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HomeMy WebLinkAbout01-162 - Resolutions RESOLUTION NO. 01-162 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, MAKING MODIFICATIONS TO CITY OF RANCHO CUCAMONGA COMMUNITY FACILITIES DISTRICT NO. 2001-01, ESTABLISHING THE DISTRICT, ESTABLISHING THREE IMPROVEMENT AREAS THEREIN, ESTABLISHING AN APPROPRIATIONS LIMIT FOR THE DISTRICT, AUTHORIZING THE LEVY OF A SPECIAL TAX WITHIN EACH IMPROVEMENT AREA, AND CALLING A SPECIAL ELECTION WITHIN EACH IMPROVEMENT AREA AND TAKING CERTAIN ACTIONS RECITALS: A. The City Council (the "City Council") of the City of Rancho Cucamonga, California (the "City"), has previously adopted Resolution No. 01-086 stating its intention to conduct proceedings to form City of Rancho Cucamonga Community Facilities District No. 2001-01 (the "District") and to establish three improvement areas, Improvement Area No. 1, Improvement Area No. 2 and Improvement Area No. 3 (each an "Improvement Area" and collectively the "Improvement Areas") therein pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the "Act") to finance certain public facilities. B. A copy of Resolution No. 01-086 setting forth a description of the proposed boundaries of the District and the Improvement Areas therein, the facilities to be financed by the District, including incidental expenses, and the rate and method of apportionment of the special tax proposed to be levied within each Improvement Area is on file in the office of the City Clerk of the City and, except to the extent modified by this Resolution, is incorporated herein by reference. C. The City Council has previously adopted Resolution No. 01-087 stating the City Council's intention, acting as the legislative body of the District, to authorize the issuance and sale of a series of bonds for Improvement Areas Nos. 1 and 2 in the maximum aggregate principal amount of $15,000,000 and a series of bonds for Improvement Area No. 3 in the maximum aggregate principal amount of $12,000,000 to finance the cost of designing and constructing such public facilities. D. Resolution Nos. 01-086 and 01-087 set June 6, 2001 as the date of a public hearing on the establishment of the District and the Improvement Areas therein, the extent of the District and each Improvement Area therein, the furnishing of specified types of public facilities within the District, the proposed rate and method of apportionment of the special tax within each Improvement Area, and the proposed debt issues. Resolution No. 01-162 Page 2 of 51 E. A notice of the public hearing was published and mailed to all landowners proposed to be included in the District in accordance with the Act. The public hearing was subsequently continued to June 20, 2001. F. The City Council desires to modify the boundaries of the District and the Improvement Areas and the rate and method of apportionment as described in Section 4 hereof. G. Prior to the public hearing there was filed with the City Council a report containing a description of the facilities necessary to adequately meet the needs of the District and an estimate of the cost of financing such facilities as required by Section 53321.5 of the Act. At this meeting, an amended report entitled, "Amended Community Facilities District Report" (the 'Report') was presented to the City Council, which Report includes a brief analysis of the impact of the proposed modifications to the rate and method of apportionment of the special tax described in Section 4 hereof on the probable special tax to be paid by the owner of any lot or parcel in the District, and the City Council has considered such Report. H. At the public hearing all persons desiring to be heard on all matters pertaining to the establishment of the District, each proposed Improvement Area, the extent of the District and each proposed Improvement Area, the furnishing of specified types of public facilities within the District, the proposed rate and method of apportionment of the special tax, and the proposed debt issues were heard and a full and fair hearing was held. I. At the public hearing evidence was presented to the City Council on the matters before it and the City Council at the conclusion of the hearing is fully advised as to all matters relating to the formation of the District and the establishment of the Improvement Areas therein, the levy of the special tax and the issuance of bonded indebtedness therein. J. The City Council desires to proceed with the establishment of the District and the three Improvement Areas therein and to proceed to make the necessary findings to incur the bonded indebtedness. K. The City Council desires to hold a special election within each Improvement Area in the District at which time there will be submitted to the qualified electors of each respective Improvement Area certain propositions relating to the authorization to levy a special tax within the Improvement Area, the establishment of an appropriations limit for the District and the incurring of a bonded indebtedness to pay for certain facilities. L. The City Council has determined that there have been fewer than twelve registered voters residing in the proposed boundaries of the District and each proposed Improvement Area therein for the period of 90 days prior to June 20, 2001 and that the qualified electors within each Improvement Area are the landowners within the respective Improvement Area. Resolution No. 01-162 Page 3 of 51 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1: RECITALS. The above recitals are all true and correct. SECTION 2: FINDING OF VALIDITY. Pursuant to Section 53325.1(b) of the Act, the City Council finds and determines that all of the proceedings prior hereto were valid and taken in conformity with the requirements of the law, and specifically the provisions of the Act. SECTION 3: NAME OF DISTRICT AND IMPROVEMENT AREAS. The City Council hereby establishes and declares the formation of a community facilities district pursuant to the Act to be designated "City of Rancho Cucamonga Community Facilities District No. 2001-01" (the "District') and hereby establishes and declares the formation of three improvement areas within the District to be designated 'Improvement Area No. 1," "Improvement Area No. 2" and 'Improvement Area No. 3" (individually, an `Improvement Area" and collectively, the 'Improvement Areas"). SECTION 4: MODIFICATIONS. (a) The City Council hereby finds and determines that the public interest will not be served by allowing the property owners to enter into a contract in accordance with subdivision (a) of Section 53329.5 of the Act. (b) The rate and method of apportionment of the Special Tax among parcels of real property in each Improvement Area of the District, is modified to be as shown in Exhibit "B," attached hereto and incorporated herein by reference, which includes sufficient detail to allow each resident or landowner within each Improvement Area of the proposed District to estimate the maximum amount such resident or owner will have to pay. (c) The City Clerk previously caused to be recorded in the Office of the County Recorder of the County of San Bernardino, California at Pages 92-93 of Book 73 of Maps of Assessments and Community Facilities Districts as Document No. 2001-0154931, a map of the exterior boundaries of the District and the Improvement Areas as Resolution No. 01-162 Page 4 of 51 originally proposed. The City Council hereby modifies the boundaries of the Improvement Areas, as shown on that certain map now on file in the Office of the City Clerk entitled "Modified Boundaries of City of Rancho Cucamonga Facilities District No. 2001-01," which map indicates by a boundary line the extent of the territory included in the proposed District and the extent of the territory in each Improvement Area and shall govern for all details as to the extent of the District and the Improvement Areas. On the original and one copy of such map, the City Clerk shall endorse the certificate evidencing the date and adoption of this Resolution. The City Clerk shall file the original of such map in her office and, within ten (10) days after the adoption of this Resolution, the City Clerk shall file a copy of such map so endorsed in the records of the County Recorder, County of San Bernardino, State of California. SECTION 5: FACILITIES. The facilities proposed to be financed by the District under the Act shall consist of those facilities set forth on Exhibit "A," attached hereto and incorporated herein by reference (the "Facilities"). The estimated cost of the Facilities and incidental expenses to be financed is set forth in the Report, which estimates may change as the Facilities are designed and bid for construction. The City is authorized by the Act to contribute revenue to, or to construct or acquire the Facilities, all in accordance with the Act. The City Council finds that the proposed Facilities are necessary to meet the increased demand that will be placed upon public infrastructure as a result of new development within the District. SECTION 6: NO MAJORITY PROTEST. The City Council hereby finds that written protests against the establishment of the District, against the furnishing of a specified type of facility within the District, or against the levying of a specified special tax within the District have not been filed by one-half or more of the registered voters within the boundaries of the District or by the property owners of one- half or more of the area of land within the boundaries of the District. The City Council hereby finds, with respect to each proposed Improvement Area, that written protests against the establishment of the District, against the establishment of that Improvement Area, against the furnishing of a specified type or types of facilities within the District or that Improvement Area or against the levying of a specified special tax within that Resolution No. 01-162 Page 5 of 51 Improvement Area have not been filed by one-half or more of the registered voters within the boundaries of that Improvement Area or by the property owners of one-half or more of the area of land within the boundaries of the Improvement Area. Therefore, the City Council finds and declares that the special tax to be levied in each Improvement Area has not been precluded by majority protest pursuant to Section 53324. SECTION 7: SPECIAL TAX. Except where funds are otherwise available to pay for the Facilities and/or the principal and interest as it becomes due on bonds of the District issued to finance the Facilities, a special tax (the "Special Tax") is hereby authorized, subject to approval by two-thirds of the votes cast within each Improvement Area of the District, to be levied annually in accordance with the procedures of the Act within the boundaries of each Improvement Area sufficient to pay for the costs thereof, including incidental expenses. The Special Tax will be secured by the recordation of a continuing lien against all non-exempt property in each respective Improvement Area of the District and will be collected in the same manner as ordinary ad valorem property taxes and shall be subject to the same penalties, procedure, sale and lien in any case of delinquency as applicable for ad valorem property taxes. Provided, however, such Special Tax may be collected in such other manner as may be provided by the City Council. In the first year in which such a Special Tax is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the District pursuant to Section 53314 of the Act and interest thereon. The proposed rate and method of apportionment of the Special Tax among parcels of real property within each Improvement Area in the District, in sufficient detail to allow each resident or landowner within each Improvement Area to estimate the maximum amount such resident or owner will have to pay, are shown in Exhibit "B", attached hereto and incorporated herein by reference. The Special Tax is based upon the expected demand that each parcel will place on the Facilities and the benefit that each parcel derives from the right to access the Facilities and the City Council hereby determines such basis to be reasonable. In the case of any Special Tax to pay for the Facilities to be levied against any parcel used for private residential purposes: (i) the maximum Special Tax shall be specified as a dollar Resolution No. 01-162 Page 6 of 51 amount which shall be calculated and thereby established not later than the date on which the parcel is first subject to the tax because of its use for private residential purposes and which amount shall not be increased over time over two percent per year; (ii) the tax year after which no further Special Tax subject to this sentence shall be levied or collected shall be as set forth in Exhibit 'B" hereto; and (iii) under no circumstances will the Special Tax levied against any parcel subject to this sentence be increased as a consequence of delinquency or default by the owner of any other parcel within the District by more than 10 percent. For the purposes hereof, a parcel is used for "private residential purposes" not later than the date on which an occupancy permit for private residential use is issued. Subject to the limitations set forth in the previous paragraph, in the event that a portion of the property within an Improvement Area shall become exempt for any reason, wholly or partially, from the levy of the Special Tax, the City Council shall, on behalf of the District, cause the levy to be increased, subject to the limitation of the maximum Special Tax for a parcel as set forth in Exhibit "B" to the extent necessary upon the remaining property within the respective Improvement Area which is not delinquent or exempt in order to yield the Special Tax revenues required for the purposes described herein. The City Council finds that there is not an ad valorem property tax currently being levied on property within the District for the exclusive purpose of paying principal or interest on bonds or other indebtedness incurred to finance the construction of capital facilities which provide the same services to the territory of the District as are proposed to be provided by the Facilities to be financed by the District. SECTION 8: NOTICE OF SPECIAL TAX LIEN. Upon recordation of a notice of special tax lien with respect to each Improvement Area pursuant to Section 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the Special Tax shall attach to all nonexempt real property in each Improvement Area, and this lien shall continue in force and effect until the Special Tax obligation is prepaid and permanently satisfied and lien canceled in accordance with law or until collection of the Special Tax by the City Council ceases. Resolution No. 01-162 Page 7 of 51 SECTION 9: APPROPRIATIONS LIMIT. An appropriations limit for the District is hereby established, subject to voter approval, as an amount equal to all the proceeds of the Special Tax collected annually within such District and as defined by Article XIIIB of the California Constitution, as adjusted for changes in the cost of living and changes in population. SECTION 10: AGRICULTURAL, TIMBER OR LIVESTOCK USES. The City Council hereby finds and declares that lands within the District, if any, being devoted primarily to agricultural, timber or livestock uses and being used for the commercial production of agricultural, timber or products is contiguous to other land which is included within the District and that such lands will be benefited by the Facilities to be provided within the District. SECTION 11: PREPARATION OF ANNUAL ROLL. The current GIS/Special Districts Supervisor, City of Rancho Cucamonga, 10500 Civic Center Drive, Rancho Cucamonga, California 91730, telephone number (909) 477-2700, extension 2575 is designated to be responsible for preparing annually, or authorizing a designee to prepare, a current roll of Special Tax levy obligations by assessor's parcel number and for estimating future Special Tax levies pursuant to Section 53340.2 of the Act. SECTION 12: REPORT. The Report is hereby approved and is made a part of the record of the public hearing regarding the formation of the District and the Improvement Areas therein and is ordered to be kept on file in the office of the City Clerk and open for public inspection. SECTION 13: SPECIAL TAX ACCOUNTABILITY MEASURES. Pursuant to and in compliance with the provisions of Government Code Section 50075.1, the City Council hereby establishes the following accountability measures pertaining to the levy by the District of the special tax described in Section 7 above: A. Such special tax shall be levied for the specific purposes set forth in Section 7 hereof. B. The proceeds of the levy of such special tax shall be applied only to the specific purposes set forth in Section 7 hereof. Resolution No. 01-162 Page 8 of 51 C. The District shall establish an account or accounts into which the proceeds of such special tax shall be deposited. D. The City Manager, or his or her designee, acting for and on behalf of the District, shall annually file a report with the City Council as required pursuant to Government Code Section 50075.3. SECTION 14: ELECTION. The City Council herewith submits the establishment of the appropriations limit for the District and the levy of the Special Tax to the qualified electors of each respective Improvement Area, such electors being the landowners within each respective Improvement Area who are the owners of record on the date hereof, or the authorized representatives thereof, with each landowner having one vote for each acre or portion of acre owned. There is hereby called and ordered to be held in each Improvement Area on June 20, 2001, or such later date as is consented to by the City Clerk and the landowners within the District, a special election for the purpose of submitting such propositions to the voters. The City Council hereby further directs that with respect to each Improvement Area the ballot proposition relating to the levy of the Special Tax and the proposition relating to the incurring of a bonded indebtedness be combined into one ballot proposition. The City Clerk shall conduct the elections, shall give notice as required by law and shall procure such services and supplies as are necessary for the conduct of the election. Except as otherwise provided by the Act, the elections shall be conducted by personally delivered or mailed ballot and, except as otherwise provided by the Act, the elections shall be conducted in accordance with the provisions of law regulating elections of the City of Rancho Cucamonga insofar as such provisions are determined by the City Clerk to be applicable. SECTION 15: AGREEMENT. That certain Deposit and Reimbursement Agreement by and between the City and Cucamonga 220, L.P. now on file in the office of the City Clerk is hereby approved and the Mayor or the City Manager is hereby authorized and directed to execute and deliver the agreement substantially in the form on file in the office of the City Clerk and presented at this meeting, with such additions thereto, or changes or insertions therein as may be approved by the Mayor or City Manager (such approval to be exclusively evidenced by such execution and delivery). Resolution No. 01-162 Page 9 of 51 That certain Engineering Costs Deposit and Reimbursement Agreement by and between the City and Cucamonga 220, L.P. now on file in the office of the City Clerk is hereby approved and the Mayor or the City Manager is hereby authorized and directed to execute and deliver the agreement substantially in the form on file in the office of the City Clerk and presented at this meeting, with such additions thereto, or changes or insertions therein as may be approved by the Mayor or City Manager (such approval to be exclusively evidenced by such execution and delivery). PASSED, APPROVED, AND ADOPTED this 20`h day of June 2001. AYES: Alexander, Biane, Curatalo, Williams NOES: None ABSENT: Dutton ABSTAINED: None William J. Ales nder, Mayor ATTEST: 4Dbra J. Ada MC, City Clerk Resolution No. 01-162 Page 10 of 51 I, DEBRA J. ADAMS, CITY CLERK of the City of Rancho Cucamonga, California, do hereby certify that the foregoing Resolution was duly passed, approved and adopted by the City Council of the City of Rancho Cucamonga, California, at a Regular Meeting of said City Council held on the 201" day of June 2001. Executed this 21" day of June 2001, at Rancho Cucamonga, California. z1f .� "011y- Debra J. a s, MC, City Clerk Resolution No. 01-162 Page 11 of 51 EXHIBIT "A" DESCRIPTION OF FACILITIES The facilities described below are proposed to be financed by City of Rancho Cucamonga Community Facilities District No. 2001-01 (the "District'). The cost of the facilities shall include incidental expenses, including the costs associated with forming the District, issuance of bonds, determination of the amount of the Special Tax, collection of the Special Tax, payment on the Special Tax, costs incurred in order to carry out the authorized purposes of the District, any other expenses, incidental to the construction, completion and inspection of the authorized work and the attributable costs of engineering and inspection. The facilities shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City and the officials thereof. FACILITIES Public improvements required as a condition of approval of development of the property within the proposed District; such improvements to include but not be limited to: street improvements, demolition and grading, curb, gutter and sidewalks, traffic signals; entry features and signs; fire hydrants; storm drains; water and sewer improvements; paving; striping; landscaping and irrigation improvements; public utilities and appurtenances. Resolution No. 01-162 Page 12 of 51 _ I Exhibit "Brr CITY OF RANCHO CUCAMONGA COMMUNITY FACILITIES DISTRICT NO. 2001-01 AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR IMPROVEMENT AREA NO. 1 A Special Tax shall be levied on all Taxable Property in Improvement Area No. 1 of the City of Rancho Cucamonga Community Facilities District No. 2001-01 and collected each Fiscal Year commencing in Fiscal Year 2002-2003 according to the tax liability determined by the Council, through the application of the rate and method of apportionment of the Special Tax set forth below. All Taxable Property shall be taxed to the extent and in the manner herein provided. I. DEFINITIONS This Amended Rate and Method of Apportionment employs terms defined below and terms defined in the Rate and Method of Apportionment for Improvement Area No. 2 of the City of Rancho Cucamonga Community Facilities District No. 2001-01 ("IA No. 2"). When necessary, terms defined in the latter shall be distinguished from terms defined in the former by including the words "IA No. 2" prior to the defined term. The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. The square footage of an Assessor's Parcel is equal to the Acreage of such parcel multiplied by 43,560. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. "Administrative Fees" or "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of IA No. 1 and IA No. 2: the costs of computing the IA No. 1 and IA No. 2 Special Taxes;the costs of preparing the annual IA No. 1 Special Tax and IA No. 2 Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the IA No. 1 and IA No. 2 Special Taxes (whether by the City, the County or otherwise); the costs of remitting the IA No. 1 and IA No. 2 Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2001-01, or any designee thereof complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-01, or any designee thereof complying with disclosure requirements of the City or CFD No. 2001-01, associated with applicable Federal and State securities laws and the Act; the costs associated with preparing IA No. 1 and/or IA No. 2 Special Tax disclosure statements and responding to public inquiries regarding the IA No. 1 and/or IA No. 2 Special Taxes; the costs to the City, CFD No. 2001-01, or any designee thereof related to an appeal of the IA No. 1 Amended,June 13,2001 C-1 City of Rancho Cucamonga Resolution No. 01-162 Page 13 of 51 and/or the IA No. 2 Special Tax; the costs associated with the release of funds from an escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2001-01 for any other administrative purposes of IA No. 1 and/or IA No. 2, including attorney's fees and other costs related to commencing and pursuing any foreclosure of delinquent IA No. 1 Special Taxes. Under no circumstances shall the Administrative Expenses include costs related to commencing and pursuing any foreclosure of delinquent Special Taxes in IA No. 2. "Apartment Property" means any Assessor's 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 which are under common management. "Assessor" means the Assessor of the County of San Bernardino. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's parce!number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section III below. "Authorized Facilities" means those improvements, as listed on'Exhibit "A" M the Construction Agreement. I "Backup Special Tax" means the Special Tax applicable to each Assessors Parcel of Developed Property, as determined in accordance with Section III below. i "Bond Share" means the share of Bonds assigned to a Taxable Parcel as specified in Section VI. "Bonds" means any bonds or other indebtedness (as defined in the Act) of CFD No. 2001-01 for Improvement Area No. 1 or Improvement Area No. 2, whether in one or more series, secured by the levy of Special Taxes. "CFD No. 2001-01" means the City of Rancho Cucamonga Community Facilities District No. 2001-01. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and for levying and collecting the Special Taxes. "City" means the City of Rancho Cucamonga, California. "Construction Agreement" means the Construction Agreement for IA No. 1 and IA No. 2 that was approved by the Council on June 20, 2001, as it may be modified or supplemented from time to time. "Council" means the City Council of the City of Rancho Cucamonga acting as the legislative body of the CFD under the Act. Amended,June 13,2001 C-2 City of Rancho Cucamonga Resolution No. 01-162 Page 14 of 51 "County" means the County of San Bernardino, California. "Debt Service" means for each Fiscal Year, the total amount of principal and interest payable on any Bonds, notes or certificates of participation of the CFD during the calendar year commencing on January 1 of such Fiscal Year. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Taxable Property Owner Association Property or Taxable Public Property, for which a building permit for new construction or renovations was issued prior to January 1 of the previous Fiscal Year. "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Taxable Property Owner Association Property or Taxable Public Property, which as of January 1 of the previous Fiscal Year was located within a Final Subdivision. The term "Final Mapped Property" shall include any parcel map or subdivision map or portion thereof that creates individual lots for which a building permit may be issued, including parcels that are designated as a remainder parcel. "Final Subdivision" means a subdivision of property within (i) a final map, or portion thereof approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) and recorded with the County Recorder that creates individual lots for which building permits may be issued, or(ii)for condominiums, a final map,:or.portion thereof, approved by the City and a condominium plan recorded pursuant to California Civil Code Section 1352 that creates individual lots for which building permits may be issued. "Fiscal Year" means the period starting on July 1 and ending the following June 30. "IA No. 1 and IA No. 2 Bonds" means any bonds or other debt (as defined in Section 53317(d)of the Act), whether in one or more series, issued by CFD No. 2001-01 for both IA No. 1 and IA No. 2 under the Act. "Improvement Area No. 1" or"IA No. 1" means Improvement Area No. 1 of CFD No. 2001-01, as identified on the boundary map for CFD No. 2001-01. "Improvement Area No. 2" or"IA No. 2" means Improvement Area No. 2 of CFD No. 2001-01, as identified on the boundary map for CFD No. 2001-01. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which IA No. 1 and IA No. 2 Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Intermediate Special Tax" means the Special Tax applicable to each Assessor's Parcel of Final Mapped Property, as determined in accordance with Section 111 below. "Land Use Class" means any of the classes listed in Table 1. "Maximum Annual Special Tax" means the greatest amount of Special Tax, determined in accordance with Section III below, which may be levied in any Fiscal Year on any Assessor's Parcel based on its Land Use classification. Amended,June 13,2001 C-3 City of Rancho Cucamonga Resolution No. 01-162 Page 15 of 51 "Multi-Family Residential (MFR)" means Residential property that shares a common wall between one or more residential units, or a parcel that contains more than one Single Family Residence. "Non-Residential Floor Area" means all of the square footage of usable area within the perimeter of a non-residential structure, not including any carport, walkway, garage, overhang, or similar area. The determination of Non-Residential Floor Area shall be made by reference to the building permit(s) issued for such Assessor's Parcel. "Non-Residential Property" means all Developed Property for which a building permit(s)was issued for a non-residential use. "Other Residential Property" means all Developed Property for which a building permit(s)was issued for a residential use. "Outstanding Bonds" means all IA No. 1 and IA No. 2 Bonds,which are deemed to be outstanding under the Indenture. "Parcel" means any County of San Bernardino Assessor's Parcel that is within the boundaries of the CFD, based on the equalized tax rolls of the County of San Bernardino as of January 1 in the prior Fiscal Year. "Partial Prepayment" means a prepayment of a portion of the Special Tax obligation applicable to a parcel of Taxable Property as set forth in Section VI. "Property Owner Association Property" means any property within the boundaries of IA No. 1 owned in fee, dedicated to or subject to an easement benefiting a property owner association, including any master or sub-association. However, notwithstanding the above, any of such property which constitutes the"pad-area" located directly under a residential or non-residential building shall not be considered Property Owner Association Property. "Proportionately" or "Proportionate" means, for Developed Property and IA No. 2 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 and IA No. 2 Developed Property. For Undeveloped Property and IA No. 2 Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levies per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property and IA No. 2 Undeveloped Property. The tens "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section IV below. "Public Property" means any property within the boundaries of IA No. 1 the ownership of which is transferred to a public agency on or after the date of formation of CFD No. 2001-01 and is used for rights-of-way or any other purpose and is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency; provided however that any property owned by a public agency and leased to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use. Amended,June 13,2001 C-4 City of Rancho Cucamonga Resolution No. 01-162 _ Page 16 of 51 "RMA" means this Amended Rate and Method of Apportionment. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Resolution of Formation" means the Resolution passed by the Council authorizing the formation of CFD No. 2001-01. "Resolution of Issuance" means the Resolution passed by the Council authorizing the issuance of bonds. "Special Tax" means any tax levied within the CFD pursuant to the Act and this Rate and Method of Apportionment of Special Tax. "Special Tax Obligation" means the total obligation of a Taxable Parcel to pay the Special Tax for the remaining life of the CFD. "Special Tax Requirement" means that amount required in any Fiscal Year to: (i) pay Debt Service on all Outstanding Bonds; (ii)pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds except for replenishment due to delinquencies in Special Tax payments in IA No. 2; (v)accumulate funds to pay directly for acquisition or construction of Authorized Facilities, and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of IA No. 1, which are not exempt from the levy of the Special Tax pursuant to law or Section VIII below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property within IA No. 1 that are not exempt from the levy of Special Tax pursuant to Section VIII below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt from the levy of Special Tax pursuant to Section VIII below. "Tax-Exempt Parcel" means, as of January 1 of each year, (i) any parcel ownedby a governmental entity, or irrevocably offered for dedication to a governmental entity, (ii) any Parcel which constitutes public right-of-way or which is encumbered by an unmanned utility easement, making impractical its utilization for other than the purpose set forth in the easement, or (iii) any Parcel assigned a zero value by the San Bernardino County Assessor. Notwithstanding the foregoing, (i) a Taxable Parcel acquired by a public entity after the adoption of the Resolution of Formation by means of negotiated transaction, or by gift or devise, or by eminent domain proceedings, shall Amended,June 13,2001 C-5 City of Rancho Cucamonga Resolution No. 01-162 Page 17 of 51 remain a Taxable Parcel, and (ii) if a governmental entity owning a Tax-Exempt Parcel, including a Tax-Exempt Parcel held in trust for any beneficiary, grants a leasehold or other possessory interest in the parcel to a non-exempt person or entity, the Special Tax shall be levied on the leasehold or possessory interest and shall be payable by the owner of the leasehold or possessory interest. Tax-Exempt Parcels include the specific parcels, or their successor parcels. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. II. CLASSIFICATION OF PARCELS Each Fiscal Year, all Taxable Property within IA No. 1 shall be classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, Taxable Public Property, or Undeveloped Property, and all such Taxable Property shall be subject to the levy of Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections III and IV below. III MAXIMUM SPECIAL TAX RATE 1. Developed Property (a). Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ti) the amount derived by application of the Backup Special Tax. (b). Assigned Special Tax The Assigned Special Tax for each Land Use Class is shown in Table 1. Amended,June 13,2001 C-6 City of Rancho Cucamonga Resolution No. 01-162 Page 18 of 51 TABLE 1 Assigned Special Taxes for Developed Property Improvement Area No. 1 Land Use Description Residential Assigned Class Floor Area Special Tax 1 Single Family Property =>3,250 sq. ft. $2,100 per residential dwelling unit 2 Single Family Property 2,950 to 3,249 sq.ft $1,684 per residential dwelling unit 3 Single Family Property 2,650 to 2,949 sq. ft. $1,515 per residential dwelling unit 4 Single Family Property 2,350 to 2,649 sq. ft. $1,301 per residential dwelling unit 5 Single Family Property 2,150 to 2,349 sq.ft. $1,217 per residential dwelling unit 6 Single Family Property 1,950 to 2,149 sq.ft. $1,119 per residential dwelling unit 7 Single Family Property < 1,950 sq.ft. $938 per residential dwelling unit 8 Apartment Property Not Applicable $237 per residential dwelling unit 9 Non-Residential Property Not Applicable $8,398 per Acre (c). Multiple Land Use Classes In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Assigned Special Tax levied on an Assessor's Parcel shall be the sum of the Assigned Special Taxes for all Land Use Classes located on that Assessors Parcel. The Maximum Special Tax that can be levied on an Assessor's Parcel shall be the sum of the Maximum Special Taxes that can be levied for all Land Use Classes located on that Assessor's Parcel derived by application of the Backup Special Tax. For an Assessor's Parcel that contains both Residential Property and Non-Residential Property, the Acreage of such Assessor's Parcel shall be allocated to each type of property based on the amount of Acreage designated for each Land Use Class as determined by reference to the site plan approved for such Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final. Amended,June 13,2001 C-7 City of Rancho Cucamonga Resolution No. 01-162 Page 19 of 51 (d). Backup Special Tax The Backup Special Tax shall equal$10,768 per Acre. 2. Final Mapped Property (a). Intermediate Special Tax The Intermediate Special Tax shall only be levied on Assessor's Parcels of Final Mapped Property. To compute the Intermediate Special Tax attributable to a Final Subdivision, the Acreage of all Developed Property and Final Mapped Property within that Final Subdivision shall be multiplied by $7,500. The Intermediate Special Tax for each Assessors Parcel of Final Mapped Property planned for residential development ( shall then be computed by dividing the Intermediate Special Tax attributable to the applicable Final Subdivision by the total number of Assessor's Parcels planned for residential development within that Final Subdivision (i.e., the number or residential lots). The Intermediate Special Tax for each Assessors Parcel of Final Mapped Property in a Final Subdivision planned exclusively for non-residential development shall equal $7,500 multiplied by the Acreage of such Assessors Parcel. If a Final Subdivision includes Assessor's Parcels of Developed Property and Final Mapped Property planned for both residential and non- residential development, then the Intermediate Special Tax for each Assessor's Parcel of Final Mapped Property planned for residential development shall be calculated as described above based exclusively on I the Acreage of the residential Final Mapped Property. Conversely, the Intermediate Special Tax for each Assessors Parcel of Final Mapped Property planned for non-residential development shall be calculated as described above based exclusively on the Acreage of the non-residential Final Mapped Property. The CFD Administrator shall allocate the Acreage of each Assessors Parcel in the Final Subdivision to residential and non-residential development based on the projected use of each such Assessor's Parcel. (b). Maximum Special Tax The Maximum Special Tax for Final Mapped Property shall be $10,768 per Acre. 3. Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property. The Maximum Special Tax for Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property shall be$10,768 per Acre. i Amended,June 13,2001 C-8 City of Rancho Cucamonga Resolution No. 01-162 Page 20 of 51 IV. APPORTIONMENT OF SPECIAL TAX For each Fiscal Year the Council shall determine the Special Tax Requirement and levy the Special Tax, taking into consideration the levy of the IA No. 2 Special Tax, until the amount of Special Taxes and IA No. 2 Special Taxes equals the Special Tax Requirement.The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied on each Assessor's Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 2 RMA, the IA No. 2 Special Tax shall be levied on each Assessor's Parcel of IA No. 2 Developed Property in an amount equal to 100%of the applicable IA No. 2 Assigned Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Final Mapped Property at up to 100% of the Intermediate Special Tax for Final Mapped Property; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 2 RMA, the IA No. 2 Special Tax shall be levied on each Assessors Parcel of IA No. 2 Final Mapped Property at up to 100% of the IA No. 2 Intermediate Special Tax for IA No. 2 Final Mapped Property, with the levy on Final Mapped Property and IA No. 2 Final Mapped Property being Proportionate; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied on each Assessor's Parcel of Undeveloped Property at up to $7,500 per Acre; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 2 RMA, the IA No. 2 Special Tax shall be levied on each Assessor's Parcel of IA No. 2 Undeveloped Property at up to $7,500 per Acre, with the levy on Undeveloped Property and IA No. 2 Undeveloped Property being Proportionate; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied on each Assessor's Parcel of Final Mapped Property and Undeveloped Property at up to 100%of the Maximum Special Tax for Final Mapped Property and Undeveloped Property; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 2 RMA, the IA No. 2 Special Tax shall be levied on each Assessor's Parcel of IA No. 2 Final Mapped Property and IA No. 2 Undeveloped Property at up to 100% of the IA No. 2 Maximum Special Tax for IA No. 2 Final Mapped Property and IA No. 2 Undeveloped Property, with the levy on Final Mapped Property and Undeveloped Property and IA No. 2 Final Mapped Property and IA No. 2 Undeveloped Property being Proportionate; Fifth: If additional monies are needed to satisfy the Special Tax Requirement 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 Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 2 RMA, the levy of the IA No. 2 Special Tax on each Assessor's Parcel of IA No. 2 Developed Property whose IA No. 2 Maximum Special Tax Amended,June 13, 2001 C-9 City of Rancho Cucamonga Resolution No. 01-162 Page 21 of 51 h. is determined through the application of the IA No. 2 Backup Special Tax shall be (( increased in equal percentages from the IA No. 2 Assigned Special Tax up to the IA No. f. 2 Maximum Special Tax for each such Assessor's Parcel, with the levy on Developed Property and IA No. 2 Developed Property being Proportionate; It Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied on each Assessor's Parcel of Taxable Property Owner Association Property or Taxable Public !. Property at up to the Maximum Special Tax for Taxable Property Owner Association E.., Property or Taxable Public Property; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 2 RMA, the IA No. 2 Special Tax shall be levied on each Assessor's Parcel of IA No. 2 Taxable Property Owner Association Property or IA No. 2 Taxable Public Property at up to the IA No. 2 Maximum Special Tax for IA No. 2 Taxable Property Owner Association Property or IA No. 2 Taxable Public Property, with the levy on Taxable Property Owner Association Property or Taxable Public Property and IA No. 2 Taxable Property Owner Association Property or IA No. 2 Taxable Public Property being Proportionate. Notwithstanding the above the Council may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax and the IA No. 2 Assigned-Special Tax in step one of Section IV (above), when (i) the Council is no longer required to levy a Special 1. Tax pursuant to steps two through six above and the Council is no longer required to levy an IA No. 2 Special Tax pursuant to steps two through six in Section IV of the IA No. 2 RMA in order to meet the Special Tax Requirement; (ii) all authorized IA No. 1 and IA No. 2 Bonds have already been issued or the Council has covenanted that it will not issue any additional IA No. 1 and IA No. 2 Bonds (except refunding bonds) to be supported by Special Taxes and IA No. 2 Special Taxes; and (iii)all Authorized Facilities have been constructed and/or acquired. Further notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within IA No. 1, except for those Residential Properties whose owners are also delinquent or in default on their Special Tax payments for one or more other properties within IA No. 1 or IA No. 2. V. MANNER OF COLLECTION Collection of the Special Tax shall be by the County in the same manner as ordinary ad valorem property taxes are collected and the Special Tax shall be subject to the same penalties and the same lien priority in the case of delinquency as ad valorem taxes; provided, however, that the Council may provide in the Indenture or in the Resolution of Issuance for(i)other means of collecting the Special Tax, including direct billings thereof to the property owners; and (ii)judicial foreclosure of delinquent Special Taxes. A Amended,June 13,2001 C-10 City of Rancho Cucamonga Resolution No. 01-162 Page 22 of 51 VI. DISCHARGE OF SPECIAL TAX OBLIGATION Property owners may prepay and permanently satisfy the Special Tax Obligation by a ^, cash settlement with the City as permitted under Government Code Section 53344. Prepayment is permitted only under the following conditions: The following definition applies to this Section VI: "CFD Public Facilities Costs" means either $10,500,000 in 2001 dollars, which shall increase by the Construction Inflation Index on July 1, 2002, and on each July 1 thereafter, or such lower number as (i)shall be determined by the CFD Administrator as sufficient to acquire or construct the Authorized Facilities to be Financed by IA No. 1 and IA No. 2 under the authorized Mello-Roos financing program for CFD No. 2001-01, or (ii)shall be determined by the Council concurrently with a covenant that it will not issue any more IA No. 1 and IA No. 2 Bonds (except refunding bonds) to be supported by Special Taxes and IA No. 2 Special Taxes. . "Construction Fund" means the fund (regardless of its name) established pursuant to the Indenture to hold funds, which are currently available for expenditure to acquire or construct the Authorized Facilities. "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 Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities Costs minus (i) costs previously paid from the Construction Fund to acquire or construct the Authorized Facilities, (ii) monies currently on deposit in the Construction Fund, and (iii) monies currently on deposit in an escrow or other earmarked fund that are expected to be available to finance Public Facilities Costs. "Outstanding Bonds" means all Previously Issued Bonds, which remain outstanding as of the first interest and/or principal payment date following the current Fiscal Year. "Previously Issued Bonds" means all IA No. 1 and IA No. 2 Bonds that have been issued prior to the date of prepayment. 1. Prepayment in Full The Special Tax Obligation applicable to an Assessor's Parcel in IA No. 1 may be prepaid and the obligation of the Assessor's Parcel to pay any Special Tax permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessors Parcel intending to prepay the Special Tax Obligation shall provide the CFD Administrator with written notice of intent to prepay. The CFD Administrator shall provide the owner with a Amended,June 13,2001 C-11 City of Rancho Cucamonga Resolution No. 01-162 Page 23 of 51 statement of the Prepayment Amount for such Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. Prepayment must be made not less than 60 days prior to any redemption date for the IA No. 1 and IA No. 2 Bonds to be redeemed with the proceeds of such prepaid Special Taxes. 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 Prepayment Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest 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. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax. For Assessors Parcels of Final Mapped Property or Undeveloped Property for which a building permit has been issued, compute the Assigned Special Tax and Backup Special Tax for that Assessors Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessors Parcel. For Assessor's Parcels of Undeveloped Property compute the Maximum Special Tax. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Taxes for IA No. 1 and IA No. 2 based on the Developed Property Special Taxes and IA No. 2 Developed Property Special Taxes which could be levied in the current Fiscal Year on all expected development through build-out of IA No. 1 and IA No. 2 as determined by the CFD Administrator, excluding any Assessor's Parcels for which the Special Tax Obligation has been prepaid,and (b) Divide the Backup Special Tax or Maximum Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes and IA No. 2 Backup Special Taxes at build-out for IA No. 1 and IA No. 2, excluding any Assessor's Parcels for which the Special Tax Obligation has been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the"Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (expressed as a percentage), if any, on the Amended,June 13,2001 C-12 City of Rancho Cucamonga Resolution No. 01-162 Page 24 of 51 Outstanding Bonds to be redeemed at the first available call date (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the"Future Facilities Prepayment Amount"). 8. 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. 9. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 10. Take the amount computed pursuant to paragraph 8 and subtract the amount computed pursuant to paragraph 9(the"Defeasance Amount"). 11. Verify the administrative fees and expenses of IA No. 1 and IA No. 2, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming IA No. 1 and IA No. 2 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption .(the "Prepayment Administrative Fees and Expenses"). 12. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the.applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment(the "Reserve Fund Credit"). No Reserve Fund Credit shall be granted if reserve funds are below 100%of the reserve requirement. 13. If any capitalized interest for the Outstanding Bonds will nct have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund after such first interest and/or principal payment(the"Capitalized Interest Credit"). 14. The Special Tax Obligation is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 10, and 11, less the amounts computed pursuant to paragraphs 12 and 13 (the"Prepayment Amount"). 15. From the Prepayment Amount, the sum of the amounts computed pursuant to paragraphs 4, 5, 10, 12, and 13 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 7 Amended,June 13,2001 C-13 City of Rancho Cucamonga Resolution No. 01-162 Page 25 of 51 in shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by CFD No. 2001-01. The Prepayment Amount may be sufficient to redeem an amount other than a $5,000 increment of IA No. 1 and IA No. 2 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 redeem IA No. 1 and IA No. 2 Bonds be used with the next prepayment of IA No. 1 and IA No. 2 Bonds. The CFD Administrator will confirm that all previously levied Special taxes have been paid in full. With respect to any Assessor's Parcel that is prepaid in full, once the CFD Administrator has confirmed that all previously levied Special taxes have been paid, the Council 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 Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes and IA No. 2 Maximum Special Taxes that may be levied on Taxable Property and IA No. 2 Taxable Property, respectively, after the proposed prepayment is at least 1.1 times the maximum annual Debt Service on all Outstanding Bonds. 2. Prepayment in Part The Special Tax on an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section VIA; except that a partial prepayment shall be calculated according to the following formula: PP= PExF. These terms have the following meaning: PP the partial prepayment PE= the Prepayment Amount calculated according to Section VIA F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Special Tax, (ii) the percentage by which the Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section VIA, and (ii) indicate in the records of CFD No. 2001-01 that there has been a partial prepayment of the Special Tax and that a Amended,June 13,2001 C-14 City of Rancho Cucamonga Resolution No. 01-162 __. Page 26 of 51 portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section IV. VII. TERM OF "SPECIAL TAX" The Special Tax shall be levied for a period not to exceed fifty years commencing with Fiscal Year 2002-2003, provided however that Special Taxes will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the IA No. 1 and IA No. 2 Bonds have been paid; and (ii) all facilities have been acquired and all reimbursements to the developer have been paid pursuant to the Construction Agreement. V111. EXEMPTIONS No Special Tax shall be levied on up to 62.15 Acres of Property Owner Association Property or Public Property. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property or Public Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property or Public Property, its status as a property exempt from the levy of Special Taxes will be revoked. . Property Owner Association Property or Public Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed as part of the sixth step in Section IV above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property or Taxable Public Property. Amended,June 13,2001 C-15 City of Rancho Cucamonga Resolution No. 01-162 Page 27 of 51 CITY OF RANCHO CUCAMONGA COMMUNITY FACILITIES DISTRICT NO. 2001-01 AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR IMPROVEMENT AREA NO. 2 A Special Tax shall be levied on all Taxable Property in Improvement Area No. 2 of the City of Rancho Cucamonga Community Facilities District No. 2001-01 (IA No. 2) and collected each Fiscal Year commencing in Fiscal Year 2002-2003 according to the tax liability determined by the Council, through the application of the rate and method of apportionment of the Special Tax set forth below. All Taxable Property shall be taxed to the extent and in the manner herein provided. III. DEFINITIONS This Amended Rate and Method of Apportionment employs terms defined below and terms defined in the Rate and Method of Apportionment for Improvement Area No. 1 of the City of Rancho Cucamonga Community Facilities District No. 2001-01 ("IA No. 1"). When necessary, terms defined in the latter shall be distinguished from terms defined in the former by including the words "IA No. 1" prior to the defined term. The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium.plan, or other recorded County parcel map. The square footage of an Assessor's Parcel is equal to the Acreage of such parcel multiplied by 43,560. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of'Division 2 of Title 5 of the Government Code of the State of California. "Administrative Fees" or "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of IA No. 1 and !A No. 2:the costs of computing the IA No. 1 and IA No. 2 Special Taxes;the costs of preparing the annual IA No. 1 Special Tax and IA No. 2 Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the IA No. 1 and IA No. 2 Special Taxes (whether by the City, the County or otherwise); the costs of remitting the IA No. 1 and IA No. 2 Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2001-01, or any designee thereof complying with arbitrage. rebate requirements; the costs to the City, CFD No. 2001-01, or any designee-thereof complying with disclosure requirements of the City or CFD No. 2001-01 associated with applicable Federal and State securities laws and the Act; the costs associated with preparing IA No. 1 and/or IA No. 2 Special Tax disclosure statements and responding to public inquiries regarding the IA No. 1 and/or IA No. 2 Special Taxes; the costs to the City, CFD No. 2001-01, or any designee thereof related to an appeal of the IA No. 1 and/or the IA No. 2 Special Tax; the costs associated with the release of funds from an Amended,June 13,2001 C-16 City of Rancho Cucamonga Resolution No. 01-162 Page 28 of 51 escrow account; and the City's annual administration fees and third party expenses- Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2001-01 for any other administrative purposes of IA No. 1 and/or IA No. 2, including attorney's fees and other costs related to commencing and pursuing any foreclosure of delinquent Special Taxes in IA No. 1. Under no circumstances shall the Administrative Expenses include costs related to commencing and pursuing any - foreclosure of delinquent Special Taxes in IA No. 2. "Apartment Property" means any Assessor's 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 which are under common [ management. i "Assessor" means the Assessor of the County of San Bernardino. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's parcel number. j "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property,as determined in accordance with Section III below. "Authorized Facilities"means those improvements, as listed on Exhibit"A'to the Construction Agreement. "Backup Special Tax" means the Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section III below. "Bond Share" means the share of Bonds assigned to a Taxable Parcel as specified in Section VI. "Bonds" means any bonds or other indebtedness (as defined in the Act) of CFD No. 2001-01 for Improvement Area No. 1 or Improvement Area No. 2, whether in one or more series, secured by the levy of Special Taxes. "CFD No. 2001-01" means the City of Rancho Cucamonga Community Facilities District No. 2001-01. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and for levying and collecting the Special Taxes. "City" means the City of Rancho Cucamonga, California. "Construction Agreement" means the Construction Agreement for IA No. 1 and IA No. 2 that was approved by the Council on June 20, 2001, as it may be modified or supplemented from time to time. "Council" means the City Council of the City of Rancho Cucamonga acting as the legislative body of the CFD under the Act. "County" means the County of San Bernardino, California. Amended,June 13, 2001 C-17 City of Rancho Cucamonga Resolution No. 01-162 Page 29 of 51 C "Debt Service" means for each Fiscal Year, the total amount of principal and interest payable on any Bonds, notes or certificates of participation of the CFD during the calendar year commencing on January 1 of such Fiscal Year. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Taxable Property Owner Association Property or Taxable Public Property, for which a building permit for new construction or renovations was issued prior to January 1 of the previous Fiscal Year. "Extraordinary Special Tax" means a Special Tax levied in any Fiscal Year as necessary to satisfy the Extraordinary Special Tax Requirement; provided, however, the sum of the Special Tax and the Extraordinary Special Tax levied on any Assessors Parcel in any Fiscal Year shall not exceed the Maximum Annual Special Tax applicable to such parcel. I "Extraordinary Special Tax Requirement" means that amount required in any Fiscal Year to: (i) pay Administrative Expenses related to commencing and pursuing any foreclosure of delinquent Special Taxes in IA No. 2. (ii) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds due to delinquencies in the payment of Special Taxes levied in IA No. 2; and (iii) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year in IA No. 2; less (iv) a credit for funds available to reduce the Extraordinary Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. Under no circumstances shall the Extraordinary Special Tax Requirement be impacted by delinquencies in the payment of Special Taxes by Assessor's Parcels in IA No. 1. "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Taxable Property Owner Association Property or Taxable Public Property, which as of January 1 of the previous Fiscal Year was located within a Final Subdivision. The tens "Final Mapped Property" shall include any parcel map or subdivision map or portion thereof that creates individual lots for which a building permit may be issued, including parcels that are designated as a remainder parcel. "Final Subdivision" means a subdivision of property within (i) a final map, or portion thereof approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 at"seq.) and recorded with the County Recorder that creates individual lots for which building permits may be issued, or(ii)for condominiums, a final map, or portion thereof, approved by the City and a condominium plan recorded pursuant to California Civil Code Section 1352 that creates individual lots for which building permits may be issued. "Fiscal Year"means the period starting on July 1 and ending the following June 30. "Improvement Area No. 1" or "IA No. 1" means Improvement Area No. 1 of CFD No. 2001-01, as identified on the boundary map for CFD No. 2001-01. "Improvement Area No. 2" or`IIA No. 2" means Improvement Area No. 2 of CFD No. 2001-01, as identified on the boundary map for CFD No. 2001-01. Amended,June 13,2001 C-18 City of Rancho Cucamonga Resolution No. 01-162 Page 30 of 51 "Indenture" means the indenture,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. "Intermediate Special Tax" means the Special Tax applicable to each Assessor's Parcel of Final Mapped Property,as determined in accordance with Section III below. "Land Use Class" means any of the classes listed in Table 1. "Maximum Annual Special Tax" means the greatest amount of Special Tax, determined in accordance with Section III below,which may be levied in any Fiscal Year on any Assessor's Parcel based on its Land Use classification. "Multi-Family Residential (MFR)" means Residential property that shares a common wall between one or more residential units, or a parcel that contains more than one Single Family Residence. "Non-Residential.Floor Area" means all of the square footage of usable area within the perimeter of a non-residential structure, not including any carport, walkway, garage, overhang, or similar area. The determination of Non-Residential Floor Area shall be made by reference to the building permit(s)issued for such Assessor's Parcel. "Non-Residential Property" means all Developed Property for which a building permit(s)was issued for a non-residential use. "Other Residential Property" means all Developed Property for which a building permit(s)was issued for a residential use. "Outstanding Bonds" mean all Bonds, which are deemed to be outstanding under the Indenture. "Parcel" means any County of San Bernardino Assessor's Parcel that is within the boundaries of the CFD, based on the equalized tax rolls of the County of San Bernardino as of January 1 in the prior Fiscal Year. "Partial Prepayment' means a prepayment of a portion of the Special Tax Obligation applicable to a Parcel of Taxable Property as set forth in Section VII. "Property Owner Association Property" means any property within the boundaries of IA No. 2 owned in fee, dedicated to or subject to an easement benefiting a property owner association, including any master or sub-association. However, notwithstanding the above, any of such property which constitutes the"pad-area" located directly under a residential or non-residential building shall not be considered Property Owner Association Property. "Proportionately" or "Proportionate" means, for Developed Property and IA No. 1 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 and IA No. 1 Developed Property. For Undeveloped Property and IA No. 1 Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levies per Acre to the Amended,June 13,2001 C-19 City of Rancho Cucamonga Resolution No. 01-162 Page 31 of 51 Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property and IA No. 1 Undeveloped Property. The term "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section IV below. "Public Property" means any property within the boundaries of IA No. 2 the ownership of which is transferred to a public agency on or after the date of formation of CFD No. - 2001-02 and is used for rights-of-way or any other purpose and is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency; provided however that any property owned by a public agency and leased to a private entity and subject to taxation under Section 53340.1 of the Act shall r . be taxed and classified in accordance with its use. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential i dwelling units. "Resolution of Formation" means the Resolution passed by the Council authorizing the formation of CFD No. 2001-01. "Resolution of Issuance" means the Resolution passed by the Council authoring the issuance of bonds: "RMA" means this Rate and Method of Apportionment- "Special Tax" means any tax levied within the CFD pursuant to the Act and this Rate and Method of Apportionment of Special Tax. "Special Tax Obligation" means the total obligation of a Taxable Parcel to pay the Special Tax for the remaining life of the CFD. "Special Tax Requirement" means that amount required in any Fiscal Year to: (i) pay Debt Service on all Outstanding Bonds; (ii)pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) accumulate funds to pay directly for acquisition or construction of Authorized Facilities, (v) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds due to delinquencies in the payment of Special Taxes levied in IA No. 1; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year in IA No. 1 ; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. Under no circumstances shall the Special Tax Requirement be impacted by delinquencies in the payment of Special Taxes by Assessor's Parcels in IA No. 2. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of IA No. 2, which are not exempt from the levy of Special Tax pursuant to law or Section IX below. Amended,June 13,2001 C-20 City of Rancho Cucamonga Resolution No. 01-162 Page 32 of 51 13 "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property within IA No. 1 and IA No. 2 that are not exempt from the levy of the Special Tax pursuant to Section IX below. _ "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt from the levy of the Special Tax pursuant to Section IX below. :.1 "Tax-Exempt Parcel" means, as of January 1 of each year, (i) any parcel owned by a governmental entity, or irrevocably offered for dedication to a governmental entity, (ii) any Parcel which constitutes public right-of-way or which is encumbered by an unmanned utility easement, making impractical its utilization for other than the purpose set forth in the easement, or (iii) any Parcel assigned a zero value by the San Bernardino County Assessor. Notwithstanding the foregoing, (i) a Taxable Parcel acquired by a public entity after the adoption of the Resolution of Formation by means of negotiated transaction, or by gift or devise, or by eminent domain proceedings, shall remain a Taxable Parcel, and (ii) if a public agency owning a Tax-Exempt Parcel, including a Tax-Exempt Parcel held in trust for any beneficiary, grants a leasehold or other possessory interest in the parcel to a non-exempt person or entity, the Special Tax j. shall be levied on the leasehold or possessory interest and shall be payable by the owner of the leasehold or possessory interest. Tax-Exempt Parcels include the specific parcels,or their successor parcels. I "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. i IV. CLASSIFICATION OF PARCELS Each Fiscal Year, all Taxable Property within IA No. 2 shall be classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, Taxable Public Property, or Undeveloped Property, and all such Taxable Property shall !_ be subject to Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections III, IV,and V below. 111 MAXIMUM SPECIAL TAX RATE 1. Developed Property (a). Maximum Special Tax — The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. Amended,June 13, 2001 C-21 City of Rancho Cucamonga _ Resolution No. 01-162 Page 33 of 51 f: (b). Assigned Special Tax The Assigned Special Tax for each Land Use Class is shown in Table 1. TABLE 1 Assigned Special Taxes for Developed Property Improvement Area No. 2 Land Use Description Assigned Special Tax Class I 1 Apartment Property $237 per unit f 2 Other Residential $10,768 per Acre Property 1 3 Non-Residential $0.63 per square foot of Non- Property Residential Floor Area (c). Multiple Land Use Classes i. In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Assigned Special Tax levied on an Assessor's Parcel shall be the sum of the Assigned Special Taxes for all Land Use Classes located on that Assessors Parcel. The Maximum Special Tax that can be levied on an Assessor's Parcel shall be the sum of the Maximum Special Taxes that can be levied for all Land Use Classes located on that Assessor's Parcel derived by application of the Backup Special Tax. For an Assessor's Parcel that contains both I Residential Property and Non-Residential Property, the Acreage of such Assessor's Parcel shall be allocated to each type of property based on the amount of Acreage designated for each Land Use Class as determined by reference to the site plan approved for such Assessor's Parcel. The CFD Administrator's allocation to each type of'property shall be final. (d). Backup Special Tax The Backup Special Tax shall equal$10, 061 per Acre. 2. Final Mapped Property (a). Intermediate Special Tax The Intermediate Special Tax shall only be levied on Assessor's Parcels of Final Mapped Property. To compute the Intermediate Special Tax attributable to a Final Subdivision, the Acreage of all Developed Property Amended,June 13,2001 C-22 City of Rancho Cucamonga Resolution No. 01-162 Page 34 of 51 in and Final Mapped Property within that Final Subdivision shall be multiplied by $7,500. The Intermediate Special Tax for each Assessor's Parcel of Final Mapped Property planned for residential development shall then be computed by dividing the Intermediate Special Tax attributable to the applicable Final Subdivision by the total number of Assessor's Parcels planned for residential development within that Final Subdivision (i.e., the number or residential lots). The Intermediate Special Tax for each Assessor's Parcel of Final Mapped Property in a Final Subdivision planned exclusively for non-residential development shall equal$7,500 multiplied by the Acreage of such Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Developed Property and Final Mapped Property planned for both residential and non- residential development, then the Intermediate Special Tax for each Assessor's Parcel of Final Mapped Property planned for residential development shall be calculated as described above based exclusively on the Acreage of the residential Final Mapped Property. Conversely, the Intermediate Special Tax for each Assessors Parcel of Final Mapped Property planned for non-residential development shall be calculated as described above based exclusively on the Acreage of the non-residential Final Mapped Property. The CFD Administrator shall allocate the Acreage of each Assessors Parcel in the Final Subdivision to residential and non-residential development based on the projected use of each such Assessor's Parcel. (b). Maximum Special Tax The Maximum Special Tax for Final Mapped Property shall be $10,768 per Acre. 3. Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property The Maximum Special Tax for Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property shall be$10,768 per Acre. IV. APPORTIONMENT OF SPECIAL TAX For each Fiscal Year the Council shall determine the Special Tax Requirement and levy the Special Tax, taking into consideration the levy of the IA No. 1 Special Tax, until the amount of Special Taxes and IA No. 1 Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied on each Assessors Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 1 RMA, the IA No. 1 Special Tax shall be levied on each Assessor's Parcel of IA No. 1 Developed Property in an amount equal to 100%of the applicable IA No- 1 Assigned Special Tax; Amended,June 13,2001 C-23 City of Rancho Cucamonga Resolution No. 01-162 _— Page 35 of 51 Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Final Mapped Property at up to 100% of the Intermediate Special Tax for Final Mapped Property; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 1 RMA, the IA No. 1 Special Tax shall be levied on each Assessor's Parcel of IA No. 1 Final Mapped Property at up to 100% of the IA No. 1 Intermediate Special Tax for IA No. 1 Final Mapped Property, with the levy on Final Mapped Property and IA No. 1 Final Mapped Property being Proportionate; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied on each Assessor's Parcel of Undeveloped Property at up to $7,500 per Acre; and the Council shall be i... notified by the CFD Administrator that under the terms of the IA No. 1 RMA, the IA No. 1 Special Tax shall be levied on each Assessor's Parcel of IA No. 1 Undeveloped Property at up to $7,500 per Acre, with the levy on Undeveloped Property and IA No. 1 Undeveloped Property being Proportionate; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied on each - Assessor's Parcel of Final Mapped Property and Undeveloped Property at up to 100%of the Maximum Special Tax for Final Mapped Property and Undeveloped Property; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 1 RMA, the IA No. 1 Special Tax shall be levied on each Assessor's Parcel of IA No. 1 Final Mapped Property and IA No. 1 Undeveloped Property at up to 100% of the IA No. 1 Maximum Special Tax for IA No. 1 Final Mapped Property and IA No. 1 Undeveloped Properly, with the levy on Final Mapped Property and Undeveloped Property and IA No. 1 Final Mapped Property and IA No. 1 Undeveloped Property being Proportionate; Fifth: If additional monies are needed to satisfy the Special Tax Requirement 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 Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel; and the Council shall be notified by the CFD Administrator that under the terms of the IA No. 1 RMA, the levy of the IA No. 1 Special Tax on each Assessor's Parcel of IA No. 1 Developed Property whose IA No. 1 Maximum Special Tax is determined through the application of the IA No. 1 Backup Special Tax shall be increased in equal percentages from the IA No. 1 Assigned Special Tax up to the IA No. 1 Maximum Special Tax for each such Assessor's Parcel, with the levy on Developed Property and IA No. 1 Developed Property being Proportionate; Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, then4he-Special-Tax c all`ba levied on-each- Assessor's Parcel-of Taxable-Property Owner Association Property or Taxable Public Property at up to the Maximum Special Tax for Taxable Property Owner Association Property or Taxable,Public Property; and the Council shall be notified by the CFD -Administrator that-under the terms of the IA No. 1 RMA, the IA No. 1 Special Tax shall be levied-on each Assessor's Parcel of IA No. 1 Taxable Property Owner Association Property or IA No. 1 Taxable Public Property at up to the IA No. 1 Maximum Special Tax fogIA No. 1 Taxable Property Owner Association Property or IA No. 1 Taxable Public Property, with the levy on Taxable Property Owner Association Property or Taxable Amended,June 13,2001 - C-24 City of Rancho Cucamonga Resolution No. 01-162 Page 36 of 51 Public Property and IA No. 1 Taxable Property Owner Association Property or IA No. 1 Taxable Public Property being Proportionate. Notwithstanding the above the Council may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax and the IA No. 1 Assigned Special Tax in step one of Section IV (above), when (i) the Council is no longer required to levy a Special Tax pursuant to steps two through six above and the Council is no longer required to levy an IA No. 1 Special Tax pursuant to steps two through six in Section IV of the IA No. 1 RMA in order to meet the Special Tax Requirement; (ii) all authorized Bonds have already been issued or the Council has covenanted that it will not issue any additional Bonds (except refunding bonds)to be supported by Special Taxes and IA No. 1 Special Taxes; and (iii)all Authorized Facilities have been constructed and/or acquired. Further notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel - within IA No. 1 or IA No. 2, except for those Residential Properties whose owners are also delinquent or in default on their Special Tax payments for one or more other properties within IA No. 1 or IA No. 2. V. EXTRAORDINARY SPECIAL TAX An Extraordinary Special Tax shall be levied in any Fiscal Year in which an Extraordinary Special Tax Requirement has been established, and shall be levied in addition to the Special Tax levied in such Fiscal Year as described under Section IV to satisfy the Special Tax Requirement. The Extraordinary Special Tax shall be levied in a manner consistent with the terms of the Apportionment of Special Tax in Section IV by continuing to levy Special Taxes on Assessor's Parcels in IA No. 2 only, according to the steps listed in Section IV, until the total Special Taxes levied within IA No. 1 and IA No. 2 _ satisfy both the Special Tax Requirement and the Extraordinary Special Tax Requirement. However, the Extraordinary Special Tax shall only be levied on Taxable Property in IA No. 2, and shall not be levied on Taxable Property in IA No. 1, and the Proportionate allocation of Special Taxes between IA No. 1 and IA No. 2 under the terms of the Apportionment of the Special Tax shall not apply to the levy of the Extraordinary Special Tax. VI. MANNER OF COLLECTION Collection of the Special Tax and the Extraordinary Special Tax shall be by the County in the same manner as ordinary ad valorem property taxes are collected and the Special Tax shall be subject to the same penalties and the same lien priority in the case of _ delinquency-as sH'valo rem faxes per vided,however, that the.Council may provide in the — -Indenture or in the Resolution of Issuance for(i) other means of collecting the Special Tax, including direct billings thereof to the property-owners and (ii)judicial foreclosure of delinquent Special Taxes. Amended,June 13,2001 C-25 City of Rancho Cucamonga Resolution No. 01-162 Page 37 of 51 I , k- VII. DISCHARGE OF SPECIAL TAX OBLIGATION Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with the City as permitted under Government Code Section 53344. Prepayment is permitted only under the following conditions: �.iThe following definition applies to this Section VII: "CFD Public Facilities Costs" means either $10,500,000 in 2001 dollars, which shall I increase by the Construction Inflation Index on July 1, 2002, and on each July 1 thereafter, or such lower number as (i)shall be determined by the CFD Administrator as sufficient to acquire or construct the Authorized Facilities to be financed by IA No. 1 and IA No. 2 under the authorized Mello-Roos financing program for CFD No. 2001-01,or(ii) I shall be determined by the Council concurrently with a covenant that it will not issue any - more Bonds (except refunding bonds) to be supported by Special Taxes and IA No. 1 Special Taxes. "Construction Fund" means the.fund (regardless of its name) pursuant to the Indenture to hold funds, which are currently available for expenditure to acquire or construct the Authorized Facilities. "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 Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles. j "Future Facilities Costs" means the CFD Public Facilities Costs minus (i) costs previously paid from the Construction Fund to acquire or construct the Authorized Facilities, (ii) monies currently on deposit in the Construction Fund, and (iii) monies currently on deposit in an escrow or other earmarked fund that are expected to be available to finance CFD Public Facilities Costs. "Outstanding Bonds" means all Previously Issued Bonds, which remain outstanding as of the first interest and/or principal payment date following the current Fiscal Year. "Previously Issued Bonds" means all Bonds that have been issued prior to the date of prepayment. 1. Prepayment in Full The Special Tax Obligation.applicable to an Assessor's Parcel in IA No. 2 may be prepaid and the obligation of the Assessor's Parcel to pay any Special Tax permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessors Parcel Amended,June 13,2001 C-26 City of Rancho Cucamonga Resolution No. 01-162 Page 38 of 51 intending to prepay the Special Tax Obligation shall provide the CFD Administrator with written notice of intent to prepay. The CFD Administrator shall provide the owner with a statement of the Prepayment Amount for such Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. Prepayment must be made not less than 60 days prior to any redemption date for the Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount (defined below) shall be calculated as summarized below { (capitalized terms as defined below): t Bond Redemption Amount plus Redemption Premium plus Future Facilities Prepayment Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit Less Capitalized Interest 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. Confirm that no Special Tax delinquencies apply to such Assessors Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a building permit has been issued, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessors Parcel. For Assessor's Parcels of Undeveloped Property compute the Maximum Special Tax. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Taxes for IA No. 1 and IA No. 2 based on the Developed Property Special Taxes and IA No. 1 Developed Property Special Taxes which could be levied in the current Fiscal Year on all expected development through build-out of IA No. 1 and IA No. 2 as determined by the CFD Administrator, excluding any Assessor's Parcels for which the Special Tax Obligation has been prepaid, and (b) Divide the Backup Special Tax or Maximum Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes and IA No.1 Backup Special Taxes at build-out for IA No. 1 and IA No. 2, excluding any Assessor's Parcels for which the Special Tax Obligation has been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the"Bond Redemption Amount"). Amended,June 13,2001 C-27 City of Rancho Cucamonga Resolution No. 01-162 Page 39 of 51 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (expressed as a percentage), if any, on the Outstanding Bonds to be redeemed(the"Redemption Premium"). 6. Compute the current Future Facilities Costs. 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the"Future Facilities Prepayment Amount"). 8. 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. 9. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 10. Take the amount computed pursuant to paragraph 8 and subtract the amount computed pursuant to paragraph 10 (the"Defeasance Amount"). 11. Verify the administrative fees and expenses of IA No. 1 and IA No. 2, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the"Prepayment Administrative Fees and Expenses"). 12. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment(the "Reserve Fund Credit'). No Reserve Fund Credit shall be granted if reserve funds are below 100%of the reserve requirement. 13 If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund after such first interest and/or principal payment(the"Capitalized Interest Credit"). 14. The Special Tax Obligation"is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 10, and 11, less the amounts computed pursuant to paragraphs 12 and 13(the"Prepayment Amount"). 15. From the Prepayment Amount, the sum of the amounts computed pursuant to paragraphs 4, 5, 10, 12, and 13 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 7 Amended,June 13,2001 C-28 City of Rancho Cucamonga Resolution No. 01-162 Page 40 of 51 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by CFD No. 2001-01. The Prepayment Amount may be sufficient to redeem an amount 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 to redeem Bonds with the next prepayment of Bonds. The CFD Administrator will confirm that all previously levied Special Taxes have been paid in full. With respect to any Assessor's Parcel that is prepaid in full, once the CFD Administrator has confirmed that all previously levied Special Taxes have been paid, the Council 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 Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes and IA No. 1 Maximum Special Taxes that may be levied on Taxable Property and IA No. 1 Taxable Property, respectively, after the proposed prepayment is at least 1.1 times the maximum annual Debt Service on all Outstanding Bonds. 2. Prepayment in Part The Special Tax on an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section V11.1; except that a partial prepayment shall be calculated according to the following formula: PP = PExF. These terms have the following meaning: PP= the partial prepayment Pe = the Prepayment Amount calculated according to Section VI1.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Special Tax, (it) the percentage by which the Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section V11.1, and (ii)indicate in the records of CFD No. 2001-01 that there has been a partial prepayment of the Special Tax and that a Amended,June 13,2001 C-29 City of Rancho Cucamonga Resolution No. 01-162 Page 41 of 51 portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section IV. T VIII TERM OF "SPECIAL TAX" The Special Tax shall be levied for a period not to exceed fifty years commencing with Fiscal Year 2002-2003, provided however that Special Taxes will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the Bonds have been paid; and (ii) all facilities have been acquired and all reimbursements to the developer have been paid pursuant to the Construction. IX. EXEMPTIONS No Special Tax shall be levied on up 12.54 Acres of Property Owner Association Property and Public Property. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property or Public Property. However, should an Assessors Parcel no longer be classified as Property Owner Association Property or Public Property, its status as a property exempt from the levy of Special Taxes will be revoked. Property Owner Association Property or Public Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed as part of the fifth step in Section IV above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property or Taxable Public Property. i . 3 Amended,June 13,2001 C-30 City of Rancho Cucamonga Resolution No. 01-162 Page 42 of 51 CITY OF RANCHO CUCAMONGA COMMUNITY FACILITIES DISTRICT NO. 2001-01 RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR IMPROVEMENT AREA NO. 3 A Special Tax shall be levied on all Taxable Property in Improvement Area No. 3 of the City of Rancho Cucamonga Community Facilities District No. 2001-01 and collected each Fiscal Year commencing in Fiscal Year 2002-2003 according to the tax liability determined by the Council, through the application of the rate and method of apportionment of the Special Tax set forth below. All Taxable Property shall be taxed to the extent and in the manner herein provided. V. DEFINITIONS This Rate and Method of Apportionment employs terms defined below and terms defined in the Rate and Method of Apportionment for Improvement Area No. 3 of the City of Rancho Cucamonga Community Facilities District No. 2001-01 (IA No. 3). The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessors Parcel as shown on an Assessors Parcel Map, or if the land area is not shown on an Assessors Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. The square footage of an Assessor's,Parcel is equal to the Acreage of such parcel multiplied by 43,560. . "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. "Administrative Fees" or "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of IA No. 3: the costs of computing the IA No. 3 Special Taxes; the costs of preparing the annual IA No. 3 Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the IA No. 3 (whether by the City, the County or otherwise); the costs of remitting the IA No. 3 Special Taxes to the Trustee; the costs of the Trustee(including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2001-01, or any designee thereof complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-01, or any designee thereof complying with disclosure requirements of the City or CFD No. 2001-01 associated with applicable Federal and State securities laws and the Act; the costs associated with preparing IA No. 3 Special Tax disclosure statements and responding to public inquiries regarding the IA No. 3 Special Taxes; the costs to the City, CFD No. 2001-01, or any designee thereof related to an appeal of the IA No. 3 Special Tax; the costs associated with the release of funds from an escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2001-01 for any other administrative purposes of IA No. 3, including attorney's fees and other costs related to commencing and pursuing any foreclosure of delinquent IA No. 3 Special Taxes. Amended,June 13,2001 C-31 City of Rancho Cucamonga Resolution No. 01-162 Page 43 of 51 "Assessor" means the Assessor of the County of San Bernardino. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessors parcel number. "Authorized Facilities" means those improvements, as listed in the Resolution of Formation. Bond Share" means the share of Bonds assigned to a Taxable Parcel as specified in Section VI. "Bonds" means any bonds or other indebtedness (as defined in the Act) of CFD No. 2001-01 for Improvement Area No. 3,whether in one or more series, secured by the levy of Special Taxes. "CFD No. 2001-01" means the City of Rancho Cucamonga Community Facilities District No. 2001-01. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and for levying and collecting the Special Taxes. "City" means the City of Rancho Cucamonga, California. "Council" means the City Council of the City of Rancho Cucamonga acting for the CFD under the Act. "County" means the County of San Bernardino, California. "Debt Service" means for each Fiscal Year, the total amount of principal and interest payable on any Bonds, notes or certificates of participation of the CFD during the calendar year commencing on January 1 of such Fiscal Year. "Fiscal Year" means the period starting on July 1 and ending the following June 30. "IA No. 3 Bonds" means any bonds or other debt(as defined in Section 53317(d)of the Act), whether in one or more series, issued by CFD No. 2001-01 for IA No. 3 under the Act. "Improvement Area No. 3" means Improvement Area No. 3 of CFD No. 2001-01, as identified on the boundary map for CFD No. 2001-01. "Indenture" means the indenture,fiscal agent agreement, resolution or other instrument pursuant to which IA No- 3 Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Maximum Annual Special Tax" means the greatest amount of Special Tax, determined in accordance with Section III below, which may be levied in any Fiscal Year on any Assessor's Parcel based on its Land Use classification. Amended,June 13,2001 C-32 City of Rancho Cucamonga Resolution No. 01-162 Page 44 of 51 "Maximum Special Tax Revenue" means the sum of the Maximum Annual Special Tax which may be levied on all of the Taxable Properties in the CFD. "Original Parcel" means the Assessor Parcel's existing at the formation of the CFD, as depicted on the Boundary Map as recorded with the County Recorder, County of Riverside, State of California "Outstanding Bonds" means all IA No. 3 Bonds, which are deemed to be outstanding under the Indenture. "Parcel" means any County of San Bernardino Assessor's Parcel that is within the boundaries of the CFD, based on the equalized tax rolls of the County of San Bernardino as of January 1 in the prior Fiscal Year. "Parcel's Allocated Share" means the Maximum Annual Special Tax for a Parcel divided by the Maximum Annual Special Tax Revenue. "Partial Prepayment" means a prepayment of a portion of the Special Tax Obligation applicable to a Parcel of Taxable Property, as set forth in Section VI. "Payoff Parcel" means any taxable Developed Parcel for which a prepayment of the Special Tax Obligation is being calculated pursuant to Section VI. "Proportionately" or "Proportionate" means, for Developed Property and IA No. 3 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 and IA No. 3 Developed Property. For Undeveloped Property and IA No. 3 Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property and IA No. 3 Undeveloped Property. The term "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section IV below. "Public Property" means any property within the boundaries of IA No. 3 that is transferred to a public agency on or after the date of formation of CFD No. 2001-01 and is used for rights-of-way or any other purpose and is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency; provided however that any property owned by a public agency and leased to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use. "Redevelopment Agency" means the Redevelopment Agency of the City of Rancho Cucamonga acting for the CFD under the Act. "Reserve Fund Share" means the total Reserve Fund amount multiplied by the Parcel's Allocated Share. "Residential Property" means all Assessors Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. Amended,June 13,2001 C-33 City of Rancho Cucamonga Resolution No. 01-162 Page 45 of 51 "Resolution of Formation" means the Resolution passed by the Council authorizing the formation of CFD No. 2001-01. " "Resolution of Issuance" means the Resolution passed by the council authorizing the issuance of bonds. "RMA" means this Rate and Method of Apportionment "Special Tax" means any tax levied within the CFD pursuant to the Act and this Rate and Method of Apportionment of Special Tax. "Special Tax Collection Schedule" means the document prepared by the Finance Director and sent to the County Auditor for use in collecting the Special Tax each Fiscal Year. "Special Tax Obligation" means the total obligation of a Taxable Parcel to pay the Special Tax for the remaining life of the CFD. "Special Tax Requirement" means that amount required in any Fiscal Year to: (1) pay Debt Service on all Outstanding Bonds; (ii)pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v)accumulate funds to pay directly for acquisition or construction of Authorized Facilities identified, and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii)a credit for funds available to reduce the annual Special Tax levy,as determined by the.CFD Administrator pursuant to the Indenture. "State" means the State of California. "Successor Parcel" means a Parcel created by Subdivision, lot line adjustment, or parcel map from an Original or Successor Parcel. "Taxable Acreage" is the area within each Parcel as shown on the Assessor.Parcel Map The Taxable Acreage for each Zone is described in Section III, Table 1. "Taxable Property" means all of the Assessor's Parcels within the boundaries of IA No. 3, which are not exempt from the levy of the Special Tax pursuant to law or Section VIII below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt from the levy of the Special Tax pursuant to Section VIII below. "Tax-Exempt Parcel" means, as of January 1 of each year, (i) any parcel owned by a governmental entity, or irrevocably offered for dedication to a governmental entity, (it) any Parcel which constitutes public right-of-way or which is encumbered by an unmanned utility easement, making impractical its utilization for other than the purpose set forth in the easement, or (iii) any Parcel assigned a zero value by the San Bernardino County Assessor. Notwithstanding the foregoing, (i) a Taxable Parcel acquired by a public entity after the adoption of the Resolution of Formation by means of Amended,June 13,2001 C-34 City of Rancho Cucamonga Resolution No. 01-162 Page 46 of 51 negotiated transaction, or by gift or devise, or by eminent domain proceedings, shall remain a Taxable Parcel, and (ii) if a public agency owning a Tax-Exempt Parcel, including a Tax-Exempt Parcel held in trust for any beneficiary, grants a leasehold or other possessory interest in the parcel to a non-exempt person or entity, the Special Tax shall be levied on the leasehold or possessory interest and shall be payable by the owner of the leasehold or possessory interest. Tax-Exempt Parcels include the specific parcels, or their successor parcels. "Trustee" means the trustee or fiscal agent under the Indenture. "Zone" means that area that is further described on the Boundary Map of CFD 2001-01. VI. CLASSIFICATION OF PARCELS Each Fiscal Year, all Taxable Property within each Zone of IA No. 3 shall be classified as Taxable or Non-Taxable Property and all such Taxable Property shall be subject to the levy of Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections III and IV below. 111. MAXIMUM SPECIAL TAX RATE A. The Maximum Special Tax and Taxable Acreage for Taxable Property and Taxable Public Property for each Zone is shown in Table 1. TABLE 1 Zone Taxable Bond Maximum Tax Acreage Share Per Acre Zone 1 —Future RDA 55.00 91.70% $15,230.37 Zone 7—Le io South 42.74 8.30% $1,963.45 B. Assignment of Maximum Annual Special Tax to Successor Parcels. The CFD Administrator shall assign the Maximum Annual Special Tax to each Successor Parcel as follows: 1) When an Original or Successor Parcel is subdivided, the CFD Administrator shall classify the resulting Successor Parcels as Taxable Parcels or Tax- Exempt parcels using the definitions in Section I. 2) If the Successor Parcel is a Taxable Parcel: calculate the percentage of the taxable Successor Parcel's square footage to the total square footage for all taxable Successor Parcels of that Original or Successor Parcel; then, multiply this percentage by the Maximum Annual Special Tax assigned to the previous Original Parcel or Successor Parcel. The result of this Amended,June 13,2001 C-35 City of Rancho Cucamonga Resolution No. 01-162 Page 47 of 51 calculation is the Maximum Annual Special Tax for the Taxable Successor Parcel. C. Taxable Parcels Acquired by a Public Agency Taxable Parcels that are acquired by a public agency after the CFD is formed will remain subject to the applicable Special Tax unless the Special Tax obligation is satisfied pursuant to Section 53317.5 of the Government Code. An exception to this may be made if the Public use planned for a Public Parcel within the CFD is relocated to a Taxable Parcel and the previously Tax-Exempt Parcel of comparable acreage becomes a Taxable Parcel. This trading of Parcels will be permitted to the extent that there is no net loss in Maximum Special Tax. It is anticipated that the City will acquire approximately 55 Acres that will be subject to the Special Tax. IV. APPORTIONMENT OF SPECIAL TAX For each Fiscal Year the Council shall determine the Special Tax Requirement and levy the Special Tax, taking into consideration the levy of the IA No. 3 Special Tax, until the amount of Special Taxes and IA No. 3 Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied on each Assessor's Parcel of Taxable Property in an.amount equal to 100% of the applicable Maximum Special Tax;or Second: If less monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied proportionately on each taxable Parcel at less than 100% of the Maximum Special tax; provided that the Council may levy an amount in excess of the Special Tax Requirement if all authorized Bonds have not already been issued. Further notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within IA No. 3, except for those Residential Properties whose owners are also delinquent or in default on their Special Tax payments for one or more other properties within IA No. 3. VI. MANNER OF COLLECTION Collection of the Special Tax shall be by the County in the same manner as ordinary ad valorem property taxes are collected and the Special Tax shall be subject to the same penalties and the same lien priority in the case of delinquency as ad valorem taxes; provided, however, that the Council may provide in the Indenture or in the Resolution of Issuance for(i)other means of collecting the Special Tax, including direct billings thereof to the property owners; and (ii)judicial foreclosure of delinquent Special Taxes. Amended,June 13,2001 C-36 City of Rancho Cucamonga Resolution No. 01-162 Page 48 of 51 i VI. DISCHARGE OF SPECIAL TAX OBLIGATION 3 Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with the City as permitted under Government Code Section 53344. Prepayment is permitted only under the following conditions: The following definition applies to this Section VI: "CFD Public Facilities Costs" means either $8,000,000 in 2001 dollars, which shall increase by the Construction Inflation Index on July 1, 2002, and on each July 1 thereafter, or such lower number as (i)shall be determined by the CFD Administrator as sufficient to acquire or construct the Authorized Facilities to be financed by IA No. 3 under the authorized Mello-Roos financing program for CFD No. 2001-01, or(ii)shall be determined by the Council concurrently with a covenant that it will not issue any more IA i' No. 3 Bonds (except refunding bonds) to be supported by Special Taxes and IA No. 3 Special Taxes. "Construction Fund" means the fund (regardless of its name) established pursuant to the Indenture to hold funds, which are currently available for expenditure to acquire or construct the Authorized Facilities. "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 Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles. i "Future Facilities Costs" means for each Zone the CFD Public Facilities Costs minus (i) costs previously paid from the Construction Fund to acquire or construct the Authorized Facilities, (ii) monies currently on deposit in the Construction Fund, and (iii) monies currently an deposit in an escrow or other earmarked fund that are expected to be available to finance CFD Public Facilities Costs. "Outstanding Bonds" means all Previously Issued Bonds, which remain outstanding as of the first interest and/or principal payment date following the current Fiscal Year. Each Zone's Bond Share is shown as a percentage of the total Bonds in Table 1. "Previously Issued Bonds" means all IA No. 3 Bonds that have been issued prior to the date of prepayment. 1. Prepayment in Full The Special Tax Obligation applicable to an Assessors Parcel in IA No. 3 may be prepaid and the obligation of the Assessor's Parcel to pay any Special Tax permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax Obligation shall provide the CFD Administrator with written notice of intent to prepay. The CFD Administrator shall provide the owner with a statement of the prepayment amount for such Assessor's Parcel within thirty(30)days of Amended,June 13,2001 C-37 City of Rancho Cucamonga Resolution No. 01-162 Page 49 of 51 in the request and may charge a reasonable fee for providing this service. Prepayment must be made not less than 60 days prior to any redemption date for the IA No. 3 Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount (defined below) shall be calculated as summarized below `'", (capitalized terms as defined below): i, Bond Redemption Amount plus Redemption Premium plus Future Facilities Prepayment Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount i _ As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: 1. Confirm that no Special Tax,delinquencies apply to such Assessor's Parcel. 2. Determine the Maximum Special Tax for the Payoff Parcel based on the assignment of the Maximum Special tax described in Section III above. i 3. Divide the Maximum Special Tax computed pursuant to paragraph 2 by the total Maximum Special Taxes for the Zone in which the Payoff Parcel is located to arrive at the Parcel's Allocated Share. 4. Determine the Bond Redemption Amount for the Payoff Parcel by multiplying the j Allocated Share from paragraph 3 by the total amount of Outstanding Bonds issued by the CFD applicable to the Zone in which the Payoff Parcel is located. ' 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (expressed as a percentage), if any, on the Outstanding Bonds to be redeemed (the"Redemption Premium"). 6. Compute the current Future Facilities Costs. 7. Multiply the Allocated Share by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount Prepayment"). 8. 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. 9. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment Amended.June 13,2001 C-38 City of Rancho Cucamonga Resolution No. 01-162 Page 50 of 51 i until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 10. Take the amount computed pursuant to paragraph 8 and subtract the amount computed pursuant to paragraph 9 (the"Defeasance Amount"). 11. Verify the administrative fees and expenses of IA No. 3, including the costs of computation of the prepayment, the Payoff Parcel's proportionate share of the costs of formation of the CFD if Bonds have not been sold, the costs to invest the prepayment proceeds, the costs of redeeming IA No. 3 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Prepayment Administrative Fees and Expenses"). 12. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment(the I "Reserve Fund Credit"). No Reserve Fund Credit shall be granted if reserve funds are below 100%of the reserve requirement. 13. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the Allocated Share by the expected balance in the capitalized interest fund after such first interest and/or principal payment(the"Capitalized Interest Credit"). 14. The Special Tax Obligation is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 10, and 11, less the amounts computed pursuant to paragraphs 12 and 13 ("Prepayment Amount"). 15. From the Prepayment Amount, the sum of the amounts computed pursuant to paragraphs 4, 5, 10, 12, and 13 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 7 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by CFD No. 2001-01. The Prepayment Amount may be sufficient to redeem an amount other than a $5,000 increment of IA No. 3 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 to redeem IA No. 3 Bonds with the next prepayment of IA No. 3 Bonds. The CFD Administrator will confirm that all previously levied Special taxes have been paid in full. With respect to any Assessor's Parcel that is prepaid in full, once the CFD Administrator has confirmed that all previously levied Special taxes have been paid, the Council 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 Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Amended,June 13,2001 C-39 City of Rancho Cucamonga Resolution No. 01-162 Page 51 of 51 _ in Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes and IA No. 3 Maximum Special Taxes that may be levied on Taxable Property and IA No. 3 Taxable Property, respectively, after the proposed prepayment is at least 1.1 times the maximum annual Debt Service on all Outstanding Bonds. 2. Prepayment in Part The Special Tax on an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section VIA; except that a partial prepayment shall be calculated according to the following formula: PP= PExF. These terms have the following meaning: PP = the partial prepayment PE= the Prepayment Amount calculated according to Section VIA F= the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Special Tax, (ii) the percentage by which the Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shalt (i) distribute the funds remitted to it according to Section VIA, and (ii) indicate in the records of CFD No. 2001-01 that there has been a partial prepayment.of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00-F)of the remaining Maximum Annual Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section IV. VII. TERM OF "SPECIAL TAX" The Special Tax shall be levied for a period not to exceed fifty years commencing with Fiscal Year 2002-2003, provided however that Special Taxes will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the IA No. 3 Bonds have been paid; and (ii) all facilities have been acquired and all reimbursements to the developer have been paid pursuant to the Acquisition and Construction Agreement. Amended,June 13,2001 C-40 City of Rancho Cucamonga