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RES-8623 Notice of Special Tax Lien Community Facilities District No. 91-2 Serrano HeightsRESOLUTION NO. 8623 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ORANGE DETERMINING THAT THE RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES, THE FACILITIES TO BE FINANCED BY AND THE BONDED INDEBTEDNESS LIMIT AND THE ANNUAL APPROPRIATIONS LIMIT FOR IMPROVEMENT AREA NO.1 AND IMPROVEMENT AREA NO.2 OF THE CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91-2 (SERRANO HEIGHTS PUBLIC IMPROVEMENTS) ARE LAWFULLY AUTHORIZED AND DIRECTING RECORDING OF SECOND AMENDMENT TO NOTICE OF SPECIAL TAX LIEN WHEREAS, in proceedings heretofore conducted by this City Council pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"), this City Council, on May 14, 1996, adopted a resolution entitled "A Resolution of the City Council of the City of Orange Calling Special Election Regarding Establishment of Improvement Areas WithintheCityofOrangeCommunityFacilitiesDistrictNo. 91-2 (Serrano Heights Public Improvements), and Determining the Rate and Method of Apportionment of Special Taxes, the Authorized Facilities, and the Bonded Indebtedness and Appropriations Limits for Such Areas" (the Resolution Calling Election"), calling for a special election of the qualified electors within the City of Orange Community Facilities District No. 91-2 ( Serrano Heights Public Improvements)the "Districf') and Improvement Area No.1 and Improvement Area No. 2 of the District;WHEREAS, pursuant to the terms of the Resolution Calling Election, said special election was held on this date, and the City Clerk has on file a Canvass and Statement of Re,;ults of Election, a copy of which is attached hereto as Attachment A; and WHEREAS, this City Council has reviewed and hereby approves said Canvass.NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ORANGE DOES HEREBY RESOLVE AS FOLLOWS:Section 1. The issues presented at said special election were as described in the Resolution Calling Election, the provisions of which are, by this reference, incorporated herein.Section 2. Pursuant to said Canvass on file with the City Clerk, the issues presented at said special election were approved by the qualified electors of the District, Improvement Area No.1 of the District and Improvement Area No.2 of the District by more than two-thirds of the votes cast within the District as a whole and within each such improvement area at said special election.Section 3. This City Council hereby determines that the rate and method of apportionment of the special taxes to be levied within, the facilities authorized to be financed by and the bonded indebtedness limit and annual appropriations limit for each of Improvement Area No.1 of the District and Improvement Area No.2 of the District are lawfully authorized and shall be as set forth in the Resolution of Consideration which is described and included by reference in the Resolution Calling Election.Section 4. The City Clerk is hereby directed to execute and cause to be recorded in the office of the County Recorder of the County of Orange an amendment tax lien recorded with respect to the District, in substantially the form attached hereto as Attachment B, said recording to occur no later than fifteen days following adoption by this City Council of this Resolution. Section 5. It is hereby found that all prior proceedings and actions taken by this City Council with respect to the District, Improvement Area No.1 of the District and Improvement Area No.2 of the District were valid and in conformity with the Act. Section 6. This Resolution shall take effect immediately upon its adoption. ADOPTED this 14th day of May, 1996. ATTEST: 25027.03:J2154 0412RjQ6 2 I hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of Orange at a regular meeting thereof held on the 14th day of May, 1996, by the following vote: AYES: NOES: ABSENT: ABSTAIN: COUNCIL MEMBERS: MURPHY, BARRERA, COONTZ. SPURGEON, SJ"ATER COUNCIL MEMBERS: NONE COUNCIL MEMBERS: NONE COUNCIL MEMBERS: NONE 3 AITACHMENT A CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91- 2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS) AND IMPROVEMENT AREA NO.1 AND IMPROVEMENT AREA NO.2 THEREOF CANVASS AND STATEMENT OF RESULTS OF ELECTION I hereby certify that on May 14, 1996, I canvassed the returns of the election held on May 14, 1996, in Improvement Area No.1 of the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements) and the total number of ballots cast in said Improvement Area and the total number of votes cast for and against the measure are as follows and the totals as shown for and against the measure are full, true and correct: Qualified Landowner Votes Votes Cast YES NO Improvement Area No.1 of the City of Orange Community Facilities District No. 91-2 Serrano Heights Public 226 Improvements) Special Election, May 14, 1996.BALLOT MEASURE: Shall the rate and method of apportionment of the special taxes to be levied within Improvement Area No. 1 of the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements), the facilities to be financed by said improvement area and the bonded indebtedness limit and annual appropriations limit for said improvement area be as described in the resolution of the City Council of the City of Orange, adopted May 14, 1996, entitled "A Resolution of the City Council of the City of Orange Calling Special Election Regarding Establishment of Improvement Areas Within the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements), and Determining the Rate and Method of Apportionment of Special Taxes, the Authorized Facilities, and the Bonded Indebtedness and Appropriations Limits for I hereby certify that on May 14, 1996, I canvassed the returns of the election held on May 14, 1996, in Improvement Area No.2 of the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements) and the total number of ballots cast in said Improvement Area and the total number of votes cast for and against the measure are as follows and the totals as shown for and against the measure are full, true and correct: Qualified Landowner Votes Votes Cast YES NO Improvement Area No.2 of the City of Orange Community Facilities District No. 91-2 Serrano Heights Public 307 Improvements) Special Election,May 14, 1996.BALLOT MEASURE: Shall the rate and method of apportionment of the special taxes to be levied within Improvement Area No. 2 of the City of Orange Community Facilities District No. 91- 2 (Serrano Heights Public Improvements), the facilities to be financed by said improvement area and the bonded indebtedness limit and annual appropriations limit for said improvement area be as described in the resolution of the City Council of the City of Orange, adopted May 14, 1996, entitled "A Resolution of the City Council of the City of Orange Calling Special Election Regarding Establishment of Improvement Areas Within the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements), and Determining the Rate and Method of Apportionment of Special Taxes, the Authorized Facilities, and the Bonded Indebtedness and Appropriations Limits for Such Areas"?Yes:No:1996.IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND this 14th day of May,By:City Clerk of the ATTACHMENTB RECORDING REQUESTED BY AND AFrER RECORDATION RETIJRN TO: City Clerk City of Orange 3300 Newport Boulevard Newport Beach, CA 92663 CITY OF ORANGE AND IMPROVEMENT COMMUNITY FACILITIES DISTRICT NO. 91.2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS) AND IMPROVEMENT AREA NO.1 AND IMPROVEMENT AREA NO.2 THEREOF SECOND AMENDMENT TO NOTICE OF SPECIAL TAX LIEN Pursuant to the requirements of Section 3114.5 of the California Streets and Highways Code and Section 53328.3 of the Mello-Roos Community Facilities Act of 1982, as amended,California Government Code Sections 53311 et. seq. (the "Act"), a Notice of Special Tax Lien with respect to the City of Orange Community Facilities District No. 91-2 ( Serrano Heights Public Improvements) (the "District") was recorded in the Office of the County Recorder of the County of Orange on January 17, 1992, as Instrument No. 92-030991, and a First Amendment to Notice of Special Tax Lien was recorded in the Office of the County Recorder of the County of Orange on November 21,1995, as Instrument No. 19950516221.Pursuant to proceedings conducted in accordance with the Act, the City Council, acting as the legislative body for the District, has designated the areas within the District as Improvement Area No.1 of the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements)" (hereinafter referred to as "Area 1 of CFD 91.2") and as Improvement Area No.2 of the City of Orange Community Facilities District No. 91.2 (Serrano Heights Public Improvements) (hereinafter referred to an "Area 2 of CFD 91-2"), as such Improvement Areas are depicted as the West Parcel and the East Parcel respectively on the map of the District in Exhibit A attached hereto and as set forth in the First Amended Map of the Boundaries of City of Orange Community Facilities District No. 91-2 (SerranoHeights Public Improvements) and Delineati~ ImJ;l52.vement Area No.1 and No.2 Thereof recorded onfIPj April::.).., 1996, as Instrument No;llr 2ft! the Office of the County Recorder for the County ofOrange, and filed in Book .:J.Z at PageR' ~ tllrs\ lgll _ in Maps of Assessment and Community Facilities Districts in the Office of the County Recorder of the County of Orange.The City Council, acting as the legislative body for the District and Area 1 of CFD 91,2 and Area 2 of CFD 91-2 has provided for the following: (a) the rate and method of apportionment of special taxes for Area 1 of CFD 91-2 to be as specified in the Rate and Method of Apportionment for Improvement Area No.1 of the City of Orange Community Facilities District No. 91-2 ( Serrano Heights Public Improvements) set forth in Exhibit B attached hereto and by this reference made a part hereof, (b) the rate and method of apportionment of special taxes for Area 2 of CFD 91-2 to be as specified in the Rate and Method of Apportionment for Improvement Area No.2 of the City of Orange Community Facilities District No. 91- 2 (Serrano Heights Public Improvements) set forth in Exhibit C hereto and by this reference made a part hereof, (c) the facilities to be as set forth in Exhibit D attached hereto and by this reference made a part hereof, (d) the facilities to be financed by Area 2 of CFD 91-2 to be as set forth in Exhibit E attached hereto and by this reference made a part hereof, (e) the annual appropriations limit for Area 1 of CFD 91- 2 to be $14,000,000, (f) the annual appropriations limit for Area 2 of CFD 91-2 to be 17,000,000, (g) the bonded indebtedness limit for Area 1 of CFD 91.2 to be $14,000,000, and h) the bonded indebtedness limit for Area 2 of CFD 91-2 to be $17, 000,000.Pursuant to the requirements of Section 3117.5 of the California Streets and Highways Code and Section 53338(c) of the Act, the undersigned City Clerk of the City ofOrange, County of Orange, State of California, hereby gives notice of the foregoing and of the material in the Exhibits attached hereto, and that the lien of the special taxes in the District and Area 1 of CFD 91-2 and Area 2 of CFD 91-2 shall continue in effect until the special taxes are prepaid or satisfied, as provided in the Act. Conditions under which the obligation to pay the special tax for Area 1 of CFD 91-2 may be prepaid and permanently satisfied and the lien of the special tax canceled are as set forth in Exhibit B hereto. Conditions under which the obligation to pay the special tax for Area 21 of CFD 91-2 may be prepaid and permanently satisfied and the lien of the special tax canceled are as set forth in Exhibit C hereto.The name of the owner and the assessor's taxparcelnumbersoftherealpropertyincludedwithinArea1ofCFD91,2 and not exempt from the special tax are as set forth in Exhibit F attached hereto and hereby made a part hereof. The name of the owner and the assessor's tax parcel numbers of the real property included within Area 2 of CFD 91,2 and not exempt from the special tax are as set forth in Exhibit G attached hereto and hereby made a part hereof.Reference is made to the boundary map of the District recorded at Book 57 of Maps of Assessment and Community Facilities Districts at Pages 44 through 47, in the office of the County Recorder for the County of Orange, State of California, as amended by the first amended boundary map of the District recorded at Book . 2Z of Maps of Assessment andCommunity Facilities Districts at Pag~ ntl<lvu/Sl. --"" in the office of the County Recorder for the County of Orange, State of California, which map, as so amended, is the boundary map of the District, Area 1 of CFD 91-2 and Area 2 of CFD 91.2.For further information concerning the current and estimated future tax liability of owners or purchasers of real property subject to this special tax lien, interested persons should contact the Finance Director of the City of Orange, 300 East Chapman Avenue, Orange,California 92666, telephone number ( 714) 744,2234.Dated:1996 By:City Clerk EXHIBIT A MAP INDICATING IMPROVEMENT AREAS WITHIN CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91- 2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS) r> P. M. 8.,\ ..~ ·I I I A- l EXIllBIT B RATE AND METHOD OF APPORTIONMENT FOR IMPROVEMENT AREA NO.1 OF THE CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91-2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS) A Special Tax shall be levied and collected in Improvement Area No. I of the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements) each Fiscal Year, in an amount determined by the Finance Director of the City through the application of the procedures described below. All of the real property in Improvement Area No. I of CFD No. 91-2, unless exempted by law or by the provisions hereof, shall be taxed for the purposes,to the extent and in the manner herein provided. A. DEFINITIONS The terms used herein shall have the following meanings:Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California.Administrative Expenses" means any or all of the following: the fees and expenses of any fIscal agent (including any fees or expenses of its counsel) employed by the City in connection with any bonds of Improvement Area No.1 of CFD No. 91-2, the expenses of the City in carrying out its duties under any fIscal agent agreement with respect to such bonds, including, but not limited to, the levy and collection of the Special Tax, any City charges and including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto, and all other costs and expenses of the City or any fIscal agent incurred in connection with the discharge of their respective duties under any fIscal agent agreement with respect to such bonds and, in the case of the City, in any way related to the administration of Improvement Area No. I of CFD No. 91-2.Apartment" 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.Assessor's Parcel" or "Parcel" means a lot or parcel with a parcel number assigned by Improvement Area No.1 CFD No. 91- 2 Page 2 Assigned Special Tax" means the Special Tax described in Section C that applies to Parcels of Developed Property.Backup Special Tax" means that Special Tax described in Section C that may apply to Parcels of Developed Property and Improved Property.CFD No. 91-2" means Community Facilities District No. 91-2 ( Serrano Heights Public Improvements) established by the City under the Act, including any annexations thereto.City" means the City of Orange, California.Condominium" means a unit meeting the statutory deftnition of a condominium contained in California Civil Code, Section 1351.Council" means the City Council of the City, acting as the legislative body of Improvement Area No. I of CFD No. 91-2.County" means the County of Orange, California.Developed Property" means for any Fiscal Year, any Parcel of Taxable Property for which a building permit was issued, as of March I of the prior Fiscal Year.Development Projection" means an annual projection of the number of residential units and non-residential acres expected to be developed within Improvement Area No. I of CFD No. 91-2. The Development Projection for each Planning Area in Improvement Area No.1 of CFD No. 91-2 shall include (i) the number and square footage of existing units in each Land Use Class and the number of existing acres of Non-Residential Property, (ii) the number and acreage of Parcels of existing Improved Property, and (iii)a projection of all future development, including the acreage, projected number of units in each Land Use Class, projected building square footage, projected non-residential acres, and an absorption schedule for all future development in Improvement Area No.1 of CFD No. 91-2. The Development Projection shall be dated as of March 1 and prepared each Fiscal Year, at the discretion of the Finance Director, by either the Master Developer or an independent consultant.Final Residential Subdivision" means a subdivision of property by recordation of a fInal map, parcel map, or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or 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.Finance Director" means the offIcial of the City who is the chief fInancial offIcer or other comparable officer of the City or designee thereof responsible for determining the Special Tax Requirement and Improvement Area No. 1 CFD No. 91- 2 Page 3 Fiscal Year" means the period starting any July I and ending on the following June 30.Flat" means any building of Residential Property that consists of attached units, other than Apartments, in which more than fIfty percent of the individual units are stacked above or below other units in the structure.Home Owner Association Property" means, for any Fiscal Year, any real property within the boundaries of Improvement Area No.1 of CFD No. 91-2 that is owned by,or irrevocably offered for dedication to, a home owner's association on or before March 1 of the previous Fiscal Year; provided however, that real property that has been irrevocably dedicated will only be included if a copy of the offer is provided to the Finance Director on or before March I.Improved Property" means, for any Fiscal Year, any Parcel of Taxable Property that is within a Final Residential Subdivision as of March 1 of the previous Fiscal Year, but that is not Developed Property.Improvement Area No.1" means that area designated as Improvement Area No. I on the boundary map of CFD No. 91-2.Land Use Class" or "Class" means any of the classes listed in Table I below.Master Developer" means the owner or owners of the predominant amount of Undeveloped Property in Improvement Area No.1 of CFD No. 91-2.Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C, that can be levied in Improvement Area No.1 of CFD No. 91-2 in any Fiscal Year on Improved Property, Undeveloped Property, and each Land Use Class of Developed Property, as applicable.Non-Residential Property" means any Parcel of Developed Property other than Residential Property.Planning Areas" means those areas shown on Exhibit A. Minor adjustments in the boundaries of the planning areas may be made to accommodate adjustments in the tentative maps prepared for these areas. (Only Planning Areas 1, 2, 3, 4, and 10 are in Improvement Area No.1 of CFD No. 91-2).Proportionately" shall mean for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property. "Proportionately" shall mean for Improved Property that the ratio of the actual Special Tax Levy to the Maximum Special Tax is equal for all Assessor's Parcels of Improved Property. "Proportionately" shall mean for Undeveloped Property that the ratio of the actual Special Tax levy to the Maximum Special Tax for Undeveloped Property is equal for Improvement AreaNo. 1 CFD No. 91- 2 Page 4 Public Property" means property within the boundaries of Improvement Area No. 1 of CFD No. 91-2 owned by, or irrevocably offered for dedication to, the federal government, State of California, or other public agency or easements for the exclusive use of a public utility provider.Residential Property" means any Parcel of Developed Property for which a building permit was issued for purposes of constructing a residential dwelling unit(s).Single Family" means any Parcel of Residential Property other than Apartments, Flats,and Town Homes.Special Tax" means the Special Tax that may be levied by CFD No. 91-2 each Fiscal Year to fund the Special Tax Requirement. Special Tax Requirement" means that amount required in any Fiscal Year to pay: (I) debt service and other periodic costs on the bonds or other indebtedness of Improvement Area No.1 of CFD No. 91-2 due in the calendar year commencing in such Fiscal Year,2) the cost of acquisition or construction of authorized facilities of Improvement Area No. I of CFD No. 91-2, (3) Administrative Expenses, (4) costs of authorized services of Improvement Area No. 1 of CFD No. 91-2, (5) any amount required to replenish any reserve fund established in association with bonds issued for Improvement Area No. I of CFD No. 91-2, (6) an amount equal to the estimated delinquencies expected in payment of the Special Tax not otherwise taken into account, as detennined by the Finance Director or his designee, and (7) the costs of remarketing, credit enhancement and liquidity facility fees (including such fees for instruments that serve as the basis of a reserve fund related to any indebtedness in lieu of cash).Taxable Property" means any Parcel in or annexed to Improvement Area No.1 of CFD No. 91-2 which is not Public Property or Home Owner Association Property.Town Home" means any building of Residential Property that consists of attached units, other than Apartments, in which fIfty percent or more of the individual units are side by side and not stacked above or below other units in the structure.Undeveloped Property" means, for any Fiscal Year, any Parcel of Taxable Property that is not classifIed as Developed Property or Improved Property as of March 1 of the previous Fiscal Year.B. ASSIGNMENT TO LAND USE CATEGORIES For each Fiscal Year, all Taxable Property shall be classifIed as Developed Property,Improved Property, or Undeveloped Property as of March 1 of the prior Fiscal Year and shall be subject to the Special Tax in accordance with the rate and method of apportionment described in Sections C and D below. For purposes of determining the applicable Assigned Special Tax in each Fiscal Year, all Developed Property shall be assigned by the Finance Director to one of the Land Use n ill u s~.,. t:::> j s ~ gf- 01 Q..- lll o I" l i;::>l 1", ot: 8.8l fi 100 Q ell U E-<;; J Cl:" C l U Q s t= ll 01"on l ~ g,xg Vi >' U t:" 0:: 8. ~g~ ::> z iIl S ; l i J i! j ll~ 8. j~ I I I Improvement Area No. 1 CFD No. 91- 2 Page 6 below as of March I of the prior Fiscal Year. Non,Residential Property shall be assigned to Class 5.C. MAXIMUM SPECIAL TAX RATES 1. Developed Property The Maximum Special Tax for any Fiscal Year for each Assessor's Parcel classifIed as Developed Property shall be the greater of (i) the Backup Special Tax for the Parcel, or (ii) the amount derived by application of the applicable Assigned Special Tax.a. Assigned Special Tax The Assigned Special Tax per unit and per building square foot for each Land Use Class is shown by Table 1. The Assigned Special Tax for each dwelling unit shall be the sum of the special tax per unit plus the product of the special tax per square foot multiplied by the building square footage of the unit. The square footage of a dwelling unit shall be determined by the Director of Public Works at the time of issuance of the original building permit for the building, by reference to the square footage shown on such building permit, exclusive of garages, common areas, and other structures which are not used as living space. Once determined, the square footage assigned to a residential unit shall not be subject to change despite the issuance of additional permits for changes or modifIcations to the structure).TABLE I Assigned Special Taxes for Developed Property in Improvement Area No.1 of CFD No. 91-2 Assigned Special Tax Rates 1995-96 Per Unit Per Square Foot 1 Single Family $650 $.65 2 Town Home $600 $.60 3 Flat $550 $.55 4 Apartment $545 NA 5 Non-Residential N/A $ 26,625 Improvement Area No. 1 CFD No. 91- 2 Page 7 On each July 1, commencing July I, 1996, the Assigned Special Tax rates for each Class shall be increased to 102 percent of the respective Assigned Special Tax in effect in the previous Fiscal Year.b. Backup Special Tax The Backup Special Tax for each of the Planning Areas shown in Exhibit A shall be the amounts indicated in Table II. TABLEll Backup Special Taxes for Developed Property and Improved Property Improvement Area No.1 of CFD No. 91-2 Planning Backup Area Special Tax FY 1995-96 I $168,935 2 $274,620 3 $179,400 4 $225,810 10 $168,740 Total $ 1,017,505 Upon the subdivision of these Planning Areas in a manner that creates a Final Residential Subdivision, the Backup Special Tax of the Planning Area shall be allocated as follows:i) If a Final Residential Subdivision includes all of the Taxable Property in a Planning Area, then the Backup Special Tax for the Final Residential Subdivision shall equal the Backup Special Tax of the Planning Area as shown in Table II, and shall be allocated equally to each Parcel in such subdivision for which the issuance of a building permit for purposes of construction of a residential dwelling unit or units is permitted. In the case of a Final Residential Subdivision which creates Condominiums, the Backup Special Tax shall be allocated equally among the dwelling units specifIed in the condominium plan. In the case of a Final Residential Subdivision that will include Apartments, the Backup Special Tax shall be allocated equally on the basis of the total units allowed to be built on any Parcel compared to the total units allowed to be built in Improvement Area No.1 CFD No. 91-2 Page 8 ii) If a Final Residential Subdivision is recorded for only a portion of the Taxable Property in a Planning Area and additional Final Residential Subdivisions have been recorded or are anticipated for such Planning Area, the Backup Special Tax for such Final Residential Subdivision, assuming that a mandatory prepayment is not required pursuant to Section K, shall equal the Backup Special Tax for the Planning Area as shown in Table II multiplied by the quotient of the number of units in such Final Residential Subdivision divided by the total number of units expected to be built in the Planning Area (as determined by the lesser of (i) the number of units shown for the Planning Area on the tentative map approved for such Final Residential Subdivision or (ii) the number of units in such Planning Area according to the current Development Projection). However, prior to the recordation of the last Final Residential Subdivision within a Planning Area (as determined by the Finance Director), the Finance Director shall, if necessary, adjust the Backup Special Tax for such Final Residential Subdivision to ensure that the sum of the Backup Special Taxes for all Final Residential Subdivisions within the Planning Area is not less than the Backup Special Tax for the Planning Area (assuming that a mandatory prepayment has not been not required pursuant to Section K). The Backup Special Tax for the Final Residential Subdivision shall then be allocated to each residential unit as described above. The Backup Special Tax for any Parcel of Non-Residential Property shall be $0.51 per square foot of the area of the Parcel.On each July I, commencing July 1, 1996, the Backup Special Tax shall be increased to 102 percent of the respective Backup Special Tax in effect in the previous Fiscal Year.c. Limits on Special Tax on Residential Property Pursuant to Section 53321 of the Act, under no circumstances shall the Special Tax levied against any Parcel of Residential Property be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Parcel. An increase of ten percent or more shall be determined by comparison to what the levy of Special Tax would be for any Parcel if there were no delinquencies or Improvement Area No. 1 CFD No. 91- 2 Page 9 2. Improved Property The Maximum Special Tax for a Parcel of Improved Property shall be the Backup Special Tax for such Parcel, as calculated pursuant to Section C.l.b. above.On each July 1, commencing July 1, 1996, the Maximum Special Tax for Improved Property shall be increased to 102 percent of the Maximum Special Tax in effect in the previous Fiscal Year.3. Undeveloped Property The 1995-96 Maximum Special Tax for Undeveloped Property shall be $ 26,625 per acre.On each July 1, commencing July 1, 1996, the Maximum Special Tax for Undeveloped Property shall be increased to 102 percent of the Maximum Special Tax in effect in the previous Fiscal Year.D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 1996-97, and for each following Fiscal Year, the Finance Director shall determine the Special Tax Requirement for the applicable Fiscal Year and shall levy the Special Tax, as provided below, until the aggregate amount of the levy equals the Special Tax Requirement for such Fiscal Year:First: The Special Tax shall be levied Proportionately on each Assessor' s Parcel of Developed Property up to 91 percent of the applicable Assigned Special Tax for each Land Use Class of Developed Property.Second: If additional monies are needed after the fIrst step have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Improved Property, up to 91 percent of the Maximum Special Tax for Improved Property.Third: If additional monies are needed after the fIrSt two steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, up to 91 percent of the Maximum Special Tax for Undeveloped Property.Fourth: If additional monies are needed after the fIrst three steps have been completed,then the levy of the Special Tax on each Assessor's Parcel of Developed Property,Improved Property, and Undeveloped Property shall be increased in equal percentages from the amounts calculated pursuant to steps I through 3 above, up to 100 percent of the applicable Assigned Special Tax for Developed Property and up to 100 percent of the Maximum Special Tax for Improved Property and Undeveloped Property.Fifth: If additional monies are needed after the fIrst four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Improvement Area No. 1 CFD No. 91- 2 Page 10 shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax.E. EXEMPTIONS The Finance Director shall not levy a Special Tax on up to 199.92 acres of Public Property and Home Owner Association Property. Tax-exempt status will be irrevocably assigned by the Finance Director in the chronological order in which property is designated Public Property or Home Owner Association Property and in the following order of priority:Em: Public Property owned by entities of the federal government, State of California,or any local government agency and easements for the exclusive use of public utility providers, as of the date of formation of CFD No. 91-2;Second: Public Property acquired by the public agency or public utility provider through a gift, dedication, negotiated transaction, eminent domain, or any other form of conveyance, including granting of an easement, subsequent to the date of fonnation of CFD No. 91-2, with priority in order of the acquisition of the property;Third: Home Owner Association Property, with acres made exempt such that the number of acres that are not exempt are equal in proportion to the number of dwelling units for each association.Public Property and Home Owner Association Property that is not exempt from Special Taxes by this section shall be subject to the levy of the Special Tax and shall be taxed as if the property were Undeveloped Property. However, on a year to year basis, the Finance Director may exempt such Parcels from the levy of the Special Tax in any Fiscal Year provided the Special Tax Requirement can be satisfIed without imposing a levy on said Parcels. F. MANNER OF COLLECTION The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem real property taxes, provided, however, that CFD No. 91-2 may collect Special Taxes at a different time or in a different manner as determined by the Finance Director, if necessary to meet its fmancial obligations. G. TERMINATION OF SPECIAL TAX Except for any delinquent Special Taxes and related penalties and interest, Special Taxes used to pay for either or both the acquisition and construction of any public facilities for Improvement Area No.1 of CFD No. 91-2 (through the issuance of bonds or otherwise)and levied on any Parcel shall not be levied after the thirtieth (30th) Fiscal Year in which such Parcel was taxed as Developed Property. After such thirtieth (30th) Fiscal Year,and the collection of any delinquent Special Taxes, penalties and interest, the Finance Director shall cause a document substantially in the Improvement Area No. 1 CFD No. 91-2 Page 11 such termination of the levy and collection to be recorded in the offIce of the recorder of the County. H. APPEALING THE LEVY OF SPECIAL TAXES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may me a written notice of appeal and refund to that effect with the Finance Director not later than one calendar year after having paid the Special Tax that is disputed. The Finance Director shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Finance Director's decision requires the Special Tax be modifIed or changed in favor of the property owner, a cash refund shall not be made (except for the last year of levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Finance Director shall be referred to the City Council of the City and the decision of the City Council shall be fmal. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. I. FULL PREPAYMENT OF SPECIAL TAX The Special Tax on any Parcel of Developed Property may be fully prepaid at any time and the obligation to pay the Special Tax pennanently satisfIed by payment of the sum of the following: 1. A sum equal to (a) delinquent Special Taxes on such Parcel, including any applicable penalties and related costs, and (b) Special Taxes due on such Parcel but not yet paid for the Fiscal Year in which such prepayment is made. 2. A sum equal to the principal portion of the amount of prepayment determined as follows: P = PVST + 1.10 Where the terms have the following meaning: P= PVST = the principal portion of the prepayment the net present value of the Maximum Special Tax for the Parcel The net present value of the Maximum Special Tax shall be calculated based on the Maximum Special Tax that may be levied on the Parcel until the termination date of Special Taxes for the Parcel calculated pursuant to Section G hereto, using as the discount rate the combined aggregate yield of the outstanding bonds (Le., the yield that when computing the net present value of the remaining payments of principal and interest on the bonds produces an amount equal to the face amount of the remaining outstanding bonds) or if no bonds are outstanding, using a discount rate of 8.25 percent. Improvement Area No.1 CFD No. 91- 2 Page 12 3. The principal portion of the prepayment shall be decreased by an adjustment for a reserve fund credit. The adjustment shall be equal to a percent of the principal portion of the prepayment equal to the lesser of the following: (i) the amount required to be in the reserve fund, as a percent of the bonds outstanding, and ( ii)the amount actually in the reserve fund, as a percent of the bonds outstanding.4. The amount calculated in steps 2-3, if used to redeem bonds, shall be rounded up to the nearest $5,000, less the interest expected to be earned on the prepayment until such bonds are redeemed; however, if prepayment is made for two or more Parcels together, the aggregate principal of all of the prepayments may be rounded up to the nearest $5,000, with the addition due to the rounding apportioned to each prepayment based on the proportion of each of the prepayments to the total prepayment.5. The amount needed to pay interest on the outstanding bonds to be redeemed until the earliest call date for outstanding bonds.6. A sum equal to applicable redemption premiums, if any, on the bonds to be redeemed.7. A sum equal to administrative fees and expenses of the City associated with the prepayment.The amounts calculated in the preceding steps shall be paid to the City and shall be distributed by the City according to the fIscal agent agreement. Upon the payment of such prepayment amount to the City, the obligation to pay Special Tax shall be deemed to be permanently satisfIed, the Special Tax shall not be levied thereafter, and the City shall cause a notice of cessation of the Special Tax to be recorded within 30 working days of receipt of such prepayment amount.The Finance Director may disallow the right to prepay Special Taxes, if in the reasonable determination of the Finance Director, such prepayment would negatively affect the security of the remaining outstanding bonds.J. PARTIAL PREPAYMENT OF SPECIAL TAX Under the conditions set forth below, the Special Tax on Developed Property may be partially prepaid on all of the Parcels within a Planning Area, or all of the Parcels within a Planning Area owned by a single owner, and that portion of the Special Tax obligation permanently satisfIed. The amount of the prepayment shall be calculated as in Section I; except, however, the principal portion shall be calculated according to the following formula:Pp = PE X P Where the terms have the Improvement Area No. 1 CFD No. 91-2 Page 13 Pp = the principal portion of the partial prepayment PE = the principal portion of the prepayment calculated according to Section 1.2 P = the percent by which the owner of the Parcels within the Planning Area is to partially prepay the Special Tax The partial prepayment of Special Taxes shall be collected at the close of escrow of each Parcel in the Planning Area. An owner of the Parcels within a Planning Area shall notify the Finance Director of (i) such owner's intent to partially prepay the Special Tax on all of the Parcels within a Planning Area or all of those Parcels within a Planning Area that are owned by such owner, (ii) the percentage by which the Special Tax shall be prepaid, (ill) the size of units being built by the owner on such Parcels and the average parcel size, and (iv) the company or agency that will be acting as the escrow agent. The owner shall provide instructions to the escrow agent and the Finance Director, which instructions shall direct the escrow agent to collect the partial prepayment of the Special Taxes as calculated pursuant to this Section J and to remit this amount to the City. The Finance Director shall provide the owner and the escrow agent with a statement of the amount required for the partial prepayment of the Special Tax for a Parcel within fIve (5) working days of notice of the pending close of an escrow. The notice to the Finance Director must include confirmation of the square footage of the unit, calculated consistent with Section C herein. The Finance Director may charge a reasonable fee for providing this fIgure. With respect to any Parcel so partially prepaid, the City shall (i) distribute the funds remitted to it by the escrow agent according to the fIscal agent agreement, (ii) cause a suitable notice to be recorded in compliance with the Act within 30 days of receipt of such prepayment of Special Taxes, to indicate the partial prepayment of Special Taxes and the release of the Special Tax lien in such amount, (ill) indicate in the records of CFD No. 91-2 that there has been a partial prepayment of the Special Tax and that this portion of the Special Tax shall not be levied thereafter. A partial prepayment of Special Taxes shall reduce both the Backup Special Tax and the Assigned Special Tax of the Parcel in equal percentages. Following a partial prepayment of the Special Tax with respect to any Parcel, the outstanding percentage (1.00 - P) of the Special Tax shall continue to be levied on such Parcel. The Finance Director may disallow the right to prepay Special Taxes, if in the reasonable determination of the Finance Director, such prepayment would negatively affect the security of the remaining outstanding bonds. K. MANDATORY PREPAYMENT Before each Final Residential Subdivision is recorded, the Finance Director, or his designee, shall: 1. Calculate the Assigned Special Taxes that can be generated in each future Fiscal Year by all existing and future (based on the Development Projection) Developed Property in Improvement Area No.1 of CFD No. 91-2. Multiply this Improvement Area No. 1 CFD No. 91- 2 Page 14 by 1.25 to determine the adjusted Assigned Special Taxes for Improvement Area No.1 of CFD No. 91-2.2. If, in each future Fiscal Year, the adjusted Assigned Special Taxes calculated in Step 1 are greater than or equal to 110 percent of the annual debt service on outstanding bonds, then mandatory prepayment is not necessary. If, in any future Fiscal Year, the adjusted Assigned Special Taxes calculated in Step I are less than 110 percent of the annual debt service on outstanding bonds, then continue to Step 3.3. Calculate the Assigned Special Taxes that can be generated in each future Fiscal Year by all existing and future (based on the Development Projection) Developed Property in the Planning Area in which the proposed Final Residential Subdivision is located. Multiply this number by 1.25 to determine the adjusted Assigned Special Taxes for the Planning Area.4. Divide the Backup Special Tax for the Planning Area in which the proposed Final Residential Subdivision is located by the total Backup Special Tax for all Planning Areas and, for each remaining Fiscal Year, multiply the quotient by 110 percent of the annual debt service on outstanding bonds.5. If, in each future Fiscal Year, the adjusted Assigned Special Taxes for the Planning Area calculated in Step 3 are greater than or equal to 11 0 percent of the annual debt service for the Planning Area calculated in Step 4, then mandatory prepayment is not necessary for this Final Residential Subdivision.If, in any future Fiscal Year, the adjusted Assigned Special Taxes calculated in Step 3 are less than 110 percent of the annual debt service calculated in Step 4,then continue to Step 6.6. Calculate the present value of the annual shortfall between the adjusted Assigned Special Taxes calculated in Step 3 and the annual debt service calculated in Step 4 using the aggregate yield of the outstanding bonds computed pursuant to Section 1.2. as the discount rate.7. Divide the Planning Area shortfall calculated in Step 6 by the future dwelling units in the Planning Area, and multiply the quotient by number of dwelling units in the proposed Final Residential Subdivision.The mandatory prepayment shall be calculated as in Section I; except however, the principal portion shall be the amount calculated in Step 7 above. Payment of such mandatory prepayment must be made prior to the recordation of the proposed Final Residential Subdivision. The Assigned Special Taxes for Developed Property within the Final Residential Subdivision shall not change as a result of the mandatory prepayment.However, the Backup Special Tax allocated to the Final Residential Subdivision shall be reduced based on the percentage of outstanding bonds allocable to such Final Residential Subdivision that were prepaid as a result of the EXHffiITA Planning Areas CFD No. 91- 2 0." I rj ri i Iii i ~ I II ~::: .JI !i!i 0 il . :~ I-; ~Zo 35 t~; I ~ z12",~ za:::; mD jj ~ ~ B CII 11)..I fill... fill iI coo J. lllllilli Iii N G ~ z:! l!lo zU)~ It:! ID lp~UI. . 'I . ~ j. . .... 1ft ... "" Iii ~ li! 22 ~ 1- N Go 0.. N N _ ........ 1000001llillillillilli il-2" u l:~_ Zz- o CIl. 9l!~ I G I~ ~ ~ : I~ 1 .! fI~l, i.l,.jdlG~ ~ J, 0-.1'-':1 8~ @) @ e.:;;::: 8I @~Cf) l- r--' C r " 2J;sV @ D ..,...t,> '" J-oI- 111 7~"' Cs r-".= :z@- @-<( 2l cz:::0 ""I~. S fT' C._ ~_r . r ,.i. v. J:\CLIENTS\ ORANOE.CIT\ SERRANO.HTS\RMA\REVIt .RMA f ~Z ~l!l ! Z z CIl ~l!lIt -CIl CIlIt ~ It us ~ I~~~~~~9~~~~ ! 2 EXIDBIT C RATE AND METHOD OF APPORTIONMENT FOR IMPROVEMENT AREA NO.2 OF THE CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91- 2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS)A Special Tax shall be levied and collected in Improvement Area No. 2 of the City of Orange Community Facilities District No. 91-2 (Serrano Heights Public Improvements) each Fiscal Year, in an amount determined by the Finance Director of the City through the application of the procedures described below. All of the real property in Improvement Area No.2 of CFD No. 91-2, unless exempted by law or by the provisions hereof, shall be taxed for the purposes,to the extent and in the manner herein provided.A. DEFINITIONS The terms used herein shall have the following meanings:Act" means the Mello,Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part I, Division 2 of Title 5 of the Government Code of the State of California.Admini<<trative Expenses" means any or all of the following: the fees and expenses of any fIscal agent (including any fees or expenses of its counsel) employed by the City in connection with any bonds of Improvement Area No. 2 of CFD No. 91-2, the expenses of the City in carrying out its duties under any fIscal agent agreement with respect to such bonds, including, but not limited to, the levy and collection of the Special Tax, any City charges and including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto, and all other costs and expenses of the City or any fIscal agent incurred in connection with the discharge of their respective duties under any fIscal agent agreement with respect to such bonds and, in the case of the City, in any way related to the administration of Improvement Area No.2 of CFD No. 91-2.Apartment" 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.Assessor's Parcel" or "Parcel" means a lot or parcel with a parcel number assigned by Improvement Area No.2 CFD No. 91- 2 Page 2 Assigned Special Tax" means the Special Tax described in Section C that applies to Parcels of Developed Property.Backup Special Tax" means that Special Tax described in Section C that may apply to Parcels of Developed Property and Improved Property.CFD No. 91-2" means Community Facilities District No. 91-2 ( Serrano Heights Public Improvements) established by the City under the Act, including any annexations thereto.City" means the City of Orange, California.Condominium" means a unit meeting the statutory defInition of a condominium contained in California Civil Code, Section 1351.Council" means the City Council of the City, acting as the legislative body of Improvement Area No.2 of CFD No. 91-2.County" means the County of Orange, California.Developed Property" means for any Fiscal Year, any Parcel of Taxable Property for which a building permit was issued, as of March 1 of the prior Fiscal Year.Development Projection" means an annual projection of the number of residential units and non-residential acres expected to be developed within Improvement Area No. 2 of CFD No. 91-2. The Development Projection for Improvement Area No.2 of CFD No.91-2 shall include (i) the number and square footage of existing units in each Land Use Class and the number of existing acres of Non-Residential Property, (ii) the number and acreage of Parcels of existing Improved Property, and (ill) a projection of all future development, including the acreage, projected number of units in each Land Use Class,projected building square footage, projected non-residential acres, and an absorption schedule for all future development in Improvement Area No.2 of CFD No. 91-2. The Development Projection shall be dated as of March I and prepared each Fiscal Year, at the discretion of the Finance Director, by either the Master Developer or an independent consultant.Final Residential Subdivision" means a subdivision of property by recordation of a fInal map, parcel map, or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or 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.Finance Director" means the offIcial of the City who is the chief fInancial offIcer or other comparable offIcer of the City or designee thereof responsible for determining the Special Tax Requirement and Improvement Area No.2 CFD No. 91- 2 Page 3 Fiscal Year" means the period starting any July I and ending on the following June 30.Flat" means any building of Residential Property that consists of attached units, other than Apartments, in which more than fIfty percent of the individual units are stacked above or below other units in the structure.Home Owner Association Property" means, for any Fiscal Year, any real property within the boundaries of Improvement Area No.2 of CFD No. 91-2 that is owned by,or irrevocably offered for dedication to, a home owner's association on or before March 1 of the previous Fiscal Year; provided however, that real property that has been irrevocably dedicated will only be included if a copy of the offer is provided to the Finance Director on or before March 1.Improved Property" means, for any Fiscal Year, any Parcel of Taxable Property that is within a Final Residential Subdivision as of March I of the previous Fiscal Year, but that is not Developed Property.Improvement Area No.2" means that area designated as Improvement Area No. 2 on the boundary map of CFD No. 91-2.Land Use Class" or "Class" means any of the classes listed in Table I below.Master Developer" means the owner or owners of the predominant amount of Undeveloped Property in Improvement Area No.2 of CFD No. 91-2.Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C, that can be levied in Improvement Area No.2 of CFD No. 91-2 in any Fiscal Year on Improved Property, Undeveloped Property, and each Land Use Class of Developed Property, as applicable.Non-Residential Property" means any Parcel of Developed Property other than Residential Property.Proportionately" shall mean for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property. "Proportionately" shall mean for Improved Property that the ratio of the actual Special Tax Levy to the Maximum Special Tax is equal for all Assessor's Parcels of Improved Property. "Proportionately" shall mean for Undeveloped Property that the ratio of the actual Special Tax levy to the Maximum Special Tax for Undeveloped Property is equal for all Assessor's Parcels of Undeveloped Property.Public Property" means property within the boundaries of Improvement Area No. 2 of CFD No. 91-2 owned by, or irrevocably offered for dedication to, the federal government, State of California, or other public agency or easements for the B. Improvement Area No.2 CFD No. 91-2 Page 4 Residential Property" means any Parcel of Developed Property for which a building permit was issued for purposes of constructing a residential dwelling unit(s). Single Family" means any Parcel of Residential Property other than Apartments, Flats, and Town Homes. Special Tax" means the Special Tax that may be levied by CFD No. 91-2 each Fiscal Year to fund the Special Tax Requirement.Special Tax Requirement" means that amount required in any Fiscal Year to pay: ( 1)debt service and other periodic costs on the bonds or other indebtedness of Improvement Area No.2 of CFD No. 91-2 due in the calendar year commencing in such Fiscal Year,2) the cost of acquisition or construction of authorized facilities of Improvement Area No.2 of CFD No. 91-2, (3) Administrative Expenses, (4) costs of authorized services of Improvement Area No.2 of CFD No. 91-2, (5) any amount required to replenish any reserve fund established in association with bonds issued for Improvement Area No. 2 of CFD No. 91-2, (6) an amount equal to the estimated delinquencies expected in payment of the Special Tax not otherwise taken into account, as determined by the Finance Director or his designee, and (7) the costs of remarketing, credit enhancement and liquidity facility fees (including such fees for instruments that serve as the basis of a reserve fund related to any indebtedness in lieu of cash).Taxable Property" means any Parcel in or annexed to Improvement Area No.2 of CFD No. 91-2 which is not Public Property or Home Owner Association Property.Town Home" means any building of Residential Property that consists of attached units, other than Apartments, in which fIfty percent or more of the individual units are side by side and not stacked above or below other units in the structure.Undeveloped Property" means, for any Fiscal Year, any Parcel of Taxable Property that is not classifIed as Developed Property or Improved Property as of March 1 of the previous Fiscal Year.ASSIGNMENT TO LAND USE CATEGORIES For each Fiscal Year, all Taxable Property shall be classifIed as Developed Property,Improved Property, or Undeveloped Property as of March 1 of the prior Fiscal Year and shall be subject to the Special Tax in accordance with the rate and method of apportionment described in Sections C and D below. For purposes of determining the applicable Assigned Special Tax in each Fiscal Year, all Developed Property shall be assigned by the Finance Director to one of the Land Use Classes designated in Table I below as of March I of the prior Fiscal Year. Non-Residential 100 Q ClIl ell U g E-<"CCl: = ell l US 8 ClIl s ~ gf- 01 Q..-lll t1l 1~ 8. p go:o ~ 8 0.. u S1i.,. t:::>l ill o I" l i;::> g l aY" l l ~g,] U t:: ~ 0:: 8. ~g~ ::> z EO lf1i_ j i j ll'" I t: I e8. I~ . J Improvement Area No.2 CFD No. 91- 2 Page 6 C. MAXIMUM SPECIAL TAX RATES 1. Developed Property The Maximum Special Tax for any Fiscal Year for each Assessor's Parcel classifIed as Developed Property shall be the greater of (i) the Backup Special Tax for the Parcel, or (ii) the amount derived by application of the applicable Assigned Special Tax.a. Assigned Special Tax The Assigned Special Tax per unit and per building square foot for each Land Use Class is shown by Table 1. The Assigned Special Tax for each dwelling unit shall be the sum of the special tax per unit plus the product of the special tax per square foot multiplied by the building square footage of the unit. The square footage of a dwelling unit shall be determined by the Director of Public Works at the time of issuance of the original building permit for the building, by reference to the square footage shown on such building permit, exclusive of garages, common areas, and other structures which are not used as living space. Once determined, the square footage assigned to a residential unit shall not be subject to change despite the issuance of additional permits for changes or modifIcations to the structure).TABLE I Assigned Special Taxes for Developed Property in Improvement Area No.2 of eFD No. 91-2 Assigned Special Tax Rates 1995-96 Per Unit Per Square Foot 1 Single Family $650 $.65 2 Town Home $600 $.60 3 Flat $550 $.55 4 Apartment $545 NA 5 Non-Residential N/A $ 21,128 per net taxable acre On each July 1, commencing July 1, 1996, the Assigned Special Tax rates for each Class shall be increased to 102 percent of the respective Assigned Special Tax in effect in Improvement Area No.2 CFD No. 91- 2 Page 7 b. Backup Special Tax The Fiscal Year 1995-96 Backup Special Tax for Improvement Area No.2 shall equal $1,273,820. The Backup Special Tax shall only apply to Parcels of Developed Property and Improved Property and shall be equal for all Parcels within a Final Residential Subdivision.Prior to the recordation of each Final Residential Subdivision, the Finance Director shall allocate a portion of the Backup Special Tax for Improvement Area No. 2 to such subdivision. The Backup Special Tax for a Final Residential Subdivision shall equal the Backup Special Tax for Improvement Area No.2 multiplied by the quotient of the Assigned Special Taxes expected to be generated by all future Developed Property within the Final Residential Subdivision (based on the Development Projection) divided by the Assigned Special Taxes expected to be generated by all existing and future Developed Property within Improvement Area No.2 ofCFD No. 91-2 based on the Development Projection).However, prior to the recordation of the last Final Residential Subdivision within Improvement Area NO.2 of CFD No 91-2 ( as determined by the Finance Director), the Finance Director shall, if necessary, adjust the Backup Special Tax for such Final Residential Subdivision to ensure that the sum of the Backup Special Taxes for all Final Residential Subdivisions is not less than the Backup Special Tax for Improvement Area No.2 (assuming that a mandatory prepayment has not been not required pursuant to Section K).The Backup Special Tax for a Final Residential Subdivision shall be allocated equally to each Assessor's Parcel of Taxable Property in such subdivision for which the issuance of a building permit for purposes of construction of a residential unit or units is permitted. In the case of a Final Residential Subdivision which creates Condominiums, the Backup Special Tax shall be allocated equally among the units specifIed in the condominium plan.On each July 1, commencing July 1, 1996, the Backup Special Tax for Improvement Area No.2 of CFD No. 91-2 and for each Parcel of Developed Property or Improved Property shall be increased to 102 percent of the Backup Special Tax in effect in the previous Fiscal Year.c. Limits on Special Tax on Residential Property Pursuant to Section 53321 of the Act, under no circumstances shall the Special Tax levied against any Parcel of Residential Property be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Parcel. An increase of ten percent or more shall be determined by comparison to what the levy of Special Tax would be for any Parcel if there Improvement Area No.2 CFD No. 91- 2 Page 8 2. Improved Property The Maximum Special Tax for a Parcel of Improved Property shall be the Backup Special Tax for such Parcel, as calculated pursuant to Section C.l.b. above.On each July 1, commencing July 1, 1996, the Maximum Special Tax for Improved Property shall be increased to 102 percent of the Maximum Special Tax in effect in the previous Fiscal Year.3. Undeveloped Property The 1995-96 Maximum Special Tax for Undeveloped Property shall be $ 21,128 per acre.On each July 1, commencing July 1, 1996, the Maximum Special Tax for Undeveloped Property shall be increased to 102 percent of the Maximum Special Tax in effect in the previous Fiscal Year.D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 1996-97, and for each following Fiscal Year, the Finance Director shall determine the Special Tax Requirement for the applicable Fiscal Year and shall levy the Special Tax, as provided below, until the aggregate amount of the levy equals the Special Tax Requirement for such Fiscal Year:First: The Special Tax shall be levied Proportionately on each Assessor' s Parcel of Developed Property up to 91 percent of the applicable Assigned Special Tax for each Land Use Class of Developed Property.Second: If additional monies are needed after the fIrSt step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Improved Property, up to 91 percent of the Maximum Special Tax for Improved Property.Third: If additional monies are needed after the fIrst two steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, up to 91 percent of the Maximum Special Tax for Undeveloped Property.Fourth: If additional monies are needed after the fIrst three steps have been completed,then the levy of the Special Tax on each Assessor's Parcel of Developed Property,Improved Property, and Undeveloped Property shall be increased in equal percentages from the amounts calculated pursuant to steps I through 3 above, up to 100 percent of the applicable Assigned Special Tax for Developed Property and up to 100 percent of the Maximum Special Tax for Improved Property and Undeveloped Property.Fifth: If additional monies are needed after the fIrst four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Improvement Area No.2 CFD No. 91- 2 Page 9 shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax.E.. EXEMPTIONS The Finance Director shall not levy a Special Tax on up to 232.83 acres of Public Property and Home Owner Association Property. Tax-exempt status will be irrevocably assigned by the Finance Director in the chronological order in which property is designated Public Property or Home Owner Association Property and in the following order of priority:E.m: Public Property owned by entities of the federal government, State of California,or any local government agency and easements for the exclusive use of public utility providers, as of the date of formation of CFD No. 91-2;Second: Public Property acquired by the public agency or public utility provider through a gift, dedication, negotiated transaction, eminent domain, or any other fonn of conveyance, including granting of an easement, subsequent to the date of fonnation of CFD No. 91-2, with priority in order of the acquisition of the property;Third: Home Owner Association Property, with acres made exempt such that the number of acres that are not exempt are equal in proportion to the number of dwelling units for each association.Public Property and Home Owner Association Property that is not exempt from Special Taxes by this section shall be subject to the levy of the Special Tax and shall be taxed as if the property were Undeveloped Property. However, on a year to year basis, the Finance Director may exempt such Parcels from the levy of the Special Tax in any Fiscal Year provided the Special Tax Requirement can be satisfIed without imposing a levy on said Parcels. F. MANNER OF COLLECTION The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem real property taxes, provided, however, that CFD No. 91-2 may collect Special Taxes at a different time or in a different manner as determined by the Finance Director, if necessary to meet its financial obligations. G. TERMINATION OF SPECIAL TAX Except for any delinquent Special Taxes and related penalties and interest, Special Taxes used to pay for either or both the acquisition and construction of any public facilities for Improvement Area No.2 of CFD No. 91-2 (through the issuance of bonds or otherwise)and levied on any Parcel shall not be levied after the thirtieth (30th) Fiscal Year in which such Parcel was taxed as Developed Property. After such thirtieth (30th) Fiscal Year,and the collection of any delinquent Special Taxes, penalties and interest, the Finance Director shall cause a document substantially in the Improvement Area No.2 CFD No. 91- 2 Page 10 such termination of the levy and collection to be recorded in the offIce of the recorder of the County.H. APPEALING THE LEVY OF SPECIAL TAXES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may fIle a written notice of appeal and refund to that effect with the Finance Director not later than one calendar year after having paid the Special Tax that is disputed. The Finance Director shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Finance Director's decision requires the Special Tax be modifIed or changed in favor of the property owner, a cash refund shall not be made (except for the last year of levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Finance Director shall be referred to the City Council of the City and the decision of the City Council shall be fmal. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner.I. FULL PREPAYMENT OF SPECIAL TAX The Special Tax on any Parcel of Developed Property may be fully prepaid at any time and the obligation to pay the Special Tax pennanently satisfIed by payment of the sum of the following:1. A sum equal to (a) delinquent Special Taxes on such Parcel, including any applicable penalties and related costs, and (b) Special Taxes due on such Parcel but not yet paid for the Fiscal Year in which such prepayment is made.2. A sum equal to the principal portion of the amount of prepayment determined as follows:P = PVST + 1. 10 Where the terms have the following meaning: P= PVST =the principal portion of the prepayment the net present value of the Maximum Special Tax for the Parcel The net present value of the Maximum Special Tax shall be calculated based on the Maximum Special Tax that may be levied on the Parcel until the termination date of Special Taxes for the Parcel calculated pursuant to Section G hereto, using as the discount rate the combined aggregate yield of the outstanding bonds ( Le.,the yield that when computing the net present value of the remaining payments of principal and interest on the bonds produces an amount equal to the face amount of the remaining outstanding bonds) or if no bonds are outstanding, using a discount rate of 8.25 Improvement Area No.2 CFD No. 91- 2 Page 11 3. The principal portion of the prepayment shall be decreased by an adjustment for a reserve fund credit. The adjustment shall be equal to a percent of the principal portion of the prepayment equal to the lesser of the following: (i) the amount required to be in the reserve fund, as a percent of the bonds outstanding, and ( ii)the amount actually in the reserve fund, as a percent of the bonds outstanding.4. The amount calculated in steps 2-3, if used to redeem bonds, shall be rounded up to the nearest $5,000, less the interest expected to be earned on the prepayment until such bonds are redeemed; however, if prepayment is made for two or more Parcels together, the aggregate principal of all of the prepayments may be rounded up to the nearest $5,000, with the addition due to the rounding apportioned to each prepayment based on the proportion of each of the prepayments to the total prepayment.5. The amount needed to pay interest on the outstanding bonds to be redeemed until the earliest call date for outstanding bonds.6. A sum equal to applicable redemption premiums, if any, on the bonds to be redeemed.7. A sum equal to administrative fees and expenses of the City associated with the prepayment.The amounts calculated in the preceding steps shall be paid to the City and shall be distributed by the City according to the fIscal agent agreement. Upon the payment of such prepayment amount to the City, the obligation to pay Special Tax shall be deemed to be permanently satisfIed, the Special Tax shall not be levied thereafter, and the City shall cause a notice of cessation of the Special Tax to be recorded within 30 working days of receipt of such prepayment amount.The Finance Director may disallow the right to prepay Special Taxes, if in the reasonable determination of the Finance Director, such prepayment would negatively affect the security of the remaining outstanding bonds.J. PARTIAL PREPAYMENT OF SPECIAL TAX Under the conditions set forth below, the Special Tax on Developed Property may be partially prepaid on all of the Parcels within a Final Residential Subdivision, or all of the Parcels within a Final Residential Subdivision owned by a single owner, and that portion of the Special Tax obligation permanently satisfIed. The amount of the prepayment shall be calculated as in Section I; except, however, the principal portion shall be calculated according to the following fonnula:Pp = PE X P Where the terms have the Improvement Area No.2 CFD No. 91- 2 Page 12 Pp = the principal portion of the partial prepayment PE = the principal portion of the prepayment calculated according to Section 1. 2 P = the percent by which the owner of the Parcels within the Final Residential Subdivision is to partially prepay the Special Tax The partial prepayment of Special Taxes shall be collected at the close of escrow of each Parcel in the Final Residential Subdivision. An owner of the Parcels within a Final Residential Subdivision shall notify the Finance Director of (i) such owner's intent to partially prepay the Special Tax on all of the Parcels within a Final Residential Subdivision or all of those Parcels within a Final Residential Subdivision that are owned by such owner, (ii) the percentage by which the Special Tax shall be prepaid, (ill) the size of units being built by the owner on such Parcels and the average parcel size, and iv) the company or agency that will be acting as the escrow agent. The owner shall provide instructions to the escrow agent and the Finance Director, which instructions shall direct the escrow agent to collect the partial prepayment of the Special Taxes as calculated pursuant to this Section J and to remit this amount to the City. The Finance Director shall provide the owner and the escrow agent with a statement of the amount required for the partial prepayment of the Special Tax for a Parcel within fIve ( 5)working days of notice of the pending close of an escrow. The notice to the Finance Director must include confmnation of the square footage of the unit, calculated consistent with Section C herein. The Finance Director may charge a reasonable fee for providing this fIgure.With respect to any Parcel so partially prepaid, the City shall (i) distribute the funds remitted to it by the escrow agent according to the fIscal agent agreement, (ii) cause a suitable notice to be recorded in compliance with the Act within 30 days of receipt of such prepayment of Special Taxes, to indicate the partial prepayment of Special Taxes and the release of the Special Tax lien in such amount, (ill) indicate in the records of CFD No. 91-2 that there has been a partial prepayment of the Special Tax and that this portion of the Special Tax shall not be levied thereafter. A partial prepayment of Special Taxes shall reduce both the Backup Special Tax and the Assigned Special Tax of the Parcel in equal percentages. Following a partial prepayment of the Special Tax with respect to any Parcel, the outstanding percentage (1.00 - P) of the Special Tax shall continue to be levied on such Parcel.The Finance Director may disallow the right to prepay Special Taxes, if in the reasonable determination of the Finance Director, such prepayment would negatively affect the security of the remaining outstanding bonds.K. MANDATORY PREPAYMENT Before each Final Residential Subdivision is recorded, the Finance Director, or his designee, shall:1. Calculate the Assigned Special Taxes that can be generated in each future Fiscal Year by all existing and future (based on the Development Projection) Developed Property in Improvement Area NO.2 of CFD No. 91-2. Multiply Improvement Area No.2 CFD No. 91- 2 Page 13 by 1.25 to determine the adjusted Assigned Special Taxes for Improvement Area No.1 of CFD No. 91-2.2. If, in each future Fiscal Year, the adjusted Assigned Special Taxes calculated in Step 1 are greater than or equal to 11 0 percent of the annual debt service on outstanding bonds, then mandatory prepayment is not necessary. If, in any future Fiscal Year, the adjusted Assigned Special Taxes calculated in Step 1 are less than 11 0 percent of the annual debt service on outstanding bonds, then continue to Step 3.3. Calculate the Assigned Special Taxes that can be generated in each future Fiscal Year by all existing and future (based on the Development Projection) Developed Property in the proposed Final Residential Subdivision. Multiply this number by 1.25 to determine the adjusted Assigned Special Taxes for the Final Residential Subdivision.4. Divide the Backup Special Tax for all Parcels in the proposed Final Residential Subdivision by the total Backup Special Tax for Improvement Area No. 2 of CFD No. 91-2 and, for each remaining Fiscal Year, multiply the quotient by 110 percent of the annual debt service on outstanding bonds.5. If, in each future Fiscal Year, the adjusted Assigned Special Taxes for the proposed Final Residential Subdivision calculated in Step 3 are greater than or equal to 110 percent of the annual debt service for the proposed Final Residential Subdivision calculated in Step 4, then mandatory prepayment is not necessary for this Final Residential Subdivision. If, in any future Fiscal Year, the adjusted Assigned Special Taxes calculated in Step 3 are less than 11 0 percent of the annual debt service calculated in Step 4, then continue to Step 6.6. Calculate the present value of the annual shortfall between the adjusted Assigned Special Taxes calculated in Step 3 and the annual debt service calculated in Step 4 using the aggregate yield of the outstanding bonds computed pursuant to Section 1.2. as the discount rate.7. Divide the shortfall calculated in Step 6 by the future dwelling units in the proposed Final Residential Subdivision.The mandatory prepayment shall be calculated as in Section I; except however, the principal portion shall be the amount calculated in Step 7 above. Payment of such mandatory prepayment must be made prior to the recordation of the proposed Final Residential Subdivision. The Assigned Special Taxes for Developed Property within the Final Residential Subdivision shall not change as a result of the mandatory prepayment.However, the Backup Special Tax allocated to Parcels in the Final Residential Subdivision shall be reduced based on the percentage of outstanding bonds allocable to such Final Residential Subdivision that were prepaid as a result of the mandatory prepayment.J:\CUENTS\ORANGE.CI'I"SERRANO.KTS\ EXHIBlTD FACILITIES TO BE FINANCED BY IMPROVEMENT AREA NO.1 OF THE CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91.2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS) 1. Serrano Avenue and Related Improvements: Construction of Serrano Avenue within and in the vicinity of the District. Construction of mainline water, sanitary sewer and storm drain improvements, equestrian trails and landscaping adjacent and/or in the vicinity of such road construction. The foregoing shall include costs related to mobilization, site preparation (including removal of existing improvements), grading, curb, gutter, sidewalk, paving, slope and erosion control, streetlights, signalization and signage, striping, walls and fences, grading of pump station site and provision of site improvements including water lines and access routes. 2. West Loop Road, Park and Related Improvements: Construction of a loop road off of Serrano Avenue within the boundaries of the Improvement Area. Construction of mainline water, sanitary sewer, storm drain improvements; and landscaping in public rights of way adjacent and/ or in the vicinity of such road construction. Grading of land for a park within or in the vicinity of the District and other site preparation costs, and construction thereon of related improvements. The foregoing shall include costs related to mobilization, site preparation (including removal of existing improvements), grading, curb, gutter, sidewalk, paving, slope and erosion control, streetlights, signalization and signage, striping, walls and fences. 3. Transportation System Improvements: Acquisition, construction and / or installation of the following improvements, including any costs related to mobilization, site preparation, site acquisition, and grading: a) Arterial Street Improvements: Nohl Ranch Road - Santiago to E.C.L.;Santiago Canyon Road - Hewes to Jamboree; and Hewes - Bond to Santiago Canyon Road.b) Freeway Ramp and Bridge Improvements: Lorna Street Bridge.c) Signalization: Santiago Canyon/Orange Park; and Serrano/Yellowstone.d) Other Transportation System Improvements: Street Scan - Audio Visual Surveillance System; Bus/Parking Bays; Signal System Master - Increase Capacity; and other Operationallmprovemenls.4. Fire Protection Facilities Improvements: Acquisition, construction and/or installation of a site for and construction of a new fire station in the general vicinity of the District,including any costs related to mobilization, site preparation, site acquisition, and grading:5. Transportation System Improvement and Fire Facility Fees. Payment of any fee obligation related to fire facility fees or transportation system improvement fees imposed by the City relative to new development in the Improvement Area, and any transportation system fees D.1 imposed on new development in the Improvement Area for improvements to the Foothill/Eastern Transportation Corrider. The Facilities shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City (or other governmental entity that will own and operate the same) and the officials thereof, and, as to items 1 and 2 above, shall be generally as described in the report of Fuscoe Engineering, lnc. on file with the City Director of Public Works. 0.2 EXHIBITE FACILITIES TO BE FINANCED BY IMPROVEMENT AREA NO.2 OF THE CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91- 2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS)1. Serrano Avenue and Related Improvements: Construction of Serrano Avenue within and in the vicinity of the District. Construction of mainline water, sanitary sewer and storm drain improvements, equestrian trails and landscaping adjacent and/ or in the vicinity of such road construction.The foregoing shall include costs related to mobilization, site preparation ( includinr;removal of existing improvements), grading, curb, gutter, sidewalk, paving, slope and erosion control, street lights, signalization and signage, striping, walls and fences, grading of pump station site and provision of site improvements including water lines and access routes.2. Water Reservoir and Related Improvements: Grading of land for a water reservoir within or in the vicinity of the District and other site preparation costs, and construction thereon of related improvements including but not limited to any water lines incident to such reservoir.The foregoing shall include costs related to mobilization, site preparation ( including removal of existing improvements), grading, curb, gutter, sidewalk, paving, slope and erosion control, street lights, signalization and signage, striping, walls and fences.3. East Collector Road and Related Improvements: Construction of a collector road off of Serrano Avenue within and in the vicinity of the Improvement Area. Construction of mainline water, sanitary sewer, storm drain improvements; and landscaping in public rights of way adjacent and/or in the vicinity of such road construction.The foregoing shall include costs related to mobilization, site preparation ( including removal of existing improvements), grading, curb, gutter, sidewalk, paving, slope and erosion control, street lights, signalization and signage, striping, walls ;ll~d fern;es.-- 4. Transportation System Improvements: Acquisition, construction and/or installation of the following improvements, including any costs related to mobilization, site preparation, site acquisition, and grading: a) Arterial Street Improvements: Nohl Ranch Road - Santiago to E.C.L.;Santiago Canyon Road - Hewes to Jamboree; and Hewes - Bond to Santiago Canyon Road.b) Freeway Ramp and Bridge Improvements: Lorna Street Bridge.c) Signalization: Santiago Canyon/Orange Park; and Serrano/Yellowstone.d) Other Transportation System Improvements: Street Scan, Audio Visual Surveillance System; Bus/ Parking Bays; Signal System Master. Increase Capacity; and other Operational Improvements. E.] 5. Fire Protection Facilities Improvements: Acquisition, construction and/or installation of a site for and construction of a new fire station in the general vicinity of the District, including any costs related to mobilization, site preparation, site acquisition, and grading: 6. Transportation System Improvement and Fire Facility Fees. Payment of any fee obligation related to fire facility fees or transportation system improvement fees imposed by the City relative to new development in the Improvement Area, and any transportation system fees imposed on new development in the Improvement Area for improvements to the Foothill/Eastern Transportation Corrider. The Facilities shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City (or other governmental entity that will own and operate the same) and the officials thereof, and, as to items 1, 2 and 3 above, should be generally as described in the report of Fuscoe Engineering, Inc. on file with the CityDirectorofPublicWorks. E- EXHIBITF PROPERTY OWNER AND ASSESSOR'S PARCEL NUMBERS IMPROVEMENT AREA NO.1 OF THE CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91- 2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS)Name and Address of Property Owner California Quartet c/o Aradi, Inc.1875 Century Park East, Suite 1880 Los Angeles, CA 90067 Assessor's Parcel Nos. 85- 551- EXHIBITG PROPERTY OWNER AND ASSESSOR'S PARCEL ,'.iUMEERS IMPROVEMENT AREA NO.2 OF THE CITY OF ORANGE COMMUNITY FACILITIES DISTRICT NO. 91- 2 SERRANO HEIGHTS PUBLIC IMPROVEMENTS)Name and Address of Property Owner Assessor's Parcel Nos,California Quartet c/o Aradi, Inc.1875 Century Park East, Suite 1880 Los Angeles, CA 90067 85- 521- 93 85- 531- 15 85- 551- 44