TITLE COMP,a 78134 07/18/2002 003347 FIRST BANKCARD CENTER 78135 07/18/2002 001135 FIRST CARE INDUSTRIAL MED ( Express mail services Express mail services Res Impr lot book rpt:De La Torre Res Impr lot book rpt:Bidwell Res Impr lot book ~pt:Eckhardt Res Impr lot bock q~t:Flores Res Impr lot book ~ot:Sanchez Res Impr lot book ~pt;,Gutie~rez Res Impr lot book rpt:Rivera xx-7824 Comerchero:Leagna Conf xx-9277 R.Roberts:League cenf xx-5288 Jones:Prof mtgs/supplies xx-3083 Naggar:League of Cities xx-5288 Jones:Earthlink.net xx-6702 Meyer. Old Twn Implementati xx-3083 Naggar. Prof Mtg First aid cam to employee 78136 07/18/2002 004239 FISHERMERRIMANSEHGALY,~ Designsvcs:TemOIdTwnTheatre 78137 07/18/2002 005139 FLORES, MAGDA Refund:Aquatics-Lifeguard Train 78138 07/18/2002 78139 07/t8/2002 000177 GLENNIESOFFICE PRODUCTS 002104 GRILL ROOM, THE Misc office supplies:Corem Svcs Misc office supplies:Ees Devel Misc office supplies: Finance Dept Misc office supplies: City Mgr Misc office supplies:City Clerk Misc office supplies:Police Misc office supplies: Finance Dept Misc office supplies: Records Mgmt Misc office supplies:City Clerk Misc, office supplies:Bldg & Safety Mlsc office supplies: Info Sys Misc office supplies:Fire Dept Deposit:2002 Corem Recognition Din 78140 07/18/2002 004053 HABITATWESTINC Restore habitat:Lg Canyon Basin 78141 07/18/2002 000186 HANKS HARDWARE INC Misc hardware supplies: Fire Dept 78142 07/18/2002 005150 HILT, TIMOTHYJ, Refund: Parcel 919-131-005 Dept 78143 07/18/2002 005141 HOOVER-TURNER, MICHELE Refund:Block Pa~ty Fees Amount Paid 275.84 191.72 137,84 150.00 150.00 150,00 150.00 150,00 150.00 150.00 1,783.18 1,329.84 927.06 375.00 307,02 122,09 165.90 47,250.00 265.00 1,983.31 643.28 518.98 322.22 210.53 201.12 104.43 79.25 62.00 49.82 29.08 22.32 255,00 761.66 410.94 995.00 25.00 Check Total 275.84 329.56 1,050.00 4,888.25 165,90 47,250.00 265.00 4,226.34 255.00 761.66 410.94 995,00 25.00 Page~ apChkLst 07/t9/2002 9:00:18AM Final Check List City of Tsmecula ' Bank: union UNION BANK OF CALIFORNIA Check # Date 78144 07/18/2002 78145 07/16/2002 78146 07/18/2002 78147 07/16/2002 78148 07/16/2002 78149 07/18/2002 003266 IRON MOUNTAIN OFFSITE 78150 07/18/2002 001186 IRWIN, JOHN (Continued) Vendor DeccHptlon 000194 I C M A RETIREMENT TRUST 45 Retirement contributions 004911 IMBSEN & ASSOCIATES INC Ped. Cmsslng Feasibility Study 004833 IMPERIAL PAVING COMPANY I R&R A.C. in Old Town 004984 INDEPENDENT ROOFING CONS Inspect & Report on City's Fac roofs 001517 INTEGRATED INSIGHTS DBA: H Employee assistance prgm June Microfilm storage TCSD instructor earnings 78151 07/18/2002 004488 J S A PUBLISHING CONSULTAN Pdnting Tern Vily street maps 78152 07/18/2002 '002140 JAGUAR COMPUTER SYSTEMS Apr/May/Jun e-mail supbort/mntc 78153 07/16/2002 003860 JOE'S SHEET METAL II 78154 07/t6/2002 002424 KELLEY DISPLAY INC Fab back board fur paramedic sqd 84 Shipping & Handling Banners 78155 07/18/2002 ~ 001667 KELLY TEMPORARY SERVICES Ha~ngton temp help w/e 06/30 78156 07/16/2002 · 005148 KEN SCHAUMANN CONSTRUCT Refund: Parcel 919-021-001 78157 07/18/2002 001091 KEYSER MARSTON ASSOOIAT Prof svcs: affordable housing devel 78158 07/18/2002 005140 LARCHER, STEVE 78159 07/18/2002 004412 LEANDER, KERRY D. Refund: Cancelled permit TCSD instructor eamings TCSD instructor earnings TCSD inst~uctor earnings TCSD instructor earnings 78160 07/18/2002 003286 LIBRARY SYSTEMS & SERVICE Tern UbraPj system agrmnt Tern Ubra~ system agrmnt 78161 07/18/2002 78162 07/18/2002 78163 07/18/2002 78164 07/18/2002 78165 07/18/2002 001967 MANPOWER TEMPORARY SER Temp help w/e 6/'30 Novotny 000217 MARGARITA OFFICIALS ASSN 004107 MASSA-LAVITr, SANDRA 005138 MAXWELL, WARD 005130 MCKEE, DAVE Jun Softball Referee Svcs 6/12-6/28/02 consult svcs EE computer loan program Refund:Music-Instant Piano Amount Paid 5,920.62 6,247.69 14,613.50 2,500.00 1,200.00 158.75 274.00 606.10 300.00 81.07 39.50 1,080.00 995.00 3,081.88 24.00 1,480.00 240.00 214.00 208.00 10,750.46 1,211.20 535.35 1,700.00 2,141.85 1,156.84 25.00 Page: 5 Check Total 5,920.62 6,247.69 14,613.50 2,500,00 1,200.00 158.75 274.00 606.10 300.00 81.07 39.50 1,080.00 995.00 3,081,88 24,00 2,142.00 11,961.66 535.35 1,700.00 2,141.85 1,156.84 25.00 Page5 apChkLst ~ i Final Check List ~ i Page: 6 07119/2002 9:00:16AM City of Temecula Bank: union UNION BANK OF CALIFORNIA Check # Date Vendor 78166 07/18/2002 78167 07/18/2002 78168 07/18/2002 78169 07/18/2002 78170 07/18/2002 005134 MCKELVEY, JENNIFER 005132 MCMILLIN COMPANIES LLC 005135 MEDLEY, LAUREN 004109 MONTELEONE MEADOWS 004530 MOVIE EXPERIENCE, THE 78171 07/18/2002 001986 MUZAK INC 78172 07/18/2002 002139 NORTH COUNTYTIMES-ATTN:. 78173 07/18/2002 004923 OAK ISLAND HVAC 78174 07118/2002 78175 07/18/2002 78176 07/18/2002 002292 OASIS VENDING 003964 OFFICE DEPOT BUSINESS SVS 002105 OLD TOWN TIRE & SERVICE 78177 07/18/2002 78178 07/18/2002 78179 07/18/2002 78180 07/18/2002 78181 07/18/2002 78182 07/18/2002 78183 07/18/2002 78184 07/18/2002 78185 07/t8/2002 78186 07/18/2002 78187 07/18/2002 003589 PACIFIC COAST ENTERPRISES 000733 PARTY PZAZZ 005136 PCCIII - CROWNE HILL LLC 003218 PELA 001958 PERS LONG TERM CARE PROG 000249 PETTY CASH 000580 PHOTO WORKS OF TEMECULA 000254 PRESS ENTERPRISE COMPAN 003493 PRO-CRAFT OVERHEAD DOOR 004934 PS MANAGEMENT 000635 R & J PARTY PALACE (Continued) Description Amount Paid Refund:Level 1 Swim Lessons Refund:Toddler Swim Lessons Refund:Bldg permit;B02-1522 Refund:Summer Day Camp Police Vol, Recogn. Luncheon:6/30 Day camp excursion:7/18/02 Old Town Sixth Street Sound System Jun Display Ads:PW Const Updates Jun Var Recruit Ads for HR Res Imprv Prgm:Rose City Hail Coffee/Kitchen Supplies Maint Fac Coffee/Kitchen Supplies Finance Office Supplies City vehicles repair/maint, svcs City vehicle repairs & maint. City vehicle malnt/repair svcs Street Addressing Svcs Equip rental-4th of July Parade Refund:ovrpmt:23143 tract Rerund:ovrpmt:23143-10 tract Jun TCSD Plan Check Svcs Jun Planning Plan Check Svcs Employee benefits Petty cash reimbursement Pe~ty cash reimbursement Jun film/photo der -Econ Der 7/14/02-7/12/03 subscription Res Imprv Prgm:Gilkey T-Shirts for Explorer Prgm Equip rental-4th of July Parade 22,00 22.00 33.50 145.00 2.250.00 921.00 59.50 825.18 256.00 1,321.00 328.81 106.00 30.38 347.38 206.90 134.61 612.50 1,091.50 1,400.00 1,000,00 3,580.00 850.00 83.99 378.26 115.14 302.78 150,80 530.00 368.12 295.00 Check Total 44.00 33.50 145.00 2,250.00 921.00 59.50 1,081.18 1,321.00 434.81 30.38 688.89 612.50 1,091.50 2,400.00 4,430.00 83,99 493.40 302.78 150.80 530.00 368.12 295.00 Page~ apChkLst 07119f2002 9:00:18Ntl Final Check List City of Temecula Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor 78188 07/18/2002 005127 PAD, ALLISON Descdptlon Amount Paid Refund:Sci Adv Camp-Wings Rying 204.00 78189 07/18/2002 000262 RANCHOCALIFWATERDIST 78190 07/18/2002 002110 RENTAL SERVICE CORPORATI 78191 07/18/2002 005128 RICHARDSON, JOHN Various water meters Various water meters Various water meters Various water meters Various water meters-Sm 84/92 Various water meters Jun 01-06-84860-5 Pujol St Misc, Equipment Rental for Public Wot Misc, Equipment Rental for Public Wor Refund:Art-Creative Drawing 23,001,89 2,860.49 785.96 425.39 401.65 309.12 43.89 228,58 91,97 36,00 78192 07/18/2002 000266 RIGHTWAY 78193 07/18/2002 .000268 RIVERSIDE CO HABITAT Equip rental-4th of July Parade Equip rental-4th of July Parade Jul equipment rentaI-Peseo Park Jun equipment rental repairs-Paseo P June 2002 K-Rat Payment 970.15 377.75 60.78 29.09 6,705.00 78194 07/18/2002 000357 RIVERSIDE CO TRANSPORTATI Traf Sgnt/Lights Maint Svcs 26,394.00 300.00 400,00 279.25 74,20 78195 07/18/2002 005073 ROCKY ZHARP Entertainment:Star Nights 7/5/02 78196 07/18/2002 001048 ROSAS CANTINA RESTAURAN Refreshments/4th of July Parade 78197 07/18/2002 000277 S&SARTS&CPAFTSINC MisccraftsuppliesforTCC 78198 07/18/2002 005137 SIEBEN, JENNIFER Rstund:Sports-Multi-Sport 78199 07/18/2002 78200 07/18/2002 000645 SMART & FINAL INC 005131 SMITH, COLETTA SMART Prgm Supplies Recreation class supplies Teen Activities Supplies Refund:Level 4 Swim Lessons 365.84 81.74 64.29 25,00 78201 07/18/2002 005123 SMITH, PATRIClA L TCSD Insffuctor Eamings 153.60 78202 07/18/2002 78203 07/18/2002 000537 SO CALIF EDISON 001212 SO CALIF GAS COMPANY Jul 2-01-202-7330 various mtrs Jul 2-01-202-7603 sffeet tights Jul 2-00-987-0775 street lights Jul 2-06-105-0654 vadous mbs · Vadous City Facilities Gas Metem Jul 095-167-7907-2 Stn 84 35,067.99 13,745.13 5,146.28 2,151.29 994.40 101.17 Page: 7 Check Total 204.00 27,828.40 320,55 36,00 1,437.77 6,705.00 26,394.00 300.00 400.00 279.25 74.20 511,87 25.00 153.60 56,110.69 1,095.57 Page~ al=Chid.st I ) Page: 8 0711912002 9:00:18AM Final Check Mst { ) City of Temecula Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description 78204 07/18/2002 000519 SOUTH COUNTY PEST CONTRC 004496 SPARKS EXHIBITS & ENVIRONE 000293 STADIUM PIZZA 005129 STEAGER, SUZAN 78205 07/18/2002 78206 07/18/2002 78207 07/18/2002 78208 07/18/2002 004465 STITCH PRO 78209 07/18/2002 002224 SYNDISTAR INC 78210 07/18/2002 003599 T Y LIN INTERNATIONAL 78211 07/18/2002 004541 TEMECULA RADIATORJAUTO R 000307 TEMECULATROPHY COMPAN 003849 TERRYBERRY COMPANY 001065 U S C M WEST (DEF COMP) 000389 U S C M WEST (OBRA) 000325 UNITED WAY 005046 VACATION POOLS 000332 VANDORPE CHOU ASSOCIATE 005133 VELEZ, KIMBERLY 004261 VERIZON CALIFORNIA 004789 VERtZON INTERNET SOLUTION 000621 WESTERN RIVERSIDE COUNC 000348 ZIGLER, GAlL 78212 07/18/2002 78213 07/18/2002 78214 07/18/2002 78215 07/18/2002 78216 07/18/2002 78217 07/18/2002 78218 07/18/2002 78219 07/18/2002 78220 07/18/2002 78221 07/18/2002 78222 07/18/2002 78223 07/18/2002 CRC Pest Control Svcs Malnt Fac Pest Control Svcs Maint Fac Pest Control Svcs TES Pest Control Svcs Sr Ctr Pest Control Svcs Jun Prgs Pmt:Chlldren's Museum May P~gs Pmt:Children's Museum Refreshments for SMART Prgrn Refreshments for SMART Prgm Refund;Music-Instant Piano Embroidery:Cap Prgm Jackets Fire Prevention training supplies Jun Design Svcs:R.C. Bddge Widenln Fire Dept Vehicle Repairs Fire Dept Vehicle Repairs Fire Dept Vehicle Repairs Fire Dept Vehicle Repairs Plaques for 4th of July Parade EE se~ce awards Employee def comp plan P/T EE retirement Employee contributions Refund:BIdg permit:B02-1121 Jun Plan Check Services Refund:Level 1 Swim Lessons JUL )O0(-1941 GENERAL USAGE Phone svcs/EOC backup @stn 84 Phone svcs/EOC backup @ stn 84 7/01/02-6/30/03 Council Membership C Refund:Arts/Crafts Cartooning Amount Paid 90.00 40.00 40.00 39.00 29.00 87,884.00 48,154.00 91.03 23.51 25.00 145.46 1,452.00 6,456.80 1,017.32 t67.10 107.95 80.91 588.25 681.30 14,092.01 4,419.94 255.80 234.29 1,979.70 30.00 56.32 349.75 69.95 11,356.00 30.00 CheckTotal 238.00 136,038.00 114.54 25.00 145.46 1,452.00 6,466.80 1,373.28 588.25 681.30 14,092.01 4,419.94 255.80 234.29 1,979.70 30.00 56.32 419.70 11,356.00 30.00 Page~ apChkLst 07119/2002 9:00:18AM Final Check List City of Temecula Page: 9 Sub total for UNION BANK OF CALIFORNIA: 769,892.41 Page9 apChkL.st { ) Final Check Ust t } Page: 10 07119/2002 9:00:18AM City of Temecula 143 checks in this report. Grand Total All Checks: 769,892.41 Page~0 ITEM 4 TO: FROM: DATE: SUBJECT: APPROVAL CITY ATTORNEY DIRECTOR OF CITY MAi~AGER ~'-- CITY OF TEMECULA AGENDA REPORT City Manager/City Council Genie Roberts, Director of Finance August 13, 2002 City Treasurer's Report as of June 30, 2002 PREPARED BY: Pascale Brown, Senior Accountant RECOMMENDATION: Report as of June 30, 2002. That the City Council receive and file the City Treasurer's DISCUSSION: Reports to the City Council regarding the City's investment portfolio, receipts, and disbursements are required by Government Code Sections 53646 and 41004 respectively. Attached is the City Treasurer's Report which provides this information. The City's investment portfolio is in compliance with Government Code Sections 53601 and 53635 as of June 30, 2002. FISCAL IMPACT: None Attachments: 1. City Treasurer's Report as of June 30, 2002 City of Temecula City Treasurer's Report As of June 30, 2002 Cash Activity for the Month of June: Cash and Investments as of June 1, 2002 Cash Receipts Cash Disbursements Cash and Investments as of June 30, 2002 $ 88,241,421 4,731,199 (4,608,884) $ 88,363,736 Cash and Investments Portfolio: Type of Investment Petty Cash General Checking Sweep Account (Money Market Account) Benefit Demand Deposits Local Agency Investment Fund Certificate of Deposit (Retention Escrow) Checking Account (Parking Citations) Trust Accounts- CFD 88-12 (Money Market Account) Delinq. Main. Reserve Account - CFD 88-12 (investment Agreement) Delinq. Main. Reserve Account - CFD 88-12 (Money Market Account) Reserve Account- CFD 88-12 (investment Agreement) Reserve Account- CFD 88-12 (Money Market Account) Trust Accounts- CFD 98-1 (Money M&rket Account) Reserve Accounts- CFD 98-1 (Money Market Account) Reserve Account- CFD 98-1 (Local Agency Investment Fund) Trust Accounts-TCSD COPs (Money Market Account) Project Account-TCSD COPs (Money Market Account) Project ACCOunt-TCSD COPs (Loca~ Agency Investment Fund) Delivery Cost Account-TCSD COPs (Money Market Account) Trust Accounts-RDA Refinance Bonds (Money Market Account) Project Account-RDA Refinance Bonds (Money Market Account) Project Account-RDA Refinance Bonds (Locat Agency investment Fund) Admin Account-RDA Refinance Bonds (Money Market Account) Institution City Hall Union Bank Union Bank (Highmark U.S. Treasury) Union Bank State Treasurer Bank of Sacramento Union Bank U.S. Bank ~ :irst Am. Treasury) CDC Fundin, Corp U.S. Bank, =irst Am. Treasury) CDC Fundin I Corp U.S. Bank First Am. Treasury) U.S. Bank First Am. Treasury) U.S. Bank First Am. Treasury) State Treasurer U.S. Bank (First Am. Treasury) U.S. Bank (First Am. Treasury) State Treasurer U.S. Bank (First Am. Treasury) U.S. Bank (First Am. Treasury) U.S. Bank (First Am, Treasury) State Treasurer U.S. Bank (First Am. Treasury) Maturity/ Termination Yield Date n/a n/a 0.770% n/a 2.687% n/a n/a 1.360% 5.430% 9/1/2017 1.360% 5.430% 9/1/2017 1.360% 1.360% 1.360% 2.687% 1.340% 1.360% 2.687% 1.360% 1.360% 1.360% 2.687% 1.360% (1)-This amount is net of outstanding checks. (2)-At June 30, 2002 total market value (including accrued interest) for the Local Agency Investment Fund (LAIF) was $48,082,558,174 The City's proportionate share of that value is $65,434,198. investments are liquid and currently available. The City of Temecula's pofifoiio is in compliance with the investment policy, Adequate funds will be available to meet budgeted and actual expenditures of the City of Temecula for the nex~ six months. PadBook Balance 1,500 (1.047,476) (1) 1,686,719 238 (1) 65,252,785 (2) 128,179 5,459 52 500,000 368,996 1,531,489 64 743 608 916,716 22 2,949 2,686,163 6,429 1,322 4,960 16,290.000 25,838 88,363,736 ITEM 5 APPROVAL CITY ATTORNEY DIRECTOR OF FINANCE~ CITY MANAGER TO: FROM: DATE: SUBJECT: CITY OFTEMECULA AGENDA REPORT City Manager/City Council 5,u~Susan W. Jones (,, ~City Clerk/Director of Support Services V August 13, 2002 City Council Meeting Schedule - September 2002 RECOMMENDATION: Direct the City Clerk to re-schedule the September 10, 2002 City Council Meeting to September 17, 2002, and to perform the appropriate postings and noticing requirements of the Government Code. BACKGROUND: Based on September 11 th events involving our Sister City Visitors, it is suggested that the first meeting in September be changed from September 10, 2002 to September 17, 2002. The meeting of September 24, 2002, will be held as previously scheduled. FISCAL IMPACT: Changes of dates for City Council, TCSD and RDA meetings will result in no additional cost to the City. AgendaRpt/City Council Schedule ITEM 6 APPROVAIf~//,~ CITY ATTORNEY DIRECTOR OF FINAN~. CITY MANAGER TO: FROM: DATE: SUBJECT: CITY OF TEMECULA AGENDA REPORT City Manager/City Council Herman Parker, Director of Community Services August 13, 2002 Riverside County Library Contract Amendment No. 5 PREPARED BY: ~(~"/Phyllis L. Ruse, Deputy Director of Community Services RECOMMENDATION: That the City Council: 1. Approve Amendment No. 5 to the Agreement to Provide Library Services (Additional Staff). Authorize the expenditure of an amount not to exceed $150,000 to fund the Temecula Library Volunteer Coordinator half-time position and to subsidize funding to maintain the Senior Reference Librarian and Reference Librarian positions for fiscal year 2002-03. DISCUSSION: The Riverside County Library system (RCLS) has been operating under a contract with Library Systems and Services, Inc. (LSSI) since July 1,1997. This contract is administered by RCLS by breaking the County into three service areas. The Temecula Library is in the Mid-South Zone Service Area and receives funding from Temecula, Sun City, Lake Elsinore, Canyon Lake, San Jacinto, Valle Vista, Idyllwild, Calimesa, and Anza regions. For the past year, the Temecula Branch Library has been open to the general public br 52 hours per week. The library staffing for FY 2001-2002 was as follows: POSITION TITLE NUMBER OF FULL TIME EQUIVALENTS (FTE) Librarian (Branch Manager) Reference Librarian Librarian Associate Library Technician Library Assistant Volunteer Coordinator Library Page 1 2 1 2 4.5 .5 5 TOTAL 16.0 R:\RUSEP~AGENDAS\2002-03 library amendment.doc On July 1, 1998, the City of Murrieta withdrew from the RCLS and, therefore, the library property taxes generated within the Murrieta city limits have been redirected from RCLS to the City of Murrieta. This has resulted in a revenue shortfall to the Mid-South Zone for each fiscal year since 1998. The City of Temecula has subsidized 2.5 full time equivalent positions in FY 1998-99 through FY 2001-02 in an amount not to exceed $150,000. The positions provided for are two Reference Librarians and a half-time Volunteer Coordinator. Without the additional revenue from the City, the RCLS would not be able to provide these positions or the services that they offer to the community. FISCAL IhlPACT: Cost to provide funding for 2.5 full time equivalent positions at the library is not to exceed $150,000. Sufficient funding has been included in the Council discretionary line item in the approved FY 2002-03 Community Support budget in Account 001-101-999-5285. R:\RUSEP~AGENDAS~002-03 library amendment.doc FIFTH AMENDMENT TO AGREEMENT TO PROVIDE LIBRARY SERVICES (Additional Staff) COUNTY OF RIVERSIDE - RIVERSIDE COUNTY LIBRARY SYSTEM And the CITY OF TEMECULA (Fiscal Year 2002-2003) WHEREAS, the County of Riverside, Riverside County Library System ("County") and the City of Temecula ("City") have entered into an agreement to provide library services (additional staff) (the "Agreement"), as amended, and the parties wish to further amend the Agreement, to be effective on July 1,2002: NOW THEREFORE, the parties agree as follows: A. Section 1. RESPONSIBILITY OF THE PARTIES is amended to change the time period in sub-section 1.1, as amended, to "July 1, 2002 to June 30, 2003". All other provisions of the section, as amended, shall remain unchanged. B. Section 4.2 Term is amended to add the following paragraph to the end of the existing section, as amended: "The term of this Agreement is extended, and shall include the time period from July 1, 2002 through June 30, 2003. City or County may terminate this Agreement, as amended, for no cause, on the giving of thirty (30) days written notice to the other party." R:\RUSEP\CONTRACT~2002-2003 library amendment no 5.doc ] C. All other terms and conditions of the Agreement, as amended, shall remain unchanged and remain in full force and effect. IN WITNESS WHEREOF, County and City have caused this Fifth Amendment to be duly executed by the parties hereto: CITY OF TEMECULA COUNTY OF RIVERSIDE By: By: Mayor Chair, Board of Supervisors Attest: City Clerk Attest: Clerk to the Board of Supervisors APPROVED AS TO FORM: Peter M. Thorson City Attorney By: City Attorney By: Deputy APPROVED AS TO FORM: WILLIAM C. KATZENSTEIN County Counsel By:, Deputy County Counsel LIBRARY SYSTEMS AND SERVICES, LLC By: President, LSSl R:\RUSEP\CONTRACT~.002-2003 library amendment no 5.doc ITEM 7 APPROVAl, CITY ATTORNEY DIRECTOR OF FINA ,N~E~ CITY MANAGER TO: FROM: DATE: SUBJECT: CITY OF TEMECULA AGENDA REPORT City Manager/City Council Herman Parker, Director of Community Services August13,2002 Arts Council of Temecula Valley Special Events Community Grant Agreement PREPARED BY: c~'~'Phyllis L. Ruse, Deputy Director of Community Services RECOMMENDATION: That the City Council approve a Special Events Community Grant Agreement between the City of Temecula and the Arts Council of Temecula Valley in the amount of $34,OO0. DISCUSSION: The Arts Council of Temecula Valley (Arts Council) has been sponsoring a Fall Concert on the Green and an annual Arts in the Country Festival for several years. The Arts Council also began sponsoring a Spring Concert two years ago. The C!ty has participated with the Arts Council in partial funding of these events. Last year, the City Council provided $34,000 in funding in support of the Arts Council's community events. Funds provided by the City are used to pay for orchestras, advertising and promotion, printing, stage and lighting. The Arts Council would again like to offer all three events to the community and is requesting that the City participate in this effort by providing a community special events grant in an amount of $34,000. FISCAL IMPACT: The cost to co-sponsor the Spdng and Fall Concerts on the Green and Arts in the Country Festival is $34,000. These funds are available in the Community Support Budget of the General Fund in account 001-101-999-5286. R:\RUSEP~AGENDAS~2002-03 Arts Council Event G-ant Agreement-CC,doc SPECIAL EVENTS COMMUNITY GRANT AGREEMENT BETVVEEN THE CITY OF TEMECULA AND THE ARTS COUNCIL OF TEMECULA VALLEY THIS AGREEMENT is made by and between the City of Temecula ("City"), a municipal corporation, and the Arts Council of Temecula Valley, a non-profit corporation, and is dated as of August 13, 2002. In consideration of the mutual covenants and agreements contained herein, the parties agree as follows: 1. This Agreement is made with respect to the following facts and purposes, which each of the padies hereto acknowledge and agree to be true and correct: a. The Arts Council of Temecula Valley ("Arts Council") coordinates many programs for the cultural arts within the City of Temecula, which are not provided by the City's recreation and cultural arts program. b. The Arts Council warrants and represents to the City that it is a non-profit, tax exempt corporation under the tax laws of the United State and California, and agrees to continue in such status during the term of this Agreement. b. The City Council desires to award a special events community grant to the Arts Council in the amount of thirty-four thousand dollars ($34,000.00) for the purpose of continuing and enhancing its cultural arts programs within the City of Temecula. The City Council hereby allocates $12,000 to co-sponsor the costs of providing the Spring Concert on the Green, $12,000 for the Fall Concert on the Green, and $10,000 for the Arts in the Country Festival special events ("Events") to be presented by the Arts Council during fiscal year 2002-2003. c. This Agreement provides for the manner in which the grant will be paid to the Arts Council. 2. The City shall pay $34,000 to the Arts Council to promote and present the Events for the fiscal year ending June 30, 2003. Arts Council shall submit an invoice to the City prior to each event, which shall represent the City's sponsorship of each event as outlined in Section 1 .b. City shalt pay the invoice or provide its written objections to it within thirty (30) working days following receipt by the City. 3. The term of this agreement shall be July 1, 2002 to June 30, 2003. 4. The City may at any time, for any breach of this Agreement, suspend or terminate this Agreement, or any portion hereof, by serving upon the Arts Council at least ten (10) days prior written notice. If the breach is corrected during this ten-day period, City may, in its sole and exclusive discretion, rescind the termination. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. Arts Council shall make available to the City its books, records and financial documents in such form as to allow City to verify Arts Council's compliance with the terms of this Agreement. R:\RUSEP\CONTRACT~2.002-03 Arts Council Community Special Events Grant Agreement.doc 5. The Arts Council agrees to defend, indemnify, protect and hold harmless the City, its officers, officials, and employees from and against any and all claims, demands, losses, defense costs or expenses, including attorney fees and expert witness fees, or liability of any kind or nature which the City, its officers, agents and employees may sustain or incur or which may be imposed upon them for injury to or death of persons, or damage to property arising out of Arts Council's negligent or wrongful acts or omissions arising out of or in any way related to the performance or non-performance of this Agreement, excepting only liability attributable to the active negligence of the City. 6. Arts Council shall procure and maintain, or shall have provided on its behalf, for the duration of fiscal year 2002-2003 insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the activities of the Arts Council, its agents, representatives, or employees. a. Minimum Scope of Insurance. Coverage shall be at least as broad as: (1) Insurance Services Office Commercial General Liability form No. CG 00 01 11 85 or 88, including a non-owned auto endorsement. (2) Worker's Compensation insurance as required by the State of California and Employer's Liability Insurance. Workers Compensation Insurance shall not be required if the Arts Council has no employees. b. Minimum Limits of Insurance. Arts Council shall maintain limits on the policies described in Subsection a. of no less than the following amounts unless otherwise approved by the City Manager: (1) General Liability: One million dollars ($1,000,000) per occurrence for bodily injury, personal injury and property damage. (2) Workers' Compensation as required by the State; Employer's Liability: One million dollars ($1,000,000) per accident for bodily injury or disease. c. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City Manager. d. Other Insurance Provisions. The general liability policies shall contain, or be endorsed to contain, the following provisions: (1) The City, its officers, officials, employees and volunteers are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the Arts Council; premises owned, occupied or used by the Arts Council; or automobiles owned, leased, hired or borrowed by the Arts Council. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers. (2) For any claims related to this Agreement, the Arts Council's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees and volunteers. Any insurance or self-insured maintained by R:\RUSEP\CONTRACT~2002-03 Arts Council Community Special Events Grant Agreement.doc the City, its officers, officials, employees or volunteers shall be excess of the Ads Council's insurance and shall not contribute with it. (3) Any failure to comply with repoding or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers. (4) The Arts Council's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (5) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, cancelled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice to the City by certified mail, return receipt requested, has been given to the City. e. " . Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII, unless otherwise acceptable to the City. Self insurance shall not be considered to comply with these insurance requirements. f. _ . . Arts Council shall furnish the City with original endorsements effecting coverage required by this clause. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. The endorsements are to be on forms provided by the City. All endorsements are to be received and approved by the City before work commences. As an alternative to the City's forms, the Arts Council's insurer may provide complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. 7. Arts Council is and shall at all times remain as to the City a wholly independent contractor. The personnel performing the services under this Agreement on behalf of Arts Council shall at all times be under Arts Council's exclusive direction and control. Neither City nor any of its officers, employees or agents shall have control over the conduct of Arts Council or any of Arts Council's officers, employees or agents, except as set forth in this Agreement. Arts Council shall not at any time or in any manner represent that it or any of its officers, employees or agents are in any manner officers, employees or agents of the City. Arts Council shall not incur or have the power to incur any debt, obligation or liability whatever against City, or bind City in any manner. 8. Any notices which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, that provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by Notice. Notice shall be effective upon delivery to the addresses specified below or on the third business day following deposit with the document delivery service or United States Mail as provided above. R:\RUSEP\CONTRACT~2002-03 Arts Council Community Special Events Grant Agreement,doc To City: City of Temecula 43200 Business Park Drive P.O. Box 9033 Temecula, California 92589-9033 Attention: City Manager To Arts Council: Ads Council of Temecula Valley P.O. Box 2337 Temecula, California 92593 Attention: Martha Minkler, Executive Director 9. The Arts Council shall not assign the performance of this Agreement, nor any part thereof, nor any monies due hereunder, without prior written consent of the City. 10. This Agreement contains the entire understanding between the parties relating to the obligations of the parties described in this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement and shall be of no further force or effect. R:\RUSEP\CONTRACT~2002-03 Arts Council Community Special Events Grant Agreement.doc IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF TEMECULA Ron Roberts Mayor Attest: Susan Jones, CMC City Clerk Approved As to Form: Peter M. Thorson City Attorney ARTS COUNCIL OF TEMECULA VALLEY, a California non-profit corporation By: Name: Title: By: Name: Title: R:\RUSEP\CONTRACT~2002-03 Arts Council Community Special Events Grant Agreement.doc ITEM 8 TO: FROM: DATE: APPROVAL CITY ATTORNEY DIRECTOR OF FINANC~)~;:~_ CITY MANAGER CITY OF TEMECULA AGENDA REPORT City Manager/City Council Susan W. Jones, City Clerk/Director of Support Services August 13, 2002 SUBJECT: Review of City Conflict of Interest Code RECOMMENDATION: That the City Council adopt a resolution entitled: RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING THE CITY'S CONFLICT OF INTEREST CODE BACKGROUND: Government Code Section 87306.5 requires that the Fair Political Practices Commission (FPPC - Code reviewing body)direct each local agency to review its Conflict of Interest Code each even numbered year. Ifa change were necessitated, an amended Conflict of Interest Code must be submitted to the FPPC. The City Attorney has reviewed the City's Code and has indicated the necessity to amend Exhibit A (Designated City of Temecula Employees and Disclosure Categories) by deleting and adding the following positions: Delete Building Official Planning Manager Housing and Redevelopment Manager Assistant to the City Manager Museum Manager Add Assistant to City Manager/Human Resources Director Director of Housing and Redevelopment Director of Building and Safety Director of Planning Development Services Administrator Fiscal Service Manager Information Systems Manager Principal Planner Principal Engineer Property Agent Revenue Manager Grant Yates John Meyer Anthony Elmo Debbie Ubnoske Cathy McCar[hy Gus Papagolos Open Don Hazen, David Hogan, Steve Brown Greg Butler, Amer Attar, {)pen Open Open R:~GENDA REPORTSICONFLICT OF INTEREST CODE 2002, DOC 817/02 ATTACHMENTS: Resolution No. 02- Sect[on 7 - Exhibit A R:~GENDA REPORTSICONFLICT OF INTEREST CODE 2002. DOC 817/02 RESOLUTION NO. 2002- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING THE CITY'S CONFLICT OF INTEREST CODE THE CITY COUNCIL OF THE CITY OF TEMECULA DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS: WHEREAS, the City Council of the City of Temecula has previously adopted a Conflict of Interest Code to apply to certain officers and employees of the City; and WHEREAS, the City Council of the City of Temecula desires to amend the Conflict of Interest Code to update its provisions; and Section 1. The Conflict of Interest Code for the City of Temecula is hereby amended in full to read as set forth in Exhibit A, attached hereto and incorporated herein by this reference. Section 2. The City Clerk shall certify the adoption of this resolution. PASSED, APPROVED, AND ADOPTED, by the City Council of the City of Temecula at a regular meeting held on the 13t~ day of August, 2002. ATTEST: Ron Roberts, Mayor Susan W. Jones, CMC City Clerk [SEAL] R:Resos 2002-FPPC Reso 1 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, CMC, City Clerk of the City of Temecula, California, do hereby certify that Resolution No. 2002- was duly and regularly adopted by the City Council of the City of Temecula at a regular meeting thereof held on the 13th day of August, 2002, by the following vote: AYES: NOES: ABSENT: COUNCILMEMBERS: COUNCILMEMBERS: COUNCILMEMBERS: Susan W. Jones, CMC City Clerk R:Resos 2002-FPPC Reso 2 SECTION 7. EXHIBIT A DESIGNATED CiTY OF TEMECULA EMPLOYEES AND DISCLOSURE CATEGORIES The following positions entail the making or participation in the making of decisions which may foreseeably have a material effect on financial interests: Desi,qnated Position Assistant City Manager Assistant to the City ManagedHR Director Assistant Finance Director Chief of Police City Clerk/Director of Support Services City EngineedDirector of Public Works Consultant1' Deputy Building Official Deputy City Manager Director of Buildinq and Safety Director of Community Services Deputy Director of Community Services Deputy Director of Public Works Exempt Officials~ Fire Chief Fiscal Service Manaqer Information Systems Administrator Information Systems Manaqer Maintenance Superintendent Principal En9ineer Principal Planner Property Aqent Recreation Superintendent Revenue Manaqer R.'tAGENDA REPORTSICONFLICT OF INTEREST CODE 2002. DOC Disclosure Cateqories 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 8/7/02 Senior Accountant Senior Building Inspector Senior Management Analyst Traffic Engineer Senior Planner Members of all City Commissions, Boards, and Committees not otherwise required to file Conflict of Interest Statements 1' Consultants shall be included in the list of designated employees and shall disclose all of the information required to be disclosed by designated employees subject to the following limitations: The City Manager or his or her designee may determine in writing that a particular consultant, although a designated position, is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirement described in this Section. Such written disclosure shall include a description and based upon that description, a statement of the extent of disclosure requirements. The City Manager's determination is a public record and shall be retained for public inspection in the same manner and location as this Conflict of Interest Code. The Mayor, City Council, Members of the Planning Commission, City Manager, City Attorney, City Treasurer, and Director of Finance are all required to file disclosure statements pursuant to State law and thus are not included herein. R:~GENDA REPORTS~CONFLICT OF INTEREST CODE 2002. DOC 8/7/02 ITEM 9 APPROVAL *¢~'f.,, CITY A'I-I'ORN EY ~ DIRECTOR OF FINANCE C TY MANAGER ~ ClTY OFTEMECULA AGENDA REPORT TO: FROM: City Manager/City Council ,'~William G. Hughes, Director of Public Works/City Engineer DATE: August 13, 2002 SUBJECT: Subdivision Improvement Agreement and Bonds for TM 29639 Harveston Offsite Improvements - Winchester Road Widening at Margarita Road PREPARED BY: P?Ronald J. Parks, Deputy Director of Public Works (~Clement M. Jimenez, Associate Engineer RECOMMENDATION: That the City Council: 1. ACCEPT the Subdivision Improvement Agreement for the offsite improvements required of the Harveston Project developer, Lennar Communities. 2. ACCEPT the Subdivision Faithful Performance and Labor & Materials Bond as security for the improvements and as a source for claims against labor and materials, respectively. 3. DIRECT the City Clerk to so advise the developer and surety. BACKGROUND: The Harveston Project required certain improvements to be made on Winchester Road and Margarita Road to mitigate traffic impact from the project (Condition of Approval No. 59.c.ii). The developer, Lennar Communities, is currently processing improvement plans through Caltrans and the City to get encroachment permits to do this work. These improvements require additional right-of-way along Winchester Road west of Margarita Road to allow for dual left turn lanes from eastbound Winchester Road to north bound Margarita Road, which has already been acquired as approved by City Council on May 14, 2002. The developer submitted a Subdivision Improvement Agreement and bonds as follows: Faithful Performance Bond No. ST2248 in the amount of $61,500 to secure improvements. Labor and Materials Bond No. ST2248 in the amount of $30,750 for labor and materials. FISCALIMPACT: ATTACHMENTS: None Location Map 1 R:~agenda reports~002\0813\Winchester Rd Widening at Margarita Bonds & Agmts ITEM 10 APPROVAL j--~.~... ClTYATTORNEY ~ DIRECTOR OFFINANCE.~ ClTY MANAGER ~ TO: FROM: DATE: SUBJECT: CITY OFTEMECULA AGENDA REPORT City ManagedCity Council ~J/~William G. Hughes, Director of Public Works/City Engineer August 13, 2002 Authorize Temporary Street Closure of Main Street between Old Town Front Street and the Murrieta Creek Bridge for the inaugural event Temecula Onstage scheduled for August 31, 2002 and Delegate Authority to Issue Special Events/Street Closures Permit to Director of Public Works/City Engineer. PREPARED BY: I~/rRonald J. Parks, Deputy Director of Public Works Clement M. Jimenez, Associate Engineer RECOMMENDATION: That the City Council adopt a resolution entitled: RESOLUTION NO. 2002- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA, AUTHORIZING TEMPORARY STREET CLOSURE OF MAIN STREET BETWEEN OLD TOWN FRONT STREET AND MURRIETA CREEK BRIDGE FOR THE INAUGURAL EVENT TEMECULA ONSTAGE SCHEDULED FOR AUGUST 31, 2002 AND AUTHORIZING THE DIRECTOR OF PUBLIC WORKS/CITY ENGINEER TO ISSUE SPECIAL EVENTS PERMIT INCLUDING STREET CLOSURES BACKGROUND: The inaugural event "Temecula Onstage" is scheduled for August 31, 2002 from 6:00 PM to 11:00 PM. This first-class event will showcase the areas top chefs and wineries along with a variety of performance arts including local musicians, vocalists, actors and dancers. The event will be the focal point of an entire weekend. Visitors to Temecula witl be invited to spend the Labor Day weekend enjoying all that the Temecula Valley offers, at a discount by purchasing a special passport provided by local businesses who partner with the event. Through this event, the organizers of Temecula Onstage will participate in the funding process of the economic development sub-committee and will benefit the Theatre Foundation in its efforts to bdng a Community Theatre to Old Town Temecula. The event will require assistance from the Public Works Department by providing support services for the street closure, public safety monitoring, power washing of streets, and the permit process. Under Vehicular Code Section 21101, "Regulation of Highways", local authorities, for those highways under their jurisdiction, may adopt rules and regulations by ordinance or resolution for, I r:~agdrpt~002\0813\temecula on stage.street closure among other instances, "temporary closing a portion of any street for celebrations, parades, local special events, and other purposes, when, in the opinion of local authorities having jurisdiction, the closing is necessary for the safety and protection of persons who are to use that portion of the street during the temporary closing". The City Council adopted Resolution No. 91-96 on September 10, 1991, which provided standards and procedures for special events on public streets, highways, sidewalks, or public rights-of-way. This resolution set forth processes for staff reviewing applications, denying approval or approving subject to conditions including events requiring changes in normal traffic patterns, and an appeal process to the City Manager. However the resolution did not delegate authority to temporarily close streets for these special events. The subject resolution delegates the authority to approve temporary street closures for the specific event, the inaugural "Temecula Onstage", to the Director of Public Works/City Engineer. All other special events requiring temporary street closures, construction-related closures, etc, shall remain subject to the approval of the City Council subject to rules and regulations established by the City Council. These rules and regulations shall also be adopted by resolution in accordance with California Vehicular Code Section 21101. Some partial closures, such as limiting lane widths for construction purposes or partial closures for block parties on cul-de-sac streets only do not require full street closures. These and similar partial street closures or restrictions are not submitted for similar resolutions in order to reduce or eliminate the administrative impact on City Council and staff time. FISCAL IMPACT: The costs of police services, and for provision, placement, and retrieval of necessary warning and advisory devices by the Public Works Department are included in budgetary items. ATTACHMENTS: 1. Resolution No. 2002- 2. Location Map 2 r:~agdrpt~2002\0813\temecula on stage,street closure RESOLUTION NO. 2002- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA, AUTHORIZING TEMPORARY STREET CLOSURE OF MAIN STREET BETWEEN OLD TOWN FRONT STREET AND MURRIETA CREEK BRIDGE FOR THE INAUGURAL EVENT TEMECULA ONSTAGE SCHEDULED FOR AUGUST 31, 2002 AND AUTHORIZING THE DIRECTOR OF PUBLIC WORKS/CITY ENGINEER TO ISSUE SPECIAL EVENTS PERMIT INCLUDING STREET CLOSURES THE CITY COUNCIL OF THE CITY OF TEMECULA DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS: WHEREAS, the California State Vehicular Code provides for the promulgation of rules and regulations for the temporary closure of public streets by local authorities by Resolution; and WHEREAS, the City Council desires to establish rules and regulations for the temporary closure of public streets in the interest of promoting safety and protection; and WHEREAS, the City of Temecula sponsors the inaugural event "Temecula Onstage", for which such temporary street closure on Main Street between Old Town Front Street and Murrieta Creek Bridge promote the safety and protection of persons using or proposing to use that street for the special event; and WHEREAS, the City Council desires to facilitate the issuance of permission to temporarily close Main Street for the inaugural event "Temecula Onstage" scheduled for August 31,2002; and, NOW, WHEREAS, the City Council desires to authorize the Director of Public Works/City Engineer to approve the temporary street closure of Main Street for the inaugural event "Temecula Onstage", and to establish the general rule that all other proposed temporary street closures shall be reviewed and approved subject to conditions, or disapproved, by the City Council; and THEREFORE, BE IT RESOLVED, that the City Council of the City of Temecula, hereby authorizes the Director of Public Works/City Engineer to permit the temporary street closure of Main Street for the inaugural event "Temecula Onstage" scheduled for August 31,2002, and affirms the general rule that all other temporary public street closures shall be approved or denied approval by the City Council. PASSED, APPROVED, AND ADOPTED, by the City Council of the City of Temecula at a regular meeting held on the 13~h day of August, 2002. ATTEST: Ron Roberts, Mayor Susan W. Jones, CMC City Clerk 3 r:~agdrpt~_002\0813\temecula on stage.street closure [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE )ss CITY OF TEMECULA ) I, Susan W. Jones, CMC, City Clerk of the City of Temecula, California, do hereby certify that Resolution No. 2002- was duly and regularly adopted by the City Council of the City of Temecula at a regular meeting ihereof held on the 13~ day of August, 2002, by the following vote: AYES: 0 NOES: 0 ABSENT: 0 COUNCILMEMBERS: COUNCILMEMBERS: COUNCILMEMBERS: Susan W. Jones, CMC, City Clerk 4 r:~agdrp~2.002\0813\temecula on stage.street closure ITEM 11 TO: FROM: DATE: SUBJECT: APPROVAL ~x/,, z~] ClTYATTORNEY ~ II DIRECTOR Of FINANCE~/_~.~I CITY MANAGER ~ II CITY OF TEMECULA AGENDA REPORT City Manager/City Council ~William G. Hughes, Director of Public Works/City Engineer August 13, 2002 First Street Extension Environmental Mitigation - Project No. PW01-08 PREPARED BY: Ward Maxwell, Associate Engineer RECOMMENDATION: That the City Council Reject all bids received on June 6, 2002 for the First Street Extension Environmental Mitigation, Project No. PW01-08. BACKGROUND: On June 6, 2002 three (3) bids for the project plans and specifications were publicly opened with bid results ranging from $85,700 to $149,000. On Wednesday, July 10, 2002, staff met with Army Corp of Engineers (ACOE) and Riverside County Flood Control (RCFC) concerning the location of the mitigation site. Both ACOE and RCFC requested that the City not construct the mitigation site as specified on the project plans, since it would cause a conflict with the Murrieta Creek Improvement Project scheduled for construction in 2004. ACOE and RCFC are currently working on an alternative site to satisfy the city's environmental obligation to the regulatory agencies. FISCAL IMPACT: None ATTACHMENT: 1. Project Location 2. Project Description 1 R:'~AGENDA REPORTS~OO2~081302\PW01-08 REJ DOC J.$~ ITEM 12 TO: FROM: DATE: SUBJECT: APPROVAL CITY ATTORNEY ~11 DIRECTOR O F FINAN~C~.E~ II ClTYMANAGER ~ CITY OFTEMECULA AGENDA REPORT City ManagedCity Council "~ -AWilliam G. Hughes, Director of Public Works/City Engineer August 13, 2002 Award of Construction Contract for the Mercantile Building Seismic Retrofit Project, Project No. PW01-20 PREPARED BY: Ward Maxwell, Associate Engineer RECOMMENDATION: That the City Council: Award a construction contract for the Mercantile Building Seismic Retrofit Project, Project No. PW01-20 to 2H Construction, Inc. in amount of $332,467.00 and authorize the Mayor to execute the contract. Authorize the City Manager to approve change orders not to exceed the contingency amount of $49,870.05 which is equal to 15% of the contract amount. Approve an appropriation in the amount of $155,000.00 from the Redevelopment Agency (RDA) bond proceeds. BACKGROUND: On March 26, 2001 City Council approved the list of Pro-Qualified Contractors and the Plans and Specifications for the Mercantile Building Seismic Retrofit Project, Project No. PW01-20. This project will provide a seismic upgrade to the existing Memantile Building in Old Town Temecula. The work shall include demolishing an existing two (2) story wood framed addition on the north side of the building, construction of a new cast-in-place concrete grade beams beneath existing masonry walls, furnish and install a braced framed structural steel support system, furnish and install a new roof system and repoint the exterior wythe of the un-reinforced masonry walls. Due to the complex nature of seismic retrofit work and the uncertainty associated with constructing with existing materials that are over 100 years in age, staff recommends a 15% contingency for this project. The Engineer's estimate for this project is $ 275,000. I r:\agdrpt~OO2\032602~PW01-20Bid Two (2) bids were received and publicly opened on July 30, 2002 and results are as follows: 2H Construction, Inc .................................................................................... $332,467.00 M.R. Bracey Construction Co., Inc ................................................................ $364,447.00 Staff has reviewed the bid proposals and found 2H Construction, Inc. of Long Beach, California to be the lowest responsible bidder for this project. 2H Construction, Inc. was a pre-qualified contractor able to submit a bid proposal for the said project. The specifications allow Seventy-five (75) working days for completion of this project. Work is expected to begin in mid October 2002 and be completed by the end of February 2003. A copy of the bid summary is available for review in the City Engineer's office. FISCAL IMPACT: The Mercantile Building Seismic Retrofit Project is a Capital Improvement Project funded through the Redevelopment Agency with a budgeted amount of $287,500.00. The appropriation of $155,000 to the project budget from RDA bond proceeds is necessary to ensure adequate funds are available to cover the construction contract and the contingency ($332,467 + $49,870.05 = $382,337.05), as well as the necessary administrative costs including soil testing, special inspections, structural oversight, and in-house construction management. The requested appropriation will be distributed as follows: Original RequeSted AdjUSted AcC0unt N0: I AccOunt Name APPrOpria[i0n APpt°Pii~ti0n I ApPropriation 210-190-183-5804 Construction $ 250,000 $135,000 $ 385,000 210-190-183-5801 Administration $ 37,500 $ 20,000 $ 57,500 Total $ 287,500 $155,000 $ 442,500 ATTACHMENT: 1. Project Location 2. Project Description 3. Contract 2 r:~agdrpt~002\O32602\PW01-20Bid CITY OF TEMECULA, PUBLIC WORKS DEPARTMENT CONTRACT FOR PROJECT NO. PW01-20 OLD TOWN TEMECULA MERCANTILE BUILDING SEISMIC RETROFIT (COMMUNITY THEATER) THIS CONTRACT, made and entered into the 13th day of August, 2002, by and between the City of Temecula, a municipal corporation, hereinafter referred to as "CITY", and 2H Construction, Inc., hereinafter referred to as "CONTRACTOR." WITNESSETH: That CITY and CONTRACTOR, for the consideration hereinafter named, mutually agree as follows: .8, CONTRACT DOCUMENTS. The complete Contract includes all of the Contract Documents, to wit: Notice Inviting Bids, Instructions to Bidders, Proposal, Performance Bond, Labor and Materials Bond, Plans and Specifications entitled PROJECT NO. PW01-20, OLD TOWN TEMECULA MERCANTILE BUILDING - SEISMIC RETROFIT (COMMUNITY THEATER), Insurance Forms, this Contract, and all modifications and amendments thereto, the latest version of the State of California Department of Transportation Standard Specifications where specifically referenced in the Plans and Technical Specifications, and the latest version of the Standard Specifications for Public Works Construction, including all supplements as written and promulgated by the Joint Cooperative Committee of the Southern California Chapter of the American Associated General Contractors of California (hereinafter, "Standard Specifications") as amended by the General Specifications, Special Provisions, and Technical Specifications for PROJECT NO. PW01-20, OLD TOWN TEMECULA MERCANTILE BUILDING - SEISMIC RETROFIT (COMMUNITY THEATER). Copies of these Standard Specifications are available from the publisher: Building New, Incorporated 3055 Overland Avenue Los Angeles, California 90034 (213) 202-7775 The Standard Specifications will control the general provisions, construction materials, and construction methods for this Contract except as amended by the General Specifications, Special Provision, and Technical Specifications for PROJECT NO. PW01-20, OLD TOWN TEMECULA MERCANTILE BUILDING - SEISMIC RETROFIT (COMMUNITY THEATER). In case of conflict between the Standard Specifications and the other Contract Documents, the other Contract Documents shall take precedence over, and be used in lieu of, such conflicting portions. Where the Contract Documents describe portions of the work in general terms, but not in complete detail, it is understood that the item is to be furnished and installed completed and in place and that only the best general practice is to be used. Unless otherwise CONTRACT CA-1 R:\CIP\PROJECTS~PW01\PW01-20CSD Theater~Contract.dot specified, the CONTRACTOR shall furnish all labor, materials, tools, equipment, and incidentals, and do all the work involved in executing the Contract. The Contract Documents are complementary, and what is called for by anyone shall be as binding as if called for by all. Any conflict between this Contract and any other Contract Document shall be resolved in favor of this Contract. SCOPE OF WORK. CONTRACTOR shall perform everything required to be performed, shall provide and furnish all the labor, materials, necessary tools, expendable equipment, and all utility and transportation services required for the following: PROJECT NO. PW01-20, OLD TOWN TEMECULA MERCANTILE BUILDING SEISMIC RETROFIT (COMMUNITY THEATER) All of said work to be performed and materials to be furnished shall be in strict accordance with the Drawings and Specifications and the provisions of the Contract Documents hereinabove enumerated and adopted by CITY. CITY APPROVAL. All labor, materials, tools, equipment, and services shall be furnished and work performed and completed under the direction and supervision, and subject to the approval of CITY or its authorized representatives. CONTRACT AMOUNT AND SCHEDULE. The CITY agrees to pay, and CONTRACTOR agrees to accept, in full payment for, the work agreed to be done, the sum of: THREE HUNDRED THIRTY TWO THOUSAND FOUR HUNDRED SIXTY SEVEN DOLLARS and NO CENTS ($332,467.00), the total amount of the base bid. CONTRACTOR agrees to complete the work in a period not to exceed seventy five (75) working days, commencing with delivery of a Notice to Proceed by CITY. Construction shall not commence until bonds and insurance are approved by CITY. CHANGE ORDERS. All change orders shall be approved by the City Council, except that the City Manager is hereby authorized by the City Council to make, by written order, changes or additions to the work in an amount not to exceed the contingency as established by the City Council. PAYMENTS LUMP SUM BID SCHEDULE: Before submittal of the first payment request, the CONTRACTOR shall submit to the City Engineer a schedule of values allocated to the various portions of the work, prepared in such form and supported by such data to substantiate its accuracy as the City Engineer may require. This schedule, as approved by the City Engineer, shall be used as the basis for reviewing the CONTRACTOR's payment requests. UNIT PRICE BID SCHEDULE: Pursuant to Section 20104.50 of the Public Contract Code, within thirty (30) days after submission of a payment request to the CITY, the CONTRACTOR shall be CONTRACT CA-2 R:\CIP~PROJECTS~PW0 I~PW01-20CSD TheateAContract.dot paid a sum equal to ninety percent (90%) of the value of the work completed according to the bid schedule. Payment request forms shall be submitted on or about the thirtieth (30th) day of each successive month as the work progresses. The final payment, if unencumbered, or any part thereof unencumbered, shall be made sixty (60) days after acceptance of final payment and the CONTRACTOR filing a one-year Warranty and an Affidavit of Final Release with the CITY on forms provided by the CITY. Payments shall be made on demands drawn in the manner required by law, accompanied by a certificate signed by the City Manager, stating that the work for which payment is demanded has been performed in accordance with the terms of the Contract, and that the amount stated in the certificate is due under the terms of the Contract. Partial payments on the Contract price shall not be considered as an acceptance of any part of the work. Interest shall be paid on all undisputed payment requests not paid within thidy (30) days pursuant to Public Contracts Code Section 20104.50. Public Contract Code Section 7107 is hereby incorporated by reference. In accordance with Section 9-3.2 of the Standard Specifications for Public Works Construction and Section 9203 of the Public Contract Code, a reduction in the retention may be requested by the Contractor for review and approval by the Engineer if the progress of the construction has been satisfactory, and the project is more than 50% complete. The Council hereby delegates its authority to reduce the retention to the Engineer. WARRANTY RETENTION. Commencing with the date the Notice of Completion is recorded, the CITY shall retain a portion of the Contract award price, to assure warranty performance and correction of construction deficiencies according to the following schedule: CONTRACT AMOUNT $25,000- $75,000 RETENTION PERIOD RETENTION PERCENTAGE 180 days 3% $75,000- $500,000 180 days $2,250 + 2%ofamountin excess of $75,000 Over $500,000 One Year $10,750 + 1% of amount in excess of $500,000 LIQUIDATED DAMAGES - EXTENSION OF TIME. In accordance with Government Code Section 53069.85, CONTRACTOR agrees to forfeit and pay to CITY the sum of one thousand dollars ($1,000.00) per day for each calendar day completion is delayed beyond the time allowed pursuant to Paragraph 4 of this Contract. Such sum shall be deducted from any payments due to or to become due to CONTRACTOR. Such sum shall be deducted from any payments due to or to become due to CONTRACTOR. CONTRACTOR will be granted an extension of time and will not be assessed liquidated damages for unforeseeable delays beyond the control of, and without the fault or negligence of, the CONTRACTOR including delays caused by CITY. CONTRACTOR is required to promptly notify CITY of any such delay. CONTRACT CA-3 R:\CIP\PROJECTS~PW01 \PW0'i-20CSD Theater~Conkact.dot 10. 11. 12. 13. 14. 15. WAIVER OF CLAIMS. On or before making each request for payment under Paragraph 6 above, CONTRACTOR shall submit to CITY, in writing, all claims for compensation as to work related to the payment. Unless the CONTRACTOR has disputed the amount of the payment, the acceptance by CONTRACTOR of each payment shall constitute a release of all claims against the CITY related to the payment. CONTRACTOR shall be required to execute an affidavit, release, and indemnity agreement with each claim for payment. PREVAILING WAGES. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of workman needed to execute this Contract, from the Director of the Department of Industrial Relations. These rates are available from the California Department of Industrial Relations' Internet Web Site at http://www.dir.ca.gov. CONTRACTOR shall post a copy of such wage rates at the job site and shall pay the adopted prevailing wage rates as a minimum. CONTRACTOR shall comply with the provisions of Section 1773.8, 1775, 1776, 1777.5, 1777.6, and 1813 of the Labor Code. Pursuant to the provisions of 1775 of the Labor Code, CONTRACTOR shall forfeit to the CITY, as a penalty, the sum of $25.00 for each calendar day, or portion thereof, for each laborer, worker, or mechanic employed, paid less than the stipulated prevailing rates for any work done under this Contract, by him or by any subcontractor under him, in violation of the provisions of the Contract. TIME OF THE ESSENCE. Time is of the essence in this contract. INDEMNIFICATION. All work covered by this Contract done at the site of construction or in preparing or delivering materials to the site shall be at the risk of CONTRACTOR atone. CONTRACTOR agrees to save, indemnify, hold harmless and defend CITY, its officers, employees, and agents, against any and all liability, injuries, or death of persons (CONTRACTOR's employees included) and damage to property, arising directly or indirectly out of the obligations herein undertaken or out of the operations conducted by CONTRACTOR, save and except claims or litigations arising through the sole active negligence or sole willful misconduct of the CITY. The CONTRACTOR shall indemnify and be responsible for reimbursing the CITY for any and all costs incurred by the CITY as a result of Stop Notices filed against the project. The CITY shall deduct such costs from Progress Payments or final payments due to the CITY. GRATUITIES. CONTRACTOR warrants that neither it nor any of its employees, agents, or representatives has offered or given any gratuities or promises to CITY's employees, agents, or representatives with a view toward securing this Contract or securing favorable treatment with respect thereto. CONFLICT OF INTEREST. CONTRACTOR warrants that he has no blood or marriage relationship, and that he is not in any way associated with any City officer or employee, or any architect, engineer, or other preparers of the Drawings and Specifications for this project. CONTRACTOR further warrants that no person in its employ has been employed by the CITY within one year of the date of the Notice Inviting Bids. CONTRACTOR'S AFFIDAVIT. After the completion of the work contemplated by this Contract, CONTRACTOR shall file with the City Manager, its affidavit stating that all CONTRACT CA-4 R:~CIP\PROJECTS~PW0 I\PW01-20CSD Theater~Contract.dot 16. 17. 18. 19. 20. 21. workmen and persons employed, all firms supplying materials, and all subcontractors upon the Project have been paid in full, and that there are no claims outstanding against the Project for either labor or materials, except certain items, if any, to be set forth in an affidavit covering disputed claims or items in connection with a Stop Notice which has been filed under the provisions of the laws of the State of California. NOTICE TO CITY OF LABOR DISPUTES. Whenever CONTRACTOR has knowledge that any actual or potential labor dispute is delaying or threatens to delay the timely performance of the Contract, CONTRACTOR shall immediately give notice thereof, including all relevant information with respect thereto, to CITY. BOOKS AND RECORDS. CONTRACTOR's books, records, and plans or such part thereof as may be engaged in the performance of this Contract, shall at all reasonable times be subject to inspection and audit by any authorized representative of the CITY. INSPECTION. The work shall be subject to inspection and testing by CITY and its authorized representatives during manufacture and construction and all other times and places, including without limitation, the plans of CONTRACTOR and any of its suppliers. CONTRACTOR shall provide all reasonable facilities and assistance for the safety and convenience of inspectors. All inspections and tests shall be performed in such manner as to not unduly delay the work. The work shall be subject to final inspection and acceptance notwithstanding any payments or other prior inspections. Such final inspection shall be made within a reasonable time after completion of the work. DISCRIMINATION. CONTRACTOR represents that it has not, and agrees that it will not, discriminate in its employment practices on the basis of race, creed, religion, national origin, color, sex age, or handicap. GOVERNING LAW. The City and Contractor understand and agree that the laws of the State of California shall govern the rights, obligations, duties and liabilities of the parties to this Contract and also govern the interpretation of this Contract. Any litigation concerning this Contract shall take place in the municipal, superior, or federal district court with geographic jurisdiction over the City of Temecula. In the event of litigation between the parties concerning this Contract, the prevailing party as determined by the Court, shall be entitled to actual and reasonable attorney fees and litigation costs incurred in the litigation. PROHIBITED INTEREST. No member, officer, or employee of the City of Temecula or of a local public body shall have any interest, direct or indirect, in the contract of the proceeds thereof during his/her tenure or for one year thereafter. Furthermore, the contractor/consultant covenants and agrees to their knowledge that no board member, officer or employee of the City of Temecula has any interest, whether contractual, non-contractual, financial or otherwise, in this transaction, or in the business of the contracting party other than the City of Temecula, and that if any such interest comes to the knowledge of either party at any time, a full and complete disclosure of all such information will be made, in writing, to the other party or parties, even if such interest would not be considered a conflict of interest under Article 4 (commencing with Section 1090) or Article 4.6 (commencing with Section 1220) of Division 4 of Title I of the Government Code of the State of California. CONTRACT CA-5 R:\CIP\PROJECTS~PW01\PW01*20CSD Theater~Contract.dot 22. 23. ADA REQUIREMENTS. By signing this contract, Contractor certifies that the Contractor is in total compliance with the Americans with Disabilities Act of 1990, Public Law 101- 336, as amended. WRITTEN NOTICE. Any written notice required to be given in any part of the Contract Documents shall be performed by depositing the same in the U.S. Mail, postage prepaid, directed to the address of the CONTRACTOR as set forth in the Contract Documents, and to the CITY addressed as follows: Mailing Address: William G. Hughes Director of Public Works/City Engineer City of Temecula P.O. Box 9033 Temecula, CA 92589-9033 Street Address: William G. Hughes Director of Public Works/City Engineer City of Temecula 43200 Business Park Drive Temecula, CA 92590-3606 CONTRACT CA~ R:\CIP\PROJECTS~PW0 I\PW01-20CSD Theate~Contract.dot IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed on the date first above written. DATED: CONTRACTOR 2H Construction, Inc. 4101 Long Beach Blvd. Long Beach, CA 90807 (562) 424-5567 Sean R. Hitchcock, President DATED: CITY OFTEMECULA APPROVED AS TO FORM: Ron Roberts, Mayor Peter M. Thorson, City Attorney ATDEST: Susan W. Jones, CMC, City Clerk CONTRACT CA-7 R:~CIP~PROJECTS~PW0 I~PW01-20CSD Theate~Contract,dot ITEM 13 TO: FROM: DATE: SUBJECT: APPROVAL CITY ATTORNEY ~ .ECTO E- CITY MANAGER .~ CITY OF TEMECULA AGENDA REPORT City Manager/City Council Jim O'Grady, Assistant City Manager August 13, 2002 Resolution of Support-AB 415 (Runner) Emergency Alert System PREPARED BY: Aaron Adams, Sr. Management Analyst RECOMMENDATION: That the City Council adopt the following resolution: RESOLUTION NO.02-._ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA SUPPORTING AB 415 (RUNNER) WHICH WOULD CREATE A STATEWIDE PLAN TO USE THE EMERGENCY ALERT SYSTEM AS "AMBER ALERTS" TO INFORM THE PUBLIC OF KIDNAPPINGS BACKGROUND: In light of recent tragedies, the idea of interrupting radio and television broadcasts using the Emergency Alert System to enlist the public's help soon after a child is abducted is now being considered in the form of Assembly Bilr 415 (Runner). In 1997, following the abduction and murder of 9-year old Amber Hagerman, in Texas the Dallas Association of Radio Managers developed a local program to alert the public of abducted children. In 2001, the National Center for Missing and Exploited Children (NCMEC), launched a national AMBER (America's Missing Broadcast Emergency Response) Plan with the goal of assisting towns across the United States to develop their own child abduction alert system. Currently in the legislature, AB 415 would create a statewide plan to use the emergency system for "Amber alerts" to respond to kidnappings. Currently existing law authorizes use of the Emergency Alert System to inform the public of local, state, and national emergencies. AB 415 would require law enforcement agencies that are informed of the abduction of a child 17 years of age or younger, or an individual with a proven mental or physical disability, and that determine the victim, to request, absent extenuating investigative needs, activation of the Emergency Alert System within the appropriate local area. In addition AB 415 would require the State Office of Emergency Services, in consultation with the Department of Justice, to develop policies and procedures providing instruction how law enforcement agencies, broadcaster and any other intermediate emergency services agencies that may institute activation of the Emergency Alert System shall proceed after a qualifying abduction has been reported to a law enforcement agency. With the City Council approval of support for such legislation, staff will prepare appropriate letters of support for AB 415 (Runner). FISCAL IMPACT: None ATTACHMENTS: Resolution 02-__ R:~ADAMSA\COUNCIL~AB 415 staff reporLdoc RESOLUTION NO. 02- A RESOLUTION OF THE CITY COUNCIL OF TEMECULA SUPPORTING ASSEMBLY BILL 415 (RUNNER) WHICH WOULD CREATE A STATEWIDE PLAN TO USE THE EMERGENCY ALERT SYSTEM AS "AMBER ALERTS" TO INFORM THE PUBLIC OF KIDNAPPINGS WHEREAS, The National Center for Missing and Exploited Children has reported that 74% of children murdered by non-family members had been killed within the first three hours of their abduction; WHEREAS, Reporting of missing children is often delayed by at least two hours, compounding the critical importance of rapid response; WHEREAS, in 1997, following the abduction and murder of 9-year old Amber Hagerman, in Arlington, TX, the Dallas Association of Radio Managers developed a local program to alert the public of abducted children; WHEREAS, In 2001, the National Center for Missing and Exploited Children (NCMEC), launched a national AMBER (America's Missing Broadcast Emergency Response) Plan with the goal of assisting towns across the United States develop their own child abduction alert system; WHEREAS, Existing law authorizes use of the Emergency Alert System to inform the public of local, state, and national emergencies; WHEREAS, AB 415 would require law enforcement agencies that are informed of the abduction of a child 17 years of age or younger, or an individual with a proven mental or physical disability, and that determine the victim, to request, absent extenuating investigative needs, activation of the Emergency Alert System within the appropriate local area, WHEREAS, AB 415 would require the Office of Emergency Services, in consultation with the Department of Justice, to develop policies and procedures providing instruction how law enforcement agencies, broadcaster and any other intermediate emergency services agencies that may institute activation of the Emergency Alert System shall proceed after a qualifying abduction has been reported to a law enforcement agency. NOW THEREFORE BE IT RESOLVED that the City of Temecula supports AB 415 (Runner) and will provide a formal letter of support to California State legislators; and PASSED, APPROVED, AND ADOPTED, by the City Council of the City of Temecula at a regular meeting held on the 13th day of August 2002. Ron Roberts, Mayor ATTEST: Susan W. Jones, CMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, City Clerk of the City of Temecula, California, do hereby certify that Resolution No. 02- was duly and regularly adopted by the City Council of the City of Temecula at a regular meeting thereof held on the 13th day of August, 2002, by the following vote: AYES: 0 NOES: 0 ABSENT: 0 COUNCILMEMBERS: COUNCILMEMBERS: COUNCILMEMBERS: Susan W. Jones, CMC City Clerk ITEM 14 APPROV,~.~_~ CITY A']-rORNEY DIRECTOR OF FINAI~E CITY MANAGER TO: FROM: DATE: SUBJECT: CITY OF TEMECULA AGENDA REPORT City ManagedCity Council Genie Roberts, Director of Finance August 13, 2002 Contract for Cost of Service (User Fee) Study and Development Impact Fee Study PREPARED BY: Polly von Richter, Management Assistant III RECOMMENDATION: That the City Council: 1. Approve the agreement with Maximus (formerly David M. Griffith & Associates) to conduct a cost of service (user fee) and development impact fee analysis in an amount of $60,000. 2. Approve a contingency of 10% in an amount not to exceed $6,000. BACKGROUND: In 1997, David M. Griffith and Associates (DMG) conducted a user fee and development impact fee analysis to determine the appropriate level of: 1) fees for services, and 2) development impact fees to be collected by the City to fund capital improvements necessitated by new development in the City. On May 27, 1997, the City Council adopted a schedule for residential and non-residential development impact fees (DIF). Using the DMG DIF study as a basis, the Council adopted residential development fees at 100%, and non-residential fees at 36% of the maximum allowable DIF. In addition, the non-residential DIF were adopted with the caveat that the fees would be reviewed each year by the Council so that development trends could be considered prior to applying an additional escalation factor of 10%. On December 8, 1998, the City Council adopted the first annual adjustment of 10% to the non-residential fees. A 10% 'increase was also approved in February, 1999 and July, 2000. Additionally, the DIF have been automatically adjusted each year by the Engineering News-Record Building Cost Index (BCI) for the Los Angeles Metropolitan area. Typically, user fees and development impact fees are analyzed every three to five years to identify the total cost of providing various City services, determine current cost recovery levels, and recommend fees and charges based on analysis. Maximus, a recognized industry leader in conducting User Fee and Development Impact Fee studies, has been successful in implementing revised fees in many communities across the nation. City staff is confident that Maximus will deliver a quality product that will justify the service fees and charges. Maximus expects the studies to be completed by the end of January 2003. Cost of Service (User Fee) Study: This component will update the City's central service cost allocation plan as well as planning, building, engineering and recreation user fees. The City will be provided with a full cost plan to be used for external and non-intergovernmental recapture of central service costs (user fees, redevelopment agency, enterprise funds). We will also receive an OMB A~87 plan to be used to recover inter- and intra-governmental central service costs (SB 90, CDBG). Development Impact Fee Study: This component involves several aspects: · Collecting updated information on existing and future development and facility plans, facility needs and level service data. · Recalculation of development impact fees by applying the updated information to the general methodology and assumptions used in the DIF study completed by DMG in 1997. · Preparation of an updated DIF nexus report. · Attendance at two public meetings to present and discuss the report. FISCAL IMPACT: The total cost of this contract, including expenses, is not to exceed $60,000. The fee for the Cost of Service (User Fee) Study is $28,500 plus a maximum of $1,500 in expenses. The fee for the Development Impact Fee Study is $28,500 plus a maximum of $1,500 in expenses. Adequate funds are available in the Finance Department line item budget. A'I-rACHMENT: Agreement for Consulting Services CITY OF TEMECULA AGREEMENT FOR CONSULTANT SERVICES MAXIMUS COST OF SERVICE UPDATE AND DEVELOPMENT IMPACT FEE UPDATE THIS AGREEMENT, is made and effective as of August 13, 2002, between the City of Temecula, a municipal corporation ("City") and MAXlMUS, ("Consultant"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. TERM. This Agreement shall commence on August 13, 2002, and shall remain and continue in effect until tasks described herein are completed, but in no event later than June 30, 2003, unless sooner terminated pursuant to the provisions of this Agreement. 2. · SERVICES. Consultant shall perform the services and tasks described and set forth in Exhibit A, attached hereto and incorporated herein as though set forth in full. Consultant shall complete the tasks according to the schedule of performance which is also set forth in Exhibit A. 3. PERFORMANCE. Consultant shall at all times faithfully, competently and to the best of his or her ability, experience, and talent, perform all tasks described herein. Consultant shall employ, at a minimum, generally accepted standards and practices utilized by persons engaged in providing similar services as are required of Consultant hereunder in meeting its obligations under this Agreement. 4. PAYMENT. a. The City agrees to pay consultant monthly, in accordance with the payment rates and terms and the schedule of payment for both projects as set forth in Exhibit B, Payment Rates and Schedule, attached hereto and incorporated herein by this reference as though set forth in full, based upon actual time spent on the above tasks. Any terms in Exhibit B other than the payment rates and schedule of payment are null and void. This amount shall not exceed Sixty Thousand Dollars and No Cents ($60,000.00) for the total term of the Agreement unless additional payment is approved as provided in this Agreement. b. consultant shall not be compensated for any services rendered in connection with its performance of this Agreement, which are in addition to those set forth herein, unless such additional services are authorized in advance and in writing by the City Manager. Consultant shall be compensated for any additional services in the amounts and in the manner as agreed to by City Manager and Consultant at the time City's written authorization is given to Consultant for the performance of said services. The City Manager may approve additional work not to exceed ten percent (10%) of the amount of the Agreement. c. Consultant will submit invoices monthly for actual services performed. Invoices shall be submitted between the first and fifteenth business day of each month, for services provided in the previous month. Payment shall be made within thirty (30) days of receipt of each invoice as to all non-disputed fees. If the City disputes any of consultant's fees it shall give written notice to Consultant within 30 days of receipt of an invoice of any disputed . fees set forth on the invoice. R~purchasing/agreementsrn-zl~lAXIMUS.2002 1 5. SUSPENSION OR TERMINATION OF AGREEMENT WITHOUT .CAUSE. a. The City may at any time, for any reason, with or without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon the consultant at least ten (10) days pdor written notice. Upon receipt of said notice, the Consultant shall immediately cease all work under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement. b. In the event this Agreement is terminated pursuant to this Section, the City shall pay to Consultant the actual value of the work performed up to the time of termination. Upon termination of the Agreement pursuant to this Section, the Consultant will submit an invoice to the City pursuant to Section 4. 6. DEFAULT OF CONSULTANT. a. The Consultant's failure to comply with material previsions of this Agreement shall constitute a default. In the event that Consultant is in default for cause under the terms of this Agreement, City shall have no obligation or duty to continue compensating Consultant for any work performed after the date of default and can terminate this Agreement immediately by written notice to the Consultant. If such failure by the Consultant to make progress in the performance of work hereunder arises out of causes beyond the Consultant's contrel, and without fault or negligence of the Consultant, it shall not be considered a default. b. If the City Manager or his delegate determines that the Consultant is in default in the performance of any of the terms or conditions of this Agreement, it shall serve the Consultant with written notice of the default. The Consultant shall have (10) days after service upon it of said notice in which to cure the default by rendering a satisfactory performance. In the event that the Consultant fails to cure its default within such period of time, the City shall have the right, notwithstanding any other prevision of this Agreement, to terminate this Agreement without further notice and without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement. 7. OWNERSHIP OF DOCUMENTS. a. Consultant shall maintain complete and accurate records with respect to sales, costs, expenses, receipts and other such information required by City that relate to the performance of services under this Agreement. Consultant shall maintain adequate records of services provided in sufficient detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be cleady identified and readily accessible. Consultant shall provide free access to the representatives of City or its designees at reasonable times to such books and records, shall give City the right to examine and audit said books and records, shall permit City to make transcripts there from as necessary, and shall allow inspection of all work, data, documents, proceedings and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of three (3) years after receipt of final payment. b. Upon completion of, or in the event of termination or suspension of this Agreement, all odginal documents, designs, drewings, maps, models, computer files containing data generated for the work, surveys, notes, and other documents prepared in the course of providing the services to be performed pursuant to this Agreement shall become the sole property of the City and may be used, mused or otherwise disposed of by the City without the permission of the Consultant. With respect to computer files containing data generated for the R~purchasing/agreem entsm-zl\MAXlMUS.2002 2 work, Consultant shall make available to the City, upon reasonable wdtten request by the City, the necessary computer software and hardware for purposes of accessing, compiling, transferring and printing computer files. c. With respect to the design of public improvements, the Consultant shall not be liable for any injuries or property damage resulting from the reuse of the design at a location other than that specified in Exhibit A without the written consent of the Consultant. 8. INDEMNIFICATION. The Consultant agrees to defend, indemnify, protect and hold harmless the City, its officere, officials, employees and volunteere from and against any and all claims, demands, losses, defense costs or expenses, including attorney fees and expert witness fees, or liability of any kind or nature which the City, its officere, agents and employees may sustain or incur or which may be imposed upon them for injury to or death of persons, or damage to property arising out of Consultant's negligent or wrongful acts or omissions where there is a duty to act in its performance or non-performance of this Agreement, excepting only liability adsing out of the negligence of the City. 9. INSURANCE REQUIREMENTS. Declare deductible of $250,000 for professional liability. a. Minimum Scope of Insurance. Coverage shall be at least as broad as: (1) Insurance Services Offica Commercial General Liability form No. CG 00 01 11 85 or 88. (2) Insurance Services Office Business Auto Coverage form CA 00 01 06 92 covering Automobile Liability, code 1 (any auto). If the Consultant owns no automobiles, a non-owned auto endorsement to the General Liability policy described above is acceptable. (3) Worker's Compensation insurance as required by the State of California and Employer's Liability Insurance. If the Consultant has no employees while performing under this Agreement, worker's compensation insurance is not required, but Consultant shall execute a declaration that it has no employees. (4) Professional Liability Insurance shall be written on a policy form previding professional liability for the Consultant's profession. bo Minimum Limits of Insurance. Consultant shall maintain limits no less than: (1) General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a generet aggregate limit is used~ either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. (2) Automobile Liability: $1,000,000 per accident for bodily injury and property damage. R~pumhasing/agreem entsm-zl~lAXIMUS.2002 3 (3) Worker's Compensation as required by the State of California; Employer's Liability: One million dollars ($1,000,000) per accident for bodily injury or disease. (4) Professional Liability coverage: : One million ($1,000,000 per claim and in aggregate. c. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City Manager. At the option of the City Manager, either the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Consultant shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. d. Other Insurance Provisions. The general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions: The City, its officers, officials, employees and volunteers are to be covered as insured's as respects: liability arising out of activities performed by or on behalf of the Consultant; products and completed operations of the Consultant; premises owned, occupied or used by the Consultant; or automobiles owned, leased, hired or borrowed by the Consultant. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers. (2) For any claims related to this project, the Consultant's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees and volunteers. Any insurance or self-insured maintained by the City, its officers, officials, employees or volunteers shall be excess of the Consultant's insurance and shall not contribute with it. (3) Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers. (4) The Consultant's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (5) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' written notice in the event of termination or cancellation. e. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII, unless otherwise acceptable to the City. Self insurance shall not be considered to comply with these insurance requirements. f. Verification of Covera.qe. Consultant shall furnish the City with original endorsements effecting coverage required by this clause. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. The endorsements are to R~purchasing/agreementsm-zl'A4AXIMUS.2002 4 be on forms provided by the City. All endorsements are to be received and approved by the City before work commences. As an alternative to the City's forms, the Consultant's insurer may provide complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications. 10. INDEPENDENT CONTRACTOR. a. Consultant is and shall at all times remain as to the City a wholly independent contractor. The personnel performing the services under this Agreement on behalf of Consultant shall at all times be under Consultant's. exclusive direction and control. Neither City nor any of its officers, employees, agents, or volunteers shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents except as set forth in this Agreement. Consultant shall not at any time or in any manner represent that it or any of its officers, employees or agents are in any manner officers, employees or agents of the City. Consultant shall not incur or have the power to incur any debt, obligation or liability whatever against City, or bind City in any manner. b. No employee benefits shall be available to Consultant in connection with the performance of this Agreement. Except for the fees paid to Consultant as provided in the Agreement, City shall not pay salaries, wages, or other compensation to Consultant for performing services hereunder for City. City shall not be liable for compensation or indemnification to Consultant for injury or sickness arising out of performing services hereunder. 11. LEGAL RESPONSIBILITIES. The Consultant shall keep itself informed of all local, State and Federal ordinances, laws and regulations which in any manner affect those employed by it or in any way affect the performance of its service pursuant to this Agreement. The Consultant shall at all times observe and comply with all such ordinances, laws and regulations as they exist during the term of this agreement. The City, and its officers and employees, shall not be liable at law or in equity occasioned by failure of the Consultant to comply with this section. 12. RELEASE OF INFORMATION. a. All information gained by Consultant in performance of this Agreement shall be considered confidential and shall not be released by Consultant without City's prior written authorization. Consultant, its officers, employees, agents or subcontractors, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the work performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary" provided Consultant gives City notice of such court order or subpoena. b. Consultant shall promptly notify City should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party regarding this Agreement and the work performed there under or with respect to any project or property located within the City. City retains the right, but has no obligation, to represent Consultant and/or be present at any deposition, hearing or similar proceeding. Consultant agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Consultant. However, City's dght to review any such response does not imply or mean the dght by City to control, direct, or rewdte said response. R~purchasing/agreementsm-zl',MAXIMUS.2002 5 13. NOTICES. Any notices which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (I) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, that provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by Notice. Notice shall be effective upon delivery to the addresses specified below or on the third business day following deposit with the document delivery service or United States Mail as provided above. To City: To Consultant: City of Temecula Mailing Address: P.O. Box 9033 Temecula, California 92589-9033 43200 Business Park Drive Temecula, California 92590 Attention: City Manager MAXIMUS Attention: Richard Pearl 4320 Auburn Blvd., Ste 2000 Sacramento, CA 95841 14. ASSIGNMENT. The Consultant shall not assign the performance of this Agreement, nor any part thereof, nor any monies due hereunder, without prior wdtten consent of the City. MAXIMUS may use assistants, under their direct supervision, to perform some of the services under this Agreement. Consultant shall provide City fourteen (14) days' notice or such lesser time as may be required under the circumstances prior to the departure of any staff, performing any scope of work related to this project as outlined in Exhibit A, from Consultant's employ. If any staff leaving the Consultant's employ affects the progress of work as outlined in this agreement, the City shall have the option to immediately terminate this Agreement, within three (3) days of the close of said notice period. Upon termination of this Agreement, Consultant's sole compensation shall be payment for actual services performed up to, and including, the date of termination or as may be otherwise agreed to in writing between the City Council and the Consultant. 15. LICENSES. At all times during the term of this Agreement, Consultant shall have in full force and effect, all licenses required of it by law for the performance of the services described in this Agreement. 16. GOVERNING LAW. The City and Consultant understand and agree that the laws of the State of Califomia shall govern the rights, obligations, duties and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the municipal, superior, or federal distdct court with geographic jurisdiction over the City of Temecula. In the event such litigation is filed by one party against the other to enforce its rights under this Agreement, the prevailing party, as determined by the Court's judgment, shall be entitled to reasonable attorney fees and litigation expenses for the relief granted. R~purchaslng/agreernentsrn-zl\MAXIMUS.2002 6 '17. PROHIBITED INTEREST. No officer, or employee of the City of Temecula shall have any financial interest, direct or indirect, in this Agreement, the proceeds thereof, the Contractor, or Contractor's sub-contractors for this project, dudng his/her tenure or for one year thereafter. The Contractor hereby warrants and represents to the City that no officer or employee of the City of Temecula has any interest, whether contractual, non- contractual, financial or otherwise, in this transaction, or in the business of the Contractor or Contractor's sub-contractors on this project. Contractor further agrees to notify the City in the event any such interest is discovered whether or not such interest is prohibited by law or this Agreement. 18. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties relating to the obligations of the parties described in this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral or wdtten, are merged into this Agreement and shall be of no further force or effect. Each party is entering into this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. 19. AUTHORITY TO EXECUTE THIS AGREEMENT. The person or persons executing this Agreement on behalf of Consultant warrants and represents that he or she has the authority to execute this Agreement on behalf of the Consultant and has the authority to bind Consultant to the performance of its obligations hereunder. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. CITY OF TEMECULA Ron Roberts, Mayor Attest: Susan W. Jones, CMC, City Clerk Approved As to Form: Peter M. Thorsen, City Attorney R~purchasing/agreementsm-zl~MAXIMUS.2002 7 CONSULTANT: MAXIMUS 4320 Auburn Blvd., Ste 2000 Sacramento, CA 95841 Phone (916) 485-8102 Fax (916) 485-0111 Contact: Richard Pearl By:. Title: By:. Name: Title: (Signatures of two corporate officers required for Corporations) R~purchasing/agreementsm-z~MAXlMUS.2002 8 EXHIBIT a TASKS TO BE PERFORMED All tasks to be performed are as outlined in the attached Scope of Service for both the Cost of Service Update and the Development Impact Fee Update including formal presentations to City Council and special interest groups, attached hereto and incorporated herein. R~purchaslng/agreementsm-zl\MAXI MUS.2002 9 Ms. Genie Roberts Director of Finance City of Temecula Temecula, CA August 4, 2002 Dear Ms. Roberts, MAXIMUS is pleased to provide this quotation to update the city's cost allocation plan, selected user fee activities, and development impact fees. We have performed similar services for the city in the past and, accordingly, we are familiar with the city, its operations, and desired outcomes from these important studies. A. COST OF SERVICE UPDATE This component will update the city's central service cost allocation plan, and planning, building, engineering, and recreation user fees. SCOPE OF SERVICE We will provide the city with both a full cost plan and an OMB A-87 plan. The former is used for external and non-inter govemmental recapture of central service costs (user fee, redevelopment agency, enterprise funds), and the latter is used to recover inter and intra governmental central service costs (SB 90, CDBG). Both analyses will be developed based on federal guidelines for cost allocation. We will update the city's development-related operating fees, and the fees in the recreation department. The planning and engineering fees will be structured based on our "standard cost" accounting model. This model has been used in nearly 100 California user fee studies, including previous studies for the city of Temecula. Our system calculates the typical cost to complete an activity, i.e. a site plan review, based on time input derived from city personnel. Program, division, and city-wide overhead costs are allocated to each of the service areas, and a full cost is developed. The model can be used to predict future revenue based on varying unit volume levels. An added benefit is that we can compare your city's time and cost values to other MAXIMUS clients for internal-designated management information. We will present our findings in a formal report depicting full cost, current cost recovery, level of subsidy, and recommended fee levels. At the city's direction, we will present the findings to the city council, or assist in that presentation. The building and safety fee study will be conducted using our NEXUS model. NEXUS was developed in calendar .2000 to respond to the growing criticism of the use of valuation tables to set fees (and other tables not constructed to directly address to a specific judsdiction's particular costs). Over the past 24 months, we have provided this fee structure for the cities of Anaheim, San Jose, Chico, Vallejo, Belmont, Oceanside, and Malibu. We are currently developing the numerical database for Orange County, and the cities of San Diego (CA), Missoula (MT). We will soon begin similar work for the city of Henderson, Nevada. The key to NEXUS is development of a fee schedule based on direct work (required time) for each structural ICBO occupancy and construction type category (and by square footage within each category), and specific fees for each electricaUmechanical/ plumbing service and miscellaneous fee categories. Productive hourly rates are determined and multiplied by the average time to complete various services. The resultant costs are then re-categorized by square footage to provide a fee schedule that is easy to understand by the community and easy to administer by the building department. NEXUS not only provides a jurisdiction with a legally defensible fee schedule, but the model can also be used as a prognosticator of required personnel. To accomplish this, the final productive hours value are restated as a staff requirement leveL.to suggest staff additions or reductions/redeployment depending upon forecast volume workload. The recreation fee analysis will be accomplished by creating support cost and overhead calculations (stated as a percentage of cost recovery) on applicable recreation areas. The city would thereafter use these rates as overhead factors on direct cost categories. This system provides both recovery level flexibility, and the ability to apply cost recovery decisions to future recreation activities without having to perform constant financial analysis. OPERA T/NC FEE STUD Y COST/T/M/NC The fee for the cost allocation plans and the user fee studies is $28,500 plus a maximum of $1,500 in expenses. The fee includes two formal presentations to either the city council or special interest groups. It is our understanding that the city wishes all work to be completed by the end of January 2003. This can be accomplished as long as the contract has been executed by September 1, 2002. B. DEVELOPMENT IMPACT FEE UPDATE SCOPE OF SERVICES In general, the scope involves (1) collecting updated information on existing and future development and facility plans, facility needs, and level of service data; (2) recalculation of development impact fees by applying the updated information to the general methodology and assumptions used in the DIF study completed by DMG in 1997; (3) preparation of an updated DIF nexus report; (4) attendance at two public meetings to present and discuss the report. (The scope also includes two working site visits during preparation of the study update). The scope of services offered in this proposal excludes legal, engineering, and architectural services. It also excludes the preparation of planning studies, facility master plans, land use surveys, appraisals, facility cost estimates and collection/analysis of raw data. In addition, the scope offered in this proposal assumes that any impact fees calculated as part of this study will be calculated for a citywide service area. FACILITY TYPES TO BE ADDRESSED The facility types to'be addressed in this study are as follows: Street System Improvements Parks and Recreation Improvements Open Space Corporate Facilities Fire Protection Facilities Libraries INFORMA T/ON TO BE PROVIDED BY THE CITY Much of the work to be performed by the consultant in the impact fee analysis will depend on information and policy direction to be provided by the city. This proposal assumes that all information needed to perform the work covered by the scope of services will be provided by the city or is readily available from published sources. The following items are examples of information that is essential for the completion of work addressed in this proposal and must be provided by the city: · The General Plan, and other relevant planning documents · A tabulation of existing and planned development in the study area, by development type, through buildout of the study area, and for any service areas that are not co-incident with the study area · Facility master plans and cost estimates for each type of facility to be addressed in the analysis. Ideally, facility master plans and cost estimates should cover additional infrastructure and facilities needed to serve all future development in the study area to planned buildout · An inventory of existing facilities and documents containing service level policies for each type of facility to be addressed in the analysis · Information on any outstanding debt related to existing capital facilities and any other fund sources available for relevant capital improvements · The city budget, capital improvement program and facility financing plans including other sources of revenue and proposed debt financing for future facilities to receive impact fee funding DEVELOPMENT IMPACT FEE STUDY COST Not-to-Exceed Cost. MAXIMUS will prepare the impact fee nexus study update as described in the scope of services for a total cost of $28,500 plus a maximum of $1,5000 in expenses. This not-to-exceed cost assumes the work will not be delayed or interrupted by the city for any period exceeding 60 days, or for a cumulative period of 120 days before completion of all work covered by this proposal. In the event of such delays, the consultant shall have the right to request additional compensation for added work caused by those delays. D. ADDITIONAL SERVICES/INVOICING In the event that the city requests additional services in connection with this project, including support fxom the consultant in defending any fees adopted as a result of this study, those services will be billed at the standard hourly rates for the personnel involved, plus actual expenses. Invoices will be submitted monthly, based on time and expenses accrued, but not to exceed the estimated percentage of total work completed up to that time. E PROJECTPERSONNEL The consultants assigned to the project bring to the engagement years of operating cost and development impact fee analysis experience. Mr. Joe Colgan will be the engagement leader in the development impact fee study. He has provided similar services to that requested by the city for over 40 westem jurisdictions, including the city of Temecula. The user fee study will be under the direction of Ms. Greta Davis of our Irvine office. Ms. Davis has worked on fee studies for over 20 California jurisdictions. She will be assisted by other MAXIMUS personnel fi.om either the Irvine or Sacramento offices. The undersigned will be project director, responsible for overall quality control and formal presentations. F. SUMMARY Our division has been serving California governments since 1979 and, together with the other MAXIMUS family of governmental specialists, is the largest provider of cost, revenue maximization, and operations improvement services in the nation. We have attained this pinnacle by adherence to our founding principle: to provide above quality service at a fair price. We look forward to being of continued service to the city of Temecula. We believe our cost of service analysis and development impact fee study will provide the city with important information for the fair and equitable recovery of the costs of its vital services. As a vice president of MAXIMUS, I am authorized to commit the firm to this proposal. Respectfully submitted, Richard Pearl Vice President Western Region MAXIMUS EXHIBIT B PAYMENT RATES AND SCHEDULE Payment Rates are as per the attached schedule supplied within the proposal by the consultant MAXIMUS for the Cost of Service Update and the Development Impact Fee Update. Total cost of the agreement shall not exceed $60,000.06 for the scope of work set forth in Exhibit A. R~purchasing/agreem entsm-zl\MAXIMUS.2002 10 · A tabulation of existing and planned development in the study area, by development type, through buildout of the study area, and for any service areas that are not co-incident with the study area · Facility master plans and cost estimates for each type of facility to be addressed in the analysis. Ideally, facility master plans and cost- estimates should cover additional infxastmcture and facilities needed to serve all future development in the study area to planned buildout · An inventory of existing facilities and documents containing service level policies for each type of facility to be addressed in the analysis · Information on any outstanding debt related to existing capital facilities and any other fund sources available for relevant capital improvements · The city budget, capital improvement program and facility financing plans including other sources of revenue and proposed debt fmancing for future facilities to receive impact fee funding DEVELOPMENT IMPACT FEE STUDY COST Not-to-Exceed Cost. MAXIMUS. will prepare the impact fee nexus study update as described in the scope of services for a total cost of $28,500 plus a maximum of $1,5000 in expenses. This not-to-exceed cost assumes the work will not be delayed or interrupted by the city for any period exceeding 60 days, or for a cumulative period of 120 days before completion of all work covered by this proposal. Irt tho event of such delays, the consultant shall have the right to request additional compensation for added work caused by those delays. ADDITIONAL SERVICES/INVOICING In the event that the city requests additional services in connection with this project, including support from the consultant in defending any fees adopted as a result of this study, those services will be billed at the standard hourly rates for the personnel involved, plus actual expenses. Invoices will be submitted monthly, based on time and expenses accrued, but not to exceed the estimated percentage of total work completed up to that time. PROJECT PERSONNEL The consultants assigned to the project bring to the engagement years of operating cost and development impact fee analysis experience. Mr. Joe Colgan will be the engagement leader in the development impact fee study. He has provided similar serdees to that requested by the city for over 40 western jurisdictions, including the city of Temecula. The user fee study will be under the direction of Ms. Greta Davis of our Irvine office. Ms. Davis has worked on fee studies for over 20 California jurisdictions. She will be assisted level of subsidy, and recommended fee levels. At the city's direction, we will present the findings to the city council, or assist in that presentation. The building and safety fee study will be conducted using our NEXUS model. NEXUS was developed in calendar 2000 to respond to the growing criticism of the use of valuation tables to set fees (and other tables not constructed to directly address to a specific jurisdiction's particular costs). Over the past 24 months, we have provided this fee structure for the cities Of Anaheim, San Jose, Chico, Vallejo, Belmont, Oceanside, and Malibu. We are currently developing the numerical database for Orange County, and the cities of San Diego (CA), Missoula (MT). We will soon begin similar work for the city of Henderson, Nevada. The key to NEXUS is development of a fee schedule based on direct work (required time) for each structural ICBO occupancy and construction type category (and by square footage within each category), and specific fees for each electrical/mechanical/ plumbing service and miscellaneous fee categories. Productive hourly rates are determined and multiplied by the average time to complete various services. The resultant costs are then re-categorized by square footage to provide a fee schedule that is easy to understand by the community and easy to administer by the building department. NEXUS not only provides a jurisdiction with a legally defensible fee schedule, but the model can also be used as a prognosticator of required personnel. To accomplish .this, the final productive hours value are restated as a staff requirement leveL.to suggest staff additions or reductions/redeployment depending upon forecast volume workload. The recreation fee analysis will be accomplished by creating support cost and overhead calculations (stated as a percentage of cost recovery) on applicable recreation areas. The city would thereafter use these rates as overhead factors on direct cost categories. This system provides both recovery level flexibility, and the ability to apply cost recovery decisions to fUture recreation activities without having to perform constant financial analysis. OPERA T/NO FEE STUDY COST/T/M/NC The fee for the cost allocation plans and the user fee studies is $28,500 plus a maximum of $1,500 in expenses. The fee includes two formal presentations to either the city council or special interest groups. It is our understanding that the city wishes all work to be completed by the end of January 2003. This can be accomplished as long as the contract has been executed by September 1, 2002. TEMECULA COMMUNITY SERVICES DISTRICT ITEM 1 APPROVAl. a, C~TY ATTORNEY DIRECTOR OF FINAI~.E~ ,J~V~ CITY MANAGER TO: FROM: DATE: SUBJECT: CITY OF TEMECULA AGENDA REPORT Board of Directors s .,,/~- Herman D. Parker, Director of Community Service August13,2002 Acceptance of Landscape Bonds and Agreements for Tract No. 23209 Shea Homes Limited Partnership PREPARED BY: RECOMMENDATION: Barbara Smith, Management Analyst That the Board of Directors: Accept the agreement and surety bonds from Shea Homes Limited Partnership to improve the perimeter slopes and parkways within Tract No. 23209. Accept the agreement and surety bonds from Shea Homes Limited Partnership to improve the landscaped medians on Butterfield Stage Road within Tract No. 23209. Accept the agreement and surety bonds from Shea Homes Limited Partnership to construct a 3.25 acre public park on La Serena and Butterfield Stage Roads within Tract No. 23209. BACKGROUND: Pursuant to the conditions of approval for Tract No. 23209, Shea Homes Limited Partnership is proposing to improve certain perimeter slopes and landscaped parkways adjacent to Walcott Lane, La Serena Way and Butterfield Stage Road. In addition, the developer is proposing to improve and dedicate to the TCSD landscaped medians along Butterfield Stage Road. Shea Homes Limited Partnership will also be constructing a 3.25 acre public park. Once the landscaping is installed and the Temecula Community Services District (TCSD) has approved these landscaped areas TCSD will take over the maintenance responsibilities of the proposed landscaped improvements within Tract 23209. To insure that the slopes/parkways, landscaped medians and public park are constructed to City standards, the developer is required to post security to improve these areas based upon the approved landscape/irrigation plans and the certified construction cost estimates for the improvements. As a result, Shea Homes Limited Partnership has entered into an agreement with the City and has provided surety bonds, issued by American Home Assurance Company, as follows: Slopes and Parkway Landscapinq: Faithful Performance Bond No. 00-290-243 in the amount of $521,558.00. Labor and Materials Bond No. 00-290-243 in the amount of $260,779.00 Warranty Bond No. 00-290-243A in the amount of $52,155.00. Landscaped Medians 1. Faithful Performance Bond No. 00-290-249 the amount of $83,997.00. 2. Labor and Materials Bond No. 00-290-249 in the amount of $41,998.00. 3. Warranty Bond No. 00-290-249-A in the amount of $8,399.00 Public Park 1. Faithful Performance Bond No. 00-290-919 in the amount of $476,484.00. 2. Labor and Materials Bond No. 00-290-919 in the amount of $238,242.00. 3. Warranty Bond No. 00-290-919-A in the amount of $47,648.00. Upon completion and acceptance of the improvements by the Board of Directors, staff will recommend the appropriate release or reduction of the bonds. FISCAL IM PACT: None. The cost of construction for the perimeter slope areas, medians and public park will be borne by the developer. ATFACHMENTS: Vicinity Map Project Map Agreement/Bonds. VICINITY MAP Tract No. 23209 Not to Scale PROJECT SITE AHERN HEI' Tract No. 23209 SYMBOL DESCRIPTION TCSD LOT 233 AREA [SQ. FT.) CITY OF TEMECULA PARKLAND / LANDSCAPE IMPROVEMENT AGREEMENT DATE OF AGREEMENT: june 2002 NAME OF SUBDIVIDER: Shea Homes r:im/te~ Partnership (Referred to as "SUBDIVIDER") NAME OF SUBDIVISION: Serena Hills (Referred to as "SUBDIVIDER") TRACT NO.: 23209 TENTATIVE MAP RESOLUTION OF APPROVAL NO.: (Referred to as "Resolution of Approval") PARKLAND IMPROVEMENT PLANS NO.: ESTIMATED TOTAL COST OF PARKLAND IMPROVEMENTS:S, ,476 ~ 484. 00 COMPLETION DATE: June 200/4 NAME OF SURETY AND BOND NO. FOR LABOR AND MATERIALS BOND: American Home Assurance Com~ny , Bond No. 00-290-919 NAME OF SURETY AND BOND NO. FOR FAITHFUL PERFORMANCE BOND: American Home Assurance Company .Bond No. 00-290-919 NAME OF SURETY AND BOND NO. FOR WARRANTY BOND: American Home Assurance Compa. n,y Bond No. 00-290-919A R:~ZIGLERG~(AGREEMN~oarkland landscape improvement~agreement.doc This Agreement is made and entered into by and between the City of Temecula, California, a Municipal Corporation of the State of California, hereinafter referred to as CITY, and the SUBDIVIDER. RECITALS A. SUBDIVIDER has presented to CITY for approval and recordation, a final subdivision map Of a proposed subdivision pursuant to provisions of the Subdivision Map Act of the State of California and the CITY ordinances and regulations relating to the filing, approval and recordation of subdivision maps. The Subdivision Map Act and the CITY ordinances and regulations relating to the filing, approval and recordation of subdivision maps are collectively referred to in this Agreement as the "Subdivision Laws." B. A tentative map of the SUBDIVISION has been approved, subject to the Subdivision Laws and to the requirements and conditions contained in the Resolution of Approval. The Resolution of Approval is on file in the Office of the city Clerk and is incorporated into this Agreement by reference. C. SUBDIVIDER is required, as a condition of the approval of the tentative map that the Parkland Improvement plans must be completed, in compliance with City standards, by the Completion Date. The Subdivision Laws establish as a condition precedent to the approval of a final map, that the SUBDIVIDER has entered into a secured Agreement with the CITY to complete the Parkland/Landscape Improvement Plans within the Completion Date. D. In consideration of approval of a final map for the SUBDIVISION by the City Council, SUBDIVIDER desires to enter into this Agreement, whereby promises to. install and complete, at SUBDIVIDER'S own expense, all the Parkland/Landscape Improvement work required by City in connection with proposed subdivision. Subdivider has secured this agreement by Parkland/Landscapihg Improvement Security required by R:~ZlGLERG~(AGREEMN~parkland landscape improvement~gmement.doc the Subdivision Laws and approved by the City Attorney. The term "Parkland" includes landscape areas intended to be maintained by the Temecula Community Services District. E. Complete Parkland/Landscape Improvement Plans for the construction, installation and completion of the Parkland Improvements have been prepared by SUBDIVIDER and approved by the Director of Community Services. The Parkland Improvement Plans numbered as referenced previously in this Agreement are on file in the Office of the Director of Community Services and are incorporated into this Agreement by this reference. All references in this Agreement to the Parkland Improvement Plans shall include reference to any specifications for the Improvements as approved by the Director of Community Services. F. An estimate of the cost for construction of the Parkland Improvements according to the Improvement Plans has been made and approved by the Director of Community Services. The estimated amount is stated on Page 1 of this Agreement. The basis for the estimate is attached as Exhibit "A" to this Agreement. G. The CITY has adopted standards for the construction and installation of Parkland/Landscape Improvements within the CITY. The Parkland/Landscape Improvement Plans have been prepared in conformance with the CITY standards, (in effect on the date of approval of the Resolution of Approval). H. SUBDIVIDER rec(~gnizes that by approval of the final map for SUBDIVISION, CITY has conferred substantial rights upon SUBDIVIDER, including the right to sell, lease, or finance lots within the SUBDIVISION, and has taken the final act necessary to subdivide the property within the SUBDIVISION. As a result, CITY will be damaged to the extent of the cost of installation of the Parkland/Landscape Improvements by SUBDIVIDER'S failure to perform its obligation under this Agreement, including, but not limited to, SUBDIVIDER'S obligation to complete construction of R:~ZIGLERGg(AGREEMN~arkland landscape irnprovement3~greement,doc Parkland/Landscape Improvements by the Completion Date. CITY shall be entitled to all remedies available to it pursuant to this Agreement and the Subdivision Laws in the event of a default by SUBDIVIDER. It is specifically recognized that the determination of whether a reversion to acreage or rescission of the SUBDIVISION constitutes an adequate remedy for default by the SUBDIVIDER shall be within the sole discretion of NOT, THEREFORE, in consideration of the approval and recordation by the City Council of the final map of the SUBDIVISION, SUBDIVIDER and CITY agree as follows: 1. SUBDIVIDER'S Obli,qations to Construct Parkland/Landscapin,q Improvements. SUBDIVIDER Shall: a. Comply with ail the requirements of the Resolution of Approval, and any amendments thereto, and with the provisions of the Subdivision Laws. b. Pursuant to the requirements of Labor Code Section 1720, SUBDIVIDER shall pay prevailing wages for all work performed for the construction, alteration, demolition, installation, or repair for the Parkland/Landscape Improvement Work required by this Agreement. In accordance with the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of workman needed to execute this Contractor from the Director of the Department of Industrial Relations. These rates are on file with the City Clerk. Copies may be obtained at cost at the City Clerk's office of the City of Temecula. Subdivider shall post a copy of such wage rates at the job site and shall R:~ZlGLERG~XAGREEMN~parkland landscape improvement4~greement.doc pay the adopted prevailing wage rates as a minimum. Subdivider shall 'comply with the provisions of Sections 1773.8, 1775, 1776, 1777.5, 1777.6, and 1813 of the Labor Code and other applicable laws and regulations with respect to the payment of prevailing wages. Pursuant to the provisions of 1775 of the Labor Code, Subdivider shall forfeit to the City, as a penalty, the sum of $25.00 for each calendar day, or portion thereof, for each laborer, worker, or mechanic employed, paid less, than the stipulated prevailing rates for any work done under this Agreement, by it or by any subcontractor under it, in violation of the provisions of the Agreement or in violation of any applicable laws or regulations pertaining to the payment of prevailing wages. c. Complete by the time established in Section 20 of this Agreement and at SUBDIVIDER'S own expense, all the Parkland/Landscape improvement work required on the Tentative Map and Resolution of Approval in conformance with the Parkland Improvement Plans and the CITY standards: d. Furnish the necessary materials for completion of the Parkland Improvements in conformity with the Parkland Improvement Plans and CITY standards. e. Except for easements or other interested in real property to be dedicated to the Homeowners Association of the SUBDIVISION, acquire and dedicate, or pay the cost of acquisition by CITY, of all rights- of-way, easements and other interests in real property for construction Or installation of the Parkland/Landscape Improvements, free and clear of all liens and encumbrances for the SUBDIVIDER'S obligations with regard to acquisition by CITY of off-site rights-of-way, easements and other R:~ZlGLERGg(AGREEMN~parkland landscape ImprovementS~greement.doc interests in real property shall be subject to a separate Agreement between SUBDIVIDER and CITY. 2. Acquisition and Dedication of Easements or Rights-of-Way. If any of the Parkland/Landscape Improvements and land development work contemplated by this Agreement are to be constructed or installed on land not owned by SUBDIVIDER, no construction or installation shall be commenced before: a. The offer of dedication to CITY or appropriate rights-of- way, easements or other interest in real property, and appropriate authorization from the property owner to allow construction or installation of the Improvements or work, or b. The dedication to, and acceptance by, the CITY of appropriate rights-of-way, easements or other interests in real property, and approved by the Depadment of Public Works, as determined by the Director of Community Services. c. The issuance by a court of competent jurisdiction pursuant to the State Eminent Domain Law of an order of possession. SUBDIVIDER shall comply in all respects with order of possession. Nothing in this Section 2 shall be construed as authorizing or granting an extension of time to SUBDIVIDER. 3. Security. SUBDIVIDER shall at all times guarantee SUBDIVIDER'S performance of this Agreement by furnishing to CITY, and maintaining, good and sufficient security as required by the Subdivision Laws on forms approved by CITY for the purposes and in the amounts as follows: a. to assure faithful performance of this Agreement in regard to said improvements in and amount of 100% of the estimated cost of the Parkland/Landscape Improvements; and R:~ZiGLERG~XAGREEMN~pmkland landscape improvement~greement,doc b. to secure payment to any contractor, subCOntractor, persons renting equipment, or furnishing labor materials for Parkland/Landscape Improvements required to be constructed or installed pursuant to this Agreement in the additional amount of 50% of the estimated cost of the Improvements; and c. to guarantee or warranty the work done pursuant to this Agreement for a period of one year following acceptance thereof by CITY against any defective work or labor done or defective materials furnished in the additional amount of 10% of the estimated cost of the Parkland Improvements. The securities required by this Agreement shall be kept on file with the City Clerk. The terms of the security documents referenced on Page 1 of this Agreement are incorporated into this Agreement by this Reference. If any security is replaced by another approved security, the replacement shall be filed with the City Clerk and, upon filing, shall be deemed to have been made a part of and incorporated into this Agreement. Upon filing of a replacement security with the City Clerk, the former security may be released. 4. Alterations to Parkland Improvement Plans. a. Any changes, alterations or additions to the Parkland/Landscape Improvement Plans and specifications or to the improvements, not exceeding 10% of the original estimated cost if the improvement, which are mutually agreed upon by the CITY and SUBDIVIDER, shall not relieve the improvement security given for faithful performance of this Agreement. In the event such changes, alterations, or additions exceed 10% of the original estimated cost of the improvement, SUBDIVIDER shall provide improvement security for R:~.IGLERG~(AGREEMN~parkland landscape improvement;agreement.doc faithful performance as required by Paragraph 3 of this Agreement for 100% of the total estimated cost of the improvement as changed, altered, or amended, minus any completed partial releases allowed by Paragraph 6 of this Agreement. b. The SUBDIVIDER shall construct the Parkland Improvements in accordance with the CITY Standards in effect at the time of adoption of the Resolution of Approval. CITY reserves the right to modify the standards applicable to the SUBDIVISION and this Agreement, when necessary to protect the public health, safety or welfare or comply with applicable State or federal law or CITY zoning ordinances. If SUBDIVIDER requests and is granted an extension of time for completion of the improvements, CITY may apply the standards in effect at the time of the extension. Inspection and Maintenance Period. a. SUBDIVIDER shall obtain City inspection of the Parkland/Landscape Improvements in accordance with the City standards in effect at the time of adoption of the Resolution of Approval. SUBDIVIDER shall at all times maintain proper facilities and safe access for inspection of the Parkland Improvements by CITY inspectors and to the shops wherein any work is in preparation. Upon completion of the work the SUBDIVIDER may request a final inspection by the Director of Community Services, or the Director of Community Service's authorized representative. If the Director of Community Services, or the designated representative, determine that the work has been completed in accordance with this Agreement, then the Director of Community R:~.IG LERG~(AGRE EMN~oa rkland landscape improvemenl~greement.doc Services shall certify the completion of the Improvements to the Board of Directors. b. SUBDIVIDER shall continue Parkland/Landscape to maintain the Parkland/Landscape Improvements for ninety (90) days after they have been certified completed. No improvements shall be finally accepted unless the maintenance period has expired, and all aspects of the work have been inspected and determined to have been completed in accordance with the Parkland/Landscape Improvement Plans and CITY standards. SUBDIVIDER shall bear all costs of inspection and certification. 6. Release of Securities. Subject to approval by the Board of Directors of the Community Services District of the CITY, the securities required by this Agreement shall be released as follows: a. Security given for faithful performance of any act, obligation, work or Agreement shall be released upon the expiration of the maintenance period and the final completion and acceptance of the act or work, subject to the provisions of subsection (b) hereof. b. The Director of Community Servi'ces may release a portion of the security given for faithful performance of improvement work as the Parkland Improvement progresses upon application therefore by the SUBDIVIDER; provided, however, that no such release shall be for an amount less that 25% of the total Parkland Improvement Security given for faithful performance of the improvement work' and that the security shall not be reduced to an amount less than 50% of the total Parkland/Landscape Improvement Security given for faithful performance until expiration of the maintenance period and final completion and R:~.IGLERG~(AGREEMN~parkland landscape improvement~greement.doc acceptance of the improvement work. In no event shall the Director of Community Services authorize a release of the Parkland/Landscape Improvement Security, which would reduce such security to an amount below that required to guarantee the completion of the improvement work and any other obligation imposed by this Agreement. c. Security given to secure payment to the contractor, his or her subcontractors and to persons .furnishing labor, materials or equipment shall, six months after the completion and acceptance of the work, be reduced to an amount equal to the total claimed by all claimants for whom lien have been filed and of which notice has been given to the legislative body, plus an amount reasonable determined by the Director of Community Services to be required to assure the performance of any other obligations secured by the Security. The balance of the security shall be released upon the settlement of all claims and obligations for which the security was given. d. No security given for the guarantee or warranty of work shall be released until the expiration of the warranty period and until any claims filed during the warranty period have been settled. As provided in paragraph 10, the warranty period shall not commence until final acceptance of all work and improvements by the City Council. e. The CITY may retain from any security released, and amount sufficient to cover costs and reasonable expenses and fees, including reasonable attorney's fees. 7. Iniury to Public Improvements, Public Property or Public Utilities Facilities. SUBDIVIDER shall replace or have replaced, or repair or have repaired, as the case may be, all public improvements, public utilities facilities and surveying or subdivision R:~ZIGLERG~XAGREEMN~a rkland landscape improvemen~ ~greement.doc monuments which are dest[oyed or damaged or destroyed by reason of any work done' under this Agreement. SUBDIVIDER shall bear the entire cost of replacement or repairs of any and all public property on public utility property damaged or destroyed by reason of any work done. Under this agreement whether such property is owned by the United States or any agency thereof, or the State of California, or any agency or political subdivision thereof, or by the CITY or any public or private utility corporation or by any combination or such owners. Any repair or replacement shall be to the satisfaction, and subject to the approval, of the City Engineer. 8. Permits. SUBDIVIDER shall, at SUBDIVIDER'S expense, obtain all necessary permits and licenses for the construction and installation of the improvements, give all necessary notices and pay all fees and taxes required by law. 9. Default of SUBDIVIDER a. default of SUBDIVIDER shall include, but not be limited to, SUBDIVIDER'S failure to timely commence construction pursuant to this Agreement; SUBDIVIDER'S failure to timely commence construction of the Parkland/Landscape Improvements; SUBDIVIDER'S failure to timely cure the defect in the Parkland/Landscape Improvements; SUBDIVIDER'S failure to perform substantial construction work for a period of 20 calendar days after commencement of the work; SUBDIVIDER'S insolvency, appointment of a receiver, or the filing of any petition in bankruptcy either voluntary or involuntary which SUBDIVIDER fails to discharge within thirty (30) days; the commencement of a foreclosure action against the SUBDIVISION or a portion thereof, or any conveyance in lieu or in avoidance of foreclosure; or SUBDIVIDER'S failure to perform any other obligation under this Agreement. R:~.IGLERG~(AGREEMN~parkland landscape improvemen~ ~greement.doc b. The CITY reserves to itself all remedies available to it at law or in equity for breach of SUBDIVIDER'S obligations under this Agreement. The CITY shall have the right, subject to his section, to draw upon or utilize the appropriate security to mitigate CITY damages in event of default by SUBDIVIDER. The right of CITY to draw upon or utilize the security is additional to and not in lieu of any other remedy available to CITY. It is specifically recognized that the estimated costs and security amounts may not reflect the actual cost of construction or installation of Parkland/Landscape Improvements and, therefore, CITY damages for SUBDIVIDER'S default Shall be measured by the cost of completing the required improvements. The sums provided by the improvement security may be used by CITY for the completion of the Parkland/Landscape Improvements in accordance with the Parkland/Landscape Improvement Plans and specifications contained herein. In the event of SUBDIVIDER'S default under this Agreement, SUBDIVIDER authorizes CITY to perform such obligation twenty days after mailing written notice of default to SUBDIVIDER and to SUBDIVIDER'S Surety, and agrees to pay the entire cost of such performance by CITY. CITY may take over the work and prosecute the same to completion, by contract or by any other method CITY may deem advisable, for the account and at the expense of SUBDIVIDER, and SUBDIVIDER'S Surety shall be liable to CITY for an excess cost or damages occasioned CITY thereby; and, in such event, CITY without liability for so doing, may take possession of, and utilize in completing the work, such materials, appliances, plan and other property belonging to SUBDIVIDER as may be on the site of the work and necessary for performance of the work. R:~.iGLERG~(AGREEMNtparkland landscape improvemen~ ~reement.doc c. Failure of SUBDIVIDER to comply with the terms of this Agreement shall constitute consent to the filing by CITY of a notice of violation against all the lots in the SUBDIVISION, or to rescind the approval or otherwise revert the SUBDIVISION to acreage. The remedy provided by this Subsection C is in addition to and not in lieu of other remedies available to CITY. SUBDIVIDER agrees that the choice of remedy or remedies for SUBDIVIDER'S breach shall be in the discretion of CITY. d. In the event that SUBDIVIDER fails to perform any obligation hereunder, SUBDIVIDER agrees to pay all costs and expenses incurred by CITY in securing performance of such obligations, including costs of suit and reasonable attorney's fees. e. The failure of CITY to take an enforcement action with respect to a default, or to declare a breach, shall not be construed as a waiver of that default or breach or any subsequent default or breach of SUBDIVIDER. 10. Warranty. SUBDIVIDER shall guarantee or warranty the work done pursuant this Agreement for a period of one year after expiration of the maintenance period and final acceptance by the City Council of the work and improvements against any defective work or labor done or defective materials furnishbd. Where Parkland/Landscape Improvements are to be constructed in phases or sections, the one year warranty period shall commence after CITY acceptance of the last completed improvement. If within the warranty period any work or improvement, or part of any work or improvement done, furnished, installed, constructed or caused to be done, furnished, installed or constructed by SUBDIVIDER fails to fulfill any of the requirements of this Agreement or the Parkland/Landscape Improvement Plans and R:~.IGLERG~(AGREEMN~parkland landscape improvemer~ ~re~rnent.doc specifications referred to herein, SUBDIVIDER shall without delay and without any cost to CITY, repair or replace or reconstruct any defective or otherwise unsatisfactory part or parts of the work or structure. Should SUBDIVIDER fail to act promptly or in accordance with this requirement, SUBDIVIDER hereby authorizes CITY, at CITY option, to perform the work twenty days after mailing written notice of default to SUBDIVIDER and to SUBDIVIDER'S Surety and agrees to pay the cost of such work by CITY. Should CITY determine that an urgency requires repairs or replacements to be made before SUBDIVIDER can be notified, CITY may, in its sole discretion, make the necessary repairs or replacements or perform the necessary work and SUBDIVIDER shall pay to CITY the cost of such repairs. 11. Subdivider Not ARent of City. Neither SUBDIVIDER nor any of SUBDIVIDER'S agents or contractors are or shall be considered to be agents of CITY in connection with the performance of SUBDIVIDER'S obligations under this Agreement. 12. .Iniuryto Work. Until such time as the Parkland/Landscape Improvements are accepted by CITY, SUBDIVIDER shall be responsible for and bear the risk of loss to any of the improvements constructed or installed. CITY shall not, nor shall any officer or employee thereof, be liable or responsible for any accident, loss or damage, regardless of cause, happening or occurring to the work or improvements specified in. this Agreement prior to the completion and acceptance of the work or improvements. All such risks shall be the responsibility of and are hereby assumed by SUBDIVIDER. 13. Other A.qreements. Nothing contained in this Agreement shall preclude CITY from expending monies pursuant to agreements concurrently or previously executed between the parties, or from entering into agreement with other subdividers for the appointment of costs of water and sewer mains, or other improvements, pursuant to R:~IGLERG~(AGREEMN~parkland landscape improveme~i~reement.doc the provisions of the CITY ordinances providing therefore, nor shall anything in this Agreement commit CITY to any such apportionment. 14. SUBDIVIDER'S Obli.qation to Warn Public Durin,(:l Construction. Until final acceptance of the Parkland Improvements, SUBDIVIDER shall give good and adequate warning to the public of each and every dangerous condition existent in said improvements, and will take all reasonable actions to protect the public from such dangerous condition. 15. Vestin,q of Ownership. Upon acceptance of work on behalf of CITY and recordation of the Notice of Completion, ownership of the improvements constructed pursuant to this Agreement shall vest in CITY. 16. Final Acceptance of Work. Acceptance of the work on behalf of CITY shall be made by the City Council upon recommendation of the Director of Community Services after final completion and inspection of all Parkland/Landscape Improvements. The Board of Directors shall act upon the Director of Community Services recommendations within thirty (30) days from the date the Director of Community Services certifies that the work has finally completed, as provided in Paragraph 5. Such acceptance shall not constitute a waiver of defects by CITY. 17. Indemnity/Hold Harmless. CITY or any officer or employee thereof shall not be liable for any injury to persons or property occasioned by reason of the acts or omissions of SUBDIVIDER, its agents or employees in the performance of this Agreement. SUBDIVIER further agrees to protect and hold harmless CITY, its officials and employees from any and all claims, demands, causes of action, liability or loss of any sort, because of, or arising out of, acts or omissionsor SUBDIVIDER, its agents or employees in the performance of this Agreement, including all claims, demands, causes of action, liability, or loss because of, or arising out of, in whole or in part, the design or construction of the Parkland/Landscape Improvements. This indemnification and R:~ZIGLERG~XAGREEMN'koan~Iand landscape improvemen~ ~greement.doc Agreement to hold harmless shall extend to injuries to persons and damages or taking of property resulting from the design or construction of the Parkland/Landscape Improvements as provided herein, and in addition, to adjacent property owners as a consequence of the diversion of waters from the design or construction of public drainage systems, streets and other public improvements. Acceptance of any of the Parkland/Landscape Improvements shall not constitute any assumption by the CITY of any responsibility for any damage or taking covered by this paragraph. CITY shall not be responsible for the design or construction of the Parkland/Landscape Improvements pursuant to the approved Parkland/Landscape Improvement Plans, regardless of any negligent action or inaction taken by the CITY in approving the plans, unless the particular improvement design was specifically required by CITY over written objection by SUBDIVIDER submitted to the Director of Community Services before approval of the particular improvement design, which objection indicated that the particular improvement design was dangerous or defective and suggested an alternative safe and feasible design. After acceptance of the Parkland/Landscape Improvements, the SUBDIVIDER shall remain obligated to eliminate any defect in design or dangerous condition caused by the design or construction defect, however, SUBDIVIDER shall not be responsible for routine maintenance. Provisions of this paragraph shall remain in full force and effect for ten years following the acceptance by the CITY of Parkland/Landscape Improvements. It is the intent of this section that SUBDIVIDER shall be responsible for all liability for design and construction of the Parkland/l~andscape Improvements installed or work done pursuant to this Agreement and the CITY shall not be liable for any negligence, nonfeasance, misfeasance or malfeasance in approving, reviewing, checking, or correcting any plans or specifications or in approving, reviewing or inspecting any work or construction. The improvement security shall not be required to cover the provision of this paragraph. R:~ZIGLERG~(AGREEMNtparkland landscape improvementI ~greement.doc 18. Sale or Disposition of SUBDIVISION. Sale or other disposition of this property will not relieve SUBDIVIDER from the obligations set forth herein. If SUBDIVIDER sells the property or any portion of the property within the SUBDIVISION to any other person, the SUBDIVIDER may request a novation of this Agreement and a substitution of security. Upon approval of the novation and substitution of securities, the SUBDIVIDER may request a release or reduction of the securities required by this Agreement. Nothing in the novation shall relieve the SUBDIVIDER of the obligations under Paragraph 17 for the work or improvement done by SUBDIVIDER. 19. Time of the Essence. Time is of the essence of this Agreement.. 20. Time for Completion of Work Extensions. SUBDIVIDER shall complete construction of the improvements required by this Agreement no later than .]'uae 2004 In the event good cause exists as determined by the City Engineer, and if otherwise permitted under the tentative map condition, the time for completion of the improvements hereunder .may be extended. The extension shall be made by writing executed by the Director of Community Services. Any such extension may be granted without notice to SUBDIVIDER'S Surety and shall not affect the validity of this Agreement or release the Surety or Sureties on any security given for this Agreement. The Director of Community Services shall be the sole and final judge as to whether or not good cause has been shown to entitle SUBDIVIDER to an extension. Delay, other than delay in the commencement of work, resulting from an act of CITY, or by an act of God, which SUBDIVIDER could not have reasonably foreseen, or by storm or inclement weather which prevents the conducting of work, or by strikes, boycotts, similar actions by employees or labor organizations, which prevent the conducting or work, and which were not caused by or contributed to by SUBDIVIDER, shall constitute good cause for an extension of time for completion. As a condition of such extension, the Director of Community Services may require SUBDIVIDER to furnish new security guaranteeing R:~ZIGLERG~(AGREEMN~oan~Iand landscape improvemer~ {~greement.doc performance of this Agreement as extended in an increased amount as necessary to compensate for an increase in construction costs as determined by the Director of Community Services. 21. No Vestinq of Ri,qhts. Performance by SUBDIVIDER of this Agreement shall not be construed to vest SUBDIVIDER'S rights with respect to any change in any change in any zoning or building law or ordinance. 22. .Notices. Al! notices required or provided for under this Agreement shall be in writing and delivered in person or sent by mail, postage prepaid and addressed as provided in this Section. Notice shall be effective on the date it is delivered in person, or, if mailed, on the date of deposit in the United States Mail. Notices shall be addressed as follows unless a written change of address is filed with the City: Notice to CITY: City Clerk City of Temecula 43200 Business Park Drive P.O. Box 9033 Temecula, CA 92589-9033 Notice to SUBDIVIDER: Shea Homes Att:n: John Vance 10721 Treena St. Suite 200 San Diego, Ca 92131 23. severabilit¥. The provisions of this Agreement are severable. If any portion of this Agreement is held invalid by a court of competent jurisdiction, the remainder of the Agreement shall remain in full force and effect unless amended or modified by the mutual consent of the parties. R:~ZIGLERGO(AGREEMN~arkland landscape improvernen~ ~greement.doc 24. Captions. The captions of this Agreement are for convenience and reference only and shall not define, explain, modify, limit, exemplify, or aid in the interpretation, construction or meaning of any provisions of this Agreement. 25. Liti.qation or Arbitration. In the event that suit or arbitration is brought to enforce the terms of this contract, the prevailing party shall be entitled to litigation costs and reasonable attorney's fees. 26. Incorporation of.Recitals. The recitals to this agreement are hereby incorporated into the terms of this agreement. 27. Le.qal Responsibilities. The Subdivider shall keep itself informed of all local, State and Federal laws and regulations which in any manner affect those employed by it or in any way affect the performance of its obligations pursuant to this Agreement. The Subdivider shall at all times observe and comply with all such laws and regulations. The City, and its officers and employees, shall not be liable at law or in equity occasioned by failure of the Subdivider to comply with this section. 28. Entire A,qreement. This Agreement constitutes the entire Agreement of the parties with respect to the subject matter. All modifications, amendments, or waivers of the terms of this Agreement must be in writing and signed by the appropriate representative of the parties. In the case of the CITY, the appropriate party shall be the City Manager. R:~ZIGLERG~(AGREEMN~parkland landscape ImprovementI ~greement.doc IN WITNESS WHEREOF, this Agreement is executed by CITY, by and through its Mayor. Shea Homes Limited Partnership A California Limited Partnership By: J.F. Shea Co., Inc., a Nevada Corporation, General Partner Name:~Z?J3/3 & ~ By: ~ ~ .~me: ~- / ~. ~ ~rx CITY OFTEMECULA By:. Name: Title: (Proper Notarization of SUBDIVIDER'S signature is required and shall be attached) ATTEST: By:. Susan W. Jones, CMC, City Clerk RECOMMENDED FOR APPROVAL: By: Name: City Engineer By: Name: Director of Community Services APPROVED AS TO FORM: BY:pe~ City Attorney R:~ZlGLERGg(AGREEMN~parkland landscape improvemenj[~greement.doc State of California ) ) S.S. County of San Diego ) On June 21, 2002, before me, Debm E. Young, Notary Public, personally appeared John B. Vance and Paul L.L. Barnes personally known to me to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Corem, / 1333971 UJ ~ NOTARY PUBLiC-CALIFORNIA Comm. Expires Dec.~, 2005 1oft Shea Homes Cost Estimate for Tr. 23209/Park ~/1~02 Descrtption Unit Quantit Unit Sub Total Cost Total Construcl~on ~x~c~eteWalk ~.f. 11,520 $ 2,50 $ 28,800.00 ~- C. PaY;no s.f. 3,885 $ 5.00 $ 19,425.00 ~cTeteCurb ;.f. 210 $ 5.~0 $ 1,050.00 H.C. Ramps/Stgnage ~ts 2 $ 1,500.00 $ 3,000.00 ~lnldngFountaln oa. $ 2,750.00 $ 2,750.00 Trash Receptacles ea. $ 500.00 $ 3,000.00 BBQ's ea. $ 300.00 $ Be~hes ' ea. $ 750.00 $ 3,000.00 F~n~Table~ sa. $ 1,250,00 $ Bike Racks ea. $ 7{XL00 $ 700.00 PVCSplitRoJIFence I.f. 78( $ 10.00 $ S~n ea. $ 5,000.00 $ 5,000.00 SeonltyLJghtlng I.e. 1 $ 20,000.00 $ Fray Equipment ~6. 1 $ 68,476.00 $ 68,476.00 ShadeStmctum e.a. 1: $ 20,000.00 $ 20,000,00 Play Ama Sand :.y. 2051 $ 60.00 $ 15,900.00 PlayAmaRut)berlVlaUing s.f. 1,690 $ 15.00 $ 25,350.~0 Con(~etePtayCurb I.f. 415 $ 25.00 $ 10,375.00 Totals $ 240,226.00 Bari Valve- 1 1/2 · e~. 4 $ 75.00 $ 300.00 BacHtowPTeventor*11/2' e~. I $ ?,500.00 $ 7,500.00 Master Valve- 1 t/2' es. I $ 250.00 $ 250.00 Fiow~nsor ea. t $ 650.00 $ 650.00 Coflb~ler ea. I $ 5,000.00 $ 5,000.00 Heads, Piping, Valves, etc. s.f. 108,330 $ 0.90 $ 97,505.10 QbJckCoiJide~ ea. 16 $ 75.00 $ Totals $ tt2,405.10 Planting WeedAbateme~lt e.f. 108,339 $ 0.05 $ 6,416.95 8ollF'~p. s.f. 108,339 $ 0.10 $ 10,833.90 Mulch c.y. 130 $ 05.00 $ 8,450.00 H'ydmseededTu~f 9,f. 88,928 $ 0.~0 $ 8,892.80 GroundCover 8.f. 19,411 $ 0.40 $ 7,764.40 Shrt~s-SGagon ea. 432 $ 16,00 $ 6,480.00 $hrt~e- 1 Gaflon ea. 20 $ 4.50 $ 60.00 Trees-24'B(2x ea. 91 $ 275.00 $ 25,025.00 90 Day Mainte~mnce s,f. 108,339 $ 0.07 $ 7,583.73 Totals $ 80,636.78 Totzd $ 433,167.88 Cort~Tngency (~10~) $ 43,316.79 6rand Total $ 476,484,67 Bond No. 00-290-919 Premium: $2,097.00 CITY OF TEMECULA PARKLAND/LANDSCAPE FAITHFUL PERFORMANCE BOND WHEREAS, the City of Temecula, State of Califomia, and Shea Homos Limited Partnership (hereinafter designated as "Principal") have entered into an Agreement whereby Principal agrees to install and complete certain Parkland Improvements, which said Agreement, dated 20 , and identified as Project Tract 23209/Park Serena Hills , is hereby referred to and made a part hereof; and WHEREAS, Principal is required under the terms of the Agreement to furnish a bond for the Faithful Performance of the Agreement; /Assurance Company NOW, THEREFORE, we the Principal and American Home as surety, are held and firmly bound unto the City of Temecula, California, in the penal sum of $476~484.00 ...... ., Four Hundred Seyenty Six Thousand Four Hundred Eight Four & 00/100 lawful money of the United States, for the payment of such stun well and truly to be made, we bind ourselves, our heirs, successors, executors and administrators, jointly and severally. The condition of this obligation is such that the obligation shall become null and void if the above-bounded Principal, his or its heirs, executors, administrators, successors, or assigns, shall in all things stand to, abide by, well and truly keep, and perform the covenants, conditions, and provisions in the Agreement and any alteration thereof made as therein provided, on his or their part, to be kept and performed at the time and in the manner therein specified, and in all respects according to his or their true intent and meaning, and shall indemnify and save harmless the City of Temecula, its officers, agents, and employees, as therein stipulated; otherwise, this obligation shall be and remain in full force and effect. As a part &the obligation secured hereby and in addition to the face mount specified therefor, there shall be included costs and reasonhble expenses and fees, including reasonable attorney's fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgement rendered. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anyway affect its obligations on this bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Agreement or the work or to the specifications. /// IN WITNESS WHEREOF, this instrument has been duly execmed by the Principal and Surety above named, on June 20 ., 20 02 SURETY AMERICAN HOME ASSURANCE COMPANY At t orne¥-i~n-F~ ct) (TITLE) PRINCIPAL Shea Hom~s Limited Partnerhip a California Limited Partnership By: J.F. Shea Co. Inc., ~a Nevada corporation, ~~rtner (NAME),_ ~ . (TITLE) ~(NAME) (TITLE) APPROVED AS TO FORM: Peter Thorsen City Attorney ~ CAUFORNIA'ALL-PURPOSE ACKNOWLEDGMENT No. Sso? State of California County of oz ange On June 20, 2002 before me, DATE personally appeared [] personally known to me - OR - Chzistine Maestas, Notazy Public NAME, TITLE OF OFFICER -E.G., "JANE DOE, NOTARY PUBLIC" Te~ I. Jackson NAME{S) OF SiGNER(B) [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITN .E~~ ~,,..~..~.-/ SIGNATURE OF NOTARY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF A'I-FACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER TITLE(S) [] PARTNER(S) [] LIMITED [] GENERAL [] A'I-rORNEY-IN-FACT [] TRUSTEE(S) ~ GUARDiAN/CONSERVATOR [] OTHER: Pazkland/Landscape Faithful Pezfozmance Bond TITLE OR TYPE OF DOCUMENT NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(lES) June 20, 2002 DATE OF DOCUMENT Shea Homes himited Paztnezship, a Califoznia limited paztnership SIGNER(S) OTHER THAN NAMED ABOVE WC~4087/EP7/94 (~ 1993NATIONALNOTARYASSOCIATION · 8230 Rammer Ave.. P,O. Box 7184 · Cenoga Park.CA 91309-7184 State of California ) ) S.S. County of San Diego ) On June 21, 2002, before me, Debra E. Young, Notary Public, personally appeared John B. Vance and Paul L.L. Bames personally known to me to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instnnnent the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. OEBRA E, YOUNG Comm.//1333971 I~OIARY RUBUC .CALIFORNIA San Diego County Bond NO. 00-290-919 Premium: Included in charge for Performance Bond CITY OF TEMECULA PARKLAND/LANDSCAPE LABOR AND MATERIALS BOND WHEREAS, the City of Temecula, State of California, and Shea Homes Limited Partnership , (hereinafter designated as "Principal") have entered into an Agreement whereby Principal agrees to install and complete certain Parkland Improvements, which said Agreement, dated , 20 , and identified as H~%ls , Project Tract: No. 23209/Park/Serena , ~snereDy referred to and made a par~ hereof; and WHEREAS, under the 1erin of said Agreement, Principal is required before entering upon the performance of the work, to file a good and sufficient payment bond with the City of Temecula, to secure the claims to which reference is made in Title 15 (commencing with Section 3082) of Part 4 'of Division 3 of the Civil Code of the State of California; and / Comp any NOW, THEREFORE, we the principal and American Home Assurance as Surety, are held and firmly bound unto the City of Temecula, California, and all con~'actors, subcontractors, laborers, materialmen, other persons employed in the performance of the aforesaid Agreement and referred to in Title 15 of the Civil Code, in the penal sum of * · Two Hundred Thirty Eight Thousand Two Hundred Forty TWo and 00/100 $238,242.0Qlawful money of the United States, for mater als furnished or labor thereon of any kind, or for amounts due under the Unemployment Insurance Act with respect to such work or labor, that Surety will pay the same in an amount not exceeding the amount set forth. As a part of the obligation secured hereby and in addition to the face amount specified therefor, there shall be included costs and reasonable expenses and fees, including reasonable attorney's fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgement rendered. It is hereby expressly stipulated and agreed that this bond shall insure to the benefit of any and all persons, companies and corporations entitled to file claims under Title 15 RSZIGLERG\FORMS\parkIand landscape labor and matcria{s bond.doc -I- (commencing with Section 3082) of Part 4 of Division 3 of the Civil Code, so as to give a fight of action to them or their assigns in any suit brought upon this bond. If the condition of this bond is fully performed, then this obligation shall become null and void; otherwise, it shall be and remain in full rome and effect. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anyway affect its obligations on this bond, and it does hereby waive notice of any such changes, extension of time, alteration or addition to the terms of the Agreement or to the work or to the specifications. R:~ZIGLERG~FORMS~parkland landscape labor and materials bond.doc - 2 - IN WITNESS WHEREOF, this instrument has been duly executed by the Principal and Surety above named, on ,.Tune 20 ., 20 02 (Seal) (Seal) AMERICAN HOME ASSURANCE COMPANY At ~orney-in-Fac t (Title) Shea Homes Limited Partnership a California Limited Partnership By: J.F. Shea Co. Inc., a Nevada corporation, General Partner (Title) (Name) (Title) APPROVED AS TO FORM: R:~ZIGLERG\FORMS\parkland landscape labor and materials bond.doc - 3 - CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT .o. 8Bo7 State of calif'o:n:[a Coun~ of Orange On June 20, 20o2 before me, DATE personally appeared [] personally known to me - OR - Christine Maestas, Notary Public NAME, TITLE OF OFFICER - E.G., "JANE DOE. NOTARY PUBLIC" Teresa I. Jackson , NAME(S) OF SIGNER(S) [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/am subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(les), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. SIGNATURE OF NOTARY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF A'rFACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER TITLE(S) [] PARTNER(S) [] LIMITED [] GENERAL [] ATTORNEY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: Parkland/Landscape ~abo: and Materials Bond TITLE OR TYPE OF DOCUMENT Three NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(lES) June 20, 2002 DATE OF DOCUMENT Shea Homes Limited Partnership, a California limited partnership SIGNER(S) OTHER THAN NAMED ABOVE WC-4OB7/EP7/B4 ~) 1983 NATIONAL NOTARYASSOCIATION · 8230 Rammer Ave.. P.O. Box 7184 · Canoga Park.CA 91309-7184 · - Amer. ican Home ~ssuranee Company POWER OF ATTORNEY National Union Fire Insurance Company of Pittsburgh, Pa. Principal Bond Office: 70 Pine Street, New York, N.Y. 10270 No. 88-B-34295 KNOW ALL MEN BY THESE PRESENTS: That American Home Assurance Company, a New York corporation, and National Union Fire Insurance Company of Pittsburgh, Pa., a Pennsylvania corporation, does each hereby appoint --Christine Maestas, Teresa I. Jackson, Victoria Voorhees, John Miller: of Santa Aha, California--- its true and lawful Attorney(s)-in-Fact, with full authority to execute on its behalf bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, issued in the course of its business, and to bind the respective company thereby. IN WITNESS WHEREOF. American Home Assurance Company and National Union Fire insurance Company of Pittsburgh, Pa. have each executed these presents Michael C. Fay, Vice Pre~idant STATE OF NEW YORK } COUNTY OF NEW YORK }ss. On this t7th day of September, 2001 before me came the above named officer of American Home Assurance Company and National U9ion Fire Insurance Company of Pittsburgh, Pa., to me personally known to be the individual and officer described herein, and acknowledged that he executed the foregoing instrument and affixed the seals of said corporations thereto by authority of his office. Nota~ CERTIFICATE Excerpts of Resolutions adopted by the Boards of Directors of American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa. on May 18, 1976: "RE~OLVED, that the Chairman of the Board, the President, or any Vice President be, and hereby is, authorized to appoint Attorneys-in-Fact to represent and act for and on behalf of the Company to execute bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, and to attach thereto the corporate seal of the Company, in the transaction of its surety business; "RESOLVED, that the signatures and attestations of such officers and the seal of the Company may be affixed to any such Power of Attorney or to any certificate relating thereto by Pacsimile, and any such Power of Attorney or certificate bearing such facsimile signatures or facsimile seal shall be valid and binding upon the Company when so affixed with respect to any bond, undertaking, recognizance or other contract of indemnity or writing obligatory in the nature thereof; "RESOLVED, that any such Attorney-in-Fact delivering a secretarial certification that the foregoing resolutions still be in ~ffect may insert in such certification the date thereo[ said date to be not later than the date of delivery thereof by such Attorney-in-Fact." 1, Elizabeth M. Tuck, Secretary of American Home Assurance Company and of National Union Fire Insurance Company of Pittsburgh, Pa. do hereby certify that the foregoing excerpts of Resolutions adopted by the Boards of Directors of' these corporations, and the Powers of Attorney issued pursuant thereto, are true and correct, and that both the Resolutions and the Powers of Attorney are in t~tl force a~d effean IN WITNESS WHEREOF, [ have hereunto set my hand and ~ffixed the facsimile seal of each corporation- this 20th day of June 20~2 Elizabeth M. Tuc}, S~cretary 65166 (4)96) State of Califomia ) ) S.S. County of SanDiego ) On June 21, 2002, before me, Debra E. Young, Notary Public, personally appeared John ~. Vance and Paul L.L. Barnes personally known to me to be the persons whose names are subscribed to the within instnnnent and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Bond No. 00-290-919-A Premium: Included in charge for Performance Bond CITY OF TEMECULA PARKLAND/LANDSCAPE WARRANTY BOND WHEREAS, the City of Temecula, State of California (hereinafter designated as "City"), ~*Partn~rsh~ip .... and Shea Homes Limited ~ .tneremarter uemgnateo as "Principal") have entered into an Agreement whereby Principal agrees to install and complete certain designated Parkland Improvements, which said Agreement, dated 20 , and identified as Project Tract: 23209/Park. Serena Hille is hereby referred to and made a part hereof; and WHEREAS, Principal is required to warranty the work done under the terms of the Agreement for a period of one (1) year following acceptance thereof by City against any defective work or labor done or defective materials furnished, in the amount of ten percent (10%) of the estimated cost of the improvements; ,Company NOW, THEREFORE, we the Principal and American Home Assurance! as su~ty, are held and firmly bound unto the City of Temecula, California, in the penal sum of * · Forty Seven Thous,and Six Hundred Forty Eight and 00/100 $47,648.oo , lawful money of the United States, for the payment of such sum well and truly to be made, we bind ourselves, our heirs, successors, executors and administrators, jointly and severally. The condition of this obligation is such that the obligation shall become null and void if the above-bounded Principal, his or its heirs, executors, administrators, successors, or assigns shall in all things stand to, abide by, well and truly keep, and perform the covenants, conditions, and provisions in the Agreement and any alteration thereof made as therein provided, on his or their part, to be kept and performed at the time and in the manner therein specified, and in all respects according to his or their true intent and meaning, and shall indemnify and save harmless the City of Temecula, its officers, agents, and employees, as therein stipulated; otherwise, this obligation shall be and remain in full force and effect R:~ZIGLERGkFORMS\Warranty Bond parkland landscape.doc - I - As a part of the obligation secured hereby and in addition to the face mount specified therefor, there shall be included costs and reasonable expenses and fees, including reasonable attorney's fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgement rendered. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anyway affect its obligations on this bond, and ii does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Agreement or to the work or to the specifications. R:~ZIGLERG~FORMS\Warranty Bond parkland landscape.doc -2 - IN WITNESS WHEREOF, this inslrument has been duly executed by the Principal and Surety above named, on June 20 ., 20 02 . (Seal) (Seal) American Home Assuranc~ Company Attorney-in-Fact (Title) Shea Homes Limited Partnership a California Limited Partnership · By: J.F. Shea Co. Inc., a Nevada corporation, General P~tner PRINCIPAI~ By: //~ % ~//'~ . (Name) (Title) (Name) (Title) APPROVED AS TO FORM: R:~ZIGLERG~FORMS\Warranty Bond parkland landscape.doc - 3 - . CAUFORNIA ALL-PURPOSE ACKNOWLEDGMENT NO. 5907 State of Califoznia County of o~ange On Juae 20, 2002 before me, DATE personally appearod Chiistine Maestas, Notary Public NAME, T~LE OF OFFICER - E.G.. "JANE DOE. NOTARY PUBLIC T~esa I. Jackson NAME(S) OF SIGNER(S) [] personally known to me - OR - [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WIT~~ official seal. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF A'rFACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER Pazkland/Landscape Wamzanty Bond TITLE(S) [] PARTNER(S) [] LIMITED [] GENERAL [] ATTORNEY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: TITLE OR TYPE OF DOCUMENT Thzee NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(lES) AmeIican Home Assuzance Company June 20, 2002 DATE OF DOCUMENT Shea Homes Limited Paztnezship, a Califo~nia limited paItnership SIGNER(S) OTHER THAN NAMED ABOVE WC~IOO7/EP 7/94 ~) 1993NATIONALNOTARYASSOCIATION · 8236 Remmet Ave., P,O. BOX 7184 · Canoga Park. CA 91309-7184 ,Afiaeriear* Home Assurance Company POWER'OF ATTORNEY National Union Fire Insurance Company of Pittsburgh, Pa. Principal Bond Office: 70 Pine Street, New York, N.Y. 10270 No. 88-B-34295 I~NOW ALL MEN BY THESE PRESENTS: That American Home Assurance Company, a New York corporation, and National Union Fire Insurance Company of Pittsburgh, Pa., a Pennsylvania corporation, does each hereby appoint --Christine Maestas, Teresa I. Jackson, Victoria Voorhees, John Miller: of Santa Aaa, California-- its true and lawful Attomey(s)-in-Fact, with full authority to execute on its behalf bonds, undertakings, recognizances and other contracts of indemnity &nd writings obligatory in the nature thereof, issued in the course of its business, and to bin~l th~ ?espective company thereby. IN WITNESS WHEREOF, American Home Assurance Company and National Union Fire insurance Company of Pittsburgh, Pa. have each executed these presents Michael ~. FaY, Vi~e Pre6ident STATE OF NEW YORK COUNTY OF NEW YORK }ss. On this 17th day of September, 2001 before me came the above named officer of American Home Assurance Company and Nationa[ Union Fire Insurance Company of Pittsburgh, Pa., to mc personally known to be the individual and officer described herein, and acknowledged that he executed the foregoing instrument and a.,q]xed the seals o£ said corporations thereto, by authority of his office. CERTIFICATE Excerpts of Resolutions adopted by thc Boards of Directors of American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa. on May 18, 1976: "RESOLVED, that the Chairman of the Board, the President, or an>, Vice President be, and hereby is, authorized to appoint Attorneys-in-Fact to represent and act for and on behalf of the Company to execute bonds, undertakings, recognizances and other contracts o£ indemnity and writings obligatory in the nature thereof, and to attach thereto the corporate seal o f the Company, in th6 transaction of its surety business; "RESOLVED, that the signatures and attestations of such officers and the seal of the Company may be affixed to any such Power of Anomey or to any certificate relating thereto by hcsimile, and any such Power of Attorney or certificate bearing Sfi~h facsimile signatures or facsimile seal shall be valid and binding upon the. Company when so affixed with respect to any bond, undertaking, recognizance or other contract of indenmity or writing obligatory in the nature thereof; "RESOLVED, that any such Attorney-in-Fact delivering a secretarial certification that the foregoing resolutions still be in effect may insert in such certification the date thereo[ said date to be not later than the date of delivery thereof by such Attorney-in-Fact." I, Elizabeth M Tuck, Secretary of American Home Assurance Company and of National Union Fire Insurance Company of Pittsburgh, Pa. do hereby certify that the foregoing excerpts of Resolutions adopted by the Boards of Directors of these corporations, and the Powers of Attorney issued pursuant thereto, are tree and correct, and that both the Resolutions and the Powers of Attorney are in full force and effect. IN WITNESS WHEREOF, [ have hereunto set my hand and affixed the facsimile seal of each corporation this 20th day of . 0'une , 20(12 Tuck, Secretary. . 65166(4/96) State of Califomia ) ) S.S. County of San Diego ) On June 21, 2002, before me, Debra E. Young, Notary Public, personally appeared John B. Vance and Paul L.L. Barnes personally known to me to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. ~,~1~ Comm.#1333971 t~ V/~NOTARY PUBLIC-CAlIFORNIA UI % ~?,~'~/ Sa0 Diego C~nty ~ ~ My Comm. ExR[tes Dec 9.2005 ~ CITY OF TEMECULA PARKLAND I LANDSCAPE IMPROVEMENT AGREEMENT DATE OF AGREEMENT: June 2002 NAME OF SUBDIVIDER: Shea Homes r.im/te~ Pactnership (Referred to as "SUBDIVIDER") NAME OF SUBDIVISION: Serena Hills (Referred to as "SUBDIVIDER") TRACT NO.: 23209 TENTATIVE MAP RESOLUTION OF APPROVAL NO.: (Referred to as "Resolution of Approval") PARKLAND IMPROVEMENT PLANS NO.: ESTIMATED TOTAL COST OF PARKLAND IMPROVEMENTS:$~ COMPLETION DATE: June 200/* NAME OF SURETY AND BOND NO. FOR LABOR AND MATERIALS BOND: American Home Assurance C~mpan¥ Bond No. 00-290-243 NAME OF SURETY AND BOND NO. FOR FAITHFUL PERFORMANCE BOND: American Home Assurance Com~an~; Bond No. 00-290-243 NAME OF SURETY AND BOND NO. FOR WARRANTY BOND: American Home Assurance Company Bond No. 00-290-243A R:~ZIGLERG~(AGREEMN~oarkland landscape improvement~agreement.doc This Agreement is made and entered into by and between the City of Temecula, California, a Municipal Corporation of the State of California, hereinafter referred to as CITY, and the SUBDIVIDER. RECITALS A. SUBDIVIDER has presented to CITY for approval and recordation, a final subdivision map Of a proposed subdivision pursuant to provisions of the Subdivision Map Act of the State of California and the CITY ordinances and regulations relating to the filing, approval and recordation of subdivision maps. The Subdivision Map Act and the CITY ordinances and regulations relating to the filing, approval and recordation of subdivision maps are collectively referred to in this Agreement as the "Subdivision Laws." B. A tentative map of the SUBDIVISION has been approved, subject to the Subdivision Laws and to the requirements and conditions contained in the Resolution of Approval. The Resolution of Approval is on file in the Office of the City Clerk and is incorporated into this Agreement by reference. C. SUBDIVIDER is required, as a condition of the approval of the tentative map that the Parkland Improvemenl plans must be completed, in compliance with City standards, by the Completion Date. The Subdivision Laws establish as a condition precedent to the approval of a final map, that the SUBDIVIDER has entered into a secured Agreement with the CITY to complete the Parkland/Landscape Improvement Plans within the Completion Date. D. In consideration of approval of a final map for the SUBDIVISION by the City Council, SUBDIVIDER desires to enter into this Agreement, whereby promises to install and complete, at SUBDIVIDER'S own expense, all the Parkland/Landscape Improvement work required by City in connection with proposed subdivision. Subdivider has secured this agreement by Parkland/Landscapihg Improvement Security required by R:~ZIGLERG~(AGREEMN~parkland landscape improvement~greement.doc the Subdivision Laws and approved by the City Attorney. The term "Parkland" includes landscape areas intended to be maintained by the Temecula Community Services District. E. Complete Parkland/Landscape Improvement Plans for the construction, installation and completion of the Parkland Improvements have been prepared by SUBDIVIDER and approved by the Director of Community Services. The Parkland Improvement Plans numbered as referenced previously in this Agreement are on file in the Office of the Director of Community Services and are incorporated into this Agreement by this reference. All references in this Agreement to the Parkland Improvement Plans shall include reference to any specifications for the Improvements as approved by the Director of Community Services. F. An estimate of the cost for construction of the Parkland Improvements according to the Improvement Plans has been made and approved by the Director of Community Services. The estimated amount is stated on Page 1 of this Agreement. The basis for the estimate is attached as Exhibit "A" to this Agreement. G. The CITY has adopted standards for the construction and installation of Parkland/Landscape Improvements within the CITY. The Parkland/Landscape Improvement Plans have been prepared in conformance with the CITY standards, (in effect on the date of approval of the Resolution of Approval). H. SUBDIVIDER rec(~gnizes that by approval of the final map for SUBDIVISION, CITY has conferred substantial rights upon SUBDIVIDER, including the right to sell, lease, or finance lots within the SUBDIVISION, and has taken the final act necessary to subdivide the property within the SUBDIVISION. As a result, CITY will be damaged to the extent of the cost of installation of the Parkland/Landscape Improvements by SUBDIVIDER'S failure to perform its obligation under this Agreement, including, but not limited to, SUBDIVIDER'S obligation to complete construction of R:~.IGLERG~XAGREEMN~parkland landscape improvernent~greement.doc Parkland/Landscape Improvements by the Completion Date. CITY shall be entitled to all remedies available to it pursuant to this Agreement and the Subdivision Laws in the event of a default by SUBDIVIDER. It is specifically recognized that the determination of whether a reversion to acreage or rescission of the SUBDIVISION constitutes an adequate remedy for default by the SUBDIVIDER shall be within the sole discretion of NOT, THEREFORE, in consideration of the approval and recordation by the City Council of the final map of the SUBDIVISION, SUBDIVIDER and CITY agree as follows: 1. SUBDIVIDER'S Obli,qations to Construct Parkiand/Landscapin,q Improvements. SUBDIVIDER Shall: a. Comply with all the requirements of the Resolution of Approval, and any amendments thereto, and with the provisions of the Subdivision Laws. b. Pursuant to the requirements of Labor Code Section 1720, SUBDIVIDER shall pay prevailing wages for all work performed for the construction, alteration, demolition, installation, or repair for the Parkland/Landscape Improvement Work required by this Agreement. In accordance with the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of workman needed to execute this Contractor from the Director of the Department of Industrial Relations. These rates are on file with the City Clerk. Copies may be obtained at cost at the City Clerk's office of the City of Temecula. Subdivider shall post a copy of such wage rates at the job site and shall R:~ZlGLERG~,AGREEMN~parkland landscape improvement4~greement.doc pay the adopted prevailing wage rates as a minimum. Subdivider shall 'comply with the provisions of Sections 1773.8, 1775, 1776, 1777.5, 1777.6, and 1813 of the Labor Code and other applicable laws and regulations with respect to the payment of prevailing wages. Pursuant to the provisions of 1775 of the Labor Code, Subdivider shall forfeit to the City, as a penalty, the sum of $25.00 for each calendar day, or portion thereof, for each laborer, worker, or mechanic employed, paid less, than the stipulated prevailing rates for any work done under this Agreement, by it or by any subcontractor under it, in violation of the provisions of the Agreement or in violation of any applicable laws or regulations pertaining to the payment of prevailing wages. c. Complete by the time established in Section 20 of this Agreement and at SUBDIVIDER'S own expense, all the Parkland/Landscape Improvement work required on the Tentative Map and Resolution of Approval in conformance with the Parkland Improvement Plans and the CITY standards: d. Furnish the necessary materials for completion of the Parkland Improvements in conformity with the Parkland Improvement Plans and CITY standards. e. Except for easements or other interested in real property to be dedicated to the Homeowners Association of the SUBDIVISION, acquire and dedicate, or pay the cost of acquisition by CITY, of all rights- of-way, easements and other interests in real property for construction Or installation of the Parkland/Landscape Improvements, free and clear of all liens and encumbrances for the SUBDIVIDER'S obligations with regard to acquisition by CITY of off-site rights-of-way, easements and other R:~ZIGLERG~XAGREEMN~parkland landscape improvement~greement.doc interests in real property shall be subject to a separate Agreement between SUBDIVIDER and CITY. 2. Acquisition and Dedication of Easements or Ri,qhts-of-Wa¥. If any of the Parkland/Landscape Improvements and land development work contemplated by this Agreement are to be constructed or installed on land not owned by SUBDIVIDER, no construction or installation shall be commenced before: a. The offer of dedication to CITY or appropriate rights-of- way, easements or other interest in real property, and appropriate authorization from the property owner to allow construction or installation of the Improvements or work, or b. The dedication to, and acceptance by, the CITY of appropriate rights-of-way, easements or other interests in real property, and approved by the Department of Public Works, as determined by the Director of Community Services. c. The issuance by a court of competent jurisdiction pursuant to the State Eminent Domain Law of an order of possession. SUBDIVIDER shall comply in all respects with order of possession. Nothing in this Section 2 shall be construed as authorizing or granting an extension of time to SUBDIVIDER. 3. Security. SUBDIVIDER shall at all times guarantee SUBDIVIDER'S performance of this Agreement by furnishing to CITY, and maintaining, good and sufficient security as required by the Subdivision Laws on forms approved by CITY for the purposes and in the amounts as follows: a. to assure faithful performance of this Agreement in regard to said improvements in and amount of 100% of the estimated cost of the Parkland/Landscape Improvements; and R:~ZIGLERG~(AGREEMN~pa~kland landscape improvement~greement.doc b. to secure payment to any contractor, subCOntractor, persons renting equipment, or furnishing labor materials for Parkland/Landscape Improvements required to be constructed or installed pursuant to this Agreement in the additional amount of 50% of the estimated cost of the Improvements; and c. to guarantee or warranty the work done pursuant to this Agreement for a pedod of one year following acceptance thereof by CITY against any defective work or labor done or defective materials furnished in the additional amount of 10% of the estimated cost of the Parkland Improvements. The securities required by this Agreement shall be kept on file with the City Clerk. The terms of the security documents referenced on Page 1 of this Agreement are incorporated into this Agreement by this Reference. If any security is replaced by another approved security, the replacement shall be filed with the City Clerk and, upon filing, shall be deemed to have been made a part of and incorporated into this Agreement. Upon filing of a replacement secudty with the City Clerk, the former security may be released. 4. Alterations to Parkland Improvement Plans. a. Any changes, alterations or additions to the Parkland/Landscape Improvement Plans and specifications or to the improvements, not exceeding 10% of the original estimated cost if the improvement, which are mutually agreed upon by the CITY and SUBDIVIDER, shall not relieve the improvement security given for faithful performance of this Agreement. or additions exceed 10% of improvement, SUBDIVIDER In the event such changes, alterations, the original estimated cost of the shall provide improvement security for R:~ZlGLERG~(AGREEMN~parkland landscape Improvement,agreement.doc faithful performance as required by Paragraph 3 of this Agreement for 100% of the total estimated cost of the improvement as changed, altered, or amended, minus any completed partial releases allowed by Paragraph 6 of this Agreement. b. The SUBDIVIDER shall construct the Parkland Improvements in accordance with the CITY Standards in effect at the time of adoption of the Resolution of Approval. CITY reserves the right to modify the standards applicable to the SUBDIVISION and this Agreement, when necessary to protect the public health, safety or welfare or comply with applicable State or federal law or CITY zoning ordinances. If SUBDIVIDER requests and is granted an extension of time for completion of the improvements, CITY may apply the standards in effect at the time of the extension. Inspection and Maintenance Period. a. SUBDIVIDER shall obtain City inspection of the Parkland/Landscape Improvements in accordance with the City standards in effect at the time of adoption of the Resolution of Approval. SUBDIVIDER shall at all times maintain proper facilities and safe access for inspection of the Parkland Improvements by CITY inspectors and to the shops wherein any work is in preparation. Upon completion of the work the SUBDIVIDER may request a final inspection by the Director of Community Services, or the Director of Community Service's authorized representative. If the Director of Community Services, or the designated representative, determine that the work has been completed in accordance with this Agreement, then the Director of Community R:~.IG LERG~(AG RE E MN~parkland landscape improvement~g reement.doc Services shall certify the completion of the Improvements to the Board of Directors. b. SUBDIVIDER shall continue Parkland/Landscape to maintain the Parkland/Landscape Improvements for ninety (90) days after they have been certified completed. No improvements shall be finally accepted unless the maintenance period has expired, and all aspects of the work have been inspected and determined to have been completed in accordance with the Parkland/Landscape Improvement Plans and CITY standards. SUBDIVIDER shall bear all costs of inspection and certification. 6. Release of Securities. Subject to approval by the Board of Directors of the Community Services District of the CITY, the securities required by this Agreement shall be released as follows: a. Security given for faithful performance of any act, obligation, work or Agreement shall be released upon the expiration of the maintenance period and the final completion and acceptance of the act or work, subject to the provisions of subsection (b) hereof. b. The Director of Community Services may release a portion of the security given for faithful performance of improvement work as the Parkland Improvement progresses upon application therefore by the SUBDIVIDER; provided, however, that no such release shall be for an amount less that 25% of the total Parkland Improvement Security given for faithful performance of the improvement work and that the security shall not be reduced to an amount less than 50% of the total Parkland/Landscape Improvement Security given for faithful performance until expiration of the maintenance period and final completion and R:~ZIGLERG~XAGREEMN~parkland landscape improvement~greement.doc acceptance of the improvement work. In no event shall the Director of Community Services authorize a release of the Parkland/Landscape Improvement Security, which would reduce such security to an amount below that required to guarantee the completion of the improvement work and any other obligation imposed by this Agreement. c. Security given to secure payment to the contractor, his or her subcontractors and to persons .furnishing labor, materials or equipment shall, six months after the completion and acceptance of the work, be reduced to an amount equal to the total claimed by all claimants for whom lien have been filed and of which notice has been given to the legislative body, plus an amount reasonable determined by the Director of Community Services to be required to assure the performance of any other obligations secured by the Security. The balance of the security shall be released upon the settlement of all claims and obligations for which the security was given. d. No security given for the guarantee or warranty of work shall be released until the expiration of the warranty period and until any claims filed during the warranty period have been settled. As provided in paragraph 10, the warranty period shall not commence until final acceptance of all work and improvements by the City Council. e. The CITY may retain from any security released, and amount sufficient to cover costs and reasonable expenses and fees, including reasonable attorney's fees. 7. Injury to Public Improvements, Public Property or Public Utilities Facilities. SUBDIVIDER shall replace or have replaced, or repair or have repaired, as the case may be, all public improvements, public utilities facilities and surveying or subdivision R:~ZIGLERGg(AGREEMN~parkland landscape improvemen~ ~greement.doc monuments which are destroyed or damaged or destroyed by reason of any work done under this Agreement. SUBDIVIDER shall bear the entire cost of replacement or repairs of any and all public property on public utility property damaged or destroyed by reason of any work done. Under this agreement whether such property is owned by the United States or any agency thereof, or the State of California, or any agency or political subdivision thereof, or by the CITY or any public or private utility corporation or by any combination or such owners. Any repair or replacement shall be to the satisfaction, and subject to the approval, of the City Engineer. 8. Permits. SUBDIVIDER shall, at SUBDIVIDER'S expense, obtain all necessary permits and licenses for the construction and installation of the improvements, give all necessary notices and pay all fees and taxes required by law. 9. Default of SUBDIVIDER a. default of SUBDIVIDER shall include, but not be limited to, SUBDIVIDER'S failure to timely commence construction pursuant to this Agreement; SUBDIVIDER'S failure to timely commence construction of the Parkland/Landscape Improvements; SUBDIVIDER'S failure to timely cure the defect in the Parkland/Landscape Improvements; SUBDIVIDER'S failure to perform sbbstantial construction work for a pedod of 20 calendar days after commencement of the work; SUBDIVIDER'S insolvency, appointment of a receiver, or the filing of any petition in bankruptcy either voluntary or involuntary which SUBDIVIDER fails to discharge within thirty (30) days; the commencement of a foreclosure action against the SUBDIVISION or a portion thereof, or any conveyance in lieu or in avoidance of foreclosure; or SUBDIVIDER'S failure to perform a. ny other obligation under this Agreement. R:~.IGLERG~XAGREEMN~parkland landscape improvernenlI ~greement.doc b. The CITY reserves to itself all remedies available to it at law or in equity for breach of SUBDIVIDER'S obligations under this Agreement. The CITY shall have the right, subject to his section, to draw upon or utilize the appropriate security to mitigate CITY damages in event of default by SUBDIVIDER. The right of CITY to draw upon or utilize the security is additional to and not in lieu of any other remedy available to CITY. It is specifically recognized that the estimated costs and security amounts may not reflect the actual cost of construction or installation of Parkland/Landscape Improvements and, therefore, CITY damages for SUBDIVIDER'S default shall be measured by the cost of completing the required improvements. The sums provided by the improvement security may be used by CITY for the completion of the Parkland/Landscape Improvements in accordance with the Parkland/Landscape Improvement Plans and specifications contained herein. In the event of SUBDIVIDER'S default under this Agreement, SUBDIVIDER authorizes CITY to perform such obligation twenty days after mailing written notice of default to SUBDIVIDER and to SUBDIVIDER'S Surety, and agrees to pay the entire cost of such performance by CITY. CITY may take over the work and prosecute the same to completion, by contract or by any other method CITY may deem advisable, for the account and at the expense of SUBDIVIDER, and SUBDIVIDER'S Surety shall be liable to CITY for an excess cost or damages occasioned CITY thereby; and, in such event, CITY without liability for so doing, may take possession of, and utilize in completing the work, such materials, appliances, plan and other property belonging to SUBDIVIDER as may be on the site of the work and necessary for performance of the work. R:~ZIGLERG~(AGREEMN~parkland landscape improvemenlI ~reement.doc c. Failure of SUBDIVIDER to comply with the terms of this Agreement shall constitute consent to the filing by CITY of a notice of violation against all the lots in the SUBDIVISION, or to rescind the approval or otherwise revert the SUBDIVISION to acreage. The remedy provided by this Subsection C is in addition to and not in lieu of other remedies available to CITY. SUBDIVIDER agrees that the choice of remedy or remedies for SUBDIVIDER'S breach shall be in the discretion of CITY. d. In the event that SUBDIVIDER fails to perform any obligation hereunder, SUBDIVIDER agrees to pay all costs and expenses incurred by CITY in securing performance of such obligations, including costs of suit and reasonable attorney's fees. e. The failure of CITY to take an enforcement action with 'respect to a default, or to declare a breach, shall not be construed as a waiver of that default or breach or any subsequent default or breach of SUBDIVIDER. 10. Warranty. SUBDIVIDER shall guarantee or warranty the work done pursuant this Agreement for a period of one year after expiration of the maintenance period and final acceptance by the City Council of the work and improvements against any defective work or labor done or defective materials furnished. Where Parkland/Landscape Improvements are to be constructed in phases or sections, the one year warranty period shall commence after CITY acceptance of the last completed improvement. If within the warranty period any work or improvement or part of any work or improvement done, furnished, installed, constructed or caused to be done, furnished, installed or constructed by SUBDIVIDER fails to fulfill any of the requirements of this Agreement or the Parkland/Landscape Improvement Plans and R:~.IG LERG~,AG RE E M N~pa rkland landscape Improvemen~ ~;~reement.doc specifications referred to herein, SUBDIVIDER shall without delay and without any cost to CITY, repair or replace or reconstruct any defective or otherwise unsatisfactory part or parts of the work or structure. Should SUBDIVIDER fail to act promptly or in accordance with this requirement, SUBDIVIDER hereby authorizes CITY, at CITY option, to perform the work twenty days after mailing written notice of default to SUBDIVIDER and to SUBDIVIDER'S Surety and agrees to pay the cost of such work by CITY. Should CITY determine that an urgency requires repairs or replacements to be made before SUBDIVIDER can be notified, CITY may, in its sole discretion, make the necessary repairs or replacements or perform the necessary work and SUBDIVIDER shall pay to CITY the cost of such repairs. 11. Subdivider Not A,qent of City. Neither SUBDIVIDER nor any of SUBDIVIDER'S agents or contractors are or shall be considered to be agents of CITY in connection with the performance of SUBDIVIDER'S obligations under this Agreement. 12. Injury to Work. Until such time as the Parkland/Landscape Improvements are accepted by CITY, SUBDIVIDER shall be responsible for and bear the risk of loss to any of the improvements constructed or installed. CITY shall not, nor shall any officer or employee thereof, be liable or responsible for any accident, loss or damage, regardless of cause, happening or occurring to the work or improvements specified in. this Agreement prior to the completion and acceptance of the work or improvements. All such dsks shall be the responsibility of and are hereby assumed by SUBDIVIDER. 13. Other A,qreements. Nothing contained in this Agreement shall preclude CITY from expending monies pursuant to agreements concurrently or previously executed between the parties, or from entering into agreement with other subdividers for the appointment of costs of water and sewer mains, or other improvements, pursuant to R:~ZIGLERG~(AGREEMN~oarkland landscape improvementI ~reement.do¢ the provisions of the CITY ordinances providing therefore, nor shall anything in this Agreement commit CITY to any such apportionment. 14. SUBDIVIDER'S Obli.qation to Warn Public Durin.q Construction. Until final acceptance of the Parkland Improvements, SUBDIVIDER shall give good and adequate warning to the public of each and every dangerous condition existent in said improvements, and will take all reasonable actions to protect the public from such dangerous condition. 15. Vestin,q of Ownership. Upon acceptance of work on behalf of CITY and recordation of the Notice of Completion, ownership of the improvements constructed pursuant to this Agreement shall vest in CITY. 16. Final Acceptance of Work. Acceptance of the work on behalf of CITY shall be made by the City Council upon recommendation of the Director of Community · Services after final completion and inspection of all Parkland/Landscape Improvements. The Board of Directors shall act upon the Director of Community Services recommendations within thirty (30) days from the date the Director of Community Services certifies that the work has finally completed, as provided in Paragraph 5. Such acceptance shall not constitute a waiver of defects by CITY. 17. Indemnity/Hold Harmless. CITY or any officer or employee thereof shall not be liable for any injury to persons or property occasioned by reason of the acts or omissions of SUBDIVIDER, its agents or employees in the performance of this Agreement. SUBDIVIER further agrees to protect and hold harmless CITY, its officials and employees from any and all claims, demands, causes of action, liability or loss of any sort, because of, or adsing out of, acts or omissionsor SUBDIVIDER, its agents or employees in the performance of this Agreement, including all claims, demands, causes of action, liability, or loss because of, or arising out of, in whole or in part, the design or construction of the Parkland/Landscape Improvements. This indemnification and R:~ZIGLERG~XAGREEMN~parkland landscape irnprovemen~ ~reement.doc Agreement to hold harmless shall extend to injuries to persons and damages or taking of property resulting from the design or construction of the Parkland/Landscape Improvements as provided herein, and in addition, to adjacent property owners as a consequence of the diversion of waters from the design or construction of public drainage syStems, streets and other public improvements. Acceptance of any of the Parkland/Landscape Improvements shall not constitute any assumption by the CITY of any responsibility for any damage or taking covered by this paragraph. CITY shall not be responsible for the design or construction of the Parkland/Landscape Improvements pursuant to the approved Parkland/Landscape Improvement Plans, regardless of any negligent action or inaction taken by the CITY in approving the plans, unless the particular improvement design was specifically required by CITY over written objection by SUBDIVIDER submitted to the Director of Community Services before approval of the particular improvement design, which objection indicated that the particular improvement design was dangerous or defective and suggested an alternative safe and feasible design. After acceptance of the Parkland/Landscape Improvements, the SUBDIVIDER shall remain obligated to eliminate any defect in design or dangerous condition caused by the design or construction defect, however, SUBDIVIDER shall not be responsible for routine maintenance. Provisions of this paragraph shall remain in full force and effect for ten years following the acceptance by the CiTY of Parkland/Landscape Improvements. It is the intent of this section that SUBDIVIDER shall be responsible for all liability for design and construction of the Parkland/Landscape Improvements installed or work done pursuant to this Agreement and the CITY shall not be liable for any negligence, nonfeasance, misfeasance or malfeasance in approving, reviewing, checking, or correcting any plans or specifications or in approving, reviewing or inspecting any work or construction. The improvement security shall not be required to cover the provision of this paragraph. R:~IGLERG~<AGREEMNXparkland landscape improvementI ~reement.doc 18. Sale or Disposition of SUBDIVISION. Sale or other disposition of this property will not relieve SUBDIVIDER from the obligations set forth herein. If SUBDIVIDER sells the property or any portion of the property within the SUBDIVISION to any other person, the SUBDIVIDER may request a novation of this Agreement and a substitution of security. Upon approval of the novation and substitution of securities, the SUBDIVIDER may request a release or reduction of the securities required by this Agreement. Nothing in the novation shall relieve the SUBDIVIDER of the obligations under Paragraph 17 for the work or improvement done by SUBDIVIDER. 19. Time of the Essence. Time is of the essence of this Agreement, 20. Time for Completion of Work Extensions. SUBDIVIDER shall complete construction of the improvements required by this Agreement no later than ~'-,~,,1~..."7_0~-~, · In the event good cause exists as determined by the City Engineer, and if otherwise permitted under the tentative map condition, the time for completion of the improvements hereunder .may be extended. The extension shall be made by writing executed by the Director of Community Services. Any such extension may be granted without notice to SUBDIVIDER'S Surety and shall not affect the validity of this Agreement or release the Surety or Sureties on any security given for this Agreement. The Director of Community Services shall be the sole and final judge as to whether or not good cause has been shown to entitle SUBDIVIDER to an extension. Delay, other than delay in the commencement of work, resulting from an act of CITY, or by an act of God, which SUBDIVIDER could not have reasonably foreseen, or by storm or inclement weather which prevents the conducting of work, or by strikes, boycotts, similar actions by employees or labor organizations, which prevent the conducting or work, and which were not caused by or contributed to by SUBDIVIDER, shall constitute good cause for an extension of time for completion. As a condition of such extension, the Director of Community Services may require SUBDIVIDER to furnish new security guaranteeing R:~ZIGLERG~,AGREEMN~parkland landscape improvemer~ ~reement,doc performance of this Agreement as extended in an increased amount as necessary to compensate for an increase in construction costs as determined by the Director of Community Services. 21. NoVestin(~ of Riehts. Performance by SUBDIVIDER of this Agreement shall not be construed to vest SUBDIVIDER'S rights with respect to any change in any change in any zoning or building law or ordinance. 22, Notices. Al! notices required or provided for under this Agreement shall be in writing and delivered in person or sent by mail, postage prepaid and addressed as provided in this Section. Notice shall be effective on the date it is delivered in person, or, if mailed, on the date of deposit in the United States Mail. Notices shall be addressed as follows unless a written change of address is filed with the City: Notice to CITY: City Clerk City of Temecula 43200 Business Park Ddve P.O. Box 9033 Temecula, CA 92589-9033 Notice to SUBDIVIDER: Shea Homes Attn: John Vance 10721 Treena St. Suite 200 San Diego, Ca 92131 23. severabilit¥, The provisions of this Agreement are severable. If any portion of this Agreement is held invalid by a court of competent jurisdiction, the remainder of the Agreement shall remain in full fome and effect unless amended or modified by the mutual consent of the parties. R:~ZlGLERG~,AGREEMN~parkland landscape improveme~ ~greernent.doc 24. Captions. The captions of this Agreement are for convenience and reference only and shall not define, explain, modify, limit, exemplify, or aid in the interpretation, construction or meaning of any provisions of this Agreement. 25. Liti,qation or Arbitration. In the event that suit or arbitration is brought to enforce the terms of this contract, the prevailing party shall be entitled to litigation costs and reasonable attorney's fees. 26. Incorporation of,Recitals. The recitals to this agreement are hereby incorporated into the terms of this agreement. 27. Le,qal Responsibilities. The Subdivider shall keep itself informed of all local, State and Federal laws and regulations which in any manner affect those employed by it or in any way affect the performance of its obligations pursuant to this Agreement. The Subdivider shall at all times observe and comply with all such laws and regulations. The City, and its officers and employees, shall not be liable at law or in equity occasioned by failure of the Subdivider to comply with this section. 28. Entire ARreement. This Agreement constitutes the entire Agreement of the parties with respect to the subject matter. All modifications, amendments, Or waivers of the terms of this Agreement must be in writing and signed by 'the appropriate representative of the parties. In the case of the CITY, the appropriate party shall be the City Manager. R:~7..IG LERG~(AG RE E M N~parkla nd landscape improvernen~ ~greement,doc IN WITNESS WHEREOF, this Agreement is executed by CITY, by and through its Mayor. Shea Homes Limited Partnership A California Limited Partnership By: J.F. Shea Co. Inc., a Nevada SUBDIVI~E]~ corpor~on, General Name: ~--~/'l .~, By: Name: ~u/ (Proper Notarization of SU~DIVlOER'S signature is required and shall be a~ached) CITY OF TEMECULA By: Name: Title: ATTEST: By: Susan VV. Jones, CMC, City Clerk RECOMMENDED FOR APPROVAL: By: Name: City Engineer By:. Name: Director of Community Services APPROVED AS TO FORM: By: ~ Peter Thorsen City Attorney R:~ZlGLERG%XAGREEMN%parkland landscape improvemen~greement.doc State of California ) ) S.S. County of San Diego ) On May 20, 2002, before me, Debra E. Young, Notary Public, personally appeared John Vance and Paul L.L. Barnes personally known to me to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the insmunent. WITNESS my hand and official seal. Comm.# 1333971 NOTARY PUBLIC-. CALII:OBNIA San Omgo County ~My Comm. Expires Oac.9, 2005 David Neaul{ Assoclatas, Inc. Shea Homes Landscape Construction Cost Estimate for Tract 23209/TCSD Streetscape Descdpflon Unit Quantity Unit Sub Total Coat Total Irrigation 12' P/U Spray Head Assy. ea. 2006 $ 25.00 $ 50,150.00 Shrub Rotor Heads ea. 467 $ 45.00 $ 21,015.00 Remote Control Valves ea. 73 $ 200.00 $ 14,600,00 2-1/2" Gate Valve ea. 7 $ 150.00 $ 1,050.00 1" Quick Coupler ea. 52 $ 125.00 $ 6,500.00 PVC Lateral Line I.f. 18,991 $ 1.50 $ 28,486.50 PVC Lateral Line On Grade I.f. 8,746 $ 1.25 $ 10,932.50 3" CL. 315 Main Line I.f. 5,150 $ 4.00 $ 20,600.00 Sleeves I.f. 680 $ 7.00 $ 4,760.00 14#AWG-UFWire I.f. 79,250 $ 0.20 $ 15,850.00 Mexicable I.f. 5,650 $ 0.35 $ 1,977.50 Master Control Valves ea. 2 $ 500.00 $ 1,000.00 Flow Sensor ea. 2 $ 750.00 $ 1,500.00 I~dgation Controller Assy ea. I $ 7.500.00 $ 7,500.00 Irrigation Controller Assy W/CCU ea. I $ 16.000.00 $ 16,000.00 Totals $ 201,921.50 Planting Weed Abatement s.f. 243,104 $ 0.05 $ 12,155.20 Soil Prep. s.f. 243,104 $ 0.10 $ 24,310.40 Mulch c.y. 210 $ 55.00 $ 13,550.00 Grour~JCover s.f. 243,104 $ 0,40 $ 97,241.60 Shrubs - 5 Gallon ea. 1,398 $ 15.00 $ 20,970.00 Shrubs- 1 Gallon ea. 1,134 $ 4.50 $ 5,103.00 Trees - 24" Box ea. 105 $ 275.00 $ 28,875.00 Trees - 15 Gallon ea. 529 $ 100.00 $ 52,900.00 90 Day Maintenance s.f. 243,104 $ 0,07 $ 17,017.28 Totals $ 272,222.48 Total $ 474,143.98 Contingency (10%) $ 47,414.40 Grand Total $ 521,558.38 lofl David Neault Aeao~ates, In~ Shea Homes Landscape Construction Cost Estimate for Tract 23209/TCSD Butterfleld Stage Rd. Median 5/t/02 I)escltptlon Unit Quanflt~ Unit Sub Total Cost Total Irrlgason r~ripErnlti~? ea. 936 $ 12.00 $ 11,232.00; Re~oteContmi, Valves ~ ea. 6 $ 200.00 $ 1,200.00! 1.1/2' Gate Valve ea. $ 150.00 $ 600.00 l'QuickC~upter ea. 10 $ 125.00 $ 1,250.00 PVC Lateral Llne On Grade I.f. 3,02( $ 1.25 $ 3,775,00 1~l/2'Cl_315MalnLIne I.f. 1,51C $ 2.00 $ 3,020,00 Sleeves I.f. 11( $ 7.00 $ 770.00 14~AWC.--UFWlre t.f. 3,77.~ $ 0.20 $ 755.00 Maxlcable I.f. 90( $ 0.35 $ 315.00 Master Control Valvea ~a. $ 500.00 $ 500.00 Ftow Sensm ~a. $ 750,00 $ In~_~tlea~lerAssy ~ $ 7,500.00 $ 7,5~0.00 Totals $ 31,687.00 Planting WeadA~atement ~.f. 14,268 $ 0.05 $ 713.40 Soil Prep. ~,f. 14,268 $ 0,10 1 $ 1,428.80 Mulch :.y. 132 $ 85.00 ~ $ 8,580.00 3roundCover-tGa~on~3'o.c~ ;.f. 1,410 $ 0.50 $ 705.00 Shtubs-SGaltea ,e. 784 $ 15.00 $ 11,760.00 rmea-24'so~ ~a~ 38 $ 275.00 $ 10,450.00 IODeyMalnteeance ~f. 14,268 $ 0.07 $ 9g~.76 Totals $ 34,633.9~ total $ 66,300.96 ~tingency (10%) $ 6,630.10 3rand Total $ 72,931.06 1ofl Bond No. 00-290-243 Premium: $2,294.00 CITY OF TEMECULA PARKLAND/LANDSCAPE FAITHFUL PERFORMANCE BOND WHEREAS, the City of Temecula, State of California, and Shea Homes Limi~;~] Part/nership (hereinafter designated as "Principal") have entered into an Agreement whereby Principal agrees to install and complete certain Parkland Improvements, which said Agreement, dated 20 , and identified as Project. Tract No. 23209 / Parkland/Lai~d~cap, e Improv9ments Serena Hills · , ~s nereoy referredto and made a part hereof; and WHEREAS, Principal is required under the terms of the Agreement to furnish a bond for the Faithful Performance of the Agreement; *Assurance Company NOW, THEREFORE, we the Principal and American Home* as surety, are held and firmly bound unto the City of Temecula, California, in the penal sum of $ 521,558.00 , Five Hundred Twenty One Thousand Five Hundred Fifgy Eight & 00/100 lawful money of the United States, for the payment of such sum well and truly to be made, we bind ourselves, our heirs, successors, executors and administrators, jointly and severally. The condition of this obligation is such that the obligation shall become null and void if the above-bounded Principal, his or its heirs, executors, administrators, successors, or assigns, shall in ail things stand to, abide by, well and truly keep, and perform the covenants, conditions, and provisions in the Agreement and any alteration thereof made as therein provided, on his or their part, to be kept and performed at the time and in the manner therein specified, and in all respects according to his or their true intent and meaning, and shall indemnify and save harmless the City of Temecula, its officers, agents, and employees, as therein stipulated; otherwise, this obligation shall be and remain in full force and effect. As a part 0fthe obligation secured hereby and in addition to the face amount specified therefor, there shall be included costs and reasonable expenses and fees, including reasonable attomey's fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgement rendered. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anyway affect its oblightions on this bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Agreement or the work or to the specifications. /// IN WITNESS WHEREOF, this instnunent has been duly executed by the Principal and Surety above named, on May 17 , 20 02 SURETY American Home Assurance Company ~4f'ers~ L Jackson~ / Attorney~in Fact (TITLE) PRINCIPAL Shea Homes Limited Partnership a California Limited Partnership By: J.F. Shea Co. Inc., a Nevada corporati~n~ Gene~;~l Partner BY: ~'/~ /C4/~zx~---- ^ ) (TITLE) BY: ~ -- (N)dV E) (TITLE) APPROVED AS TO FORM: City Attorney CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT No. B907 State of California County of Ozange On May 17, 2002 before me, DATE personally appeared Chztstine Maestas, Notazy Public NAME. TITLE OF OFFICER - E,G., 'JANE DOE, NOTARY PUBLIC' Te;~f~{~ I. Jackson NAME(S) OF SIGNER(S) [] personally known to me - OR - [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(les), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF Aq-rACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER TITLE(S) [] PARTNER(S) [] LIMITED [] GENERAL [] A'I-rORNEY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: Parkland/Landscape Faithful Pezformanee Bond TITLE OR TYPE OF DOCUMENT NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTiTY(lES) May 17, 2002 DATE OF DOCUMENT Shea Homes Limited Paztnezship, a Oalifo~nia limited pa~tneIshtp SIGNER(S) OTHER THAN NAMED ABOVE WC-4087/EP7/94 (~) 1993NATIONAL NOTARYASSOCIATION · 8238 Rammer Ave.. P,O. Box 7184 · Canoga Park.CA 91309-7184 State of Califomia ) ) S.S. County of San Diego ) On May 20, 2002, before me, Debra E. Young, Notary Public, personally appeared John Vance and Paul L.L. Barnes personally known to me to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the emity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. DI:BRA E. YOUNG U} ~) NOTARY Pt/BLIC-CAL~FORNIA San Diego County Bond No. Premium: 00-290-243 Included in charge for Performance Bond CITY OF TEMECULA PARKLAND/LANDSCAPE LABOR AND MATERIALS BOND WHEREAS, the City. of Temecula, State of California, and Shea Homes Limited Partnership , (hereinafter designated as "Principal") have entered into an Agreement whereby Principal agrees to install and complete certain Parkland Improvements, which said Agreement, dated , 20 , and identified as · - · : /Parkland Landscape-Improvements Project Tract No. 23209 Serena Hills, is hereby referred to and made a part hereof; and WHEREAS, under the term of said Agreement, Principal is required before entering upon the performance of the work, to file a good and sufficient payment bond with the City of Temecula, to secure the claims to which reference is made in Title 15 (commencing with Section 3082) of Part 4 of Division 3 of the Civil Code of the State of California; and · Assurance Company NOW, THEREFORE, we the principal and American Home* as Surety, are held and firmly bound unto the City of Temecula, California, and all contractors, subcontractors, laborers, materialmen, other persons employed in the performance of the aforesaid Agreement and referred to in Title 15 of the Civil Code, in the penal sum of $ 260,779.qC~a~vful money of the United States, for materials furnished or labor thereon of any kind, or for amounts due under the Unemployment Insurance Act with respect to such work or labor, that Surety will pay the same in an amount not exceeding the amount set forth. As a part of the obligation secured hereby and in addition to the face amount specified therefor, there shall be included costs and reasonable expenses and fees, including reasonable attorney's fees, incurred by City in successfully chroming such obligation, all to be taxed as costs and included in any judgement rendered. It is hereby expressly stipulated and agreed that this bond shall insure to the benefit of any and all persons, companies and corporations entitled to file claims under Title 15 · *Two Hundred Sixty Thousand Seven Hundred Seventy Nine and 00/100 RSZIGLERG\FORMS\parkland landscape labor and materials bond.do{: - I - (commencing with Section 3082) of Part 4 of Division 3 of the Civil Code, so as to give a fight of action to them or their assigns in any suit brought upon this bond. If the condition of this bond is fully performed, then this obligation shall become null and void; otherwise, it shall be and remain in full force and effect. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Agreement or to the work to be performed thereunder or the Specifications accompanying the same shall in anyway affect its obligations on this bond, and it does hereby waive notice of any such changes, extension of time, alteration or addition to the terms of the Agreement or to the work or to the specifications. R:~ZIGLERG~ORMS',.parkland landscape labor and mmerial$ bond. doc - 2 - IN WITNESS WHEREOF, this instrument has been duly executed by the Principal and Surety above named, on Flay 17 , 20 02 (Seal) (Seal) American Home Assurance Attorney-in-Fact Company (Title) Shea Homes Limited Partnership a California Limited Partnership By: J.F. Shea Co. Inc., a Nevada corporation, General Partner PRINCIPAL (Name) (Title) (Name) (Title) APPROVED AS TO FORM: Peter Thorson, City Attorney RSZIGLERG\FORMS~pm'kland landscape labor and materials bond.doc - 3 - CALI.FORNIA ALL-PURPOSE ACKNOWLEDGMENT No. 5907 State of Calt~oznia County of Orange On ){ay 1'7, 2002 before me, DATE porsonally appeared [] personally known to me - OR - Chmistine Maestas, Notary Public NAME, TITLE OF OFFICER - E.G., "JANE DOE, NOTARY PUBLIC' Temesa I. Jackson NAME(S) OF SIGNER(S) [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. SIGNATURE OF NOTARY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF AI-rACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER TITLE(S) [] PARTNER(S) [] LIMITED [] GENERAL [] A'I-rORN NY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: Parkland/Landscape Labor and Materials Bond TITLE OR TYPE OF DOCUMENT Thzee NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(rES) May 17, 2002 DATE OF DOCUMENT Shea Homes Limited Partnership, a Califomnia limited partnership SIGNER(S) OTHER THAN NAMED ABOVE WC-4087/EP7/94 ~) 1993NATIONALNOTARYASSOCL~TION · 8230 Remmet Ave., P,O. Box 7184 · Canoga Park~ CA 91309-7184 American Home Assurance Company N~tional Union Fire Insurance Company of Pittsburgh, Pa. Principal Bond Office: 70 Pine Street, New York, N.Y~ 10270 KaNOW ALL MEN BY THESE PRESENTS: POWER OF ATTORNEY No. 88-B-34295 That American Home Assurance Company, a New York corporation, and National Union Fire Insurance Company of Pittsburgh, Pa., a Pennsylvania corporation, does each hereby appoint --Christine Maestas, Teresa I. Jackson, Victoria Voorhees, John Miller: of Santa Ann, California--- its tree and lawful AUomey(s)-in-Fact, with full authority to execute on its behalf bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, issued in the course of its business, and to bind the respective company thereby. IN WITNESS WHEREOF. American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa. have each executed these presents Mic[~ael C. Fay, Vice Pre~idant STATE OF NEW YORK } COUNTY OF NEW YORK }ss. On this 17th day of September, 200l before me came the above named officer of American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh: Pa., to me personally known to be'the individual and officer described herein, and acknowledged that he executed the foregoing instrument and affixed the seals of said corporations thereto by authority of his CERTIFICATE Excerpts of Resolutions adopted by the Boards of Directors of American Home Assurance Company and National Union'Fire insurance Company of Pittsburgh, Pa~ on May lg, 1976: .... '~ "RESOLVED, that the Chairman of the Board, the President, or any Vice President be, and hereby is, authorized to appoint Attorneys-in-Fact to represent and act tbr a~don behalf of the Company to execute bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, and to attach thereto the corporate seal of the Company, in the transaction o fits surety business; "RESOLVED, that the signatures and attestations of such officers and the seal of the Company may be affixed to any such Power of Attorney or to any certificate relating thereto by facsimile, and any such Po~ver of Attorney or certificate bearing such facsimile, signatures or facsimile seal shall be valid and binding upon the Company when so affixed with respect to any bond, undertaking, recognizance or other contract of indemnity or writing obligatory in the nature thereof; "RESOLVED, that any such Attorney-in-Fact delivering a secretarial certification that the foregoing resolutions still be in effect may insert in such certification the date thereof, said date to be not later than the date o f delivery theranf by such Attorney-in-Fact." I. Elizabeth M. Tuck, Secretary of American Home Assurance Company and of National Union Fire Insurance Company of Pittsb,~irgh, Pa. do hereby certify that the foregoing excerpts of Resolutions adopted by the Boards of Directors of these corporations, and the Powers of Attorney issued pursuant thereto, are true and correct, and that both the Resolutions and the Powers of Attorney are in full force and effect IN WITNESS WHEREOF, I have hereunto set my hand and affixed the thcsimile seal of each corporation this 17th dayof May ,2002 Tuck, Secretary 65166 (4/96) ' State of Califomia ) ) S.S. County of San Diego ) On May 20, 2002, before me, Debra E. Young, Notary Public, personally appeared John Vance and Paul L.L. Barnes personally known to me to be the persons whose names are subscribed to the within immanent and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Comm. # 1333971 NOTARY PUBLIC-CALIFORNIA Son Diego County My Corem Expires Dec,9,2005 Bond No. 00-290-243A Premium: Included in charge for Performance Bond CITY OF TEMECULA PARKLAND/LANDSCAPE WARRANTY BOND WHEREAS, the City of Temecula, State of Califomia (hereinafter designated as "City"), andShea Homes Limited Partners _~reinafier designated as "Principal") have entered into an Agreement whereby Principal agrees to install and complete certain designated Parkland Improvements, which said Agreement, dated 20 , and identified as Project Tract No. 23209 Serena Hills /,P~asr~elrae~9-rLe~eS~%n~m~ev%ments part hereof; and WHEREAS, Principal is required to warranty the work done under the terms of the Agreement for a period of one (1) year following acceptance thereof by City against any defective work or labor done or defective materials furnished, in the amount often percent (10%) of the estimated cost of the improvements; *Company NOW, THEREFORE, we the Principal and American Home Assurance* as surety, are held and firmly bound unto the City of Temecula, California, in the penal sum of $52,155.00'* , lawful money of the United States, for the payment of such sum well and truly to be made, we bind ourselves, our heirs, successors, executors and administrators, jointly and severally. The condition of this obligation is such that the obligation shall become null and void if the above-bounded Principal, his or its heirs, executors, administrators, successors, or assigns shall in all things stand to, abide by, well and truly keep, and perform the covenants, conditions, and provisions in the Agreement and any alteration thereof made as therein provided, on his or their part, to be kept and performed at the time and in the manner therein specified, and in all respects according to his or their true intent and meaning, and shall indemnify and save harmless the City of Temecula, its officers, agents, and employees, as therein stipulated; otherwise, this obligation shall be and remain in full force and effect. **Fifty Two Thousand One Hundred Fifty Five and 00/100 R:LZIGLERG~FORMS\Warranty Bond parkland landscape.doc - I - As a part of the obligation secured hereby and in addition to the face amount specified therefor, there shall be included costs and reasonable expenses and fees, including reasonable attorney's fees, incurred by City in successfully enforcing such obligation, all to be taxed as costs and included in any judgement rendered. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the Agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anyway affect its obligations on this bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the Agreement or to the work or to the specifications. R:XZIGLERGLFORMS\Warranty Bond parkland landscape.doc - 2 - IN WITNESS WHEREOF, this instrument has been duly executed by the Principal and Surety above named, on Ha'/ 17 ,20 02 (Seal) (Seal) American Home Assurance Company SURETY Tere:~I. Jackson (Name) Attorney-in-Fact (Title) Shea Homes Limited Partnership a California Limited Partnership By: J.P. Shea Co. Inc., a Nevada corporation, General Partner PRINCIPAL (Name) (Title) By:~~ (Name) (Title) APPROVED AS TO FORM: RSZIGLERG~FORMS\Warranty Bond parkland landscape.doc - 3 - CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT No. SSO? State of Cal~Lfoznia County of Orange On Nay 1'/, 2002 before me, DATE personally appeared [] personally known to me - OR - ChzXstXne Maestas, Notary PublXc NAME, TITLE OF OFFICER - E.G.. 'JANE DOE. NOTARY PUBLIC" Teresa I. Jackso~ NAME(S) OF SIGNER(S) [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ~ ~ SIGNA~RE OF NOTARY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF A'FI'ACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER Pamkland/Landscape Wammanty Bond TITLE(S} [] PARTNER(S) [] [] AI-rORNEY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: LIMITED GENERAL TITLE OR TYPE OF DOCUMENT Thzee NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(lES) Amez~can Home Assurance Company May 17, 2002 DATE OF DOCUMENT Shea Homes L~mtted Paxtnexship, a California limited paxtne=ship SIGNER(S) OTHER THAN NAMED ABOVE W~406?/EPT/94 ~) 1993NATIONALNOTARYASSOCIATION · 823(3 Remmet Ave.. P.O. Box 7184 · Canoga Parl~ CA 91309-7184 Ameriegn Home Assurance Company National Union Fire Insurance Company of Pittsburgh, Pa. Principal Bond Office: 70 Pine Street, New York, N~Y. 10270 KNOW ALL MEN BY THESE PRESENTS: POWER OF ATTORNEY No. 88-B-34295 That American Home Assurance Company, a New York corporation, and National Union Fire Insurance Company of Pittsburgh, Pa., a Pennsylvania corporation, does each hereby appoint -~-Christine Maestas, Teresa I. Jackson, Victoria Voorhees, John Miller: of Santa Aha, California-- its true and lawful Attorney(s)-in-Fact, with full authority to execute on its behalf bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, issued in the course of its business, and to bind the respective company thereby. IN WITNESS WHEREOF, American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa. have each executed these presents Mic[mel C. Fay, Vice PreSident STATE OF NEW YORK . } COUNTY OF NEW YORK }ss. On this 17th day of ~mber, 2001 before me came the above named officer of American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa., to me personally known to be the individual and officer described herein, and acknowledged that he executed the foregoing instrument and affixed the seals of said corporations thereto by authority of his office. CERTIFICATE Excerpts of Resolutions adopted by the Boards of Directors of American Home Assurance Company and Nationa[ Union Fire Insurance Company of Pittsburgh, Pa. on May 18, [976: "RESOLVED, that the Chairman of the Board, the President, or any Vice President be, and hereby is, authorized to appoint Attorneys-in-Fact to represent and act for and on behalf of the Company to execute bonds, undertakings, recognizances and other cont~acts of indem?ity and writings obtigatory in the nature thereof, agd to attach thereto the corporate seat of the Company, in the transaction of its surety business; "RESOLVED, that the signatures and attestations of such officers and the seal of the ~ompany may be affixed to any such Power of Attorney or to any certificate relating thereto by facsimde, and any such Power of Attorney or certificate bearing such facsimile signatures or facsimile seal shaft be valid and binding upon the Company when so affixed with respect to any bond, undertaking, recognizance or other contract of indemnity or writing obligatoE in the nature thereof; "RESOLVED, that any such Attomey-ir~-Fact delivering a secretarial certification that the foregoing resolutions still be in effect may insert such certification the date thereof, said date to be not later than the date ot:detive[y thereof by such Attorney-in-Fact." l, Elizabeth M. Tuck, Secretary of American Hom~ Assurance Company and of National Union Fire Insurance Company of Pittsburgh, Pa. do hereby certify that the foregoing excerpts of Resolutions adopted by the Boards of Directors of these corporations, and the Powers of Attorney issued pursuant thereto, are true and correct, and that both the Resolutions and the Powers of Attorney are in tull force and e ft~ct. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the ['acsimile seal of each corporation this 17th dayof May , 2002 glizafi>eth M. Tuck, Secretary 65166 (4/96) State of California ) ) S.S. County of San Diego ) On May 20, 2002, before me, Debra E. Young, Notary Public, personally appeared John Vance and Paul L.L. Barnes personally known to me to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. ~ ,~.-~e']'~ Comm. # 1333971 (~ ~l~l~f_~ N OTAitY PUBLIC- CALIFOItNIA ~ LxT;~,.~"/ San Diello County ~ My Corem Expires Dec 9,2005 Bond No. 00-290-249 Premium: $370.00 CITY O1' TEM]~CULA PARKLAND/LANDSCAPE FAITHFUL PERFORMANCE BOND WHEREAS, the City of Temecula, State of Californla, and Shiaa Bomez bizt6.t;q~ .Pa~c. nerahJ, p (hereinafter designated as ~Prinoipal") have entored into an Agreement whereby Principal agrees to install and complct~ certain Parkland Improvements, which mid Agrc~nent, dated 20 , and idc~t~ed as Projcvt ~ract: 23209, Stase Rd. Med.J~a~ , is herebymferr~i to and made a par~ hcl~oC and WHEREAS, Principal is required under the terms of th~ Agreement to furv~h a bond for the Faithful Performance of the Agreement; /Assurance Companv NOW, TI-I~_~FOR~, we the Pr~l~ipai and Amerioan Home~ a~ SUrety, oxc held and f~mly bound unto thc City ofTcmecul~ Caiifomia~ in the pcmd sum of $ 83,997.00 .*Mighty three thousand nine hur~r~ n£net:lr meven and 00/100 lawful money of the United States, for the payment of such sum well and t~y to be made, we bind ourselves, our heirs, successors, executors and administrators, jointly and s~vcral]y The condition of this obligation is such that the obligation shall bec~ne null and void if th~ above-bounded Pr~ipal, his or its heirs, executors, administrators, successors, or assigns, sh~i! in all thinga stand to, abide b~, well ~nd truly keep, and peifvnn the covenants, conditions, and provisions in the Agreement and any alteration thereof made as therein provided, on Ms or their part, to be kept and performed at the time and in the manner thesein specificd~ and in all respects according to his or their true intent ~ meaning, and shall indem.~y and save harmless the City o~Tem~-ctl~ its of~cers, agent~, and employees, ~s thcre~n stipulated; otherw~e, ~hls obligation shall be and rem~dn in full force and effect. As a part 0/the obligation secured h~r~by and in addition to the fac~ amount specified therefor, there shzt! b~ included costs and reasonable expanses and fees, ~ucluding reasonable a~ormey's fees, incurred by City in suceessfulbr enfore~ng such obllgmtinn, ail to be taxed as costs ai~d included in any judgement r~ndered. The surety hereby stipulates and agrees t~t no ch~nga, extension of time, alteration or ~ddifion to the tv~ u~S of the Agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anyway affect its obligations on this bond, ~nd it does hereby waive notice of any such chs~tc, cxtcnsion of t/me, alte~,~ion or addition to the t~ms of thc A~rccment o£ thc work or to the specifications. /// IN WITNESS WHEREOF, fl~i~ imtrument ha~ been duly cxecut~l by the Principal and Surety abovcnamcd, on biay 22 , 20 02 SURETY American Home Assuran, (TITLE) Company PPdNC AL Shea Ho~es LLmlted Partnershi~ a C21ifon~/a L~m~t~ P~e=~p ~= J.F. S~a ~. Inc., BY:~ APPROVED AS TO FORM: Peter Thoracn City Attorney CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT .o. 8907 State of California County of Orange On May 22, 2002 before me, DATE personally appeared [] personally known to me - OR - Ch/istine Maestas, Notary Public NAME. TITLE OF OFFICER - E.G.. 'JANE DOE. NOTARY PUBLIC' [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/'are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNES. S_.B'rv. hand and official seal. ~ SIGNATURE OF NOT~.RY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER TITLE(S) [] PARTNER(S) [] LIMITED [] GENERAL [] AI-rORN NY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: Parkland/Landscape Faithful Performance Bond TITLE OR TYPE OF DOCUMENT NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(lES) Amezican Home Assurance Company May 22, 2002 DATE OF DOCUMENT Shea Homes Limited Partnership a Califo[nia limited partnership SIGNER(S) OTHER THAN NAMED ABOVE WC~4067/EP 7/94 (~) 1993 NATIONAL NOTARYASSOCIATION · 8236 Rernmet Ave.. P.O. BOX 7184 · Canoga Park. CA 91309-7184 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California '[ ss. County of San Dieq(~ On May 28, 2002 personally appeared before me, Marcia J. Goodman~ Notary Public John B. Vance and Paul L. L. Barnes Name{s) of Signer(s) ~/personally known to me [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s).is?am subscribed to the within instrument and acknowledged to me that .be/sh~/they executed the same in bisYheT/t heir authorized capacity(les), and that by J:ds/her'/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. /~SS my hand an~offic~ seal. 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 rea~tachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(les) Claimed by Signer Signer's Name: [] Individual [] Corporate Officer -- Title(s): [] Partner--[] Limited [] General [] Attorney in Fact [] Trustee [] Guardian or Conservator [] Other: Signer Is Representing: Top of thumb here Bond No. 00-290-249 Premium: Included in charge for Performance Bond CITY OF TEMECLr[_~ PARKLAND/LANDSCAPE LABOR AND MATERIALS BEN]) WI-I~RF:,AS, the City of Temecula, State of Califom/a, and ihs , (hereinnf~ designamd nn "Principal") Imvo entered into un Agreement whereby Principal agrees to install and complete cemtin Parkland Improvements, whieh said Agreement, dated , 20 , and identified ProjectTract 23209, Butterfield ** ,isherebyrefen~itoandmad~apanh~r~o~a~d WHEREAS, under the term of said A~eement, Principal is r~q~ired before entering upon the performenc~ of the work, to file a =~ood and sufficient payment bond with the City of Teme~ula. to secure the claims to which reference is made in T/fie 15 {commencing with Section 3082) 0f Part 4 of Division 3 of the Civil Code of the State of California; and /Company NOW, THERI~FOR~, we the principal and American Home Assurance/s Surety, are held and i~mly bound unto the City o.f T~ne~la, California, and all ennlra~om, subcomractors, laborers, materialmen, o/her pe~ons employed in the perfonnunce of the aforesaid Agreement and referred to in T/tie 15 of'/he Civil Code,, in thc pana~ ium of $ 41 · 998. OO lawful money of the United States, for materials furnished or labo~ thereon of a~y kind, or for amomts due under the Unemployment Insurance Act with ~ to such we~ or labor, that Surety will pay ~he same in an amount not ~xceedin$ the amour~ set for~. As a part of the obligsfioa secured hereby and in ack[it/on to the face amount specified /herefar, there shall b~ in¢ladl~i costs and reasonable expends and f~s, including attorney's fees, inenrred by City in suc¢~fully enfeming such obligation, all to be taxed as cosis and included in enyjud~¢men! rendered. It i.~ hereby expressly st/pulated and agreed that this bo~d shall insm~ to the besefit of any and all persons, companies and corporations entitled to file claims under Title Ii: **Stage Rd. Median R:~.lOLERO~CORDl~pmklnnd kmdsca[~ labo~ nad me~ials bon~L~oc - I - (commencing with Section 3082) of Part 4 of Division 3 of the Civil Code., so as to give a fight of a~tion to them or their assigns in aay suit brought upon this bonn. If the condition of this bond is fully performed, then this obligation shall become null and void; otherwise, it shall be and remain in full force and effect. Th~ surge' hereby stipulates and a~-ees that no change, extension of time, alt~-dfiOn or addition to ~)g terms of the Ag~-mngnt or to thc work to bo p6neormnn thgretmdcr or the specili~ations accompanying the same shill in anyway affect its obligatio~ on this bond, and it do~s hereby waive notice of any such ch~n~ extension of tim~ al~ralion or addition to the ~ of the Agreement or to the work or ~o the sl~cifications. IN WITNESS WHEREOF, this instalment has been duly executed by thc Principal and Suretyabovenamed, on Hay 22 , 20 02 (Seat) (Seal) American Home Assurance Company (N.me) ~.~ Attorney-in-Fact (Title) Shea Homes Limited Partnership a Calif~ia Limited Part~%ership By: J.~. shea ~o. In~, a Nevada corporation, General Partner f ! (Name) (Name) trine) APPKOVED AS TO FORM: CAUFORNIA ALL-PURPOSE ACKNOWLEDGMENT No. 6~o7 State of California County of Orange On May 22, 2002 before me, DATE personally appeared Christine Maestas, Notary Public NAME. TITLE OF OFFICER - E.G.. "JANE DOE, NOTARY PUBUC" T~esa I. J~c~o~ NAME(S) OF SIGNER(S) [] personally known to me - OR - [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Notc~'y Public - Cc~ifemk~ __. Orange Courtty SIGNATURE OF NOTARY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATFACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER TITLE{S) [] PARTNER(S) [] LIMITED [] GENERAL [] A'I-]'OR N EY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: Parkland/Landscape Labor and Materials Bond TITLE OR TYPE OF DOCUMENT Three NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(lES) May 22, 2002 DATE OF DOCUMENT Shea Homes Limited Partnership a California limited partnership SIGNER(S) OTHER THAN NAMED ABOVE WC-4067/EP7/94 (~) 1993NATIONAL NOTARYASSOCIATION · 8236 Remmet Ave, P.O. Box 7184 · Canoga Park.CA 91309~7184 POWER OF ATTORNEY No. $8-B-34295 American glome Assurance Company National Union Fire Insurance Company of Pittsburgh, Pa. Principal Bond Office: 70 Pine Street, New York, N.Y. 10270 KNOW ALL MEN BY THESE PRESENTS: That American Home Assurance Company, a New York corporation, and National Union Fire Insurance Company of Piazburgh, Pa., a Pennsylvania corporation, does each hereby appoint --Christine Maestas, Teresa I. Jackson, Victoria Voorhees, John Miller: of Santa Ann, California-- its true and lawful Attomey(s)-in-Fact, with full authority to execute on its behalf bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, issued in the course of its business, and to bind the respective company thereby. IN WITNESS WHEREOF. American Home Assurance Company and National Union Fire Insurance Company of PiRsburgh, Pa. have each executed these presents STATE OF NEW YORK } COUNTY OF NEW YORK }ss. On this 17th day of~ 2001 before me came the above named officer of American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa., to me personally known to be the individual and officer described herein, and acknowledged that he executed the foregoing instrument and affixed the seals of said corporations thereto by authority of his office. CERTIFICATE Excerpts of Resolutions adopted by the Boards of Directors of American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa. on May 18, 1976: "RESOLVED, that the Chairman of the Board, thc President, or any Vice President be, and hereby is, authorized to appoint Attorneys-in-Fact to represent and act for and on behalf of the Company to execute bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, and to attach thereto the corporate seal of the Company, in the transaction of its surety business; "RESOLVED, that the signatures and attestations of such officers and the seal of the Company may be affixed m any such Power of Attorney or to any certificate relating thereto by facsimile, and any such Power of Attorney or certificate bearing such facsimile signatures or facsimile seal shall be valid and binding upon the Company when so affixed with respect to any bond, undertaking, recognizance or other contract of indemnity or writing obligatory in the nature thereof; "RESOLVED, that any such Attorney-in-Fact delivering a secretarial certification that the foregoing resolutions still be in effect may insert in such certification the date thereof, said date to be not later than the date of delivery thereof by such Attorney-in-Fact" I, Elizabeth M. Tuck, Secretary of Amedcan Home Assurance Company and of National Union Fire Insurance Company of Pittsburgh, Pa. do bemby certify that the foregoing excerpts of Resolutions adopted by the Boards of Directors of these corporations, and the Powers of Attorney issued pursuant thereto, are tree and correct, and that both the Resolutions and the Powers of Attorney are in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the facsimile seal of each corporation this 22nd day of May ,2002 65166 (4/96) CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California '[ ss. County of $~n Dieq~ On May 28, 2002 personally appeared , before me, Marcia J. Goodman~ Notary Public . John B. Vance and Paul L. L. Barnes Name(s) of Signer(s) ~/personally known to me [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s).je'/are subscribed to the within instrument and acknowledged to me that--/they executed the same in L~s/hedtheir authorized capacity(les), and that by ~heir signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. W)T~IIESS my hand and offi,eiel seal. Place No.fy Seal Above Sigr~lure ol lofary Public OPTIONAL Though the information be/ow is not required by/aw, 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: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: [] Individual [] Corporate Officer -- Title(s): [] Partner--[] Limited [] General [] Attorney in Fact [] Trustee [] Guardian or Conservator [] Other: Signer Ps Representing: Top of thumb here © 1997 National Nolary Association · 9350 De Soto Ave., P,O. Box 2402 · Chatsworth, CA 91313-2402 Prcd. NO. 5907 Reorder; Col1 Toll-Free 1-80(~87~6827 Bond No: Premium: 00-290-249-A Included in charge for Performance. Bond CITY OF Tg~I~cuL~ PARKLAND/LAiFDSCAPE WARRANTY BOND WHEREAS, the City of T~mecula, Stme of California (h~rehm~r designated as "City"), and sh~a Homes Limited (~ere~ffer doalgnsted as "Principal") have entered into an Agreement who'cby Principal agr0es to Mztall and complete certain designated Parkland Impmvemunts, which said Ag~emon~ d~t~ identified as Project~ract ~3209 Butterfield ** part hcreot~ and 20 , and ., is heroby referred to ami made a WHEREAS, Principal is required to warranty the work done under the terms of tho Agreement for a pc~ind of one (1) year following acceptance thereof by City against any defective work or labor done or defective materials furnished, in the mount often percent (10%) of the o~timated cost of the improvements; /Company NOW, TH]3RF-~FORF-, we the Principal attd AmeridarA Home A~{}urance~a~ surety, are held and Cumly bound unw the City of Temecula~ California, (~ {he penal sum of $ 8,399.00*** ., lawful money of the Un/ted $taT~S, for tho payment of such sum well Had h~uly to be made, we bind ourselves, our he/rs, sncoe~sore, executors and adroinis~rators, jointly and severally. ~'he condition of thls obligation is such that the obligation shall become null and void if tho abov~boended Principal, his or its heirs, executors, adminlstratow, succorers, or {msign~ shall in all thing~ s~md to, abide by, well and mtiy keep~ and perform the ¢ov~ants, conditions, and provisions in the Agreement and any altm-ation tho'eof made as therein provided, on his or thalr part, to be kept and performed at tho//me and in the manner there/n ,peeiiied, and in all ~SpeCt~ according to his or their true intent and meaning, and shall indemnify and save harmless the City of Temoculig it~ officers, agents, and employees, as therein stipulated; other~vise, this obligation shall bo and r~nain in full forc~ and eff~t. **Stage Rd. Median ***Eight Thousand Three Hundred Ninety Nine & 00/100 R:~ZIG L ERG~FORMS\WarranEy Bond pafldand lan~.doc - I - As a part of the obli~ation secured hereby and ~ a~om~y's f~ ~c~ ~ Ci~ ~ mcces~lly ~ s~h obli~o~ ~d incl~ ~ ~y judg=m~t ~d. ~e su~ he.by ~i~la~ ~d a~s ~ no ch~ge, e~nsi~ of t~ ~on or ~o~ ~ ~ te~ of ~ A~m~t or to ~ w~k ~ifi~ ~omp~y~ ~e s~ ~I E ~ ~ec~ do~ hcrc~ ~o noti~ of ~y ~ch ch~-5~, ~sion R:~Z I'GL ERG~FO RM.S',Warmn~ Bond parkland landscape, doc .2 - 1N WITNESS WHEREO1~, this instrument hns been duly execumd by gte Principal and Suru'ty above named, on }fay 22 ,20 02 . (sm) (s~) American Home' Assurance Company Attorney-in-Fact (Title) APPROVED AS TO FORM: Peter Thorso~ City Attorney R:~ZIG LF_,RG WO RM~\Wan-~ty Bond parkland lsndscape,do~ .3 · CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT No. 8907 State of CalifoznJ. a County of Orange On Hay 22, 2002 before me, DATE personally appeared Christine Maestas, Notary Public NAME, TITLE OF OFFICER - E.G.. 'JANE DOE, NOTARY PUBLIC' Tez;e¢~{~ ;[. Jackson NAME(S} OF SIGNER(S} [] personally known to me - OR - [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT [] INDIVIDUAL [] CORPORATE OFFICER Parkland/Landscape Warranty Bond TITLE(S) [] PARTNER(S) [] LIMITED [] GENERAL [] A]-I'ORNEY-IN-FACT [] TRUSTEE(S) [] GUARDIAN/CONSERVATOR [] OTHER: TITLE OR TYPE OF DOCUMENT Three NUMBER OF PAGES SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(lES) May 22, 2002 DATE OF DOCUMENT Shea Homes Limited Pa[tnership a California limited partnership SIGNER(S) OTHER THAN NAMED ABOVE WC-4OB7/EP 7/94 (~) 1993NATIONALNOTARYASSOClATION · 8236 Remmet Ave.. P.O. Box 7184 · Canoga Park. CA 91309-7184 POWER OF ATTORNEY No. 88-B-34295 American Home Assurance Company National Union Fire Insurance Company of Pittsburgh, Pa. Pr/ncipal Bond Office: 70 Pine Street, New York, N.Y. 10270 KNOW ALL MEN BY THESE PRESENTS: That American Homa Assurance Company, a New York corporation, and National Union Fire Insurance Company of PiRsburgh, Pa., a Pennsylvania corporation, does each hereby appoint ---Christine Maestas, Teresa I. Jackson, Victoria Voorhees, John Miller: of Santa Ann, California-- its true and lawful Attomey(s)-in-Fact, with full authority to execute on its behalf bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, issued in the course of its business, and to hind the respective company thereby. IN WITNESS WHEREOF, American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa. have each Michael C. Fay, Vi~ Pre6ident executed these presents STATE OF NEW YORK } COUNTY OF NEW YORK }ss. On this 17th day of September, 2001 before me came the above named officer of American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, Pa., to me personally known to be the individual and officer described herein, and acknowledged that he executed the foregoing instrument and affixed the seals of said corporations thereto by authority of his office. CERTIFICATE Excerpts of Resolutions adopted by the Boards of Directors of American Home Assurance Company and National Union Fire Insurance Company of pit, burgh, Pa. on May 18, 1976: "RESOLVED, that the Chairman of the Board, the President, or any Vice President be, and hereby is, authorized to appoint Anorneys-in-Fact to represent and act for and on behalf of the Company to execute bonds, undertakings, recognizances and other contracts of indemnity and writings obligatory in the nature thereof, and to attach thereto the corporate seal of the Company, in the transaction of its surety business; "RESOLVED, that the signatures and attestations of such officers and the seal of the Company may be affixed to any such Power of Attorney or to any certificate relating thereto by facsimile, and any such Power of Attorney or certificate bearing such facsimile signatures or facsimile seal shall be valid and binding upon the Company when so affixed with ~spect to any bond, undertaking, recognizance or other conWact of indemnity or writing obligatory in the nature thereof; "RESOLVED, that any such Attorney-in-Fact delivering a secretarial certification that the foregoing resolutions still be in effect may insert in such certification the date thereof, said date to be not later than the date of delivery thereof by such Attorney-in-Fact." I, Elizabeth M. Tuck, Secretary of American Home Assurance Company and of National Union Fire Insurance Company of Pittsburgh, Pa. do hereby certify that the foregoing excerpts of Resolutions adopted by the Boards of Directors of these corporations, and the Powers of Attorney issued pursuant thereto, are true and correct, and that both the Resolutions and the Powers of Auorney are in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the facsimile seal of each corporation this 22nd,! dayof I, Iay , 2002 Elizabeth M. Tuck, Secretary 65166(4/96) CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California [ ss. Coun~ of San Die~ On May 28, 2002 personally appeared , before me, Marcia J. Goodman, Notary Public John B. Vance and Paul L. L. Barnes Name(s) of Signer(s) [~personally known to me [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s),ie/'are subscribed to the within instrument and acknowledged to me that belehe/they executed the same in ~their authorized capacity(les), and that by bieY'rr~/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WIT~I~SS my hand and oft"Hal seal. 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: Number of Pages: Signer(s) Other Than Named Above: Capacity(les) Claimed by Signer Signer's Name: [] Individual [] Corporate Officer -- Title(s): [] Partner-- [] Limited [] General [] Attorney in Fact [] Trustee [] Guardian or Conservator [] Other: Signer Is Representing: Top of thumb here ITEM 2 A P P ROVA L/~,,f/,¢~ CITY ATTORNEY /- ~o~/~ DIRECTOR OF FINANCE ],~r/.~.-..- CITY MANAGER ~ TO: FROM: DATE: SUBJECT: CITY OF TEMECULA AGENDA REPORT Board of Directors Herman D. Parker, Director of Community Service~ v August 13, 2002 Tract Map No. 23209 - Service Level B, Residential Street Lighting; Service Level C, Perimeter Landscaping and Slope Maintenance and Service Level D, Trash and Recycling Collection Services Rates and Charges PREPARED BY: Barbara Smith, Management Analyst RECOMMENDATION: That the Board of Directors: 1. Adopt a resolution entitled: RESOLUTION NO. CSD 02- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA COMMUNITY SERVICES DISTRICT ORDERING, CALLING AND GIVING NOTICE OF AN ELECTION TO BE HELD ON SEPTEMBER 30, 2002 REGARDING SERVICE LEVEL B AND SERVICE LEVEL C RATES AND CHARGES FOR TRACT MAP NO. 23209 BEGINNING FISCAL YEAR 2003-2004 PURSUANT TO ARTICLE XIIID, SECTION 6 OF THE CALIFORNIA CONSTITUTION. Approve the Election Notice, Ballot, and Procedures for the Completion, Return and Tabulation of the Ballots. Authorize staff to mail the ballots to the affected property owners pursuant to the aforementioned process. BACKGROUND: The Temecula Community Services District (TCSD) operates under the authority of Community Services District Law and provides residential street lighting services, perimeter and slope maintenance, and trash/recycling collection services to numerous residential subdivisions within the City of Temecula through Service Levels B, C and D. Pursuant to the request of the property owner, staff has initiated proceedings to assume the responsibility for long-term residential street lighting services, perimeter landscaping and slope maintenance, and trash/recycling collection services within Tract Map No. 23209 beginning Fiscal Year 2003-2004. On June 25, 2002 and in accordance with Proposition 218, the Board of Directors adopted the resolution of intention to file the levy report on lots 1-220 within Tract Map No. 23209. The Notice of Public Hearing was subsequently mailed to the property owner identifying the proposed TCSD Rates and Charges for each affected parcel as follows: Service Level B $25.68 per residential parcel Service Level C $200.00 per residential parcel Service Level D $172.56 per occupied residential parcel At tonight's Public Hearing, the Board of Directors must hear and consider all objections or protests to the levy report for Tract Map No. 23209 and the proposed rates and charges, if the property owner presents a written protest, the Board must reject the proposed fee and abandon any further proceedings. In this instance, a homeowner's association would be required to assume the street lighting and slope landscape maintenance responsibilities. However, if the property owner does not submit a written protest against the proposed rates and charges, the Board of Directors may then adopt the proposed fees subject to an election requiring a majority approval of the affected property owners. In this instance, the Board of Directors can order and call an election for September 30, 2002 and authorize staff to proceed with mailing a notice and ballot to the property owner of Tract Map No. 23209, a copy of which is attached for your review. Pursuant to the ballot process, staff is also recommending the approval of the attached Procedures for the Completion, Return and Tabulation of Ballots. The ballot procedure explains the process for completion, return and tabulation of the ballot and will be included as part of the mailed ballot documents. The ballot can only be completed by the property owner of each parcel. In order to be counted, the ballot must be completed in compliance with these procedures and returned to the City Clerk/District Secretary prior to 3:30 p.m. on September 30, 2002. The City Clerk/District Secretary will open the ballot on September 30, 2002 at 4:00 p.m. in the Main Conference Room in City Hall. The results of the election shall be announced by the City Clerk/District Secretary at that time, and presented to the Community Services District for formal certification at it's meeting on October 8, 2002. Mailed ballot proceedings are not required to assess or adjust Service Level D rates and charges. FISCAL IMPACT: In the event that the Board of Directors calls for an election, staff will prepare the notices, ballot and election procedures in-house. If approved, upon build-out of the development, the proposed rates and charges of $25.68 and $200.00 per parcel will generate an annual levy of $5,649.60 and $44,000.00 respectively, for Service Level B and Service Level C maintenance programs. The proposed Service Level D charge of $172.56 per parcel will generate an annual levy of $37,963.20. As per the contractual agreement with CR&R, Inc., the City's franchised trash/recycling hauler, this rate shall be adjusted with the Consumer Price Index (CPI). Pursuant of Proposition 218, these amounts may be increased by the TCSD only after conducting a public hearing, however, mailed ballot proceedings are not required to increase Service Level D rates and charges. Actual costs for providing long-term residential street lighting and perimeter landscaping and slope maintenance services within Tract Map No. 23209 will be absorbed into Service Level B and Service Level C upon installation of said improvements. A'I-rACHMENTS: 2. 3. 4. Resolution Calling and Noticing the Election. Notice and Ballot Form. Procedures for Completion, Return and Tabulation of Ballots. Vicinity Map R:~mithb\Elections\23209 ElectionXStat')~Notice of Election doc 07~23/2002 RESOLUTION NO. CSD 02 - A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA COMMUNITY SERVICES DISTRICT ORDERING, CALLING AND GIVING NOTICE OF AN ELECTION TO BE HELD ON SEPTEMBER 30, 2002 REGARDING SERVICE LEVEL B AND SERVICE LEVEL C RATES AND CHARGES FOR TRACT MAP NO. 23209 BEGINNING FISCAL YEAR 2003-2004 PURSUANT TO ARTICLE XlIID, SECTION 6 OF THE CALIFORNIA CONSTITUTION THE BOARD OF DIRECTORS OF THE TEMECULA COMMUNITY SERVICE DISTRICT HEREBY FINDS, RESOLVES, DECLARES, DETERMINES AND ORDERS AS FOLLOWS: Section 1. Pursuant to the requirements of Article XIIID, Section 6 of the California Constitution, there is hereby called and ordered to be held on September 30, 2002, an election for the purpose of submitting to the property owners of Tract Map No. 23209 in the City of Temecula proposed Service Level B and Service Level C Rates and Charges beginning Fiscal Year 2003- 2004. Mailed ballot proceedings are not required to assess or adjust Service Level D rates and charges. Section 2. The notice and ballot to be submitted to the property owners shall be substantially in the form attached as Exhibit A and incorporated herein by reference. Section 3. The Board of Directors hereby approves the Procedures for the Completion, Return and Tabulation of Ballots ("Ballot Procedures") presented to the Board at this meeting and directs such procedu res be placed on file in the office of the Secretary of the Temecula Community Services District and open to public inspection. Section 3. All ballots must be received by the Secretary of the Temecula Community Services District no later than 3:30 p.m. on September 30, 2002. In all particulars not recited in this Resolution, the election shall be held and conducted as provided in the Ballot Procedures. Section 4. The Secretary of the Temecula Community Services District is hereby authorized to canvass the returns of the election. The officers and staff of the Temecula Community Services District are hereby authorized and directed to take such further action as may be necessary or appropriate in preparing for and conducting the election. R:Xsmithb\Elections\23209 Election\Reso- Election doc REDEVELOPMENT AGENCY ITEM 1 MINUTES OF A REGULAR MEETING OF THE TEMECULA REDEVELOPMENT AGENCY JULY 23, 2002 A regular meeting of the City of Temecula Redevelopment Agency was called to order at 7:53 P.M., in the City Council Chambers, 43200 Business Park Drive, Temecula. ROLLCALL PRESENT: 5 AGENCY MEMBERS: Naggar, Pratt, Roberts, Stone Comerchero ABSENT: 0 AGENCY MEMBER: None Also present were Executive Director Nelson, City Attorney Thorson, and Ballreich. PUBLIC COMMENTS No input. CONSENT CALENDAR 1 Minutes 2 RECOMMENDATION: Deputy City Clerk 1.1 Approve the minutes of June 25 and July 9, 2002. Approval of Cooperative Aqreement with the Temecula Redevelopment Aqency for Construction and Fundinq of the Mercantile Build nq Se stoic Retrofit (Community Theater) - Project PW01-20 RECOMMENDATION: 2.1 Approve an Agreement entitled "Cooperative Agreement" between the City of Temecula and the Redevelopment Agency of the City of Temecula for construction and funding of the Mercantile Building Seismic Retrofit (Community Theatre) - Project No. PW01-20; 2.2 Authorize the Chairperson to execute the Agreement on behalf of the Agency in substantially the form attached to'the Agenda Repod; 2.3 Authorize the budgeted expenditure of $287,500.00 for the RDA's share of the. Mercantile Building Seismic Retrofit project costs incurred, as approved by the City or the RDA. (Agency Member Stone abstained with regard to this item.) R:'~lin utes, rda\072302 I 3 First Amendment to Lease of Agency Property - 27500 Jefferson Avenue RECOMMENDATION: 3.1 Approve a first amendment to the lease agreement with the Donna L Reeves Trust UTD 7~25~90 for Agency property located at 27500 Jefferson Avenue to provide a one-year extension to this lease for an amount of $15,000 per month; 3.2 Approve a first amendment to the sublease agreement between the Donna L. Reeves Trust and Temecula Valley Automotive, d/b/a Temecula Valley Mitsubishi and authorize the City Manager to sign the consent agreement. 4 Revision of Facade Improvement Proqram RECOMMENDATION: 4.1 Approve the recommended revisions to the Facade Improvement Program, extending the list of eligible improvements to include hardscape and landscaping. (Pulled for separate discussion; see below.) MOTION: Agency Member Roberts moved to approve Consent Calendar Item Nos. 1 - 3. The motion was seconded by Agency Member Naggar and voice vote reflected approval with the exception of Agency Member Stone who was abstained with regard to Item No. 2. CONSENT CALENDAR ITEM NO. 4 CONSIDERED UNDER SEPARATE DISCUSSION 4 Revision of Facade Improvement Pro,qram RECOMMENDATION: 4.1 Approve the recommended revisions to the Facade Improvement Program, extending the list of eligibte improvements to include hardscape and landscaping. Having discussed the matter with Redevelopment and Housing Director Meyer, Chairman Comerchero recommended amending the staff recommendation by imposing a $2,500.00 limit toward landscaping. MOTION: Agency Member Comerchero moved to approve staff recommendation with the amendment to limit the landscaping improvements at $2,500.00. The motion was seconded by Agency Member Naggar and voice vote reflected approval with the exception of Agency Member Stone who abstained. DEPARTMENTAL REPORT No additional comments. EXECUTIVE DIRECTOR'S REPORT No comment. R:'A4inutes.rd a\072302 2 AGENCY MEMBERS'REPORTS In response to Agency Member Stone, City Attorney Thorson advised that there are specific requirements under State law to initiate expansion of the Redevelopment area, noting that the process would take approximately nine months. Agency Member Stone requested that staff explore mechanisms available to the City to expand the demographic area of the City's Redevelopment Agency. Offering to serve, Mr. Stone suggested the formation of a subcommittee of the City Council to identify potential areas of the City to be included in a Redevelopment Agency expansion and to forward a recommendation to the City Council for review. Chairman Comerchero offered to as well serve on such a subcommittee and suggested to agendize the matter for the August 27, 2002, City Council meeting. ADJOURNMENT At 7:59 P.M., the Temecula Redevelopment Agency meeting was formally adjourned to Tuesday, August 13, 2002, in the City Council Chambers, 43200 Business Park Drive, Temecula, California. Jeff Comerchero, Chairman ATTEST: Susan W. Jones, CMC City Clerk/Agency Secretary [SEAL] R:\Minutes.rda\072302 3 TEMECULA PUBLIC FINANCING AUTHORITY ITEM 1 MINUTES OF A REGULAR MEETING OF THE TEMECULA PUBLIC FINANCING AUTHORITY APRIL 9, 2002 A regular meeting of the City of Temecula Public Financing Authority was called to order at 7:30 P.M., in the City Council Chambers, 43200 Business Park Drive, Temecula. ROLL CALL PRESENT: 4 BOARD MEMBERS: Comerchero, Naggar, Stone, and Roberts ABSENT: 1 BOARD MEMBER: Pratt Aisc present were Executive Director Nelson, City Attorney Thorson, and City Clerk Jones. PUBLIC COMMENTS No input. CONSENT CALENDAR I Minutes RECOMMENDATION: 1.1 Approve the minutes of March 5, 2002; 1.2 Approve the minutes of March 26, 2002. 2 Second Readinq of Ordinance No. TPFA 02-01 RECOMMENDATION: 1.1 Adopt an ordinance entitled: ORDINANCE NO. TPFA 02-01 A ORDINANCE OF THE TEMECULA PUBLIC FINANCING AUTHORITY LEVYING SPECIAL TAXES WITHIN TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON) MOTION: Agency Member Comerchero moved to approve Consent Calendar Item Nos. 1 and 2. The motion was seconded by Agency Member Naggar and voice vote reflected approval with the exception of Agency Member Pratt who was absent. R:minutes.tpfa\040902 1 EXECUTIVE DIRECTOR'S REPORT NO comment. BOARD OF DIRECTORS' REPORTS No comments. ADJOURNMENT At 7:30 P.M., the Temecula Public Financing Authority meeting was formally adjourned. ATTEST: Ron Roberts, Chairman Susan W. Jones, CMC City Clerk/Agency Secretary [SEAL] R:min utes.tpfa\040902 2 ITEM 2 AP PROV,/~,.,~. CITY ATTORNEY DIR.OF FINANCE CITY MANAGER TEMECULA PUBLIC FINANCING AUTHORITY AGENDA REPORT TO: FROM: DATE: SUBJECT: Temecula Public Financing Authority Executive Director Shawn Nelson August 13, 2002 Issuance of Bonds for Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) RECOMMENDATION: That the Board of Directors adopt a resolution entitled: RESOLUTION NO. TPFA 02- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS OF THE TEMECULA PUBLIC FINANCING AUTHORITY FOR TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON), APPROVING AND DIRECTING THE EXECUTION OF AN INDENTURE OF TRUST AND APPROVING OTHER RELATED DOCUMENTS AND ACTIONS BACKGROUND: Lennar Homes of California, Inc. ("Lennar") and Winchester Hills I LLC, a California limited liability company (collectively, the "Landowners") have requested that the Authority form a community facilities district (the "CFD") to assist in the defeasance of the Winchester Hills Financing Authority Community Facilities District No. 98-1 (Winchester Hills) Special Tax Bonds, 1998 Series A, as well as the funding of various public roadway improvements and the provision of lake and park maintenance services in the Winchester Hills area of the City of Temecula. On March 26, 2002, (i) a public hearing was held regarding the formation of the CFD, (ii) the Board of Directors adopted a resolution of formation of the CFD, (iii) an election was held wherein the Landowners approved the CFD, the levy of a special tax on land located in the CFD, and (iv) the issuance of bonds by the Authority for the CFD, and the CFD was declared to be officially formed. The CFD only includes land owned by the Landowners. Various documents have been prepared relative to the issuance of the bonds by the Authority for the CFD, including (i) an Indenture of Trust which provides the terms of the bonds to be issued and establishes the funds and accounts from which the CFD bond program will be administered; (ii) a Preliminary Official Statement which describes the bond program, to be used to assist in the offering of the bonds to potential investors; (iii) a Bond Purchase Agreement, whereby the bonds will be sold by the Authority to Stone & Youngberg LLC (the "Underwriter") for sale by the Underwriter to the public; (iv) a Remarketing Agreement, whereby bonds that are requested to be repurchased by bondowners are remarketed; (v) an Acquisition Agreement pursuant to which Lennar will construct the public improvements to be financed with bond proceeds; and (vi) a Continuing Disclosure Agreement pursuant to which the Authority will agree to provide certain information regarding the bond program to investors and certain nationally-recognized information repositories. The bonds will be issued initially as variable rate bonds, with the payment of the variable rate bonds secured by a letter of credit of Bank of America to be provided by Lennar or an entity related to Lennar. It is contemplated that, as land in the CFD develops, portions of the variable rate bonds will be converted to fixed rate bonds. The conversions are expected to occur from time to time, but are expected to be completed in any event by August 1, 2012. Once the bonds are converted to fixed rate bonds, they will be secured solely by the proceeds of the levy of special taxes on the land in the CFD and amounts held under the Indenture of Trust for the bonds, and the letter of credit will be released. if the Board of Directors adopts the Resolution authorizing the issuance of the bonds, it is expected that the bonds will be issued on August 29, 2002. FISCAL IMPACT: The bonds will not be obligations of the City of Temecula, or general obligations of the Authority or the CFD, but will be limited obligations of the Authority for the CFD secured solely by the special taxes levied in the CFD, the letter of credit provided by Lennar and amounts held in certain funds and accounts established under the Indenture of Trust for the bonds. All costs of issuance of the bonds will be paid from the proceeds of the bonds. All administrative costs of the CFD and the bonds will be paid from proceeds of the special taxes levied in the CFD. Attachments: Resolution Indenture of Trust Preliminary Official Statement Bond Purchase Agreement Remarketing Agreement Acquisition Agreement Continuing Disclosure Agreement -2- RESOLUTION NO. TPFA 02- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS OF THE TEMECULA PUBLIC FINANCING AUTHORITY FOR TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON), APPROVING AND DIRECTING THE EXECUTION OF AN INDENTURE OF TRUST AND APPROVING OTHER RELATED DOCUMENTS AND ACTIONS WHEREAS, this Board of Directors has conducted proceedings under and pursuant to the Mello-Roos Community Facilities Act of 1982 (the "Law"), to form the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) (the "District"), to authorize the levy of special taxes upon the land within the District, and to issue bonds secured by the special taxes the proceeds of which are to be used to finance certain roadway and other public improvements (the "Facilities"), all as described in the Resolutions entitled "A Resolution of the Board of Directors of the Temecula Public Financing Authority of Formation of Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Authorizing the Levy of a Special Tax Within the District, Preliminarily Establishing an Appropriations Limit for the District and Submitting Levy of the Special Tax and the Establishment of the Appropriations Limit to the Qualified Electors of the District" and "A Resolution of the Board of Directors of the Temecula Public Financing Authority Determining the Necessity to Incur Bonded Indebtedness Within Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) and Submitting Preposition to the Qualified Electors of the District," which Resolutions were adopted by this Board of Directors on March 26, 2002; and WHEREAS, pursuant to said resolutions, an election was held within the District on March 26, 2002 and the qualified electors approved the propositions of the incurrence of the bonded debt, the established of the appropriations, limit and the levy of the special tax by more than two-thirds of the votes cast at said special election; and WHEREAS, there have been submitted to this Board of Directors for its approval an Indenture of Trust (the "Indenture") providing for the issuance of the Bonds (as defined in Section 1 below) and the use of the proceeds of the Bonds to finance the Facilities (the "Indenture"), as well as a Preliminary Official Statement (the "Preliminary Official Statement") describing the 2002-A Bonds (as defined in Section 1 below), a bond purchase agreement to be used in connection with the sale of the 2002-A Bonds (the "Purchase Contract") a Remarketing Agreement related to the 2002-A Bonds (the "Remarketing Agreement"), and an Acquisition Agreement relating to the construction of the Facilities (the "Acquisition Agreement"), and this Board of Directors, with the aid of Authority staff, has reviewed said documents and found them to be in proper order; and WHEREAS, the Indenture requires that the payment of debt service on the Bonds that are variable interest rate bonds be secured by a direct pay letter of credit (the "Letter of Credit") to be provided by a financial institution whose letter of credit results in variable rate debt that is rated "A-I" or its equivalent or better by a national rating agency; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of said bonds and the levy of said special taxes as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Law. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Temecula Public Financing Authority as follows: Section 1. Pursuant to the Law, this Resolution and the Indenture (hereafter defined), special tax bonds of the Temecula Public Financing Authority (the "Authority") for the District (the "Bonds") in an aggregate principal amount not to exceed $25,000,000 are hereby authorized to be issued and the first series of such bonds designated the "Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Revenue Bonds, 2002 Series A," in an aggregate principal amount not to exceed $20,000,000 (the "2002-A Bonds") are hereby authorized to be issued and sold as provided herein. The 2002-A Bonds shall be executed in the form set forth in and otherwise as provided in the Indenture. Jurisdiction is hereby reserved to issue the remaining authorized, but unissued portion of the Bonds. The Board of Directors hereby finds and determines that the 2002-A Bonds do not present any unusual credit risk due to the requirements of the Indenture that there be provided to the 2002-A Bond trustee the Letter of Credit that will secure the payment of debt service on the 2002-A Bonds so long as such bonds are variable interest rate bonds, and that the Indenture requires a minimum lien-to-value ratio for property securing any 2002-A Bonds to be converted from variable rate bonds to fixed rate bonds (and thereby no longer secured by the Letter of Credit) to be at least 1:3. By reason of the foregoing, the Board of Directors hereby waives the requirement for a one to three lien to value ratio for the 2002-A Bonds that are variable rate bonds otherwise required by the Authority's Local Goals and Policies for Community Facilities Districts, adopted by the Board of Directors on April 10, 2001 (the "Local Goals and Policies"). Except as provided in the immediately preceding two sentences, the Board of Directors finds that the 2002-A Bonds, when issued pursuant to the indenture, will be in accordance with the Local Goals and Policies. The Board of Directors further finds that the sale of the 2002-A Bonds at negotiated sale as contemplated by the Purchase Contract will result in a lower overall cost. Section 2. The Indenture with respect to the Bonds in the form presented to this Board of Directors at this meeting, is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Indenture in said form, with such additions thereto or changes therein as are approved by the Executive Director upon consultation with the Authority General Counsel and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Indenture by the Designated Officer. The date, manner of payment, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption and other terms of the 2002-A Bonds shall be as provided in the Indenture as finally executed. -2- Section 3. The Purchase Contract between the Authority and Stone & Youngberg LLC (the "Underwriter"), in the form presented to the Board of Directors at this meeting, is hereby approved. The Executive Director is hereby authorized and directed to accept the offer of the Underwriter to purchase the 2002-A Bonds contained in the Purchase Contract (provided that the aggregate principal amount of the 2002-A Bonds sold thereby is not in excess of $20,000,000 and the underwriters' discount is not in excess of 1.0% of the aggregate principal amount of the 2002-A Bonds) and to execute and deliver the Purchase Contract in said form, with such additions thereto or changes therein as are recommended or approved by such officer upon consultation with the Authority General Counsel and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Purchase Contract by the Executive Director. Section 4. The Preliminary Official Statement in the form presented to the Board of Directors at this meeting, is hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Authority, to make changes to the Preliminary Official Statement prior to its dissemination to prospective investors, and to bring the Preliminary Official Statement into the form of a final official statement (the "Official Statement") including such additions thereto or changes therein as ara recommended or approved by such officer upon consultation with Authority Counsel and Disclosure Counsel. The Executive Director is hereby authorized and directed to execute and deliver the Official Statement. The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the purchase of the Series 2002-A Bonds and is directed to deliver copies of the Official Statement to all actual purchasers of the Series 2002-A Bonds. The Executive Director is hereby authorized to execute a certificate or certificates to the effect that the Official Statement and such preliminary official statement were deemed "final" as of their respective dates for purposes of Rule 15c2-12 of the Securities Exchange Act of 1934, and is authorized to so deem such statements final. Section 5. The Remarketing Agreement and the Acquisition Agreement, in the respective forms presented to the Board of Directors at this meeting, are hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Remarketing Agreement and the Acquisition Agreement in said forms, with such additions thereto or changes therein as are approved by the Executive Director upon consultation with the Authority Counsel and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Remarketing Agreement and the Acquisition Agreement by the Executive Director. Section 6. The Continuing Disclosure Agreement related to the Bonds, in the form on file with the Secretary, is hereby approved. The Executive Director is hereby authorized and directed, for and in the name of and on behalf of the Authority, to execute and deliver the Continuing Disclosure Agreement in said form, with such additions thereto or changes therein as are deemed necessary, desirable or appropriate by the Executive Director upon consultation with the Authority Counsel and Disclosure Counsel, the approval of such changes to be conclusively evidenced by the execution and delivery by the Executive Director of the Continuing Disclosure Agreement. Section 7. The Authority hereby covenants, for the benefit of the Bondowners, to commence and diligently pursue to completion any foreclosure action regarding delinquent installments of any amount levied as a special tax for the payment of interest or principal of the Bonds, said foreclosure action to be commenced and pursued as more completely set forth in the Indenture. Section 8. The 2002-A Bonds, when executed, shall be delivered to the Trustee for authentication. The Trustee is hereby requested and directed to authenticate the 2002-A Bonds by executing the Trustee's certificate of authentication and registration appearing thereon, and to deliver the 2002-A Bonds, when duly executed and authenticated, to the Underwriter in accordance with written instructions executed on behalf of the Authority by the Executive Director, which instructions such officer is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver to the Trustee. Such instructions shall provide for the delivery of the 2002-A Bonds to the Underwriter upon payment of the purchase price therefor. Section 9. The Authority has heretofore approved agreements with the financial advisor and disclosure counsel for the Bonds. Given the complexity of the Bond transaction and the extended time period to complete the transaction, the Executive Director and/or the Treasurer are hereby authorized to approve amendments to the contracts with the Authority's consultants for the Bonds to increase their respective compensation, so long as such additional compensation is (a) payable solely from the proceeds of the 2002-A Bonds, and (b) not in excess of forty-five percent (45%) of the compensation set forth in the respective consultant's original contract with the Authority. Section 10. All actions heretofore taken by the officers and agents of the Authority with respect to the establishment of the District and the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the proper officers of the Authority are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with this Resolution, and any certificate, agreement, and other document described in the documents herein approved. Section 11. 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 13th day of August, 2002. ATTEST: Jeff Comerchero, Chairperson Susan W. Jones, CMC City Clerk/Authority Secretary STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan Jones, Secretary of the Temecula Public Financing Authority, HEREBY DO CERTIFY that the foregoing Resolution No. TPFA 02- was duly adopted at a special th meeting of the Board of Directors of the Temecula Public Financing Authority on the 13 day of August, 2002, by the following vote: AYES: BOARDMEMBERS: NOES: BOARDMEMBERS: ABSENT: BOARDMEMBERS: Susan W. Jones, CMC City Clerk/Authority Secretary -5- INDENTURE OF TRUST by and between the TEMECULAPUBLIC FINANCING AUTHORITY and U.S. BANK, N.A., as Trustee Dated as of August 1, 2002 Relating to: $. Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A TABLE OF CONTENTS Section 1.01. Section 1.02. Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.10. Section 2.11. Section 3.01. Section 3.02. Section 3.03. section 3.04. Section 3.06. Section 3.07. Section 3.08. Section 3.09. Section 3.1 o. Section 3.11. Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. ARTICLE I DEFINITIONS AND GENERAL PROVISIONS Definitions ............................................................................................................................ 3 Rules of Construction ........................................................................................................ 17 ARTICLE II THE BONDS Authorization and Terms of Bonds .................................................................................... 19 Determination of Interest Rate on the Bonds .................................................................... 20 Demand for and Mandatory Purchase .............................................................................. 23 Execution of Bonds ........................................................................................................... 25 Transfer and Exchange of Bonds ...................................................................................... 25 Bond Register .................................................................................................................... 25 Temporary Bonds .............................................................................................................. 26 Bonds Mutilated, Lost, Destroyed or Stolen ...................................................................... 26 Use of Depository .............................................................................................................. 26 Issuance of Parity Bonds ................................................................................................... 28 Limited Obligation .............................................................................................................. 29 ARTICLE Ill ISSUANCE OF 2002 SERIES A BONDS; APPLICATION OF PROCEEDS; CERTAIN FUNDS AND ACCOUNTS Authentication and Delivery of the 2002 Series A Bonds .................................................. 30 Application of Proceeds of Bonds ..................................................................................... 30 Improvement Fund ............................................................................................................ 30 Cost of Issuance Fund ...................................................................................................... 31 Administrative Expense Fund ............................................................................................ 36 Post-Conversion Reserve Fund ........................................................................................ 36 Pre-Conversion Reserve Fund .......................................................................................... 38 Interest Differential Fund ................................................................................................... 39 Conversion Expenses Fund .............................................................................................. 40 Prior Bonds Payment Fund ............................................................................................... 40 ARTICLE IV REDEMPTION OF BONDS Circumstances of Redemption .......................................................................................... 42 Selection of Bonds for Redemption ................................................................................... 43 Notice of Redemption ........................................................................................................ 44 Partial Redemption of Bonds ............................................................................................. 44 Effect of Redemption ......................................................................................................... 44 ARTICLE V PLEDGE OF SPECIAL TAX REVENUES; BOND FUND Pledge of Special Tax Revenues ...................................................................................... 46 Bond Fund ......................................................................................................................... 46 Investment of Moneys ....................................................................................................... 48 Assignment to Trustee; Enforcement of Obligations ......................................................... 49 Draws on Letter of Credit .................................................................................................. 49 -i- Section 5.06. Section 5.07. Section 5.08. Section 6,01, Section 6.02. Section 6.03. Section 6.04. Section 6.05. Section 6,06, Section 6,07, Section 6.08. Section 6.09, Section 6.10. Section 6.11, Section 6.12. Section 6.13. Section 6,14, Section 6.15. Section 6.16. Section 6.17. Section 6,18, Section 6,19, Section 7.01, Section 7.02. Section 7.03. Section 7.04. Section 7.05. Section 7.06. Section 7.07. Section 7.08. Section 7.09. Section 7,10, Section 7.11. Section 8.01. Section 8.02. Section 8.03. Section 8.04. Section 8.05. Section 8.06. Section 8.07. Section 8.08. Section 8.09. Section 8,10, Section 8.11. Section 8.12. Section 8.13. Provision of Letter of Credit ............................................................................................... 50 Liability of Authority ............................................................................................................ 52 Employment of Agents by Authority .................................................................................. 53 ARTICLE VI COVENANTS OF THE AUTHORITY Payment of Principal and Interest ..................................................................................... 54 Paying Agents ................................................................................................................... 54 Preservation of Special Tax Revenues ............................................................................. 54 Compliance with Indenture ................................................................................................ 54 Further Assurances ........................................................................................................... 54 No Arbitrage ...................................................................................................................... 54 Compliance with Law ........................................................................................................ 55 Rebate of Excess Investment Earnings to United States .................................................. 55 Levy of Special Taxes ....................................................................................................... 55 Covenant to Foreclose ...................................................................................................... 57 Federal Guarantee Prohibition .......................................................................................... 58 Use Covenant .................................................................................................................... 58 Maintenance of Tax-Exemption ........................................................................................ 59 State Reporting Requirements .......................................................................................... 59 Reduction of Special Taxes ............................................................................................... 60 Limits on Special Tax Waivers and Bond Tenders ........................................................... 60 Release of Property Subject to Special Tax Lien .............................................................. 60 Limitation on Principal Amount of Parity Bonds ................................................................ 60 Limitation on Conversion Expenses .................................................................................. 60 ARTICLE VII DEFAULT Events of Default ............................................................................................................... 61 Institution of Legal Proceedings by Trustee ...................................................................... 61 Application of Moneys Collected by Trustee ..................................................................... 61 Effect of Delay or Omission to Pursue Remedy ................................................................ 62 Remedies Cumulative ....................................................................................................... 62 Covenant to Pay Bonds in Event of Default ...................................................................... 62 Trustee Appointed Agent for Bondholders ........................................................................ 63 Power of Trustee to Control Proceedings ......................................................................... 63 Limitation on Bondholders' Right to Sue ........................................................................... 63 Limitation of Liability to Special Tax Revenues ................................................................. 63 Notice of Default ................................................................................................................ 64 ARTICLE VIII THE TRUSTEE AND AGENTS Duties, Immunities and Liabilities of Trustee ..................................................................... 65 Right of Trustee to Rely Upon Documents, Etc ................................................................ 67 Trustee Not Responsible for Recitals ................................................................................ 67 Intervention by Trustee ...................................................................................................... 68 Moneys Received by Trustee to be Held in Trust ............................................................. 68 Compensation and Indemnification of Trustee and Agents .............................................. 68 Qualifications of Trustee ................................................................................................... 69 Resignation and Removal of Trustee and Appointment of Successor Trustee ................ 69 Acceptance of Trust by Successor Trustee ...................................................................... 70 Merger or Consolidation of Trustee ................................................................................... 70 Accounting Records and Reports ...................................................................................... 70 Remarketing Agent ............................................................................................................ 70 Qualifications of Remarketing Agent ................................................................................. 71 -ii- Section 8.14. Section 8.15. Section 8.16. Section 8.17. Section 8.18. Section 8.19. Section 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05. Section 9.06. Section 10.01. Section 10.02. Section 10.03. Section 10.04. Section 11.01. Section 11.02. Section 11.03. Section 11.04. Section 11.05. Section 11.06. Section 11.07. Section 11.08. Section 11.09. Section 11.10. Section 11.11. Section 11.12. Section 11.13. Section 11.14. Section 11.15. EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E Remarketing of Bonds ....................................................................................................... 72 Purchase of Bonds Not Remarketed ................................................................................. 73 Delivery of Purchased Bonds ............................................................................................ 73 Tender Agent ..................................................................................................................... 73 Qualifications of Tender Agent .......................................................................................... 74 Dealing in Bonds ............................................................................................................... 75 ARTICLE IX MODIFICATION OF INDENTURE Modification of Indenture without Consent of Bondholders ............................................... 76 Modification of Indenture with Consent of Bondholders .................................................... 77 Effect of Supplemental Indenture ...................................................................................... 78 Opinion of Counsel as to Supplemental Indenture ............................................................ 78 Notation of Modification on Bonds; Preparation of New Bonds ......................................... 78 Notice to Rating Agency .................................................................................................... 78 ARTICLE X DEFEASANCE Discharge of Indenture ...................................................................................................... 79 Discharge of Liability on Bonds ......................................................................................... 79 Payment of Bonds after Discharge of Indenture ............................................................... 79 Deposit of Money or Securities with Trustee ..................................................................... 80 ARTICLE Xl MISCELLANEOUS Successors of Authority ..................................................................................................... 81 Limitation of Rights to Parties and Bondholders ............................................................... 81 Waiver of Notice ................................................................................................................ 81 Destruction of Bonds ......................................................................................................... 81 Separability of Invalid Provisions ....................................................................................... 81 Notices .............................................................................................................................. 81 Authorized Representatives .............................................................................................. 82 Evidence of Rights of Bondholders ................................................................................... 82 Waiver of Personal Liability ............................................................................................... 83 Acts and Payments on Business Days .............................................................................. 84 Execution in Several Counterparts .................................................................................... 84 Governing Law .................................................................................................................. 84 Conflict with Act or Trust Indenture Act of 1939 ................................................................ 84 Successors ........................................................................................................................ 84 CUSIP Numbers ................................................................................................................ 84 FORM OF VARIABLE RATE BOND FORM OF FIXED RATE BOND FORM OF TENDER NOTICE FORM OF SPECIAL TAX BILL OWNERS OF OTHER UNDEVELOPED PROPERTY SUBJECT TO EXTRAORDINARY SPECIAL TAX A AND ONE-TIME SPECIAL TAX A -iii- INDENTURE OF TRUST THIS INDENTURE OF TRUST, dated as of August 1, 2002 (the "Indenture"), is by and between the Temecula Public Financing Authority (the "Authority"), a joint exercise of powers authority duly organized and existing under the laws of the State of California, for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) (the "District"), a California community facilities district established by the Board of Directors of the Authority under the Act, as defined below, and U.S. Bank, N.A. (the "Trustee"), a national banking association organized under the laws of the United States of America, and being qualified to accept and administer the trusts hereby created. RECITALS WHEREAS, the Board of Directors of the Authority (the "Board of Directors") has formed the District under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311, et seq. of the California Government Code) (the "Act") and Resolution No. __ of the Board of Directors adopted on March 26, 2002; and WHEREAS, the Board of Directors, as the legislative body with respect to the District, is authorized under the Act to levy special taxes (the "Special Taxes") to pay for the costs of the District and to authorize the issuance of bonds secured by the Special Taxes under the Act; and WHEREAS, under the provisions of the Act, on August 13, 2002 the Board of Directors of the Authority adopted its Resolution No. __ (the "Resolution"), which resolution authorized the issuance and sale of special tax bonds of the Authority for the District in the aggregate principal amount of not to exceed $25,000,000, and authorized the issuance of the first series of such bonds designated the "Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A" (the "2002 Series A Bonds") provided that such issuance would be in accordance with the Act and this Indenture, and authorized the execution hereof; and WHEREAS, it is in the public interest and for the benefit of the Authority, the District and the owners of the 2002 Series A Bonds and any Parity Bonds, as defined herein (collectively, the "Bonds") that the Authority enter into this Indenture to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the repayment of the Bonds and the administration and payment of the Bonds; and WHEREAS, initially the 2002 Series A Bonds will bear interest at a Variable Rate (as defined herein), and the repayment of the 2002 Series A Bonds while they are Variable Rate Bonds (as defined herein) will be secured by a direct-pay letter of credit initially provided by Bank of America, N.A. (the "Credit Bank") pursuant to an Amended and Restated Credit Agreement, dated as of May 24, 2002 among Lennar Corporation, the lenders listed on Schedule 1 thereto and Bank One NA, as administrative agent; and WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof and of the interest and premium, if any, thereon, the Authority has authorized the execution and delivery of this Indenture; and WHEREAS, all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority for the District, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority for the District, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken and the execution and delivery of this Indenture have been in all respects duly authorized. AGREEMENT NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and the interest and premium, if any, on, all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and for and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other consideration the receipt and sufficiency of which is hereby acknowledged, the Authority covenants and agrees with the Trustee, for the equal and proportionate benefit of the respective registered owners from time to time of the Bonds, as follows: -:2- ARTICLE I DEFINITIONS AND GENERAL PROVISIONS Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.01 shall, for all purposes of this Indenture and of any indenture supplemental hereto, have the meanings herein specified, as follows: The term "Acquisition Agreement" shall mean the Acquisition Agreement, dated as of August 1, 2002, between Lennar and the Authority, as originally executed and as thereafter amended or supplemented in accordance with its terms. The term "Act" shall mean the Mello-Roos Community Facilities Act of 1982, being Sections 53311 et seq. of the California Government Code, as now in effect and as it may from time to time hereafter be amended or supplemented. The term "Act of Bankruptcy of the Bank" shall mean the closing, liquidation or bankruptcy of the Credit Bank, or its failure to pay its debts generally as such debts become due or its admission in writing of its inability to pay any of its indebtedness or its consent to appointment of a receiver, liquidator, trustee or similar official for itself or for all or any substantial part of its properties or assets or the appointment of any such trustee, receiver, liquidator or similar official or the institution of insolvency, reorganization, arrangement or liquidation proceedings (or similar proceedings) by or against the Credit Bank. The term "Administrative Expenses" shall mean costs directly related to the administration of the District consisting of the costs of computing the Special Taxes and preparing the annual Special Tax bills (whether by the Finance Director or designee thereof, or by the Trustee) and the costs of collecting the Special Taxes (whether by the Authority, Trustee, the County or otherwise); the costs of remitting the Special Taxes to the Trustee; fees and costs of the Trustee and any of the Agents (including their respective legal counsel) in the discharge of the duties required of them under this Indenture; fees and expenses of the Remarketing Agent under the Remarketing Agreement; the costs of the Authority or its designee of complying with the disclosure provisions of the Act, any Continuing Disclosure Agreement and this Indenture, including those related to public inquiries regarding the Special Tax and disclosures to Bondowners and the Original Purchaser; the costs of the Authority or its designee related to an appeal of the Special Tax; any amounts required to be rebated to the federal government in order for the Authority to comply with Section 6.08; an allocable share of the salaries of the City staff directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto; and Letter of Credit Fees. Administrative Expenses shall also include amounts advanced by the Authority for any administrative purpose of the District, including costs related to prepayments of Special Taxes, recordings related to such prepayments and satisfaction of Special Taxes, amounts advanced to ensure compliance with Section 6.08, and the costs of commencing and prosecuting the foreclosure of delinquent Special Taxes. The term "Administrative Expense Fund" shall mean the fund established pursuant to Section 3.06 hereof. The term "Agents" shall mean the Remarketing Agent, the Tender Agent and any paying agent hereunder. The term "Annual Levy Account" shall mean the account by that name within the Special Tax Fund established pursuant to Section 3.05 hereof. The term "Authority" shall mean the Temecula Public Financing Authority, and its successors and assigns as provided in Section 11.01. The term "Authorized Authority Representative" shall mean the Executive Director of the Authority, the Treasurer of the Authority or the Secretary of the Authority, or any other person designated to act in such capacity by a Certificate of the Authority containing the specimen signature of any of such persons which certificate may designate an alternate or alternates. The term "Authorized Amount" shall mean Twenty-Five Million Dollars ($25,000,000), the maximum authorized principal amount of the Bonds. The term "Authorized Bank Representative" shall mean any person who at the time and from time to time may be designated as such, by written certificate furnished to the Authority and the Trustee containing the specimen signature of such person and signed on behalf of the Credit Bank by any officer of the Credit Bank, which certificate may designate an alternate or alternates. The term "Authorized Denominations" shall mean (i) $100,000 or any integral multiple of $5,000 in excess thereof with respect to any Variable Rate Bonds, and (ii) $5,000 and any integral multiple thereof with respect to any Fixed Rate Bonds. The term "Board of Directors" shall mean the Board of Directors of the Authority, acting in the capacity as the legislative body of the District The term "Bond Counsel" shall mean (i) Quint & Thimmig LLP, or (ii) any other attorney at law or firm of attorneys selected by the Authority, of nationally recognized standing in matters pertaining to the federal tax status of interest on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America, but shall not include counsel for Lennar or the Credit Bank. The term "Bond Documents" shall mean, collectively, the Bonds and the Indenture. The term "Bond Fund" shall mean the fund established pursuant to Section 5.02 hereof. The term "Bonds" shall mean the 2002 Series A Bonds, and, if the context requires, any Parity Bonds, at any time Outstanding under this Indenture. The term "Bond Year" shall mean, with respect to the 2002 Series A Bonds, the one- year period beginning on September 2 in each year and ending on September 1 in the following year, except that the first Bond Year shall begin on the Closing Date. The term "Business Day" shall mean any day other than a Saturday, Sunday, legal holiday, day on which banking institutions in New York, New York, in the city in which the Credit -4- Bank's office for the presentation of drawings under the Letter of Credit is located or in the city in which Trustee's Office is located, or day on which the New York Stock Exchange is or are authorized or obligated by law or executive order to close. The term "CDIAC" shall mean the California Debt and Investment Advisory Commission of the State Treasurer of the State of California or any successor agency or bureau thereof. The term "Capitalized Interest Account" shall mean the account by that name within the Bond Fund established pursuant to Section 5.02 hereof. The term "Certificate of the Authority" shall mean a certificate of the Authority signed by an Authorized Authority Representative. The term "Certified Resolution" shall mean a copy of a resolution of the Authority certified by the Secretary of the Authority to have been duly adopted by the Board of Directors of the Authority and to be in full force and effect on the date of such certification. The term "City" shall mean the City of Temecula, California. The term "Closing Date" shall mean August 29, 2002, the date of initial issuance and delivery of the 2002 Series A Bonds. The term "Code" shall mean the Internal Revenue Code of 1986, as amended, and the Regulations thereunder, or any successor to the Internal Revenue Code of 1986, as amended. The term "Continuing Disclosure Agreement" shall mean any agreement executed by the Authority in satisfaction of the applicable requirement of Rule 15c2-12 of the United States Security and Exchange Commission. The term "Conversion" shall mean establishment of a fixed interest rate on all or a portion of the Variable Rate Bonds, pursuant to Section 2.02(c). The term "Conversion Date" shall mean, with respect to all or any portion of the Variable Rate Bonds, the date on which such Variable Rate Bonds are converted to Fixed Rate Bonds pursuant to Section 2.02(c) hereof. The term "Conversion Expenses" shall mean the costs incurred by the Authority in connection with the conversion of Variable Rate Bonds to Fixed Rate Bonds, including but not limited to: (i) underwriter's or remarketing agent's discount and/or fees; (ii) counsel fees, including bond counsel, disclosure counsel, underwriter's or remarketing agent's counsel and Authority general counsel; (iii) the Authority's fees and expenses related thereto, including fees and expenses of any financial advisor, appraiser, absorption consultant or any other consultant and an allocation of expense for City Staff time (and related City overhead) in connection with any such Conversion; (iv) if applicable, Rating Agency fees; (v) Trustee's fees and Trustee's counsel fees related to the Conversion; (vi) printing cost of Bonds and of any preliminary or final offering memorandum; and (vii) any other cost or expense related to the Conversion as determined by the Finance Director. The term "Conversion Expenses Fund" shall mean the fund established pursuant to Section 3.10 hereof. The term "Cost of Issuance Fund" shall mean the fund established pursuant to Section 3.04 hereof. The term "County" shall mean the County of Riverside, California. The term "Credit Agreement" shall mean the Amended and Restated Credit Agreement, dated as of May 24, 2002, among Lennar Corporation, the lenders listed on Schedule 1 thereto and Bank One NA, as administrative agent, as in effect on the Closing Date or as it may from time to time be supplemented or amended in accordance with its terms, providing for the issuance of the Letter of Credit, and any subsequent similar agreement pursuant to which a substitute Letter of Credit may be issued. The term "Credit Bank" shall mean Bank of America, N.A., as issuer of the Letter of Credit, or any issuer of a substitute Letter of Credit as permitted under Section 5.06, and the respective successors and assigns of the business thereof and any surviving, resulting or transferee banking association or corporation with or into which it may be consolidated or merged or to which it may transfer all or substantially all of its banking business. The term "Credit Criteria" shall mean that the aggregate of the maximum Special Taxes that may be levied on all Qualified Property as of the date of determination is at least 110% of the maximum annual Debt Service on all Fixed Rate Bonds to be Outstanding following the Conversion Date or date of issuance of Parity Bonds, as applicable, after first subtracting from such maximum Special Taxes a pro rata share of estimated annual Administrative Expenses, as determined by the Finance Director. For purposes of the preceding sentence, the term "Qualified Property" shall mean Developed Property, Update Property and, in connection with the Final Conversion Date, Undeveloped Property, which in each case (i) is not at the time delinquent in the payment of any Special Taxes theretofore levied on such property, and (ii) has an assessed value based on the then current County real property tax roll, or, at the option of the Authority as to any parcel or parcels in the District, an appraised value based upon an appraisal conducted by an MAI appraiser selected by the Finance Director, that is at least three times the sum of the allocable portion of the principal of the Fixed Rate Bonds described in the preceding sentence and the allocable share of any other assessment or special tax bonds secured by a lien on the respective parcel (with any such allocable share to be determined separately for each applicable assessment or special tax district, based upon the special taxes or assessments on such parcel as a percentage of the total special taxes or assessments levied in the immediately preceding Fiscal Year on all parcels in the respective district). The term "DTC" shall mean The Depository Trust Company, New York, New York, and its successors and assigns. The term "Debt Service" shall mean the scheduled amount of interest and amortization of principal payable on the applicable Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. The term "Demand Date" shall mean any date on which any Bond is required to be purchased pursuant to Sections 2.02 and 2.03 hereof. The term "Developed Property" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. The term "District" shall mean the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston), formed by the Board of Directors of the Authority under the Act and the Resolution of Formation. The term "Event of Default" shall have the meaning specified in Section 7.01 hereof. The term "Extraordinary Special Tax A" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. The term "Fair Market Value" shall mean the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment previsions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury-State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. The term "Final Conversion" shall mean the last conversion of Variable Rate Bonds to Fixed Rate Bonds under the provisions of Section 2.02(c) hereof, such that, following such conversion, there are no longer any Variable Rate Bonds outstanding under this Indenture. The term "Final Conversion Date" shall mean the date on which the Final Conversion occurs, which date shall be the earlier of (i) August 1, 2012, or (ii) the date on which the Authority determines that Credit Criteria (without giving effect to clause (i) of the definition of "Qualified Property" contained within the term Credit Criteria, so that delinquent parcels are not excluded from the valuation requirement of clause (ii) of such definition) have been satisfied as to all of the parcels of real property in the District that are then subject to the levy of the Special Taxes. The term "Finance Director" shall mean the Finance Director of the City, or such other officer or employee of the City or the Authority performing the functions of the chief financial officer of the Authority. The term "Fiscal Year" shall mean the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive. The term "Fixed Bond Payment Account" shall mean the account by that name within the Bond Fund established pursuant to Section 5.02. The term "Fixed Rate" shall mean the interest rate borne by a designated portion of the Bonds after a Conversion occurs with respect to such Bonds, which rate, once determined for any Bonds, shall remain in effect until the maturity date of such Bonds, all as determined in accordance with Section 2.02(c) hereof. The term "Fixed Rate Bonds" shall mean Bonds that bear interest at a Fixed Rate. The term "holder" or "Bondholder" or "owner" or "Bondowner" shall mean the person in whose name any Bond is registered. The term "Improvement Fund" shall mean the fund established pursuant to Section 3.03 hereof. The term "Indenture" shall mean this Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended by any supplemental indenture entered into pursuant to the provisions hereof. The term "Independent Financial Consultant" shall mean any consultant or firm of such consultants appointed by the Authority or the Finance Director, and who, or each of whom: (i) has experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact independent and not under the domination of the City or the Authority; (iii) does not have any substantial interest, direct or indirect, with or in the City or the Authority, or any owner of real property in the District, or any real property in the District; and (iv) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City. The term "Information Services" shall mean Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Moody's Investors Service "Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, NC 28217, Attention: Called Bonds Department; Kenny S&P, 55 Water Street, 45th Floor, New York, New York 10041, Attention: Notification Department; Standard & Poor's Corporation "Called Bond Record,~ 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds as the Authority may designate in a Certificate of the Authority delivered to the Trustee. The term "Interest Differential Fund" shall mean the fund established pursuant to Section 3.09 hereof. The term "Interest Differential Fund Requirement" shall mean, as of any date, an amount equal to the principal amount of any Variable Rate Bonds then Outstanding multiplied by seventy-five one hundredths percent (0.75%). As of the Closing Date, the Interest Differential Fund Requirement is $ The term "Interest Payment Date" shall mean October 1, 2002, and (i) for interest accrued on any Variable Rate Bond, the first Business Day of each month thereafter, and (ii) for interest accrued on any Fixed Rate Bonds, March 1 and September 1 of each year, commencing on the March 1 or September I next following the applicable Conversion Date for or date of issuance of such Fixed Rate Bonds. The term "Interest Period" shall mean each period commencing on an Interest Payment Date and ending on the day before the next succeeding Interest Payment Date, except that the first Interest Period shall begin on the Closing Date and shall end on the day before the first Interest Payment Date. _$_ The term "Investment Securities" shall mean any of the following obligations if and to the extent that, at the time of making the investment, they are permitted by law: (i) Direct obligations of, or obligations the interest on and principal of which are unconditionally guaranteed by, the United States of America, including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America and including any receipt, certificate or any other evidence of an ownership interest in such an obligation or in specified portions thereof (which may consist of specified portions of interest thereon); (ii) Obligations issued by the Resolution Funding Corporation, the Student Loan Marketing Association, Fannie Mae, the Federal Home Loan Bank Board, the Federal Farm Credit Bank or the Federal Home Loan Mortgage Association, or obligations, participations or other instruments or issued by, or fully guaranteed as to interest and principal by, the Government National Mortgage Association (excluding stripped mortgage backed securities which are valued at greater than par on the unpaid principal); (iii) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances, which are eligible for purchase through a bank that is a member of the Federal Reserve System and which are drawn on any commercial bank the short-term obligations of which commercial bank are rated in the highest letter and numerical rating category as provided by the Rating Agency; provided, that eligible bankers' acceptances may not exceed two hundred seventy (270) days' maturity; (iv) Commercial paper of "prime" quality of the highest rating category as provided by the Rating Agency, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an "A-I" or "P-I", or higher (or its equivalent), rating for the issuer's unsecured debentures, other than commercial paper, as provided by the Rating Agency or Moody's Investors Service, as applicable; provided, that eligible commercial paper may not exceed one hundred eighty (180) days' maturity nor represent more than ten percent (10%) of the outstanding commercial paper of any issuing corporation; (v) Medium-term notes with a maximum maturity of five (5) years which notes are limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an "AA" or higher (or its equivalent), rating for the issuer's unsecured debentures, as provided by the Rating Agency; (vi) Negotiable and non-negotiable certificates of deposit or bank notes issued by a state or national bank (including the Trustee and its affiliates) or a state- licensed branch of a foreign bank that have maturities of not more than three hundred sixty-five (365) days and that are fully insured by the Federal Deposit Insurance Corporation or the short term obligations of which state or national bank (including the Trustee and its affiliates) or state-licensed branch of a foreign bank are rated no lower "AA" (or the equivalent) by the Rating Agency; (vii) Any repurchase agreement or reverse repurchase agreement of any securities enumerated in subdivisions (i) and (ii) of this definition with any state or -9- national bank or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, and with respect to which repurchase agreement or reverse repurchase agreement, it is either: (a) with any institution which has debt rated no lower than "AA" (or the equivalent) by the Rating Agency or whose commercial paper is rated no lower than "Al+" (or the equivalent) by the Rating Agency; (b) with any corporation or other entity that falls under the jurisdiction of the Federal Bankruptcy Code; provided, that (1) the term of such repurchase agreement or reverse repurchase agreement is less than one (1) year or due on demand; (2) a third party acting solely as agent has possession of the collateral; (3) the market value of the collateral (as determined at least once every seven (7) days) exceeds the principal amount of the repurchase agreement or reverse repurchase agreement plus accrued interest and the market value of the collateral is maintained at levels acceptable to the Rating Agency; (4) failure to maintain the requisite collateral levels will require an immediate liquidation of collateral; and (5) the repurchase agreement or reverse repurchase agreement securities are free and clear of any third- party lien or claim; or (c) with financial institutions insured by the Federal Deposit Insurance Corporation or any broker-dealer with "retail customers" that falls under the jurisdiction of the Securities Investors Protection Corporation; provided, that (1) the market value of the collateral (as determined at least once every seven (7) days) exceeds the principal amount of the repurchase agreement or reverse repurchase agreement plus accrued interest and the market value of the collateral is maintained at levels acceptable to the Rating Agency; (2) a third party acting solely as agent has possession of the collateral; (3) the agent has a perfected first priority security interest in the collateral; (4) the collateral is free and clear of third-party liens and, in the case of a Securities Investors Protection Corporation broker, was not acquired pursuant to repurchase agreement or reverse repurchase agreement; and (5) failure to maintain the requisite collateral percentage will require an immediate liquidation of the collateral; and with respect to any reverse repurchase agreement, the investment is solely done to supplement the income normally received from such securities; (viii) Certificates, notes, warrants, bonds or other evidence of indebtedness of the State of California or any local agency therein which are rated in the highest short- term rating category or within one of the two highest long-term rating categories by the Rating Agency (excluding securities that do not have a fixed par value and/or the terms of which do not provide a fixed dollar amount at the maturity or call date); (ix) Interest-bearing demand or time deposits (including certificates of deposit) in a state or national bank (including the Trustee and its affiliates) fully insured by the Federal Deposit Insurance Corporation; provided, that not greater than one hundred thousand dollars ($100,000) in the aggregate shall be deposited in any one such financial institution; (x) Investments in a money-market fund registered under the Federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by S&P of "AAAM-G," "AAAM' or "AAm" which fund may include a fund for which the Trustee, its affiliates or its subsidiaries provide investment, advisory or other services; (xi) Investment agreements with entities that meet and maintain the following credit and collateral requirements: (a), they are initially rated "AA" or better (or its equivalent) by the Rating Agency; (b) if the credit quality reaches "AA-" or its equivalent by the Rating Agency the provider either (1) (A) will respond with adequate collateralization within ten (10) Business Days, (B) will value assets weekly, and (C) will present collateral at one hundred two percent (102%) on U.S. Government Treasury securities and one hundred five percent (105%) on U.S. Government agency securities or (2) will substitute another entity as the provider so that the rating is AA or better; (c) the provider must maintain minimum credit quality of "A" or its equivalent by the Rating Agency; and (d) the investment agreement must be subject to termination at the option of the Trustee or the Authority if credit ratings reach "A-" or its equivalent by the Rating Agency; and (xii) Other investments approved in writing by the Authority. The term "Issuance Costs" shall mean all costs and expenses of issuance of the Bonds, including, but not limited to: (i) underwriter's discount and fees; (ii) counsel fees, including bond counsel, disclosure counsel and Authority general counsel fees, as well as any other specialized counsel fees incurred in connection with the formation of the District, the Acquisition Agreement, or the issuance of the Bonds; (iii) the Authority's fees and expenses incurred in connection with the formation of the District and issuance of the Bonds, including fees of any financial advisor to the Authority; (iv) Rating Agency fees; (v) Trustee's fees and Trustee's counsel fees, and initial fees of the Remarketing Agent and Tender Agent; (vi) Letter of Credit origination fees (but only to the extent determined to be reasonable by the Finance Director as compared to transactions similar to the Bond financing); (vii) accountant's fees related to issuance of the Bonds; (viii) printing costs of the Bonds and of the preliminary and final official statements; (ix) publication costs associated with the financing proceedings; (x) costs of appraisals, market studies, engineering studies and feasibility studies necessary or otherwise conducted in connection with the District or the issuance of the Bonds; and (xi) costs incurred in connection with the obtaining of consents of owners of the Winchester Hills Financing Authority Community Facilities District No. 98-1 (Winchester Hills) Special Tax Bonds, 1998 Series A to an amendment to the provisions of such bonds allowing for the optional redemption of such owners bonds on the Closing Date. In no event shall "Issuance Costs" include any fees of counsel to or other Bond-related expenses of Lennar; except that "Issuance Costs" may include fees of the special tax consultant to Lennar (in an amount not in excess of the fees of the Special Tax Consultant of the Authority), and other amounts advanced by Lennar to the City or the Authority to pay costs described in the preceding sentence. The term "Lennar" means Lennar Homes of California, Inc. and any successor thereto which is the account party on any Letter of Credit. The term "Letter of Credit" shall mean that certain irrevocable, direct-pay letter of credit issued by the Credit Bank on or before the Closing Date, or any reissuance or extension thereof, or any substitute letter of credit or other credit instrument meeting the requirements of Section 5.06(a). The term "Letter of Credit Account" shall mean the account by that name within the Bond Fund established pursuant to Section 5.02 hereof. The term "Letter of Credit Fees" shall mean the annual cost of providing the Letter of Credit, including those fees referenced in Sections and __ of the Credit Agreement; provided that any increase in such annual cost in excess of three percent (3%) compounded annually shall not be considered to be an Administrative Expense and must be paid by or on behalf of the account pady on the Letter of Credit from funds other than proceeds of Special Taxes or amounts in the Administrative Expense Fund. -Il- The term "Market Risk Event" shall mean (a) (i) legislation enacted by the Congress, or introduced in the Congress, or recommended to the Congress for passage by the President of the United States or the United States Department of the Treasury or the Internal Revenue Service or any member of the United States Congress, or favorably reported for passage to either House of Congress by any Committee of such House to which such legislation has been referred for consideration, or (ii) a decision rendered by a court established under Article III of the Constitution of the United States, or the United States Tax Court, or (iii) an order, ruling, regulation or communication (including a press release) issued by the United States Department of the Treasury or the Internal Revenue Service, or (iv) any action taken or statement made by or on behalf of the President of the United States or the United States Department of the Treasury or the Internal Revenue Service or any member of the United States Congress which indicates or implies that legislation will be introduced in the current or next scheduled session of the United States Congress, in each case referred to in clauses (i), (ii), (iii) and (iv) above with the purpose or effect, directly or indirectly, of including interest on the Bonds in the gross income for federal income tax purposes of any owner of the Bonds; or (b) legislation enacted or any action taken by the Securities and Exchange Commission which, in the opinion of counsel to the Remarketing Agent, has the effect of requiring the remarketing of the Bonds to be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any other "security," as defined in the Securities Act, issued in connection with or as part of the remarketing of the Bonds to be so registered or the Indenture to be qualified as an indenture under the Trust Indenture Act of 1939, as amended; or any event shall have occurred or shall exist which, in the reasonable judgment of the Remarketing Agent, makes or has made untrue or incorrect in any material respect any statement or information contained in the reoffering circular distributed in connection with the remarketing or is not or was not reflected in such reoffering circular but should be or should have been reflected therein in order to make the statements or information contained therein not misleading in any material respect; or (c) in the reasonable judgment of the Remarketing Agent, any event which makes it impractical or inadvisable for the Remarketing Agent to remarket or enforce agreements to remarket Bonds because (i) trading in securities generally shall have been suspended on the New York Stock Exchange, Inc., or a general banking moratorium shall have been established by federal, New York or State of California authorities, or (ii) the State of California shall have taken any action, whether administrative, legislative, judicial or otherwise which materially and adversely affects the Remarketing Agent's ability to remarket the Bonds, or (iii) a war or other national calamity involving the United States shall have occurred which materially and adversely affects the Remarketing Agent's ability to remarker the Bonds. The term "Maximum Conversion Expenses Fund Balance" shall mean an amount equal to 3.50% of the then Outstanding principal amount of any Variable Rate Bonds. The term "Office" with respect to the Trustee shall mean the principal corporate trust office of the Trustee located at the address set forth in Section 11.06 hereof, or at such other place as the Trustee shall designate by notice given under said Section 11.06 except for purposes of transfer, exchange, registration, payment and surrender of Bonds means the corporate trust office of U.S. Bank, N.A. in St. Paul, Minnesota or such other office specified by the Trustee in writing; and with respect to the Remarketing Agent shall mean its office located at the address set forth in Section 11.06 hereof, or at such other place as the Remarketing Agent shall designate to the Trustee as provided in Section 8.12; and with respect to the Credit Bank shall mean its office located at the address set forth in Section 11.06 hereof, or at such other place as the Credit Bank shall designate as provided in said Section 11.06; and with respect to the Tender Agent shall mean its office located at the address set forth in Section 11.06 hereof, or at such other place as the Tender Agent shall designate to the Trustee as provided in Section 8.17. -1:2- The term "One-Time Special Tax A" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. The term "Opinion of Counsel" shall mean a written opinion of counsel, who may be counsel for the Authority or Bond Counsel or counsel for the Trustee, and who shall be acceptable to the Authority. The term "Ordinance" shall mean any ordinance of the Authority levying the Special Taxes. The term "Original Purchaser" shall mean Stone & Youngberg LLC, the first pumhaser of the 2002 Series A Bonds from the Authority. The term "Other Undeveloped Property" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. The term "outstanding" or "Outstanding", when used as of any particular time with reference to Bonds, shall, subject to the provisions of Section 11.08(e), mean all Bonds theretofore authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds for the payment or redemption of which moneys or securities in the necessary amount (as provided in Section 10.04) shall have theretofore been deposited with the Trustee (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; (c) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to the terms of Section 2.08; and (d) Bonds tendered or deemed tendered for purchase pursuant to Article II thereof. The term "Parity Bonds" shall mean any bonds issued by the Authority for the District and secured on a parity with any then Outstanding Bonds pursuant to Section 2.10 hereof. The term "Payment Date" shall mean any date on which payment of principal, interest and/or redemption price on the Bonds is due under the terms of this Indenture. The term "Payment Request" has the meaning given such term in the Acquisition Agreement and shall be generally in the form of Exhibit C to the Acquisition Agreement. The term "person" shall mean an individual, a corporation, a partnership, a trust, an unincorporated organization or a government or any Authority or political subdivision thereof. The term "Post-Conversion Reserve Fund" shall mean the fund established pursuant to Section 3.07 hereof. The term "Post-Conversion Reserve Requirement" shall mean, as of any date, an amount equal to the least of: (i) ten percent (10%) of the principal amount of the Fixed Rate Bonds then Outstanding, (ii) one hundred twenty-five percent (125%) of the average annual Debt Service on the Fixed Rate Bonds then Outstanding, or (iii) the maximum annual Debt Service in the then or any future Bond Year with respect to the Fixed Rate Bonds then Outstanding. The term "Pre-Conversion Reserve Fund" shall mean the fund established pursuant to Section 3.08 hereof. The term "Pre-Conversion Reserve Requirement" shall mean (a) as of the Closing Date, $[estimated maximum annual debt service on eventual Fixed Rate Bonds at 6.50% and based on estimated conversion schedule]; (b) following each Conversion Date, the amount described in the preceding clause (a) less an amount equal to the maximum annual debt service on the Fixed Rate Bonds so converted from Variable Rate Bonds on such Conversion Date; and (c) on the Final Conversion Date, $0.00. The term "Prepayment Account" shall mean the account by that name within the Special Tax Fund established pursuant to Section 3.05 hereof. The term "Prior Bonds" shall mean the Winchester Hills Financing Authority Community Facilities District No. 98-1 (Winchester Hills) Special Tax Bonds, 1998 Series A, outstanding as of the Closing Date. The term "Prior Bonds Agreement" shall mean the Fiscal Agent Agreement, dated as of July 1, 1998, between the Winchester Hills Financing Authority and the Prior Bonds Fiscal Agent, as amended by a Supplemental Agreement No. 1 to Fiscal Agent Agreement, dated as of August 9, 2001 and a Supplemental Agreement No. 2 to Fiscal Agent Agreement, dated as of June 1, 2002. The term "Prior Bonds Fiscal Agent" shall mean U.S. Bank, N.A., successor to U.S. Bank Trust National Association, acting as fiscal agent for the Prior Bonds under the Prior Bonds Agreement. The term "Prior Bonds Payment Fund" shall mean the fund established pursuant to Section 3.11 hereof. The term "Project" shall mean the public improvements and facilities authorized to be financed by the District, as described in the Resolution of Formation. The term "Purchase Price", with respect to any Bond required to be purchased pursuant to Section 2.03 hereof, shall mean the principal amount of such Bond plus interest accrued thereon to the Demand Date. The term "Rate and Method of Apportionment of Special Taxes" shall mean the rate and method of apportionment of special taxes for the District, as approved pursuant to the Resolution of Formation, and as it may be amended in accordance with the Act. The term "Rating Agency" shall mean S&P, or its successors and assigns or, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities Rating Agency, any other nationally recognized Rating Agency designated by the Authority. The term "Record Date" shall mean (i) with respect to any Variable Rate Bond, the close of business on the Business Day before each Interest Payment Date for the Variable Rate Bonds; and (ii) with respect to any Fixed Rate Bonds, the close of business on the fifteenth (15th) day of the month (whether or not a Business Day) before each Interest Payment Date for the Fixed Rate Bonds. The term "Regulations" shall mean the Income Tax Regulations promulgated or proposed by the Department of the Treasury pursuant to the Code from time to time or pursuant to any predecessor statute to the Code. The term "Remarketing Agent" shall mean the remarketing agent appointed in accordance with Section 8.12 hereof. The term "Remarketing Agreement" shall mean the Remarketing Agreement, of even date herewith, between the Authority and the Remarketing Agent, and any similar substitute or additional such agreement providing for the remarketing of Variable Rate Bonds (either during any Variable Period or on any Conversion Date), in each case as supplemented or amended from time to time. The term "Remarketing Date" shall mean the date by which the Remarketing Agent is required to notify the Trustee, the Tender Agent and the Credit Bank of the Bonds for which it has found purchasers, as set forth in Section 8.14 hereof. The term "Resolution" shall mean Resolution No. Directors of the Authority on August 13, 2002. , adopted by the Board of The term "Resolution of Formation" shall mean Resolution No. Board of Directors on March 26, 2002. , adopted by the The term "Resolution of Intention" shall mean Resolution No. Board of Directors on December 4, 2001. , adopted by the The term "responsible officer" of the Trustee shall mean any officer of the Trustee assigned to the corporate trust services department of the Trustee with direct responsibility for the administration of this Indenture and any other officer of the Trustee to whom any corporate trust matter is referred because of his or her knowledge of, and familiarity with, a particular subject. The term "S&P" shall mean Standard & Poor's, A Division of The McGraw-Hill Companies, and any successor thereto. The term "Securities Depositories" shall mean The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority may designate in a Written Request of the Authority delivered to the Trustee. The term "Special Tax A" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. -15- The term "Special Tax B" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. The term "Special Tax Fund" shall mean the fund established pursuant to Section 3.05 hereof. The term "Special Tax Prepayments" shall mean the proceeds of any prepayments of Special Tax A received by the Authority, as calculated pursuant to the Rate and Method of Apportionment of Special Taxes, less any administrative fees or penalties collected as part of any such prepayment. The term "Special Tax Prepayments Redemption Account" shall mean the account by that name within the Bond Fund established pursuant to Section 5.02 hereof. The term "Special Tax Revenues" shall mean the proceeds of the Special Taxes received by the Authority or the Trustee, including any scheduled payments thereof and any Special Tax Prepayments, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon. "Special Tax Revenues" does not include any penalties collected in connection with delinquent Special Taxes, which amounts may be forgiven or disposed of by the Authority in its discretion and, if collected, shall be used in a manner consistent with the Act. The term "Special Taxes" shall mean the Special Tax A levied within the District pursuant to the Act, the Ordinance and this Indenture, including any Extraordinary Special Tax A and any One-Time Special Tax A; but in no event shall "Special Taxes" include any Special Tax B. The term "supplemental indenture" or "indenture supplemental hereto" shall mean any indenture hereafter duly authorized and entered into between the Authority and the Trustee in accordance with the provisions of this Indenture. The term "Tender Agent" shall mean the Tender Agent appointed in accordance with Section 8.17. The term "Tender Notice" shall mean a notice of demand for purchase of Bonds given by any Bondholder pursuant to Section 2.03 hereof. The term "2002 Series A Bonds" shall mean the Bonds described in the second paragraph of Section 2.01 (including any of such Bonds converted to Fixed Rate Bonds). The term "Trustee" shall mean U.S. Bank, N.A., a national banking association organized under the laws of the United States of America, or its successor as Trustee hereunder. The term "Undeveloped Property" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. The term "Update Property" shall have the meaning given such term in the Rate and Method of Apportionment of Special Taxes. The term "Variable Bond Payment Account" shall mean the account by that name within the Bond Fund established pursuant to Section 5.02. The term "Variable Interest Accrual Period" shall mean, during any Variable Period, a period beginning on any Thursday and ending on the following Wednesday, except that the first Variable Interest Accrual Period for any Variable Period shall begin on the first day of such Variable Period and end on the following Wednesday; provided that the Variable Interest Accrual Period shall be changed, upon at least two Business Days' prior written notice by the Remarketing Agent to the Trustee, the Credit Bank and the Authority, to a period beginning on any day of the week specified by the Remarketing Agent in such notice and ending on the sixth day following such beginning day, and in the event of such a change the Variable Interest Accrual Period immediately preceding the effective date of such change shall end on the day immediately preceding such effective date. The term "Variable Interest Computation Date" shall mean, with respect to any Variable Interest Accrual Period other than the first Variable Interest Accrual Period, the first Business Day immediately preceding the first day of such Variable Interest Accrual Period; provided, that in the event the Remarketing Agent shall change the Variable Interest Accrual Period as provided herein, the Variable Interest Computation Date shall be the day specified in a written notice provided by the Remarketing Agent. The term "Variable Period" shall mean each period during which any Bonds bear interest at a Variable Rate. The term "Variable Rate" shall mean the variable rate of interest borne by the Variable Rate Bonds as determined in accordance with Section 2.02(b) hereof. The term "Variable Rate Adjustment Date" shall mean any date upon which the Bonds begin to bear interest at a Variable Rate for the succeeding Variable Period. The term "Variable Rate Bonds" means any Bonds that bear interest at a Variable Rate. The terms "Written Consent", "Written Demand", "Written Direction", "Written Election", "Written Notice", "Written Order", "Written Request" and "Written Requisition" of the Authority or the Credit Bank shall mean, respectively, a written consent, demand, direction, election, notice, order, request or requisition signed on behalf of the Authority by an Authorized Authority Representative, or on behalf of the Credit Bank by an Authorized Bank Representative. Section 1.02. Rules of Construction. (a) The singular form of any word used herein, including the terms defined in Section 1.01, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. (b) All references herein to "Articles", "Sections" and other subdivisions hereof are to the corresponding Articles, Sections or subdivisions of this Indenture as originally executed; and the words "herein", "hereof", "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. (c) The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Indenture. ARTICLE II THE BONDS Section 2.01. Authorization and Terms of Bonds. (a) Authorization. There are hereby authorized to be issued bonds of the Authority for the District designated as "Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Special Tax Bonds" in the maximum aggregate principal amount of the Authorized Amount, pursuant to the Resolution and the Act. Notwithstanding the foregoing, any Variable Rate Bonds shall be designated "Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A.' The initial series of Bonds to be issued hereunder shall be Variable Rate Bonds, shall be issued on the Closing Date in the principal amount of $ , and shall be subject to the provisions of this Indenture (including, without limitation, the provisions of Section 2.02(c) allowing for Conversion of such Bonds to Fixed Rate Bonds). Jurisdiction is hereby reserved to issue Parity Bonds hereunder in the maximum principal amount of $ ; provided that the maximum aggregate principal amount of Bonds which may be issue d and outstanding under this Indenture shall not exceed the Authorized Amount, exclusive of Bonds executed and authenticated as provided in Section 2.08. (b) General Terms. Any Variable Rate Bonds shall be in substantially the form set forth in Exhibit A hereto, and any Fixed Rate Bonds shall be in substantially the form set forth in Exhibit B hereto; in each case with necessary or appropriate variations, omissions and insertions as permitted or required by this Indenture, including any supplemental indenture. The Bonds shall be issuable only as fully registered Bonds, without coupons, in Authorized Denominations, and shall be numbered from one upward, in the order of their authentication, with any other designation as the Trustee deems appropriate. The 2002 Series A Bonds shall be dated as of the Closing Date, and all 2002 Series A Bonds shall mature on September 1, 2041, shall bear interest payable on each Interest Payment Date at the rate per annum determined from time to time as provided in Section 2.02, and shall be subject to redemption prior to maturity as provided in Article IV. Each Bond shall bear interest from the date to which interest has been paid on the Bonds next preceding the date of its authentication, unless it is authenticated as of an Interest Payment Date for which interest has been paid or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from its date. Any such interest not paid or duly provided for when due shall forthwith cease to be payable to the owner on the regular Record Date therefor and shall be paid to the owner in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to the owners by first-class mail not less than ten (10) days prior to such special record date. (c) Payment. Both the principal and redemption price, including any premium, of the Bonds shall be payable in lawful money of the United States of America only upon presentation thereof at the Office of the Trustee. Payment of the interest on any Bond shall be made in like lawful money to the person appearing on the bond registration books of the Trustee as the registered owner thereof on the applicable Record Date, such interest to be paid by check mailed on the Interest Payment Date by first class mail, postage prepaid, to the registered owner at its address as it appears on such registration books, except that the Trustee will, at the request of any registered owner of $1,000,000 or more in aggregate principal amount of Bonds, make payments of interest on such Bonds by wire transfer to the account in the United States designated by such owner to the Trustee in writing at least fifteen (15) days before the Record Date for such payments, any such designation to remain in effect until withdrawn in writing. Section 2.02. Determination of Interest Rate on the Bonds. (a) Initial Interest Rate. The 2002 Series A Bonds shall bear interest at a rate of % per annum, calculated on the basis of a 365-day or 366-day, as appropriate, year from and including the Closing Date to and including September 4, 2002; and thereafter shall bear interest at a Variable Rate, determined as set forth in subsection (b) of this Section, until a Conversion Date, if any, with respect to specific Variable Rate Bonds as provided in Section 2.02(c), and the Bonds for which the Conversion Date has occurred shall bear interest from and after the Conversion Date at a Fixed Rate determined in accordance with Section 2.02(c). (b) Variable Rate. The Variable Rate of interest borne by the Variable Rate Bonds for each Variable Interest Accrual Period shall be the Variable Rate determined by the Remarketing Agent and reported to the Trustee, the Tender Agent, the Authority and the Credit Bank, as provided in Section 8.12 hereof, on the Variable Interest Computation Date for such Variable Interest Accrual Period. Any Bondholder may obtain information on the Variable Rate by request to the Trustee. The Variable Rate Bonds shall bear interest during any Variable Period computed on the basis of a 365 or 366 day-year, as appropriate, and actual number of days elapsed. The Variable Rate determined by the Remarketing Agent on each Variable Interest Computation Date shall be that rate of interest which, if borne by the Variable Rate Bonds, would, in its judgment, having due regard to prevailing financial market conditions, be the interest rate required, but which would not exceed the interest rate required, to be borne by the Variable Rate Bonds in order for their market value on said date to be 100% of the principal amount thereof (disregarding accrued interest); provided that in no event shall the Variable Rate at any time exceed 12% per annum unless and to the extent that there shall have been delivered to the Trustee (i) a Letter of Credit in an amount equal to the then outstanding principal amount of the Variable Rate Bonds plus interest thereon for a period of 37 days calculated at the higher maximum Variable Rate, and (ii) an opinion of Bond Counsel to the effect that such higher maximum Variable Rate is permitted under applicable law and will not, in itself, cause the interest on the 2002 Series A Bonds to be included in the gross incomes of the Bondowners for federal income tax purposes; and provided further that the Variable Rate on any Variable Rate Bond shall never exceed the maximum rate of interest which may be charged or collected by the registered owner thereof pursuant to provisions of federal or state law applicable to such owner. If the Remarketing Agent shall fail or refuse to determine the Variable Rate on any Variable Rate Computation Date, then the Variable Rate most recently determined shall remain in effect until the Remarketing Agent determines the Variable Rate as provided above. The determination of the Variable Rate by the Remarketing Agent shall (in the absence of manifest error) be conclusive and binding on the holders of the Variable Rate Bonds, the Authority, the Credit Bank, the Remarketing Agent, the Tender Agent and the Trustee, and each shall be fully protected in relying on it. -2.0- (c) Fixed Rate. The rate of interest on all, or any portion (in increments of $5,000 principal amount), of the Variable Rate Bonds may be established at a Fixed Rate on any Interest Payment Date during a Variable Period, in accordance with the procedures set forth in this subsection (c). In order to effect any Conversion, the Authority must deliver a written notice to the Trustee, the Credit Bank, the Tender Agent and the Remarketing Agent specifying (i) the Conversion Date, which shall be not less than forty (40) days after such notice is sent to such parties, (ii) the principal amount of Variable Rate Bonds to be converted to Fixed Rate Bonds on the Conversion Date (which shall be an integral multiple of $5,000), (iii) the date on which the Fixed Rate or Fixed Rates for such Bonds will be determined by the Remarketing Agent, which date shall be not later than the fifth Business Day immediately prior to the Conversion Date; (iv) an estimate of the Conversion Expenses and any amounts needed to fund capitalized interest, the Post-Conversion Reserve Fund or other amounts required to effect the Conversion and whether or not the Authority expects to issue Parity Bonds to fund any of such Conversion Expenses or other amounts, and (v) specifying the maximum expected annual debt service on the Bonds to be converted that may be in effect each year following the Conversion Date. Such notice must be accompanied by (i) an opinion of Bond Counsel to the effect that Conversion in accordance with the procedures described in this subsection (c) is permitted by this Indenture and the Act and will not adversely affect the exclusion of interest on the 2002 Series A Bonds and any Parity Bonds then Outstanding from gross income for federal income tax purposes (in rendering such opinion, Bond Counsel may rely on a written commitment of the Authority that it will, on or before the Conversion Date, file a form 8038G and execute and deliver a certificate as to arbitrage with respect to the Bonds to be converted), (ii) a report by an Independent Financial Consultant to the effect that, using for purposes of estimating the debt service on the Bonds to be converted, the maximum debt service described in clause (v) of the preceding sentence, the Credit Criteria will be satisfied in connection with such Conversion, (iii) the form of notice to be given by the Trustee to the owners of the applicable Variable Rate Bonds with respect to Conversion, (iv) if not already executed by the Authority, a Continuing Disclosure Agreement in form acceptable to the Remarketing Agent, executed by the Authority, and (v) if not already executed by Lennar, a continuing disclosure undertaking by Lennar and/or any other "obligated person" for purposes of Rule 15c2-12 of the Securities and Exchange Commission, to the extent and in a form, if any, required by the Remarketing Agent. In the event that the amount then on deposit in the Conversion Expenses Fund is not reasonably expected by the Authority to be sufficient to pay all Conversion Expenses and any amounts needed to fund capitalized interest, the Post-Conversion Reserve Fund (to the extent amounts in the Pre-Conversion Reserve Fund to be transferred to the Post-Conversion Reserve Fund pursuant to Section 3.08(d) related to the Conversion will not be sufficient to bring the amount in the Post-Conversion Reserve Fund up to the expected amount of the Post- Conversion Reserve Requirement to be in effect following the Conversion) and any other amounts required to effect the Conversion, the following actions shall be taken in the following order of priority as necessary to cover the deficiency: (a) the Authority shall provide for the issuance of Parity Bonds, subject to the requirements of Section 2.10 and the limitation in Section 6.18 hereof; (b) the Authority shall identify to the Trustee in writing the amount of any remaining deficiency, and the Trustee shall take the actions described in Section 6.09(a)(iii) or (iv), as applicable; and (c) if Special Taxes levied as contemplated by the preceding clause (b) are not remitted in full to the Trustee by 9:00 a.m. on the Business Day prior to the Conversion Date, the Trustee shall make a draw on the Letter of Credit pursuant to Section 5.05(e) in the amount of Special Taxes so levied but not received by the Trustee. The Trustee shall give notice to the owners of the Variable Rate Bonds to be converted, by first class mail, not less than thirty (30) days before the Conversion Date, specifying: (i) that the interest rate on the 2002 Series A Bonds to be converted will be established at the Fixed -21- Rate and the Conversion Date; and (ii) that all Variable Rate Bonds to be converted must be surrendered to the Tender Agent for purchase not later than 9:30 a.m., New York City time, on the Conversion Date. If on any Business Day at least five (5) Business Days before a Conversion Date, the Trustee receives notice from the Authority to the effect that it no longer wishes to proceed with the Conversion, or the Trustee receives notice from the Remarketing Agent (i) that a Market Risk Event has occurred, or (ii) that the expected annual debt service on the Bonds to be converted is in excess of the maximum debt service for any year as set forth in the notice by the Authority under clause (v) of the second sentence of the third preceding paragraph, the Trustee shall promptly (but in any event within two (2) Business Days) give notice to the owners of the affected Variable Rate Bonds, in the same manner that the notice of Conversion described in the preceding paragraph was given to such owners, canceling such notice of Conversion and stating that the Variable Rate Bonds will continue to bear interest at a Variable Rate. The Trustee shall also provide written notice of the cancellation to the Credit Bank, the Authority and the Remarketing Agent. Notwithstanding the foregoing, in lieu of canceling the entire Conversion pursuant to the preceding sentences, if the expected annual debt service on the Fixed Rate Bonds following the Conversion is estimated by the Remarketing Agent to be in excess of the maximum debt service specified by the Authority in its notice of conversion, the Authority may by written notice to the Trustee and the Remarketing Agent delivered on the fifth Business Day prior to the scheduled Conversion Date, reduce the principal amount of the Variable Rate Bonds to be converted to an amount such that it can nevertheless (and does) deliver to the Trustee a report of an Independent Financial Consultant to the effect that given the lower principal amount of Bonds to be converted, the Credit Criteria will be met; in which event the principal amount of the Bonds to be converted shall be the reduced principal amount and the Trustee shall send a notice of non-conversion only to the owners of the principal amount of Bonds not to be converted, such owners to be selected by the Trustee by lot from among the Bonds previously designated for Conversion. Any Bond not tendered to the Tender Agent for purchase in accordance with the provisions of this Section 2.02(c) on a Conversion Date for such Bond shall be deemed to have been tendered for purchase on such Conversion Date pursuant to Section 2.03 hereof for all purposes of this Indenture, including particularly Article Vlll hereof. In connection with the Bonds to be converted on any Conversion Date, on or before the Conversion Date, the Remarketing Agent shall determine: (i) serial maturities and or term bond maturities, in increments of $5,000, for the new Fixed Rate Bonds with each such maturity to be on a September I on or prior to September 1, 2041, (ii) sinking fund redemption dates (each to be a September 1) and amounts with respect to any such term bonds (in establishing such maturities and sinking fund amounts, the Remarketing Agent shall attempt to maintain, as much as practicable, debt service on all Fixed Rate Bonds which is substantially level but which decreases as necessary to correspond to any expected increase in Administrative Expenses in future Fiscal Years), and (iii) the optional redemption provisions to apply to the new Fixed Rate Bonds following Conversion under Section 4.01(g). The Fixed Rate for each maturity of such new Fixed Rate Bonds following the Conversion Date for such Bonds shall be that rate, determined by the Remarketing Agent on the date specified in the notice from the Authority referred to in the first paragraph of this subsection (c), which, in the judgment of the Remarketing Agent, having due regard for prevailing financial market conditions, would be required, but would not exceed the rate which would be required, to be borne by the Bonds of such maturity, taking into account the prospective maturity date and any sinking fund payments for the Bonds of such maturity, in order for the market value of the Bonds to be converted on such date to be 100% of the principal amount thereof (disregarding accrued interest); provided -22- that in no event shall the Fixed Rate exceed twelve percent (12%) or, if lower, any maximum rate permitted by law to be paid on the Bonds. From and after Conversion and until maturity, each Bond converted to a Fixed Rate Bond will bear interest at the applicable Fixed Rate so established by the Remarketing Agent for the respective maturity of such Fixed Rate Bond, payable on March 1 and September 1 of each year, commencing on the Interest Payment Date next following the Conversion Date, computed on the basis of a 360-day year of twelve 30-day months. The Remarketing Agent shall, on or before the Conversion Date, send written notice to the Trustee, the Authority and the Tender Agent specifying the serial and term maturities, sinking fund installments and interest rates for the Bonds being converted on such Conversion Date, and the optional redemption provisions applicable to such Bonds following the Conversion Date. The determination of the Fixed Rates and the serial and term maturities, any sinking fund installments and any optional redemption provisions by the Remarketing Agent shall (in the absence of manifest error) be conclusive and binding on the holders of the Fixed Rate Bonds then converted, the Authority, the Trustee, the Credit Bank, the Tender Agent and the Remarketing Agent, and each shall be fully protected by relying on such information. The Trustee shall, upon written request of any Bondholder, notify such Bondholder of the maturity, any sinking fund installments, the Fixed Rate and any optional redemption provisions for any Fixed Rate Bond to be in effect on and after the Conversion Date for such Bond. Upon Conversion, the Trustee shall (i) transfer from the Pre-Conversion Reserve Fund (or, if the amount to be transferred from such fund pursuant to Section 3.08(d) is insufficient for such purpose, the amount of the insufficiency to be drawn from the Conversion Expenses Fund) to the Post-Conversion Reserve Fund an amount sufficient to increase the amount on deposit in the Post-Conversion Reserve Fund following the Conversion to the Post-Conversion Reserve Requirement; and (ii) cause to be prepared at the expense of and in consultation with the Authority and Bond Counsel, new Bonds in the form set forth in Exhibit B hereto and stating the Fixed Rate. Any such Bonds shall be executed and authenticated as provided in Section 2.04, and shall be delivered to the applicable Bondholders on the Conversion Date without charge. Notwithstanding the foregoing, if there are any Variable Rate Bonds Outstanding on the date which is forty-five (45) days prior to the Final Conversion Date, the Authority shall send a notice to the Trustee pursuant to the first paragraph of this Section 2.02(c) specifying the Final Conversion Date as the Conversion Date in such notice. In determining the principal amount of Variable Rate Bonds to be converted for purposes of such notice, the Authority shall take into account any expected redemptions of Variable Rate Bonds with any expected excess funds on deposit in the Pre-Conversion Reserve Fund, the Interest Differential Fund and the Conversion Expenses Fund. Finally, notwithstanding the provisions of the third paragraph of this Section 2.02(c), any Variable Rate Bonds not converted on the Final Conversion Date shall be redeemed pursuant to Section 4.01(b). Section 2.03. Demand for and Mandatory Purchase. Any Variable Rate Bond, or any portion of the Outstanding principal amount thereof in Authorized Denominations, shall (unless remarketed pursuant to Section 8.14 hereof) be purchased, from the sources prescribed in Section 8.15 hereof on demand of the registered owner of such Variable Rate Bond (or, so long as Variable Rate Bonds are in "book-entry only" form pursuant to Section 2.09, demand of a Direct Participant through DTC with respect to such Variable Rate Bonds), or upon being tendered or deemed tendered pursuant to Section 2.02 hereof, on any Business Day during a Variable Period or on any Conversion Date, at a Purchase Price equal to the principal amount thereof, or of any portion thereof purchased in Authorized Denominations, plus interest accrued thereon, if any, to the date of pumhase, upon (a) in the case of a demand purchase while the Variable Rate Bonds bear interest at a Variable Rate, delivery to the Tender Agent, with a copy to the Trustee and the Remarketing Agent, of a written notice in the form set forth as Exhibit C hereto (a "Tender Notice") which states (i) the principal amount (or portion thereof) of such Variable Rate Bond for which payment is demanded, (ii) that such demand is irrevocable and (iii) the date on which such Variable Rate Bond or portion of principal amount thereof in Authorized Denominations shall be purchased pursuant to this Section 2.03 (the "Demand Date"), which date shall be a Business Day not prior to the seventh (7th) day next succeeding the date of the receipt of the Tender Notice by the Tender Agent; and (b) in all cases, delivery to the Tender Agent, at or prior to 9:30 a.m., New York City time, on the Demand Date, of such Bond (with an appropriate transfer of registration form executed in blank and in form satisfactory to the Tender Agent). In the event that a depository is appointed pursuant to Section 2.09 hereof and a "book-entry only" system is in effect with respect to the Bonds, delivery of Bonds for purchase on the Demand Date may be effected in the manner set forth by such depository. Variable Rate Bonds not delivered to the Tender Agent on or prior to 9:30 a.m., New York City time, on the Demand Date for such Bonds shall be deemed purchased for all purposes of this Indenture and interest shall cease to accrue on such Variable Rate Bonds on the Demand Date for such Bonds. Payment of the Purchase Price of any Variable Rate Bond shall be made by check or by wire transfer (if requested in writing by the registered owner) or as designated in the Tender Notice with respect to such Variable Rate Bond, but only upon delivery and surrender of such Variable Rate Bond to the Tender Agent on or after the Demand Date for such Bonds. Anything herein to the contrary notwithstanding, no Variable Rate Bonds shall be purchased pursuant to this Section or remarketed pursuant to Section 8.14 if an Event of Default hereunder other than an Event of Default under Section 7.01(d) shall have occurred and be continuing, or if all of the Variable Rate Bonds shall have been called for redemption, and no Variable Rate Bonds shall be purchased pursuant to this Section or remarketed pursuant to Section 8.14 after a Conversion Date for such Bonds; nor shall any Variable Rate Bond be purchased pursuant to this Section if such Variable Rate Bond is registered in the name of the Authority, any guarantor of the obligations of the account party under the Letter of Credit, the account party on the Letter of Credit or the Credit Bank, or known by the Trustee to be registered in the name of any guarantor of the obligations of the account party under the Letter of Credit, or the account party on the Letter of Credit, or any nominee of the Authority, any guarantor of the obligations of the account party under the Letter of Credit, the account party on the Letter of Credit, or the Credit Bank. Not later than the seventh (7th) day before each Conversion Date (or, if such day is not a Business Day, then on the next succeeding Business Day), the Trustee shall notify the Tender Agent by telephone, promptly confirmed in writing, with a copy to the Remarketing Agent, that the Variable Rate Bonds then to be converted to Fixed Rate Bonds are deemed to have been tendered for purchase on the Conversion Date as provided in Section 2.02(c) and the principal amount of the Variable Rate Bonds to be so converted, and such notice from the Trustee shall be treated as a Tender Notice for all purposes of this Indenture, including this Section and Article VIII hereof, whether or not the Variable Rate Bonds referred to therein are in fact delivered to the Tender Agent; provided that payment of the Purchase Price of any such Variable Rate Bonds shall be made only upon delivery and surrender thereof to the Tender Agent. Section 2.04. Execution of Bonds. The Bonds shall be signed in the name and on behalf of the Authority with the manual or facsimile signature of its Executive Director and the manual or facsimile signature of its Secretary, under the seal of the Authority. Such seal may be in the form of a facsimile of the Authority's seal and may be imprinted or impressed upon the Bonds. The Bonds shall then be delivered to the Trustee or the Tender Agent for authentication by the Trustee or the Tender Agent, as the case may be. In case any officer who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated or delivered by the Trustee or the Tender Agent, as the case may be, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issuance, shall be as binding upon the Authority as though the officers who signed the same had continued to be such officers of the Authority. Also, any Bond may be signed on behalf of the Authority by such persons as on the actual date of the execution of such Bond shall be the proper officers although on the nominal date of such Bond any such person shall not have been such officer. Only such of the Bonds as shall bear thereon a certificate of authentication in the form set forth in Exhibit A or Exhibit B hereto, executed by the Trustee or the Tender Agent, as the case may be, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee or the Tender Agent, as the case may be, shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section 2.05. Transfer and Exchange of Bonds. Any Bond may, in accordance with the terms of this Indenture, be transferred upon the books of the Trustee, required to be kept pursuant to the provisions of Section 2.06, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the Office of the Trustee, or of the Tender Agent, as the case may be, accompanied by a written instrument of transfer in a form acceptable to the Trustee, or the Tender Agent, as the case may be, duly executed. Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other Authorized Denominations. Whenever any Bond shall be surrendered for transfer or exchange, the Authority shall execute and the Trustee or the Tender Agent, as the case may be, shall authenticate and deliver a new Bond or Bonds of other Authorized Denominations, for a like aggregate principal amount. The Trustee or the Tender Agent shall require the payment by the Bondholder requesting any such transfer or exchange of any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange, and may, in connection with any exchange, collect a charge equal to a customary fee charged by the Trustee for such exchange, but any such transfer or exchange shall otherwise be made without charge to the Bondholder requesting the same. The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee or the Tender Agent in connection therewith shall be Administrative Expenses. No transfer or exchange shall be required to be made of any Bonds called for redemption or of any Bonds during the ten (10) days next preceding the giving of any notice of redemption. Section 2.06. Bond Register. The Authority hereby appoints the Trustee as registrar and authenticating agent, and the Tender Agent as co-registrar and co-authenticating agent for the Bonds. The Trustee and the Tender Agent will keep or cause to be kept at their respective Offices sufficient books for the transfer of the Bonds, which shall at all reasonable times upon reasonable notice be open to inspection by the Authority; and, upon presentation for such -:25- purpose, the Trustee as registrar shall, under such reasonable regulations as it may prescribe, transfer or cause to be transferred, on said books, Bonds as hereinbefore provided. Section 2.07. Temporary Bonds. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may be determined by the Authority and may contain such reference to any of the previsions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and be authenticated and registered by the Trustee or Tender Agent upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish without unreasonable delay definitive Bonds, which may be printed, lithographed or typewritten, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the holder of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bonds so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and delivered to, or upon the order of, the Authority. If any Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to the Trustee and indemnity for the Trustee and the Authority satisfactory to the Trustee shall be given, the Authority, at the expense of the holder, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee on behalf of the Authority may pay the same without surrender thereof upon receipt of indemnity for the Authority and the Trustee satisfactory to the Trustee). The Authority may require payment of a reasonable fee for each new Bond delivered under this Section and payment of the expenses which may be incurred by the Authority and the Trustee. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture. Section 2.09. Use of Depository. Notwithstanding any provision of this Indenture to the contrary: (a) As per the direction of the initial purchasers of the Bonds, the ownership of one fully registered Bond for each maturity of the Bonds shall be registered in the name of Cede & Co. ("Cede"), as nominee of DTC. Payments of interest on, principal of and any premium on the Bonds shall be made to the account of Cede on each payment date at the address indicated for Cede in the registration books of the Authority kept by the Trustee by transfer of immediately available funds. DTC has represented to the Authority that it will maintain a book-entry system in recording ownership interests of its participants (the "Direct Participants"), and the ownership interests of a purchaser of a beneficial interest in the Bonds (a "Beneficial Owner") will be recorded through book entries on the records of the Direct Participants. (b) With respect to Bonds registered in the name of Cede, the Authority, the Trustee and the Tender Agent shall have no responsibility or obligation to any Direct Participant (with the exception of the right of Direct Participants through DTC to demand purchase of Bonds pursuant to Section 2.03 hereof) or to any Beneficial Owner of such Bonds. Without limiting the immediately preceding sentence, the Authority, the Trustee and the Tender Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede or any Direct Participant with respect to any beneficial ownership interest in the Bonds, (ii) the delivery to any Direct Participant, Beneficial Owner or other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption, (iii) the payment to any Direct Participant, Beneficial Owner or other person, other than DTC, of any amount with respect to the principal or redemption price of, or any interest on, the Bonds or (iv) any consent given or other action taken by DTC as owner of the Bonds. The Authority, the Trustee and the Tender Agent may treat DTC as, and deem DTC to be, the absolute owner of each Bond for all purposes whatsoever (with the exception of the right of Direct Participants through DTC to demand purchase of Bonds pursuant to Section 2.03 hereof) including (but not limited to) (i) payment of the principal or redemption price of, and interest on, each such Bond, (ii) giving notices of purchase or redemption and other matters with respect to such Bonds and (iii) registering transfers with respect to such Bonds. The Trustee shall pay the principal or redemption price of, and interest on, all Bonds only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to such principal or redemption price, and interest, to the extent of the sum or sums so paid. No person other than DTC shall receive a Bond evidencing the obligation of the Authority to make payments of principal or redemption price of, and interest on, the Bonds pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede, and subject to the transfer provisions hereof, the word "Cede" in this Indenture shall refer to such new nominee of DTC. (c) (i) DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving reasonable written notice to the Authority, the Trustee and the Tender Agent and discharging its responsibilities with respect thereto under applicable law. (ii) The Authority, in its sole discretion and without the consent of any other person, may terminate, upon provision of notice to the Trustee and Tender Agent, the services of DTC with respect to the Bonds if the Authority determines that the continuation of the system of book-entry-only transfers through DTC (or a successor securities depository) is not in the best interests of the Beneficial Owners of the Bonds or is burdensome to the Authority, and shall terminate the services of DTC with respect to the Bonds upon receipt by the Authority, the Trustee and the Tender Agent of written notice from DTC to the effect that DTC has received written notice from Direct Participants having interests, as shown in the records of DTC, in an aggregate principal amount of not less than fifty percent (50%) of the aggregate principal amount of the then Outstanding Bonds to the effect, that: (A) DTC is unable to discharge its responsibilities with respect to such Bonds; or (B) a continuation of the requirement that all of the Outstanding Bonds be registered in the registration books kept by the Trustee in the name of Cede, as nominee of DTC, is not in the best interest of the Beneficial Owners of such Bonds. (d) Upon the termination of the services of DTC with respect to the Bonds pursuant to subsection (c)(ii)(B) hereof, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to subsection (c)(i) or subsection (c)(ii)(A) hereof after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found or which, in the opinion of the Authority, is willing and able to undertake such functions upon reasonable and customary terms, the Bonds shall no longer be restricted to being registered in the registration books kept by the Trustee in the name of Cede as nominee of DTC. In such event, the Authority shall issue and the Trustee shall transfer and exchange Bond certificates as requested by DTC of like principal amount and maturity, in Authorized Denominations to the identifiable Beneficial Owners in replacement of such Beneficial Owners' beneficial interests in the Bonds. (e) Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of Cede, as nominee of DTC, all payments with respect to the principal or redemption price of, and interest on, such Bond and all notices with respect to such Bond shall be made and given, respectively, to DTC as provided in the representation letter of the Authority and the Trustee addressed to DTC with respect to the Bonds. (f) In connection with any notice or other communication to be provided to Bondowners pursuant to this Indenture by the Authority, the Tender Agent or the Trustee with respect to any consent or other action to be taken by Bondowners, the Authority, the Tender Agent or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than fifteen (15) calendar days in advance of such record date to the extent possible. (g) Notwithstanding any provision herein to the contrary, the Authority and the Trustee may agree to allow DTC, or its nominee, Cede, to make a notation on any Bond redeemed in part to reflect, for informational purposes only, the principal amount and date of any such redemption. (h) Notwithstanding any provision herein to the contrary, so long as the Bonds are subject to a system of book-entry-only transfers pursuant to this Section, any requirement for the delivery of Bonds to the Tender Agent in connection with a mandatory tender pursuant to Section 2.02 or demand for and mandatory purchase pursuant to Section 2.03 shall be deemed satisfied upon the transfer, on the registration books of DTC, of the beneficial ownership interests in such Bonds tendered for purchase to the account of the Tender Agent, or a Direct Participant acting on behalf of the Tender Agent. Section 2.10. Issuance of Parity Bonds. The Authority may from time to time issue bonds (the "Parity Bonds"), in addition to the 2002 Series A Bonds authorized under Section 2.01 hereof, by means of a supplement to this Indenture and without the consent of any Bondowners, upon compliance with the provisions of this Section 2.10 and subject to the restriction in Section 6.18. Any such Parity Bonds shall constitute Bonds hereunder and shall be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds hereunder on a parity with all other Bonds Outstanding hereunder. The Authority may issue the Parity Bonds subject to the following specific conditions precedent: (a) The Authority shall be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in this Indenture and all supplements hereto. (b) The supplemental indenture providing for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on Interest Payment Dates and principal thereof shall be payable on September 1 in any year in which principal is payable. If any such Parity Bonds are to be Fixed Rate Bonds with term maturities and sinking fund redemptions, the Authority shall provide the Trustee with a sinking fund payment schedule for such Fixed Rate Bonds to be used for purposes of Section 4.01(h), and, in any event, the Authority shall provide the Trustee with the terms of any optional redemption of any such Fixed Rate Bonds under Section 4.01(d). (c) The Parity Bonds shall be designated by an Authorized Authority Representative in writing to the Trustee as either (i) Variable Rate Bonds, but only if the amount available to be drawn under the Letter of Credit in effect as of the date of issuance of the Parity Bonds is increased as necessary to satisfy the requirements of 5.06(c) taking into account the issuance of the Parity Bonds and the then rating on the Variable Rate Bonds is confirmed by the Rating Agency; or (ii) Fixed Rate Bonds, but only if the Credit Criteria are met taking into account the issuance of such Parity Bonds as Fixed Rate Bonds. (d) The proceeds of such Parity Bonds shall be used solely to make deposits to the Cost of Issuance Fund, the Conversion Expenses Fund, the Capitalized Interest Account (in respect of any capitalized interest on such Parity Bonds), the Pre- Conversion Reserve Fund and/or the Post-Conversion Reserve Fund, in amounts as designated by an Authorized Authority Representative in writing to the Trustee. In the case of any deposit to the Capitalized Interest Account, the Authorized Authority Representative shall provide the Trustee with a written schedule showing the Payment Dates and the respective Bonds on and to which, respectively, such amounts are to be applied under Section 5.02(f). (e) The Authority shall deliver to the Trustee a Certificate of the Authority certifying that the conditions precedent to the issuance of such Parity Bonds set forth in subsections (a), (b), (c) and (d) of this Section 2.10 have been satisfied. The Authority will use its best efforts to issue Parity Bonds in connection with any Conversion to the extent necessary to fund Conversion Expenses in excess of available amounts in the Conversion Expenses Fund, or to make transfers to the Post-Conversion Reserve Fund required in connection with the Conversion, so as to avoid, to the extent reasonably practicable, any levy of Special Taxes described in Sections 6.09(a)(iii) or (iv). Notwithstanding the foregoing, in no event shall any failure by the Authority for any reason whatsoever to issue Parity Bonds in any way invalidate any such Special Tax levy or give rise to any liability to any owner of Other Undeveloped Property subject to any such levy. Section 2.11. Limited Obligation. All obligations of the Authority under this Indenture and the Bonds shall be special obligations of the Authority, payable solely from the Special Tax Revenues and the funds pledged therefor hereunder. -29- ARTICLE III ISSUANCE OF 2002 SERIES A BONDS; APPLICATION OF PROCEEDS; CERTAIN FUNDS AND ACCOUNTS Section 3.01. Authentication and Delivery of the 2002 Series A Bonds. Upon the execution and delivery of this Indenture, the Authority shall execute the 2002 Series A Bonds and deliver them to the Trustee. Thereupon, and upon satisfaction of the conditions set forth in this Section, and without any further action on the part of the Authority, the Trustee shall authenticate the 2002 Series A Bonds in an aggregate principal amount equal to $ , and shall deliver them to or upon the Written Order of the Authority hereinafter mentioned. Prior to the authentication and delivery of any of the Bonds by the Trustee, there shall have been delivered to the Trustee each of the following: (a) a certified copy of the Resolution authorizing issuance and sale of the 2002 Series A Bonds; (b) original executed counterparts of this Indenture; (c) the original of the Letter of Credit; and (d) a Written Order of the Authority to the Trustee to authenticate and deliver the 2002 Series A Bonds as directed in such Written Order, upon payment to the Trustee, for the account of the Authority, of the sum specified therein. Section 3.02. Application of Proceeds of Bonds. Authority from the sale of the 2002 Series A Bonds ($ Trustee, who shall deposit such proceeds as follows: The proceeds received by the .) shall be remitted to the (a) to the Interest Differential Fund $. (being an amount equal to the Interest Differential Fund Requirement as of the Closing Date); (b) to the Cost of Issuance Fund $ (c) to the Improvement Fund $5,150,000.00; (d) to the Administrative Expense Fund $ (e) to the Pre-Conversion Reserve Fund $ (being an amount equal to the Pre-Conversion Reserve Fund Requirement as of the Closing Date); and (f) to the Prior Bonds Payment Fund $ Section 3.03. Improvement Fund. (a) Establishment of Fund. There is hereby created and established with the Trustee a separate fund which shall be designated the "Improvement Fund." Deposits shall be made to the Improvement Fund as required by Section 3.02(c), and as provided in Section 3.03(c). Moneys in the Improvement Fund shall be held in trust by the Trustee for the benefit of the Authority. Amounts deposited or held in such fund shall be applied only as provided in this Section. -30- (b) Disbursements. Disbursements from the Improvement Fund shall be made by the Trustee upon receipt of a Certificate of the Authority which shall (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made (which shall be for a purpose described in the next sentence, as applicable), that the disbursement is a proper expenditure from the Improvement Fund, and the person to which the disbursement is to be paid; and (ii) cedify that no portion of the amount then being requested to be disbursed was paid pursuant to any Certificate of the Authority previously filed requesting a disbursement. Amounts held in the Improvement Fund will be used to pay the costs of the Project pursuant to the terms of the Acquisition Agreement or, if no Acquisition Agreement is then in effect, as permitted by the Act. (c) Investment. Moneys in the Improvement Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits from such investment and deposit shall be transferred, six (6) Business Days prior to each Payment Date, by the Trustee to Annual Levy Account of the Special Tax Fund to be used for the purposes of such account. (d) Closinq of Fund. Upon the filing of a Certificate of the Authority stating that the Project has been completed and that all costs of the Project have been paid, or that any such costs are not required to be paid from the Improvement Fund, the Trustee shall transfer the amount, if any, remaining in the Improvement Fund to the Variable Bond Payment Account, to be used (A) if such amount is less than $100,000, for reimbursement of draws on the Letter of Credit the proceeds of which were used for payment of interest on the Variable Rate Bonds, or (B) if such amount is in excess of $100,000, for reimbursement of drews on the Letter of Credit the proceeds of which were used to redeem Variable Rate Bonds and the Trustee shall call for redemption Variable Rate Bonds in a principal amount equal to the amount of such transfer (rounded down to the nearest $5,000), with such redemption to occur on the next redemption date for which notice of redemption can timely be given following the date of such transfer, pursuant to Section 4.01(e). (e) When all amounts in the Improvement Fund have been disbursed pursuant to either Section 3.03(b) or (d) above, the Improvement Fund shall be closed. Section 3.04. Cost of Issuance Fund. (a) Establishment of Fund. There is hereby created and established with the Trustee a separate fund which shall be designated the "Cost of Issuance Fund," to the credit of which a deposit shall be made as required by Section 3.02(b). Moneys in the Cost of Issuance Fund shall be held in trust by the Trustee and shall be disbursed as provided in subsection (b) of this Section for the payment or reimbursement of Issuance Costs. (b) Disbursement. Amounts in the Cost of Issuance Fund shall be disbursed from time to time to pay Issuance Costs, as set forth in a requisition or requisitions containing respective amounts to be paid to the designated payees, signed by an Authorized Authority Representative and delivered to the Trustee. The Trustee shall pay all Issuance Costs after receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee pursuant to any such requisition requesting payment of Issuance Costs. The Trustee shall maintain the Cost of Issuance Fund for a period of 180 days from the date of delivery of the 2002 Series A Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Administrative Expense Fund. Following the disbursement of all amounts in the Cost of Issuance Fund, the Cost of Issuance Fund shall be closed; provided, however, that such fund may be reopened in connection with the issuance of Parity Bonds to the extent a portion of the proceeds thereof are to be deposited to the Cost of Issuance Fund. -31- (c) Investment. Moneys in the Cost of Issuance Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Cost of Issuance Fund to be used for the purposes of such fund. Section 3.05. Special Tax Fund. (a) Establishment of Fund. There is hereby created as a separate fund to be held by the Trustee, the Special Tax Fund, and within the Special Tax Fund an Annual Levy Account and a Prepayment Account. Deposits shall be made to the accounts within the Special Tax Fund as provided in Sections 3.03(c), 3.05(b), 3.06(b), 3.09(d)(iv) and 3.10(c)(ii). Moneys in the accounts within the Special Tax Fund shall be held in trust by the Trustee for the benefit of the Authority and the owners of the Bonds, and shall be disbursed as provided below. (b) Uses of Special Taxes. The Authority shall remit to the Trustee, within five (5) Business Days of receipt, any Special Tax Revenues received by it. The Authority shall separately identify to the Trustee all Special Tax Revenues so remitted as attributable to: (i) Special Taxes collected on the County secured tax roll, (ii) Extraordinary Special Tax A, (iii) One-Time Special Tax A (with separate identification for such Special Taxes levied for purposes of Section 6.09(a)(iii) and 6.09(a)(iv)), (iv) Special Tax Prepayments, and (v) collections of delinquent Special Tax levies. Special Tax Revenues so received by the Trustee which are attributable to (i) Special Taxes collected on the County secured tax roll and any collections of delinquent Special Taxes (as well as any transfers from the Improvement Fund pursuant to Section 3.03(c)) shall be deposited by the Trustee to the Annual Levy Account; (ii) Extraordinary Special Tax A shall be deposited by the Trustee to the Variable Bond Payment Account; (iii) One-Time Special Tax A levied for purposes described in clause (iv) of Section 6.09(a) shall be deposited by the Trustee to the Variable Bond Payment Account, and One- Time Special Tax A levied for purposes described in clause (iii) of Section 6.09(a) shall be deposited by the Trustee to the Conversion Expenses Fund; (iv) Special Tax Prepayments shall be deposited by the Trustee to the Prepayment Account; (v) collections of delinquent Special Taxes shall be deposited by the Trustee to the Post-Conversion Reserve Fund as necessary to increase the amount on deposit therein to the then amount of the Post-Conversion Reserve Requirement, with any excess remitted by the Trustee to Lennar to make payments to Lennar of the character described in clause (iii) of the second paragraph of Section 3.05(c), with any excess over any amounts so owing to Lennar to be deposited by the Trustee to the Pre- Conversion Reserve Fund to increase the amount on deposit therein to the then amount of the Pre-Conversion Reserve Requirement, with any remaining excess to be deposited by the Trustee to the Annual Levy Account to be used for the purposes of such account. (c) Deposits and Withdrawals - Annual Levy Account. Deposits shall be made by the Trustee to the Annual Levy Account as provided in Sections 3.05(b), 3.06(b), 3.09(d) and 3.10(c). (i) All amounts deposited to the Annual Levy Account during the period from December 10 to April 9 in any Fiscal Year shall be transferred by the Trustee promptly following receipt thereof from the Annual Levy Account in the following order of priority, the requirements of each such transfer to be satisfied prior to any subsequent transfer: (A) to the Administrative Expense Fund, an amount equal to $25,000 for such period occurring in Fiscal Year 2002-03, with annual transfers thereafter to be in an amount equal to 103% of the amount transferred in the prior Fiscal Year (e.g. $25,750 for such period occurring in Fiscal Year 2003-04, $26,523 for such period occurring in Fiscal Year 2004-05, etc.); and (B) to the Fixed Bond Payment Account an amount, together with any amounts then on deposit in the Fixed Bond Payment Account and any amounts in the Capitalized Interest Account to be used to pay interest on Fixed Rate Bonds in the calendar year which commences in such Fiscal Year (as set forth in the schedule provided to the Trustee under Section 2.10(d)), sufficient to pay one-half of the scheduled Debt Service (including any mandatory sinking payment redemptions under Section 4.01(h)) due and unpaid on the Fixed Rate Bonds in the calendar year that commences in such Fiscal Year. Five (5) Business Days prior to each Payment Date which occurs on the first Business Day of February, March, April and May in any Fiscal Year, following the date on which full satisfaction of the transfers required pursuant to the preceding clauses (A) and (B) for such Fiscal Year, additional transfers shall be made by the Trustee from the Annual Levy Account in the following order of priority, the requirements of each such transfer to be satisfied in full for any such Payment Date prior to any subsequent transfer on such Payment Date: (A) to the Post-Conversion Reserve Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Post- Conversion Reserve Requirement; (B) to the Variable Bond Payment Account, an amount, together with any amount then on deposit in such account, equal to the Debt Service due on such Payment Date on the Variable Rate Bonds; (C) payment to Lennar for unreimbursed draws on the Letter of Credit related to prior Payment Dates where the amount on deposit in the Variable Bond Payment Account was less than the amount due on the Variable Rate Bonds on such date, together with interest on such unreimbursed draws at the rate set forth in Section __ of the Credit Agreement (being the rate of interest on unreimbursed draws on the Letter of Credit), all as such unreimbursed draws and interest are identified to the Trustee from time to time by a written certificate or cedificates of Lennar in each case acknowledged in writing as accurate by an Authorized Authority Representative (provided, however, that any such payments to Lennar shall be suspended if the Authority informs the Trustee in writing that Special Taxes levied on property in the District owned by Lennar are delinquent, with any such payments to Lennar to thereafter resume following the date on which the Authority informs the Trustee in writing that all such delinquencies have been cured); (D) to the Interest Differential Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Interest Differential Fund Requirement; and (E) to the Pre-Conversion Reserve Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Pre- Conversion Reserve Requirement. (ii) All amounts deposited to the Annual Levy Account during the period from April 10 in any year to December 9 in the subsequent year shall be transferred by the Trustee promptly following the receipt thereof from the Annual Levy Account in the following order of priority, the requirements of each such transfer to be satisfied prior to any subsequent transfer: (A) to the Administrative Expense Fund, an amount equal to $25,000 for such period which commences in Fiscal Year 2002-03, with annual transfers thereafter to be in an amount equal to 103% of the amount transferred in the prior Fiscal Year (e.g. $25,750 for such period which commences in Fiscal Year 2003-04, $26,523 for such period which commences in Fiscal Year 2004-05, etc.); and (B) to the Fixed Bond Payment Account an amount, together with any amounts then on deposit in the Fixed Bond Payment Account and any amounts in the Capitalized Interest Account to be used to pay interest on Fixed Rate Bonds in the calendar year which commences during such period (as set forth in the schedule provided to the Trustee under Section 2.10(d)), sufficient to pay one-half of the scheduled Debt Service (including any mandatory sinking payment redemptions under Section 4.01(h)) due and unpaid on the Fixed Rate Bonds in the calendar year that commences during such period. Five (5) Business Days prior to each Payment Date which occurs on the first Business Day of June, July, August, September, October, November and December during such period and which occurs on the first Business Day of January after such period, following the date on which full satisfaction of the transfers required pursuant to the preceding clauses (A) and (B) for such period, additional transfers shall be made by the Trustee from the Annual Levy Account in the following order of priority, the requirements of each such transfer to be satisfied in full for any such Payment Date prior to any subsequent transfer on such Payment Date: (A) to the Post-Conversion Reserve Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Post- Conversion Reserve Requirement; (B) to the Variable Bond Payment Account, an amount, together with any amount then on deposit in such account, equal to the Debt Service due on such Payment Date on the Variable Rate Bonds; (C) payment to Lennar for unreimbursed draws on the Letter of Credit related to prior Payment Dates where the amount on deposit in the Variable Bond Payment Account was less than the amount due on the Variable Rate Bonds on such date, together with interest on such unreimbursed draws at the rate set forth in Section __ of the Credit Agreement (being the rate of interest on unreimbursed draws on the Letter of Credit), all as such unreimbursed draws and interest are identified to the Trustee from time to time by a written certificate or certificates of Lennar in each case acknowledged in writing as accurate by an Authorized Authority Representative (provided, however, that any such payments to Lennar shall be suspended if the Authority informs the Trustee in writing that Special Taxes levied on property in the District owned by Lennar are delinquent, with any such payments to Lennar to thereafter resume following the date on which the Authority informs the Trustee in writing that all such delinquencies have been cured); (D) to the Interest Differential Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Interest Differential Fund Requirement; (E) to the Administrative Expense Fund an amount, if any, necessary to pay any Administrative Expenses in any Fiscal Year in excess of the amounts transferred to such fund in such Fiscal Year pursuant to Sections 3.05(c)(i) first subclause (A) and 3.05(c)(ii) first subclause (A) above, as any such amounts are identified in writing to the Trustee by an Authorized Authority Representative; and (F) to the Pre-Conversion Reserve Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Pre- Conversion Reserve Requirement. (iii) Each year that the Bonds are Outstanding, upon the first remission by the Authority to the Trustee of Special Tax Revenues described in clauses (i) of Section 3.05(b) above identified by the Authority as attributable to Special Taxes that are delinquent if not paid by the immediately preceding December 10th, and before the Special Tax Revenues then being remitted are deposited by the Trustee to the Annual Levy Account, all then remaining amounts in the Annual Levy Account shall be disposed of by the Trustee as follows: (A) prior to the Final Conversion Date, any such remaining amounts shall be transferred by the Trustee to the Conversion Expenses Fund; provided, however, that if the amount on deposit in the Conversion Expenses Fund would exceed the Maximum Conversion Expenses Fund Balance following such transfer, an amount equal to the excess shall be transferred by the Trustee to the Variable Bond Payment Account and the Trustee shall call for redemption pursuant to Section 4.01(e) on the next Interest Payment Date for which notice of redemption can timely be given, as many Variable Rate Bonds in $5,000 increments as can be so called for redemption with such funds, with any remaining amount (being the amount less than $5,000) to remain on deposit in the Annual Levy Account; and (B) on or after the Final Conversion Date, any such remaining amounts shall remain on deposit in the Annual Levy Account to be used for the purposes of such account, and Special Taxes levied in the succeeding Fiscal Year pursuant to Section 6.09(b) shall be reduced by the Authority by the amount so retained in the Annual Levy Account. (iii) It is hereby acknowledged that, for each Fiscal Year following the Fiscal Year in which the Final Conversion Date occurs, no transfers will be required by reason of subclauses (B), (C), (D) or (E) of the second paragraph of Section (c)(i) above or required by subclauses (B), (C), (D) or (F) of the second paragraph of Section (c)(ii) above. (d) Deposits and Withdrawals - Prepayment Account. Deposits shall be made by the Trustee to the Prepayment Account as provided in Section 3.05(b). The Trustee shall make -35- transfers from the Prepayment Account to the Special Tax Prepayments Redemption Account to be used, together with transfers from the Post-Conversion Reserve Fund pursuant to Section 3.07(f) and/or the Pre-Conversion Reserve Fund pursuant to Section 3.08(c), to redeem Bonds on the next date for which notice of redemption can timely be given pursuant to Section 4.01(g), with such transfers to be made on the applicable redemption date for the Bonds to be so redeemed. (e) Investment. Moneys in the Annual Levy Account and the Prepayment Account shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the respective account from which the investment was made to be used for the purposes of such account. Section 3.06. Administrative Expense Fund. (a) Establishment of Fund. There is hereby created and established as a separate fund to be held by the Trustee, the Administrative Expense Fund to the credit of which deposits shall be made as required by Sections 3.02(d), 3.04(b) and 3.05(c). Moneys in the Administrative Expense Fund shall be held in trust by the Trustee for the benefit of the Authority, and shall be disbursed as provided below. (b) Withdrawals. Amounts in the Administrative Expense Fund shall be withdrawn by the Trustee and paid to the Authority or its order upon receipt by the Trustee of a Certificate of the Authority stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense or Issuance Costs, and the nature of such Administrative Expense or issuance Costs. Amounts, if any, transferred from the Cost of Issuance Fund to the Administrative Expense Fund pursuant to Section 3.04(b) shall be placed by the Trustee in a separate subaccount within the Administrative Expense Fund created for such purpose, and amounts in such subaccount shall be expended for purposes of the Administrative Expense Fund prior to the use of amounts transferred to the Administrative Expense Fund from the Annual Levy Account pursuant to Section 3.05(c). Annually, on the last day of each Fiscal Year commencing with the last day of Fiscal Year 2003-2004, the Trustee shall withdraw any amounts then remaining in the Administrative Expense Fund that have not been allocated to pay Administrative Expenses incurred but not yet paid as directed pursuant to a Certificate of the Authority, and transfer such amounts to the Special Tax Fund for deposit to the Annual Levy Account therein. (c) Investment. Moneys in the Administrative Expense Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Administrative Expense Fund to be used for the purposes thereof. Section 3.07. Post-Conversion Reserve Fund. (a) Establishment of Fund. There is hereby created and established as a separate fund to be held by the Trustee, the Post- Conversion Reserve Fund to the credit of which deposits shall be made as required by Sections 2.02(c), 2.10(d) and 3.05(b) and (c). Moneys in the Post-Conversion Reserve Fund shall be held in trust by the Trustee for the benefit of the owners of the Fixed Rate Bonds, and shall be disbursed as provided below. (b) Use of Fund to Pay Fixed Rate Bond Debt Service. Except as otherwise provided in this Section, all amounts deposited in the Post-Conversion Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Fixed Bond Payment Account in the event of any deficiency in the Fixed Bond Payment Account on any Payment Date of the amount then required for payment of the principal of, and interest and any premium on, the Fixed Rate Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming Fixed Rate Bonds from the Fixed Bond Payment Account. (c) Notice of Withdrawal. Whenever transfer is made from the Post-Conversion Reserve Fund to the Fixed Bond Payment Account due to a deficiency in the Fixed Bond Payment Account on any Payment Date to pay amounts due on the Fixed Rate Bonds, the Trustee shall provide written notice thereof to the Finance Director, specifying the amount withdrawn, as required by Section 6.14(b). (d) Transfer of Excess. Whenever, on the Business Day prior to any Interest Payment Date, or on any other date at the request of the Finance Director, the amount in the Post- Conversion Reserve Fund exceeds the Post-Conversion Reserve Requirement, the Trustee shall provide written notice to the Finance Director of the amount of the excess and shall transfer an amount equal to the excess from the Post-Conversion Reserve Fund to the Fixed Bond Payment Account to be used for the payment of interest on the Fixed Rate Bonds on the next Payment Date for the Fixed Rate Bonds in accordance with Section 5.02. (e) Transfer to Redeem All Fixed Rate Bonds. Whenever, following the Final Conversion Date, the balance in the Post-Conversion Reserve Fund equals or exceeds the amount required to redeem or pay the Outstanding Fixed Rate Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee shall upon the written direction of the Finance Director transfer the amount in the Post- Conversion Reserve Fund to the Fixed Bond Payment Account to be applied, on the next succeeding Payment Date to the payment and redemption, in accordance with Section 4.01(d) and 5.02, as applicable, of all of the Outstanding Fixed Rate Bonds. In the event that the amount so transferred from the Post-Conversion Reserve Fund to the Fixed Bond Payment Account exceeds the amount required to pay and redeem the Outstanding Fixed Rate Bonds, the balance in the Post-Conversion Reserve Fund shall be transferred to the Authority to be used for any lawful purpose of the Authority (consistent with the provisions of the Act). Notwithstanding the foregoing, no amounts shall be transferred from the Post- Conversion Reserve Fund pursuant to this Section 3.07(e) until after (i) the calculation of any amounts due to the federal government pursuant to Section 6.08 following payment of the Fixed Rate Bonds and withdrawal of any such amount from the Post-Conversion Reserve Fund for purposes of making such payment to the federal government, and (ii) payment of any fees and expenses due to the Trustee. (f) Transfers Related to Special Tax Prepayments. Whenever Special Taxes are prepaid and Fixed Rate Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 4.01(g), and only if the amount then on deposit in the Post-Conversion Reserve Fund is then at least equal to the Post-Conversion Reserve Fund Requirement, a propodionate amount in the Post-Conversion Reserve Fund (determined on the basis of the principal of Fixed Rate Bonds to be redeemed, and the then Outstanding principal of the Fixed Rate Bonds) shall be transferred on the Business Day prior to the redemption date by the Trustee to the Special Tax Prepayments Redemption Account to be applied to the redemption of Fixed Rate Bonds pursuant to Section 4.01(g). The Finance Director shall deliver to the Trustee a Certificate of the Authority specifying any amount to be so transferred, and the Trustee may rely on any such Certificate of the Authority. (g) Use for Rebate and Yield Reduction Payments. Amounts in the Post-Conversion Reserve Fund may at any time be used, at the written direction of an Authorized Authority Representative, for purposes of paying any rebate liability under Section 6.08, or to make yield reduction payments described in the second paragraph of Section 5.03. (h) Investment. Moneys in the Post-Conversion Reserve Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Post-Conversion Reserve Fund to be used for the purposes of such fund. Section 3.08. Pre-Conversion Reserve Fund. (a) Establishment of Fund. There is hereby created and established as a separate fund to be held by the Trustee, the Pre- Conversion Reserve Fund to the credit of which deposits shall be made as provided in Sections 2.10(d), 3.02(e) and Section 3.05. Moneys in the Pre-Conversion Reserve Fund shall be held in trust by the Trustee for the benefit of the owners of the Variable Rate Bonds, and shall be disbursed as provided below. (b) Use of Fund to Pay Variable Rate Bond Debt Service. Whenever on any Payment Date the aggregate amount in the Variable Rate Payment Account and in the Letter of Credit Account is insufficient to pay Debt Service due on the Variable Rate Bonds, but only following (i) any draw on the Letter of Credit pursuant to Section 5.05(a), (b) or (d), as applicable, to pay Debt Service on the Variable Rate Bonds on such Payment Date, (ii) any transfers to the Variable Rate Payment Account from the Special Tax Fund pursuant to Section 3.05 with respect to such Payment Date, (iii) any transfer from the Interest Differential Fund to the Variable Rate Payment Account pursuant to Section 3.09 in respect of such Payment Date, and (iv) any levy of Extraordinary Special Tax A pursuant to Section 6.09(a)(ii) and corresponding transfer of any amount collected in respect of such levy to the Variable Rate Payment Account pursuant to Section 3.05 in respect of such Payment Date, the Trustee shall withdraw the amount of the insufficiency from the Pre-Conversion Reserve Fund (not to exceed the amount then on deposit in the Pre-Conversion Reserve Fund) and transfer the amount so withdrawn to the Letter of Credit Account. The Trustee shall provide written notice of any such withdrawal and transfer to the Finance Director, specifying the amount withdrawn, as required by Section 6.14(b). (c) Transfers Related to Special Tax Prepayments. Whenever Special Taxes are prepaid and Variable Rate Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 4.01(g), and only if the amount then on deposit in the Pre-Conversion Reserve Fund is then at least equal to the Pre-Conversion Reserve Requirement, a proportionate amount in the Pre-Conversion Reserve Fund (determined on the basis of the principal of Variable Rate Bonds to be redeemed, and the then Outstanding principal of the Variable Rate Bonds) shall be transferred on the Business Day prior to the redemption date by the Trustee to the Special Tax Prepayments Redemption Account to be applied to the redemption of the Variable Rate Bonds pursuant to Section 4.01(g). The Finance Director shall deliver to the Trustee a Certificate of the Authority specifying any amount to be so transferred, and the Trustee may rely on any such Certificate of the Authority. (d) Transfers to Post-Conversion Reserve Fund. On each Conversion Date, the Trustee shall transfer from the Pre-Conversion Reserve Fund to the Post-Conversion Reserve Fund an amount necessary to increase the amount then on deposit in the Post-Conversion Reserve Fund to the Post-Conversion Reserve Requirement in effect immediately following such Conversion Date; provided that any such transfer shall not exceed an amount equal to the amount deposited to the Pre-Conversion Reserve Fund on the Closing Date pursuant to Section 3.02(e) multiplied by a fraction the numerator of which is the principal amount of the Bonds being converted to Fixed Rate Bonds on such Conversion Date and the denominator of which is the initial principal amount of the Bonds issued on the Closing Date. If the amount then on deposit in the Pre-Conversion Reserve Fund is insufficient to fully fund the Post- Conversion Reserve Requirement due to a lack of monies in such fund or the limitation of the proviso in the preceding sentence, the Trustee shall make a withdrawal from the Conversion Expenses Fund in the amount of such insufficiency, and transfer the amount so withdrawn to the Post-Conversion Reserve Fund. (e) Final Conversion Date Transfers. On the Final Conversion Date and following any transfer in respect of such date pursuant to Section 3.08(b) and/or (d), the Trustee shall transfer any remaining amount in the Pre-Conversion Reserve Fund first, to the Variable Bond Payment Account to cure any deficiency in such account, and, if there are any amounts remaining after such transfer, to the Annual Levy Account to be used for purposes of such account. (f) Draws to Pay Yield Reduction Payments. The Trustee shall withdraw amounts in the Pre-Conversion Reserve Fund upon receipt of a Certificate of the Authority which specifies the amount to be withdrawn, the place where the funds are to be remitted, and that the withdrawal is for purposes of making yield reduction payments referred to in the second paragraph of Section 5.03. (g) Investment. Moneys in the Pre-Conversion Reserve Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Pre-Conversion Reserve Fund to be used for the purposes of such fund. Section 3.09. Interest Differential Fund. (a) Establishment of Fund. There is hereby created and established as a separate fund to be held by the Trustee, the Interest Differential Fund to the credit of which deposits shall be made as provided in Sections 3.02(a) and Section 3.05(c). Moneys in the Interest Differential Fund shall be held in trust by the Trustee for the benefit of the owners of the Variable Rate Bonds, and shall be disbursed as provided below. (b) Withdrawals Prior to Payment Dates. Four (4) Business Days prior to each Payment Date, the Trustee shall withdraw from the Interest Differential Fund and transfer to the Variable Bond Payment Account an amount equal to the difference, if any, between the amount then on deposit in the Variable Bond Payment Account and the interest due on the Variable Rate Bonds on the next Payment Date. In determining the debt service due on the Variable Rate Bonds for purposes of the preceding sentence, if a new Variable Interest Accrual Period will commence at any time during the four Business Day period prior to the applicable Payment Date, the Trustee shall assume that the Variable Rate in effect at the time the determination is made under such preceding sentence will remain in effect until the applicable Payment Date. (c) Withdrawals on Payment Dates. On each Payment Date, the Trustee shall withdraw from the Interest Differential Fund and transfer to the Variable Bond Payment Account an amount equal to the interest due on the Variable Rate Bonds attributable to an increase in the interest rate on such Bonds described in the second paragraph of Section 6.09(a)(vii). (d) Withdrawal on Final Conversion Date. On the Final Conversion Date, following any transfers on such date pursuant to the preceding Sections 3.09(b) and (c), the Trustee shall withdraw all amounts then on deposit in the Interest Differential Fund and shall use the amounts so withdrawn as follows: (i) to make a deposit to the Post-Conversion Reserve Fund as necessary to bring the amount on deposit in said fund to the amount of the Post-Conversion Reserve Fund Requirement to be in effect following the Final Conversion Date, (ii) to make a deposit to the Conversion Expenses Fund in an amount determined by the Finance Director as needed to pay Conversion Costs related to the Final Conversion as specified in writing to the Trustee, (iii) to the Variable Bond Payment Account to be used to reimburse the Credit Bank for draws on the Letter of Credit to redeem Variable Rate Bonds on the Final Conversion Date in a principal amount equal to the amount so transferred rounded down to the nearest $5,000, and (iv) any remaining amount to the Annual Levy Account to be used for the purposes of such account. Following the transfer pursuant to the preceding sentence, the Interest Differential Fund shall be closed. (e) Investment. Moneys in the Interest Differential Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Interest Differential Fund to be used for the purposes of such fund. Section 3.10. Conversion Expenses Fund. (a) Establishment of Fund. There is hereby created and established as a separate fund to be held by the Trustee, the Conversion Expenses Fund to the credit of which deposits shall be made as provided in Sections 3.05(b) and (c). Moneys in the Conversion Expenses Fund shall be held in trust by the Trustee for the benefit of the Authority, and shall be disbursed as provided below. (b) Transfers on Conversion Dates. On each Conversion Date, the Trustee shall withdraw from the Conversion Expenses Fund an amount specified in a certificate of an Authorized Authority Representative and shall use the amount so withdrawn to pay Conversion Expenses set forth in such certificate. In addition to the foregoing, a transfer shall be made from the Conversion Expenses Fund to the Post-Conversion Reserve Fund on any Conversion Date as necessary, following any transfer thereto pursuant to the first sentence of Section 3.08(d), to bring the amount on deposit in said fund to the amount of the Post-Conversion Reserve Fund Requirement to be in effect following the Conversion Date. (c) Transfers on Final Conversion Date. On the Final Conversion Date, following any withdrawal from such fund for purposes of Section 3.10(b), the Trustee shall withdraw all amounts then on deposit in the Conversion Expenses Fund and shall use the amounts so withdrawn as follows: (i) to the Variable Bond Payment Account to be used to reimburse the Credit Bank for draws on the Letter of Credit to redeem Variable Rate Bonds on the Final Conversion Date in a principal amount equal to the amount so transferred rounded down to the nearest $5,000, and (ii) any remaining amount to the Annual Levy Account to be used for the purposes of such account. Following the transfer pursuant to the preceding sentence, the Conversion Expenses Fund shall be closed. (e) Investment. Moneys in the Conversion Expenses Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from said investment shall be retained by the Trustee in the Conversion Expenses Fund to be used for the purposes of such fund. Section 3.11. Prior Bonds Payment Fund. (a) Establishment of Fund. There is hereby created and established as a separate fund to be held by the Trustee, the Prior Bonds Payment Fund to the credit of which a deposit shall be made as provided in Section 3.02(f). Moneys in the Prior Bonds Payment Fund shall be held in trust by the Trustee for the benefit of the owners of the Prior Bonds, and shall be disbursed as provided below. (b) Disbursement. On the Closing Date, the Trustee shall transfer all amounts on deposit in the Prior Bonds Payment Fund to the Prior Bonds Fiscal Agent to be used by the Prior Bonds Fiscal Agent to [redeem the Prior Bonds in full pursuant to Section 2.03(A)(iii) of the Prior Bonds Agreement]. Following the transfer of all amounts on deposit in the Prior Bonds Payment Fund pursuant to the preceding sentence, the Prior Bonds Payment Fund shall be closed. ARTICLE IV REDEMPTION OF BONDS Section 4.01. Circumstances of Redemption. The Bonds are subject to redemption upon the circumstances, on the dates and at the prices set forth as follows; provided that the redemption price of any Variable Rate Bond to be redeemed shall be paid from the proceeds of the draw on the Letter of Credit as provided in clause (b) of the first paragraph of Section 5.05 hereof: (a) The Variable Rate Bonds shall be subject to redemption in whole on the first date for which notice of redemption can timely be given, at a price equal to the principal amount of Variable Rate Bonds to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium, (i) if the Credit Bank shall fail to honor a draw on the Letter of Credit, or, (ii) if within 60 days of notice to the Trustee of an Act of Bankruptcy of the Bank, the Authority shall fail to deliver or cause to be delivered to the Trustee a Letter of Credit from another institution which meets the requirements of Section 5.06. (b) The Variable Rate Bonds shall be subject to redemption in whole or in part on any Interest Payment Date, at a price equal to the principal amount of Variable Rate Bonds to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium, during any Variable Period or on any Conversion Date, in the amount of any voluntary prepayments of the Variable Rate Bonds by the Authority, from any source of available funds. (c) The Variable Rate Bonds shall be subject to redemption in whole, at a price equal to the principal amount thereof, plus interest accrued thereon to the date fixed for redemption, without premium, on the last Business Day which is not less than five days before the date of expiration of any Letter of Credit unless the Trustee receives a renewal or extension of or replacement for such Letter of Credit meeting the requirements of Section 5.06 not less than ten (10) days before the expiration of the then-existing Letter of Credit. (d) The Fixed Rate Bonds shall be subject to optional redemption at the Authority's option in whole or in part, on Interest Payment Dates and at redemption prices determined by the Authority at the time of Conversion of such Bonds pursuant to Section 2.02(c), and as identified to the Trustee and the Authority by the Remarketing Agent pursuant to the seventh paragraph of Section 2.02(c); or as determined in connection with the issuance of Parity Bonds under Section 2.10, if such Fixed Rate Bonds are Parity Bonds issued under Section 2.10. (e) The Variable Rate Bonds shall be subject to redemption, in part, on the next Interest Payment Date for which notice of redemption can timely be given, in connection with a transfer from the Improvement Fund to the Variable Bond Payment Account for such purpose as described in Section 3.03(d), or in the amount of any transfers from the Annual Levy Account to the Variable Bond Payment Account pursuant to the last paragraph of Section 3.05(c), at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium. (f) The Variable Rate Bonds shall be subject to redemption in whole, at a price equal to the principal amount thereof, plus interest accrued thereon to the date fixed for redemption, without premium, on the earliest date for which notice of redemption can timely be given, ninety (90) days after the date on which the Trustee receives notice from the Credit Bank of the occurrence of an Event of Default under and as defined in the Credit Agreement, together with a direction from the Credit Bank to cause such redemption. (g) The Bonds shall be subject to redemption in whole or in part, at a price equal to the principal amount thereof to be redeemed, plus accrued interest thereon to the redemption date, without premium in the case of any Variable Rate Bonds to be redeemed and with a premium of three percent (3%) of the principal amount of the Bonds to be redeemed in the case of Fixed Rate Bonds to be redeemed (or such lesser premium as may then apply to such Fixed Rate Bonds in connection with the optional redemption provisions for such Fixed Rate Bonds established under the seventh paragraph of Section 2.02(c) above or otherwise determined for such Bonds if they are Parity Bonds under Section 2.10), on the next Interest Payment Date for which notice of redemption can timely be given, in the amount of any Special Tax prepayments deposited to the Prepayment Account and any amounts transferred from the Pre- Conversion Reserve Fund pursuant to Section 3.08(c) or the Post-Conversion Reserve Fund pursuant to Section 3.07(f) in connection with such prepayment and redemption.. The Finance Director shall provide a written determination of the Bonds to be redeemed, the redemption date and the redemption prices of such Bonds, to the Trustee, and the Trustee may conclusively rely on any such written determination in selecting the Bonds to be redeemed. (h) The Fixed Rate Bonds of any maturity shall be subject to mandatory sinking account payments in the amounts and on the dates established for such maturity in connection with the Conversion procedures in Section 2.02(c), which allow the Authority, on the Conversion Date for any Variable Rate Bonds, to determine whether all or any portion of the resulting Fixed Rate Bonds will be term bonds subject to sinking payment redemption, or in the amounts and on the dates established for any Parity Bonds that are to be Fixed Rate Term Bonds pursuant to Section 2.10. Any redemption pursuant to this Section 4.01(h) shall only occur on a September 1, and shall be at a redemption price equal to the principal amount of the Fixed Rate Bonds to be redeemed, together with accrued interest to the redemption date, without premium. The Trustee is hereby authorized and directed, and hereby agrees, to give notice of the call for redemption of Bonds at the times set forth in this paragraph, to fix the date for any such redemption within the periods prescribed in Section 4.03, and, if moneys are available, to redeem the Bonds so called on the date so fixed by the Trustee and set forth in such notice. The Trustee shall give such redemption notice (i) in the case of redemption pursuant to (a) or (¢) above, at the time required therefor pursuant to Section 4.03, without any further authorization or direction; and (ii) in the case of redemption pursuant to (b), (d), (e), (f) or (g) above, at the time required therefor pursuant to Section 4.03. Section 4.02. Selection of Bonds for Redemption. When any redemption is made pursuant to any of the provisions of this Indenture and less than all of the outstanding Bonds are to be redeemed, the Trustee shall select the Bonds to be redeemed among series or maturities as directed in a Certificate of the Authority, and by lot within a maturity of any series in any manner the Trustee deems fair, in whole multiples of $5,000. In no event shall Bonds be redeemed in amounts other than whole multiples of $5,000; provided that Bonds remaining after such redemption shall be in minimum Authorized Denominations. For purposes of a redemption pursuant to Section 4.01(b) hereof, the Trustee may round down to the nearest $5,000. The Trustee shall promptly notify the Authority in writing of the numbers of the Bonds selected for redemption. In connection with the delivery of any Certificate of the Authority under the preceding paragraph, the Authority shall determine the Bonds to be redeemed based upon the following priorities: (a) as between Fixed Rate Bonds and Variable Rate Bonds, Variable Rate Bonds shall be redeemed prior to Fixed Rate Bonds; and (b) as among Fixed Rate Bonds, so as to maintain, as much as practicable, debt service on all Fixed Rate Bonds Outstanding that is substantially level but which decreases as necessary to correspond to any expected increases in Administrative Expenses in future Fiscal Years. If any Bonds tendered for purchase pursuant to Section 2.03 hereof and delivered pursuant to Section 8.16 hereof shall have been selected for redemption, then the new Bond delivered pursuant to Section 8.16 hereof shall be delivered with notice that it is subject to such redemption and shall be deemed to be the Bond so selected for redemption notwithstanding the notice period stated in Section 4.03 hereof. Section 4.03. Notice of Redemption. Subject to the provisions of the last paragraph of Section 4.01, notice of redemption shall be given by the Trustee for and on behalf of the Authority, by first class mail, not less than thirty (30) days or, in the case of a redemption pursuant to Sections 4.01(a) or (c), not less than five (5) days prior to the redemption date, to (i) the Securities Depositories and Information Services, and (ii) the registered owner of each Bond called for redemption, at its address as it appears on the registration books, but neither failure to mail such notice to any Bondholder nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of any of the Bonds with respect to which such failure or defect shall have occurred. Each notice of redemption shall state the redemption date, the place of redemption, the source of the funds to be used for such redemption, the principal amount and, if less than all, the distinctive numbers of the Bonds to be redeemed, and shall also state that the interest on the Bonds in such notice designated for redemption (other than the unredeemed portions, if any, thereof) shall cease to accrue from and after such redemption date and that on said date there will become due and payable on each of said Bonds the principal amount thereof to be redeemed, interest accrued thereon to the redemption date and the premium, if any, thereon (such premium to be specified). Neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any inaccuracy in such numbers. Section 4.04. Partial Redemption of Bonds. Any Bond may be redeemed in whole or in part, but no part of any Bond shall be redeemed in an amount less than $5,000, and Bonds remaining after any redemption shall be in Authorized Denominations. Upon surrender of any Bond redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the registered owner thereof, without charge to the owner thereof, a new Bond or Bonds of like maturity and of Authorized Denominations designated by such owner equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. Section 4.05. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price being held by the Trustee, the Bonds so called for redemption shall, on the redemption date designated in such notice, become due and payable at the redemption price specified in such notice, interest on the Bonds so called for redemption shall cease to accrue, said Bonds shall cease to be entitled to any lien, benefit or security under this Indenture, and the holders of said Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. All Bonds fully redeemed pursuant to the provisions of this Adicle IV shall be destroyed by the Trustee, which shall thereupon deliver to the Authority a cedificate evidencing such destruction. ARTICLE V PLEDGE OF SPECIAL TAX REVENUES; BOND FUND Section 5.01. Pledge of Special Tax Revenues. The Bonds shall be secured by a first pledge of all of the Special Tax Revenues and all of the moneys in the Prepayment Account, the Special Tax Prepayment Redemption Account, the Capitalized Interest Account, and, until disbursed as provided herein, in the accounts within the Special Tax Fund. The Special Tax Revenues and all moneys deposited into said accounts (except as otherwise provided herein) are hereby dedicated to the payment of the principal of, and interest and any premium on, the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or defeased in accordance with Section 10.02. All Special Tax Revenues shall be held in trust for the benefit of the holders from time to time of the Bonds, but shall nevertheless be disbursed, allocated and applied solely for the uses and purposes hereinafter in this Article V and in Article III set forth. The Variable Rate Bonds are further secured by a first pledge of all of the moneys deposited in the Pre-Conversion Reserve Fund, the Interest Differential Fund, the Variable Bond Payment Account, and the Letter of Credit Account. The Fixed Rate Bonds are further secured by a first pledge of all of the moneys deposited in the Post-Conversion Reserve Fund and the Fixed Bond Payment Account. Amounts in the Administrative Expense Fund, the Conversion Expenses Fund, the Cost of Issuance Fund and the Improvement Fund are not pledged to the repayment of the Bonds. The facilities acquired with the proceeds of the Bonds are not in any way pledged to pay the Debt Service on the Bonds. Any proceeds of condemnation or destruction of any facilities financed with the proceeds of the Bonds are not pledged to pay the Debt Service on the Bonds and are free and clear of any lien or obligation imposed hereunder. Neither the Authority (or any member of the Board of Directors thereof) nor any person executing the Bonds is liable personally on the Bonds or subject to any personal liability or accountability by reason of their issuance. The Bonds are limited obligations of the Authority for the District and are not a debt, nor a pledge of the faith and credit, of the State of California or any of its political subdivisions, and neither are they liable on the Bonds, nor are the Bonds payable out of any funds or properties other than those of the Authority for the District specifically pledged hereunder for the payment thereof. Section 5.02. Bond Fund. (a) Establishment of Fund. There is hereby created and established with the Trustee a separate trust fund which shall be designated the "Bond Fund", which shall be applied only as provided in this Section. There is also hereby created in the Bond Fund, as separate accounts to be held by the Trustee, the Fixed Bond Payment Account, the Variable Bond Payment Account, the Letter of Credit Account, the Capitalized Interest Account and the Special Tax Prepayments Redemption Account, to the credit of which deposits shall be made as provided in Sections 2.10(d), 3.03(d), 3.05(b), (c) and (d), 3.07, 3.08 and 3.09. Moneys in the Bond Fund and the accounts therein shall be held in trust by the Trustee for the benefit of the owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds and for the other purposes as provided below, and, pending such disbursement, shall be subject to a lien in favor of the owners of the Bonds. (b) Fixed Bond Payment Account. Amounts deposited to the Fixed Bond Payment Account shall be used by the Trustee to make payments of principal of and interest and any redemption premium on the Fixed Rate Bonds as such amounts become due and payable in accordance with the terms of the Fixed Rate Bonds and this Indenture. In the event that, as of any Payment Date, amounts in the Fixed Bond Payment Account are insufficient for purposes of the preceding sentence, the Trustee shall make a draw upon the Post-Conversion Reserve Fund in the amount of the insufficiency. If, following the transfer of any amounts on deposit in the Post-Conversion Reserve Fund, there is still deficiency in amounts available to pay the amounts due on the Fixed Rate Bonds, the Trustee shall use the available amounts first, to pay interest due on the Fixed Rate Bonds, second, to pay principal due on any Fixed Rate Bonds at the respective maturity thereof, and third, to pay principal due on the Fixed Rate Bonds by reason of mandatory sinking account payments. Amounts due but unpaid on the Fixed Rate Bonds (including principal or sinking fund payments) shall bear interest at the rate of interest on the applicable Fixed Rate Bond to which they pertain. (c) Variable Bond Payment Account. Amounts deposited to the Variable Bond Payment Account shall be used by the Trustee on each Payment Date (but only following any transfer on such Payment Date from such account required under the second sentence of Section 5.02(d)), to reimburse the Credit Bank for draws on the Letter of Credit pursuant to Section 5.05(a), (b) or (d), by means of a wire transfer by the Trustee to the Credit Bank on each Payment Date of an amount equal to the proceeds of draws received by the Trustee on the Letter of Credit pursuant to draws made under Section 5.05(a), (b) or (d), as applicable. In the event that amounts on deposit in the Variable Bond Payment Account on the date which is four (4) Business Days prior to any Payment Date are insufficient to fully reimburse such draws expected to be made on such Payment Date, the Trustee shall (i) withdraw the amount of the insufficiency from the Interest Differential Fund to the extent of any amounts on deposit therein, and (ii) if following such draw an insufficiency still exists, send out special tax bills as required by Section 6.09(a)(ii) and deposit any Special Taxes collected pursuant to such billing in the Variable Bond Payment Account (as described in clause (ii) of the second sentence of Section 3.05(b)). (d) Letter of Credit Account. Amounts deposited to the Letter of Credit Account shall be used by the Trustee solely to make payments of principal and interest due on any Payment Date on the Variable Rate Bonds. In the event that amounts in the Letter of Credit Account are not sufficient to pay the full amount due on the Variable Rate Bonds on any Payment Date, the Trustee shall withdraw the amount of the insufficiency first, from the Variable Bond Payment Account to the extent of any funds then on deposit therein, and then from the Pre-Conversion Reserve Fund to the extent of any funds on deposit therein. (e) Special Tax Prepayments Redemption Account. Amounts deposited to the Special Tax Prepayments Redemption Account shall be used by the Trustee to pay the redemption price (other than accrued interest which shall be paid from amounts in the Fixed Bond Payment Account or the Variable Bond Payment Account, as applicable) of Bonds called for redemption pursuant to Section 4.01(g) on the applicable redemption date. (f) Capitalized Interest Account. Amounts deposited to the Capitalized Interest Account shall be used to make transfers, on the fifth Business Day prior to each Payment Date, to the Fixed Bond Payment Account or the Variable Bond Payment Account, as directed by an Authorized Authority Representative pursuant to Section 2.10(d) or 2.02(c), as applicable. (g) Investment. Moneys in the accounts within the Bond Fund shall be invested and deposited in accordance with Section 5.03. Interest earnings and profits resulting from the investment and deposit shall be retained in the respective account from which the investment was made, to be used for purposes of such account. Section 5.03. Investment of Moneys. Except as otherwise provided in this Section, any moneys in any of the funds and accounts to be established by the Trustee pursuant to this indenture shall be invested by the Trustee, if and to the extent then permitted by law, in Investment Securities selected and directed in writing by the Authority, with respect to which payments of principal thereof and interest thereon are scheduled or otherwise payable not later than the date on which it is estimated that such moneys will be required by the Trustee. The Trustee may rely on the written direction of the Authority as to the legality of any such investment. In the absence of such directions, the Trustee shall invest such monies in Investment Securities described in clause (x) of the definition thereof. Notwithstanding the foregoing, (a) amounts in the Pro-Conversion Reserve Fund shall be invested solely in investments the interest on which is excluded from gross income for federal tax purposes (including tax-exempt money market funds otherwise described in clause (x) of the definition of Investment Securities herein), and (b) amounts drawn under the Letter of Credit and proceeds received from the remarketing of the Bonds shall not be invested. The Trustee shall have no liability or responsibility for any loss resulting from any investment made in accordance with this Section 5.03. The Authority acknowledges that a portion of the amounts in the Pro-Conversion Reserve Fund, the Interest Differential Fund and the Post-Conversion Reserve Fund may need to be invested at a yield not in excess of the yield on the Bonds, or yield reduction payments may need to be made to the federal government. The amount that may need to be yield restricted (and/or any yield reduction payments) pursuant to the preceding sentence will change as Conversions occur. The Authority agrees to retain a qualified rebate analyst for each Bond Year to and including the Bond Year following the Final Conversion Date, to compute any amounts that need to be yield restricted and/or any yield reduction payments that need to be made, in light of the foregoing. The Authority may withdraw amounts in the Pre-Conversion Reserve Fund and, to the extent amounts in such fund are insufficient for such purpose, from the Post-Conversion Reserve Fund, as necessary to make any such yield reduction payments. Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in any reserve fund pledged to the payment of the Bonds or the reimbursement of draws on the Letter of Credit shall be valued at their present value (within the meaning of Section 148 of the Code). The Trustee may make any and all investments permitted under this Section 5.03 through its own bond department or any affiliate. The Trustee and its affiliates may act as principal, agent, sponsor, advisor or depository with respect to Investment Securities under this Section 5.03. The Trustee may sell or present for redemption any obligations so purchased whenever it shall be necessary in order to provide moneys to meet any payment. The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Authority periodic cash transaction statements which include detail for ail investment transactions made by the Trustee hereunder. Section 5.04. Assignment to Trustee; Enforcement of Obligations. The Authority hereby transfers, assigns and sets over to the Trustee, for the benefit of the Bondholders, and the Trustee hereby accepts, all of the Special Tax Revenues, all moneys at any time held in the funds and accounts described in the first two paragraphs of Section 5.01; and any Special Tax Revenues or other amounts payable to the Trustee hereunder which are collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee, and shall forthwith be paid by the Authority to the Trustee. Subject to the provisions of this Indenture, the Trustee also shall be entitled to take all steps, actions and proceedings reasonably necessary in its judgment (a) to enforce the terms, covenants and conditions of, and preserve and protect the priority of its interest in and under, this Indenture and the Letter of Credit, and (b) to assure compliance with all covenants, agreements and conditions on the part of the Authority contained in this Indenture with respect to the Special Tax Revenues. Section 5.05. Draws on Letter of Credit. The Authority hereby authorizes and directs the Trustee, and the Trustee hereby agrees, to draw on the Letter of Credit in accordance with its terms, in order to receive payment thereunder on the following dates in the following amounts: (a) On each Interest Payment Date for any Variable Rate Bonds, in an amount which will be sufficient to pay the interest due and payable on such Interest Payment Date on all outstanding Variable Rate Bonds; (b) On any date fixed for redemption of Variable Rate Bonds under Section 4.01 hereof, in an amount which will be sufficient to pay the redemption price, including accrued interest, on the Variable Rate Bonds; (c) On each Demand Date (including any Conversion Date), in an amount sufficient to pay the Purchase Price of any Variable Rate Bonds tendered or deemed tendered pursuant to Section 2.03 hereof and not remarketed pursuant to Section 8.14 hereof (including because there has been a failure to receive in a timely manner the Purchase Price thereof), such draw to be in an amount not less than the total Purchase Price of the Variable Rate Bonds so tendered less the amount of the Purchase Price theretofore received by the Remarketing Agent in connection with the remarketing of the Bonds, as such amounts are identified to the Trustee by the Remarketing Agent and the Tender Agent pursuant to the provisions of Section 8.14 hereof; and (d) On the final maturity date of the Variable Rate Bonds, in an amount which will be sufficient to pay the principal and interest due on all outstanding Variable Rate Bonds on such final maturity date; and (e) On any Conversion Date an amount, if any, by which Conversion Expenses and other amounts needed to effect a Conversion exceed amounts then on deposit in the Conversion Expenses Fund or otherwise available for such purpose, provided that no such draw shall exceed an amount equal to the principal amount of the Variable Rate Bonds converted to Fixed Rate Bonds on such Conversion Date. Proceeds of draws on the Letter of Credit: (i) pursuant to clause (a), (b) or (d) above shall be deposited by the Trustee to the Letter of Credit Account of the Bond Fund, (ii) pursuant to clause (c) above shall be used solely to pay the Purchase Price of Variable Rate Bonds as provided in Section 8.15, and (iii) pursuant to clause (e) above shall be deposited to the Conversion Expenses Fund. Each such drawing shall be made not later than the time required by the Letter of Credit in order to receive payment thereunder on the date on which payment of the amount of such drawing is required to be made to the holders of the Variable Rate Bonds pursuant to this Indenture. The Trustee hereby acknowledges that the Letter of Credit delivered on the Closing Date requires that demands for payment thereunder be received by the Credit Bank (i) no later than , California time, on a Business Day in respect of a payment on the next Business Day for purposes of clauses (a), (b), (d) and (e) of the preceding paragraph, and (ii) no later than a.m., California time, on a Business Day in respect of a payment on the same Business Day for purposes of clause (c) of the preceding paragraph. The Trustee shall give notice of each such drawing to the Authority and Lennar at the time of each draw. The Trustee shall comply with all provisions of the Letter of Credit in order to realize upon any drawing thereunder. The Trustee agrees to accept any Letter of Credit conforming to the requirements of Section 5.06(a) which is delivered to the Trustee in substitution for the then-outstanding Letter of Credit. Upon acceptance of any such substitute Letter of Credit, the Trustee shall surrender the superseded Letter of Credit to the issuer thereof and shall give notice of such substitution to Variable Rate Bondholders by first class mail as soon as practicable upon receipt by the Trustee of such substitute Letter of Credit. The Trustee shall give all required notices to the Credit Bank in accordance with the provisions of the Letter of Credit, including, but not limited to, notice of receipt of a substitute Letter of Credit, notice of a successor Trustee, and notice of discharge or defeasance of this Indenture. The Trustee shall transfer, in a timely manner, to any paying agent, if other than the Trustee, all amounts drawn under the Letter of Credit in order to make payments on the Variable Rate Bonds, or, in the case of a draw on the Letter of Credit to pay the Purchase Price of any Bonds tendered pursuant to Section 2.03 hereof and not remarketed pursuant to Section 8.14 hereof, the Trustee shall arrange for payments under the Letter of Credit to be made directly to the Tender Agent. Section 5.06. Provision of Letter of Credit. At all times there shall be provided and continuously available to the Trustee, as beneficiary, an irrevocable direct pay Letter of Credit (whether in the form of a letter of credit or any other credit instrument) meeting the requirements of this Section while any of the Bonds bear interest at a Variable Rate. The Authority and Lennar each shall have the right at any time, whether or not in connection with the pending expiration of any then-outstanding Letter of Credit, to provide or cause to be provided to the Trustee a substitute Letter of Credit which meets the requirements of this Section, and the Trustee has been directed pursuant to Section 5.05 to accept any such substitute Letter of Credit. The following requirements shall apply to any Letter of Credit: (a) The Letter of Credit initially provided shall be effective from no later than the Closing Date, and any Letter of Credit provided in substitution for any then outstanding Letter of Credit shall be for a term commencing not later than the expiration date of the term of the prior Letter of Credit. (b) Any Letter of Credit provided in substitution for any then-outstanding Letter of Credit shall be for a term of not less than one year; provided that any Letter of Credit -50- may provide that it shall terminate prior to its stated expiration date upon receipt by the Credit Bank of notice from the Trustee that the Letter of Credit is being surrendered to the Credit Bank because no Variable Rate Bonds remain outstanding or upon receipt by the Credit Bank of notice from the Trustee that the Letter of Credit is being surrendered to the Credit Bank in response to the issuance and delivery of a substitute Letter of Credit. (c) Each Letter of Credit shall be issued in an amount not less than the sum of the aggregate principal amount of the Variable Rate Bonds then outstanding, plus an amount equal to interest on the Variable Rate Bonds for a period of thidy seven (37) days (or such lesser or greater number of days as shall be necessary to obtain the statement of the Rating Agency referred to in clause (g) below) calculated at an assumed rate of twelve percent (12%) per annum or such higher rate as may be determined in accordance with the provisions of Section 2.02(b). (d) Except for its term, each Letter of Credit shall have substantially the same provisions as the Letter of Credit delivered on the Closing Date, including, without limitation, provisions permitting drawings thereunder to pay amounts due on the Variable Rate Bonds on the scheduled dates for payment of such amounts or upon redemption, to pay the Purchase Price of Variable Rate Bonds tendered for purchase as provided in Section 2.03, and to pay for Conversion Expenses and other amounts needed for Conversion on Conversion Dates in excess of amounts on deposit in the Conversion Expenses Fund. (e) Each Letter of Credit shall be issued by a national banking association organized under the National Banking Act, or any successor law, or a banking corporation organized under the laws of any state of the United States, or a savings and loan association or corporation or savings bank organized under the laws of the United States or any state thereof, or a branch or agency of a foreign banking corporation or association licensed in one of the States of the United States, or any other issuer acceptable to the Authority; provided that the long term unsecured debt obligations of any such association or other organization are rated "A" or its equivalent or better by Standard & Poor's Ratings Service or Moody's Investors Service and whose letter of credit results in variable rate debt that is rated "A-I" or its equivalent or better by Standard & Poor's Ratings Service or Moody's Investors Service. (f) Each Letter of Credit delivered to the Trustee (other than the Letter of Credit initially provided) must be accompanied by (i) an opinion of Bond Counsel addressed to the Trustee to the effect that delivery of the Letter of Credit complies with the provisions of the Indenture and will not cause interest on the Bonds to become includable in gross income for federal income tax purposes; and (ii) one or more Opinions of Counsel, addressed to the Authority and the Trustee, to the effect, singly or together, that: (A) The Letter of Credit is a legal, valid and binding obligation of the Credit Bank, enforceable against the Credit Bank in accordance with its terms, except as limited by applicable reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the enforcement of the rights of creditors generally as such laws may be applied in the event of a reorganization, insolvency, liquidation, readjustment of debt or other similar proceeding of or moratorium applicable to the Credit Bank and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (B) If required by the Rating Agency in order to obtain the statement referred to in subsection (g) below, an opinion to the effect that payments made by the Credit Bank under the Letter of Credit will not be voidable under Section 544 or 547 of the Federal Bankruptcy Code in the context of a case or proceeding by or against the Authority under the Federal Bankruptcy Code. (g) Each Letter of Credit delivered to the Trustee in substitution for the then- outstanding Letter of Credit shall be accompanied by a written statement, signed by an officer of the Rating Agency to the effect that the then rating on the Variable Rate Bonds will not be lowered or withdrawn following the delivery of such Letter of Credit, and confirming that the short term rating on the Variable Rate Bonds will be at least "A-I" or its equivalent or better. Section 5.07. Liability of Authority. The Authority shall not incur any responsibility in respect of the Bonds or this Indenture other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The Authority shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The Authority shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Trustee herein or of any of the documents executed by the Trustee in connection with the Bonds, or as to the existence of a default or event of default thereunder. In the absence of bad faith, the Authority and the Finance Director may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Authority and conforming to the requirements of this Indenture. The Authority, including the Finance Director, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. No prevision of this Indenture shall require the Authority to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Authority and the Finance Director may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Authority may consult with counsel, who may be the Authority's General Counsel, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Authority shall not be bound to recognize any person as the owner of a Bond unless and until such Bond is submitted for inspection, if required, and his or her title thereto satisfactory established, if disputed. Whenever in the administration of its duties under this Indenture the Authority or the Finance Director shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part -52- of the Authority, be deemed to be conclusively proved and established by a certificate of the Trustee, and such certificate shall be full warrant to the Authority and the Finance Director for any action taken or suffered under the provisions of this Indenture or any supplemental indenture upon the faith thereof, but in its discretion the Authority or the Finance Director may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 5.08. Employment of Agents by Authority. In order to perform its duties and obligations hereunder, the Authority and/or the Finance Director may employ such persons or entities as it deems necessary or advisable. The Authority shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. ARTICLE VI COVENANTS OF THE AUTHORITY Section 6.01. Payment of Principal and Interest. The Authority, for and on behalf of the District, shall punctually pay, but only out of Special Tax Revenues and amounts in the Bond Fund as herein provided, the principal and the interest (and premium, if any) due in respect of every Bond issued hereunder at the times and places and in the manner provided herein and in the Bonds, according to the true intent and meaning thereof. When and as paid in full, all Bonds shall be delivered to the Trustee and shall forthwith be destroyed. Section 6.02. Paying Agents. The Authority, with the written approval of the Trustee, may appoint and at all times have one or more paying agents in such place or places as the Authority may designate, for the payment of the principal of, and the interest (and premium, if any) on, the Bonds. It shall be the duty of the Trustee to make such arrangements with any such paying agent as may be necessary and feasible to assure, to the extent of the moneys held by the Trustee for such payment, the availability of funds for the prompt payment of the principal of and interest and premium, if any, on the Bonds presented at either place of payment. The paying agent initially appointed hereunder is the Trustee. Section 6.03. Preservation of Special Tax Revenues. The Authority shall not take any action to interfere with or impair the pledge and assignment hereunder of the Special Tax Revenues. The Authority will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Indenture. Section 6.04. Compliance with Indenture. The Authority shall not issue, or permit to be issued, any Bonds secured or payable in any manner out of Special Tax Revenues in any manner other than in accordance with the previsions of this Indenture; it being understood that the Authority reserves the right to issue obligations payable from and secured by sources other than the Special Tax Revenues and the assets assigned herein. The Authority shall not suffer or permit any default to occur under this Indenture, but shall faithfully observe and perform all the covenants, conditions and requirements hereof. Section 6.05. Further Assurances. Whenever requested so to do by the Trustee, the Authority shall promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things, as may be necessary or reasonably required in order to further and more fully vest in the Trustee and the Bondholders all of the rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them by this Indenture and to perfect and maintain as perfected such rights, interests, powers, benefits, privileges and advantages. Section 6.06. No Arbitrage. The Authority shall not take, nor permit nor suffer to be taken by the Trustee or otherwise, any action with respect to the gross proceeds of the 2002 Series A Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of the issuance of the 2002 Series A Bonds would have caused the 2002 Series A Bonds to be "arbitrage bonds" within the meaning of section 148(a) of the Code and Regulations promulgated thereunder. Section 6.07. Compliance with Law. The Authority will comply with all applicable provisions of the Act and law in administering the District and completing the acquisition of the Project. Section 6.08. Rebate of Excess Investment Earnings to United States. The Authority hereby covenants to calculate or cause to be calculated and rebate to the federal government, in accordance with the Regulations, excess investment earnings to the extent required by section 148(f) of the Code, to the extent that such section is applicable to the Bonds. If necessary, the Authority may use amounts in the Administrative Expense Fund, in the Pre-Conversion Reserve Fund, and in the Post-Conversion Reserve Fund, and any other moneys available to the District, including amounts advanced by the Authority, in its sole discretion, to be repaid by the District as soon as practicable from amounts described in the preceding clause, to satisfy its obligations under this Section 6.08. The Finance Director shall take note of any investment of monies hereunder in excess of the yield on the Bonds, and shall take such actions as are necessary to ensure compliance with this Section 6.08, such as increasing the portion of the Special Tax levy for Administration Expenses as appropriate to have funds available in the Administrative Expense Fund to satisfy any rebate liability under this Section 6.08. Section 6.09. Levy of Special Taxes. (a) Prior to Final Conversion. (i) Annual Levy. For each Fiscal Year commencing with Fiscal Year 2002-03 and continuing to and including the Fiscal Year in which the Final Conversion Date occurs, the Authority shall levy or cause to be levied Special Taxes pursuant to the Ordinance and the Rate and Method of Apportionment of Special Taxes (A) at the maximum permissible rate on any Developed Property, and (B) on Undeveloped Property as necessary to satisfy the Special Tax A Requirement (as defined in the Rate and Method of Apportionment of Special Taxes) after taking into account the amount of the levy on Developed Property pursuant to the preceding clause (A). (ii) Extraordinary Special Tax A Levies. In addition to the foregoing, in the event that the amount on deposit in the Variable Bond Payment Account as of the fourth Business Day prior to any Payment Date is less than the amount due on the Variable Rate Bonds due on such Payment Date, the Trustee shall notify the Finance Director of the amount of the insufficiency, and, on the third Business Day prior to such Payment Date, the Trustee shall send a special tax bill in the form of Exhibit D hereto to the owners of Other Undeveloped Property identified on Exhibit E hereto, as such Exhibit E is then in effect. The Trustee shall allocate a portion of the amount of the insufficiency to each applicable parcel of Other Undeveloped Property in the District according to the percentages in Exhibit E, as then in effect. (iii) One-Time Special Tax A Levy - Conversion Dates. In addition to the foregoing, in the event that on any date which is three (3) Business Days prior to a Conversion Date the amount then on deposit in the Conversion Expenses Fund is less than the Conversion Expenses identified by the Finance Director to the Trustee pursuant to Section 2.02(c) as expected to be due and payable on such Conversion Date, the Trustee shall send a special tax bill in the form of Exhibit D hereto to the owners of Other Undeveloped Property identified on Exhibit E hereto, as such Exhibit E is then in effect. The Trustee shall allocate a portion of the amount of the insufficiency to each applicable parcel of Other Undeveloped Property in the District according to the percentages in Exhibit E, as then in effect. -55- (iv) One-Time Special Tax A Levy - Final Conversion. In addition to the foregoing, in the event that on the date which is three (3) Business Days prior to the Final Conversion Date, the Finance Director has identified to the Trustee in writing pursuant to Section 2.02(c) a principal amount of Variable Rate Bonds that are not expected to be converted to Fixed Rate Bonds on such Final Conversion Date, the Trustee shall send a special tax bill in the form of Exhibit D hereto to the owners of Other Undeveloped Property identified on Exhibit E hereto, as such Exhibit E is then in effect. The Trustee shall allocate the principal amount so identified by the Finance Director to each applicable parcel of Other Undeveloped Property in the District according to the percentages in Exhibit E, as then in effect. (v) Use of Amounts Received. Amounts collected pursuant to levies (A) identified in Section 6.09(a)(i) shall be remitted by the Authority to the Trustee for deposit by the Trustee to the Annual Levy Account as provided in clause (i) of the second sentence of Section 3.05(b); (B) identified in Section 6.09(a)(ii) constitute Extraordinary Special Tax A levies and shall be deposited by the Trustee to the Variable Bond Payment Account as provided in clause (ii) of the second sentence of Section 3.05(b); (C) identified in Section 6.09(a)(iii) constitute One-Time Special Tax A levies and shall be deposited by the Trustee to the Conversion Expenses Fund as provided in clause (iii) of the second sentence of Section 3.05(b); and (D) identified in Section 6.09(a)(iv) constitute One-Time Special Tax A levies and shall be deposited by the Trustee to the Variable Bond Payment Account to be used to reimburse the Credit Bank for a draw on the Letter of Credit to redeem Variable Rate Bonds on the Final Conversion Date, as provided in Section 2.02(c). (vi) Maintenance of Exhibit E. As of the Closing Date, the County Assessor's Parcel numbers of each parcel of Other Undeveloped Property in the District, the name and address of each such owner, and the percentage of the Special Tax, if any is then to be levied, attributable to each such owner is as set forth in Exhibit E hereto. The Finance Director shall provide the Trustee with updates to Exhibit E from time to time whenever any of the information as to the parcels subject to any One-Time Special Tax A or any Extraordinary Special Tax A changes, as known to the Finance Director. (vii) Variable Rate Assumptions, Interest Differential Fund Transfers. In determining the debt service due on the Variable Rate Bonds for purposes of Section 6.09(a) (ii) above, if a new Variable Interest Accrual Period will commence at any time during the four Business Day period prior to the applicable Payment Date, the Trustee shall assume that the Variable Rate in effect at the time the determinations are made under such Section 6.09(a)(ii) will remain in effect until the applicable Payment Date. If a Variable Interest Computation Date occurs during the period commencing four Business Days before any Payment Date to such Payment Date, and the Variable Rate increases on such Variable Interest Computation Date, the Trustee shall, on the Payment Date, withdraw from the Interest Differential Fund for the amount of interest due on the Variable Rate Bonds on such Payment Date as a consequence of such increase in the Variable Rate. If the amount available on the date of any such transfer is insufficient to make the transfer in full, the amount of the insufficiency shall be drawn from the Pre-Conversion Reserve Fund pursuant to Section 3.08(b). (b) Followinq Final Conversion. For each Fiscal Year commencing with the Fiscal Year following the Fiscal Year in which the Final Conversion Date occurs, the Authority shall levy or cause to be levied Special Taxes pursuant to the Ordinance and the Rate and Method of Apportionment of Special Taxes, and in the manner described in Section 6.09(c) below, on alt Taxable Property as necessary to satisfy the Special Tax A Requirement (as such terms are defined in the Rate and Method of Apportionment). (c) Special Tax Levies on the County Secured Property Tax Roll. Any Special Tax levies pursuant to Section 6.09(a)(i) (Fiscal Year 2003-04 and thereafter) or 6.09(b) shall be made in accordance with the following procedures. The Authority shall effect any such levy of the Special Taxes in accordance with the Ordinance and the Rate and Method of Apportionment of Special Taxes by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which the County will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next County secured real property tax roll. Upon the completion of the computation of the amounts of the levy, the Authority shall prepare or cause to be prepared, and shall transmit to the County, such data as the County requires to include the levy of the Special Taxes on the next County secured real properly tax roll. The Authority shall fix and levy the amount of Special Taxes within the District (i) prior to Final Conversion as directed in Section 6.09(a)(i) above, and (ii) following Final Conversion as required for satisfaction of the Special Tax A Requirement, including the payment of principal of and interest on any outstanding Fixed Rate Bonds becoming due and payable during the ensuing year, including any necessary replenishment of the Post-Conversion Reserve Fund and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts necessary to discharge any obligation under Section 6.08) during such year, taking into account any balances in the Annual Levy Account and such funds. The Special Taxes so levied shall not exceed the authorized amounts as provided in the Rate and Method of Apportionment of Special Taxes. The Special Taxes levied on the County secured real property tax roll shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property. Notwithstanding the foregoing, the Special Taxes levied pursuant to Section 6.09(b) may be collected by means of direct billing of the applicable property owners within the District if necessary to pay obligations of the District, in which event the Special Taxes shall become delinquent if not paid when due pursuant to said billing. (d) Special Tax Levies by Direct Billinq. Any Special Tax levies pursuant to Section 6.09(a)(i) (Fiscal Year 2002-03 only), (ii), (iii) or (iv) shall be made by direct billing of the applicable property owners as described in such clauses (ii), (iii) or (iv) of Section 6.09(a), respectively, and shall be due and payable on (and will be delinquent if not paid by) the day specified in the tax bill, the day prior to the applicable Payment Date, the day prior to the Conversion Date or the day prior to the Final Conversion Date, respectively. In the event of a delinquency in payment, Special Taxes so levied shall have the same priority and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on the respective parcels. Section 6.10. Covenant to Foreclose. Pursuant to Section 53356.1 of the Act and the provisions of the Code, the Authority hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following paragraph. The Finance Director shall notify the City Attorney (acting in the capacity as General Counsel to the Authority) of any such delinquency of which it is aware, and the City Attorney (acting in the capacity as General Counsel to the Authority) shall commence, or cause to be commenced, such proceedings. On or about February 15 and June 15 of each Fiscal Year, the Finance Director shall compare the amount of Special Taxes theretofore levied in the District pursuant to Sections 6.09(a)(i) or 6.09(b), as applicable, to the amount of Special Tax Revenues theretofore received by the Authority, and: (A) Individual Delinquencies. If the Finance Director determines that any single parcel subject to the Special Tax in the Distdct is delinquent in the payment of Special Taxes in the aggregate amount of $2,500 or more, then the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the Authority within 90 days of such determination. Notwithstanding the foregoing, the Finance Director may defer such action if the amount in the Post-Conversion Reserve Fund is at least equal to the Post-Conversion Reserve Requirement. (B) Aqqreqate Delinquencies. If the Finance Director determines that (i) the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax levied pursuant to Sections 6.09(a)(i) or 6.09(b), as applicable, for the prior Fiscal Year, or (ii) there are ten (10) or fewer owners of real property within the District, determined by reference to the latest available secured property tax roll of the County, the Finance Director shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes and demand immediate payment of the delinquency within 45 days of such determination, and the Authority shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency that is in excess of $2,000.00. (C) One-Time Special Tax A and Extraordinary Special Tax A Delinquencies. If the Finance Director determines that any Special Tax levied pursuant to Section 6.09(a)(ii), (iii) or (iv) has not been paid when due, the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 10 days of such determination and (if the delinquency remains uncured) foreclosure proceedings shall be commenced within 30 days of such determination. The Finance Director and the City Attorney, as applicable, are hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for City staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder. Section 6.11. Federal Guarantee Prohibition. The Authority shall take no action nor permit nor suffer any action to be taken if the result of the same would be to cause the 2002 Series A Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Section 6.12. Use Covenant. The Authority shall assure that the proceeds of the 2002 Series A Bonds are not so used as to cause the 2002 Series A Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. Section 6.t3. Maintenance of Tax-Exemption. The Authority shall take all actions necessary to assure the exclusion of interest on the 2002 Series A Bonds from the gross income of the owners of the 2002 Series A Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the 2002 Series A Bonds. Section 6.14. State Reporting Requirements. The following requirements shall apply to the Bonds, in addition to any continuing disclosure requirements under any applicable securities laws: (a) Not later than October 30 of each calendar year, beginning with the October 30 first succeeding the date of the Bonds, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the Finance Director shall cause the following information to be supplied to CDIAC: (i) the principal amount of the Bonds Outstanding; (ii) the balance in the Pre-Conversion Reserve Fund and the balance in the Post-Conversion Reserve Fund; (iii) the balance, if any, in the Capitalized Interest Account; (iv) the number of pamels in the District which are delinquent in the payment of Special Taxes, the amount of each delinquency, the length of time delinquent and when foreclosure was commenced for each delinquent parcel; (v) the balances in the accounts within the Improvement Fund; and (vi) the assessed value of all parcels in the District subject to the levy of the Special Taxes as shown in most recent equalized roll. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC. (b) If at any time the Trustee fails to pay principal and interest due on any scheduled payment date for the Bonds, or makes a withdrawal from the Pre-Conversion Reserve Fund pursuant to Section 3.08(b) or the Post-Conversion Reserve Fund pursuant to Section 3.07(b), the Trustee shall notify the Finance Director of such failure or withdrawal in writing. The Finance Director shall notify CDIAC and the Original Purchaser of such failure or withdrawal within 10 days of such failure or withdrawal. (c) The chief fiscal officer of the Authority shall file a report with the Board of Directors of the Authority no later than January 1, 2003 and at least once a year thereafter, which annual report shall contain: (i) the amount of Special Taxes collected and expended with respect to the District, (ii) the amount of Bond proceeds collected and expended with respect to the District, and (iii) the status of the Project. It is acknowledged that the Special Tax Fund and the Special Tax Prepayments Account are the accounts into which Special Taxes collected on the District will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in Section 3.02 are the funds and accounts into which Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and the annual report described in the preceding sentence is intended to satisfy the requirements of Sections 50075.1(d), 50075.3, 53410(d) and 53411 of the California Government Code. (d) The reporting requirements of this Section 6.14 shall be amended from time to time, without action by the Authority or the Trustee, (i) with respect to subparagraphs (a) and (b) above, to reflect any amendments to Section 53359.5(b) or 53359.5(c) of the Act, and (ii) with respect to subparagraph (c) above, to reflect any amendments to Section 50075.1, 50075.3, 53401 or 53411 of the California Government Code. -59- (e) None of the Authority and its officers, agents and employees, the Finance Director or the Trustee shall be liable for any inadvertent error in reporting the information required by this Section 6.14. The Finance Director shall provide copies of any of such reports to any Bondowner upon the written request of a Bondowner and payment by the person requesting the information of the cost of the Authority to produce such information and pay any postage or other delivery cost to provide the same, as determined by the Finance Director. The term "Bondowner" for purposes of this Section 6.14 shall include any beneficial owner of the Bonds. Section 6.15. Reduction of Special Taxes. The Authority covenants and agrees to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in the District in any event prior to the Final Conversion Date, and after the Final Conversion Date below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Fixed Rate Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is hereby acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that said covenant is necessary to assure the full and timely payment of the Bonds. Section 6.16. Limits on Special Tax Waivers and Bond Tenders. The Authority covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds and further covenants not to permit the tender of Bonds in payment of any Special Taxes except upon a determination by the Finance Director that to accept such tender will not result in the Authority having insufficient Special Tax revenues to pay the principal of and interest on the Bonds and any Parity Bonds remaining Outstanding following such tender. Section 6.17. Release of Property Subject to Special Tax Lien. The Authority may at any time, without notice to or the consent of the Trustee or the Bondowners, release property in the District from the lien of Special Taxes to the extent that such property becomes exempt from the levy of Special Taxes under Section G of the Rate and Method of Apportionment of Special Taxes. Section 6.18. Limitation on Principal Amount of Parity Bonds. The Authority will not issue more than $1,000,000 initial principal amount of Parity Bonds (exclusive of any refunding Bonds issued in a principal amount not in excess of the principal amount of the Bonds being refunded). Section 6.19. Limitation on Conversion Expenses. The Authority shall use all reasonable diligence to limit total Conversion Expenses to no more than $1,000,000. -(50- ARTICLE VII DEFAULT Section 7.01. Events of Default. Each of the following events shall constitute an "Event of Default" hereunder: (a) failure to pay the principal of or premium (if any) on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise; (b) failure to pay any installment of interest on any Bond when such interest installment shall become due and payable; (c) failure to pay the Purchase Price of any Variable Rate Bond tendered in accordance with the provisions of Section 2.03 hereof when such Purchase Price shall become due and payable; and (d) failure by the Authority to perform or observe any other of the covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, and the continuation of such failure for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Authority by the Trustee, or to the Authority and the Trustee by the holders of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds at the time outstanding. No default specified in (d) above shall constitute an Event of Default unless the Authority shall have failed to correct such default within the applicable period; provided, however, that if the default shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default if corrective action is instituted by the Authority within the applicable period and diligently pursued until the default is corrected. Section 7.02. Institution of Legal Proceedings by Trustee. If one or more of the Events of Default shall occur and be continuing, the Trustee in its discretion may, and upon the written request of the holders of a majority in principal amount of the Bonds then outstanding and upon being indemnified to its satisfaction therefor the Trustee shall, proceed to protect or enforce its rights or the rights of the holders of Bonds under the Act or under this Indenture and the Letter of Credit, by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein or therein, or in aid of the execution of any power herein or therein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder; provided that any such request from the Bondholders shall not be in conflict with any rule of law or with this Indenture, expose the Trustee to personal liability or be unduly prejudicial to Bondholders not joining therein. Section 7.03. Application of Moneys Collected by Trustee. Any moneys held by the Trustee (other than from drawings upon the Letter of Credit), or collected by the Trustee pursuant to Section 7.02 shall be applied in the order following, at the date or dates fixed by the Trustee and, in the case of distribution of such moneys on account of principal (or premium, if -6!- any) or interest, upon presentation of the Bonds and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid: First: For payment of all amounts due to the Trustee under Section 8.06. Second: For deposit in the Bond Fund to be applied to payment of the principal of all Bonds then due and unpaid and the premium, if any, and interest thereon; ratably to the persons entitled thereto without discrimination or preference; except that no payment of principal, premium or interest shall be made with respect to any Bonds registered in the name of the Authority, the account party under the Letter of Credit or the Credit Bank, or known by the Trustee to be registered in the name of any nominee of the Authority, the account party under the Letter of Credit, the Credit Bank, or the account party under the Letter of Credit, until all amounts due on all Bonds not so registered have been paid. Third: For payment of all other amounts due to any person hereunder. Section 7.04. Effect of Delay or Omission to Pursue Remedy. No delay or omission of the Trustee or of any holder of Bonds to exercise any right or power arising from any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every power and remedy given by this Article VII to the Trustee or to the holders of Bonds may be exercised from time to time and as often as shall be deemed expedient. In case the Trustee shall have proceeded to enforce any right under this Indenture, and such proceedings shall have been discontinued or abandoned because of waiver or for any other reason, or shall have been determined adversely to the Trustee, then and in every such case the Authority, the Trustee, the Credit Bank and the holders of the Bonds, severally and respectively, shall be restored to their former positions and rights hereunder in respect to the trust estate; and all remedies, rights and powers of the Authority, the Trustee and the holders of the Bonds shall continue as though no such proceedings had been taken. Section 7.05. Remedies Cumulative. No remedy herein conferred upon or reserved to the Trustee or to any holder of the Bonds is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. Section 7.06. Covenant to Pay Bonds in Event of Default. The Authority covenants that, upon the happening of any Event of Default, the Authority will pay to the Trustee upon demand, but only out of Special Tax Revenues, for the benefit of the holders of the Bonds, the whole amount then due and payable thereon for interest or for principal and premium, or both, as the case may be, and all other sums which may be due hereunder or secured hereby, including reasonable compensation to the Trustee, its agents and counsel, and any expenses or liabilities incurred by the Trustee hereunder. In case the Authority shall fail to pay the same fodhwith upon such demand, the Trustee, in its own name and as trustee of an express trust, and upon being indemnified to its satisfaction shall be entitled to institute proceedings at law or in equity in any court of competent jurisdiction to recover judgment for the whole amount due and unpaid, together with costs and reasonable attorneys' fees, subject, however, to the condition that such judgment, if any, shall be limited to, and payable solely out of, Special Tax Revenues and any other assets pledged, transferred or assigned to the Trustee under this Indenture as herein provided and not otherwise. The Trustee shall be entitled to recover such judgment as aforesaid, either before or after or during the pendency of any proceedings for the enforcement of this Indenture, and the right of the Trustee to recover such judgment shall not -62- be affected by the exercise of any other right, power or remedy for the enforcement of the provisions of this Indenture. Section 7.07. Trustee Appointed Agent for Bondholders. The Trustee is hereby appointed the agent and attorney of the holders of all Bonds outstanding hereunder for the purpose of filing any claims relating to the Bonds. Section 7.08. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the written request of the holders of a majority in principal amount of the Bonds then outstanding, it shall have full power, in the exemise of its discretion for the best interests of the holders of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default hereunder, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the holders of at least a majority in principal amount of the Bonds outstanding hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Section 7.09. Limitation on Bondholders' Right to Sue. No holder of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such holder shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the holders of at least a majority in aggregate principal amount of all the Bonds then outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said holders shall have tendered to the Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of thirty (30) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any holder of Bonds of any remedy hereunder; it being understood and intended that no one or more holders of Bonds shall have any right in any manner whatever by its or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enfome any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all holders of the outstanding Bonds. The right of any holder of any Bond to receive payment of the principal of (and premium, if any) and interest on such Bond out of Special Tax Revenues, as herein and therein provided, on and after the respective due dates expressed in such Bond, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such holder, notwithstanding the foregoing provisions of this Section or Section 7.08 or any other provision of this Indenture. Section 7.10. Limitation of Liability to Special Tax Revenues. Notwithstanding anything in this Indenture contained, the Authority shall not be required to advance any moneys derived from the proceeds of taxes collected by the Authority, by the State of California or by any political subdivision thereof or from any source of income of any of the foregoing other than -63- the Special Tax Revenues, for any of the purposes in this Indenture mentioned, whether for the payment of the principal of or interest on the Bonds or for any other purpose of this Indenture. The Bonds are limited obligations of the Authority for the District, and are payable from and secured only by the Special Tax Revenues and amounts on deposit in the Bond Fund and the Special Tax Fund. Section 7.11. Notice of Default. If a default occurs of which the Trustee is by Section 8.01(c) hereof required to take notice or if notice of default be given as in said Section 8.01(c) provided, the Trustee shall within fifteen (15) days thereafter (unless such default is cured or waived), mail by first-class mail notice of such default to each registered owner of Bonds then outstanding; provided that, except in the case of a default in the payment of the principal of, premium, if any, or interest on any Bond, the Trustee may withhold such notice to the Bondholders if and so long as the Trustee in good faith determines that the withholding of such notice is in the interests of the Bondholders; and provided further that, in the case of any default of the character specified in Section 7.01(d), no such notice to the Bondholders shall be given until at least thirty (30) days after notice thereof is received by the Trustee. ARTICLE VIII THE TRUSTEE AND AGENTS Section 8.01. Duties, Immunities and Liabilities of Trustee. The Trustee shall perform such duties and only such duties as are specifically set forth in this Indenture, including the duty to draw on the Letter of Credit as required by Section 5.05 hereof, and no additional covenants or duties of the Trustee shall be implied in this Indenture, the Letter of Credit or otherwise. The Trustee shall, during the existence of any Event of Default (which has not been cured or waived), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as prudent persons familiar with such matters would exercise or use under similar circumstances in the conduct of their own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action or its own negligent failure to act, except that: (a) The duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificate or opinion furnished to the Trustee pursuant to the requirements of this Indenture; but in the case of any such certificate or opinion which by any provision hereof is specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not it conforms to the procedural requirements of this Indenture; (b) At all times, regardless of whether or not any Event of Default shall exist, (1) the Trustee shall not be liable for any error of judgment made in good faith by a responsible officer or officers or by any agent or attorney of the Trustee appointed with due care unless the Trustee was negligent in ascertaining the pertinent facts; and (2) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority, or such other percentage as may be required hereunder, in aggregate principal amount of the Bonds at the time outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture; (c) The Trustee shall not be required to take notice or be deemed to have notice of any default or Event of Default hereunder, except under Section 7.01(a), (b) or (c) hereof, unless a responsible officer of the Trustee shall be specifically notified in writing of such default by the Authority or the owners of at least twenty-five percent (25%) in aggregate principal amount of all Bonds then outstanding; (d) Before taking any action under Article VII hereof or this Section (except with respect to any drawing required hereunder on the Letter of Credit) at the request or direction of the Bondholders or the Credit Bank, the Trustee may require that a satisfactory indemnity bond be furnished by the Bondholders for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken; (e) Upon any application or request by the Authority to the Trustee to take any action under any provision of this Indenture, the Authority shall furnish to the Trustee a Certificate of the Authority stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, and an Opinion of Counsel stating that in the opinion of such Counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished; (f) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or through agents or attorneys and the Trustee shall not be responsible for any negligence or misconduct on the part of any agent or attorney appointed with due care by it hereunder; (g) None of the Credit Bank, the Remarketing Agent, the Authority, the Tender Agent, the account party under the Letter of Credit, or Lennar shall be deemed to be agents of the Trustee for any purpose, and the Trustee shall not be liable for any noncompliance of any of them in connection with their respective duties, if any, hereunder or in connection with the transactions contemplated hereby; (h) The Trustee shall be entitled to rely upon telephonic notice for all purposes whatsoever so long as the Trustee reasonably believes such telephonic notice has been given by a person authorized to give such notice; (i) The immunities extended to the Trustee also extend to its directors, officers, employees and agents; (j) Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Bonds, it being the sole obligation of the Trustee to administer, for the benefit of the Bondholders, the various funds and accounts established hereunder; (k) No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy; and (I) The Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of its rights or powers; except that this sentence shall in no way limit the obligations of the Trustee to make draws under the Letter of Credit (and the Trustee shall not seek indemnity hereunder prior to drawing on the Letter of Credit) in accordance with the requirements of this Indenture. Whether or not therein expressly so provided, every provision of this Indenture or any document relating to the conduct, powers or duties of, or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Article VIII. -65- Section 8.02. Right of Trustee to Rely Upon Documents, Etc. Except as otherwise provided in Section 8.01: (a) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, requisition, direction, election, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) Any consent, demand, direction, election, notice, order or request of the Authority mentioned herein shall be sufficiently evidenced by a Written Consent, Written Demand, Written Direction, Written Election, Written Notice, Written Order or Written Request of the Authority, and any resolution of the Authority may be evidenced to the Trustee by a Certified Resolution; (c) The Trustee may consult with counsel (who may be counsel for the Authority, counsel for the Trustee or Bond Counsel) and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel; (d) Whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by a Certificate of the Authority; and such Certificate of the Authority shall, in the absence of negligence or bad faith on the part of the Trustee, be full warrant to the Trustee for any action taken or suffered by it under the provisions of this Indenture upon the faith thereof; (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; and (f) The Trustee and the Tender Agent may conclusively rely on information furnished by DTC in determining the identity and holdings of Direct Participants (as defined in Section 2.09(a)). Section 8.03. Trustee Not Responsible for Recitals. The recitals contained herein and in the Bonds shall be taken as the statements of the Authority for the District, and the Trustee assumes no responsibility for the correctness of the same. The Trustee shall have no responsibility with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the Bonds. The Trustee makes no representations as to the value or condition of any assets pledged or assigned as security for the Bonds, or as to the right, title or interest of the Authority therein, or as to the security provided thereby or by this Indenture or the Letter of Credit, or as to the compliance of the Project with the Act, or as to the tax-exempt status of the Bonds, or as to the technical or financial feasibility of the Project, or as to the validity or sufficiency of this Indenture as an instrument of the Authority or of the Bonds as obligations of the Authority. The Trustee shall not be accountable for the use or application by the Authority or the Remarketing Agent of any of the Bonds authenticated or delivered hereunder or of the use or application of the proceeds of such Bonds by the Authority. Section 8.04. Intervention by Trustee. The Trustee may intervene on behalf of the Bondholders in any judicial proceeding to which the Authority is a pady and which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of owners of the Bonds and, subject to the provisions of Section 8.01(d), shall do so if requested in writing by the owners of a majority in aggregate principal amount of all Bonds then outstanding. Section 8.05. Moneys Received by Trustee to be Held in Trust. All moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law or as otherwise provided herein. Amounts drawn under the Letter of Credit and proceeds of any remarketing of Bonds shall not be commingled with any other funds held by the Trustee hereunder. The Trustee shall be under no liability for interest on any moneys received by it hereunder except such as it may agree with the Authority to pay thereon. Any moneys held by the Trustee may be deposited by it in its banking department and (excluding any moneys derived from a drawing on the Letter of Credit) invested in Investment Securities. Section 8.06. Compensation and Indemnification of Trustee and Agents. The Authority hereby agrees (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the other agreements related to the Bonds to which it is a party (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture or other agreement related to the Bonds to which the Trustee is a party or incurred in complying with any request made by the Authority or Rating Agency with respect to the Bonds (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be adjudicated by a court of competent jurisdiction to be attributable in whole or in part to its negligence or willful misconduct; (c) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense including those of its attorneys incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the duties of the Trustee hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder or other agreement to which the Trustee is a party; and (d) to indemnify the Trustee for any reasonable fees and expenses incurred during a period of default hereunder. The Agents shall be entitled to reasonable compensation for all services rendered by them as such Agents, and the Authority shall provide for payment or reimbursement of the Agents upon request for all expenses, disbursements and advances incurred or made by the Agents in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of their counsel and of all persons not regularly in their employ) except any such expense, disbursement or advance as may arise from their negligence or willful misconduct. The Trustee's rights to immunities, indemnities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment of the Bonds. Notwithstanding the foregoing, any monetary obligations of the Authority or the District under this Section 8.06 shall be satisfied solely from amounts on deposit in the Administrative Expense Fund. Section 8.07. Qualifications of Trustee. There shall at all times be a trustee hereunder which shall be a corporation or banking association organized and doing business under the laws of the United States or of a state thereof, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. If such corporation or banking association publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such corporation or banking association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.08. Section 8.08. Resignation and Removal of Trustee and Appointment of Successor Trustee. (a) The Trustee may at any time resign by giving written notice delivered to the Authority and by giving written notice to the Bondholders by first class mail. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor trustee by an instrument in writing. If no successor trustee shall have been so appointed and have accepted appointment within forty-five (45) days after the giving of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Bondholder who has been a bona fide holder of a Bond for at least six months may, on behalf of itself and others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and may prescribe, appoint a successor trustee. (b) In case at any time either (1) the Trustee shall cease to be eligible in accordance with the provisions of Section 8.07 and shall fail to resign after written request therefor by the Authority or by any Bondholder who has been a bona fide holder of a Bond for at least six (6) months, or (2) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Authority shall remove the Trustee and, upon such removal or upon any removal pursuant to paragraph (c) of this Section 8.08, except as otherwise provided in said paragraph (c), shall appoint a successor trustee by an instrument in writing, or any such Bondholder may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and may prescribe, remove the Trustee and appoint a successor trustee. (c) The Authority or, but only if an Event of Default has occurred and is continuing, the holders of a majority in aggregate principal amount of the Bonds at the time outstanding, may at any time remove the Trustee and the Authority may appoint a successor trustee, in each case by an instrument or concurrent instruments in writing signed by the Authority and delivered to the Trustee, the Tender Agent, the Authority, the Credit Bank and the Remarketing Agent. (d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section shall become effective only upon acceptance of appointment and assumption of duties by the successor trustee as provided in Section 8.09, and upon transfer of the Letter of Credit to the successor Trustee. -69- Section 8.09. Acceptance of Trust by Successor Trustee. Any successor trustee appointed as provided in Section 6.08 shall execute, acknowledge and deliver to the Authority and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with and shall assume all the rights, powers, trusts, duties and obligations of its predecessor in the trusts hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the Written Request of the Authority or the request of the successor trustee, the trustee ceasing to act shall execute and deliver an instrument transferring to such successor trustee, upon the trusts herein expressed, all the rights, powers and trusts of the trustee (including, but not limited to, the Letter of Credit) so ceasing to act. Upon request of any such successor trustee, the Authority shall execute any and all instruments in writing necessary or desirable for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and duties. Any trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such trustee to secure the amounts due it as compensation, reimbursement, expenses and indemnity afforded to it by Section 8.06. No successor trustee shall accept appointment as provided in this Section 8.09 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 8.07. Upon acceptance of appointment by a successor trustee as provided in this Section, the Authority or such successor trustee shall give Bondholders notice by first class mail of the succession of such trustee to the trusts hereunder. In the event of the appointment of a successor Trustee, the predecessor Trustee which has resigned or been removed shall cease to be Trustee of the funds hereunder and bond registrar and paying agent for the Bonds, and the successor Trustee shall become such trustee and shall accept such other appointments as the trustee may hold, including the offices of bond registrar and paying agent hereunder. Section 8.10. Merger or Consolidation of Trustee. Any corporation or association into which the Trustee may be merged or with which it may be consolidated, or any corporation or association resulting from any merger or consolidation to which the Trustee shall be a party, or any corporation or association succeeding to the business of the Trustee, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding, provided that such successor trustee shall be eligible under the provisions of Section 8.07. Section 8.11. Accounting Records and Reports. The Trustee shall keep proper books of record and account in which complete and correct entries shall be made of all transactions made by it relating to the receipt, disbursement, allocation and application of the Special Tax Revenues and the proceeds of the Bonds, and amounts held by the Trustee in the funds and accounts established under this Indenture. Such records and other information shall be open to inspection by the Authority and by any Bondholder at any reasonable time on reasonable notice. The Trustee shall furnish to the Authority regular accounting statements on such dates and furnish such information as the Authority shall reasonably require, covering the activities and responsibilities of the Trustee, with copies of such statements and information to be provided by the Trustee to Lennar. Section 8.12. Remarketing Agent. The Authority shall appoint a Remarketing Agent for the Bonds, subject to the conditions set forth in Section 8.13 hereof. The Remarketing -70- Agent initially appointed hereunder is Stone & Youngberg LLC. The Remarketing Agent shall designate to the Trustee its Office and signify its acceptance of the duties and obligations imposed upon it hereunder by execution of the Remarketing Agreement. The Remarketing Agent shall, and shall agree in the Remarketing Agreement to, do each of the following: (a) act as agent for the Authority in determining the Variable Rate and, if and as necessary, the Fixed Rate, and act as agent for Bondholders in receiving and holding Bonds and moneys to pay the Purchase Price of Bonds tendered for purchase; (b) notify the Trustee, the Credit Bank and the Tender Agent of the Variable Rate determined in accordance with Section 2.02(b), and the Fixed Rate determined in accordance with Section 2.02(c), on the Variable Interest Computation Date or other date required for such determination, each such notification to be in writing or by telex or telecopier or other communication device which produces a written record thereof, or by telephone confirmed within one Business Day by any such written communication; and upon request by the Authority, submit copies of any such notices to the Authority; (c) hold all moneys delivered to it hereunder for the purchase of Bonds in trust for the benefit of the person which shall have so delivered such moneys until the Bonds purchased with such moneys shall have been delivered to or for the account of such person, and not commingle such moneys with other funds of the Remarketing Agent; (d) keep such books and records with regard to the remarketing of the Bonds as shall be consistent with prudent industry practice and make such books and records available for inspection by the Authority, the Trustee and the Credit Bank at all reasonable times; and (e) perform the duties and comply with the provisions set forth in Sections 8.13 through 8.16 hereof, inclusive. Section 8.13. Qualifications of Remarketing Agent. (a) The Remarketing Agent shall be a national banking association or a member of the National Association of Securities Dealers, Inc., and authorized by law to perform all the duties imposed upon it by this Indenture and the Remarketing Agreement. (b) The Remarketing Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least sixty (60) days' written notice to the Authority, the Credit Bank, the Trustee and the Tender Agent, but any such resignation shall not be effective until a successor is appointed and has accepted such appointment. (c) The Remarketing Agent may be removed upon thirty days written notice, and a successor Remarketing Agent appointed by the Authority upon receipt by the Trustee of an instrument directing such removal and appointment, (i) signed by the Authority and filed with the Remarketing Agent, the Trustee and the Tender Agent, or (ii) signed by the Credit Bank and filed with the Authority, the Remarketing Agent, the Trustee and the Tender Agent, which the Credit Bank certifies that Bonds that have been tendered for purchase pursuant to Section 2.03 have not been remarketed within thirty (30) days of such tender. Within thirty (30) days after receipt of such filing, the Trustee shall confirm in writing to the successor Remarketing Agent, the Credit Bank and the Authority that such removal has been approved and the successor Remarketing Agent has been appointed. No removal of the Remarketing Agent shall be effective until a successor is appointed and has accepted such appointment. (d) In the event of the resignation or removal of the Remarketing Agent, the Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity to its successor. Section 8.14. Remarketing of Bonds. Upon the receipt by the Remarketing Agent of any notice from the Tender Agent that any Bondholder (or Direct Participant, with respect to any Bonds in "book-entry only~ form pursuant to Section 2.09) has delivered a Tender Notice pursuant to Section 2.03 hereof, or upon receipt of any notice from the Trustee of Bonds deemed to have been tendered in accordance with the previsions of Section 2.02(b) or (c), the Remarketing Agent shall offer for sale and use its best efforts to market the Bonds referred to in such Tender Notice or such notice from the Trustee (which shall be deemed to be a Tender Notice as provided in Section 2.03) at a price of par plus accrued interest to the Demand Date, in accordance with the Remarketing Agreement; provided, however, that the Remarketing Agent shall not offer for sale or sell such Bonds to the Authority, Lennar or the account party under the Letter of Credit. The Remarketing Agent shall give telephonic notice, promptly confirmed in writing, to the Trustee, the Tender Agent and the Credit Bank by 4:00 p.m., New York City time, on the day prior to each Demand Date, including any Conversion Date (each, a "Remarketing Date") specifying the names, addresses, and taxpayer identification numbers of the purchasers of, and the principal amount and denominations of, such Bonds, if any, for which it has found purchasers as of such Remarketing Date, the Purchase Price at which the Bonds are to be sold (which shall be par plus accrued interest to the Demand Date) and the Demand Date. The Remarketing Agent shall instruct such purchasers to deliver to it, no later than 10:00 a.m., New York City time, on the Demand Date, in same day funds, the amount required to purchase such Bonds. Upon receipt by the Remarketing Agent of such amount from such purchasers, the Remarketing Agent will give written instructions to the Tender Agent, as co-authenticating agent, to transfer the registered ownership of the Bonds to the respective purchasers, and to deliver such Bonds to such purchasers. The Tender Agent shall hold all Bonds delivered to it in trust for the benefit of the respective Bondholders which shall have so delivered such Bonds until moneys representing the purchase price of such Bonds shall have been delivered to or for the account of or to the order of such Bondholders. The Remarketing Agent shall remit the Purchase Price of such Bonds to the Tender Agent, no later than 10:30 a.m., New York City time, on the Demand Date, and the Tender Agent shall remit the Purchase Price of such Bonds to the tendering Bondholder or Bondholders entitled to the same as provided in Section 2.03. In the event that any purchaser which shall have been identified by the Remarketing Agent to the Trustee and the Tender Agent shall fail to pay the Purchase Price for any Bonds prior to 10:30 a.m., New York City time, on the Demand Date, the Remarketing Agent shall not be obligated to accept delivery of such amount after such time. The Remarketing Agent will immediately notify the Trustee, the Credit Bank and the Tender Agent of any such failure to receive the Purchase Price for such Bonds. One Business Day prior to the Demand Date and on the Demand Date (including any Conversion Date), the Tender Agent shall notify the Trustee, the Credit Bank and the Remarketing Agent of the amount of funds held by the Tender Agent as of 10:45 a.m., New York City time, on each such date constituting the Purchase Price of the Bonds remarketed by the Remarketing Agent. The Tender Agent shall hold all moneys delivered to it for the purchase of Bonds in trust in a non-commingled account for the benefit of the person or entity which shall have so delivered such moneys until the Bonds purchased with such moneys shall have been delivered to or for the account of such person. The Authority shall not have any right, title or interest in such monies. None of the Authority, Lennar, or the account party under the Letter of Credit may purchase any Bonds from the Remarketing Agent or otherwise. Section 8.15. Purchase of Bonds Not Remarketed. In the event that the proceeds of remarketing of any Bond in respect of which a Tender Notice has been given have not been received by the Tender Agent on or prior to 10:30 a.m., New York City time, on the Demand Date, the Trustee shall, within the time required by Section 5.05 hereof, draw on the Letter of Credit in an amount sufficient to enable the Tender Agent to pay the Purchase Price of such Bond. On each Demand Date, the Trustee shall pay to the Tender Agent, but only from amounts drawn under the Letter of Credit, the Purchase Price of any Bonds for which it has received a Tender Notice and which have not been remarketed pursuant to Section 8.14 hereof or arrange to have such amounts drawn under the Letter of Credit to be paid directly to the Tender Agent. Upon receipt of such Purchase Price and upon receipt of the Bonds tendered for purchase pursuant to Section 2.03 hereof, the Tender Agent shall pay such Purchase Price to the registered owners thereof; provided that if the Purchase Price was theretofore paid from the proceeds of a draw on the Letter of Credit, the Tender Agent shall pay such amount to the Credit Bank. Any amounts drawn under the Letter of Credit to purchase Bonds shall be used solely for such purpose. Any Bonds so purchased with amounts drawn under the Letter of Credit by the Trustee shall be purchased for the account of the account party under the Letter of Credit. Amounts drawn under the Letter of Credit which are not used to purchase Bonds pursuant to this Section 8.15, shall be remitted by the Trustee or the Tender Agent to the Credit Bank promptly upon payment of the Purchase Price of the Bonds. Section 8.16. Delivery of Purchased Bonds. (a) Bonds remarketed by the Remarketing Agent pursuant to Section 8.14 hereof shall be cancelled by the Tender Agent and new Bonds in a like aggregate principal amount shall be registered by the Tender Agent in the names and shall be in the denominations set forth in the written notice given to the Trustee and the Tender Agent by the Remarketing Agent pursuant to Section 8.14 hereof, and the Tender Agent shall deliver such Bonds to the purchasers thereof at the written direction of the Remarketing Agent and shall promptly notify the Trustee in writing of such cancellation and delivery. (b) Bonds purchased for the account of the account party under the Letter of Credit pursuant to Section 8.15 hereof shall be registered by the Trustee in the name of the account party under the Letter of Credit and shall be delivered by the Trustee to the account party under the Letter of Credit. So long as any Bonds are registered in the name of the account party under the Letter of Credit or its nominee or the Authority or its nominee, such Bonds shall be subordinate as to principal to all other Bonds outstanding hereunder and may not be tendered for purchase pursuant to Section 2.03 hereof. The Remarketing Agent shall, however, continue its efforts to remarket such Bonds on behalf of the account party under the Letter of Credit or its nominee and such Bonds shall be remarketed before any other Bonds are remarketed. (c) Notwithstanding any other provisions hereof, neither the Trustee nor the Tender Agent shall deliver Bonds purchased with the proceeds of a draw on the Letter of Credit to a new purchaser following a remarketing of such Bonds, until the Letter of Credit has been reinstated, as confirmed in writing by the Credit Bank to the Tender Agent, by an amount sufficient to cover principal and interest on such Bonds in the amounts required by Section 5.06(c). Section 8.17. Tender Agent. The Trustee on behalf of the Authority shall act as the Tender Agent or shall appoint another entity to act as the Tender Agent for the Bonds, subject to the conditions set forth in Section 8.18 hereof. The Tender Agent initially appointed hereunder shall be the Trustee. Any Tender Agent other than the Trustee shall designate to the Trustee its Office and signify its acceptance of the duties and obligations imposed upon it hereunder by a written instrument of acceptance delivered to the Authority, the Trustee and the Remarketing Agent under which the Tender Agent acknowledges its qualifications and authority to act as Tender Agent under this Indenture and agrees, particularly, as follows: (1) The Tender Agent shall, upon receipt of a Tender Notice from any Bondholder (or Direct Participant through DTC, with respect to a Bond in "book-entry only" form pursuant to Section 2.09), give prompt telephonic notice thereof to the Trustee and the Remarketing Agent, specifying the amount of Bonds to be purchased and the Demand Date, and shall, not later than the following Business Day, confirm such telephonic notice in writing and deliver to the Remarketing Agent, the Trustee and the Credit Bank a copy of such Tender Notice. (2) On each Demand Date, the Tender Agent shall give the Remarketing Agent and the Trustee telephonic notice, confirmed in writing by the following Business Day, of the principal amount of Bonds delivered pursuant to Section 2.03. (3) The Tender Agent shall hold all Bonds delivered to it pursuant to Section 2.03 in trust for the benefit of the respective Bondholders which shall have so delivered such Bonds until such Bonds are required by this Indenture to be delivered to the respective purchasers thereof. (4) The Tender Agent shall cancel all Bonds for which it has received written notice of remarketing from the Remarketing Agent and shall authenticate new Bonds in a like aggregate principal amount in the names and in the denominations set forth in the written notice given to the Tender Agent by the Remarketing Agent pursuant to Section 8.14 hereof. (5) The Tender Agent shall deliver Bonds to the purchasers thereof in accordance with Section 8.16 hereof. The Tender Agent shall remit the Purchase Price of tendered Bonds to the tendering Bondholders in accordance with Section 8.14 hereof. (6) The Tender Agent shall deliver to the Trustee all tendered Bonds cancelled. (7) The Tender Agent shall keep such books and records as shall be consistent with prudent industry practice and shall make such books and records available for inspection by the Authority, the Trustee and the Credit Bank at all reasonable times. Section 8.18. Qualifications of Tender Agent. The Tender Agent shall be a commercial bank or trust company with an office or affiliate in New York, New York, having a capitalization of at least $25,000,000 and authorized by law to perform all the duties imposed upon it by this Indenture; provided that, in any event, the Trustee may serve as the Tender Agent. The Tender Agent shall be the Trustee or an affiliate of the Trustee unless the Trustee has no affiliate meeting the requirements of the first sentence of this Section, in which case the selection of the Tender Agent shall be subject to the approval of the Credit Bank. The Tender Agent may at any time resign and be discharged by giving at least sixty (60) days' notice to the Trustee, the Authority and the Credit Bank. The Tender Agent may be removed at any time by an instrument signed by the Trustee and filed with the Tender Agent, the Remarketing Agent and the Authority. In the event of the resignation or removal of the Tender Agent, the Tender Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity, and shall deliver all books and records relating thereto, to its successor or, if there be no successor, to the Trustee. In the event that the Trustee on behalf of the Authority shall fail to appoint a Tender Agent hereunder, or in the event that the Tender Agent shall resign or be removed, or be dissolved, or if the property or affairs of the Tender Agent shall be taken under the control of any state or federal court or administrative body because of bankruptcy or insolvency, or for any other reason, and the Trustee shall not have appointed its successor as Tender Agent, the Trustee, notwithstanding the provisions of the first paragraph of this Section 8.18, shall be deemed to be the Tender Agent for all purposes of this Indenture until the appointment by the Trustee of the Tender Agent or a successor Tender Agent, as the case may be, notwithstanding the fact that the Trustee may not meet the qualifications set forth in the first paragraph of this Section 8.18. The Tender Agent shall pay to tendering Bondholders the Purchase Price of any Bonds for which it has received a Tender Notice and which have not been remarketed pursuant to Section 8.15 hereof, but solely from amounts received from the Trustee pursuant to a draw under the Letter of Credit; and the Tender Agent shall pay to tendering Bondholders the Purchase Price of any Bonds for which it has received a Tender Notice and which have been remarketed pursuant to Section 8.14 hereof, but solely from amounts received from the Remarketing Agent. Insofar as such provisions may be applicable, the Tender Agent shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Sections 8.01(a), (b), (f) and (h), 8.02, 8.03 and 8.06(c), with respect to the Trustee. The Tender Agent shall perform such duties, and only such duties, as are specifically set forth in this Indenture and the Agreement and no implied covenants shall be read into this Indenture or the Agreement against the Tender Agent. Section 8,19. Dealing in Bonds. The Credit Bank, the Trustee, the Tender Agent or the Remarketing Agent, in its individual capacity, may each in good faith buy, sell, own, hold and deal in any of the Bonds, and may join in any action which any Bondholder may be entitled to take with like effect as if it did not act in any capacity hereunder. The Trustee, the Tender Agent, the Credit Bank or the Remarketing Agent, in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Authority or the Credit Bank, and may act as depository, trustee or agent for any committee or body of Bondholders secured hereby or other obligations of the Authority as freely as if it did not act in any capacity hereunder. It is expressly understood that the Trustee and the Tender Agent in carrying out their respective duties hereunder shall each be acting as a conduit with respect to deliveries of Bonds for purchase and purchases pursuant to Section 2.03 hereof. ARTICLE IX MODIFICATION OF INDENTURE Section 9.01. Modification of Indenture without Consent of Bondholders. The Authority and the Trustee, from time to time and at any time, subject to the conditions and restrictions in this Indenture contained, may, with the prior written consent of the Credit Bank (but such consent not to be required if the Credit Bank has wrongfully dishonored a draw on the Letter of Credit) enter into an indenture or indentures supplemental hereto, which indenture or indentures thereafter shall form a part hereof, for any one or more of the following purposes: (a) to add to the covenants and agreements of the Authority in this Indenture contained, other covenants and agreements thereafter to be observed, or to assign or pledge additional security for the Bonds, or to surrender any right or power herein reserved to or conferred upon the Authority; provided that no such covenant, agreement, assignment, pledge or surrender shall materially adversely affect the interests of the holders of the Bonds; (b) to evidence the succession of a new Trustee hereunder, or to provide for the appointment of a co-trustee or for a paying agent in addition to the Trustee; (c) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the Authority may deem necessary or desirable and not inconsistent with this Indenture and which shall not materially adversely affect the interests of the holders of the Bonds; (d) to provide for the issuance of coupon bonds; provided, however, that the Authority and the Trustee shall have received an opinion of Bond Counsel to the effect that issuance of the Bonds in coupon form complies with all applicable laws and will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes; (e) to modify, amend or supplement this Indenture or any indenture supplemental hereto in such manner as to permit the qualification hereof or thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and, if they so determine, to add to this Indenture or any indenture supplemental hereto such other terms, conditions and provisions as may be permitted by said Trust Indenture Act of 1939, as amended, or similar federal statute, and which shall not materially adversely affect the interests of the holders of the Bonds; (f) to make such additions, deletions or modifications as may be necessary to assure compliance with the Code, or otherwise to assure the exclusion from gross income under federal tax law of interest on the Bonds; (g) so long as all of the Bonds are Variable Rate Bonds, to modify, alter, amend or supplement this Indenture in any other respect, including amendments which would otherwise be described in Section 9.02 hereof, if notice of the proposed supplemental indenture is given to Bondholders (in the same manner as notices of redemption are given) at least thirty (30) days before the effective date thereof and, on or before such effective date, the Bondholders have the right to demand purchase of their Bonds pursuant to Section 2.03 hereof; or (h) to make provisions for the issuance of Parity Bonds under the provisions of Section 2.10 hereof. Any supplemental indenture authorized by the provisions of this Section may be executed by the Authority and the Trustee without the consent of or, except in the case of clause (g) above, notice to the holders of any of the Bonds at the time outstanding, notwithstanding any of the provisions of Section 9.02, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 9.02. Modification of Indenture with Consent of Bondholders. With the prior written consent of the holders of not less than a majority in aggregate principal amount of the Bonds at the time outstanding, evidenced as provided in Section 11.08, and the prior written consent of the Credit Bank, the Authority and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture; provided, however, that, except to the extent permitted by Section 9.01, no such supplemental indenture shall (a) extend the fixed maturity of any Bond or reduce the rate of interest thereon or extend the time of payment of interest, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the holder of each Bond so affected, or (b) reduce the aforesaid percentage of holders of Bonds whose consent is required for the execution of such supplemental indentures, or permit the creation of any lien on the Special Tax Revenues prior to or on a parity with the lien of this Indenture, except as permitted herein, or permit the creation of any preference of any Bondholder over any other Bondholder or deprive the holders of the Bonds of the lien created by this Indenture upon the Special Tax Revenues, or impair the right of the owners of Bonds to demand purchase thereof pursuant to Section 2.03 hereof, without in each case the consent of the holders of all the Bonds affected thereby. Nothing in this paragraph shall be construed as making necessary the approval of any Bondholder of any supplemental indenture permitted by the provisions of Section 9.01. Upon receipt by the Trustee of a Certified Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Bondholders, as aforesaid, the Trustee shall join with the Authority in the execution of such supplemental indenture, unless (i) such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture; or (ii) such supplemental Indenture affects the rights or obligations of the Tender Agent hereunder, in which case the Trustee shall enter into such supplemental indenture only if the Trustee has received the Tender Agent's written consent thereto. It shall not be necessary for the consent of the Bondholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Authority and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give Bondholders, by first class mail, a notice setting fodh in general terms the substance of such supplemental indenture. Any failure of the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 9.03. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Authority, the Trustee and all holders of outstanding Bonds shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be part of the terms and conditions of this Indenture for any and all purposes. Section 9.04. Opinion of Counsel as to Supplemental Indenture. Subject to the provisions of Section 8.01, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to the provisions of this Article IX is authorized and permitted by this Indenture and does not adversely affect the exclusion from gross income for purposes of federal income taxation of interest on the Bonds. Section 9.05. Notation of Modification on Bonds; Preparation of New Bonds. Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation, in form approved by the Trustee and the Authority as to any matter provided for in such supplemental indenture, and if such supplemental indenture shall so provide, new Bonds, so modified as to conform, in the opinion of the Trustee and the Authority, to any modification of this Indenture contained in any such supplemental indenture, may be prepared by the Authority, authenticated by the Trustee and delivered without cost to the holders of the Bonds then outstanding, upon surrender for cancellation of such Bonds in equal aggregate principal amounts. Section 9.06. Notice to Rating Agency. The Trustee shall give to each Rating Agency which maintains a rating on the Bonds notice of any amendment made to this Indenture, the Letter of Credit or the termination, renewal, substitution or expiration of the Letter of Credit, notice of any amendment made to the Credit Agreement with the knowledge of the Trustee, notice of any pledge of additional collateral to the Credit Bank known to the Trustee, notice of any extraordinary redemptions or any redemption or defeasance or purchase of all of the Bonds, notice of any Conversion, and notice of any successor Trustee or Tender Agent hereunder or any successor Remarketing Agent. Such notice shall be delivered to the Rating Agency at its address set forth in Section 11.06. ARTICLE X DEFEASANCE Section 10.01. Discharge of Indenture. If the entire indebtedness on all Bonds outstanding shall be paid and discharged in any one or more of the following ways: (a) by the payment of the principal of (including redemption premium, if any) and interest on all Bonds outstanding; or (b) after Conversion, but not before Conversion, by the deposit or credit to the account of the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.04) to pay or redeem Bonds outstanding, whether by redemption or otherwise; or (c) by the delivery to the Trustee, for cancellation by it, of all Bonds outstanding; and if all other sums payable hereunder by the Authority shall be paid and discharged, then and in that case this Indenture shall cease, terminate and become null and void, except only as provided in Sections 6.08, $.06 and 10.02 hereof, and thereupon the Trustee shall, upon Written Request of the Authority, and upon receipt by the Trustee of a Certificate of the Authority and an Opinion of Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging this Indenture. The fees, expenses and charges of the Trustee and the Tender Agent (including reasonable counsel fees) must be paid in order to effect such discharge. The Authority or the Credit Bank may at any time surrender to the Trustee for cancellation by it any Bonds previously authenticated and delivered which the Authority or the Credit Bank lawfully may have acquired in any manner whatsoever, and such Bonds upon such surrender and cancellation shall be deemed to be paid and retired. Section 10.02. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.04) to pay or redeem outstanding Bonds (whether upon or prior to their maturity or the redemption date of such Bonds) provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, all liability of the Authority in respect of such Bonds shall cease, terminate and be completely discharged, except only that thereafter the holders thereof shall be entitled to payment by the Authority, and the Authority shall remain liable for such payment, but only out of the money or securities deposited with the Trustee as aforesaid for their payment, subject, however, to the provisions of Section 10.03. Section 10.03. Payment of Bonds after Discharge of Indenture. Notwithstanding any provisions of this Indenture, any moneys deposited with the Trustee or any paying agent in trust for the payment of the principal of, or interest or premium on, any Bonds remaining unclaimed for two (2) years after the principal of all the outstanding Bonds has become due and payable (whether at maturity or upon call for redemption or by declaration as provided in this Indenture), shall, subject to the escheat laws of the State, then be paid to the Authority, and the holders of such Bonds shall thereafter be entitled to look only to the Authority for payment thereof, and only to the extent of the amount so paid to the Authority, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease. In the event of the payment of any such moneys to the Authority as aforesaid, the holders of the Bonds in respect of which such moneys were deposited shall thereafter be deemed to be unsecured creditors of the Authority for amounts equivalent to the respective amounts deposited for the payment of such Bonds and so paid to the Authority (without interest thereon). Section 10.04. Deposit of Money or Securities with Trustee. Whenever in this Indenture it is previded or permitted that there be deposited with or credited to the account of or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be deposited or held shall constitute: (a) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which there shall have been furnished to the Trustee preof satisfactory to it that notice of such redemption on a specified redemption date has been duly given or prevision satisfactory to the Trustee shall be made for such notice, the amount so to be deposited or held shall be the principal amount of such Bonds and interest thereon to the redemption date, together with the redemption premium, if any; or (b) noncallable direct obligations of the United States of America or noncallable direct obligations which as to principal and interest constitute full faith and credit obligations of the United States of America, in such amounts and maturing at such times that the proceeds of said obligations received upon their respective maturities and interest payment dates, without further reinvestment, will provide funds sufficient, in the opinion of a nationally recognized firm of certified public accountants, to pay the principal, premium, if any, and interest to maturity, or to the redemption date, as the case may be, with respect to all of the Bonds to be paid or redeemed, as such principal, premium and interest become due; provided that the Trustee shall have been irrevocably instructed by the Authority to apply the proceeds of said obligations to the payment of said principal, premium, if any, and interest with respect to such Bonds. -80- ARTICLE Xl MISCELLANEOUS Section 11.01. Successors of Authority. All the covenants, stipulations, promises and agreements in this Indenture contained, by or on behalf of the Authority, shall bind and inure to the benefit of its successors and assigns, whether so expressed or not. If any of the powers or duties of the Authority shall hereafter be transferred by any law of the State of California, and if such transfer shall relate to any matter or thing permitted or required to be done under this Indenture by the Authority, then the body or official who shall succeed to such powers or duties shall act and be obligated in the place and stead of the Authority as in this Indenture provided. Section 11.02. Limitation of Rights to Parties and Bondholders. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any person other than the Authority, the Trustee, the Credit Bank, the Agents and the holders of the Bonds issued hereunder any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the Credit Bank, the Agents and the holders of the Bonds issued hereunder. Section 11.03. Waiver of Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 11.04. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds and deliver a certificate of such destruction to the Authority. Any destruction of the Bonds shall, upon Written Request of the Authority, be done in the presence of an officer of the Authority. Section 11.05. Separability of Invalid Provisions. In case any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, but this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section tl.06. Notices. It shall be sufficient service of any notice, request, complaint, demand or other paper on the Authority, the Administrator, the Trustee, the Tender Agent, the Credit Bank, the Remarketing Agent, Lennar or the Rating Agency if the same shall, except as otherwise provided herein, be duly mailed by first class mail, postage prepaid, or given by telephone or telecopier and confirmed by such mail, and to the other parties as follows: -81- The Authority: The Trustee or the Tender Agent: The Credit Bank: Temecula Public Financing Authority 43200 Business Park Drive Temecula, CA 92590 Attention: Finance Director U.S. Bank, N.A. 550 South Hope Street, Suite 500 Los Angeles, CA 90071 Attention: Corporate Trust Services [to come] The Remarketing Agent: Stone & Youngberg LLC 50 California Street, 35"~ Floor San Francisco, CA 94111 Attention: Lennar: Lennar Communities 24800 Crisanta Drive Mission Viejo, CA 92691 The Rating Agency: Standard & Poor's Ratings Services 55 Water Street NewYork, NY 10041 Attention: Letter of Credit Group A duplicate copy of each notice, certificate or other communication given hereunder by the Authority or the Trustee to the other shall be given to the Tender Agent. The Authority, the Trustee, the Tender Agent, the Credit Bank, the Remarketing Agent, the Rating Agency and the Landowner may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Notwithstanding the foregoing previsions of this Section 11.06, the Trustee shall not be deemed to have received, and shall not be liable for failing to act upon the contents of, any notice unless and until the Trustee actually receives such notice. Section 11.07. Authorized Representatives. Whenever under the provisions of this Indenture the approval of the Authority is required for any action, and whenever the Authority or the Credit Bank is required to deliver any notice or other writing, such approval or such notice or other writing shall be given, respectively, on behalf of the Authority by the Authorized Authority Representative or on behalf of the Credit Bank by the Authorized Bank Representative and the Authority, the Trustee and the Credit Bank shall be authorized to act on any such approval or notice or other writing and neither party hereto nor the Credit Bank shall have any complaint against the others as a result of any such action taken. In designating its Authorized Bank Representative, the Credit Bank shall have the right to provide specific instructions to the Trustee in relation to the action which any of such Authorized Bank Representatives is authorized to take as a representative of the Credit Bank under this Indenture. Section 11.08. Evidence of Rights of Bondholders. (a) Any request, consent or other instrument required by this Indenture to be signed and executed by Bondholders may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Bondholders in person or by agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the ownership of any Bonds, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Authority if made in the manner provided in this Section. (b) The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof. (c) The ownership of Bonds shall be proved by the Bond register maintained pursuant to Section 2.06 hereof. The fact and the date of execution of any request, consent or other instrument and the amount and distinguishing numbers of Bonds held by the person so executing such request, consent or other instrument may also be proved in any other manner which the Trustee may deem sufficient. The Trustee may nevertheless, in its discretion, require further proof in cases where it may deem further proof desirable. (d) Any request, consent or vote of the holder of any Bond shall bind every future holder of the same Bond and the holder of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote. (e) In determining whether the holders of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned by the Authority or by any other direct or indirect obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or any other direct or indirect obligor on the Bonds, shall be disregarded and deemed not to be outstanding for the purpose of any such determination, provided that, for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned shall be disregarded. Bonds so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this subsection (e) if the pledgee shall establish to the satisfaction of the Trustee and the Authority the pledgee's right to vote such Bonds and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or any other direct or indirect obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Solely for purposes of the limitation expressed in this paragraph (e), the Credit Bank shall not be deemed to be a direct or an indirect obligor on the Bonds. (f) In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Bondholders upon such notice and in accordance with such rules and regulations as the Trustee considers fair and reasonable for the purpose of obtaining any such action. Section 11.09. Waiver of Personal Liability. No member of the Board of Directors, officer, agent or employee of the Authority, and no officer, official, agent or employee of the State of California or any department, board or Authority of any of the foregoing, shall be individually or personally liable for the payment of the principal of or premium or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such person from the performance of any official duty provided by law or by this Indenture. Section 11.10. Acts and Payments on Business Days. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Indenture, is not a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the date provided therefor in this Indenture and, in the case of any payment, no interest shall accrue for the period from and after such date. Section 11.11. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. Section 11.12. Governing Law. This Indenture shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Section 11.13. Conflict with Act or Trust Indenture Act of 1939. In the event of a conflict between any provision of this Indenture with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting prevision of this Indenture. If this Indenture is qualified under the Trust Indenture Act of 1939, as amended (the "39 Act") and any provision of the 39 Act which is required to be included in this Indenture limits, qualifies or conflicts with another prevision hereof which is required to be included in this Indenture such required prevision shall control. Section 11.14. Successors. Whenever in this Indenture either the Authority or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Authority or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 11.15. CUSIP Numbers. Neither the Trustee nor the Authority shall be liable for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any redemption notice. The Trustee may, in its discretion, include in any redemption notice a statement to the effect that the CUSIP numbers on the Bonds have been assigned by an independent service and are included in such notice solely for the convenience of the Bondholders and that neither the Authority nor the Trustee shall be liable for any inaccuracies in such numbers. IN WITNESS WHEREOF, TEMECULA PUBLIC FINANCING AUTHORITY has caused this Indenture to be signed in its name and its seal to be hereunto affixed and attested by its duly authorized officers and U.S. BANK, N.A., in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its name by its duly authorized officer, all as of the day and year first above written. TEMECULA PUBLIC FINANCING AUTHORITY By. Executive Director U.S. BANK, N.A., as Trustee By. Authorized Officer 19026.01:J5316 -85- EXHIBIT A FORM OF VARIABLE RATE BOND No. TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON) VARIABLE RATE DEMAND SPECIAL TAX BOND, 2002 SERIES A INTEREST RATE Variable REGISTERED OWNER: PRINCIPAL SUM: MATURITY DATE September 1, __ ISSUE DATE CUSIP August 29, 2002 DOLLARS The TEMECULA PUBLIC FINANCING AUTHORITY (the "Authority"), for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) (the "District"), for value received, hereby promises to pay (but only out of Special Tax Revenues as hereinafter provided) to the registered owner identified above or registered assigns, on the Maturity Date indicated above (subject to any right of prior redemption hereinafter mentioned), the principal sum identified above in lawful money of the United States of America; and to pay interest thereon in like money, until payment of such principal sum, at the rates and at the times as hereinafter provided. The principal or redemption price hereof is payable only upon presentation and surrender hereof at the principal corporate trust office of U.S. Bank, N.A. (herein called the "Trustee"), and interest shall be paid by check mailed, by first class mail, by the Trustee on each Interest Payment Date, to the person in whose name this Bond is registered on the applicable Record Date (as hereinafter defined), at the address of such registered owner shown on the books of the Trustee, except that such interest payment may be made by wire transfer to any registered owner of $1,000,000 or more in aggregate principal amount of the Bonds who shall have designated to the Trustee an account in the United States for such payment at least fifteen days before the Record Date therefor. This Bond is one of a duly authorized issue of bonds of the Authority designated as "Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A" (herein called the "Bonds"), in the initial aggregate principal amount of $ , authorized to be issued pursuant to Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (herein called the "Act"), and issued under and secured by an Indenture of Trust, dated as of August 1, 2002 (herein called the "Indenture"), between the Authority and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Authority thereunder, to all of the previsions of which Indenture the holder of this Bond, by acceptance hereof, assents and agrees. This Bond shall bear interest from the date to which interest has been paid next preceding the date of authentication of this Bond (unless this Bond is authenticated as of an Interest Payment Date, as defined below, for which interest has been paid, or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from the date of the first authentication and delivery of the Bonds), at the rate determined as provided herein, payable on each Interest Payment Date. The term "Interest Payment Date" means October 1, 2002, and the first Business Day of each month thereafter until the rate of interest on this Bond is established at a Fixed Rate, as defined in the Indenture, and thereafter means March 1 and September 1 of each year. The term "Record Date" means during any Variable Period, as defined in the Indenture, the close of business on the Business Day (as defined in the Indenture) before an Interest Payment Date. Any such interest not paid or duly provided for when due shall forthwith cease to be payable to the owner on the regular Record Date therefor and shall be paid to the owner in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to the owners by first-class mail not less than ten (10) days prior to such special record date. THE FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM OR INTEREST ON THIS BOND. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE AUTHORITY OR THE DISTRICT NOR DO THEY CONSTITUTE INDEBTEDNESS OF THE AUTHORITY OR THE DISTRICT UNDER ANY DEBT LIMITATION IMPOSED BY THE CONSTITUTION OF THE STATE OF CALIFORNIA. The Bonds are limited obligations of the Authority and, as and to the extent set forth in the Indenture, are payable solely from, and secured by a pledge of and lien on, the Special Tax Revenues, as that term is defined in the Indenture, consisting primarily of amounts drawn under an irrevocable direct-pay letter of credit issued by Bank of America, N.A. (such bank or the issuer of any credit instrument in substitution therefor being herein called the "Credit Bank"), in favor of the Trustee concurrently with the issuance of the Bonds, or any qualified letter of credit or other credit instrument issued in substitution therefor (such letter of credit or substitute being referred to herein as the "Letter of Credit"). The Bonds are being issued in order to provide funds to finance certain public facilities and to refund certain bonds issued by the Winchester Hills Financing Authority secured by liens on land in the District. As more particularly described in the indenture, additional bonds may be issued by the Authority for the District from time to time secured under the Indenture on a parity with the Bonds. Until the rate of interest on this Bond is converted to a Fixed Rate, as defined in the Indenture, the rate of interest hereon shall be calculated on the basis of a year of 365 or 366 days, as appropriate, for the actual number of days elapsed, and shall be a rate (the "Variable Rate"), determined by the remarketing agent appointed pursuant to the Indenture (the "Remarketing Agent"), on the Wednesday of each week, or if any such Wednesday is not a Business Day, on the next succeeding Business Day (a "Variable Interest Computation Date"), for the period beginning on the following Thursday and ending on the next succeeding Wednesday (a "Variable Interest Accrual Period"), except that the first Variable Interest Accrual Period shall commence on the Closing Date (as defined in the Indenture) and end on the next succeeding Wednesday. The Variable Rate determined by the Remarketing Agent on each Variable Interest Computation Date shall be that rate of interest which, if borne by the Bonds, would, in its judgment having due regard to prevailing financial market conditions, be the interest rate required to be borne by the Bonds in order for their market value on said date to be 100% of the principal amount thereof (disregarding accrued interest), subject to the limitations on such rate set forth in the Indenture, including the limitations that the maximum Variable Rate on this Bond shall never exceed 12% per annum or, under certain circumstances set forth in the Indenture, a higher rate not in any event to exceed the maximum rate of interest which may be charged or collected by the registered owner hereof pursuant to provisions of federal or state law applicable to such owner. The determination of the Variable Rate by the Remarketing Agent shall (in the absence of manifest error) be conclusive and binding on the holders of the Bonds, the Authority, the Trustee, the Credit Bank and the Remarketing Agent. If the Remarketing Agent shall fail or refuse to determine the Variable Rate on any Variable Rate Computation Date, then the Variable Rate most recently determined shall remain in effect until the Remarketing Agent determines the Variable Rate as provided above. Any Bondholder may obtain information on the Variable Rate by request to the Trustee. This Bond or any portion hereof in an Authorized Denomination shall be purchased on any Business Day during a Variable Period and on the date the Fixed Rate becomes effective (the "Conversion Date"), on demand of the registered owner of such Bond (or, in the case of Bonds in "book-entry only" form, a Direct Participant, as defined in the Indenture), or upon being tendered or deemed tendered as provided in the Indenture, at a Purchase Price equal to the principal amount thereof, or of any Authorized Denomination thereof purchased, plus interest accrued thereon, if any, to the date of purchase, upon (a) in the case of a demand, purchase while the Bonds bear interest at a Variable Rate, delivery to U.S. Bank, N.A., or its successor as tender agent (the "Tender Agent"), at its affiliate's corporate trust office in New York, New York, with a copy to the Trustee and the Remarketing Agent, of a written notice in the form set forth in the Indenture (a "Tender Notice") which states (i) the principal amount of such Bond for which payment is demanded, (ii) that such demand is irrevocable and (iii) the date on which such Bond or portion of principal amount thereof (in an Authorized Denomination) shall be purchased {the "Demand Date"), which date shall be a Business Day not prior to the seventh (7th) day next succeeding the date of the receipt of the Tender Notice by the Tender Agent; and (b) in all cases, delivery to the Tender Agent, at or prior to 9:30 a.m., New York time, on the Demand Date, of such Bond (with an appropriate transfer of registration form executed in blank and in form satisfactory to the Tender Agent). Payment of the Purchase Price of any Bond so delivered shall be made by check or by wire transfer, or as designated in the Tender Notice, on the Demand Date or such later date as the delivery and surrender of such Bond to the Tender Agent shall occur. No Bonds shall be so purchased or remarketed if an Event of Default under the Indenture, other than certain specified covenant defaults as described in the Indenture, shall have occurred and be continuing, or if all of the Bonds shall have been called for redemption, and no Bond shall be so purchased or remarketed while such Bond bears interest at a Fixed Rate except on the Conversion Date; nor shall any Bond be purchased if such Bond is registered in the name of the Authority, any guarantor of the obligations of the account party under the Letter of Credit, the account party on the Letter of Credit or the Credit Bank, or known by the Trustee to be registered in the name of any guarantor of the obligations of the account party under the Letter of Credit, or the account party on the Letter of Credit, or any nominee of the Authority, any guarantor of the obligations of the account party under the Letter of Credit, the account party on the Letter of Credit, or the Credit Bank. The rate of interest on this Bond or a portion hereof in an Authorized Denomination may be established at a Fixed Rate on any Interest Payment Date in accordance with the procedures set forth in the Indenture. The Fixed Rate shall be computed on the basis of a year of 360 days with twelve 30-day months, and shall be determined by the Remarketing Agent as A-3 provided in the Indenture. The Trustee shall give to the owners of the Bonds by first class mail of notice of the establishment of a Fixed Rate not less than thirty (30) days before the Conversion Date, specifying the information set forth in the Indenture. The conversion of the interest rate to a Fixed Rate may be cancelled as to all or any portion of the Bonds, under the circumstances set forth in the Indenture. If this Bond is to be converted to a Fixed Rate Bond and is not tendered for purchase by 9:30 a.m., New York City time, on the Conversion Date it will be deemed to have been so tendered and shall be purchased on the Conversion Date, at a price equal to the principal amount hereof plus interest accrued to such date. The Purchase Price shall be paid only upon presentment of the Bond. The Bonds shall be subject to redemption prior to maturity, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption, without premium, during any Vadable Period (a) in whole or in part on any Interest Payment Date, if the Bonds are voluntarily prepaid in whole or in part (including any prepayment from the proceeds of Special Tax prepayments); or (b) in whole five days before any date on which any Letter of Credit expires, unless the Trustee receives a renewal or extension of or replacement for such Letter of Credit meeting the requirements of the Indenture; or (c) in whole on the first date for which notice of redemption can timely be given if the Credit Bank shall fail to honor a draw on the Letter of Credit, or if within sixty (60) days of notice to the Trustee of an Act of Bankruptcy of the Bank (as defined in the Indenture) the Authority shall fail to provide or cause to be provided to the Trustee a Letter of Credit from another institution which meets the requirements of the Indenture; (d) in part in connection with a transfer from amounts in an account within the Improvement Fund created under the Indenture or transfers from the Annual Levy Account created under the Indenture; or (e) in whole following an event of default under the Credit Agreement and receipt by the Trustee of notice of such default and direction from the Credit Bank to cause such redemption. After the Conversion Date, the Bonds shall be subject to optional and mandatory redemption in whole or in part only as set forth in the Indenture. Notice of redemption of Bonds shall be given to the registered owners thereof by mail, as provided in the Indenture, not less than thirty (30) days or, in the case of redemption described in clause (b) or (c) of the preceding paragraph, such lesser amount of days as is specified in the Indenture. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon shall cease to accrue from and after the date fixed for redemption. The Bonds are issuable only as fully registered Bonds without coupons in denominations of $100,000 or any integral multiple of $5,000 in excess thereof until the Conversion Date, and $5,000 or any integral multiple thereof after the Conversion Date. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Bonds of the same series of other authorized denominations. This Bond is transferable by the registered owner hereof, in person, or by its attorney duly authorized in writing, at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Authority and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. The Indenture contains provisions permitting the Authority and the Trustee to execute supplemental indentures adding provisions to, or changing or eliminating any of the provisions of, the Indenture, subject to the limitations set forth in the Indenture. The Indenture contains provisions permitting the Authority to make provision for the payment of the interest on, and the principal and premium, if any, of the Bonds so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. No officer, agent or employee of the Authority, and no officer, official, agent or employee of the State of California, nor any person executing this Bond, shall in any event be subject to any personal liability or accountability by reason of the issuance of the Bonds. The Bonds are not a debt, nor a pledge of the faith and credit, of the State of California, or any of its political subdivisions and neither are they liable on the Bonds, nor are the Bonds payable out of any funds or properties other than those of the Authority for the District pledged for the payment thereof. The Authority hereby certifies that all of the conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California (including the Act) and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of California. Unless this certificate is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. In the event and to the extent of any inconsistency between the provisions of this Bond and the provisions of the Indenture, the provisions of the Indenture shall control. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been signed by the Trustee or the Tender Agent. IN WITNESS WHEREOF, the TEMECULA PUBLIC FINANCING AUTHORITY has caused this Bond to be executed in its name by the manual or facsimile signature of its Executive Director and its official seal to be impressed or printed hereon and attested by the manual or facsimile signature of its Secretary, all as of the Issue Date set forth above. TEMECULA PUBLIC FINANCING AUTHORITY (S E A L) By. Executive Director Attest: By Secretary FORM OF CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within-mentioned Indenture and has been registered on this date: U.S. BANK, N.A., as Trustee By: Authorized Officer or U.S. BANK, N.A., as Tender Agent By: Authorized Officer A-6 FORM OF ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution. NOTICE: The signature on this assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. EXHIBIT B FORM OF FIXED RATE BOND No, TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON) SPECIAL TAX BOND INTEREST RATE MATURITY DATE: CONVERSION DATE CUSIP: % September 1, REGISTERED OWNER: PRINCIPAL SUM: DOLLARS The TEMECULA PUBLIC FINANCING AUTHORITY (the "Authority"), for and on behalf of the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) (the "District"), for value received, hereby promises to pay (but only out of Special Tax Revenues as hereinafter provided) to the registered owner identified above or registered assigns, on the Maturity Date indicated above (subject to any right of prior redemption hereinafter mentioned), the principal sum identified above in lawful money of the United States of America; and to pay interest thereon in like money, until payment of such principal sum, at the rate of percent (%) per annum, on March 1 and September 1 of each year, commencing 1, (each such date herein called an "Interest Payment Date"). The principal or redemption price hereof is payable only upon presentation and surrender hereof at the corporate trust office of U.S. Bank, N.A. (herein called the "Trustee"), and interest shall be paid by check mailed, first class mail, postage prepaid to the person in whose name this Bond is registered on or before the Record Date (as hereinafter defined), at the address of such registered owner shown on the books of the Trustee, except that such interest payments may be made by wire transfer to any registered owner of $1,000,000 or more in aggregate principal amount of the Bonds who shall have designated to the Trustee an account in the United States for such payments at least fifteen days before the Record Date therefor. This Bond is one of a duly authorized issue of bonds of the Authority designated as "Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) 2002 Special Tax Bonds" or "Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A" (collectively called the "Bonds"), in the initial aggregate principal amount of $ , authorized to be issued pursuant to Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (herein called the "Act"), and issued under and secured by an Indenture of Trust, dated as of August 1, 2002 (herein called the "Indenture"), between the Authority and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Authority thereunder, to all of the provisions of which Indenture the holder of this Bond, by acceptance hereof, assents and agrees. This Bond shall bear interest from the date to which interest has been paid next preceding the date of authentication of this Bond (unless this Bond is authenticated as of an Interest Payment Date for which interest has been paid, or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from the date of the first authentication and delivery of the Bonds). The term "Record Date" means the fifteenth (15th) day of the month before an Interest Payment Date. Any such interest not paid or duly provided for when due shall fodhwith cease to be payable to the owner on the regular Record Date therefor and shall be paid to the owner in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to the owners by first-class mail not less than ten (10) days prior to such special record date. THE FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM OR INTEREST ON THIS BOND. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE AUTHORITY OR THE DISTRICT. The Bonds are limited obligations of the Authority and, as and to the extent set forth in the Indenture, are payable solely from, and secured by a pledge of and lien on, the Special Tax Revenues (as that term is defined in the Indenture), consisting primarily of the proceeds of special taxes levied on certain real property located in the District. The Bonds were issued in order to provide funds to finance certain public facilities and to refund certain bonds issued by the Winchester Hills Financing Authority secured by liens on land in the District. As more particularly described in the Indenture, additional bonds may be issued by the Authority for the District from time to time secured under the Indenture on a parity with the Bonds. The Bonds shall be subject to redemption prior to maturity, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption, in part, on September 1 in the years and in the amounts set forth in the Indenture. The Bonds are also subject to redemption in whole on any date or in part on any Interest Payment Date, in an amount equal to any voluntary prepayments of the Loan, at a redemption price equal to the principal amount of Bonds redeemed, plus interest accrued thereon to the date of redemption, plus the applicable premium (expressed as a percentage of the principal amount of Bonds redeemed) set forth below, as follows: [insert optional redemption table here] Notice of Redemption of Bonds shall be given to the registered owners thereof by mail, as provided in the Indenture, not less than thirty (30) days or, in the case of certain redemptions, not more nor less than five (5) days before the date fixed for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon shall cease to accrue from and after the date fixed for redemption. The Bonds are issuable only as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Bonds of the same series of other authorized denominations. This Bond is transferable by the registered owner hereof, in person, or by its attorney duly authorized in writing, at the principal corporate trust office of the Trustee, but only in the B-2 manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Authority and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. The Indenture contains provisions permitting the Authority and the Trustee to execute supplemental indentures adding provisions to, or changing or eliminating any of the provisions of, the Indenture, subject to the limitations set forth in the Indenture. The Indenture contains provisions permitting the Authority to make provision for the payment of the interest on, and the principal and premium, if any, of the Bonds so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. No officer, agent or employee of the Authority, and no officer, official, agent or employee of the State of California, nor any person executing this Bond, shall in any event be subject to any personal liability or accountability by reason of the issuance of the Bonds. The Bonds are not a debt, nor a pledge of the faith and credit, of the Temecula Public Financing Authority, the State of California, nor any of its political subdivisions and neither are they liable on the Bonds, nor are the Bonds payable out of any funds or properties other than those of the Authority for the District pledged for the payment thereof. The Authority hereby certifies that all of the conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California (including the Act) and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of California. Unless this certificate is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. In the event and to the extent of any inconsistency between the provisions of this Bond and the provisions of the Indenture, the provisions of the Indenture shall control. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been signed by the Trustee. B-3 IN WITNESS WHEREOF, the TEMECULA PUBLIC FINANCING AUTHORITY has caused this Bond to be executed in its name by the manual or facsimile signature of its Executive Director and its official seal to be impressed or printed hereon and attested by the manual or facsimile signature of its Secretary, all as of the Conversion Date set forth above. TEMECULA PUBLIC FINANCING AUTHORITY Attest: By. Executive Director By. Secretary FORM OF CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within-mentioned Indenture and has been registered on this date: U.S. BANK, N.A., as Trustee By. Authorized Officer FORM OF ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax identification or Social Secudty Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an NOTICE: The signature on this assignment must eligible guarantor institution, correspond with the name(s) as wdtten on the face of the within Bend in every particular without alteration or enlargement or any change whatsoever. B-5 EXHIBIT C FORM OF TENDER NOTICE NOTICE OF DEMAND FOR PURCHASE To: U.S. Bank, N.A., as Trustee 550 South Hope Street, Suite 500 Los Angeles, CA 90071 Attention: Corporate Trust The undersigned is the registered owner of the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A, No(s). (the "Bonds"). The undersigned hereby irrevocably demands payment of $ . aggregate principal amount of the Bonds (which amount is $100,000 or an integral multiple of $5,000 in excess of $100,000) and accrued interest thereon to the date of payment (the "Purchase Price"), and represents that it retains either no Bonds or Bonds in a principal amount at least equal to $100,000. Payment of the Purchase Price shall be made in the following manner: Check and complete (a) or (b): (a) By check mailed to the undersigned at the following address: ;or (b) By wire transfer of immediately available funds to Account No. __ following bank: at the Payment shall occur on , (the "Demand Date"), which shall be not prior to the seventh (Tth) calendar day after (but not including) the date of receipt of this notice by the addressee hereof, as Tender Agent (the "Tender Agent") or, if such seventh calendar day is not a Business Day (as defined in the Indenture pursuant to which the Bonds were issued), the Business Day next succeeding such day. Delivery hereof shall be made in person or by registered mail, return receipt requested, to the address set forth above and shall occur upon receipt hereof by the Tender Agent on a Business Day. The Bonds shall be tendered to the Tender Agent, at its address set forth above, with a duly executed instrument of transfer in the form set forth on the Bonds, with signature guaranteed in a manner satisfactory to the Tender Agent, at or prior to 9:30 a.m., New York time, on the Demand Date, and if the Bonds are not delivered by such time, interest shall cease to accrue on such Bonds from and after the Demand Date. The Bonds shall conform in all respects to the description thereof in this Notice. The undersigned hereby authorizes and directs , as Remarketing Agent, to arrange for the sale of all or any part of the Bonds at not less than par plus accrued interest to the Demand Date. In the event of such a sale, payment of the Purchase Price of the Bonds shall be made on the Demand Date as hereinabove provided. This notice shall not be effective unless, simultaneously with the delivery hereof to the Tender Agent, a copy hereof is sent to the Trustee at the address set forth below. Date: (Name of Registered Owner) Authorized Signature cc; Stone & Youngberg LLC 50 California Street, 35th Floor San Francisco, California 94111 EXHIBIT D FORM OF SPECIAL TAX BILL [insert date of mailing - three Business Days prior to next Interest Payment Date on the Variable Rate Bonds for levies pursuant to Section 6.09(a)(ii), and three Business Days prior to applicable Conversion Date for levies pursuant to Section 6.09(a)(iii) or (iv)] [insert name and address of property owner of parcels in the District subject to the special tax levy - as shown on Exhibit E to the Indenture, as revised by the Authority from time to time] Re: Special Tax Bill - Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Dear Property Owner: You have been identified by the Temecula Public Financing Authority (the "Authority") as an owner of "Other Undeveloped Property" in the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) (the "District"), as such term is defined in the Rate and Method of Apportionment of Special Taxes for the District (the "Rate and Method"). A special tax has been authorized to be levied by the Authority on all property classified by the Authority as "Other Undeveloped Property" (the "Taxed Parcels") in the Rate and Method, and the Authority has determined to levy a special tax on your property that is classified as such Other Undeveloped Property. Pursuant to the direction of the Authority and the Rate and Method, we hereby notify you that a special tax has been levied by the Authority on the Taxed Parcels owned by you as follows: Special Tax Amount Now Due and Payable: Date By Which Payment Must Be Received: Place Where Payment Is To Be Made: 1, 20__ 550 South Hope Street, Suite 500 Los Angeles, California 90071 Attention: Corporate Trust Payee For Payment: U.S. Bank, N.A., as trustee for the Temecula Public Financing Authority Please include a copy of this letter with your payment. The Authority advises that a ten percent (10%) penalty will be added to the Special Tax Amount Now Due and Payable shown above if the amount so due is not received at the address shown above by the Date By Which Payment Must Be Received shown above. The Authority has further advised that a one and one-half percent (1-1/2%) penalty will be added to the amount not so paid commencing on the first day of the month which is six months after the Date By Which Payment Must Be Received shown above, and on the first day of each month thereafter is the Special Tax Amount Now Due and Payable remains unpaid. If you have any questions regarding the foregoing, please contact either [insert Trustee contact name and phone numbed or [insert Authority contact name and phone numbed. U.S. BANK, N.A., as Trustee for the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Revenue Bonds cc: Temecula Public Financing Authority cio City of Temecula 43200 Business Park Drive Temecula, CA 92590 Attention: Finance Director EXHIBIT E OWNERS OF OTHER UNDEVELOPED PROPERTY SUBJECT TO EXTRAORDINARY SPECIAL TAX A AND ONE-TIME SPECIAL TAX A As of the Closing Date, the following landowners in the District are owners of Other Undeveloped Property subject to Extraordinary Special Tax A and One-Time Special Tax A levies, when required under Sections 6.09(a)(ii), (iii) or (iv), as applicable, of the Indenture: As to % of any such Special Tax levy, Special Tax bills should be sent to Lennar Communities, 24800 Crisanta Drive, Mission Viejo, CA 92691 , Attention [For reference purposes, said % consists of the following percentages of any Special Tax levy applied to the following County Assessor's Parcels: Percentage of Special APN No. Tax Levy As to consists of % of any such Special Tax levy, Special Tax bills should be sent to ' CA , Attention . [For reference purposes, said % % of any Special Tax levy applied to County Assessor's Parcel No. .] NEW ISSUE RATING: S&P: "AA-/AI+" (See "RAT~qG" herein.) In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, subject, to certain qualifications described herein, under existing law, until the Conversion Date, the interest on the 2002 Series A Bonds is excluded from gross income for federal income tax es and ts not an item o£ tax preference for purposes of the federal alternative minimum tax imposed on individuals and corpo rations; purpos , ' ~, ~ , ~' ..... :~- ,~ ~lternative minimum tax imnosed on corporations (as defined for federal it should be noted, however, mat, jor tne purpose income tax purposes), such interest is taken into account in determining certain income and earnings. Bond Counsel is also of the opinion that under existing law the interest on the 2002 Series A Bonds is exempt from personal income taxation imposed by the State of California. See "LEGAL MATTERS- Tax Exemption" herein. $19,000,000' TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON) VARIABLE RATE DEMAND SPECIAL TAX BONDS, 2002 SERIES A Dated: Date of Delivery Due: September 1, 2041,as shown below The Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A (the"2002 Series A Bonds") are being issued under the Mello-Roos Community Facilities Act of 1982 (the "Act') and an Indenture of Trust, dated as of August 1,2002, by and between the Temecula Public Financing Authority (the "Authority") and U. S. Bank, N.A. as Trustee the"Trustee") and are pay,~ble fio~ proceeds of Spec a Taxes (m defined herein) levied on properly within Community Facilities District(No. 0 -2 (Harveston) (the District ) according to the rate and method of apportionrcent of ( ) special tax approved by qualified electors of the District and by the Authority, acting as the legislative body of the District and (ii)a letter of credit. The 2002 Series A Bonds me initially being issued in a Variable Rate mode and will bear interest at a Variable Rate determined weekly. The rate of interest borne by the 2002 Series A Bonds may be converted to a Fixed Rate on any Interest Payn~nt Date (as defined below). While in the weekly variable mode, ~terest is payable on October 1, 2002 and the first Business Day of each month thereafter. See "THE 2002 SERIES A BONDS." THIS OFF1CIAL STATEMENT IS NOT INTENDED TO DESCRIBE THE VARIABLE RATE BONDS SUBSEQUENT TO THE1R CONVERSION TO FIXED RATE BONDS. The 2002 Series A Bonds an: being issued ( ) to refund the outstanding Wk~chester Hills Finandng Authority Community Facilities · ' . - inchester H s S ecial Tm Bonds 1998 Series A, (ii) to finance the acquisition and constracllon o,f certain street and s~;malC~mNp~o9vSe~e(ntWs, storm drain i;)mp~vements and park and recreation mprovements (collectively, the "Improvements )of benefit to the District, (iii) to fund a pre-conversion reserve fund for the 2002 Series A Bonds which bear interest at a Variable Rate, (iv) to fund an interest differential fund and a conversion expense fund, (v) to pay interest on the 2002 Series A Bonds through February 1, 2003, (vi) to pay certatn administrative expenses of the District, and (vii) to pay the costs of issuing the 2002 Series A Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" and "PLAN OF FINANCE; IMPROVEMENTS TO BE FINANCED WITH PROCEEDS OF THE 2002 SER1ES A BONDS" herein. The 2002 Series A Bonds m Variable Rate mode are secured by an irrevocable, direct-pay letter of credit (the "Lc ter of Cred t") issued by: Bank of America, N.A. (the 'Credit Bank '~. The Letter of Credit will initially be issued in an armuont equal to the aggregate principal amount ofthe Variable Rate 2002 Series A Bond's plus 37 days interest thereon calculated at the rate of 12 Yo per annum. The Letter of Cred t, unless ~xtended, will ini i~lly expire on August l, 2003, and will permit the Trustee to draw thereunder amounts sufficient to pay (a) the principal of the 2002 Series A Bonds bearing interest at a Variable Rate when due at maturity, upon earlier redemption or upon acceleration, (b) regularly scheduled interest on such 2002 Series A Bonds or payment of intffest on a date established for the redemption of such 2002 Series A Bonds, and (c) the purchase price of 2002 Series A Bonds tmdered or subject to rmndatory tender and not remarketed. The Letter of Credit will not secure payment of any 2002 Series A Bonds converted to a Fixed Rate. The 2002 Series A Bonds will be issued in denominations of $100,000 or integral multiples of $5,000 in excess thereof. The 2002 Serles A Bonds, when delivered, will be initially registered in the narre o f Cede & Co., asnominee ofTheDepos ory Trust Company ("DTC"), New York, NewYork. DTC will act as securitie~ depository for the 2002 Series A Bonds t~ described herein under "THE 2002 SERIES A BONDS - Book-Entry and DTC." The 2002 Series A Bonds are subject to optional redemption, mandatory redemption from prepayment of Special Taxes and mandatory redemption as described herein. While the 2002 Series A Bonds bear interest at a Variable Rate, any 2002 Series A Bond, or portions thereof in increments of $100,000 or integral multiples of $5,000 in excess thereof will be purchased upon the demand oflhe registered owner thereof on any Business Day following the giving of required notice and compliance with other requirements· The 2002 Series A Bonds a~e also subject to mandatory tender for purchase under certain circumstances. See "THE 2002 SERIES A BONDS Demand For and Manthtory Purchase." THE 2002 SERIES A BONDS, THE INTEREST THEREON, AND ANY pREM1UMS PAYABLE ON THE REDEMPTION OF ANY OF THE 2002 SERIES A BONDS, ARE NOT AN INDEBTEDNESS OF THE AUTHORITY, COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON) (THE "DISTRICT"), THE STATE OF CALIFORNIA (THE "STATE") OR ANY OF 1TS POLITICAL SUBDMSIONS, AND NEITHER THE AUTHORITY, THE DISTRlCT (EXCEPT TO THE LIMITED EXTENT *Preliminary, subje ct to change. TEMH OSv.wpd/364 DESCRIBED HEREIN), THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE ON THE 2002 SERIES A BONDS. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN) OR THE STATE OR ANY POLITICAL SUBDIWISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2002 SERIES A BONDS. OTHER THAN THE SPECIAL TAXES LEVIED WITHIN THE DISTRICT, NO TAXES ARE PLEDGED TOTHE PAYMENT OF THE2002 SERIES A BONDS. THE 2002 SERIES A BONDS ARE NOT A GENERAL OBLIGATION OF THE AUTHORITY OR THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES AS MORE FULLY DESCRIBED HEREIN. This cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must read the entire Officiol Statement to obtain information essential to the making of an informed investment decision. Investment in the 2002 Series`4 Bonds involves ri~s which may not be appropriate for some investors. See "BONDOtFNERS' RISKS" herein for a discussion of special risk factors that should be considered in evaluating the investment quality of the 2002 Series,4 Bonds. The 2002 Series A Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Quint & Thimmig LLP, San Francisco, California, Bond Counsel, and subject to certain other conditions. McFariin & Anderson, Lake Forest, California is acting as Disclosure Counsel. Certain legal matters will be passed on ~r the Authority md the District by the City Attorney. Certain legal trotters will be passed on for Lennar Homes of California, Inc., aCalifordia corporation ("Lennar") by Luce, Forward, Hamilton & Scripps. It is anticipated that the 2002 S eries A Bonds, in book-entry form, will be available for delivery to DTC in New York, New York on or about ,2002. Stone & Youngberg 1 J.C Dated: August__, 2002 The following language to be inserted by the prin ter, in red, at the top of the POS front cover: PRELIMINARY OFFICIAL STATEMENT DATED AUGUST__, 2002 The following language to be inserted by theprinter, in red, vertically along the left margin of the POS front cover: This Preliminary Offici al Statement and the information contained herein are subject to compl etion or am endment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitetion of an offer to buy nor shall there be any sale of these securities th any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. TEMECULA PUBIC FINANCING AUTHORITY BOARD OF DIRECTORS Ron Roberts, Chairperson Jeff Stone, Vice Chairperson Jeff Comerchero, Member Albert "Sam" Pratt, Member Michael S. Naggar, Member SPECIAL SERVICES Bond Counsel Quint & Thimmig LLP San Francisco, California Authority Counsel Richards, Watson & Gershon A Professional Corporation Los Angeles, California Disclosure Counsel McFarlin & Anderson Lake Forest, California Remarketing Agent Stone & Youngberg LLC San Francisco, California Credit Bank Bank of America, N.A. _, California Special Tax Consultant Albert A. Webb Associates Riverside, California Financial Advisor to the Auihority Fieldman, Rolapp & Associates Irvine, California Tender Agent and Trustee U.S. Bank, N.A. Los Angeles, California Verification Agent Grant Thornton LLP Minneapolis, Mhnesota NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKEANY REPRESENTATION WITH RESPECT TO THE 2002 SERIES A BONDS, OTHER THAN AS CONTAINED IN THIS OFFICIAL STATEMENT, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE AUTHORITY OR THE UNDERWRITER. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE DESCRIBED ON THE COVER PAGE OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE 2002 SERIES A BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE. THIS OFFICIAL STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE 2002 SERIES A BONDS. Statements contained in this Official Statement which involve time estimates, forecasts or matters of opinion, whether or not expressly so described hacein, are intended solely as such and are not to be construed as representations of fact. The information set forth herein has been furnished by the District, or other sources which are believed to be rdiable, but it is not guaranteed as to accuracy or completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the informationin this Official Statement in accordance with, and as p~'t of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circurmtances, create any implication that there has been no change in the affairs of the District since the date hereof. This Official Statenent is submitted inconnection with the sale of securities refened to herein and may not be reproduced or be used, as a whole or in part, for any other purpose. IN CONNECTION WITH THE OFFERING OF THE 2002 SERIES A BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2002 SERIES A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAiL 1N THE OPEN MAKKET. SUCH STABILIZING, IF COMMENCED, MAY BE D1SCONTINUEDAT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE 2002 SERIES A BONDS TO CERTAiN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFI~RING PRICES MAY BECHANGED FROM TIME TO TIME BY THE UNDERWRITER. THE 2002 SERIES A BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 1N RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE 2002 SERIES ABONDS HAVENOT BEEN REGISTEREDOR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. AERIAL MAP [Regional Map to be provided by TABLE OFCONTENTS Pa~e INTRODUCTION ................................................................... ! General ....................................................................... 1 Thc Authority .................................................................. 1 The Community Facilities District .................................................. 1 Purpose of the 2002 Series A Bonds ................................................ 2 Sources of Payment for the2002 Series A Bonds; LetterofCredit ........................ 3 Tax Exemption ................................................................. 4 Risk Factors Associated with Purchasing the 2002 Series A Bonds ........................ 4 Forward Looking Statements ...................................................... 4 Professionals Involved in the Offering .............................................. 4 Other Information ............................................................... 5 CONTINUING DISCLOSURE ........................................................ 5 PLAN OF FINANCE; IMPROVEMENTS TO BE FINANCED WITH PROCEEDS OF THE 2002 SERiES A BONDS ......................................................... 5 ESTIMATED SOURCES AND USES OF FUNDS ......................................... 7 THE 2002 SERiES A BONDS ......................................................... 7 Description of the 2002 Series A Bunds ............................................. 7 Book-Entry and DTC ............................................................ 9 Variable Rate .................................................................. 9 Fixed Rate .................................................................... 9 Demand For and Mandatory Purchase .............................................. 12 Transfer and Exchange of Bonds .................................................. 13 Issuance of Parity Bonds ........................................................ 13 Terms of Redemption ........................................................... I4 Selection of Bonds for Redemption ................................................ 15 Notice of Redemption .......................................................... 16 Partial Redemption of Bonds ..................................................... 16 Effect of Redemption ........................................................... 16 SECURiTY FOR THE 2002 SERiES A BONDS .......................................... 16 General ...................................................................... 16 Letter of Credit ................................................................ 17 Special Taxes ................................................................. 17 Rate and Method .............................................................. 18 Special Taxes and the Teeter Plan ................................................. 20 Proceeds of Foreclosure Sales .................................................... 21 Special Tax Fund .............................................................. 22 Bond Fund ................................................................... 24 Pre-Conversion Reserve Fund .................................................... 25 Interest Differential Fund ........................................................ 26 Administrative Expense Fund .................................................... 26 Investment of Moneys in Funds ................................................... 27 Rebate Requirement ............................................................ 27 Additional Bonds for Conversion Costs or for Refunding Purposes Only .................. 27 THE LETTER OF CREDIT AND THE CREDIT AGREEMENT ............................. 27 THE CREDIT BANK ............................................................... 28 THE AUTHORITY ................................................................. 29 Authority for Issuance .......................................................... 29 THE COMMUNITY FACILITIES DISTRICT ............................................ 30 -i- Location and Description of the District ............................................ 30 General Information ............................................................ 31 Harveston Specific Plan ......................................................... 31 Environmental Conditions ....................................................... 31 Development Agreement ........................................................ 32 Settlement of Litigation Regarding Development ..................................... 33 Acquisition of Improvements ..................................................... 33 Property Ownership ............................................................ 33 Leunar, Harveston, LLC and Winchester ........................................... 34 The Development Plan .......................................................... 35 Plan of Finance ................................................................ 36 Estimated Special Tax Allocation by Project ........................................ 40 Direct and Overlapping Debt ..................................................... 41 Overlapping Assessment and Community Facilities Districts ............................ 43 Other Overlapping Direct Assessmenls ............................................. 44 Estimated Assessed Value-To-Lien Ratios .......................................... 44 BONDOWNERS' RISKS ............................................................ 45 Expiration of the Letter of Credit .................................................. 45 Credit Bank's Obligations Unsecured .............................................. 46 Default by Lermar Under the Credit Agreement ...................................... 46 General Factors Affecting the Credit Bank .......................................... 46 Variable Rate Bonds Subordinate to Fixed Rate Bonds ................................ 46 Risks of Real Estate Secured Investments Generally .................................. 46 Concentration o f Ownership ..................................................... 46 Failure to Develop Properties .................................................... 47 Special Taxes Are Not Personal Obligations ......................................... 47 The 2002 Series A Bonds Are LimitedObligations of the District ........................ 47 Land Development ............................................................. 48 Burden of Parity Liens, Taxes and Other Special Assessments on the Taxable Property ....... 48 Disclosure to Future Purchasers ................................................... 49 Government Approvals ......................................................... 49 Local, State and Federal Land Use Regulations ...................................... 49 Endangered and Threatened Species ............................................... 50 Hazardous Substances .......................................................... 50 Levy and Collection of the SpecialTax ............................................. 50 Exempt Properties ............................................................. 51 Depletion of Pre-Conversion Reserve Fund ......................................... 52 Potential De lay and Limitations in Foreclosure Procee dings ............................ 52 Bankruptcy and Foreclosure Delay ................................................ 53 Payments by FDIC and Other Federal Agencies ...................................... 54 Payment of Special Tax Nc~ a Personal Obligation of the Property Owners ................ 55 Factors Affecting Parcel Values and Aggregate Value ................................. 55 No Acceleration Provisions ...................................................... 56 Community Facilities District Formation ........................................... 56 Billing of Special Taxes ......................................................... 56 Collection of Special Tax ........................................................ 56 Right to Vote on Taxes Act ...................................................... 57 Ballot Initiatives and Legislative Measures .......................................... 58 Limited Secondary Market ....................................................... 58 Loss of Tax Exemption ......................................................... 58 Limitations on Remedies ........................................................ 58 LEGAL MATTERS ................................................................. 59 Legal Opinion ................................................................. 59 Tax Exemption ................................................................ 59 No Litigation ................................................................. 59 No General Obligation of the Authority or the District ................................. 60 -ii- RATINGS ........................................................................ 60 UNDERWRITING .................................................................. 60 VERIFICATION OF MATHEMATICAL ACCURACY .................................... 60 PROFESSIONAL FEES ............................................................. 61 MISCELLANEOUS ................................................................ 61 APPENDIXA - GenerallnformationAbouttheCityofTemecula ......................... A-1 APPENDIXB - Rate and Method ofApportionment for Community Facilities Distfict No. 01-2 (Harveston) ............................................... B-1 APPEND1XC - Form of Letter of Credit ............................................. C-1 APPENDIXD - Form of Opinion of Bond Co~ms¢l ..................................... D-1 APPENDIXE - Summary&Indenture ............................................... E-1 APPENDIXF - Forms ofConfinuing Disclosure Agreements .............................. F-I APPENDIXG - Book-EntrySystem ................................................. G-1 -iii- OFFICIAL STATEMENT $19,000,000' TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 01-2 (HARVESTON) VARIABLE RATE DEMAND SPECIAL TAX BONDS, 2002 SERIES A INTRODUCTION This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Offtcial Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the 2002 Series A Bonds to potential investors is made only by means of the ~tire Official Statement. General This Official Statement, including the cover page and appendices hereto, is provided to fumish information regarding the issuance ~ad sale by the Temecula Public Financing Authority (the "Authority"), on behalf of Community Facilities District No. 01-2 (Harveston) (the "District") orS 19,000,000' aggregate principal amount of the Temecula Public Financing Authority Community Facilities District No. 01-2 (Harveston) Variable Rate Demand Special Tax Bonds, 2002 Series A (the "2002 Series A Bonds"). The 2002 Series A Bonds are issued pursuant to the Act (as defined below) and an Indenture of Trust, dated as of August 1, 2002 (the "Indenture"), by and between the District and U.S. B~k, N.A., as Trustee (the "Trustee"). See "THE AUTHORITY- Authority for Issuance" herein. The Authority may issue additional bonds payable on a paritywith the 2002 Series A Bonds for payment of conversion costs and for refunding purposes only. "Bonds" means the 2002 Series A Bonds and any Parity Bonds, as defined herein (collectively, the "Bonds"). The 2002 Series A Bonds are initially issued in a Variable Rate and are subject to conversion to Fixed Rate. See "THE 2002 SERIES A BONDS - Fixed Rate." This Official Statement describes the 2002 Series A Bonds bearing a Variable Rate and provides only limited information about the Bonds bearing a Fixed Rate. The Authority The Authority was formed on April 10, 2001, pursuant to a Joint Exercise of Powers Agreement between the City of Temccula, California (the "City") and the Redevelopment Agency of the City of Temecula, in accordance with Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California. See "THE COMMUNITY FAC1LIlIES DISTRICT General Information" and "THE AUTHORITY." The Community Facilities District The District was formed and established by the Authority on March 26, 2002 pursuant to the Mello- Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the California Government Code, the "Act"), following apublic hearing and a landowner election at which the qualified electors of the District,by more than a two-thirds vote, authorized the District toincur bondedindebtedness h~ the aggregate not-to-exceed amount of $25,000,000 and approved the levy of special taxes (the "Special Taxes"). *Preliminary, subject to change. Once duly established, a communities facilities district is a legally constituted governmental entity established for the purpose of financing specific facilities and services within defined boundaries. Subject to approval by a two-thirds vote of the qualified voters within a district and compliance with the provisions of the Act, a district may issue bonds and may levy and collect special taxes to repay such bonded indebtedness and interest thereon. The District is comprised of approximately 510 gross acres of undeveloped land located in the northern portion of the City. The District is bounded generally on the north by the boundary line of the City of Murfieta, California, on the west by Interstate 15, on the east by Margarita Rind and on the south by Winchester Hills Road. Approximately 398 acres of the property in the District (the "Harveston, LLC Property") is currently owned by Harvesto n, LLC, a Delaware limited liability company ("Harveston, LLC"), of which Lennar Homes of California, Inc., a California corporation ("Lennar"), is the Administrative Member. The remaining 112 acres of property in the District (the "Winchester Property") is owned by Winchester Hills I LLC, a California limited liability company ("Winchester") and is zoned service commercial. The property in the District is currently undeveloped, except for a school completed in September 2001, and is subject torte Harveston Specific Plan (the "Harveston Specific Plan") adopted in August2001. The Temecula Valley Unified School District (the "School District") is developed with road access and those improvements will be acquired by the Authority for the City with Bond proceeds. Pursuant to an Agreement and Covenants Running With the Land, dated July 1, 1998, as amended by the First Amendment to Agreement and Covenants Running With the Land, dated June 29, 2001 and recorded June 29, 2001 as Document No. 2001-300715 (the "Agreement and Covenants") between Lennar and Winchester, Lennar agreed to undertake certain obligations with respect to the property in the District (including the Winchester Property), including (i) payment of all taxes and assessments on the Winchester Property to July 30, 2006 (subject to termination upon the occurrence of certain events),(ii) application for and processing ofaspecific plan and tentative subdivision maps necessary for the initial development of the Winchester Property and the Lennar Property (Harveston Specific Plan approved in August 2001; tentative maps approved August 2001), (iii) construction and landscaping of certain major streets within the District which remain to be completed, and (iv) sheet grading of the Winchester Property which retrains to be completed. The Agreement and Covenants was assigned by Lenmr to Hatveston, LLC. See "THE COMMUNITY FACILITIES DISTRICT - The Development Plan." The Harveston LLC Property is currently planned for development of approxinmtely 1,621 single familyhomes within approximately 347 acres, and approximately 300 apartment onits within approximately [ 16.8] acres. The Harveston LLC Property also includes an approximately 12 acre elanentary school which opened in September 2001, and is planned to include approximately 20 acres of parks, approximately 13.8 acres of open space, and approximately 65 acres of roads and other miscellaneous uses. The Winchester Property is planned to be developed with commercial and business park uses. See "THE COMMUNITY FACILITIES DISTRICT" herein. Purpose of the 2002 Series A Bonds The 2002 Series A Bonds are being issued (i) to refund or defease to maturity the outstanding Winchester Hills Financing Authority Community Facilities District No. 98-1 (Winchester Hills) Special Tax Bonds, 1998 Series A (the "1998 Winchester Hills Bonds"), (ii) to finance, either directly or indirectly, the acquisition and construction of certain street and signal improvements, storm drain improvements and p~k and recreation improvements (collectively, the "Improvements") of benefit to the District, (iii)to fund a pre- conversion reserve fund for the 2002 Series A Bonds bearing interest at a Variable Rate, (iv) to fund an interest differential fund, (v) to pay interest on the 2002 Series A Bonds through February 1, 2003, (vi) to pay certain administrative expenses of the District, and (vii) to pay the costs of issuing the 2002 Series A Bonds. The lien for special taxes of Community Facilities District No. 98-1 will be canceled upon issuance of the 2002 Series A Bonds. See "PLAN OF FINANCE; IMPROVEMENTS TO BE FINANCED WITH PROCEEDS OF THE 2002 SERIES A BONDS" herein. Sources of Payment for the 2002 Series A Bonds; Letter of Credit Harveston, LLC, as the master developer of the developmer~ planned for the Harveston Project (the "Project"), has arranged for an irrevocable direct-pay letter of credit (the "Letter of Credit") to be issued to the Trustee by Bank of America,N.A. (the "Credit Bank"). See"APPENDIX C - Form of Letter of Credit." Under the Indenture, the Trustee is directed to draw on the Letter of Credit in amounts sufficient to pay the principal of and interest on the 2002 Series A Bonds bearing interest at a Variable Rate as the same become due, and the purchase price of any 2002 Series A Bonds tendered by the Owners thereof to the Trustee, as initial Tender Agent, that are not remarketed. The Letter of Credit is issued pursuant to anAmended and Restated Credit Agreement dated as of May 24, 2002, among Lennar Corporation, the lenders listed on Schedule 1 thereto and Bank One NA, as Administrative Agent (the "Credit Agreement"). The Letter of Credit will initially expire on August 1,2003,if not renewed or extended. See "SECURITY FOR THE 2002 SERIES A BONDS - The Letter of Credit and the Credit Agreement" and "THE CREDIT BANK" heroin. The Letter o fCredit may be replaced at any time with a substitute letter or other financial instrument which satisfies the requirements of the lndmture. The 2002 Series A Bonds are secured by and payable from a first pledge of"Special Tax Revenues," defined in the Indenture as the proceeds of the Special Taxes of Community Facilities District No. 01-2 received by the Authority or the Trustee, including any scheduled payments thereof and any Special Tax Prepayments, interest on scheduled payments, ~md proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien arrl interest thereon. "Special Tax Revenues" does not include any penalties collected in connection with delinquent Special Taxes which amounts may be forgiven or disposed of by the Authority in its discretion, and if collected, shall be used in a manner consistent with the Act. "Special Taxes" are defined in the Indenture as the special taxes levied within the District pursuant to the Act, the ordinance adopted by the legislative body of the District providing for the levy of the Special Taxes, the Rate and Method of Apportionment of Special Tax (the "Rate and Method") recorded as a lien on the Property pursuant to the Notice of Special Tax Lien and the Indenture, including any Extraordinary Special Tax A and any One-Time Special Tax A; but in no event shall "Special Taxes" include any Special Tax B. Extraordinary Special Tax A is defined in the Rate and Method as the Special Tax A leviedon Other Undeveloped Property to cover any shortfall in funds available to pay interest due on Variable Rate Bonds in a Fiscal Year. Pursuant to the Act, the Rate and Method, the Resolution of Formation (as defined herein) and the Indenture, so long as any 2002 Series A Bonds are outstanding, the District will annually levy the Special Tax against the land within the District not exempt from Special Taxes under the Act and the Rate and Method ("Taxable Properly") in accordance with the proceedings for the authorization and issuance of the 2002 Series A Bonds and with the Rate and Method, to make provision for the collection of the Special Tax in amounts which will be sufficient to (a)(i) pay debt service onall Fixed Rate Bonds, if any, for the calendar year that commences in such Fiscal Year, (ii) pay debt service on all Variable Rate Bonds for the calendar year that commences in such Fiscal Year, assuming a constant interest rate of 3.5% for all Variable Rate Bonds for the 2002-03 Fiscal Year levy, and assuming a constant interest rate for each Fiscal Year thereafter equal to the average interest rate for thc Fiscal Year immediately preceding that for which the Special lax A Requirement is being determined; (ii0 pay period/c costs on the Bonds, including but not limited to, credit enhancement, remarketing costs, liquidity supportand rebate payments on the Bonds; (iv) pay Administrative Expenses; and (v) pay any amounts required to establish or replenish any bond or interest rate reserve funds for any Outstanding Bonds; less (b) a credit for funds available to reduce the annual Special Tax levy under the Indenture. See "SECURITY FOR THE 2002 SERIES A BONDS - Special Taxes and the Teeter Plan" herein. The Rate and Method exempts fromthe Special Tax up to 16.5 acres of Property Owner Association Property and up to 93.3 acres of Public Property. See "SECURITY FOR THE 2002 SERIES A BONDS - Rate and Method" and "BONDOWNERS' RISKS - Exempt Properties." The District has also covenanted in the Indenture to cause foreclosure proceedings to be commenced and prosecuted against certain parcels with delinquent installments of the Special Tax. For a more detailed description of the foreclosure covenant see "SECURITY FOR THE 2002 SERIES A BONDS - Proceeds of Foreclosure Sales." NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN) OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2002 SERIES A BONDS. OTHER THAN THE SPECIAL TAXES OF THE DISTRICT, NO TAXES ARE PLEDGED TO THE PAYMENT OF THE 2002 SERIES A BONDS. THE 2002 SERIES A BONDS ARE NOT A GENERAL OBLIGATION OF THE AUTHORITY OR THE DISTRICT, BUT ARE LIM1TED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES WITHIN THE DISTRICT AS MORE FULLY DESCRIBED HEREIN. Tax Exemption Assuming compliance with certain covenants and provisions of the Intemal Revenue Code of 1986, in the opinion of Bond Counsel, interest on the 2002 Sa:ies A Bonds will not be includable in gross income for federal income tax purposes although it may be includable in the calculation for certain taxes. Also in the opinion of Bond Counsel, interest on the 2002 Series A Bonds will be exempt from State personal income taxes. See "LEGAL MATTERS - Tax Exemption" herein. Risk Factors Associated with Purchasing the 2002 Series A Bonds Investment in the 2002 Series A Bonds involves risks that may not be appropriate for some investors. See the section of this Official Statement entitled "BONDOWNERS' RISKS" for a discussion ofcertainrisk factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the 2002 Series A Bonds. Forward Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a "plan," "expect," "estimate," "project," "budget" or similar words. Such forward-looking statements include, but are not limited to certain statements contained in the information under the caption"THE COMMUNITY FACILITIES DISTRICT" and "- Lennar, Harveston, LLC and Winchester" and "- The Development Plan" therein. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED 1N SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR 1MPL1ED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMMUNiTY FACILITIES DISTRICT DOES NOT PLAN TO 1SSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. Professionals Involved in the Offering U.S. Bank, N.A., Los Angeles, California, will serve as the paying agent, registrar, authentication and transfer agent for the 2002 Series A Bonds and will perform the functions required of it under the Indenture for the payment of the principal of and interest and any premium on the 2002 Series A Bonds and all activities related to the redemption of the 2002 Series A Bonds. Quint & Thimmig LLP, San Francisco, California is serving as Bond Counsel to the District. Richards, Watson & Gershon, A Professional Corporation, is serving as special counsel to the Authority. McFarlin & Anderson, Lake Forest, California, is acting as Disclosure Counsel to the District. Stone & Youngberg LLC is acting as Underwriter and as Remarketing Agent in connection with the issuance and delive~ of the 2002 Series A Bonds. Grant Thornton LLP will act as the Verification Agent. 4 Albert A. Webb Associates, Riverside, California, acted as special tax consultant to the District. Empire Economics, LLC, Capistrano Beach, California, acted as Market Consultant to the District. Other Information This Official Statement speaks only as of its date, and the inforn-ation contained herein is subject to change. Brief descriptions of the 2002 Series A Bonds, certain sectionsofthe Indenture, security for the 2002 Series A Bonds, special risk factors, the Authority, the District, Harveston, LLC, Leunar, Winchester, information regarding the development plan for the propertyowned by Harveston, LLC and by Winchester and other information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions herein of the 2002 Series A Bonds, the Indenture, and other resolutions and documents are qualified in their entirety by reference to the forms thereof and the information with respect thereto included in the 2002 Series A Bonds, the Indenture, such resolutions and other documents. All such descriptions are further qualified in their entirety by reference to laws and to principles of equity relating to or affecting generally the enforcement of creditors' rights. Copies of such documents may he obtained from the Temecula Public Financing Authority, 43200 Business Park Drive, Temecula, California 92590. CONTINUING DISCLOSURE The Authority. The Authority has covenanted for thebenefit of the Owners of the 2002 Series A Bonds to provide ~nnually certain financing information and operating data relating to the 2002 Series A Bonds, the District, ownership and development of the property in the District which is subject to the Special Tax, the occurrence of delinquencies in payment of the Special Tax, and the status of foreclosure proceedings, if any, respecting Special Tax delinquencies (the "Authority Annual Report"), and to provide notice of the occurrence of certain enumerated events, if rmterial. Such information is to be providedby the Authority not later than eight months after the end of the Authority's fiscal year (which currently would be March 1), commencing with the reports for the 2001-02 fiscal year. The Authority has no previous undertakings with regard to said Rule. The Authority, the City and related entities have never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events. Harveston, LLC. Harveston, LLC has covenanted for the benefit of the Owners of the 2002 Series A Bonds to provide semi-annually certain financial information and information regarding the development of the property owned by Harveston LLC in the District (the "Harveston LLC Semi-Annual Report"), and to provide notice of the occurrence of certain enamerated events, if material Such information is to be provided by Harveston LLC not later than four months after the end of HarvestonLLC's fiscal year (which for the fiscal year ending November 31 would be March 31 of the following year) and not later than ten months after the end of Harveston LLC's fiscal year (which for the fiscal year currently ending Noxember 31, would be the following September 30), commencing with the report due not later than March 31, 2003. In connection with covenants relating to the 1998 Winchester Bonds, the Administrative Member of Harveston LLC has filed audited financial statements for each fiscal year through its 1999 fiscal year (the report filed in May 2000) but did not file the report due for the 2000 fiscal year ~d did not include financial information regarding the development of the property owned by Lennar in the 1999 report. Leunar has updated its system for filing reports and expects, as the Administrative Member of the Harveston, LLC to satisfy Harveston, LLC's obligations with regard to disclosure in the future. Filing of Annual Reports; Form of Reports. Each Annual Report will be filed by the Trustee, as dis semination agent, with each Nationally Recognized Municipal Securities Information Repository and with each State Repository, if any. These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). For acomplete listing of items of information which will be provided in the Authority Annual Report andthe Harveston LLC Semi-Annual Report, see "APPENDIX F -Forms of Continuing Disclosure Agreements." PLAN OF FINANCE; IMPROVEMENTS TO BE FINANCED WITH PROCEEDS OF THE 2002 SERIES A BONDS Payment of 1998 Winchester Hills Bonds. The proceeds of the 2002 Series A Bonds in the amount of $ , together with other available moneys, will be applied to pay $ of the 1998 Winchester Hills Bonds on the date of issuance of the 2002 Series ABonds[ and to establish an escrow fund for the payment of $__ of the 1998 Winchester Hills Bonds maturing September 1,2004 on their sinking fund payment dates or maturity date]. Upon payment and defeasance of the 1998 Winchester Hills Bonds, the Winchester Hills Financing Authority will prepare, file and record a notice of cessation of special taxes with respect to the 1998 Winchester Hills Bonds. Amounts in the escrow fund will be invested solely in direct obligations of the United States Treasury or held in cash, the principal of and interest on which, together with other available cash to be held and invested, will be verified by Grant Thornton LLP (the "Verification Agent") as sufficient to pay the principal of and interest on the 1998 Winchester Hills Bonds to and including the date of redemption thereof and to redeem the 1998 Winchester Hills Bonds on September 1,2004. See "VERIFICATION OF MATHEMATICAL ACCURACY" herein. The moneys and securities held in the escrow fund are pledged to thepayment of the 1998 Winchester Hills Bonds. Neither the moneys nor the principal of the escrow securities deposited with the ~scrow Agent nor the interest thereon will be available for the payment of the 2002 Series A Bonds. Acquisition or Construction oflmprovements. Proceeds of the 2002 Series A Bonds in the amount of $5,150,000 will be applied to acquire or construct certain street and signal improvements, storm drain improvement and park and recreation improvements (collectively, the "Improvements") of benefit to the District. For a list of the Improvemants, see "THE COMMUNITY FACILITIES DISTRICT - Acquisition or Construction of Improvements." The balance of the proceeds of the 2002 Series A Bonds will be used (i) to fund a Pre-Conversion Reserve Fund for the 2002 Series A Bonds bearing interest at a Variable Rate, (ii) to pay interest on the 2002 Series A Bonds through February 1, 2003 estimated at a rate of 3.50%, (iii) to pay certain administrative expenses of the District, and (iv) to pay the costs of issuing the 2002 Series A Bonds. The Pre-Conversiun Reserve Fund is pledged to the 2002 Series A Bonds which bear interest at a Variable Rate and will be used to secure 2002 Series A Bonds prior to conversion to a Fixed Rate. Moneys in the Pre-Conversion Reserve Fund may be transferred to the Post42onversion Reserve Fund, or may be transferred to the Special Tax Prepaymerls Redemption Account in connectionwith Special Tax prepayments so long as the amount then on deposit in the Pre-Conversion Reserve Fund is equal to the Pre-Conversion Reserve Requirement. The Authority has entered into a Joint Community Facilities Agreement between the Authority and the City whereby the City agrees to accept dedication of discrete components of facilities financed by the Authority. The Authority has entered into an Acquisition Agreement between the Authority and Harveston, LLC providing for the acquisition by the Authority fi.om Harveston, LLC of discrete components of the public facilities. The Authority is also entering into a Joint Community Facilities Agreement between the Authority and the California Department of Transportation ("CDOT"), pursuant to which the CDOT will accept comple ted facilit les financed by the Authority. ESTIMATED SOURCES AND USES OF FUNDS The proceeds from the sale of the 2002 Series A Bonds will be deposited into the following respective accounts and funds established by the Authority under the Inderture, as follows: SOURCES Principal Amount of 2002 Series A Bonds Less: Underwriter's Discount Total Sources $ .00 ( $ USES Deposit into Improvement Ftmdm Deposit into Prior Bonds Paynent Fund Deposit into Pre-Conversim Reserve Funff2) Deposit into Capitalized lnt~xest Subaccount of the Bond Fund13) Deposit into Interest Differential Fund Deposit into Administrative Expense Fund Deposit into Cost of Issuance Fundm $5,150,000.00 .00 Total Uses $ See "PLAN OF FiNANCE; IMPROVEMENTS TO BE FiNANCED WITH PROCEEDS OF THE 2002 SERIES A BONDS" above. Equal to the Pre-Conversion Reserve Requirement with respect to the 2002 Series A Bonds as of the date of delivery of the 2002 Series A Bonds. Represents capitalized interest on a portion of the 2002 Series A Bonds at 3.50% through Febru~y I, 2003. Includes, among other things, the fees and expenses of Bond Counsel, Disclosure Counsel, the financial advisor, the Special Tax Consultant, [the Verification Agmt] and the Trustee, initial Letter of Credit fees, the cost of printing the Preliminary and fin al Offici al Stat emenls, the cos ts of th e Market Study, and reimbursement to the District and Lennar. THE 2002 SERIES A BONDS The 2002 Series A Bonds are initially issued bearing interest at a Variable Rate and arc subject to conversion to a Fixed Rate. See "THE 2002 SERIES A BONDS - Fixed Rate." This Official Statement describes the 2002 Series A Bonds bearing interest at a Variable Rate and provides only limited information about the 2002 Series A Bonds bearing a Fixed Rate. The Letter of Credit will not secure payment of any 2002 Series A Bonds converted to a Fixed Rate. Description of the 2002 Series A Bonds The 2002 Series A Bonds are dated as of their date of original issuance and will mature on September 1, 2041. The 2002 Series A Bonds will initially bear interest at the initial rate of interest, calculated on the basis ofa 365-dayyear and actual days elapsed, as set forth in the Indenture fromtheir date of original issuance to and including the following Wednesday. Thereafter, the 2002 Series A Bonds shall bear interest until the ConversionDate, if any, at a variable rate of interest (the "Variable Rate"). Any period during which the 2002 Series A Bonds bear interest at a Variable Rate shall be referred to herein as a "Variable Period." See "THE 2002 SERIES A BONDS - Variable Rate" below. During any Variable Period, the 2002 Series A Bonds may be tendered for purchase at a price equal to the principal amount thereof plus accrued interest thereon to the date of purchase, upon seven days' notice as described below under "THE 2002 SERIES A BONDS - Demand for and Mandatory Purchase." Interest accrued on the 2002 Series A Bonds during any Variable Period will be computed on the basis of a 365- or 366-day year, as appropriate, and the actual number of days elapsed, and will be payable on the first Business Day of each month, commencing October 1, 2002. Each date upon which interest is to be paid on the 2002 Series A Bonds is referred to herein as an "Interest Payment Date." Each 2002 Series A Bond shall bear interest from the date to which interest has been paid on the 2002 Series A Bonds next preceding the date of its authentication, unless it is authenticated as of an Interest Payment Date for which interest has been paid or after the Record Date (as defined below) in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from its date. Any such interest not paid or duly provided for when due shall forthwith cease to be payable to the owner on the regular Record Date therefor and shall be laid to the owner in whose n~ane the 2002 Series A Bond is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to the owners by first-class mail not less than ten (10) days prior to such special record date. The principal of, and interest and premium, if any, payable on the 2002 Series A Bonds shall be payable when due, by wire transfer of the Trustee, to The Depository Trust Company, New York, New York ("DTC"), which will in turn remit such principal, interest and premium, if any, to its Participants (as described in Appendix G - "Book-Entry System"), which Participants will in turn remit such princilal, interest and premium, if any, to the Beneficial Owners (as defined in Appendix G - "Book-Entry System") of the 2002 Series A Bonds as describedbelow under "APPENDIX G- Book-Entry S~tem." In the event that the 2002 Series A Bonds are not registered in the name of Cede & Co., as nominee of DTC or anothereligible depository as described below, both the principal and rederqotion price, including any premium, of the 2002 Series A Bonds shall be payable in lawful money of the United States of America only upon presentation thereof at the principal corporate trust office of the Trustee m specified in the Indenture. Payment of the interest on any2002 Series A Bond shall be made in lawful money of the United States of America to the person appearing on the bond registration books of the Trustee as the registered owner thereof on the applicable Record Date, such interest to be paid by check mailed on the Interest Payment Date by first class mail, postage prepaid, to the registered owner at its address as it appears on such registration books, except that the Trustee will, at the request ofanyregistered owner of $1,000,000 or mom in aggregate principal amotmt of 2002 Series A Bonds, make payments of interest on such 2002 Series A Bonds by wire transfer to the account in the United States desigmted by such owner to the Trustee in writing at least fifteen (15) days before the Record Date for such payments. The 2002 Series A Bonds are issuable only as fully registered Bonds without coupons in denominations of $100,000 or any integral multiple of $5,000 in excess thereof until the Conversion Date, and $5,000 or any integral multiple thereof after the Conversion Date. Such denominations are referred ~o herein as "Authorized Denominations." The registered owner of any 2002 Series A Bond will be the person or persons in whose name or names a 2002 Series A Bond is registered on the registration books kept for that purpose by the Trustee in accordance with the terms of the Indenture. The "Record Date" with respect to any Variable Rate Bond, means the close of business on the Business Daybefore each Interest Payment Date, and with respect to any Fixed Rate Bonds, means the close of business on the fifteenth (15th) day of the month (whether or not a Business Day) before such Interest Payment Date. Book-Entry and DTC The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the 2002 Series A Bonds. The 2002 Series A Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered 2002 Series A Bond certificate will be issued for each maturity of the 2002 Series A Bonds, each in the aggregate princilal amount of such maturity, and will be deposited with DTC. All references in this Official Statement to the Bondowners or an owner of 2002 Series A Bonds shall mean DTC or its designee and not the beneficial owners of the 2002 Series A Bonds. See "APPENDIX G - Book-Entry System." Variable Rate The 2002 Series A Bonds shall bear interest at the initial rate per annum set forth in the Irdenture to and including [[[September 4, 2002 andthereafter shall bear interest at a Variable Rate, determined as set forth in the Indenture, until a Conversion Date, if any, with respect to specific Variable Rate Bonds as provided in the Indenture. During each Variable Period, the Va'/able Rate of interest borne by the 2002 Series A Bonds for each period beginning on any Thursday and ending on the following Wednesday (each such period to be known as a "Variable Interest Accrual Period") will be the determined by Stone & Youngberg LLC (the "Remarketing Agent") and reported to tho Trustee, the Tender Agent, the Authority and the Credit Bank, on the first Business Day immediately preceding the first day of such Variable Interest Accrual Period (the "Variable Interest Computation Date"). Any Bondowner may obtain information on the Variable Rate by written request to the Trustee. The Variable Rate Bonds shall bern: interest during any Variable Period computed on the basis of a 365 or 366, as appropriate, day-year and actual number of days elapsed. The Variable Rate determined by the Rermrketing Agem on each Variable lnterest Computation Date shall be that rate of interest which, if borne by the Variable Rate Bonds, would, in its judgment, having due regard to prevailing financial market conditions, be the interest rate required, but which would not exceed the interest rate required, to be borne by the Variable Rate Bonds in order for their market value on said date to be 100% of the principal mount thereof(disregarding accrued interest); provided that in no event shall the Variable Rate at any time exceed 12% per annum unless and to the extem that there sh all have been delivered to the Trustee (i) a Letter of Credit in an amount equal to the then outstanding principal amount of the Variable Rate Bonds plus interest thereen for a period of thirty-seven (37) days calculated at the higher maximum Variable Rate, and (ii) an opinion of Bond Connsel to the effect that such higher maximum Variable Rate is permitted under applicable law and will not, in itself, cause the interest on thc 2002 Series A Bonds to be included in the gross incomes of the Bondowners for federal income tax purposes; and provided further that the Variable Rate on any Variable Rate Bond shall never exceed the maximum rate of interest which may be charged or collected by the registered owner thereof pursuant to provisions of federal or state law applicable to such owner, lfthe Ren-arketing Agent shall fail or refuse to determine the Variable Rate on any Variable Rate Computation Date, then ~e Variable Ratemost recently determined shall remain in effect until the Remarketing Agent determines the Variable Rate as provided above. The determination of the Variable Rate by the Remarketing Agem shall (in the absence of manifest error) be conclusive and binding on the owners of the Variable Rate Bonds, the Authority, the Credit Bank, the Remarketing Agent, the Tender Agent and the Trustee, and each shall be fully protected in relying on it. Fixed Rate The 2002 Series A Bonds for which the Conversion Date has occurred shall bear interest from and after the Conversion Date at a Fixed Rate determined in accordance with the Indenture. The rate of interest on all, or any portion (in increments of $5,000 principal amount), of the Variable Rate Bonds may be established at a Fixed Rate on any lrlemst Payment Date during a Variable Period, in accordance with the procedures described below. In order to convert Variable Rate Bonds to Fixed Rate Bonds (referred to herein as a "Conversion") the Aulhority must deliver a written notice to the Trustee, the Credit Bank, the Tender Agent and the Remarketing Agent specifying (i) the date of such conversion (referred to herein as a "Conversion Date"), which shall be not iess than forty (40) days after such noticeis sent to suchparties, (ii) the principal amount of Variable Rate Bonds to be converted to Fixed Rate Bonds on the Conversion Date (which shall be an integral multiple of $5,000), (iii) the date on which the Fixed Rate or Fixed Rates for such Bonds will be determined by the Remarketing Agent, which date shall be not later than the fifth Business Day immediately prior to the Conversion Date; (iv) an estimate of the Conversion Expenses and any amounts needed to fund capitalized interest, the Post-Conversion Reserve Fund or other amounts require to effect the Conversion and whether ar not the Authority expects to issue Parity Bonds (defined in "THE 2002 SERIES A BONDS - Issuance of Parity Bonds" below) to fund any of such Conversion Expenses or other amounts, and (v) specifying the maximum expected annual debt service on the 2002 Series A Bonds to be converted that may be in effect each year following the Conversion Date. Such notice must be accompanied by (i) an opinion of Bond Counsel to the effect that Conversion in accordance with the procedures described is permitted by the Indenture and the Act and will not adversely affect the exclusion of interest on the 2002 9 Series A Bonds and any Parity Bonds then Outstanding from gross income for federal income tax purposes (in rendering such opinion, Bond Coansel may rely on a written commitment of the Authcrity that it will, on or before the Conversion Date, file a form 8038Gand execute and deliver a certificate as to gbitrage with respect to the 2002 Series A Bonds to be converted), (ii) a report by an Independent Financial Consultant to the effect that, using for purposes of estimating the debt service on the 2002 Series A Bonds to be converted, the maximum debt service described in clause (v) of the preceding sentence, the Credit Criteria will be satisfied in connection with such Conversion, (iii) the form of notice to be given by the Trustee to the owners of the applicable Variable Rate Bonds with respect to Conversion, (iv) if not already executed by the Authority, a Continuing Disclosure Agreement in form acceptable to the Remarketing Agent, executed by the Authority, and (v) if not already executed by Harveston LLC, a continuing disclosure undertaking by Lennar and/or any other "obligated person" for purposes o f Rule 15c2-12 of th e Securities and Exchange Commission, to the extent andin a form, if any, required bythe Remarketing Agent. For purposes of the Indenture, the term "Credit Criteria" means that the aggregate of the maximum Special Taxes that may be levied on all Qualified Property as of the date of determination is at least 110% of the maximum annual Debt Service on all Fixed Rate Bonds to be Outstanding following the Conversion Date or date of issuance of Parity Bonds, as applicable [[[after first subtracting from such rmximum Special Taxes a pro-ratashare of annual[ District ] Administrative Costs]]]. For purposes of the preceding sentence, the term "Qualified Property" shall mean Developed Property, UpdateProperty and, in connection with the Final Conversion Date, Undeveloped Property, which in each case (i) is not at the time delinquent in the payment of any Special Taxes theretofore levied on such property, and (ii) has an assessed value based on the then current County real property tax roll, or, at the option of the Authority as to any pamel or parcels in the District, an appraised value based upon an appraisal conducted by an MAI appraiser selected by the Finance Director, that is at least three times the sumofthe allocable portion of the principal of the Fixed Rate Bonds described in the preceding sentence mad the allocable sham of any other assessment or special tax bonds secured by a lien on the respective parcel (with any such allocable share to be determined separately for each applicable assessment or special tax d~strict, based upon the special taxes or assessments on such parcel as a percentage of the total special taxes or assessments levied in the immediately preceding Fiscal Year on all parcels in the respective district). In the event that the amount then on deposit in the Conversion Expenses Fund is not reasonably expected by the Authority to be sufficient to pay all Conversion Expenses and any amounts needed to fund capitalized interest, the Post-Conversion Reserve Fund (to theextent amoants inthe Pre-Conversion Reserve Fund to be transferred to the Post-Conversion Reserve Fundrelated to the Conversion will not be sufficient to bring the amount in the Post-Conversion Reserve Fund up to the expected amount of the Post-Conversion Reserve Requirement to be in effect following the Conversion) and any other amounts required to effect the Conversion, the following actions shall be taken in the following order of priority as necessary to cover the deficiency: (a) the Authority shall provide for the issuance of Parity Bonds, subject to the requirements of the Indenture and the limitation of $I ,000,000 of Parity Bonds (excluaive of any refunding bonds); (b) the Authority shall identify to the Trustee in writing the amount of any remaining deficiency, and the Trustee shall take the actions in the Indenture relating to the collections of the One-Time Special Tax A levy, as applicable; and (c) if Special Taxes levied as contemplated by the preceding clause (b) am not remitted in full to the Trustee by 9:00 a.m. onthe Business Day prior to the Conversion Date, the Trustee shall make a draw on the Letter of Credit in the amount of Special Taxes so levied but not received by the Trustee. The Trustee shall give notice to the owners of the Variable Rate Bonds to be converted, by first class mail, not less than thirty (30) days before the Conversion Date, specifying: (i) that the interest rate on the 2002 Series A Bonds to be converted will be established at the FixedRate and the Conversion Date; and (ii) that all Variable Rate Bonds to be converted must be surrendered to the Tender Agent for purchase not later than 9:30 a.m., New York City time, on the Conversion Date. If on any Business Day at least five (5) Business Days before a Conversion Date, the Trustee receives notice from the Authority to the effect that it no longer wishes to proceed with the Conversion, or the Trustee receives notice from the Remarketing Agent (i) that a Market Risk Event (as defined below) has occurred, or (ii) that the expected annual debt service onthe 2002 Series A Bonds to be converted is in excess of the maximum debt service for any year as set forth in the notice by the Authority under clause (v) of the second sentence of the fourth preceding paragraph, the Trustee shall promptly (but in any event within two (2) 10 Business Days) give notice to the owners of the affected Variable Rate Bonds, in the saree manner that the notice of Conversion described in the preceding paragraph was givento such owners, canceling such notice of Conversionand stating that the Variable Rate Bonds will continue to bear interest at a Variable Rate. The Trustee shall also provide written notice of the cancellation to the Credit Bank, the Authority ard the Remarketing Agent. Notwithstanding the foregoing, in lieu of canceling the entire Conversion pursuant to the preceding sentences, if the expected annual debt service on the Fixed Rate Bonds following the Conversion is estimated by the Remarketing Agent to be in excess of the maximum debt service specified by the Authority in its notice of conversion, the Authority may by written notice to the Trustee and the Remarketing Agent delivered on the fifth Business Day prior to the scheduled Conversion Date, reduce the principal amount of the Variable Rate Bonds to be converted to an amount such that it can nevertheless (and does) deliver to the Trustee a report of an Independent Financial Advisor to the effect that given the lower principal amount of 2002 Series A Bonds to be converted, the Credit Criteria will be met; in which event the principal amount of the 2002 Series A Bonds to be converted shall be the reduced principal amount and the Trustee shall send a notice of non-conversion only to the owners of the principal amount of 2002 Series A Bonds not to be converted, such owners tobe selected by the Trustee by lot from among the 2002 Series A Bonds previously designated for Conversion. ANY 2002 SERIES A BOND NOT TENDERED TO THE TENDER AGENT FOR PURCHASE IN ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE ON A CONVERSION DATE FOR SUCH BOND SHALL BE DEEMED TO HAVE BEEN TENDERED FOR PURCHASE ON SUCH CONVERSION DATE FOR ALL PURPOSES OF THE INDENTURE. [[[DISCUSS MATURITY OF FIXED RATE ISSUES IF CONVERSION IS DONE IN MORE THAN ONE SERIES -- In connection with the 2002 Series A Bonds to be converted on any Conversion Date, on or before the Conversion Date, the Remarketing Agent shall determine: (i) serial maturities and or term bond maturities, in increments of $5,000, for the new Fixed Rate Bonds with each such maturity to be on a September 1 on or prior to September 1, 2041, (ii) sinking fund redemption dates (each to be a September 1 ) and amotmts with respect to any such term bonds (in establishing such maturities and sinking ftmd amounts, the Remarketing Agent shall attempt to maintain, as much as practicable, debt service ~m all Fixed Rate Bonds which is substantially level but which decreases as necessary to correspond to any expected increase in Administrative Expenses in future Fiscal Years), and (iii) the optional redemption provisions to apply to the newFixed Rate Bonds following Conversionunder the Indenture. The Fixed Rate for each maturity of such new Fixed Rate Bonds following the Conversion Date for such Bonds shall bethat rate, determined by the Rermrketing Agent on the date specified in the notice from the Authority referred to above, which, in the judgment of the Remarketing Agent, having due regard for prevailing financialmarket conditions, would be required, but would not exceed the rate which would be required, to be borne by the 2002 Series A Bonds of such maturity, taking into account the prospective maturity date and any sinking fund payments for the 2002 Series A Bonds of such rmturity, in order for the market value of the 2002 Series A Bonds to be converted on such date to be 100% of the principal amount thereof (disregarding accrued interest); provided that in no event shall the Fixed Rate exceed twelve percent (12%) or, if lower, any maximum rate permitted by law to he paid on the 2002 Series A Bonds. From and after Conversion and until maturity, each Bond converted to a Fixed Rate Bond will bear interest at the applicable Fixed Rate so established by the Remarketing Agent for the respective maturity of such Fixed Rate Bond, payable on the Interest Payment Date for Fixed Rate Bonds next following the Conversion Date, computed on the basis of a 360-day year of twelve 30-day months. The Remarketing Agent shall, on or before the Conversion Date, send written notice to the Trustee, the Authority and the Tender Agent specifying the serial and term maturities, sinking fund installments and interest rates for the Variable Rate Bonds being converted on such Conversion Date, and the optional redemption provisions applicable to such Bonds following the Conversion Date. The determination of the Fixed Rate and the serial and term maturities, any sinking fund installments and any optional redemption provisions by the Remarketing Agent shall (in the absence of manifest error) be conclusive and binding on the owners of the Fixed Rate Bonds thenconverted, the Authority, the Trustee, the Tender Agent and the Remarketing Agent, and each shall be fully protected by relying on such information. The Trustee shall, upon written request of any Bondowner, notify such Bondowner of the maturity, any sinking fund installments, the Fixed Rate and any optional redemption provisions for any Fixed RateBonds to be in effect on and after the Conversion Date for such Bonds. 11 Upon Conversion, the Trustee shall (i) transfer from the Pre-Conversion Reserve Fund (or, if the amount to be transferred from such fund are pursuant to the Indenture is insufficient for such purpose, the amount of the insufficiency to be drawn from the Conversion Expenses Fund) to the Post-Conversion Reserve Fund an amount sufficient to increase the amount on deposit in the Post42onversion Reserve Fund following the Conversion to the Post-Conversion Reserve Requirement; and (ii) cause to be prepared at the expense of and in conmltation with the Authority and Bond Counsel, new Bonds in the form set forth in Exhibit B hereto and stating the Fixed Rate. Any such Bonds shall be executed and authenticated as provided in the Indenture, and shall be delivered to the applicable Bondholders on the Conversion Date without charge. Notwithstanding the foregoing, if there are any Variable Rate Bonds Outstanding on thedate which is forty-five (45) days prior to the Final Conversion Date, the Authority shall send a notice to the Trustee specifying the Final Conversion Date as the Conversion Date in suchnotice. In determining the princi!ml amount of Variable Rate Bonds to be converted for purposes of tach notice, the Authority shall take into account any expected redemptions of Variable Rate Bonds with any expected excess funds on depesit in the Pre-Conversion Reserve Fund, the Interest Differential Fund and the Conversion Expenses Fund. Finally, notwithstanding the provisions described above, any Variable Rate Bonds not converted on the Final Conversion Date shall be redeemed at the principal mnount thereof plus accrued interest to the date fixed for redemption pursuant to the provisions of the Indenture. Demand For and Mandatory Purchase Any Variable Rate Bund, or any units of principal amount thereof in Authorized Denominations, shall (unless rem~'keted pursuant to the Indenture) be purchased on demand of the registered owner of such Variable Rate Bond (or, so long as Variable Rate Bonds are in "book-entry only" form on demand of a Direct Participant through DTC with respect to such Variable Rate Bonds), or upon being tendered or deemed tendered on a Conversion Date (as described above), on any Business Day during a Variable Period or on any Conversion Date, at a Purchase Price equal to the prircipal amount thereof, or of any portion thereof purchased in Authorized Denominations, plus interest accrued thereon, if any, to the date of purchase, upon (a) in the case of a dermnd purchase while the Variable Rate Bonds hear interest at a Variable Rate, delivery to the Tender Agent, with a copy to the Trustee and the Remarketing Agent, of a written notice in the form set forth in the Indenture (a "Tender Notice") which states (i) the principal amount (or portion thereof) of such Variable Rate Bond for which payment is demanded, (ii) that such demand is irrevocable and (iii) the date on which such Variable Rate Bund or portion of principal amount thereof inAuthorized Denominations shall be purchased pursuant to the Indenture (the "Demand Date"), which date shall be a Business Day not prior to the seventh (7th) day next succeeding the date of the receipt of the Tender Notice by the Tender Agent; and (b) in all cases, delivery to the Tender Agent, at or prior to 9:30 a.m., New York City time, on the Demand Date, of such Bond (with an appropriate transfer of registration form executed in blank and in form satisfactory to the Tender Agent). In the event that a "book-entry only" system is in effect with respect to the 2002 Series A Bonds, delivery of 2002 Series A Bonds for purchase on the Demand Date rmy be effected in the manner set forth by such depository. VARIABLE RATE BONDS NOT DELIVERED TO THE TENDER AGENT ON OR PRIOR TO 9:30 A.M., NEW YORK CITY TIME, ON THE DEMAND DATE FOR SUCH BONDS SHALL BE DEEMED PURCHASED FORALL PURPOSES OF THE INDENTURE AND INTEREST SHALL CEASE TO ACCRUE ON SUCH VARIABLE RATE BONDS ON THE DEMAND DATE FOR SUCH BONDS. Payment of thc Purchase Price of any Variable Rate Bond shall be made by check or by wire transfer (if requested in writing by the registered owner) or as designated in the Tender Notice with respect to such Variable Rate Bond, but only upon delivery and surrender of such Variable Rate Bond to the Tender Agent on or after the Demand Date for such Bonds. The availability ofmoney for payment of the Purchase Price is only supported by the Letter of Credit; the Authority has not provided for any other source of funds for such payment. Anything in thc Indenture to the contrary notwithstanding, no Variable Rate Bunds shall be purchased or remarketed (i) if an Event of Default under the Indenture (other than a covenant default of the Authority) shall have occurred and be continuing (ii) if all of the Variable Rate Bonds shall have been called 12 for redemption, (iii) after a Conversion Bate for such Bonds; r~ (iv) ifsuchVariable Rate Bond is registered in the name of the Authority, any guarantor of the obligations of the account party under the Letter of Credit, the account party on the Letter of Credit or the Credit Bank, or known by the Trustee to be registered in the name of any guarantor of the obligations of the account party trader the Letter of Credit, orthe account party on the Letter of Credit, or any nominee of the Authority, any guarantor of the obligations of the account party under the Letter of Credit, the account party on the Letter of Cmdit, or the Credit Bank. Transfer and Exchange of Bonds Any 2002 Series A Bond may, in accordance with the terms of the Indenture, be transferred upon the books of the Trustee, required to be kept pursuant to the Indenture by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2002 Series A Bond for cancellation at the Office of the Trustee, or of the Tender Agent, as the case may be, accompanied by a written instrument of transfer in a form acceptable to the Trustee, or the Tender Agent, as the case may be, duly executed. 2002 Series A Bonds n~y be exchanged at the Office of the Trustee for a like aggregate principal amount of 2002 Series A Bonds of other Authorized Denominations. The Trustee or Tender Agent shall require the payment by the 2002 Series A Bondowner requesting any such transfer or exchange of any tax, fee or other governmental char ge required to be paid with respect to such transfer or exchan ge, and may, in connection with any exchange, collect a charge equal to a customary fee charged by the Trustee for such exchange, but any such transfer or exchange shall otherwise be made without charge to the Bondowner requesting the same. No transfer or exchange shall be required to be made of any 2002 Series A Bonds called for redemption or of any 2002 Series A Bonds during the ten (10) days next preceding the giving of any notice of redemption. Issuance of Parity Bonds The Authoritymay from time totime issue bonds (the "Parity Bonds"), in addition to the 2002 Series A Bonds authorized under the Indenture, by means ora supplement to the Indentme and without the consent of any Bondowners, upon compliance with the provisions of the Indenture relating to the issuance of Parity Bonds. Any such Parity Bonds shall constitute Bonds under the Indenture and shall be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds under the Indenture on aparity with all other Bonds Outstanding under the Indenture. The Authority may issue the Parity Bonds subject to the following specific conditions precedent: (a) The Authority shall be in compliance on the date of issuance of the Parity Bonds wilh all covenants set forth in the Indenture and all supplements hereto. (b) The supplemental indentureproviding for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on Interest Payment Dates (which for Fixed Rate Bonds is March 1 and September 1 of each year) and principal thereof shall be payable on September 1 in any year in which principal is payable. If any such Parity Bonds are to be Fixed Rate Bonds with term maturities and sinking fund redemptions, the Authority shall provide the Trustee with a sinking fund payment schedule for such Fixed Rate Bonds to be used for purposes of the Indenture and, in any event, the Authorityshall provide the Trustee with the terms of any optional redemption of any Fixed Rate Bonds under the Indenture. (c) The Parity Bonds shall be designatedby an Authorized Authority Representative in writing to the Trustee as either (i) Variable Rate Bonds, but only if the amount available to be drawn under the Letter of Credit in effect as of the date of issuance of the Parity Bonds is increased as necessary to satisfy the requirements of the Indenture taking into account the issuance of the Parity Bonds andthe then rating on the Variable Rate Bonds is confirmed by the Rating Agency; or (ii) Fixed Rate Bonds, but only if the Credit Criteria are met taking into accotmt the issuance of such Parity Bonds as Fixed Rate Bonds. (d) The proceeds of such ParityBonds shall be used solely to make deposits to the Cost of Issuance Fund, the Conversion Expenses Fund, the Capitalized Interest Account (inrespect of any capitalizedinterest on such Parity Bonds), the Pm-Conversion Reserve Fund and/or the Post-Conversion Reserve Fund, in 13 amounts as designated by an Authorized Authority Representative in writing to the Trustee. In the case of any deposit to the Capitalized Interest Account, the Authorized Authority Representative shall provide the Trustee with a written schedule showing the Payment Dates and the respective Bonds on and to which, respectively, such amounts are to be applied. (e) The Authority shall deliver to the Trustee a Certificate of the Authority certifying that the conditions precedent to the issuance of such Parity Bonds set forth in the Indenture have been satisfied. In no evmt will the Authority issue Parity Bonds in an aggregate amount in excess of $1,000,000, except for Parity Bonds to refund some or all Variable Rate Bonds or Fixed Rate Bonds. Terms of Redemption The 2002 Series A Bonds am subject to redemption upon the circumstances, on the dates and at the prices set forth as follows; provided that the redemption price of any Variable Rate Bond to be redeemed shall be paid ftom the proceeds of the draw on the Letter of Credit as provided in the Indenture: (a) The Variable Rale Bonds shallbe subject to redemption in whole on the first date for which notice of redemption can timely be given, at a price equal to the principal amount of Variable Rate Bonds to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium, (i) if the Credit Bank shall fail to honor a draw on the Letter of Credit, or, (ii) if within 60 days of notice to the Trustee of an Act of Bankruptcy of the Credit Bank, the Authority shall fail to deliver or cause to be delivered to the Trustee a Letter of Credit from another institution which meets the requirements of the Indenture. (b) The Variable Rate Bonds shall be subject to redemption in whole or in part on any Interest Payment Date, at a price equal to the principal amount of Variable Rate Bonds to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium, during any Variable Period or on any Conversion Date, in the amount of any voluntary prepayments of the Variable Rate Bonds by the Authority, from any soume of available funds. (c) The Variable Rate Bonds shall be subject to redemption in whole, at a price equal to the principal amoum thereof, plus interest accrued thereon to the date fixed for redemption, without premium, on the last Business Day which/s not less than five days before the date of expiration of any Letter of Credit unless the Trustee receives a renewal or extension of or replacement for such Letter of Credit meeting the requirements of the Indmture not less than ten (10) days before the expiration of the then-existing Letter of Credit. (d) The Fixed Rate Bonds shall be subject to optional redemption at theAuthority'soption in whole or in part, on Interest Payment Dates and at redemption prices determined by the Authority at the time of Conversion of such Bonds pursuant to the Indenture, and as identified by the Trustee and the Authority by the Remarketing Agentpursuant to the Indenture; or as determined in connection with the issuance of Parity Bonds under the indenture, if such Fixed Rate Bonds am Parity Bonds issued under the Indenture. (e) The Variable Rate Bonds shall be subject to redemption, in part, onthe next Interest Payment Date for which notice of redemption can timely be given, in connectionwith a transfer from the Improvement Fund to the Variable Bond Payment Account for such purpose as described inthe Indenture, or in the amount of any transfers from the Annual Levy Account to the Variable Bond Payment Account pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued thereon to the date fixed for redemption, without premium. (f) The Variable Rate Bonds shall be subject to redemptionin whole, at a price equal to the principal amount thereof, plus interest accrued thereon to the date fixed for redemptiov, without premium, on the earliest date for which notice of redemption can timelybe given, ninety (90) days after the date on which the Trustee receives notice from the Credit Bank of the occurrence of an Event of Default under and as defined in the Credit Agreement, together with a direction from the Credit Bank to cause such redemption. (g) The 2002 Series A Bonds shall be subject to redemption in whole or in part, at a price equal to 14 the principal amount thereof to be redeemed, plus accrued interest thereon to the redemption date, without premium in the case of any Variable Rate Bonds to be redeemed and with a premium of three (3%) of the principal amount of the Bonds to be redeemed in the case of Fixed Rate Bonds to be redeemed (or such lesser premium as may thru apply to such Fixed Rate Bonds in connection with the optional redemption provisions for such Fixed Rate Bonds established under the Indenture or otherwise determined for such Bonds if they are Parity Bonds under the Indenture), on the next Interest Payment Date for which notice of redemption can timely be given, in the amount of any Special Tax prepayments deposited to the Prepayment Account and any amounts transferred from the Pre-Conversion Reserve Fund pursuant to the Indenture or the Post- Conversion Reserve Fund pursuant to the Indenture in connection with such prepayment and redemption. The Finance Director shall provide a written determination of thc 2002 Series A Bonds to be redeemed, the redemption date and the redemption prices of such 2002 Series A Bonds, to the Trustee, and the Trustee may conclusively rely on any such written determination in selecting the 2002 Series A Bonds to be redeemed. [[As between Fixed Rate Bonds and Variable Rate Bonds, Variable Rate Bonds shall be redeemed prior to Fixed Rate Bonds. See second paragraph of "Selection of Bonds for Redemption" below.]] (h) The Fixed Rate Bonds of any maturity shall be subject to mandatory sinking account payments in the amounts and on the dates established for such maturity in connection with the Conversion procedures in the Indenture, which allow the Authority, on the Conversion Date for any Variable Rate Bonds, to determine whether all or any portion oftheresulting Fixed Rate Bonds will be termbonds subject to sinking payment redemption, or in the amouats and on the dates established for any Pmty Bonds that are to be Fixed Rate Term Bonds pursuant to the Indenture. Any redemption pursuant to this clause shall only occur on a September 1, and shall he at a redemption price equal to the principal amount of the Fixed Rate Bonds to be redeemed, together with ac crued interest to the redemption date, without premium. The Trustee is authorized and directed in the Indenture, to give notice of the call for redemption of Bonds at the times set forth above, to fix the date for any such redemption within the periods prescribed by the Indenture, and, if moneys are available, to redeem the 2002 Series A Bonds so called on the date so fixed by the Trustee and set forth in such notice. The Trustee shall give such redemption notice (i) in the case of redemption pursuant to (a) or (c) above, at the time required therefor pursuant to the Indenture, without any further authorization or direction; and (ii) in the case of redemption pursuant to (b), (d), (e), (f) or (g) above, at the time required therefor pursuant to the Indenture. Selection of Bonds for Redemption When any redemption is made pursuant to any of the provisions of the Indenture and less than all of the outstanding 2002 Series A Bonds are to be redeemed, the Trustee shall select the 2002 Series A Bonds to be redeemed among series or maturities as directed in a Certificate of the Authority, and by lot within a maturity of any series in any manner the Trustee deems fair (subject in any event to the provisions of the Indenture), in whole multiples of $5,000. In no event shall 2002 Series A Bonds be redeemed in amounts other than whole multiples of $5,000; provided that 2002 Series A Bonds remaining after such redemption shall be in minimum Authorized Denominations. For purposes of a redemption pursuant to the Indenture, the Irustee may round down to the nearest $5,000. The Trustee shall promptly notify the Authority in writing of the numbers of the 2002 Series A Bonds selected for redemption. In connection with the delivery of any Certificate of the Authority under the preceding paragaph, the Authority shall determine the Bonds to be redeemed based upon the following priorities: (a) as between Fixed Rate Bonds and Variable Rate Bonds, Variable Rate Bonds shall be redeemed prior to Fixed Rate Bonds; and (b) as among Fixed Rate Bonds, so as to maintain, as much as practicable, debt service on all Fixed Rate Bonds Outstanding that is substantially level but which decreases as necessary to correspond to any expected increases in Administrative Expenses in future Fiscal Years. If any 2002 Series A Bonds tendered for purchase pursuant to the Indenture and delivered pursuant to the Indenture shall have been selected for redemption, then the new 2002 Series A Bond delivered pursuant to the Indenture shall be delivered with notice that it is subject to such redemption and shall be deemed to be the 2002 Series A Bond so selected for redemption notwithstanding the notice period stated in the Indenture. 15 Notice of Redemption Subject to the provisions of the Indenture, notice of redemption shall be given by the Trustee for and on behalf of the Authority, by first class mail, not less than thirty (30) days or, in the case of a redemption pursuant to the Indenture, not less than five (5) days prior to the redemption date, to (i) the Secta'ities Depositories and Information Services, and (ii) the registered owner of each Bond called for redemption, at its address as it appears on the registration books, but neither failure to mail such notice to any Bondowner nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of any of the 2002 Series A Bonds with respect to which such failure or defect shall have occurred. Each notice of redemption shall state the redemptiondate, the place of redemption, the source of the funds tobe used for such redemption, the principal amount and, if less than all, the d~stinctive numbers of the Bonds to be redeemed, and shall also state that the interest on the Bonds in such notice designated for redemption (other than the unredeemed portions, if any, thereof) shall cease to accrue from and after such redemption date and that on said date there will become due and payable on each of said Bonds the principal amount thereof to be redeemed, intere st accru ed there on to the redempti on date and the pr emium, if any, thereon (such premium to be specified). Neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither theAuthority nor the Trustee shall be liable for any inaccuracy in such numbers. Partial Redemption of Bonds Any Bond may be redeemed in whole or in part, but no part of any Bond shall be redeemed in an amount less than $5,000, and Bonds rermining after Ny redemption shall be in Authorized Denominations. Upon surrender of any Bond redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the registered owner thexeof, without charge to the owner thereof, a new Bond or Bonds of like maturity and of Authorized Denominations designated by such owner equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. Effect of Redemption Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price being held by the Trustee, the Bonds so called for redemption shall, on the redemption date designated in such notice, become due and payable at the redemption price specified in such notice, interest on the Bonds so called for redemption shall cease to accrue, said Bonds shall cease to be entitled to any lien, benefit or security under the Indenture, and the owners of said Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereofi All Bonds fully redeemed pursuant to the provisions of the Indenture shall be destroyed by the Trustee, which shall thereupon deliver to the Authority a certificate evidencing such destruction. SECURITY FOR THE 2002 SERIES A BONDS General The Bonds are secured by a pledge of all of the Special Tax Revenues and, in the case of Variable Rate Bonds, moneys deposited in the Letter of Credit Account in the Bond Fund and in the Pm-Conversion Reserve Fund and, until disbursed asprovided in the Indenture, inthe Special Tax Fund. Pursuant to theAct and the Indenture, the District will annually levy in each Fiscal Year the Special Taxes in an amount required for the payment of principal of and interest on any outstanding Bonds becoming due and payable during the calendar year comraencing in each Fiscal Year, including any necessary replenishment or expenditure of the Pm-Conversion Reserve Fund for the Variable Rate Bonds, replenishment o fPost-Conversion Reserve Fund for Fixed Rate Bonds and an amount estknated to be mfficient to pay the Administrative Expenses during such year. The Special Tax Revenues and all deposits into said funds (until disbursed as provided in the Indenture) are pledged to the payment of the principal of, and interest and any premium on, the Bonds as 16 provided in the Indenture and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities (as defined in the Indenture) have been set aside irrevecably for that purpose. While the 2002 Series A Bonds bear interest at a Variable Rate, such 2002 Series A Bonds are seemed by amounts drawn on the Letter of Credit. Amountsin the Administrative Expense Fund, the Cost of Issuance Fund, and the Improvement Fund are not pledged to the repayment of the 2002 Series A Bonds. The Improvements constructed or acquired with the proceeds of the 2002 Series A Bonds are not in any way pledged to paythe debt service on the 2002 Series A Bonds. Any proceeds of condemnation or destruction of any facilities financed with the proceeds of the 2002 Series A Bonds are not pledged to pay the debt service on the 2002 Series A Bonds and are free and clear of any lien or obligation imposed under the Indenture. Letter of Credit The Indenture provides that at all tin'es during the period that any portion of the 2002 Series A Bonds bear interest at a Variable Rate there shall be provided and continuously available to the Trustee, as beneficiary for benefit of owners of the Variable Rate Bonds, an inevocable direct pay Letter of Credit (whether in the form of a letter of credit or any other credit instrument) meeting the requirements of the Indenture, which requirements include that the Letter of Credit is issued by a national banking association organized under the national Banking Act, or any successor law, or a banking corporation organized under the laws of any state of the United States of America, or a savings and loan association or corporation or savings bank organized under the laws of the United States of America or any state thereof, or a branch or agency of a foreign banking corporation or association licensed in one of the states of the United States of America, or any other issuer acceptable to the Authority; provided that the loog term unsecured debt obligations of any such association or other organimtion are rated"A" or its equivalent or better by Standard & Poor's or Moody's Investors Service and whose letter of credit results in variable rate debt that is rated "A- 1" or its equivalent or better by Standard & Poor's or Moody's Investors Service. The Letter of Cret~t does not secure payment of any Fixed Rate Bond. Special Taxes The District has covenanted in the Indenture to comply with all requirements of the Act so as to assure the timely collection of Special Taxes, ircluding without limitation, the enforcement of delinquent Special Taxes. The Indenture provides that the Special Taxes are payable and will be collected in the same manner and at the same time and in the same installment as the general taxes on mai property, and will have the same priority, become ddinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property;, provided, the District may provide for direct collection of the Special Taxes in certain circumstances such as the levy of the Extraordinary Special Tax A. Because the Special Tax levy is limited to the maximum Special Tax rates set forth in theRate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the receipts of Special Taxes will, in fact, be collected in sufficient amounts in any given year to pay debt service on the 2002 Series A Bonds. Although the Special Tax, when levied, will constitute a lien on parcels subject to taxation within the District, it does not constitute a personal indebtedness of the owners of proptxty within the District. There is no assurance that the owners of real property in the District will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. See "BONDOWNERS' RISKS" herein. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN) OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF 1S PLEDGED TO THE PAYMENT OF THE 2002 SERIES A BONDS. OTHER THAN THE SPECIAL TAXES OF THE DISTRICT, NO TAXES ARE PLEDGED TO THE PAYMENT OF THE 2002 SERIES A BONDS. THE 2002 SERIES A BONDS 17 ARE NOT A GENERAL OBLIGATION OF THE AUTHORITY OR THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES AS MORE FULLY DESCRIBED HEREIN. Rate and Method General. The Special Tax is levied and collected acceding to the Rate and Method set forth in "APPENDIX B - Rate and Method of Apportionment for Community Facilities District No. 01-2 (Harveston)." The qualified electors of the District approved the Rate and Method on March 26, 2002. Capitalized terms used in the following parag'aphs but not defined herein have the meanings given them in the Rate and Method. The Rate and Method provides the means by which the Board of Directors of the Authc~-ity may annually levy the Special Taxes within the District up to the Maximum Special Tax. Thc Rate and Method provides that the Annual Special Tax may not be levied after Fiscal Year 2051-52. Minimum Annual Special Tax Requirement. Annually, at the time of levying the Special Tax for the District, the Authority will determine the amount of money to be collected from Taxable Property in the District (the "Special Tax ARequimment"), which will be the amount required in anyFiscal Year to pay the following: (i) the debt service on all Fixed Rate Bonds for the calendar year that commences in such Fiscal Year; (ii) the debt service on all Variable Rate Bonds for the calendar year that conm~nces in such Fiscal Year, assuming a constant interest rate of 3.5% for all Variable Rate Bonds for the 2002-03 Fiscal Year levy, and assuming a constant interest rate for each Fiscal Year thereafter equal to the average interest rate for the Fiscal Year immediately preceding that for which the Special Tax A requirement is being determined; (iii) the periodic cost on the Bonds, including but not limited to, credit enhancement, liquidity support and rebate payments on the Brads; (iv) the Administrative Expenses; and (v) any amount required to establish or replenish any bond or interest rate reserve funds for any outstanding Bonds, less (vi) a credit for funds available to reduce the annual Special Tax levy under the Indenture. In addition, the Authority will determine the amount of money to be collected from Taxable Property in the District to pay the "Special Tax B Requirement." "Special Tax B Requirement" means that amount required in any Fiscal Year for the District to pay the estimated costs of providing services, including the salaries of City staff related to and a proportionate share of City oxerhead costs, for the maintenance of the approximately 7.5 acres of landscaped parkland and the approximately 8.5 acres lake locate in Planning Area 3 of the Harveston Specific Plan. In no event shall "Special Taxes" include any Special Tax B and moneys derived from the levy of Special Tax B do not constitute Special Taxes for purposes of the Indenture andare not pledge to payment of the Bonds. Developed and Undeveloped Property; Exempt Propo'ty. The Rate and Method declares that for each Fiscal Year, each Assessor's Parcel within the District shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property or Undeveloped Property and shall be subject to Special Taxes in accordance with the Rate and Method. (i) "Developed Property" means all Assessor's Parcels that are not exempt from the Special Tax, exclusive of Property Owner Association Property and Public Property, for which (i) a Final Subdivision was recorded prior to the January 1 s, preceding the Fiscal Year k~ which the Special 18 Tax is being levied and (ii) a building permit was issued after January 1, 2001, but prig to the April 1*~ preceding the Fiscal Year in which the Special Tax is being levied. (ii) "Undeveloped Property'' means all Assessor's Parcels of Taxable Property which are not Developed Property, Taxable Property Owner Association Property or Taxable Public Property. (iii) "Taxable Property'' means all of the Assessor's Parcels within the boundaries of the District that are not exempt from the Special Tax pursuant to law or the Rate and Method. (iv) Exemptions: TheRateandMethodprovidesthatnoSpecialTaxshallbeleviedonupto 16.5 acres of Property Owner Association Property and on up to 93.3 acres of Public Property. The District Administrator will assign tax-exempt status to Assessor's Parcels in the chronological order in which such Parcels are known to the District Administrator to become Property Owner Association Property or Public Properly. Once an Assessor's Parcel has been classified as Public Property, its tax-exempt status will be permanent, independent of its future uses. Public Property includes property used for rights-of-way or any other purpose and owned by or irrevocably offered for dedication to the federal government, the State, the County, the City or any other public agency. Maximum Special Tax. The Maximum Special Tax is defined in the Rate and Method as follows: (i) Undeveloped Propert~ The Maximum Special Tax A for Fiscal Year 2002-03 and future Fiscal Years for Undeveloped Propertythat is Service Commercial Property shallbe $1,960 per Acm. The Maximum Special Tax A forFiscal Year 2002-03 and future Fiscal Years for Undeveloped Property that is Taxable Property Owner Association Property and Taxable Public Property shall be $6,126 per Acre. The Maximum Special Tax A for Fiscal Year 2002-03 and future Fiscal Years for Other Undeveloped Property shall be $6,126 per Acre plus any Extraordinary Special Tax A or One-Time Special Tax A that may be applicable. The Maximum Special Tax B for Other Undeveloped Property shall be $685 per Acre for Fiscal Year 2002-03 and shall increase by an amount equal to 1.00% of the nmximum tax rates in effect for the prior Fiscal Year. The Maxinmm Special Tax for each Assessor's Parcel classified as Other Undeveloped Property, shall be Maximum Special Tax A plm Maximum Special Tax B. (ii) Developed Property:. The Maximum Special Tax A for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax A, or (ii) the amount derived by application of the Backup Special Tax A. The Combined Assigned Annual Special Tax for Developed Property ranges from $307 to $1,681 per unit. See "APPENDIX B - Rate and Method of Apportionment for Community Facilities District No. 01-2 (Harveston)- Table 1" herein for a listing of the Assigned Annual Special Tax rates for various sizes of Units. The Backup Special Tax A for Developed Property in each Fiscal Year, starting with Fiscal Year 2002-03 and for each Fiscal Year thereafter, is $6,126 per acre for Residential Property and Other Non- Residential Property, and $1,960 per acre for Service Commemial Property. Method of Apportionment. The Rate and Method provides that commencing Fiscal Year 2002- 03 and for each subsequent Fiscal Year, the Authority shall levy Annual Special Taxes as follows: First: Special Tax A shall be levied on each Assessor's Parcel of Developed Property at 100% of the applicable Assigned Special Tax A for each Fiscal Year to and including the Fiscal Year in which Final Conversion occurs, irrespective of the Special Tax A Requirermnt, in order to pay amounts described in the definition of the "Special Tax A Requirement," as well as to accumulate funds to maintain an interest rate reserve account with respect to Variable Rate Bonds established under the Indenture at a level specified in the Indenture, to pay Conversion Amounts and for the redemption of Variable Rate Bonds under the Indenture. For each subsequent Fiscal Year, 19 Special Tax A shall be levied Proportionately on each Assessor's Pamel of Developed Property at up to 100% of the applicable Assigned Special Tax A as needed to satisfy the Special Tax A Requirement Special Tax B shall be levied Proportionatelyon each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax B as needed to satisfy the Special Tax B Requirement; Second: If additional moneys are needed to satisfy the Special Tax A Requirement after the first step has been completed, Special Tax A shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property that is Service Commercial Property at up to $1,960 per Acre and Proportionately on each Assessor's Parcel of Other Undeveloped Property at up to $3,212 per Acre and if additional moneys are neededto satisfy the Special Tax B Requirement after the first step has been completed, Special Tax B shall be levied Proportionately on each Assessor's Parcel of Other Undeveloped Property at up to 100% of the applicable Assigned Special Tax B; Third: If additional moneys are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, Special Tax A shall be levied Proportionately on each Assessor's Pamel of Other Undeveloped Property at up to $6,961 per Acre; Fourth: If additional moneys are needed to satisfy the Special Tax A Requirement after the first three steps have been completed, then the levy of Special Tax A on each Assessor's Parcel of Developed Property whose Maximum Special Tax A is determined through the application of the Backup Special Tax A shall be increased Proportionately from the Assigned Special Tax A up to the Maximum Special Tax A for each such Assessor's Parcel; Fifth: If additional moneys are reeded to satisfy the Special Tax A Requirement after the first four steps have been completed, then the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property up to the Maximum Special Tax A for Taxable Property Owner Association Property; Sixth: If additional moneys are needed to satisfy the Special Tax A Requirement after the first five steps have been completed, then the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property up to the Maximum Special Tax A for Taxable Public Property. Extraordinary Special Tax A. If at any time during a Fiscal Year the intexest rate on Variable Rate Bonds exceeds the rate described in clause (a)(ii) of the definition of "Special Tax A Requirement" that was utilized to determine that Fiscal Year's Special Tax A Requirement, it may be necessary to levy an Extraordinary Special Tax A on all Other Undeveloped Property to cover any shortfall in funds available to pay interest due on Variable Rate Bonds in such Fiscal Year. Three business days prior to any interest payment date for Variable Rate Bonds, if sufficient funds are not available in a debt service or interest rate reserve account for the payment of Variable Rate Bonds under the Indenture, the District Administrator shall levy Special Taxes Proportionately on Assessor's Parcels classified for such Fiscal Year as Other Undeveloped Property in an aggregate amount equal to the amount of the insufficiency, and the payment of Special Taxes so levied shall be due and payable on (and will be delinquent if not paid by) the day prior to such interest payment date. Such Special Taxes shall be levied by means of direct billing to the affected property owners. Prepayment of Annual Special Taxes. The Special Tax A Annual Special Tax obligation for an Assessor's Pamel of Developed Property, Update Property r~ Undeveloped Property that is Service Commercial Property may in certain circurmtances be prepaid in whole or in l~rt, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assess~'s Parcel at the time the Annual Special Tax obligation would be prepaid. The Prepayment Amount for an applicable Assessor's Parcel after the issuance of 2002 Series A Bonds is calculated based on Bond Redemption Amounts and other costs, all as specified in "APPENDIX B - Rate and Method of Apportionment for Community Facilities District No. 01-2 (Harveston) - Section J" herein. 20 Special Taxes and the Teeter Plan The County has adopted a Teeter Plan as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, under which a tax distribution procedure is implemented and secured roll taxes are distributed to taxing agencies within the County on the basis of the tax levy, rather than on the basis of actual tax collections. By policy, the County does not include assessments, reassessments and special taxes of the District in its Teeter program. Proceeds of Foreclosure Sales Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax, the District may order the institution of a Superior Court actim to foreclose the lien therefur within specified time limits. In such an action, the real properly subject to the unpaid amount maybe sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. On or abmt February 15 and June 15 of each Fiscal Year, the Finance Director shall compare the amount of Special Taxes theretofore levied in the District pursuant to the Indenture to the amount of Special Tax Revenue theretofore received by the Authority, and: IndividualDelinquencies. If the Finance Director determines that any single parcel subject to the Spedal Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of $2,500 or mom, then the Finance Director will send or cause to be sent a notice of delinquency (and a demand for immediate payment) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings will be commenced by the District within 90 days of such determination. Notwithstanding the foregoing, the Finance Director may defer such action if the armunt in the Post-Conversion Reserve Fund is at least equal to the Post-Conversion Reserve Requkement. Aggregate Delinquencies. If the Fimnce Director determines that (i) the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District (including total individual delinquencies described above) exceeds 5% of the total Special Tax levied for the prior Fiscal Year or (ii) there am ten (10) or fewer owners of realproperty in the District, determined by reference to the latest available secured property tax roll of the County,the Finance Director shall notify or cause to be notified property own~s who are thendelinquent inthe payment of Special Taxes anddemand immediatepayment of the delinquency within 45 days of such determination, andthe Authoritywill commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency that is in excess of $2,000. Extraordinary Special Tax A and One-Time Special Tax A Delinquencies. If the Finance Director determines that any Extraordina'y Special Tax A or One Time Special Tax A levied pursuant to the Indenture has not been paid when due, the Finance Director shall send or cause to be sent a notice of delinquency (and a dem~md for immediate payment thereof) to the property owner within 10 days of such determination and (if the delinquency remains uncured) foreclosure proceedings shall be commence within 30 days of such determination. It should be noted that any foreclosure proceedings commenced as described above could be stayed by the commencement of bankruptcy proceedings by or against the owner of the delinquent property. See "BONDOWNERS' RISKS -Bankruptcy and Foreclosure Delay." No assurances can be given that a judicial foreclosure action, once commenced, will be completed or that it will be completed in a timely manner. See "BONDOWNERS' RISKS - Potential Delay and Limitations in Foreclosure Proceedings." If a judgment of foreclosure and order ofsale is obtained, the judgment creditor (the District) must cause a Notice of Levy to be issued. Under current law, a judgment debtor (property owner) has 120 da~ from the date of service of the Notice of Levy and 20 days from the subsequent notice of sale in which to redeem the property to be sold. If a judgment debtor fails to so redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such action, a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made. 21 The constitutionality of the aforementioned legislation, which repeals the former one-year redemption period, has not been tested; and there can be no assurance that, if tested, such legislation will be upheld. Anypamel subject to foreclosure sale must be sold at the minimum bid price unless a lesser minimum bid price is authorized by the Owners of 75% of the principal amount of 2002 Series A Bonds Outstanding. No assurances can be given that the real property subject to sale or foreclosure will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinqueat Special Tax installment. The Act does not require the Authority or the District to purchase or otherwise acquire any lot or parcel of property offered for sale or subject to foreclosure if there is no other purchaser at such sale. The Act does specify that the Special Tax will have the same lien priority in the case of delinquency as for ad valorem property taxes. If the Pre-Conversion Reserve Fund is depleted and delinquencies in the payment of Special Taxes exist, there could be a default or dray in payments to the Owners of the Variable Rate Bonds pending prosecution of foreclosure proceedings and receipt by the District of foreclosure sale proceeds, if any. However, within the limits of the Rate and Method of Apportioument and the Act, the District may adjust the Special Taxes levied on all property within the District in future Fiscal Years to provide an amount, taking into account such delinquencies, required to pay debt service on the 2002 Series A Bonds and to replenish the Pre-Conversion Reserve Fund. There is, however, no assurance that the maximum Special Tax rotes will be at all times sufficient to pay the amounts required to be paid on the 2002 Series A Bonds and any Parity Bonds by the Indenture. Special Tax Fund Pursuant to the Indenture, all Special Tax Revenues received by the District will be deposited in the Special Tax Fund, which will be held by the Trustee on behalf of the District. Moneys in the Special Tax Fund shall be held in trust by the Trustee for the benefit of the District and the Bondownffs. Pending disbursement, moneys in the Special Tax Fund will be subject to a lien in favor of the Bondowners and the District established under the Indenture. Disbursements. Moneys in the Special Tax Fund will he disbursed asneeded to pay the obligations of the District in the following priority, the requirements of each such transfer to be satisfied prior to any subsequent transfer: (i) to the Administrative Expense Fund, an amouat equal to $25,000 for such period occurring in Fiscal Year 2002-03, with annual transfers thereafter to be in an amount equal to 103% of the amount transferred inthe prior Fiscal Year (e.g. $25,750 for such period occurring inFiscal Year 2003-04, $26,523 for such period occurring in Fiscal Year 20044}5, etc.) [plus an amount equal to the Credit Bank Letter of Credit fees (not in excess of amounts set forth in the Indenture), Remarketing Agent Fees (not in excess of amounts set forth in the Indenture) and rating agency fees]; and (ii) the Fixed Bond Payment Account an amount, together with any amounts then on deposit in the Fixed Bond Payment Account and any amounts in the Capitalized Interest Account to be used to pay interest onFixed Rate Bonds in the calendar year which commences in such fiscal year sufficient to pay the scheduled Debt Service (including any mandatory sinking payment reden~ptions due and unpaid on the Fixed Rate Bonds in the calendar year that commences in such Fiscal Year. Five (5) Business Days prior to each Payment Date which occurs on the first Business Day of February, March, April and May in any Fiscal Year following the date on which full satisfaction of the transfers required pursuant to the preceding clause (i) and (ii) for such Fiscal Year, additional transfers shall be made by the Trustee from the Annual Levy Account in the following order of priority, the requirements of each such transfer to be satisfied in full for any such Payment Date prior to any subsequent transfer on such Payment Date: (A) to the Post-Conversion Reserve Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Post-Conversion Reserve Requirement; (B) to the Variable Bond Payment Account, an amount, together with any amoma then on deposit in such Account, equal to the Debt Service due on such Payment Date on the Variable Rate Bonds; 22 (C) payment to Harveston, LLC for unreimbursed draws on the Letter of Credit related to prior Payment Dates where the amount on deposit in the Variable Bond Payment Account was less than the amount due on the Variable Rate Bonds on such date, together with interest on such unreimbursed draws at the rate set forth in the Credit Agreement (being the rate of interest on unreimbursed draws on the Letter of Credit), all as such uureimbursed draws and interest are identified to the Trustee from time to time by a written certificate or certificates of Harveston, LLC in each case acknowledged in writing as accurate by an Authorized Authority Representative (provided, however, that any such payments to Harveston, LLC shall be suspended if the Authority informs the Trustee in writing that Special Taxes levied on property in the District owned by Harveston, LLC are delinquent, with any such payments to thereafter resume following the date on which the Authority informs the Trustee in writing that all such d elinquenci es have been cured); (D) to the Interest Differential Fund an amoont, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Interest Differential Fund Requirement; and (E) to the Pre-Conversion Reserve Fund an amount, if any, necessary to bring the amount on deposit in such fund up the amount of the then Pre-Conversion Reserve Requirement. All amounts deposited to the Annual Levy Account during the period from April 10 in any year to December 9 in the subsequent year shall be transferredby the Trustee promptly following the receiptthereof from the Annual Levy Account in the following order of priority, the requirements of each such transfer to be satisfied prior to any su~equent transfer: (A) to the Administrative Expense Fund, an amount equal to $25,000 for such period which commences in Fiscal Year 2002-03,with annual transfers thereafter to be in an amount equal to 103% of the amount transferred in the prior Fiscal Year (e.g. $25,750 for such period occurring in Fiscal Year 2003-04, $26,523 for such period occurring in Fiscal Year 2004-05, etc.) [plus an amount equal to the Credit Bank Letter of Credit fees (not in excess of amounts set forth in the Indenture), Remarketing Agent Fees (not in excess of amounts set forth in the Indenture) and rating agency fees; and (B) to the Fixed Bond Payment Account an amount, together with any amounts then on deposit in the Fixed Bond Payment Accoant and any amounts in the Capitalized Interest Account to be used to pay interest on Fixed Rate Bonds in the calendar year which commences during such period (as set forth in the schedule provided to the Trustee under the Indenture), sufficient to pay the scheduled Debt Service (including any mandatory sinking payment redemptions under the Indenture due and unpaid on the Fixed Rate Bonds on the September 1 during such period. Five (5) Business Days prior to Payment Date which occurs on the first Bus iness Day of Ju ne, July, August, September, October, November and December during such period and which occurs on the first Business Day of January after such period, following the date on which full satisfaction of the transfem required pursuant to the preceding clauses (A) and (B) for such ~riod, additional transfers shall be made by the Trustee from the Annual Levy Account in the following order of priority, the requirements of each such transfer to be satisfied in full for any such Payment Date prior to any subsequent transfer on such Payment Date: (A) to the Post-ConversionReserve Fund an amount,if any, necessary to bring the amount on deposit in such fund up to the amount of the then Post-Cunversion Reserve Requirement; (B) to the Variable Bond Payment Account, an amount, together with any amount then on deposit in such accour~, equal to the Debt Service due on such Payment Date on the Variable Rate Bonds; (C) payment to Harveston, LLC for uureimbursed draws on the Letter of Credit related to prior Payment Dates where the amount on deposit in the Variable Bond Payment Account was less than the amount due on the Variable Rate Bonds on such date, together with interest on such unreimbursed draws at the rate set forth in the Credit Agreement (being the rate of interest on unreimbursed draws on the Letter of Credit), all as such unreimbursed draws and interest are identified to the Trustee from time to time by a written certificate or certificates of Harveston, LLC in each case acknowledged in writing as accurate by an Authorized Authority Representative (provided, however, that any such payments to Harveston, LLC shall 23 be suspended if the Authority informs the Trustee in writing that Special Taxes levied on properly in the District owned by Harveston, LLC are delinquent, with any such payments to Harveston, LLC to thereafter resume following the date on which the Authority informs the Trustee in writing that all such delinquencies have been cured); (D) to the Interest Differential Fund an amount, if any, necessary to bring the amount on deposit in such fund up to the amounl of the then Interest Differential Fund Requirement; (E) to the Administrative Expense Fund an amount, if any, necessary to pay uny Administrative Expenses in any Fiscal Year in excess of the amounts transferred to such fund in such Fiscal Year pursuunt to the Indenture, as any such amounts are identified in writing to the Trustee by an Authorized Authority Representative; and (F) to the Pre-Conversion Reserve Fundan amount, if any, necessary to bring the amount on deposit in such fund up to the amount of the then Pre-Conversion Reserve Requirement. Each year that the Bonds are Outstanding, upon the first remission by the Authority to the Trustee of Special Tax Revenues described in the Indenture identified by the Authority as attributable to Special Taxes that are delinquent if not paid by the immediately preceding December 10h, and before the Special Tax Revenues then being remitted are deposited by the Trustee to the Annual Levy Account, all then remaining amounts in the Annual Levy Account shall be disFosed of by the Trustee as follows: (A) prior to the Final Conversion Date, any such remaining amounts shall be transferred by the Trustee to the Conversion Expenses Fund; provided, however, that if the amount cn deposit in the Conversion Expenses Fund would exceedthe Maximum ConversionExpenses Fund Balance following such transfer, an amount equal to the excess shall be transferred by the Trustee to the Variable Bond Payment Account and the Trustee shall call for redemption pursuant to the Indenture on the next Ir~erest Payment Date for which notice of redemption can timely be given, as many Variable Rate Bonds in $5,000 increments as cun be so called for redemption with such funds, with any remaining amount (being the amount less than $5,000) to remain on deposit in the Annual Levy Account; and (B) On or after the Final Conversion Date, any such remaining amounts shall remain on deposit in the Annual Levy Account to be used for the purposes of such account, und Special Taxes levied in the succeeding Fiscal Year shall be reduced by the Authority by the amount so retained in the Annual Levy Account. Investment. Moneys in the Annual Levy Account und the Prepayment Account of the Special Tax Fund will be invested and deposited by the Authorized Officer as described in "Investment of Moneys in Funds" below. Interest earnings und profits resulting from such investment and deposit will be retained in the respective account from which the investment was made to be used for the purposes of such account. Bond Fund The Trustee will hold the Bond Fund in trust for the benefit of the Bondowners. There is created in the Bond Fund, as separate accounts to be held by the Trustee, the Fixed Bond Paymerl Account, the Variable Bond Payment Account, the Letter of Credit Account, the Capitalized Interest Account und the Special Tax Prepayments RedemptionAccount. Moneys in the Bond Fund und the accounts therein shall be disbursed for the payment of the principal of, and interest und any premium on, the 2002 Series A Bonds and for the other purposes as provided below, und, pending such disbursement, shall be subject to a lien in favor of the owners of the 2002 Series A Bonds. Money in the Letter of Credit account, if any, cun only be disbursed to owners of the Variable Rate Bonds or paid to the Credit Bank. VariableBondPaymentAccounL Amounts deposited to theVariable Bond Payment Account shall be used by the Trustee on each Payment Date (but only following any transfer on such Payment Date from such account required under the second sentence of the paragraph captioned "Letter of Credit Account" below, to reimburse the Credit Bank for draws on the Letter of Credit by meuns of a wire transfer by the Trustee to the Credit Bank on each Payment Date of an amount equal to the proceeds of draws received by 24 the Trustee on the Letter of Credit pursuant to draws made. In the event that amounts on deposit in the Variable Bond Payment Account on the date which is four (4) Business Days prior to any Payment Date are insufficient to fully reimburse such draws expected to be made cn such Payment Date, the Trustee shall (i) withdraw the amount of the insufficiency from the Interest Differential Fund to the extent of any amounts on deposit therein, and (ii) if following such draw, an insufficiency still exists, send out special tax bills as required by the Indenture and deposit any Special Taxes collected pursuant to such billing in the Variable Bond Payment Account. Letter of CreditAccouna Amounts deposited to the Letter of Credit Account shall be used by the Trustee solely to make payments of principal and interest due on any Payment Date on the Variable Rate Bonds. In the event that amounts in the Letter of Credit Account are not sufficient to pay the full amount due on the Variable Rate Bonds on any Payment Date, the Trustee shall withdraw the amount of the insufficiency first, from the Variable Bond Payment Account to the extent of my funds then on deposit therein, and then from the Pre-Conversion Reserve Fund to the extent of any funds on deposit therein. Special Tax Prepayments Redemption Accouna Amounts deposited to the Special Tax Prepayments Redemption Acconnt shall be used by the Trustee to pay the redemption price (other than accrued interest which shall be paid from amounts in the Fixed Bond Payment Account orthe Variable Bond Payment Account, as applicable) of Bonds called forredemption due to prepayment of Special Taxes on the applicable redemption date. CapitalizedlnterestAccount. Amounts deposited to the Capitalized Interest Account shall be used to make transfers, on the fifth Business Day prior to each Payment Date, to the FixedBond Payment Account or the Variable Bond Payment Account, as directed by an Authorized Authority Representative. Fixed Bond Payment Account. Amounts deposited to the Fixed Bond Payment Account shall be used by the Trustee to make payments of principal of and interest and any redemption premium on the Fixed Rate Bonds as such amounts become due and payable in accordance with the terma of the Fixed Rate Bonds and the Indenture. In the event that, as of any Payment Date, amounts in the Fixed Bond Payment Account are insufficient for purposes of the preceding sentence, the Trustee shall make a draw upon the Post- Conversion Reserve Fund in the amount of the insufficiency. If, following the transfer of:my amounts on deposit in the Post-Conversion Reserve Fund, there is still deficiency in amounts available to pay the amounts due on the Fixed Rate Bonds, the Trustee shall use the available amounts first, to pay interest due on the Fixed Rate Bonds, second, to pay principal due on any Fixed Rate Bonds at the respective maturity thereof, and third, to pay principal due on the Fixed Rate Bonds by reason of mandatory sinking account payments. Amounts due but unpaid on the Fixed Rate Bonds (including principal or sinking fund payments) shall bear interest at the rate of interest on the applicable Fixed Rate Bond to which they pertain. Investment. Moneys in the accounts within the Bond Fund shall be invested and deposited in accordance with the provisions of the Indenture relating to Investment of Moneys. See "APPENDIX E - Summary of Indenture." Pre-Conversion Reserve Fund In order to further secure the payment of principal of and intereston the 2002 Series A Bonds, certaha proceeds of the 2002 Series A Bonds will be deposited into the Pre-Conversion Reserve Fund in an amount equal to the Pre-ConversionReserve Requirement(see "ESTIMATED SOURCES AND USES OF FUNDS" herein). Pre-Conversion Resawe Requirement is defined in the Indenture to mean, (a) as of the date of issuance of the 2002 Series A Bonds, $. [estimated maximum annual debt service on eventual Fixed Rate Bonds at 6.50% and based on estimated conversion schedule]; (b) following each Conversion Date, the amount described in the preceding clause (a) less an amount equal to the maxinmm annual debt service on the Fixed Rate Bonds so converted from Variable Rate B~nds on such Conversion Date; and (c) on the Final Conversion Date, $0.00. Transfers Related to Special Tax Prepayments. Whenever Special Taxes are prepaid and Variable Rate Bonds are to be redeemedwith the proceeds of such prepayment, and only if the amount then on deposit in the Pre-Conversion Reserve Fund is then at least equal to the Post-Conversion Reserve Requirement, a 25 proportionate amount in the Pre-Conversion Reserve Fund (determined on the basis of the principal of Variable Rate Bonds to be redeemed, andthe then Outstanding principal of the Variable Rate Bonds) shall be transferred on the Business Day prior to the redemption date by the Trustee to the Special Tax Prepayments Redemption Account to be applied to the redemption of the Variable Rate Bonds. Transfers to Post-Conversion Reserve Fund. On each Conversion Date, the Trustee shall transfer from the Pre-Conversion Reserve Fund to the Post-Conversion Reserve Fund an amount necessary to increase the amount then on deposit in the Post-Conversion Reserve Fund to the Post-Conversion Reserve Requirement in effect immediately following such Conversion Date; provided that any such transfer shall not exceed an amount equal to the amount deposited tothe Pre-Conversion Reserve Fund onthe ClosingDate pursuant to the Indenture multiplied by a fraction the numerator of which is the principal amount of the Bonds being converted to Fixed Rate Bonds on such Conversion Date and the denominator of which is the initial principal amount of the Bonds issuedon the Closing Date. lfthe amount then on deposit in the Pre- Conversion Reserve Fund is insufficient to fully fund the Post-Conversion Reserve Requirement due to a lack of moneys in such fund or the limitation of the proviso in the preceding sentence, the Trustee shall make a withdrawal from the Conversion ExpensesFund in the amount of such insufficiency, andtransfer the amount so withdrawn to the Post-Conversion Reserve Fund. Final Conversion Date Transfers. On the Final Conversion Date and following any transfer in respect of such date described above, the Trustee shall transfer any remaining amountin the Pre-Conversion Reserve Fund first, to the Variable Bond Payment Account to cure any deficiency in such account, and if there are any amounts remaining after such transfer, to the Annual Levy Account to be used for purposes of such account. Draws to Pay Yield Reduction Payments. The Trustee shall withdraw amounts in the Pre- Conversion Reserve Fund upon receipt of a Certificate of the Authority which specifies the amount to be withdrawn, the place where the funds are to be remitted, and that the withdrawal is for purposes of making yield reduction payments pursuant to the Indenture. Investment of Pre-Conversion Reserve Fund. Moneys in the Pre-Conversion Reserve Fund will be invested and deposited as describ ed in "Investment of Moneys in Funds" below. See "APPENDIX E - Summary of Indenture" for a description of the timing, purpose and rmnner of disbursements from the Pre-Conversion Reserve Fund. Interest Differential Fund In order to further secure the payment of principal of and interest on the Variable Rate Bonds, certain proceeds of the 2002 Series A Bonds wilt be deposited into the Interest Differential Fund in an amount equal to the Interest Differential Fund Requirement (see "ESTIMATED SOURCES AND USES OF FUNDS" herein), lntemst Differential Fund Requirement is defined in the Indenture to mean as of any date, an amount equal to the principal amount of any Variable Rate Bonds then Outstanding multiplied by 0.75%. As ofthe Closing Date, the Interest Differential Fund Requirement is $ Prior to each Payment Date, the Trustee shall withdraw from the Interest Differential Fund and transfer to the Variable Bond Payment Account an amount equal to the difference, if any, between the amount then on deposit in the Variable Bond Payment Account and the interest due on the Variable Rate Bonds on the next Payment Date. On the Final Conversion Date, following any transfers on such date pursuant to the Indenture, the Trustee shall withdraw all amounts then un deposit in the Interest Differential Fund and shall use the amounts so withdrawn as provided in the Indenture. 26 Administrative Expense Fund The Trustee will receive the transfer of Special Taxes from the District from the Special Tax Fund and deposit in the Administrative Expense Fund an amount to pay Administrative Expenses. Pursuant to the Indenture, moneys in the Administrative Expense Fund will not be construed as a trust fund held for the benefit of the Bondowners and will not be available for the payment ofdebt service on the 2002 Series A Bonds. Investment of Moneys in Funds Moneys in any fund or account created or established by the Indenture and held by the Trustee will be invested by the Trustee in Investment Securities, as directed by an Authorized Officer, that mature prior to the date on which such mone3~ are required to be paid out under the Indenture. In the absence of any direction from an Authorized Officer, the Trustee will invest, to the extent reasonablypmcticable, any such moneys in money market funds rated "AAAM-G," "AAAM" or "AAm" by S&P, or better (including those for which the Trustee or its affiliates or its subsidiaries provide investment, advisory or other services). See "APPENDIX E - Summary of Indenture" for a definition of"Investment Securities." Rebate Requirement The District is required to calculate excess investmem earnings ("Excess Investment Earnings") in accordance with the requirements set forth in the Indenture. The District shall calculate Excess Investrmnt Earnings and if necessary may use amounts in the Administrative Expense Fund and in the Post [Pre]- Conversion Reserve Fund, and any other funds available to the District (except amounts required to pay debt service on the 2002 Series A Bonds, and any amounts in the Letter of Credit Fund), including amounts advanced by the Authority, in its sole discretion, to be repaid by the District as soon as practicable from amounts described in the preceding clause, to satisfy its obligations under Section 148(f) of the Code. Additional Bonds for Conversions Costs or for Refunding Purposes Only Bonds issued on a parity with the 2002 Series A Bonds ("Parity Bonds") may only be issued for conversion costs and an amount necessary to increase the Post-Conversion Reserve to the Post-Conversion Reserve Requirement following issuance of such Parity Bonds (not in excess of [$1,000,000]) or for refunding purposes and subject to specific conditions thcluding that the District nmst be in compliance with all covenants set forth in the Indenture and any Supplement then in effect and a certificate of the District to that effect will be filed with the Trustee; provided, however, that Refuading Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Refunding Bonds the District will be in compliance with all such covenarts. THE LETTER OF CREDIT AND THE CREDIT AGREEMENT The Letter of Credit. The Trustee is directed under the Indenture to draw on the Letter of Credit amounts sufficient to pay the principal of and interest on the Vari able Rate Bonds as the same shall become due, and the pumhase price of any Variable Rate Brads tendered by the owners thereof to the Trustee, as initial Tender Agent, and not remarketed. Leunar Corporation has caused Bank of America to issue the Letter o f Credit pursuant to Lennar Corporation's Credit Agreement. The Letter of Credit whichwill permit the Trustee to draw thereon in an amount equal to the aggregate principal amount of the Variable Rate Bonds, plus an amount equal to the interest on such principal amount for a period of 37 days at an assumed rate of 12% per annum. The initial Letter of Credit will expire on August 1, 2003, unless extended. See "APPENDIX C - Form of Letter of Credit." The Credit Agreement. The terms of the Letter of Credit and the obligations of Lennar Corporation with respect thereto are set forth in the Credit Agreement. Pursuant to the Credit Agreement, Lennar Corporation has agreed to reimburse the Credit Bank for the full amount of each drawing under the Letter of Credit, plus interest thereon. The obligations of Lennar Corporation under the Credit Agreement are 27 unsecured. The Credit Agreemem includes certain financial covenants by Leunar Corporation (including covenants to maintain a minimum fixed charge coverage ratio, a maximum leverage ratio and a minimum tangible net worth and a covenant against occurrence of a Material Adverse Effect, as defined below). Failure by Leunar Corporation to comply with these financial covenants can cause an Event of Default under the Credit Agreement. Upon the occurrence of an evem of default under the Credit Agreement, the Credit Bank may bring an action for payment, and otherwise seekappropriate remedies for nonpayment against Lennar Corporation. Under the Credit Agreement, the Credit Bank is also authorized, upon the occurrence of such an event of default, to make payments or take actions to effect cure on behalfofLelmar Corporation and to demand that Lennar Corporation deposit cash collateral with the Credit Bank in an amount equal to any amounts then available to be drawn under the Letter of Credit. Under the Indenture, the Credit Bank may also give notice to the Trustee of the occurrence of an Event of Default under the Credit Agreement, together with a direction from the Credit Bank to cause a redemption of the Variable Rate Bonds in whole pursuant to the Indenture, which redemption shall occur ninety (90) days after the date of delivery of such notice by the Credit Bank. Each of the following constitutes an "Evmt of Default" under the Credit Agreement (capitalized terms used in the subsection below and not otherwise defined therein have the meanings given to them in the Credit Agreement): (a) any representation or warranty made or deemed made by or on behalf of any Loan Party to the lenders (the "lenders") under the Credit Agreement, the issuer of any letter of credit (including the Credit Bank with respect to the Letter of Credit), the BankOne as the Swing Line Bank (or any of its successors) orthe Administrative Agent trader or in connection with the Credit Agreement or any loan document (the "Loan Documents) entered into in connection with the Credit Agreement shall be false or misleading in any material respect when made; (b) any report, certificate, financial statement or other document or instrument furnished kt connection with the Credit Agreement or the Loans thereunder shall be false or misleading in any material respect when furnished; (c) default shall be made in the payment of (i) the principal of any of the notes (the "Notes") entered into in connection with the Credit Agreement when and as due and payable, or (ii) the interest on any of the Notes, any fees or any other sums due pursuant to the Credit Agreement, which default continues for five days after the same becomes due and payable; (d) default shall be made with respect to any Indebtedness or Contingent Obligations of any Loan Party (other than the Indebtedness evidenced by the Notes, Non-Recourse Indebtedness and Indebtedness of a Loan Party to another Loan Party (as such terms are defined in the Credit Agreement), beyond any applicable period of grace, or default shall be made with respect to the performance of any other obligation or incurred in connection with any such Indebtedness or liabilities beyond any applicable period of grace, or default shall be made with respect to any other liability of $5,000,000 or more, if the effect of any such default is to accelerate the maturity of such Indebtedness or liability or to cause any other liability to become due prior to its stated maturity, or any such Indebtedness or liability shall not be paid when due and such default shall not have been remedied or cured by such Loan Party or waived by the obligor; (e) default shall be made in the due observance or performance of any of the provisions of the Credit Agreement or any other covenant, agreement or condition on the part of any Loan Party to be performed under or in connection with the Credit Agreement or any Loan Document, and such default shall have continued for a period of thirty (30) days after the occurrence thereof; (f) any Loan Party shall (i) petition or apply for, seek, consent to, or acquiesce in, the appointment of a receiver, trustee, examiner, custodian, liquidator or similar official of such 28 (g) (h) (i) (J) Loan Party or any of its properties or assets, (ii) be unable, or admit in writing its inability, to pay its debts as they mature, (iii) n~ke a general assignment for the benefit of or a composition with its creditors, (iv) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (v) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect, or file a petition or an answer seeking dissolution, windingup, liquidation or reorganization or an arrangement with creditors or a composition of its debts or to take advantage of any bankruptcy, reorganization, insolvency, readjnstmentofdebts, dissolution or liquidation law or statute or other statute or law for the relief of debtors, or file any answer admitting the material allegations of a petition filed against it in any proceeding under mcr law, or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, or if corporate or other action shall be taken by such Loan Party for the purpose of effecting any of the foregoing, or (vi) fail to contest in good faith any appointment or proceeding described in the Credit Agreement; an order, judgment, or decree shall be entered without the application, approval, or consent of any Loan Party by any court of competent jurisdiction appointing a receiver, trustee or liquidator of any LoanParty or aproceeding described in clause (f) above shall be instituted against the any Loan Party, and such appointment shall continue undischarged or such proceeding continues undismissed or umtayed for arey period of 45 days; final judgment for the payment of money in excess of an aggregate of $5,000,000 shall be rendered against the any Loan Party and the same shall remain undischarged or not appealed for a period of 30 days during which execution shall not be effectively stayed; there shall occur any Event or Events which, individually or in the aggregate, shall be deemed by the Required Lenders to have had a Material Adverse Effect; any Loan Party shall be the subject of any proceeding or investigation pertaining to the release by any Loan Party, any of its Subsidiaries or any other Person of any Hazardous Substance into the environment, or any violation of any Environmental Law or any federal, state or local health or safety law or regulation, which, in either case, could reasonably be expected to have a Material Adverse Effect; or there shall occur any Change in Control of Lennar Corporation. If any Event of Default described in Section (f) or (g) above occurs with respect to the Borrower, the obligations of the Lenders to make Loans, the S wing Line Bank to make Swing Line Loans and the Issuer to issue Facility Letters of Credit hereunder shall autormtically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Administrative Agent or any Lender. If any other Event of Defanlt occurs and is continuing, the Administrative Agent may, and upon written direction of the Required Lenders shall, terminate or suspend the obligations of the Lenders to make Loans, the Swing Line Bank to make Swing Line Loans and the Issuer to issue Facility Letters of Credit hereunder, ordeclare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives THE CREDIT BANK The following information concerning the Crea~t Bank has been provided by representatives of the Credit Bank and has not been independently confirmed or verified by the Underwriter, the Authority, Lennar or Winchester. No representation is made herein as to the accuracy or adequacy of such informat~'on or as to the absence of material adverse changes in such information subsequent to the date hereof or that information given below or incorporated herein by reference is correct as of any time subsequent to its date. 29 The Credit Bank did not provide and does not assume responsibility for the completeness, accuracy or adequacy of the information in this Off'~cial Statement other than information contained underthis caption "THE CREDIT BANK" and under the caption "SECURITY FOR THE 2002 SERIES A BONDS- The Letter of Credit and Credit ~4greement. " [THIS SECTION MUST BE UPDATED BY BANK OF AMERICA] Bank of America, N.A. (the "Credit Bank"), is a national banking association organized under the laws of the United States of America, and its principal executive offices are located in Charlotte, North Carolina. The Credit Bank is a wholly owned indirect subsidiary of Bank of America Corporation and is engaged in general consumer banking, commercial banking and trust business, offering a wide range of commercial, corporate, international, financial market, retail and fiduci~xy banking services. As of [March 31, 2002], the Credit Bank had consolidated assets of $ billion, consolidated deposits of $ billion and steckholder's equity of $ billion based on regulatory accounting principles. Bank of America Corporation is a bank holding company registered under the Bank Holding Company Act of 1956, as amended, with its principal executive offices located in Charlotte, North Carolina. Additional information regarding Bank of American Corporation is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, [2001], together with any subsequent documents it filed with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Letter of Credit has been issued by the Credit Bank. Moody's Investors Service, Inc. ("Moody's") currently rates the Credit Bank's long-term certificates of deposit as "Aal" and short-term certificates of deposit as "P-1 ." Standard & Poor's Rating Services ("Standard & Poc~'s") rates the Credit Bank's long-term certificates of deposit as "AA-" and its short-term certificates of deposit as "A-I +." Fitch IBCA, Inc. ("Fitch") rates long-term certificates of deposit of the Credit Bank as "AA" and short-term certificates of deposit as "Fl+." Further information with respect to such ratings may be Ootained from Moody's, Standard & Poor's and Fitch, respectively. No assurances can be given that the current ratings of the Credit Bank's instruments will be maintained. The Credit Bank will provide copies of the most recent Bank of America Corporation Annual Report on Form 10-K, any sul~equent reports on Form 10-Q, and any required reports on Form 8-K (in each case as filed with the Commission pursuant to the Exchange Act), and the most recent publicly available portions of the quarterly Call Reports of the Credit Bank delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person. Written requests should be directed to: Bank of America Corporate Communications 100 North Tryon Street, 18~h Floor Charlotte, North Carolina 28255 Attention: Corporate Communications PAYMENTS OF PRINCIPAL AND INTEREST ON THE 2002 SERIES A BONDS BEARING INTEREST AT A VARIABLE RATE ARE EXPECTED TO BE MADE FROM DRAWINGS UNDER THE LETTER OF CREDIT. PAYMENTS OF THE PURCHASE PRICE OF THE VARIABLE RATE 2002 SERIES A BONDS ARE EXPECTED TO BE MADE FROM DRAWINGS UNDER THE LETTER OF CREDIT 1F REMARKETING PROCEEDS ARE NOT AVAILABLE. ALTHOUGH THE LETTER OF CREDIT IS A BINDING OBLIGATION OF THE CREDIT BANK, THE 2002 SERIES A BONDS ARE NOT DEPOSITS OR OBLIGATIONS OF BANK OF AMERICA CORPORATION OR ANY OF 1TS AFFILIATED BANKS AND ARE NOT GUARANTEED BY ANY OF THESE ENTITIES. THE 2002 SERIES A BONDS ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY AND ARE SUBJECT TO CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. The information contained herein relates to and has been obtained from the Credit Bank. The information concerning Bank of America Corporation and the Credit Bank contained herein is furnished solely to provide limited introductory information regarding Bank of America Corporation and the Credit 30 Bank and does not purport to be comprehensive. Such information is qualified in its entiretyby the detailed information appearing in the docunents and financial statements reference above. The delivery hereof shall not create any implication that there has been no change in the affairs of Bank of America Corporation or the Credit Bank since the date hereof, or that the information contained or referred to herein is correct as of any time subsequent to its date. THE AUTHORITY The Temecula Financing Authority was established pursuant to a Joint Exerc/se of Powers Agreement, dated April 10, 2001 (the "Joktt Powers Agreement"), by and between the City and the Redevelopment Agencyofthe City of Temecula. The Joint Powers Agreement was entered into pursuant to the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California. The Authority was formed for the primary purpose of assisting in the fmancin g and ref'mancing of public capital improvemen ts in the City. The Authority is administeredby a five-member Board of Directors, which currently consists of the members of the City Council of the City. The Authority has no independent staff. The Executive Director of the Authority is the City Manager of the City, and the Treasurer of the Authority is the Finance Director. The Executive Director administers the day-to-day affairs of the Authority, and the Treasurer has custody of all money of the Authority from whatever source. Authority for Issuance The 2002 Series A Bonds are issued pursuant to the Act and the Indenture. In addition, as required by the Act, the Authority has taken the following actions with respect to establishing the District and authorizing issuance of the 2002 Series A Bonds: Resolutions of Intention: On December 4, 2001, the Board of Directors of the Authority adopted Resolution No. . stating its intention to establish the District and to authorize the levy of a special tax therein, and-~n t~he same day the Authority adopted Resolution No.. stating its intention to incur bonded indebtedness in an amount not to exceed $25,000,000 within the District for the purpose of financing the Improvements and refunding of the 1998 Winchester Hills Bonds. See "PLAN OF FINANCE; iMPROVEMENTS TO BE FINANCED WITH PROCEEDS OF THE 2002 SERIES A BONDS" herein. Resolution of Formation: Immediately following the conclusion of the noticed public hearing on March 26, 2002, the Authority adopted Resolution No. . (the "Resolution of Formation"), which established the District and authorized the levy ol~h special tax within the District. Resolution of Necessity.. On March 26, 2002 the Authority adopted Resolution No. declaring the necessity to incur bonded indebtedness in an amount not to exceed $25,000,000 within the District and submitting that proposition to the qualified electors of the District. Resolution Calling Election: On March 26, 2002, the Authority adopted Resolution No. · calling an election by the landowners for the same date on the issues of the levy of the Spdcial Tax, the incurring of bonded indebtedness and the establishment of an appropriations limit. Landowner Election and Declaration of Results: On March 26, 2002, an election was held within the District in which the two landowners eligible to vote, being the qualified electors within the District, unanimously waived all time limits for holding the election and ballot arguments, and approved a ballot proposition authorizing the issuance of up to $25,000,000 in bonds to refund the 1998 Winchester Hills Bonds, the acquisition and construction of the Improvements, the levy of a 31 special tax and the establishment of an appropriations limit for the District. On March 26, 2002, the Authority adopted Resolution No. . , pursuant to which the Authority approved the canvass of the votes and declared the District t~ be fi~lly formed with the authority to levy the Special Taxes, to incur the bonded indebtedness and to have the established appropriations limit. Special Tax Lien and Levy: A Notice of Special Tax Lien was recorded in the real property records of Riverside County on ,2002 as Document No. Ordinance Levying Special Taxes: On April 9, 2002, the Authority adopted an ordinance levying the Special Tax within the District. Resolution Authorizing Issuance of the 2002 Series A Bonds: On August 13, 2002 the Authority adopted Resolution No. ~. approving issuance of the 2002 Series A Bonds. THE COMMUNITY FACILITIES DISTRICT Location and Description of the District The District consists of unimproved land located in the northern portion of the City. The District is bounded generally on the west by Interstate 15, on the north by the boundary line with the City of Murrieta, on the east by Margarita Road and by Winchester Hills Road on the south. The property within the District is governed by the Harvestnn Specific Plan. Harveston, LLC and Winchester currently own all of the property in the District and are planning it for development with a mixture of residmtial, school, park, open space and commercial/industrial uses (collectively, the "Project"). See "THE COMMUNITY FACILITIES DISTRICT- Lennar, Harveston, LLC and Winchester" and "- The Development Plan" herein. General Information The property within the District is comprised of approximately 510 gross acres, approximately 398 of which are owned by Harveston, LLC (the "Harveston, LLC Property") and approximately 112 of which are owned by Winchester (the "Winchester Property"). Lennar purchased the Harveston, LLC Property from Winchester on July 1, 1998, pursuant to a Purchase Agreement and Escrow Instructions dated June 3, 1998 (the "Purchase Agreement") between Lennar and Winchester. Pursuant to the Agreement and Covenants, Lennar applied for and processed applications for the Harveston Specific Plan approval encompassing both the Winchester Property and the Harveston LLC Property, and submitted an application for approval of a specific plan covering the Harveston LLC Properly and the Winchester Property. [The Agreement and Convenants have been assigned to Harveston, LLC as successor to Lennar.] Specific Plan The Specific Plan was adoptedin August 2001. The Specific Plan serves as a planning guide to implement the intent of the City's General Plan. The Specific Plandevelopment concept includes a centrally located lake/park complex. Uses such as recreation, education and residential dwellings will be provided adjacent to or within a Village Center whichis proposed to iuclude a variety of uses such as retail, restaurant, office, daycare, worship and a private club facility and fitness center. Environmental Conditions Environmentallmpact Report. In connection with the Specific Plan approval and pursuant to the Agreement and Covenants, Lennar was responsible for the application and processing of an environmental impact report (the "EIR") for both the Harveston, LLC Property and the Winchester Property. The EIR was approved in August 2001. 32 Biological Resources. Based upon the biological studies performed for the site, the property within the District does not include significant onsite biological resources. The Harveston Specific Plan proposes an arroyo park, which will include the creation of a riparian habitat to be developed consistent with the mitigation requirement of the U.S. Army Corps and State Department of Fish and Game. Wetlands Mitigation. The Project involves the construction of a culvert andthe fill of approximately 2.89 acres of non-wetland waters of the U.S. tributary to Santa Gertrudis Creek. The Corps of Engineers has jurisdiction over developments in or affecting the navigable waters of the United States pursuant to the Rivers and Harbors Act and the Clean Water Act. On June 30, 1999, the Corps of Engineers determined that the activity complied with the terms and conditions of the nationwide permit issued under Section404 of the Clean Water Act, provided that the activity met the criteria in the permit terms and conditions. The culvert and fill was completed in February 2002 and facilities were certified in February 2002. StreambedAlteration Agreement. Lennar filed arequest for a Section 1603 StreambedAlteration Agreement with the California Department ofFish and Game ("CDFG"). The CDFG and Lennar entered into an Agreement Regarding Proposed Stream or Lake Alteration in April 1999. The Agreement provides for the filling of approximately 6,000 feet of two channds and a culvert crossing over a third channel. Mitigation consists of establishing an over-story riparian area of approximately eight acres along one channel. The Agreement terminates September 2, 2002 for project construction only and remains in effect for that time necessary to satisfy the terms/condition of the Agreement. Harveston, LLC, as successor to Lennar, anticipates completion of construction in accordance with the terms of the Agreement, subject to extensions. National Pollution Discharge Elimination System Permit and Storm Water Pollution Prevention Plan. Pursuant to the Federal Clean Water Act (Section 402(g)) and State General Construction Activity Storm Water Permit, a National Pollution Discharge Elimination System (NPDES) permit and storm water pollution prevention plan was requited from the California Regional Water Quality Control Board for grading and construction of areas greater than five acres. Lennar had a revised Storm Water Pollution Prevention Plan prepared for the Project in conformance with the California NPDES General Permit No. CAS000002 for Storm Water Discharges Associatedwith Construction Activity (Constructien Permit.). The permit and storm water pollution prevention plan were approved by the Regional Water Quality Control Board in October 2001. Toxic materials are not known to have been treated, stored, disposed, spilled or leaked in significant quantities onto the Project site and no contaminated soilswem found on the site. Prior to rough grading, the land was maintained as private vacant open space and free range gra~ing. The property was vacant fo r some time before being acquired by Lennar. No significant spills or disposals of gasoline or diesel fuel are known to have occurred. Additional Approvals. Additional discretionary approval is needed for development in the District as contemplated by the E1R that would require additional environmental review by the City under the California Environmental Quality Act. Development Agreement Lennar, Winchester and the City entered into a development agreement (the "Development Agreement"), recorded January 16, 2002 as Instrument No. 20024)26470, regarding the Project. Harveston, LLC is the successor to Lennar as owner and developer of property in the [District]. For purposes of the Development Agreement, the proposed development includes the improvement of the Proj eot sites fa' the purposes of construction and otherwise effecting the structure, improvements and facilities comprising the Project, including but not limited to grading, the construction of infrastructure and public facilities related to the Project (whether located within or outside the Specific Plan area), the construction of structures and buildings and the install ation of land scaping. Pursuant to the terms of the Development Agreen~nt, Harveston, LLC and Winchester have the right to develop the Project in any manner consistent with the City's approved Specific Plan, and applicable rules, regulations and official policies. The Project infrastructure is expected to be completed in 2006 with final 33 sales to homeowners in 2008, but as long as the project is cons~'ucted in a manner consistent with the City' s existing land use ordinances, the Project may be constructed at the rate and in the sequence that Harveston, LLC and Winchester deem appropriate. The City has agreed that Harveston, LLC and Winches ter shall have the right to develop the property in such order and at such rate and at such time as Harveston, LLC and Winchester deem appropriate within the exercise of its subjective business judgment, subject only to any timing or phasing requirements set forth in the developmmt plan or the phasing plan as set forth in the Development Agreement. By entering into the Development Agreement, Harveston, LLC and Winchester obtained a vested right to proceed with the project in accordance with the Specific Plan. However, development remains subject to any remaining discretionary approvals required in order to complete the Project as contemplated by the Specific Plan. Termination of the Development Agreement by one party due to the default of another pa~y will not affect a right or duty erranating from City entitlermnts or approvals on the Project. The Development Agreement was approved and entered into pursuant to California Government Code Section 65864, et seq. (the "Development Agreement Law"). The Development Agreement Law provides that a developer can obtain a vestedright to develop its real property pursuant to a validly executed development agreement. One appellate case in California, Santa Margarita Residents v. San Luis Obispo County Bd. of Supervisors, has held that development agreements are enfomeable under the Development Agreement Law. However, the development agreement in that case did not address vested right to build the development as currently planned. If the Development Agreement were to be challenged in court, there can be no assurances that such court would enforce the Development Agreement if the City fails to fulfill its obligations under the Development Ageement or if by the terms of the Development Agreement impose additional conditions on the Development. See "BONDOWNERS' RISKS - Failure to Develop Properties" and" - Ballot Initiatives and Legislative Measures" herein. Covenants, Conditions and Restrictions. All of the parcels in the District are subject to recorded covenants, conditions and restrictions that provide for a levy of homeowners' association assessments, on a basis subordinate to the lien of the Special Taxes. Settlement of Litigation Regarding Development In September 2001, a referendumpetition opposing Temecula Ordinance No. 01-08 approving the Development Agreement was submitted by a res/dent to the City for determination of whether it had been signed by the requisite number of Temecula registered '~oters. On October 10, 2001, the Temecula City Clerk submitted the referendum petitions to the Registrar of Voters of the County of Riverside for verification of the signatures on the petitions. On October 15,2001, the City filed an action for declaratory relief naming Lennar and the author of the petition seeking to have the court declare whether the referendum petitions were valid. On December 21, 2001, the City rejected the petitions as invalid and dismissed ils lawsuit. In February 2002, Lennar entered irlo a Settlement Agreement whereby the resident removed his previous opposition to the Harveston Project and agreed not to file a lawsuit or otherwise challenge in court or before any government agency with jurisdiction over the Harveston Project, any of the current or future entitlements vested by the Development Agreement or provided for in Ordinance No. 01-08, including, but not limited to, any effort to challenge the City's rejection of the referendum petition. In return, Lennar agreed to enter into good faith negotiations with the City to voluntarily donate an additional three acres of parkland. In addition, Lennar agreed to donate up to an additional $150,000 to the City at the time of the donation of parkland for the purpose of improving the community park and to pay to the resident an amount representing general darmges sustained by him as a result of being named as the defendant in the declaratory relief action filed by the City. Harveston, LLC has assumed the obligation to donate $150,000 to the City at the time of donation of the parklmd. Acquisition of Improvements 34 The Authority and Harveston, LLC have entered into an Acquisition Agreement (the "Acquisition Agreement") dated as of August 1, 2002. Under the terms of the Acquisition Agreement, the Authority will acquire the Improvemmts from Harveston, LLC upon completion of various discrete components of infrastructure and inspection thereof by the City. The Acquisition Agreement provides that the infrastructta'e will be acquired for an amount based upon the documented Actual Cost (as defined in the Acquisition Agreement) thereof or for such other amount as may be agreed upon by Harveston, LLC and the Authority. Property Ownership The information about Harveston, LLC, Lennar and V~tnchester contained in this Official Statement has been provided by representatives of Harveston, LLC, Lennar and Winchester and has not been independently confirmed or verified by either the Underwriter, the District or the Authority. Such information is included because it may be relevant to an informed evaluation of the security for the 2002 Series A Bonds. However, because ownership of the property may change at any time, no assurance can be given that the planned development will occur at all, will occur in a timely manner orwill occur as presently anticipated and described below or that either Harveston, LLC or Winchester will continue to own the Property at all. No representation is madeherein as to the accuracy or adequacy of such information, as to the experience, abilities or financial resources of Harveston, LLC, or Winchester or any other landowner, or as to the absence of material adverse changes in such information subsequent to the date hereof, or that the information given below orincorporated herein by reference is correct as of any time subsequent to its date. Harveston, LLC and Winchester are not personally liable for payment of the Special Taxes or the 2002 Series A Bonds, and the following information should not be construed to suggest that the Special Taxes or the 2002 Series A Bonds arepersonalobligations or indebtedness ofHarveston, LLC or Winchester or that Harveston, LLC or Winchester will continue to own the Property. Lennar, Harveston, LLC, and Winchester Lennar. Lennar Homes of California, lnc. ("Lennar") is a California corporation based in Mission Viejo, California, that has been in the business of developing msidentialreal estate communities in California since 1995. Lennar is a wholly owned subsidiary of Lennar Corporation, aDelaware corporation ("Lennar Corporation"), with headquarters in Miami, Florida. Lennar Corporatim, founded in 1954 and publicly traded under the symbol "LEN" since 1971, is one of the nation's largest home builders, operating under a number of brand names, including Letmar Homes, U.S Home, and Greystone Homes in Southern California. At November 30, 2001 (Lea'mar Corporation's fiscal year-end) Lennar Corporation employed over 7,700 individuals, of whom approximately4,700 were involved in homebuilding and land development operations, and owned approximately 55,000 homesites and had access to an additional 73,000 homesites through options or unconsolidated partnerships. Lennar has been involved in the acquisition and development of residential real estate projects in Southern California since 1995. Representative master plamed communities include: (i) Coto de Caza, an approximately 2,000 home development in South Orange County acquired in March of 1996 and substantially sold out, (ii) Stevenson Ranch, consi sting of approximately 5,700 homes at build out in Ventura County, California, (iii) Bressi Ranch, an approximately 500 acre mixed use community in Carlsbad, Califomiawhich recently obtained entitlement approvals, (iv) Greer Ranch, an approximately 674 home gate- guarded community in Murrietta, California, scheduled for a September, 2002 grand opening, and (v) The Bridges at Rancho Sanla Fe, an exclusive, gated residential enclave located in San Diego, California, consisting of approxinmtely 274 custom homesites and semi-custom homes in a private golf course setting. Harveston, LLC. Lennar develops residential conanunities both within the Leunar familyofbuilders and through consolidated and unconsolidated l~rtnerships in which Lennar maintains an interest. In June, 2002, Lennar sold the Harveston conanunity to Harveston, LLC ("Harveston, LLC"), a Delaware limited liability company in which Lermar maintains a 25% ownership interest, together with LBREP Harveston Holdings, LLC, a real estate company owned and operated by Lehrpan Brothers Real Estate Partners, LP ("LBREP Holdings"). The limited liability companywas initially capitalizedwith total capital contributions of $52,200,000. All major decisions are made by representatives of Lennar and LBREP Holdings, with equal 35 representation. Lennar acts as the Administrative MemberofHarveston, LLC and is responsible for the day to day management of the affairs o f the company. Lehman Brothers Lehman Brothers is a global investment bank serving the financial needs of corporations, institutions, governments and high net worth investors worldwide. Lehman Brothers actively participates in the global capital markets through a closely integrated network of offices anchored by a worldwide headquarters in New York and regional headquarters in London and Tok~o. The company operates in three segments: Investment Banking, Capital Markets and Client Services. Private equity investment activities represent an active and important component of LehmanBrothers worldwide business strategy. Lehrmn Brothers focuses its private equity activity in asset classes where it perceives a significant investment opportunity and where it possesses strong capabilities, proprietary deal flow and an excellent reputation. Lehman Brothers Real Estate Partners is a global real estate merchant banking fund formedto make equity investments in properties, real estate companies and service businesses ancillary to the real estate industry, primarily in North America and Western and Central Europe. The fund is Lehman Brothers' primary real estate investment vehicle, with capital commitments in excess of $1.6 billion. Winchester. Winchester is a California limited liability company based in San Marcos, California. Winchester originally acquired all of the property in the District in July, 1995 from Palomar Triad, Inc. an entity of Kemper Real Estate Mamgement Company. Pursuant to the Purchase and Sale Agreement, Winchester has retained the approximately 120 acres of property within the District comprising the Winchester Property for development with commercial and business ~rk uses. The managing member of Winchester is Mr. Stephen A. Bieri. Mr. Bieri has been involved in the real estate industry full time since 1979, and has owned and operate d The Stephen A. Bieri Compa.ny, Inc., since September of 1983, which has been involved in the business of investing in, processing, managing, and developing land, as well as owning apartments, office, and industrialbuildings. One of Mr. Bieri's projects is the acquisition, with a paxlner, of 959.9 acres of land known as "Rancho Coronado" in the center of the City of San Marcos. Mr. Bieri was previously in charge of the processing of all of the land use entitlements for the project, and upon completion of that process Mr. Bieri assumed responsibility for the sale of the land within the project. Other transfers include (i) the sale of 305 acres tothe State of California,which property is now the site of California State University-San Marcos and (ii) sales to Kaiser Hospitals, Palomar/Pomerado Health Systems, Bridge Housing (for a 164 unit affordable housing project) and Ashbrook Homes (433 single family lots). In addition, in __, Mr. Bieri processed a general plan amendment for a 60-acre project located in San Marcos, Califumia, which amendment will change the land use from single family detached to commercial/industrial. Once the necessary approvals are received later this year, Mr. Bieri will be responsible for rmrketing the land to users. The Development Plan General. On July 1, 1998, Lennox and Winchester entered into the Agreement and Covenmts, as amended June 29, 2001, which sets forth the rights and obligations of such parties with respect to the development of the property in the District. The Agreement and Covenants was recorded in the Official Records of the County of Riverside, California on July 1, 1998 and the amendment recorded June 29, 2001. Pursuant to the Agre~nent and Covenants, Harveston, LLC will undertake the initial development responsibilities with respect to the Harveston, LLC Property and the Winchester Property. These responsibilities include the application for and processing of a specific plan (completed by Lennox in August 2001 ) and tentative maps for the development of the Harveston, LLC Property and the Winchester Property, the grading and constructing of certain streets and utilities required for further development of the Hurveston, LLC Property and the Winchester Property, and the sheet grading of the Winchester Property. The development work contemplated by the Agreement and Covenants commenced in February 2002 and will be substantially completed by mid-2006. It is anticipated that Harveston, LLC andWinchester will continue to develop the Harveston, LLC Property and the Winchester Property, respectively, in accordance with the development plans described below. 36 Harveston, LLC Property. Of the approximately 398 gross acres comprising the Harveston, LLC Property, approximately [286] acres are currently planned for development with residential uses (the "Residential Property"), approximately 12 acres are a school site which opened in September 2001 (the "School Property"), approximately 35 acres are planned for parks and open space (the "Park/Open Space Property"), and approximately 65 acres are planned for road and other miscellaneous uses (the "Infrastmctta'e Property"). Harveston, LLC's plan of development for each of the planned uses for the Harveston, LLC Property is described below. Residential Property In accordance with the Specific Plan, Harveston, LLC would be allowed to constmct up to 1,946 housing units on the Residential Property. The cuncent plan of development for the Residential Properly, however, contemplates approximalely 1,921 housing units comprised of approximately 1,621 single family dwellings and approximately 300 apartment traits. Harveston, LLC anticipates that the developnent of the Residential Property will proceed in four phases over a period of approximately 7 years from the date of issuance of the 2002 Series A Bonds, which will continue through 2010. Phase One is currently expected to include approximately 365 single family homes ranging in size fi.om 1,800 square feet to approximately 3,300 square feet, and selling within five separate neighborhoods, and approximatdy 300 apartment units. Phase Two is expected to include approximatdy 471 single family homes similar in size to the first phase and also selling within six separate neighborhoods. Phase Two is expected to commence sales in the quarter of . Phase Three is expected to include approximately415 single family homes ranging in size from 1,800 square feet to 2,800 square feet, and selling within five separate neighborhoods. Phase Three is expected to commence sales in the __ quarter of . Phase Four is expected to include approximately 370 single family homes ranging in size from 2,600 square feet to 3,300 square feet, ~md selling within five separate neighborhoods. Phase Four is expected to commence sales in the __ quarter of . It is anticipated that a substantial portion of the single family homes will be constmcted by Lennar, with the balance of the lots to be sold to third party merchant builders. Harveston, LLC is currently negotiating the sale of the apartment site to an apartment developer. The following table sets forth the product mx currently expected to be constmcted on the Residential Property by price range: Table 1 Community Facilities District No. 01-2 (Harveston) Residential Property Product Mix by Price Ranges $200,000- $250,000- Phases Apartments <$200,000 $250,000 $300,000 >$300,000 Total Share 1 300 65 72 158 70 665 35% 2 132 170 87 82 471 24% 3 65 185 165 - 415 22% 4 __ 160 .~_ 133 77 370 19% Total 300 422 427 543 229 1,921 100% Share 16% 22% 22% 28% 12% 100% Sourc~ Harv~ton, LLC. The phasing plan contemplates the corrpletion of adequate infrastructure and other required physical improvements to service the Residential Property concurrently with the construction of each phase. See "- The Development Plan - Infrastructure Property" below. 37 School Property The School District opened the Isabel Barnett Elementary School in September 2001. Approximately 600 students attendthe school. This property is exempt frorn the Special Tax. Park/Open Space Proper02 Harveston, LLC reports that it will allocate and develop acreage for parkpurposes within the District consistent with City requirements, and that the open space areas will be left in their natural state or improved in accordance with the requirements of the applicable governmental agency. Harveston, LLC expects to complete improvements relating to the 16.5 acre lake parkin the first quarter of 2003. Infrastructure Property Harveston, LLC reports lhat it will develop and cons~xuct all backbone infrastructure, including grading, storm drain, sewer, water, streets, utilities and landscaping within the major thoroughfares of Margarita Road, Date SU'eet and Ynez Road in the District. In addition, when the interior circulation plan for the District is determined, Harveston, LLC will he responsible for developing and constructing the infrastructure necessary to develop the Harveston, LLC Property consistent with such plan. Development Budgets In February 2002, Lennar commenced grading and infrastructure improvements necessary to deliver Phase One, consisting of 300 single family detached homesites, 65 single family attached homesites, a 300 apartment home superpad andthe village/retail site located , as well as the community lake, lake park and the lake house for the planned grand opening. At the time of the grand opening in the first quarter of 2003, the aforementioned community amenities as well as model complexes for four neighborhoods are expected to be open (the model complex for the attached homes will follow). It is currently estimated that at the time of the grand opening, Harveston, LLC wilt have expended approximately $42.3 million in improvement costs, exclusive of land value, debt service and general and administrative costs. Harveston, LLC (including exper~es of Lennar as its predecessor) has expended approximately $14.5 million in improvement costs to June 1, 2002 (exclusive of land, debt service and administrative costs). The following table sets forth Harveston, LLC's budget for the approximately $74.3 million of estimated costs for develophg the Harveston, LLC Property, as of May 1, 2002. Table 2 is a projection only with respect to the residential portion encompassed by the District and no assurance can be given that these results will be achieved. Actual cash flow will depend on future events such as the rate of land sales and actual costs of infrastructure development. 38 Table 2 THE COMMUNITY FACILITIES DISTRICT PRO FORMA RESIDENTIAL DEVELOPMENT COSTSI' (Estimated as of June, 2002) BACKBONE AND IN-TRACT IMPROVEMENTS LAND AND DESCRIPTION PLANNING OFFSITES PHASE I PHASE 2 PHASE 3 PHASE 4 TOTAL DEVELOPMENT COSTS ($000s) PLANNING Planning 1,157 11 21 100 (0) 1,289 Printing/Delivery 255 94 248 110 106 78 891 Civil Engineering 1,057 845 1,691 886 708 685 5,872 Soils Engineering 53 127 549 368 354 293 1,744 Traffic Engineering 178 50 (0) 228 Utility Consultmt 2 156 200 50 50 50 508 Landscape Architect 714 128 265 111 50 1,268 Special Consultants 616 836 853 706 514 572 4,097 Fees/Bonds/Permii~ 274 238 1,002 722 466 460 3,162 Impact Fees 455 47 502 Total Planning $3,592 $3,526 $4,739 $3,207 $2,309 $2,188 $19,561 DIRECT DEVELOPMENT Grading 1,656 5,505 1,125 1,000 500 9,786 Maint Special Construction 38 500 282 0 820 Temporary Erosion Control 24 99 499 20 32 20 694 Sewer System 505 923 884 617 672 3,601 Water System 532 1,167 875 668 635 3,877 Storm Drain System 1,773 535 499 532 442 3,781 Street Improvements 7,168 2,392 2,051 1,102 1,119 13,832 Dry Utilities 11 1,130 750 405 207 57 2,560 Perimeter/Ret. Walls 152 722 165 81 214 1,334 Special Amenities 5,675 30 (0) 5,705 Entry Features 10 35 58 103 Landscaping 1 4,028 1,432 824 726 647 7,658 Parks 3,154 0 3,154 Reimbursables (7,804) (61) (7,865) Contha gency 2,103 1,387 933 681 609 5,713 Subtotal 74 20,681 15,598 7,781 5,646 4,973 54,753 Total $3,666 $24,207 $20,337 $10,988 $7,955 $7,161 $74,314 Source: Hameston, LLC (1) Pro forma residential development costs only. Does not k~clude development of commercial or retail parcds. The discussion and budgets set forth above merely reflect Harveston, LLC's present plan for the development of the residential portion of the Harveston, LLC Property (and [include/exclude] certaha costs relating to the Winchester Property pursuant to the A~'eement and Covenants). There can be no assurance that Harveston, LLC will have the resources, willingness orability to successfullyimptement the development plan as described above. Winchester Property. [UPDATE BY MR. B1ER1 TO COME] Upon completion of the improvements to be constructed pursuant to the Agreement and Covenants, Winchester plans to complete the development and market the Winchester Property. Concurrent with Lmnar's processing of the specific plan for all of the property in the District, Winchester furnished to Lennar for processing by Lennar a site-specific tentative map which entitles the Winchester Property and permits a flexible marketing approach. The tentative map allows for lot sizes as small as two acres with the ability to consolidate lots and eliminate interior streets to create 39 larger lots. The final development plan for the Wtnchester Property will be dependent on the real estate market at the time. Winchester currently anticil~tes that the marketing and sale options available with respect to the Winchester Property upon completion of the improvements by Harveston, LLC will include: (1) bulk sale of the Winchester Property at that time; (2) sale of two superpads to large users; (3) development of the Winchester Property into smaller lots or (4) a combination of options two and three. Winchester reports that if the property is subdivided into smaller lots, it will have the option to sell lots, enter into ground leases or pursue build-to-suit opportunities. It is estimated that the "in4ract" cost to develop the entire property into smaller lots will be approximately $. [2,000,000]. Development Budget Listed below are the development components for the Winchester Property, and the total amount budgeted for each compenent as of , as provided by Wkmhester. Planning, Fees, Consultants On-Site Roads North South Entry Monuments 10% Contingency Total The discussion above merry sets forth Winchester's present plan for the development of the Winchester Property. There can be no assurance that Winchester will have the resources, willingness or ability to successfully complete the development plan for the Winchester Property as described above. Plan of Finance Harveston, LLC Property Lennar and Lehman Brothers anticipate financingall future development costs for the Harveston, LLC Property through equity contributions to Harveston, LLC. It is not the current intent of Harveston, LLC to utilize any third party debt financing. Winchester Property If Winchester decides to sell or lease lets, Winchester anticipates financing the approximately $ [2,000,000] of estimated development costs for the Winchester Property through a standard construction loan from a financial institution. The foregoing plans and Harveston, LLC's projections are subject to change. There can be no assurance that Harveston, LLC has the willingness or abilityto successfullyimplement the developnent plans described above. In the event that cost overruns occur which exceed the funds described in the section captioned "Plan of Finance" above, Harveston, LLC and Winchester will need to raise additional funds. No assurance can be given that such funds coald be raised or would be raised on a timely basis. Continued development in the District may also be adversely affected by changes in general economic conditions, fluctuations in the real estate market and other similar factors. See "BONDOWNERS' RISKS" herein for a discussion of risk factors. History of Property Tax Payment; Loan Defaults; Bankruptcy. Harveston, LLC has made the following representations: neither Harveston, LLC nor to Harveston, LLC's actual knowledge any of its current Affiliates (as defined inthe Master Developer Continuing Disclosure Agreement attached hereto as Appendix F), has ever been delinquent in the payment of any ad valorem property taxes, special assessments or special taxes in any material amount, 40 neither Harveston, LLC nor any of its Affiliates is currently in material default on any loans, lines of credit or other obligation related to its development in the District or any of its other projects which default would in any way materially and adversely affect its ability to develop its property in the District as described in the Official Statement or to pay the Special Taxes for which it is responsible, Harveston, LLC and its Affiliates are solvent and neither Harveston, LLC nor any of its current Affiliates has ever filed bankruptcy or been declared bankrupt, or has any proceeding pending or to its actual knowledge threatened in which Harveston, LLC or its Affiliates may be adjudicated as bankrupt, or discharged from any or all of its debts or obligations, and no action, suit, proceedings, inquiry or investigations at law or in equity, before or by any court, regulatory agency, public board or body, is pending (with service of process to Harveston, LLC or an Affiliate having been accomplished) against Harveston, LLC or any Affiliate or, to Harveston, LLC's actual knowledge, threatened, which if successful, would materially adversely affect the ability of Harveston, LLC to complete the development and sale of the property currently owned within the District or to pay special taxes orad valorem tax obligations when due on its propertywithin the District. Winchester has made the following representations: neither Winchester nor to Winchester's actual knowledge any of its current Affiliates (as defined above), has ever been delinquent in the payment of any ad valorem property taxes, special assessments or special taxes in any malerial amount, neither Winchester nor any of its Affiliates is currently in material default on any loans,lines of credit or other obligation related to its development in the Dislrict or any of its other projects which default would in any way materially and adversely affect its ability to develop its property inthe District as described in the Official Statement or to pay the Special Taxes for which it is responsible, Winchester and its Affiliates are solvent and neither Winchester nor any of its current Affiliates has ever filed bankruptcy or been declared bankrupt, or has any proceeding pendingor to its actual knowledge threatened in which Winchester or its Affiliates n~y be adjudicated as bankrupt, or discharged from any or all of its debts or obligations, and no action, suit, proceedings, inquiry or investigations at law or in equity, before or by any court, regulatory agency, public board or body, is pending (with service of process to Winchester or an Affiliate having been accomplished) against Winchester or any Affiliate or, to Winchester's actual knowledge, threatened, which if successful, would materially adversely affect the ability of Winchester to complete the development and sale of the property currently owned within the District or to pay special taxes or ad valorem tax obligations when due on its property within the District. Estimated Special Tax Allocation by Project As of July 1,2002, Harveston, LLC and Winchester own all proposed Taxable Property in the District that is responsible for all of the Special Taxes. Pursuant to the Agreement and Covenants Running with the Land, Harveston, LLC is responsible for the payment of ad valorem and special taxes on Winchester's property within the District until July 30, 2006. To date, Lennar, as predecessor to Harveston, LLC, has been current in the payment of the County ad valorem propertytaxes and the special taxes of the Winchester Hills Community Facilities District. The Agreement and Covenants, as assigned to HarvestonLLC, provides, amongother things, that (i) Harveston, LLC will pay all of the taxes and assessments on the Winchester Property to July 30, 2006, except with respect to portions of the Winchester Property that are leased or sold to third parties or that have vertical construction thereon, (ii) Harveston, LLC will apply for and diligentlyprocess applications for specific plan approval (Specific Plan approved in August 2001) and tentative subdivision map approvals (tentative subdivision maps approved __) for the Harveston, LLC Property and the Winchester Property, and if Harveston, LLC negotiates a development agreement with the City, such agreement shallcover the Winchester Property (Development Agreement recorded January 16, 2002), (iii) Harveston, LLC will grade and construct 41 certain main streets within the District, including all utilities therein as required by governmental agencies, and all landscaping required in connection withthe construction of such streets, and (iv) Harveston, LLC will sheet grade the Winchester Proper~y, including any necessary storm drain improvements through the Winchester Property, and shall commence such grading within three years of the recording of the Agreement and Covenants [[[confirm status of grading, etc; . Winchester has the right under the Agreement and Covenants to perform the sheet grading at Harveston, LLC's expense, after first giving Harveston, LLC the opportunity to do so. The Agreement and Covenants contains certain other provisions relating to the parties rights and obligations thereunder, including the provisionthat such fights may be enforced through an action for specific performance and other equitable rdief allowed by law. Lennar Corporation, a Delaware corporation ("Lennar Corporation"), and the parent corporation of Lennar, the Administrative Member of Harveston LLC, has irrevocably and unconditionally guaranteed the timely payment and performance by Harveston, LLC to Winchester of Harveston, LLC's obligations under the Agreen'ent and Covenants. For additional information about Lennar Corporation, see "THE COMMUNiTY FACILITIES DISTRICT - Lennar, Harvestun, LLC and Winchester" herein. Table 3 shows the amount of the Special Tax for which the Taxable Property of Harveston, LLCand Winchester would be responsible and the percentage of the estimated total amount of the Special Tax for Fiscal Year 2002-03, if Special Taxes were levied based on current ownership. [DISCUSS SPECIAL TAX LEVYPLAN: NoSpecialTaxeshavebeenleviedintheDistfict atthis time. SpecialTaxeshavebeenlevied in CFD No. 98-1 in the amount of approximately $1,970,167, and proceeds of the CFD No. 98-1 Special Taxes will be [paidto the Distrieffused to .] Actual amounts levied in the District will differ based on sales to homebuyers, lnterest on the 2002 Series A Bondsis capitalized until February 1, 2003 and the first [full] year in which Special Tax levies will occur is Fiscal Year 2003-04. The following table sets forth the estimated allocation of special taxes: Table 3 Temecula Public Financing Authority Community Facilities District No. 01-2 Estimated Allocation of Special Taxes by Property Ownership Estimated % of Assessed Developer/ Special Tax Estimated Valuation Value- Merchant Parcels/ Fiscal Year Special Fiscal Year To- Debt Builder Units 2002~03~ Tax2 2001-02 Ratio i Harveston, LLC 19 $591,667.86 82.75% $5,846,637 0.37:1 Winchester ._27 123.332.14 17.25% 3,021,025 0.92:1 Totals 26 $715,000.00 100.00% $8,867,662 0.47:1 Estimated Special Tax assuming a bond sale of $19,000,000 and levy of Special Taxes in Fiscal Year 20024)3. [Special taxes have been levied in CFD No. 98-1, and proceeds of the CFD No. 98-1 Special Tax will be used to .1 Assumes a 3.5% interest component and $50,000 administrative expenses. Source: Albert W. Webb Associates Direct and Overlapping Debt Table 4 below sets forth the existing authorized indebtedness lmyable from taxes and assessments that may be levied within the District prepared by Albert A. Webb Associates and dated as of May 1, 2002 (the "Debt Report"). The Debt Report is included for general information purposes only. In certain cases, the percentages of debt calculations are based on assessed values, which will change significantly as sales occur and assessed values increase to reflect housing values. The District believes the information is current as of its date, but makes no representation as to its completeness or accuracy. Other public agencies, such as 42 the City, may issue additionalindebtedness at any time, without the consent or approval of the District or the Authority. See "- Overlapping Assessment and Districts" below. The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the Dislrict in whole ff in part. Such long term obligations generally are not payable fromproperty taxes, assessment or special taxes on land in the District. In many cases long term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. Additional indebtedness could be authorized bythe District, the City or other public agencies at any time. The District has not undertaken to commission annual appraisals of the market value of property in the District for purposes of its Annual Reports pursuant to the Continuing Disclosure Agreement, and information regarding property values for purposes of a direct and overlapping debt analysis which may be contained in such reports will be based on assessed values as determined by the County Assessor. See APPENDIX F hereto for the form of the Continuing Disclosure Agreements. 43 Table 4 City of Temecula Community Facilities District No. 01-2 Secured Property Tax Roll and Direct and Overlapping Debt I. Assessed Value 2001-2002 Secured Roll Assessed Valuation II. Secured Property Tax Roi Description of Tax Bill Type CFD 98-1~' CFD GENERAL PURPOSE 1% D3q IFE~D SCHOOLDISTRICT GO METROPOLITAN WTR DEBT SV GO EASTERN MUNICg'AL WATER GO RCWD R DIVDEBT SERVICE GO FLD CNTL STORMWATER/CLEANWATER SPCL TEMECULA PARKS/LIGHTING SVS LMD TEMECULA ZONE B LMD SANTA ROSA RANCHES WATER STDBY WTR SANTA ROSA WATER FIRE SERVICE FIRE MWD STANDBY EAST WTR EWMD STANDBY - COMBINE D CHARGE Vv~i7 R 2001~2002 TOT~4L PROPERTY T~.XL1ABIL1TY TOTAL PROPERTY TAX AS A PERCENTAGE OF2001-02 ASSESSED VALUATION $8,867,662 IlL Land Secured Bond Indebtedness Outstanding D0ect and Overlapping Bonded Debt CFD 01-2 TOTAL LAND SECURED BONDED DEBTa~ Authorized Direct and Overlapping Bonded Debt CFD 01-2 TOTAL UNISSUED LAND SECURED BONDED DEBITM Parcels Total Levied Parcels Levied Total Levy % Applicable In the District Levy Amount 26 $855,052 100.000% 26 $855,052 681,718 $897,071,400 0.010% 26 $88,677 54,477 $5,722,563 0.116% 26 $6,646 379,505 $6,721,796 0.015% 26 $1,037 116,507 $2,366,002 0.071% 26 $1,685 8,097 $5,879,943 0.452% 26 $26,603 43,831 $308,875 0.006% 4 $18 21,289 $2,630,371 3.833% 26 $100,819 16,360 $420,125 2.185% 12 $9,181 6,554 $2,637,104 0.012% 3 $308 342 $49,830 0.136% I $68 174,129 $2,648,347 0.137% 26 $3,634 174,362 $3,917,825 0.091% 26 $3,566 $1,097,292 12.37% Type Issued CFD $19,000,000' Parcels Levied Outstandine % Anolicable In the District $19,000,000' 100.000% 26 Levied Unissued%Applicable In the Distdct $1,000,000 100.000% 26 Type Authorized CFD $20,000,00ff~ of Debt $19,000,000' $19,000,00ff Amount Applicable $1,000,000 $1,000,000 44 IV. General Obligation Bond Indebtedness Parcels Outstanding Direct and Levied Amount OverlappingBonded Debt T~sp.e Issued Outstanding % Applicable In District of Debt TEMECULA UNIFIED B & 1 GO $65,000,000 $58,035,000 0.116% 26 $67,402 RCWD R DIVDEBT SERVICE GO $44,360,000 $18,857,838 0.452% 26 $85,319 METROPOLITAN WTR DEBT SV GO $850,000,000 $527,480,000 0.001% 26 $4,000 EASTERN MUNIC~AL WATER GO $35,430,000 $29,055,000 0.071% 26 $20,689 TOTAL GENERAL OBLIGATION BONDED $177,410 DEBTm Parcels Authoriz~ Direct and Levied Amount Overlapping Bonded Debt True Authorized Unissued % Applicable In the District Applicable TEMECULA UNIFIED B & I GO $65,000,000 $0 0.116% 26 $0 RCWD R DIVDEBT SERVICE GO $63,000,000 $18,935,000 0.452% 26 $85,668 METROPOLITAN WATER D~TRICT GO $850,000,000 $0 0.001% 26 $0 EASTERN MUNIC~AL WATER GO $40,530,000 $5,100,000 0.071% 26 $1,094,358 TOTAL UNISSUED GENERAL $1,180,026 OBLIGATION BONDSw TOTAL OUTSTANDING AND U~SSUED GENERAL OBLIGATIONBONDED INDEBTEDNESS $1,357,436 EBT OTAL OF ALL OUTSTANDING AND UNISSUED DIRECT AND OVERLAPPING Preliminary, subject to change. (t) The special taxes of CFD No. 98-1 will be canceled upon issuance of the 2002 Series A Bonds. (2) Additional bonded debt authorization may exist but is not shown because a tax was not levied for the referenced fiscal year. (3) Although the proceedings for formation of the District authorized $25,000,000 of Bonds, the District has approved a resolution reducing the authorized amount of Bonds to $20,000,000 provided the principal amount of refunding bonds may exceed $20,000,000. Source: .41bert A. Webb Associates Overlapping Assessment and Community Facilities Districts AdditionalDebt Payable from Taxes orAssessments. The District has no control over the amount of additional debt payable from taxes or assessments levied on all or a porticaa of the property within a special district which may be incurred in the future by other governmental agencies, including, but not limited to, the Cotmty, the City or any other governmental agency having jurisdiction over all or a portion of the properly within the District. Furthermore, nothing prevents the owners of property withinthe District from consenting to the issuance of additional debt by other governmental agencies which would be secured by taxes or assessments on a parity with the Special Taxes. To the extent such indebtedness is payable from assessments, other special taxes levied pursuant to the Act or taxes, such assessments, special taxes and taxes will be secured by liens on the property within a district on a parity with a lien of the Special Taxes. Accordingly, the debt on the property within the District could increase, without any correspcnding increase in the value of the property therein, and thereby severely reduce the ratio that exists at the time the 2002 Series A Bonds are issued between the value of the property and the debt secured by the Special Taxes and other taxes and assessments which rmy be levied on such property. The incurring of such additional indebtedness could also affect the ability and willingness of the property owners within the District to paythe Special Taxes when due. 45 Moreover, in the event of a delinquency inthe payment of Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of the property with delinquent Special Taxes would be sufficient to pay the delinquent Special Taxes. See "BONDOWNERS' RISKS." Other Overlapping Direct Assessments Metropolitan Water District Standby. Property within the District is subject to a MetropolitanWater District Standby ("MWD Standby") assessment. The MWD Standby assessment is fixed unless thffe is a vote to increase the assessment. This pay-as-you-go assessment is used for water conservation programs, emergency programs, water treatment md capital improvements such as transporting water from Colorado and Northern California to Southern California. The assessment levied for Fiscal Year 2001-2002 is $6.94 per equivalent dwelling unit. Riverside County Flood Control and Water Conservation District. [TO COME] Estimated Assessed Value-to-Lien Ratios The assessed values, direct and overlapping debt and total tax burden on individual parcels varies among parcels within the District. The value of individual parcels is significant because in the event of a delinquency in the payment of Special Taxes, the District may foreclose only against delinquent parcels. The table below sets forth the estitmted assessed value-to-lien ratios for all parcels within the District, based on certain value-to-lien categories. Table 5 City of Temecula Community Facilities District No. 01-2 Value-To-Lien Ratio Stratification for Issued Direct and Overlapping Bonded Debt % 2001-02 of Total FY 2001-02 Estimated Estimated % of Number Gross Gross Overlapping FY 2002-03 FY 2002-03 Value-To-Lien of Assessed Assessed Bonded Special Tax Special Tax Category Parcels Value(l) Value Debt(l) Levy Levy Less than 1:1 26 $8,867,662 100.00% $19,177,410 $715,000 100.00% Between 1:1 - 1.99 0 0 0.00% 0 0 0.00% Between 2:1 -2.99 0 0 0.00% 0 0 0.00% Between 3:! -3:99 0 0 0.00% 0 0 0.00% Between 4:1 - 4:99 0 0 0.00% 0 0 0.00% Between 5:1 -5:99 0 0 0.00% 0 0 0.00% Between 6:1 - 9:99 0 0 0.00% 0 0 0.00% Between 10:1 - 14:99 0 0 0.00% 0 0 0.00% Between 15:1 - 19.99 0 0 0.00% 0 0 0.00% Greater than 20:1 0 0 0.00% 0 0 0.00% TOTAL 26 $8,867,662 100.00% $19,177,410 $715,000 100.00% Source: Albert A. Webb Associates. (1) Estimated gross assessed value and estimated overlapping bonded debt values are based on the Fiscal Year because the Fiscal Year 2002-03 inforrmtion was not available as of 2002. 2001-02 information 46 BONDOWNERS' RISKS In addition to the other information contained in this Official Statement, the following risk factors sh~uld be carefully c~nsidered in evaluating the investment qua~ity ~f the 2~~2 Series A B~nds. The Authority cautions prospective investors that this discussion does notpurport to be comprehensive or definitive and does not purport to be a complete statement of all fuetors which may be considered as risks in evaluating the credit quality of the 2002 Series A Bonds. The occurrence of one or more of the events discussed ho'ein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Any such failure to pay Special Taxes could result in the inability of the Authority to make full and punctual payments of debt service on the 2002 Series A Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. Expiration of the Letter of Credit The initial Letter of Credit expires on August 1, 2003, subject to extension or earlier termination in certain circumstances as describedin the Letter of Credit. If the Letter of Credit is not extended ora substitute Letter of Credit is not obtained by Harveston, LLC, the 2002 Series A Bond~ will be subject to mandatory purchase. There can be no assurance that Harveston, LLC will be able to obtain an extension of the Letter of Credit or a substitute Letter of Credit. The Credit Bank is under no obligation to extend the Letter of Credit beyond the scheduled expiration thereof. See "THE 2002 SER1ES A BONDS - Terms of Redemption," "THE LETTER OF CREDIT AND THE CREDIT AGREEMENT" herein. The stated expiration date for the Letter of Credit should not adversely affect any Registered Owners during any Interest Period that does not extend beyond the stated expiration date. Credit Bank's Obligations Unsecured The ability of the Credit Bankto honor draws upon the Letter of Credit is based solely upon the Credit Bank's general credit and is not collateralized or otherwise guaranteed by the United States of America or any agency or instrumentality thereof. No provision has been made for replacement of or substitution for the Letter of Credit in the event of any deterioration in the financial condition of the Credit Bank. None of the Authority, Harveston, LLC, the Credit Bank, Lmnar, or Lennar Corporation assumes any liability to any purchaser of the 2002 Series A Bonds as a result of any deterioration of the financial condition of the Credit Bank Upon any insolvency of the Credit Bank, any claim by the Trustee against the Credit Bank would be subject to bank receivership proceedings. Default by Lennar Corporation under the Credit Agreement If Lennar Corporation defaults under the Credit Agreement, the Credit Bank wilt have the right to terminate the Letter of Credit. See "THE2002 SERIES A BONDS" herein. General Factors Affecting the Credit Bank The Credit Bank is subject to regulation andsupervision by various regulatorybodies. New regulations could impose restrictions upon the Credit Bank which would restrict its ability to respond to competitive pressures. Various legislative or regulatory changes could dramatically impact the bankingindustry as a whole and the Credit Bank specifically. The banking industry is highly competitive in many of the markets in which the Credit Bankoperates. Such competition directly impacts the financial performance of the Credit Bank. Any significant increase in such competition could adversely impact the Credit Bank. Prospective purchasers of the 2002 Series A Bonds should evaluate the financial strength of the Credit Bank based upon the information contained in and referred to under the caption "THE CREDIT BANK" and other information available upon request from the Credit Bank and should not rely upon any governmental supervision by any regulatory entity. Variable Rate Bonds Subordinate to Fixed Rate Bonds 47 The Indenture provides that money will be transferred from the Special Tax Fund to certain accom~ts for the exclusive benefit of Fixed Rate Bonds prior to certain transfers to accounts securing payment of the Variable Rate Bonds. As a result thereof, it is possible that the amounts available to reimburse the Credit Bank for the drawings on the Letter of Credit will be insufficient for such purpose. Risks of Real Estate Secured Investments Generally The Bondowners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local n~rket conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the maflcet value of residential property and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rate and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes and floods), which may result in uninsured losses. Concentration of Ownership As of the date hereof, Harveston, LLC andWinchester are responsible for 100% percent of the Special Taxes, and through the Agreement and Covenants, Harveston, LLC has agreed to pay the Special Tax obligation of Winchester for the next several years. If Harveston, LLC fails in its obligations under the Agreement and Covenants or if Harveston, LLC is unwilling or unable to pay the Special Tax when due, a potential shortfall in the Bond Fund could occur, which wonld result in a draw on the Letter of Credit and the redemption of the Variable Rate Bonds. No property owner is obligated in any manner to continue to own or develop any of the land it presently owns within the District. The Special Taxes are not a personal obligation ofHarveston, LLC and Winchester, any merchant builder or of any owner of the parcels, and the District can offer no assurance that any current owner or any future owner will be financially able to pay such installrrents or that it will choose to pay even if financially able to do so. Failure to Develop Properties Development of property within the District may be subject to economic considerations and unexpected delays, disruptions and changes which may affect the willingness and ability of Harveston, LLC and Winchester or any property owner to pay the Special Taxes when due. Land development is also subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as mrnerous other matters. As of July 1, 2002, no final maps have been recorded. The property within the District is partially developed with public infrastructure improvements and construction, some of which are substantially complete; however, additional approvals are necessary to complete the development. See "Government Approvals" below. It is possible that the approvals necessmy to complete developrrent of the property within the District will not be obtained on a timely basis. Failure to obtain any such approval could adversely affect land development operations within the District. In addition, there is a risk that future governmental restrictions on land development within the District will be enacted, either directly by a governmental entity with jurisdiction or by the voters through the exercise of the initiative power. The failure to complete the development or the required infrastructure in the District or substantial delays in the completion of the development or the required infrastructurefor the development due to litigation, the inability to obtain required funding, failure to obtain necessary governmental approval or other causes may reduce the value of the property within the District and increase the length of time during which Special Taxes will be payable from Undevdoped Property, and may affect the willingness and ability of the owners of property within the District to pay the Special Taxes when due. See "SECURITY FOR THE 2002 SERIES A BONDS." 48 Bondowners should assume that any event that significantly impacts the ability to develop land in the District would cause the property values within the District to decrease substantially and could affect the willingness and ability of the owners of land within the District to pay the Special Taxes when due. Special Taxes Are Not Personal Obligatiom The owners of land within the District are not personally liable for the payment of the Special Taxes. Rather, the Special Tax is an obligation only of the land within the District. If the value of the land within the District is not sufficient to fully secure the Special Tax, then the District has no mconrse against the owners under the laws by which the Special Tax has been levied and the 2002 Series A Bonds have been issued. The 2002 Series A Bonds Are Limited Obligations of the District The District has no obligation to pay principal of and interest on the Bonds in the event Special Tax collections are delinquent, other than from amounts, if any, drawn on the Letter of Credit in the case of Variable Rate Bonds, amounts, if any, on deposit in certain funds and accounts held under the Indenture, or funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax am delinquent, nor is the District obligated to advance funds to pay such debt service on the Bonds. Land Development A major risk to the Bondowners is that development by the property owners in the District may be subject to unexpected delays, dismptiuns and changes which may affect the willingness and ability of the property owners to pay Special Taxes when due. For example, proposed devdopment within a portion of the District could be adversely affected by delays in or the inability to obtain final environmental clearances required in connection with particular parcels of property, unfavorable economic conditions, competing development projects, an inability of the current owne rs or future owners of the parcels to obtain financing, fluctuations in the real estate market or interest rates, unexpected increases in development costs, changes in federal, state or local govermnental policies relating to the ownership of real estate, faster than expected depletion of existing water allocations, the appearance of previously unknown environmental impacts necessitating preparation of a supplemental environmental impact report, and by other similar factors. There can be no assurance that land development operations within the District will not be adversely affected by the factors described above. In addition, partially developed land is less valuable than developed land and provides less security for the 2002 Series A Bonds (and therefore to the Bondowners) should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of Special Taxes. Moreover, failure to cmaplete future development on a timely basis could adversely affect the land values of those parcels which have been completed. Lower land values result in less security for the payment o f principal of and interest on the 2002 Series A Bonds and lower proceeds from any foreclosure sale necessitated by delinquencies in the payment of the Special Taxes. Furthermore, an inability to develop the land within the District as planned will reduce the expected diversity of ownership of land within the District, making the payment of debt service on the 2002 Series A Bonds more dependent upon timelypayment of the Special Taxes levied on the undeveloped property. Because of the concentration of undeveloped property ownership, the timely paymem of the 2002 Series A Bonds depends upon the willingness and abilityofthe current owners of undeveloped lard and any merchant builders to whom finished lots are sold to pay the Special Taxes levied on the undeveloped land when due. Furthermore, continued concentration of ownership increases the potential negative impact of a bankruptcy or other financial difficulty experienced by the existing landowners. See "Concentration of Ownership" above. Burden of Parity Liens, Taxes and Other Special Assessments on the Taxable Property While the Special Taxes are secured by the Taxable Property, the security only extends to the value of such Taxable Property that is not subject to priority and parity liens and similar claims. 49 The table in the section entitled "THE COMMUNITY FACILITIES DISTRICT - Direct and Overlapping Debt" states the presently outstanding amount of governmental obligations (with stated exclusions), the tax or assessment for which is or may become an obligation of one or more of the parcels of Taxable Property, and furthermore states the additional amount of general obligation bonds the tax for which, if and when issued, may be come an obligati on of one or more of the parcels o f Taxable Property. The table does not specifically identify which of the governmental obligations are securedby liens on one ormore of the parcels of Taxable Property. In addition, other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessrrent or charge for which rmy become an obligation of one or more of the pamels of Taxable Property and may be secured by a lien on a parity with the lien of the Special Tax securing the 2002 Series A Bonds. In general, as long as the Special Tax is collected on the county tax roll, the Special Tax and all other taxes, assessments and charges also collected on the tax roll are on a parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. In the event of proceedings to foreclose for delinquency of Special Taxes securing the 2002 Series A Bonds, the Special Tax will be subordinate only to existing prior governmental liens, if any. Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be on a parity with the other taxes, assessments and charges, and will share the proceeds of such foreclost~e proceedings on a pro-rata basis. Although the Special Taxes will generally have priority over non-governmental liens on a parc el of Taxable Property, regardless of whether the non-governrrental liens were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of bankruptcy. While governmental taxes, assessments and charges are acommon claim against the value of a parcel of Taxable Property, other less common claims troy be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to pay the Special Tax is a claim with regard to a hazardous substance. See "Hazardous Substances" below. Disclosure to Future Purchasers The District has recorded a notice of the Special Tax lien in the Office of the Riverside Cotmty Recorder on as Document No. . While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be nmde or, if made, that a prospective purchaser or lender will comider such Special Tax obligation in the pmchase of a parcel of land or a home in the District or the lending of money thereon. The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due. Government Approvals Harveston, LLC, Winchester or its predecessors have secured most discretionary approvals, permits and government entitlements necessary to develop the land withinthe District. Nevertheless, development within the District is contingent upon the construction of a number of major public improvements as well as the necessary local in-tract improvements. The installation of the necessaryimprovements and infrastructure is subject to the receipt of construction or buildingpermits from the City and other public agencies. The failure to obtain any such approval could adversely affect construction within the District. A slow down or stoppage of the construction process could adversely affect land values. No assurance can be given that ~rmits will be obtained in a timely fashion, if at all. The failure to do so may result inthe prevention, or significant delays 50 in the developrcent of the property within the District or portions thereof. See "Failure to Develop Properties" herein. Local, State and Federal Land Use Regulations There can be no assurance that land development operations within the District will not be adversely affected by future government policies, including, but not limited to, governmental policies which directly or indirectly restrict or control development. During the past sevocal years, citizens of a number of local communities in California have placed measures on the ballot designed to control the rate of future developm~mt. During the past several years, state and federal regulatory agencies have significantly expanded their involvement in local landuse mattersthrough increased regulatca'y enforcement of various environmental laws, including the Endangered Species Act, the Clean Water Act and the Clean Air Act, among others. Such regulations can substantially impair the rote and amount of development without requiring just compensation unless the effect of the regulation is to deny all economic use of the affected property. Bondowners should assume that any event that significantly impacts the ability to construct homes on hnd in the District could cause the land values within the District to decrease substantially and could affect the willingness and ability of the owners of land to pay the Spedal Taxes when due or to proceed withdevelopment of land in the District. See "Failure to Develop Properties" herein. Endangered and Threatened Spedes it is illegal to harm or disturb any plants or animals in their habitat that have been listed as endangered species by the United States Fish & Wildlife Service under the Federal Endangered Species Act or by the CalifomiaFish & Game Commissionunder the California Endangered Species A~t without a permit. Thus, the presence of an endangered plant or animal could delay development of vacant property in the District or reduce the value of undeveloped property. Failure to develop the vacant property in the District as planned, or substantial delays in the completion of the planned development of the property may increase the amount of Special Taxes to be paid by the owners of undeveloped property and affect the willingness and ability of the owners of property within the District to pay the Special Taxes when due. See "THE COMMUNiTY FACILITIES DISTRICT - Environmental Conditions." Hazardous Substances While govemmental taxes, assessments, and charges are a common claim against the value of a taxed parcel, other less common claims may be relevant. One of the most serious interms of the potential reduction in the value that maybe realized to pay the Special Tax is a claim with regard to hazardous substances. In general, the owners and operators of parcels within the District may be requiredby law to remedy conditior, s of the parcels related to the releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, sometimes referred to as "CERCLA" or the "S uperfund Act," is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under rmny of these laws, the owner (or operator) is obligated to remedy a hazardous substances condition of a property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any parcel within the District be affected by a hazardous substance, would be to reduce the marketability and value of the parcel by the costs of remedying the condition, because the own~ (or operator) is obligated to remedy the condition. Further, such liabilities n~y arise not simply from the existence of a hazardous substance but from the method of handling or disposing of it. All of these possibilities could significantly affect the financial and legal ability of a property owner to develop the affected parcel or other parcels, as well as the value of the propa'ty that is realizable upon a delinquency and foreclosure. The assessed value of the property within the District does not take into account the possible reduction in marketability and value of any of the parcels of Taxable Property by reason of the possible liability of the owner (or operator) for the remedy of a l~zardous substance condition of the parcel. The District has not independently verified and is not aware that the owner (or operator) of any of the parcels of Taxable Property has such a current liability with respect to any such parcels of Taxable Property, except as expressly noted. However, it is possible that such liabilities do currently exist and that the District is not aware of them. 51 Further, it is possible that liabilities may arise in the future with respect to any of the parcels of Taxable Property resulting from the existenc e, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence ora hazardous substance but from the nethod of handling or disposing of it. All of these possibilities could significantly affect the value of a parcel of Taxable Property that is realizable upon a delinquency. See "THE COMMUNITY FACILITIES DISTRICT - Enviroranental Conditions" herein for a description of the prior use of the property. Levy and Collection of the Special Tax The principal source of payment of principal of and interest on the 2002 Series A Bonds is the proceeds of the annuallevy and collection of the Special Tax against property within the District. The annual levy of the Special Tax is subject to the maximumtax rates authorized. The levy cannot be made at a higher rate even if the failure to do so means that the estimatedproceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the 2002 Series A Bonds. Other funds which might be available include funds derived from the payment of penalties on delinquent Special Taxes and funds derived from the tax sale or foreclosure and sale of parcels on which levies of thc Special Tax are delinquent. The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular taxed parcels and the amount of the levy ofthe Special Tax against such parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of such parcels and the proportionate share of debt service on the 2002 Series A Bonds, and certainly not a direct relationship. The Special Tax levied in any particular tax year on a parcel of Taxable Property is based upon the revenue needs and application of the Rate and Method. Application of the Rate and Method will, in mm, be dependent upon certain development factors with respect to each parcel of Taxable Property by comparison with similar development factors with respect to the other parcels of Taxable Property within the District. Thus, in addition to annual variations of the revenue needs from the Special Tax, the following am some of the factors which might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected: (1) Reduction in the number of parcels of Taxable Property, for such reasons as acquisition of parcels of Taxable Property by a government and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government oran agency thereof, immunity from taxation, thereby resulting in an increased tax burdenon the remaining parcels of Taxable ProperS. (2) Failure of the owners o fparcels of Taxable Pro perty to pay the Special Tax and delays in the collection of or inability to collect the Spedal Tax by tax sale or foreclosure sale of the delinquent parcels, thereby resulting in an increased tax burden on the remaining parcels. Except as set forth above under "SECURITY FOR THE 2002 SERIES A BONDS - Special Taxes" and "- Rate and Method" herein, the Indenture provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in "SECURITY FOR THE 2002 SERIES A BONDS - Proceeds of Foreclosure Sales" and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem property taxes. Pursuant to these procedures, if taxes am unpaid, the property is then is subject to sale by the District. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Bondowners pending such sales or the prosecution of foreclosure proceedings and receipt by the Authority of the proceeds of sale if the Pre-Conversion Reserve Fund is depleted. See "SECURITY FOR THE 2002 SERIES A BONDS- Proceeds of Foreclosure Sales." 52 In addition, the Rate and Method limits the increase of Special Taxes levied on parcels of Developed Property to cure delinquencies of other property owners in the District. See "SECURITY FOR THE 2002 SERIES A BONDS - Rate and Method" herein. Exempt Properties Certain properties are exempt from the Special Tax in accordance with the Rate and Method (see "SECURITY FOR THE 2002 SERIES A BONDS - Rate and Method" herein). In addition, the Act provides that properties or entities of the state, federal or local government are exempt fi.om the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. It is possfl~le that property acquired by a public enlity following a tax sale or foreclosure based upon failure to pay taxes could become exempt from the Special Tax. In addition, although the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent dormin proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Tax. In the event that additional property is dedicated to the Authority or other public entities, this additional property might become exempt fi.om the Special Tax. The Act further provides that no other properties or ertities are exempt fi.om the Special Tax unless the properties or e~tities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax. Depletion of Pre-Conversion Reserve Fund The Pre-Conversion Reserve Fund is to be maintained at an amount equal to the Pre42onversion Reserve Requirement (see "SECURITY FOR THE 2002 SERIES A BONDS - Pre-Conversion Reserve Fund" herein). Funds in the Pre-Conversion Reserve Fund maybe used to pay principal of and interest on the 2002 Series A Bonds in the e