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HomeMy WebLinkAbout03-05 TPFA Resolution RESOLUTION NO. TPFA 03-05 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY OF FORMATION OF TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-1 (CROWNE HILL), AUTHORIZING THE LEVY OF A SPECIAL TAX WITHIN THE DISTRICT, PRELIMINARILY ESTABLISHING AN APPROPRIATIONS LIMIT FOR THE DISTRICT AND SUBMITFING LEVY OF THE SPECIAL TAX AND THE ESTABLISHMENT OF THE APPROPRIATIONS LIMIT TO THE QUALIFIED ELECTORS OF THE DISTRICT WHEREAS, on January 28, 2003, this Board of Directors adopted a resolution entitled "A Resolution of the Board of Directors of the Temecula Public Financing Authority Declaring Its Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Therein - Crowne Hill" (the "Resolution of Intention") stating its intention to form the Temecula Public Financing Authority Community Facilities District No. 03-1 (Crowne Hill) (the "District") pursuant to the Mello-Roos Community Facilities Act of 1982, California Government Code Section 53311 et seq. (the "Law"); and WHEREAS, the Resolution of Intention, incorporating by reference a map of the proposed boundaries of the District and describing the public improvements eligible to be financed by the District (the "Facilities") and the prior lien (the "Prior Lien") secured by a special tax lien on parcels in the District which Prior Lien is to be eliminated by the District, the cost of financing the Facilities and of eliminating the Prior Lien, and the rate and method of apportionment of the special tax (the "Initial Rate and Method") to be levied within the District to pay the cost of financing the Facilities and of eliminating the Prior Lien, and to pay the principal and interest on bonds proposed to be issued with respect to the District, is on file with the Secretary and the provisions thereof are incorporated herein by this reference as if fully set forth herein; and WHEREAS, certain technical changes have been made to the Initial Rate and Method and a revised rate and method of apportionment of special taxes for the District has been prepared the form of which is attached hereto as Exhibit A, and a copy of said revised rate and method of apportionment of special tax has been provided to all of the owners of land within the District prior to the date hereof; and WHEREAS, on this date, this Board of Directors held the public hearing as required by the Law and the Resolution of Intention relative to the proposed formation of the District; and WHEREAS, at the hearing all interested persons desiring to be heard on all matters pertaining to the formation of the District, the Facilities eligible to be funded by the District, and the Prior Lien to be eliminated, thereby and the levy of the special tax were heard and a full and fair hearing was held; and WHEREAS, at the hearing evidence was presented to this Board of Directors on the matters before it, including a report by the Director of Public Works of the City of Temecula (the "Report") as to the Facilities eligible to be funded, and the Prior Lien to be eliminated, by the R:/'rPFA Resos 2003/TPFA 03-05 I District and the costs thereof, a copy of which is on file with the Secretary, and this Board of Directors at the conclusion of the hearing was fully advised regarding the District; and WHEREAS, written protests with respect to the formation of the District and/or the furnishing of specified types of Facilities or of the Prior Lien to be eliminated as described in the Report have not been filed with the Secretary by fifty percent (50%) or more of the registered voters residing within the territory of the District or property owners of one-half (1/2) or more of the area of land within the District and not exempt from the special tax; and WHEREAS, the special tax proposed to be levied in the District to pay for the costs of the Facilities and of the elimination of the Prior Lien, as set forth in Exhibit A to this Resolution, has not been eliminated by protest by fifty percent (50%) or more of the registered voters residing within the territory of the District or the owners of one-half (1/2) or more of the area of land within the District and not exempt from the special tax. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Temecuia Public Financing Authority as follows: Section 1. The foregoing recitals are true and correct. Section 2. The proposed special tax to be levied within the District has not been precluded by majority protest pursuant to Section 53324 of the Law. On April 10, 2001, this Board of Directors adopted a resolution approving Local Goals and Policies for Community Facilities Districts, and this Board of Directors hereby finds and determines that the District is in conformity with said goals and policies. Section 3. All prior proceedings taken by this Board of Directors in connection with the establishment of the District and the levy of the special tax have been duly considered and are hereby found and determined to be valid and in conformity with the Law. Section 4. The community facilities district designated 'q'emecula Public Financing Authority Community Facilities District No. 03-1 (Crowne Hill)" is hereby established pursuant to the Law. Section 5. The boundaries of the District, as described in the Resolution of Intention and set forth in the boundary map of the District recorded on January 31,2003 at 8:00 a.m. in the Riverside County Recorder's Office at Book 52 of Maps of Assessment and Community Facilities Districts at Page 79 (instrument no. 2003-072701), are hereby approved, are incorporated herein by this reference and shall be the boundaries of the District. Section 6. The type of facilities eligible to be funded by the District pursuant to the Law, and the Prior Lien to be eliminated by the District pursuant to the Law, are as described in Exhibit A to the Resolution of Intention which Exhibit is by this reference incorporated herein. This Board of Directors hereby finds that the Facilities are necessary to meet increased demands placed upon local agencies as the result of development occurring in the District. This Board of Directors acknowledges that, pursuant to the authority granted in Section 4 of the Resolution of Intention, the Executive Director has executed Joint Community Facilities Agreements with the City of Temecula, the Eastern Municipal Water District and the Rancho California Water District. This Board of Directors also authorizes and directs the Executive Director to execute a Joint Community Facilities Agreement with the State of California Department of Transportation, in a form provided by Bond Counsel, as necessary under the R:/'rPFA Resos 2002/TPFA 03-05 2 Law to finance those Facilities to be owned by said agency. This Board of Directors hereby declares that the Joint Community Facilities Agreements described above will be beneficial to residents in the area of the District. Section 7. Except to the extent that funds are otherwise available to the District to pay for the Facilities, to pay the costs to eliminate the Prior Lien, and/or to pay the principal and interest as it becomes due on bonds of the District issued to finance the Facilities and eliminate the Prior Lien, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in the District, will be levied within the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this Board of Directors shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within the District, in sufficient detail to allow each landowner within the proposed District to estimate the maximum amount such owner will have to pay, are described in Exhibit A to this Resolution which Exhibit is by this reference incorporated herein. This Board of Directors hereby finds that the basis for the levy and apportionment of the special tax, as set forth in the Rate and Method, is reasonable. Section 8. The Treasurer of the Temecula Public Financing Authority, 43200 Business Park Drive, Temecula, CA 92590, telephone number (909) 694-6430, is the officer of the Authority that will be responsible for preparing annually and whenever otherwise necessary a current roll of special tax levy obligations by assessor's pamel number and which will be responsible for estimating future special tax levies pursuant to Section 53340.2 of the Law. Section 9. Upon recordation of a notice of special tax lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property in the District and this lien shall continue in force and effect until the special tax obligation is prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the tax by the Authority ceases. Section 10. In accordance with Section 53325.7 of the California Government Code, the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, of the District is hereby preliminarily established at $25,000,000 and said appropriations limit shall be submitted to the voters of the District as provided below. The proposition establishing the appropriations limit shall become effective if approved by the qualified electors voting thereon and shall be adjusted in accordance with the applicable provisions of Section 53325.7 of the Law. Section 11. Pursuant to the provisions of the Law, the proposition of the levy of the special tax and the proposition of the establishment of the appropriations limit specified above shall be submitted to the qualified electors of the District at an election, the time, place and conditions of which election shall be as specified by a separate resolution of this Board of Directors. Section 12. The Acquisition Agreement relating to the acquisition of certain of the Facilities specified therein from Lennar Homes of California, Inc. (the "Acquisition Agreement"), in the form presented to the Board of Directors at this meeting, is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Acquisition Agreement in said form, 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 Acquisition Agreement by the Executive Director. R:/TPFA Resos 2002J'rPFA 03-05 3 Section 13. 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 25th day of March, 2003. ~ Mi(~hae~a A. Ballreich -- -.. Deputy City Clerk/Deputy Authority Secretary '[SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Michaela A. Ballreich, Deputy Authority Secretary of the Temecula Public Financing Authority, HEREBY DO CERTIFY that the foregoing Resolution No. TPFA 03-05 was duly adopted at a special meeting of the Board of Directors of the Temecula Public Financing Authority on the 25th' day of March, 2003, by the following vote: AYES: 5 BOARDMEMBERS: Comerchero, Naggar, Pratt, Roberts, Stone NOES: 0 BOARDMEMBERS: None ABSENT: 0 BOARDMEMBERS: None ABSTAIN: 0 BOARDMEMBERS: None .... M~aela A. Ballriech Deputy City Clerk/Deputy Authority Secretary R'?rPFA Resos 2002/'FPFA 03-05 4 EXHIBIT A TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-1 (CROWNE HILL) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax shall be levied and collected on all Taxable Property located within the boundaries of the Temecula Public Financing Authority Community Facilities District No. 03-1 (Crowne Hill) ("CFD"). The amount of Special Tax to be levied in each Fiscal Year, commencing in Fiscal Year 2003-04 on a Parcel shall be determined by the Board of Directors of the Temecula Public Financing Authority or its designee, acting in its capacity as the legislative body of the CFD by applying the appropriate Special Tax as set forth in Sections B., C., and D., below. All of the real property within the CFD, unless exempted by law or by the provisions in Section E., shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of a Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other similar recorded County instrument. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part I of Division 2 of Title 5 of the California Government Code of the State of California. "Administrative Expenses" the actual or reasonably estimated costs directly related to the administration of the CFD, including but not limited to: the costs of computing the Special Taxes and of preparing the annual Special Tax collection schedules (whether by the CFD Administrator or designee thereof or both); the costs of collecting the Special Taxes (whether by the Authority, County, City, or otherwise); the costs of remitting the Special Taxes to the trustee for any Bonds; the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Taxes; the costs of the trustee (including its legal counsel) in the discharge of the duties required of it under any Indenture; the costs of the Authority, City or designee in complying with arbitrage rebate and disclosure requirements of applicable federal and State securities laws, the Act and the California Government Code, including property owner inquiries regarding the Special Taxes; the costs associated with the release of funds from any escrow account; the costs of the Authority, City or designee related to an appeal of the Special Tax; and an allocable share of the salaries of the City staff and City overhead expense directly relating to the foregoing. Administrative Expenses shall also include amounts advanced by the City or the Authority for any administrative purposes of the CFD. "Approved Property" means for any Fiscal Year, all Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) for which a building permit was not issued prior to the April 1st preceding the Fiscal Year in which the Special Tax is being levied. A-1 "Assessor's Parcel Map" means an official map of the County designating parcels by a parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Category of Developed Property, as determined in accordance with Section C.1 .a., below. "Authority" means the Temecula Public Financing Authority. "Backup Special Tax" means the Special Tax amount set forth in Section C.1 .b. below. "Board of Directors" means the Board of Directors of the Authority, acting as the legislative body of the CFD. "Bonds" means any bonds or other indebtedness (as defined in the Act) issued by the CFD and secured by the levy of Special Taxes. "CFD" means Community Facilities District No. 03-1 (Crowne Hill) of the Authority established pursuant to the Act. "CFD Administrator" means the Finance Director of the City, or designee thereof, responsible for determining the Special Tax Requirement and various other amounts described herein and for providing for the levy and collection of the Special Taxes. "City" means the City of Temecula. "Count' means the County of Riverside. "Developed Property" means all Parcels of Taxable Property, not classified as Approved Property, Undeveloped Property, Public Property and/or Property Owner's Association Property that are not Exempt Property pursuant to the provisions of Section E., below: (i) that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax is being levied and (ii) a building permit for new construction has been issued prior to April 1st preceding the Fiscal Year in which the Special Tax is being levied. "Exempt Property" means any Parcel, which is exempt from Special Taxes pursuant to Section E., below. "Final Map" means a subdivision of property evidenced by the recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or the recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which building permits may be issued without further subdivision. "Fiscal Year" means the period starting on July 1st and ending on the following June 30th "Indenture" means the indenturp, trust agreement, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Category" means any of the categories listed in Tables 1 and 2. A-2 "Maximum Special Tax" means the Maximum Special Tax, determined in accordance with Section C, which can be levied in any Fiscal Year on any Parcel. "Multifamily Residential Property" means any Parcel of Residential Property that consists of a building or buildings comprised of attached residential units available for rental but not purchase, by the general public and under common management. "Non-Residential Property" means all Pamels of Developed Property for which a building permit was issued for any type of non-residential use. "Parcel(s)" means a lot or parcel shown on an Assessor's Parcel Map with an assigned parcel number as of January 1st preceding the Fiscal Year for which the Special Tax is being levied. "Property Owner's Association Property" means any property within the boundary of the CFD, which, as of January 1st of the preceding Fiscal Year for which the Special Tax is being levied has been conveyed, dedicated to, or irrevocably dedicated to a property owner association, including any master or sub-association. "Proportionately" means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax or Backup Special Tax is the same for ail Parcels of Developed Property and for Undeveloped Property, Public Property and/or Property Owners Association Property that is not Exempt Property pursuant to Section E., for each applicable Zone, that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is the same for all such Parcels within each applicable Zone. "Public Property" means any property within the boundary of the CFD which, as of January 1st of the preceding Fiscal Year for which the Special Tax is being levied is used for rights-of-way or any other purpose and is owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State of California, the County, City or any other local jurisdiction, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use. "Residential Floor Area" means all of the square footage within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by the CFD Administrator with reference to the building permit(s) issued for such Assessor's Parcel or other appropriate means selected by the CFD Administrator. Once such determination has been made for a parcel, it shall remain fixed in ali future Fiscal Years. "Residential Property" means all Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Special Tax(es)" means the special tax to be levied in each Fiscal Year on each Parcel of Taxable Property. "Special Tax Requirement" means that amount required in any Fiscal Year to pay: (i) annual debt service on all outstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii) periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) Administrative Expenses; (iv) an amount equal to any anticipated shortfall due to Special Tax delinquency in the prior Fiscal Year; and A-3 (v) any amounts required to establish or replenish any reserve funds for the outstanding Bonds; less (vi) a credit for funds available to reduce the annual Special Tax levy as determined pursuant to the indenture. 'q'axable Property" means all Parcels in the CFD which have not prepaid pursuant to Section H, or are not exempt from the Special Tax pursuant to law or Section E., below. "Undeveloped Property" means all Taxable Property not classified as Developed Property, Approved Property, Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section E. "Zone(s)" means Zone 1 or Zone 2 as geographically identified on the boundary map of the CFD, attached as Exhibit 1. "Zone 1" means the specific area identified on the boundary map attached as Exhibit 1 as Zone 1 of the CFD. "Zone 2" means the specific area identified on the boundary map attached as Exhibit 1 as Zone 2 of the CFD. B. ASSIGNMENT TO LAND USE CATEGORY Each Fiscal Year, commencing with the 2003-2004 Fiscal Year, all Parcels of Taxable Property within the CFD of each applicable Zone shall be classified as either Developed Property, Approved Property, Undeveloped Property, Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions in Section E., and shall be subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment as determined pursuant to Sections C., and D., below. Pamels of Developed Property shall further be classified as Residential Property or Non- Residential Property. A Parcel of Residential Property shall further be classified to its appropriate Land Use Category based on the Residential Floor Area of such Parcel unless it qualifies as Multifamily Residential Property, for which the Assigned Special Tax shall be based on the number of dwelling units. C. MAXIMUM SPECIAL TAX RATE 1. Developed Property The Maximum Special Tax for each Parcel of Residential Property within its applicable Zone shall be the greater of: (i) the applicable Assigned Special Tax described in Tables 1 or 2, or (ii) the amount derived by application of the Backup Special Tax. The Maximum Special Tax for each Parcel of Non-Residential Property shall be the Assigned Special Tax described in Tables 1 or 2. A-4 a. Assiqned Special Tax The Assigned Special Tax for each Parcel of Developed Property is shown in Tables 1 or 2. TABLE 1 Assigned Special Taxes for Developed Property within Zone 1 Assigned Special Tax Taxable Per Land Use Category Unit Residential Floor Area Taxable Unit A - Residential Propert7 D/U 4,300 or more sq. ft. $5,136 B - Residential Property D/U 3,700 or more, but less than 4,300 sq. $2,457 ft. C - Residential Property D/U 3,200 or more, but less than 3,700 sq. $2,258 ft. D - Residential Property D/U 2,900 or more, but less than 3,200 sq. $1,754 ft. E - Residential Property D/U 2,600 or more, but less than 2,900 sq. $1,594 ft. F - Residential Property D/U 2,300 or more, but less than 2,600 sq. $1,442 ft. G - Residential Property D/U 2,000 or more, but less than 2,300 sq. $1,427 ft. H - Residential Property D/U Less than 2,000 sq. ft. $1,363 I Multifamily Residential Unit N/A $308 Property J - Non-Residential Property Acre N/A $5,547 A-5 TABLE 2 Assigned Special Taxes for Developed Property within Zone 2 Assigned Special Taxable Tax Per Land Use Category Unit Residential Floor Area Taxable Unit ' A - Residential Property D/U 3,300 or more sq. ft. $1,927 B - Residential Property D/U 2,800 or more, but less than 3,300 sq. $1,824 ff. C - Residential Property D/U 2,500 or more, but less than 2,800 sq. $1,539 ft. D - Residential Property D/U 2,300 or more, but less than 2,500 sq. $1,504 ft. E - Residential Property D/U 2,100 or more, but less than 2,300 sq. $1,436 ft. F- Residential Property D/U Less than 2,100 sq. ft. $1,316 G - Multifamily Residential Unit N/A $473 Property H - Non-Residential Property Acre N/A $8,519 b. Backup Special Tax Zone 1 The Backup Special Tax shall be $5,547 per Acre for Parcels of Residential Property. Zone 2 The Backup Special Tax shall be $8,519 per Acre for Parcels of Residential Property. Notwithstanding the foregoing, if pamels of Residential Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax shall be recalculated. 2. Approved Property The Maximum Special Tax for each Parcel of Approved Property within Zone 1 shall be $5,547 per Acre and the Maximum Special Tax for each Parcel of Approved Property within Zone 2 shall be $8,519 per Acre. 3., Undeveloped Property The Maximum Special Tax for each Parcel of Undeveloped Property within Zone 1 shall be $5,547 per Acre and the Maximum Special Tax for each Parcel of Undeveloped Property within Zone 2 shall be $8,519 per Acre. A-6 4. Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section E. The Maximum Special Tax for each Parcel of Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section E., within Zone 1 shall be $5,547 per Acre and the Maximum Special Tax for each Parcel of Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section E., within Zone 2 shall be $8,519 per Acre. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2003-2004 and for each following Fiscal Year, the Board of Directors shall levy the Special Tax on all Taxable Property until the amount of Special Taxes equals the Special Tax Requirement in accordance with the following steps: First: The Special Tax shall be levied Proportionately on each Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax rate in Tables 1 or 2 as needed to satisfy the Special Tax Requirement; Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Parcel of Approved Property at up to 100% of the Maximum Special Tax for Approved Property; Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property; Fourth: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax to be levied on each Parcel of Developed Property whose Maximum Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Special Tax for each such Parcel; Fifth: If additional moneys are needed to satisfy the Special Tax Requirement after the first four steps have been completed, the Special Tax shall be levied Proportionately on each Parcel of Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section E., at up to 100% of the Maximum Special Tax. Notwithstanding the above, under no circumstances will the Special Taxes levied against any Parcel of Residential Property be increased by more than ten percent (10%) per Fiscal Year as a consequence of delinquency or default by the owner of any other Parcel within the CFD. E, EXEMPTIONS 1. Zone 1 Special Taxes shall not be levied on up to 93.41 Acres of Public Property and/or Property Owner's Association Property within Zone 1 of the CFD. The CFD Administrator will assign Exempt Property status in the chronological order in which property becomes Public Property and/or Property Owner's Association Property within Zone 1. A-7 After the limit of 93.41 Acres within Zone I of the CFD has been reached, the Maximum Special Tax obligation for any additional Public Property and/or Property Owner's Association Property shall be prepaid in full pursuant to Section H., prior to the transfer or dedication of such property. Until the Maximum Special Tax obligation is prepaid as provided for in the preceding sentence, the Public Property and/or Property Owner's Association Property within the CFD shall be subject to the levy of the Special Tax as provided for in the fifth step in Section D. 2. Zone 2 Special Taxes shall not be levied on up to 30.43 Acres of Public Property and/or Property Owner's Association Property within Zone 2 of the CFD. The CFD Administrator will assign Exempt Property status in the chronological order in which property becomes Public Property and/or Property Owner's Association Property within Zone 2. After the limit of 30.43 Acres within Zone 2 of the CFD has been reached, the Maximum Special Tax obligation for any additional Public Property and/or Property Owner's Association Property shall be prepaid in full pursuant to Section H., prior to the transfer or dedication of such property. Until the Maximum Special Tax obligation is prepaid as provided for in the preceding sentence, the Public Property and/or Property Owner's Association Property within the CFD shall be subject to the levy of the Special Tax as provided for in the fifth step in Section D. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the CFD Administrator may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Parcels having delinquent Special Taxes as permitted by the Act if necessary to meet the financial obligations of the CFD. G. REVIEW AND APPEAL Any taxpayer may file a written appeal of the Special Tax levied on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant's property. No refunds of previously paid Special Taxes shall be made. H. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section H: "CFD Public Facilities" means $16,500,000 expressed in 2002 dollars, which shall increase by the Construction Inflation Index on July 1, 2003, and on each July I thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide A-8 the public facilities under the authorized bonding program of the CFD, or (ii) shall be determined by the Board of Directors concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment. "Construction Fund" means an account specifically identified in the Indenture to hold funds that are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the annual percentage change in the Engineering News-Record Building Cost Index for the City of Los Angeles, measured as of the calendar year, which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering New-Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction escrow accounts or funded by the Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment. "Outstanding Bonds" means all previously issued Bonds secured by the levy of Special Taxes, which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Special Taxes. 1. Prepayment in Full The Maximum Special Tax obligation may only be prepaid and permanently satisfied by a Pamel of Developed Property, Approved Property for which a building permit has been issued, or Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to Section E. The Maximum Special Tax obligation applicable to such Parcel may be fully prepaid and the obligation of the Parcel to pay the Special Tax permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to the Parcel at the time of prepayment. An owner of a Parcel intending to prepay the Maximum Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay, and within 10 business days of receipt of such notice, the CFD Administrator shall notify such owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the proper prepayment amount. Within 5 business days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the Prepayment Amount of such Parcel. Prepayment must be made not less than 60 days prior to any redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes. A-9 The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: 1. For Parcels of Developed Property, compute the Maximum Special Tax for the Parcel to be prepaid. For Parcels of Approved Property to be prepaid, compute the Maximum Special Tax for that Parcel as though it was already designated as Developed Property, based upon the building permit, which has already been issued for that Parcel. For Parcels of Public Property and/or Property Owner's Association Property to be prepaid, compute the Maximum Special Tax for that Parcel. 2. Divide the Maximum Special Tax computed pursuant to paragraph 1 by the total estimated Maximum Special Taxes based on the Developed Property Special Tax which could be charged on all expected development, less any Parcels which have been prepaid. 3. Multiply the quotient computed pursuant to paragraph 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). 4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed on the next applicable redemption date (the "Redemption Premium"). 5. Compute the Future Facilities Costs. 6. Multiply the quotient computed pursuant to paragraph 2 by the amount determined pursuant to paragraph 5 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount") 7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 8. Determine the Special Taxes levied on the Parcel in the current Fiscal Year which have not yet been paid. 9. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the Bond Redemption Amount less the Future Facilities A-10 Amount from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 10. Add the amounts computed pursuant to paragraphs 7 and 8 and subtract the amount computed pursuant to paragraph 9 (the "Defeasance Amount"). 11. Verify the administrative fees and expenses, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming the Outstanding Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 12. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 13. The Maximum Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 6, 10 and 11, less the amount computed pursuant to paragraph 12 (the "Prepayment Amount"). 14. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 10 and 12 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 6 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by the CFD. The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 8 (above), the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such Parcel from the County tax rolls. With respect to any Parcel that is prepaid, the Board of Directors shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Parcel, and the obligation of such Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayr~ent shall be allowed unless the amount of Maximum Special Taxes that may be levied on Taxable Property after the proposed prepayment is at least 1.10 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Special Tax on a Parcel of Developed Property or a Parcel of Approved Property for which a building permit has been issued may be partially prepaid in increments of $5,000. The amount of the prepayment shall be calculated as in Section H.I., except that a partial prepayment shall be calculated according to the following formula: A-11 PP = ((PE -A)x F)+A These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.1 F = the percent by which the owner of the Parcel(s) is partially prepaying the Maximum Special Tax. A = the Administrative Fees and Expenses calculated according to Section H.1 An owner of a Parcel intending to partially prepay the Maximum Special Tax shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, (ii) the percentage by which the Maximum Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable, and within 10 business days of receipt of such notice, the CFD Administrator shall notify such owner of the amount of the non- refundable deposit determined to cover the cost to be incurred by the CFD in calculating the proper amount of a partial prepayment. Within 5 business days of receipt of such non- refundable deposit, the CFD Administrator shall notify such owner of the partial Prepayment Amount of such Parcel. Partial prepayment must be made not less than 60 days prior to any redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes. With respect to any Parcel that is partially prepaid, the CFD Administrator shall (i) distribute the funds remitted to it according to Paragraph 14 of Section H.1., and (ii) indicate in the records of the CFD that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Parcel pursuant to Section D. I. TERM OF THE SPECIAL TAX For each year that any Bonds are outstanding the Special Tax shall be levied on all Parcels subject to the Special Tax. If any delinquent Special Taxes remain uncollected prior to or after all Bonds are retired, the Special Tax may be levied to the extent necessary to reimburse the CFD for uncollected Special Taxes associated with the levy of such Special Taxes, but not later than the 2043-2044 Fiscal Year. A-12 EXHIBIT 1 PROPOSED BOUNDARY MAP OF TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-1 (CROWNE H~LL) COUNTY OF RIVERSIDE, STATE OF CALIFORNIA A-13