HomeMy WebLinkAbout06-402 - Resolutions RESOLUTION NO. 06-402
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO CUCAMONGA, CALIFORNIA,ACTING IN ITS CAPACITY
AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES
DISTRICT NO.2006-02(AMADOR ON ROUTE 66),AUTHORIZING
AND PROVIDING FOR THE ISSUANCE OF SPECIAL TAX BONDS
OF THE DISTRICT, APPROVING THE FORM OF FISCAL AGENT
AGREEMENT, BOND PURCHASE AGREEMENT, PRELIMINARY
OFFICIAL STATEMENT AND OTHER DOCUMENTS AND
AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE
ISSUANCE OF SUCH BONDS
WHEREAS, the CITY COUNCIL of the CITY OF RANCHO CUCAMONGA,
CALIFORNIA (this "City Council'), did previously conduct proceedings to form and did form a
community facilities district pursuant to the terms and provisions of the "Mello-Roos Community
Facilities Act of 1982", being Chapter 2.5, Part 1; Division 2;Title 5 of the Government Code of the
State of California (the "Act'), such Community Facilities District designated as COMMUNITY
FACILITIES NO. 2006-02 (AMADOR ON ROUTE 66) (the "Community Facilities District') for the
purpose of financing the acquisition or construction of certain public improvements; and,
WHEREAS, as required by the Act, this City Council has previously adopted a
statement of local goals and policies concerning the use of the Act entitled the "City of Rancho
Cucamonga Statement of Goals and Policies Regarding the Establishment of Community Facilities
Districts" (the "Goals and Policies"); and
WHEREAS, this City Council has previously declared its intention to issue bonds to
finance the acquisition or construction of such improvements, such bonds to be issued pursuant to
the terms and provisions of the Act and the Goals and Policies; and,
WHEREAS, at this time this City Council desires to set forth the general terms and
conditions relating to the authorization, issuance and administration of such bonds; and,
WHEREAS, the forms of the following documents have been presented to and
considered for approval by this City Council:
A. Fiscal Agent Agreement by and between the City and Wells Fargo Bank,
National Association, as fiscal agent(the "Fiscal Agent') setting forth the terms
and conditions relating to the issuance and sale of bonds (the "Fiscal Agent
Agreement');
B. Bond Purchase Agreement authorizing the sale of bonds to Stone &Youngberg
LLC, the designated underwriter(the 'Bond Purchase Agreement');
C. Preliminary Official Statement containing information including but not limited to
the Community Facilities District and the bonds, including the terms and
conditions thereof(the "Preliminary Official Statement'); and
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D. Continuing Disclosure Agreement by and between the City and Wells Fargo
Bank, National Association, as dissemination agent, pursuant to which the
Community Facilities District will be obligated to provide ongoing annual
disclosure relating to the bonds (the "Continuing Disclosure Agreement'); and
WHEREAS, this City Council,with the aid of City staff, has reviewed and considered
the Fiscal Agent Agreement,the Bond Purchase Agreement,the Continuing Disclosure Agreement
and the Preliminary Official Statement and finds those documents suitable for approval, subject to
the conditions set forth in this resolution; and
WHEREAS,all conditions,things and acts required to exist,to have happened and to
have been performed precedent to and in the issuance of the bonds as contemplated by this
resolution and the documents referred to herein exist, have happened and have been performed or
have been ordered to have been performed in due time,form and manner as required by the laws of
the State of California, including the Act and the applicable policies and regulations of the City of
Rancho Cucamonga.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO
CUCAMONGA, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY
FACILITIES DISTRICT NO. 2006-02 (AMADOR ON ROUTE 66), DOES HEREBY RESOLVE,
DECLARE, FIND, DETERMINE AND ORDER AS FOLLOWS:
SECTION 1: Recitals. The above recitals are true and correct.
SECTION 2: Determinations. This legislative body hereby makes the following
determinations pertaining to the proposed issuance of the Bonds:
(a) The Act authorizes the City Council, acting as the legislative body
of the Community Facilities District, to sell the Bonds only if the
City Council has determined prior to the award of the sale of the
Bonds that the value of such properties will be at least 3 times
the principal amount of the Bonds and the principal amount of all
other bonds outstanding that are secured by a special tax levied
pursuant to the Act on property within the Community Facilities
District or a special assessment levied on property within the
Community Facilities District(collectively,"Land Secured Bonded
Indebtedness")
The value of the property within Community Facilities District
which will be subject to the special tax to pay debt service on the
Bonds will be at least 3 times the Land Secured Bonded
Indebtedness Allocable to such properties.
The foregoing determinations are based upon the full cash value
of such properties and development areas as shown upon an
appraisal of the subject properties prepared by Bruce Hull &
Associates, a state certified real estate appraiser, as defined in
Business and Professions Code Section 11340(c). Such
determination was made in a manner consistent with the Goals
and Policies.
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(b) The terms and conditions of the Bonds as contained in the Fiscal
Agent Agreement are consistent with and conform to the Goals
and Policies.
(c) As a result of the current status of development of the property
within the Community Facilities District and the relative overall
lack of diversity of ownership of property within the Community
Facilities District, the private sale of the Bonds will result in a
lower overall cost to the Community Facilities District.
SECTION 3: Bonds Authorized. Pursuant to the Act, this Resolution and the
Fiscal Agent Agreement, special tax bonds of the City designated as
"City of Rancho Cucamonga Community Facilities District No. 2006-
02(Amador on Route 66)2005 Special Tax Bonds,"(the"Bonds")in
an aggregate principal amount not to exceed $3,000,000 are hereby
authorized to be issued. The date, manner of payment, interest rate
or rates, interest payment dates, denominations, form, registration
privileges, manner of execution, place of payment, terms of
redemption and other terms, covenants and conditions of the Bonds
shall be as provided in the Fiscal Agent Agreement as finally
executed.
SECTION 4: Authorization and Conditions. The City Manager and such other
official or officials of the City as may be designated by this City
Council or the City Manager(each, an"Authorized Officer")are each
hereby authorized and directed to execute and deliver the final form
of the various documents and instruments described in this
Resolution, with such additions thereto or changes therein as such
Authorized Officer may deem necessary and advisable provided that
no additions or changes shall authorize an aggregate principal
amount of Bonds in excess of$3,000,000, an annual interest rate on
the Bonds in excess of six and one half percent(6.50%)per year and
a purchase price for the Bonds not less than ninety eight percent
(98%) of the par amount of the Bonds (excluding original issue
discount, if any). The approval of such additions or changes shall be
conclusively evidenced by the execution and delivery of such
documents or instruments by an Authorized Officer, following
consultation with and review by the City Attorney and Best Best &
Krieger LLP, the City's bond counsel.
SECTION 5: Fiscal Agent Agreement. The form of Fiscal Agent Agreement by
and between the City and the Fiscal Agent,with respect to the Bonds
as presented to this City Council and on file with the City Clerk is
hereby approved. An Authorized Officer is hereby authorized and
directed to cause the same to be completed and executed,subject to
the provisions of Section 4 above.
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SECTION 6: Official Statement and Continuing Disclosure Agreement. The
City Council hereby approves the form of the Preliminary Official
Statement as presented to this City Council and on file with the City
Clerk,together with any changes therein or additions thereto deemed
advisable by the City Manager or, in the absence of the City
Manager, another Authorized Officer. Pursuant to Rule 15c2-12
under the Securities Exchange Act of 1934 (the "Rule") the City
Manager or, in the absence of the City Manager, another Authorized
Officer is authorized to determine when the Preliminary Official
Statement is deemed final, and the City Manager or such other
Authorized Official is hereby authorized and directed to provide
written certification thereof. The execution of the final Official
Statement, which shall include such changes and additions thereto
deemed advisable by the City Manager or, in the absence of the City
Manager, another Authorized Officer pursuant to the Rule, shall be
conclusive evidence of the approval of the final Official Statement by
the Community Facilities District. The City Council hereby authorizes
the distribution of the final Official Statement by the Underwriter as
the initial purchaser of the Bonds.
The form of Continuing Disclosure Agreement as presented to this
City Council and on file with the City Clerk is hereby approved. An
Authorized Officer is hereby authorized and directed to cause the
same to be completed and executed on behalf of the Community
Facilities District, subject to the provisions of Section 4 above.
SECTION 7: Sale of Bonds. This City Council hereby authorizes and approves
the negotiated sale of the Bonds to Stone & Youngberg LLC (the
"Underwriter").The form of the Bond Purchase Agreement is hereby
approved and an Authorized Officer is hereby authorized and
directed to execute the Bond Purchase Agreement upon the
execution thereof by the Underwriter, subject to the provisions of
Section 4 above.
SECTION 8: Bonds Prepared and Delivered. Upon the execution of the Bond
Purchase Agreement, the Bonds shall be prepared, authenticated
and delivered, all in accordance with the applicable terms of the Act
and the Fiscal Agent Agreement, and any Authorized Officer and
other responsible City officials, acting for and on behalf of the
Community Facilities District, are hereby authorized and directed to
take such actions as are required under the Bond Purchase
Agreement and the Fiscal Agent Agreement to complete all actions
required to evidence the delivery of the Bonds upon the receipt of the
purchase price thereof from the Underwriter.
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SECTION 9: Actions. All actions heretofore taken by the officers and agents of
the City with respect to the establishment of the Community Facilities
District and the sale and issuance of the Bonds are hereby approved,
confirmed and ratified, and the proper officers of the City, acting for
and on behalf of the Community Facilities District, are hereby
authorized and directed to do any and all things and take any and all
actions and execute any and all certificates, agreements, contracts,
and other documents, which they, or any of them, may deem
necessary or advisable in order to consummate the lawful issuance
and delivery of the Bonds in accordance with the Act,this Resolution,
the Fiscal Agent Agreement, the Bond Purchase Agreement, the
Continuing Disclosure Agreement, and any certificate, agreement,
contract, and other document described in the documents herein
approved.
SECTION 10: Effective Date. This resolution shall take effect from and after its
adoption.
pleasesee ft lb&wuV page
for formal adoption,certification and signatures
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PASSED, APPROVED, AND ADOPTED this 20t" day of December 2006.
AYES: Gutierrez, Kurth, Michael, Spagnolo, Williams
NOES: None
ABSENT: None
ABSTAINED: None
onald J. Kurt, M.D., Mayor
ATTEST:
ebra J. Ad ms MC, City Clerk
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 20th day of December 2006.
Executed this 21 s`day of December 2006, at Rancho Cucamonga, California.
D bra J. Ada (sMC, City Clerk
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FISCAL AGENT AGREEMENT
by and between
CITY OF RANCHO CUCAMONGA
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Fiscal Agent
Dated as of December 1, 2006
Relating to:
City of Rancho Cucamonga
Community Facilities District No. 2006-02 (Amador on Route 66)
2006 Special Tax Bonds
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TABLE OF CONTENTS
PAGE
ARTICLE I. STATUTORY AUTHORITY AND DEFINITIONS............................................... 2
Section 1.1. Authority for this Agreement................................................................................. 2
Section 1.2. Agreement for Benefit of Owners of the Bonds.................................................... 2
Section1.3. Definitions.............................................................................................................. 2
ARTICLE II. THE BONDS......................................................................................................... 15
Section 2.1. Principal Amount: Designation............................................................................ 15
Section2.2. Terms of the Bonds.............................................................................................. 15
Section2.3. Redemption.......................................................................................................... 17
Section 2.4. Effect of Redemption........................................................................................... 19
Section2.5. Form of Bonds.....................................................................................................20
Section 2.6. Execution of Bonds.............................................................................................. 20
Section 2.6. Transfer of Bonds ................................................................................................ 20
Section2.8. Exchange of Bonds.............................................................................................. 21
Section2.9. Bond Register....................................................................................................... 21
Section 2.10. Temporary Bonds............................................................................................... 21
Section 2.11. Bonds Mutilated, Lost, Destroyed or Stolen...................................................... 21
Section 2.12. Limited Obligation............................................................................................. 22
Section 2.13. No Acceleration................................................................................................. 22
Section 2.14. Book-Entry System............................................................................................ 23 .
ARTICLE M. ISSUANCE OF BONDS ..................................................................................... 24
Section 3.1. Issuance and Delivery of Bonds .......................................................................... 24
Section 3.2. Pledge of Special Tax Revenues.......................................................................... 24
Section 3.3. Validity of Bonds................................................................................................. 25
ARTICLE IV. FUNDS AND ACCOUNTS................................................................................ 26
Section 4.1. Deposits of Bond Proceeds.................................................................................. 26
Section4.2 Project Fund.......................................................................................................... 26
Section 4.3. Costs of Issuance Fund ........................................................................................ 28
Section4.4. Reserve Fund ....................................................................................................... 29
Section4.5. Bond Fund............................................................................................................ 30
Section4.6. Special Tax Fund ................................................................................................. 31
Section 4.7.' Administrative Expense Fund..:........................................................................... 33
Section 4.8. Rebate Fund......................................................................................................... 33
Section4.9 Redemption Fund.................................................................................................. 34
ARTICLE V. OTHER COVENANTS OF THE CITY............................................................... 34
Section 5.1. Punctual Payment................................................................................................. 34
Section 5.2. Extension of Time for Payment........................................................................... 35
Section 5.3. Against Encumbrances......................................................................................... 35
Section 5.4. Books and Records .............................................................................................. 35
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Section 5.5. Protection of Security and Rights of Owners ......................................................35
Section 5.6. Compliance with Law..........................................................................................35
Section 5.7. Collection of Special Tax Revenue...................................................................... 36
Section 5.8. Reduction in Maximum Annual Special Tax....................................................... 37
Section 5.9. Covenant to Foreclose.......................................................................................... 37
Section 5.10. Further Assurances............................................................................................. 38
Section 5.11. Private Activity Bond Limitations.....................................................................38
Section 5.12. Federal Guarantee Prohibition........................................................................... 38
Section 5.13. Rebate Requirement.......................................................................................... 38
Section5.14. No Arbitrage...................................................................................................... 39
Section 5.15. Yield of the Bonds. ............................................................................................ 39
Section 5.16. Maintenance of Tax-Exemption........................................................................ 39
Section 5.17. Continuing Disclosure to Owners...................................................................... 39
Section 5.18. Tender of Bonds......................................:.......................................................... 40
Section 5.19. No Parity Bonds................................................................................................. 40
ARTICLE VI. INVESTMENTS, DISPOSITION OF INVESTMENT PROCEEDS, LIABILITY
OFTHE CITY .............................................................................................................................. 40
Section 6.1. Deposit and Investment of Moneys in Funds ......................................................40
Section 6.2. Liability of City....................................................................................................42
Section 6.3. Employment of Agents by City.....................................................................:...... 43
ARTICLE VII: THE FISCAL AGENT....................................................................................... 44
Section 7.1. Appointment of Fiscal Agent............................................................................... 44
Section 7.2. Liability of Fiscal Agent...................................................................................... 45
Section7.3. information .......................................................................................................... 46
Section 7.4. Notice to Fiscal Agent ......................................................................................... 46
Section 7.5. Compensation; Indemnification...........................................................................46
ARTICLE VIII. MODIFICATION OR AMENDMENT OF THIS AGREEMENT..................47
Section 8.1. Amendments Permitted........................................................................................47
Section 8.2. Owners' Meetings ................................................................................................ 47
Section 8.3. Procedure for Amendment with Written Consent of Owners.............................. 48
Section 8.4. Disqualified Bonds............................................................................................... 48
Section 8.5. Effect of Supplemental Agreement...................................................................... 49
Section 8.6. Endorsement or Replacement of Bonds Issued After Amendments.................... 49
Section 8.7. Amendatory Endorsement of Bonds....................................................................49
ARTICLE IX. EVENTS OF DEFAULT; REMEDIES..........:.................................................... 50
Section 9.1. Events of Default................................................................................................. 50
Section 9.2. Remedies of Owners............................................................................................ 50
Section 9.3. Application of Special Tax Revenues and Other Funds After.Default................ 51
ARTICLE X. MISCELLANEOUS ............................................................................................. 53
Section 10.1. Benefits of Agreement Limited to Parties. ........................................................ 53
Section 10.2. Successor is Deemed Included in All References to Predecessor..................... 53
Section 10.3. Discharge of Agreement. ................................................................................... 53
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Section.10.4. Execution of Documents and Proof of Ownership by Owners.......................... 54
Section 10.5. Waiver of Personal Liability.............................................................................. 54
Section 10.6. Notices to and Demands on City and Fiscal Agent ........................................... 54
Section 10.7. State Reporting Requirements ........................................................................... 55
Section 10.8. Partial Invalidity................................................................................................. 56 ..
Section10.9. Unclaimed Moneys. ............................................................................................ 56
Section 10.10. Applicable Law................................................................................................ 56
Section10.11. Conflict with Act.............................................................................................. 56
Section 10.12. Conclusive Evidence of Regularity ................................................................. 56
Section 10.13. Payment on Business Day................................................................................ 56
Section10.14. Counterparts..................................................................................................... 56
EXHIBIT A: FORM OF SERIES 2006-02(AMADOR ON ROUTE 66) BOND
EXHIBIT B: FORM OF REQUEST FOR DISBURSEMENT OFFICER'S CERTIFICATE
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FISCAL AGENT AGREEMENT
City of Rancho Cucamonga
Community Facilities District No. 2006-02 (Amador on Route 66)
2006 Special Tax Bonds
THIS FISCAL AGENT AGREEMENT (the "Agreement') is made and entered into as of
December 1, 2006, by and between the City of Rancho Cucamonga, California, a municipal
corporation, organized and existing under and by virtue of the Constitution and laws of the State
of California (the "City") for and on behalf of the City of Rancho Cucamonga Community
Facilities District No. 2006-02 (Amador on Route 66) (the "District'), and Wells Fargo Bank,
National Association, as fiscal agent (the "Fiscal Agent').
WITNESSETH:
WHEREAS, the City Council of the City has formed the District under the provisions of
the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311, et seq. of the
California Government Code) (the "Act') and Resolution No. 06-327 of. the City Council
adopted on October 18, 2006 (the "Resolution of Formation");
WHEREAS, the City Council, as the legislative body with respect to the District, is
authorized under the Act to levy Special Taxes (as herein defined) to pay for the costs of
acquisition or construction of public facilities within the District and to authorize the issuance of
bonds secured by said Special Taxes under the Act;
WHEREAS, under the provisions of the Act, on December 6, 2006, the City Council of
the City adopted its Resolution No. 06-_ (the "Resolution"), which resolution, among other
matters, authorized the issuance of the City of Rancho Cucamonga, Community Facilities
District No. 2006-02 (Amador on Route 66) 2006 Special Tax Bonds (the "Bonds"), in the
aggregate principal amount of not to exceed $5,800,000 and provided that such issuance would
be in accordance with the Act and this Agreement, and authorized the execution hereof;
WHEREAS, it is in the public interest and for the benefit of the City, the District and the
Owners of the Bonds that the City enter into this Agreement to provide for the issuance of the
Bonds, the disbursement of proceeds of the Bonds, the disposition of the Special Taxes securing
the Bonds and the administration and payment of the Bonds; and
WHEREAS, all things necessary to cause the Bonds, when authenticated by the City for
the District and issued as in the Act, the Resolution and this Agreement provided, to be legal,
valid and binding and special obligations of the City for the District in accordance with their
terms, and all things necessary to cause the creation, authorization, execution and delivery of this
Agreement and the creation, authorization, execution and issuance of the Bonds, subject to the
terms hereof, have in all respects been duly authorized;
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NOW, THEREFORE, in consideration of the covenants and provisions herein set forth
and for other valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
Section 1.1 Authority for this Agreement. This Agreement is entered into pursuant to
the provisions of the Act and the Resolution.
Section 1.2 Agreement for Benefit of Owners of the Bonds. The provisions,
covenants and agreements herein set forth to be performed by or on behalf of the City shall be
for the equal benefit, protection and security of the Owners of the Bonds. All of the Bonds,
without regard to the time or times of their issuance or maturity, shall be of equal rank without
preference, priority or distinction of any of the Bonds over any other thereof, except as expressly
provided in or permitted by this Agreement. The Fiscal Agent may become the Owner of any of.
the Bonds in its own or any other capacity with the same rights it would have if it were not Fiscal
Agent.
Section 1.3 Definitions. Unless the context otherwise requires, the terms defined in
this Section 1.3 shall, for all purposes of.this Agreement, of any Supplemental Agreement, and
of any certificate, opinion or other document herein mentioned, have the meanings herein
specified. All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or subdivision hereof, unless otherwise specifically stated.
"Acquisition Account" the account within the Project Fund by that name established
pursuant to Section 4.2(A) hereof.
"Acquisition/Financing Agreement" means the Acquisition/Financing Agreement by and
between the City and Lewis Investment Company, LLC, a California Limited Liability
Company, and William Lyon Homes, Inc., a California corporation, dated as of October 18,
2006.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being
Sections 53311 et seq. of the California Government Code.
"Administrative Expense Fund' means the fund by that name established by Section
4.7(A) hereof.
"Administrative Expenses" means the following actual or reasonably estimated costs
directly related to. the administration of the District: the costs of computing the Special Taxes
and preparing the annual Special Tax collection schedules (whether by the City, a designee
thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise);
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the costs of remitting the Special Taxes to the Fiscal Agent; the costs of the Fiscal Agent
(including its legal counsel) in the discharge of the duties required of it under this Agreement;
the costs to the City, the District or any designee of either thereof of complying with arbitrage
rebate requirements; the costs to the City, the District or any designee of either thereof of
complying with City, District or obligated persons disclosure requirements; the costs associated
with preparing Special Tax disclosure statements and responding to public inquiries regarding
the Special Taxes; the costs of the City, the District or any designee of either thereof related to an
appeal of the Special Tax; and the City's annual administration fees and third party expenses.
Administrative Expenses shall also include amounts estimated or advanced by the City or
District for any other administrative purposes of the District, including reasonable attorney's fees
and other costs related to commencing and pursuing to completion any foreclosure of delinquent
Special Taxes.
"Administrative Expense Requirement" means an annual amount, initially equal to
$25,000, to be allocated each Fiscal Year for payment of Administrative Expenses. This amount
shall be annually adjusted upward by 2% per year.
"Finance Director" means the Finance Director of the City, or the designee thereof as
evidenced by a written certificate of the City Manager or the Finance Director delivered to the
Fiscal Agent, acting for and on behalf of the District.
"Ageric ' means the Inland Empire Utilities Agency.
"Agency Account" the account within the Project Fund by that name established pursuant
to Section 4.2(A) hereof.
"Agency Capacity Facilities Amount" shall have the meaning given such term in the
Water District JCFA.
"Agreement" means this Fiscal Agent Agreement, as it may be amended or supplemented
from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof.
"Annual Debt Service" means, for each Bond Year, the sum of(i) the interest due on the
Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as
scheduled (including by reason of the provisions of Section 2.3(A)(iii) providing for mandatory
sinking fund payments), and (ii) the principal amount of the Outstanding Bonds due in such
Bond Year (including any mandatory sinking fund payment due in such Bond Year pursuant to
Section 2.3(A)(iii)).
"Assistant City Manager"means the Assistant City Manager of the City, or the designee
thereof as evidenced by a written certificate of the City Manager or the Assistant City Manager
delivered to the Fiscal Agent, acting for and on behalf of the District.
"Auditor"means the Auditor-Controller of the County.
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"Authorized Officer"means the City Manager, the Assistant City Manager or the Finance
Director,.acting on behalf of the District, or any person designated by the City Council, the City
Manager or the Finance Director and authorized to act on behalf of the District under or with
respect to this Agreement and all other agreements related hereto.
"Average Annual Debt Service" means the average over all Bond Years (from the date of
the Bonds to their maturity) of Annual Debt Service.
"Bond Counsel" means any attorney or firm of attorneys acceptable to the City and
nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status
of securities issued by public entities.
"Bond Fund"means the fund by that name established by Section 4.5(A)hereof.
"Bond Re ig ster" means the books for the registration and transfer of Bonds maintained
by the Fiscal Agent under Section 2.9 hereof.
"Bond Year" means the one-year period beginning on September 2nd in each year and
ending on the day prior to September 1st in the following year, except that the first Bond Year
shall begin on the Closing Date for the Bonds and end on September 1, 2007.
"Bonds" means the City of Rancho Cucamonga Community Facilities District No. 2006-
02 (Amador on Route 66) 2006 Special Tax Bonds at any time Outstanding under this
Agreement or any Supplemental Agreement.
"Business Day' means any day other than (i) a Saturday or a Sunday, or (ii) a day on
which banking institutions in the state in which the Fiscal Agent has its Principal Office are
authorized or obligated by law or executive order to be closed.
"CDIAC" means the California Debt and Investment Advisory Commission of the office
of the State Administrative Services Director of the State of California or any successor agency
or bureau thereto.
"City" means the. City of Rancho Cucamonga, California, and any successor thereto.
"City Attorney" means any attorney or firm of attorneys employed by the City in the
capacity of city attorney.
"City Council" means the City Council of the City.
"City Manager" means the City Manager of the City, acting for and on behalf of'the
District.
"Closing Date" means 2007, being the date upon which there is a
delivery of the Bonds in exchange for the amount representing the purchase price of the Bonds
by the Original Purchaser.
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"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of
the Bonds or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the date of issuance of the Bonds, together with applicable proposed,
temporary and final regulations promulgated, and applicable official public guidance published,
under the Code.
"Commission"means the United States Securities and Exchange Commission.
"Comptroller of the Currency" means the Comptroller of the Currency of the United
States.
"Costs of Issuance" means items of expense payable or reimbursable directly or
indirectly by the City and related to the authorization, sale and issuance of the Bonds, which
items of expense shall include, but not be limited to, the printing costs, costs of reproducing and
binding documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal
Agent including its first annual administration fee, expenses incurred by the City in connection
with the issuance of the Bonds and the expenses of the City in connection with the establishment
of the District, special tax consultant fees and expenses, preliminary engineering fees and
expenses, legal fees and charges, including Bond Counsel fees, financial consultant fees,
appraiser fees and expenses, absorption, consultant fees and expenses, charges for execution,
transportation and safekeeping of the Bonds and other costs, charges and fees in connection with
the foregoing.
"Costs of Issuance Fund" means the fund by that name established by Section 4.3(A)
hereof.
"County"means the County of San Bernardino, California.
"Debt Service" means the scheduled amount of interest and amortization of principal
payable by reason of Sections 2.2(D) and (E) on the Bonds during the period of computation,
excluding amounts scheduled during such period which relate to principal which has been retired
before the beginning of such period.
"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as
Depository pursuant to Section 2.14.
"District"or"CFD"means the City of Rancho Cucamonga Community Facilities District
No. 2006-02 (Amador on Route 66), formed by the City under the Act and the Resolution of
Formation.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding) if the investment is traded
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on an established securities market (within the meaning of section 1273 of the Code) and,
otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if(i) the investment is a certificate of deposit that is acquired in
accordance with applicable regulations under the Code, (ii) the investment is an agreement with
specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated
interest rate (for example, a guaranteed investment contract, a forward supply contract or other
investment agreement) that is acquired in accordance with applicable regulations under the Code,
(iii) the investment is a United States Treasury Security—State and Local Government Series
that is acquired in accordance with applicable regulations of the United States Bureau of Public
Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California but
only if at all times during which the investment is held its yield is reasonably expected to be
equal to or greater than the yield on a reasonably comparable direct obligation of the United
States.
"Federal Securities" means any of the following which are non-callable and which at the
time of investment are legal investments under the laws of the State of California for funds held
by the Fiscal Agent:
(i) direct general obligations of the United States of America (including
obligations issued or held in book entry form on the books of the United States
Department of.the Treasury) and obligations, the payment of principal of and interest on
which are directly or indirectly guaranteed by the United States of America, including,
without limitation, such of the foregoing which are commonly referred to as "stripped"
obligations and coupons; or
(ii) any of the following obligations of the following agencies of the United
States of America: (a) direct obligations of the Export-Import Bank, (b) certificates of
beneficial ownership issued by the Farmers Home Administration, (c) participation
certificates issued by the General Services Administration, (d) mortgage-backed bonds or
pass-through obligations issued and guaranteed by the Government National Mortgage
Association, (e) project notes issued by the United States Department of Housing and
Urban Development, and (f) public housing notes and bonds guaranteed by the United
States of America.
"Fiscal Agent" means the Fiscal Agent appointed by .the City and acting as an
independent fiscal agent with the duties and powers herein provided, its successors and assigns,
and any other corporation or association which may at any time be substituted in its place, as
provided in Section 7.1.
"Fiscal Year" means the twelve-month period extending from July 1 in a calendar year to
June 30 of the succeeding year, both dates inclusive.
"Government Obligations" means obligations described in paragraph 1 of the definition
of Permitted Investments.
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"Independent Financial Consultant" means any consultant or firm of such consultants
appointed by the City or the Finance Director, and who, or each of whom: (i) is judged by the
Finance Director to have experience in matters relating to the issuance and/or administration of
bonds under the Act; (ii) is in fact independent and not under the domination of the City; (iii)
does not have any substantial interest, direct or indirect, with or in the City, or any owner of real
property in the District, or any real property in the District; and (iv) is not connected with the
City as an officer or employee of the City, but who may be regularly retained to make reports to
the City.
"Information Services" means Bloomberg Municipal Repositories, P.O. Box 840,
Princeton, New Jersey, 08542-0840; DPC Data Inc., One Executive Drive, Fort Lee, New Jersey,
07024; Interactive Data, 100 Williams Street, New York, New York, 10038, Attention:
Repository; Standard & Poor's J. J. Kenny Repository, 55 Water Street, 45th Floor, New York,
New York, 10041; and, in accordance with then current guidelines of the Commission, such
other services providing information with respect to called bonds as the City may designate in an
Officer's Certificate delivered to the Fiscal Agent.
"Interest Account" means the account within the Bond Fund by that name established
pursuant to Section 4.5(A) hereof.
"Interest Payment Dates" means March 1 and September 1 of each year, commencing
March 1, 2007.
"Legislative Bedy' means the City Council of the City acting as the legislative body of
the District.
"Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond
Year after the calculation is made through the final maturity date of any Outstanding Bonds.
"Moody's" means Moody's Investors Service, and its successor's and assigns.
"Officer's Certificate" means a written certificate of the City signed by an Authorized
Officer of the City.
"Ordinance"means Ordinance No. 770 of the City of Rancho Cucamonga.
"Original Purchaser"means Stone &Youngberg LLC.
"Outstanding," when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 8.4) all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the
Fiscal Agent for cancellation;
(ii) Bonds paid or deemed to have been paid within the meaning of Section
10.3; and
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(iii) Bonds in lieu of or in substitution for which other Bonds shall have been
authorized, executed, issued and delivered by the City pursuant to this Agreement or any
Supplemental Agreement.
"Owner" or `Bondowner" means any Person who shall be the registered owner of any
Outstanding Bond.
"Owner Constructed City Improvements" shall have the meaning given such term in the
Ac quisition/Financing Agreement.
"Owner Constructed Water District Facilities" shall have the meaning given such term in
the Water District JCFA.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein (the
Fiscal Agent shall be entitled to rely upon any written investment direction from an Authorized
Officer of the District as a certification to the Fiscal Agent that such investment constitutes a
Permitted Investment):
1. A. Direct obligations (other than an obligation subject to variation in
principal payment) of the United States of America ("United States
Treasury Obligations");
B. Obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by the United States of America;
C. Obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by any agency or instrumentality of the United
States of America when such obligations are backed by the full faith and
credit of the United States of America;or
D. Evidences of ownership of proportionate interests in future interest and
principal payments on obligations described above held by a bank or trust
company as custodian, under which the owner of the investment is the real
party in interest and has the right to proceed directly and individually
against the obligor and the underlying government obligations are not
available to any Person claiming through the custodian or to whom the
custodian may be obligated.
2. Federal Housing Administration debentures.
3. The listed obligations of government-sponsored agencies which are not backed by
the full faith and credit of the United States of America:
A. Federal Home Loan Mortgage Corporation (FHLMC)
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(1) Participation certificates (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
(2) Senior debt obligations
B. Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate
Credit Banks and Banks for Cooperatives)
(1) Consolidated system-wide bonds and notes
C. Federal Home Loan Banks (FHL Banks)
(1) Consolidated debt obligations
D. Federal National Mortgage Association (FNMA)
(1) Senior debt obligations
(2) Mortgage-backed securities (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal
amounts)
E. Student Loan Marketing Association(SLMA)
(1) Senior debt obligations (excluded are securities that do not have a
fixed par value and/or whose terms do not promise a fixed dollar
amount at maturity or call date)
F. Financing Corporation (FICO)
(1) Debt obligations
G. Resolution Funding Corporation (REFCORP)
(1) Debt obligations
4. Unsecured certificates of deposit, time deposits, and bankers' acceptances (having
maturities of not more than 30 days) of any bank (including the Fiscal Agent and
its affiliates) the short-term obligations of which are rated "A-1" or better by
S&P.
5. Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation (FDIC), in banks which have capital and surplus of at least
$5 million(including the Fiscal Agent and its affiliates).
6. Commercial paper(having original maturities of not more than 270 days) rated
"A-1"by S&P and "Prime-1"by Moody's.
7. Money market funds rated"AAm-1"or"AAm-G"by S&P, or better.
8. State Obligations, which means:
A. Direct general obligations of any state of the United States of America or
any subdivision or agency thereof to which is pledged the full faith and
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credit of a state the unsecured general obligation debt of which is rated
"A3" by Moody's and "A" by S&P, or better, or any obligation fully and
unconditionally guaranteed by any state, subdivision or agency whose
unsecured general obligation debt is so rated.
B. Direct general short-term obligations of any state agency or subdivision or
agency thereof described in (A) above and rated "A-1+" by S&P and
"Prime-1"by Moody's.
C. Special Revenue Bonds (as defined in the United States Bankruptcy Code)
of any state, state agency or subdivision described in (A) above and rated
"AA" or better by S&P and "AA"or better by Moody's.
9. Pre-refunded municipal obligations rated "AAA" by S&P and "AAA"by
Moody's meeting the following requirements:
A. the municipal obligations are (1) not subject to redemption prior to
maturity or (2) the trustee/fiscal agent for the municipal obligations has
been given irrevocable instructions concerning their call and redemption
and the issuer of the municipal obligations has covenanted not to redeem
such municipal obligations other than as set forth in such instructions;
B. the municipal obligations are secured by cash or United States Treasury
Obligations which may be applied only to payment of the principal of
interest and premium on such municipal obligations;
C. the principal of and interest on the United States Treasury Obligations
(plus any cash in .the escrow) has been verified by the report of
independent certified public accountants to be sufficient to pay in full all
principal of, interest, and premium, if any, due and to become due on the
municipal obligations;
D. the cash or United States Treasury Obligations serving as security for the
municipal obligations are held, by an escrow agent or trustee/fiscal agent
in trust for owners of the municipal obligations;
E. no substitution of a United States Treasury Obligation shall be permitted
except with another United States Treasury Obligation and upon delivery
of a new verification; and
F. the cash or United States Treasury Obligations are not available to satisfy
any other claims, including those by or against the trustee/fiscal agent or
escrow agent.
10. Investment agreements with a domestic or foreign bank or corporation the long-
term debt or financial strength of which, it or its guarantor is rated at least "AA-"
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by S&P and "AaY by Moody's; provided that, by the terms of the investment
agreement:
A. the invested funds are available for withdrawal without penalty or
premium, upon not more than seven days' prior notice; the District and the
Fiscal Agent hereby agree to give or cause to be given notice in
accordance with the terms of the investment agreement so as to receive
funds thereunder with no penalty or premium paid;
B. the investment agreement shall state that it is the unconditional and
general obligation of and is not subordinated to any other obligation of,
the provider thereof, or, in the case of a bank, that the obligation of the
bank to make payments under the agreement ranks pari passu with the
obligations of the bank to its other depositors and its other unsecured and
unsubordinated creditors;
C. the District and the Fiscal Agent receives the opinion of domestic counsel
that such investment agreement is legal, valid, binding and enforceable
upon the provider in accordance with its terms and of foreign counsel (if
applicable);
D. the investment agreement shall provide that if during its term
(1) the provider's rating by either S&P or Moody's falls below "AA-"
or "AaY, respectively, the provider shall, at its option, within 10
days of receipt of publication of such downgrade, either (a)
collateralize the investment agreement by delivering or transferring
in accordance with applicable state and federal laws (other than by
means of entries on the provider's books) to the District, the Fiscal
Agent or a Holder of the Collateral free and clear of any third-party
liens or claims the market value of which collateral is maintained
at levels and upon such conditions as would be acceptable to S&P
and Moody's to maintain an "A" rating in an "A" rated structured
financing (with a market value approach); or (b) transfer and
assign the investment agreement to a then qualifying counterparty ,
which is to be approved by the District, with ratings specified
above; and
(2) the provider's rating by either S&P or Moody's is withdrawn or
suspended or falls below "A-" or "A3", respectively, the provider
must, at the direction of the District or the Fiscal Agent, within 10
days of receipt of such direction, repay the principal of and accrued
but unpaid interest on the investment;
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E. the investment agreement shall state and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider
under the terms of the investment agreement, at the time such collateral is
delivered, that the Holder of the Collateral has a perfected first priority
security interest in the collateral, any substituted collateral and all ;roceeds
thereof (in the case of bearer securities, this means the Holder of the
Collateral is in possession);
F. the investment agreement must provide that if during its term
(1) the provider shall default in its payment obligations, the provider's
obligations under the investment agreement shall, at the direction
of the District or the Fiscal Agent, be accelerated and amounts
invested and accrued but unpaid interest thereon shall be repaid to
the District or Fiscal Agent, as appropriate; and
(2) the provider shall become insolvent, not pay its debts as they
become due, be declared or petition to be declared bankrupt, etc.
the provider's obligations shall automatically be accelerated and
amounts invested and accrued but unpaid interest thereon shall be
repaid to the District or Fiscal Agent, as appropriate.
11. The Local Agency Investment Fund (LAIF) administered by the Finance Director
of the State to the extent such deposits remain in the name of and control of the
Fiscal Agent.
"Person" means an individual, a corporation, a partnership, a joint venture, a trust, an
unincorporated organization or a government or any agency or political subdivision thereof.
"Principal Account" means the account within the Bond Fund by that name established
pursuant to Section 4.5(A) hereof.
"Principal Office" means the office of the Fiscal Agent at Los Angeles, California or
such other offices as may be specified to the City and the District by the Fiscal Agent in writing.
"Project" means the facilities more particularly described in the Acquisition/Financing
Agreement.
"Project Fund" means the fund by that name created by and held by the Fiscal Agent
pursuant to Section 4.2(A)hereof.
"Rate and Method" means the Rate and Method of Apportionment of the Special Taxes
set forth in the Ordinance.
"Rebate Fund" means the fund by that name established pursuant to Section 4.8(A)
hereof.
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"Record Date" means the fifteenth day of the month next preceding the month of the
applicable Interest Payment Date, whether or not such day is a Business Day.
"Redemption Fund" means the fund by that name established pursuant to Section 4.9(A)
hereof.
"Reserve Fund" means the fund by that name established pursuant to Section 4.4(A)
hereof.
"Reserve Requirement" means, as of any date of calculation, (i) Maximum Annual Debt
Service on the Outstanding Bonds, (ii) one hundred twenty-five percent (125%) of Average
Annual Debt Service on the Outstanding Bonds, or (iii) ten percent (10%) of the face amount of
the Outstanding Bonds.
"Resolution" means Resolution No. 06-_ adopted by the City Council of the City on
December 6, 2006.
"Resolution of Formation" means Resolution No. 06-322 adopted by the City Council on
October 18, 2006.
"S&P" means Standard & Poor's Rating Services, a division of the McGraw Hill
Companies,.Inc. and its successors and assigns.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, 501i
Floor, New York, New York 10041, Attention: Call Notification Department, Fax-(212) 855-
7232; and, in accordance with then current guidelines of the Commission, such other addresses
and/or such other securities depositories as the City may designate in an Officer's Certificate
delivered to the Fiscal Agent.
"Special Tax" or "Special Taxes" means Special Tax as defined in the Rate and Method
authorized to be levied within the District pursuant to the Act, the Ordinance and this
Agreement.
"Special Tax Fund" means the fund by that name established by Section 4.6(A) hereof.
"Special Tax Prepayments" means the proceeds of any Special Tax prepayments received
by the City, as calculated pursuant to Section I of the Rate and Method, less any administrative
fees or penalties collected as part of any such prepayment.
"Special Tax Revenues" means the proceeds of the Special Taxes received by the City,
including any scheduled payments and any prepayments thereof, interest thereon and proceeds of
the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes
to the amount of said lien and interest thereon. "Special Tax Revenues" does not include any
penalties collected in connection with delinquent Special Taxes.
"State"means the State of California.
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"Supplemental Agreement" means an agreement the execution of which is authorized by
a resolution which has been duly adopted by the City Council under the Act and which
agreement is amendatory of or supplemental to this Agreement, but only if and to the extent that
such agreement is specifically authorized hereunder.
"Tax Consultant" means David Taussig & Associates, Inc. or another independent
financial or tax consultant retained by the City for the purpose of computing the Special Taxes.
"Water District"means the Cucamonga Valley Water District.
"Water District Account" the account within the Project Fund by that name established
pursuant to Section 4.2(A) hereof.
"Water District Capacity Facilities Proceeds" shall have the meaning given such term in
the Water District JCFA.
"Water District JCFA" means that Joint Community Facilities Agreement, dated as of
October , 2006, by and between the City and the Water District pertaining to the funding by
the District of the Water District Capacity Facilities Proceeds and the Agency Capacity Facilities
Proceeds and the acquisition of the Owner Constructed Water District Facilities.
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ARTICLE Il
THE BONDS
Section 2.1 Principal Amount; Designation. Bonds in the aggregate principal amount
of Dollars
($ ) are hereby authorized to be issued by the City for the District under and subject
to the terms of the Resolution and this Agreement, the Act and other applicable laws of the State
of California.
Section 2.2 Terms of the Bonds.
(A) Form: Denominations. The Bonds shall be issued as fully registered Bonds
without coupons in the denomination of $5,000 or any integral multiple of $5,000 in excess
thereof, except that one Bond of each maturity may be in a denomination less than $5,000, if
necessary, in connection with a partial redemption of the Bonds pursuant to Section 2.3 hereof.
(B) Date of Bonds. The Bonds shall be dated the Closing Date.
(C) CUSIP Identification Numbers. "CUSIP" identification numbers shall be
imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by
the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of
any purchaser to accept delivery of and pay for the Bonds. In addition, failure on the part of the
City or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute
an event of default or any violation of the City's contract with such Owners and shall not impair
the effectiveness of any such notice.
(D) Maturities. Interest Rates. The Bonds shall mature and become payable on
September 1 of each year, and shall bear interest at the rates, as follows:
Principal Payment
. Date Principal Interest
(September 1) Amount Rate.
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(E) Interest. The Bonds shall bear interest at the rates set forth above payable on the
Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day year
composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment
Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest
Payment Date, in which event it shall bear interest from such date of authentication, or (ii) it is
authenticated prior to an Interest Payment Date and after the close of business on the Record
Date preceding such Interest Payment Date, in which event it shall bear interest from such
Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first
Interest Payment Date, in which event it shall bear interest from the Closing Date; provided,
however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond
shall bear interest from the Interest Payment Date to which interest has previously been paid or
made available for payment thereon.
(F) Method of Payment. Interest on the Bonds (including the final interest payment
upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on the
Interest Payment Dates or date of redemption by first class mail to the registered Owner thereof
at such registered Owner's address as it appears.on the Registration Books maintained by the
Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date or
date of redemption, or by wire transfer (i) to the Depository (so long as the Bonds are in book-
entry form pursuant to Section 2.14), or (ii) to an account within the United States made on such
Interest Payment Date or date of redemption upon instructions of any Owner of$1,000,000 or
more in aggregate principal amount of Bonds, which instructions shall continue in effect until
revoked in writing, or until such Bonds are transferred to a new Owner. The principal of the
Bonds and any premium on the Bonds are payable by check in lawful money of the United States
of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent. All Bonds
paid by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The
Fiscal Agent shall destroy the canceled Bonds and issue a certificate of destruction thereof to the
City upon the City's request.
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Section 2.3 Redemption.
(A) Redemption Dates.
(i) Optional Redemption. The Bonds are subject to optional redemption prior
to their stated maturity on any Interest Payment Date, as a whole or in part, at the
following. redemption.prices (expressed as percentages of the principal amount of the
Bonds to be redeemed), together with accrued interest thereon to the date of redemption:
Redemption Date Redemption Price
March 1, 2007 through March 1, 20_ 1 %
September 1, 20 and March 1, 20_ 1 %
September 1, 20_and March 1, 20_ 1 %
September 1, 20_and thereafter 100%
(ii) Mandatory Redemption from Proceeds of Special Tax Prepayments The
Bonds shall be subject to redemption on any Interest Payment Date, prior to maturity, as
a whole or in part on a pro rata basis among maturities from amounts deposited to the
Redemption Fund representing Special Tax Prepayments. An Authorized Representative
shall deliver written instructions to the Fiscal Agent not less than 60 days prior to the
redemption date directing the Fiscal Agent to utilize the Special Tax Revenues
transferred to the Redemption Fund and the Interest Account of the Bond Fund pursuant
to Section 4.6(C) and the amount transferred to the Redemption Fund and/or Interest
Account from the Reserve Fund pursuant to Section 4.4(F) to redeem Bonds pursuant to
this Section 2.3(A)(ii). Such mandatory redemption of the Bonds shall be at the
following redemption prices (expressed as percentages of the principal amount of the
Bonds to be redeemed), together with accrued interest thereon to the date of redemption:
Redemption Date Redemption Price
September 1, 20 and March 1, 20_ 1 %
September 1, 20_and March 1, 20_ 1 %
September 1, 20_and thereafter 100%
(iii) . Mandatory Sinking Fund Payment Redemption. The Bonds maturing on
September 1, 20_ are subject to mandatory sinking fund payment redemption in part on
September 1, 20_, and on each September 1 thereafter to maturity, by lot, at a .
redemption price equal to the principal amount thereof to be redeemed, together with
accrued interest to the date fixed for redemption, without premium, from sinking fund
payments as follows:
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Redemption Date
(September 1) Sinking Fund Payments
The Bonds maturing on September 1, 20 are subject to mandatory sinking fund
payment redemption in part on September 1, 20 , and on each September 1 thereafter to
maturity, by lot, at a redemption price equal to the principal amount thereof to be .
redeemed, together with accrued interest to the date fixed for redemption, without
premium, from sinking fund payments as follows:
Redemption Date
(September 1) Sinking Fund Payments
The amounts in the foregoing tables shall be reduced, as a result of any prior
partial redemption of the Bonds pursuant to Section 2.3(A)(i) or (ii) above as specified in
an Officer's Certificate filed with the Fiscal Agent, in inverse order of sinking fund
payment date.
(B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice, by
filing an Officer's Certificate with the Fiscal Agent, of its intention to redeem Bonds pursuant to
subsection 2.3(A)(i) or(ii) not less than sixty (60) days prior to the applicable redemption date or
such shorter period as shall be acceptable to the Fiscal Agent.
(C) Purchase of Bonds in Lieu of Redemption. In lieu of redemption under Section
2.3(A), moneys in the Bond Fund or Redemption Fund may be used and withdrawn by the Fiscal
Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer's
Certificate requesting such purchase, at public or private sale as and when, and at such prices
(including brokerage and other charges) as such Officer's Certificate may provide, but in no
event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest
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accrued to the date of purchase and any premium which would otherwise be due if such Bonds
were to be redeemed in accordance with this Agreement.
(D) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of
any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not
more than sixty (60) days prior to the date fixed for redemption, to the Original Purchaser, to the
Securities Depositories, to one or more Information Services, and to the respective registered
Owners of any Bonds designated for redemption, at their addresses appearing on the Bond
Register in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition
precedent to such redemption.and failure to mail or to receive any such notice, or any defect
therein, shall not affect the validity of the proceedings for the redemption of such Bonds.
Such notice shall state the redemption date and the redemption price and, if less than all
of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP
numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP
number and Bond number of each Bond to be redeemed or shall state that all Bonds between two
stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more
maturities have been called for redemption, shall state as to any Bond called in part the principal
amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the
Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state
that,further interest on such Bonds will not accrue from and after the redemption date.
Upon the payment of the redemption price, plus accrued interest to the date of
redemption, of Bonds being redeemed, each check or other transfer of funds issued for such
purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and
maturity, of the Bonds being redeemed with the proceeds of such check or other transfer.
Except as otherwise provided for herein, whenever provision is made in this Agreement
for the redemption of less than all of the Bonds or any given portion thereof, the Fiscal Agent
shall determine the amount of Bonds to be redeemed from each maturity in any manner the City
specifies, and the Fiscal Agent shall select the Bonds to be redeemed, from each maturity of the
Bonds or such given portion thereof not previously called for redemption, according to any
manner which the Fiscal Agent deems fair.
Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal
Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new
Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate
principal amount equal to the unredeemed portion of the Bond or Bonds.
Section 2.4 Effect of Redemption. From and after the date fixed for redemption, if
funds available for the payment of the principal of, and interest and any premium on; the Bonds
so called for redemption shall have been deposited in the Bond Fund or Redemption Fund, such
Bonds so.called shall cease to be entitled to any benefit under this Agreement other than the right
to receive payment of the redemption price and interest thereon accrued through the date of
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redemption, and no interest shall accrue thereon on or after the redemption date specified in such
notice.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be
canceled by the Fiscal Agent. The Fiscal. Agent shall destroy the canceled Bonds and issue a
certificate of destruction thereof to the City.
Section 2.5 Form of Bonds. The Bonds and the form of Fiscal Agent's certificate of
authentication and the form of assignment, to appear thereon, shall be substantially in the form
set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or
appropriate variations, omissions and insertions, as permitted or required by this Agreement, the
Resolution and the Act.
Section 2.6 Execution of Bonds. The Bonds shall be executed on behalf of the City
manually or by the facsimile signatures of its Mayor and City Clerk who are in office on the date
of adoption of this Agreement or at any time thereafter, and the seal of the City shall be
impressed, imprinted or reproduced by facsimile thereon. If any officer whose signature appears
on any Bond ceases to be such officer before delivery of the Bonds to the Owner, such signature
shall nevertheless be as effective as if the officer had remained in office until the delivery of the
Bonds to the Owner. Any Bond may be signed and attested on behalf of the City by such
persons as at the actual date of the execution of such Bond shall be the proper officers of the City
although at the nominal date of such Bond any such person shall not have been such officer of
the City. Only such Bonds as shall bear thereon a certificate of authentication in substantially
the form set forth in Exhibit A, executed and dated by the Fiscal Agent, shall be valid or
obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of
authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered
hereunder have been duly authenticated, registered and delivered hereunder and are entitled to
the benefits of this Agreement.
Section 2.7 Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred, upon the books required to be kept pursuant to the provisions of Section 2.9 by the
Person in whose name it is registered, in person or by his duly authorized attorney, upon
surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of
transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any
expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the
City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other
governmental charge required to be paid with respect to such transfer.
Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and
the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal
amount.
No transfers of Bonds shall be required to be made (i) fifteen days prior to the date
established by the Fiscal Agent for selection of Bonds for redemption, (ii) with respect to a Bond
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after such Bond has been selected for redemption, or (iii) between a Record Date and the
succeeding Interest Payment Date.
Section 2.8 Exchange of Bonds. Bonds may be exchanged at the Principal Office of
the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and
of the same series and maturity. The cost for any services rendered or any expenses incurred by
the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal
Agent shall collect from the Owner requesting such exchange any tax or other governmental
charge required to be paid with respect to such exchange. No exchanges of Bonds shall be
required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection
of Bonds for redemption, (ii) with respect to a Bond after such Bond has been selected for
redemption, or(iii) between a Record Date and the succeeding Interest Payment Date.
Section 2.9 Bond Register. The Fiscal Agent will keep or cause to be kept, at its
Principal Office sufficient books for the registration and transfer of the Bonds, which books shall
show the series, number, date, amount, rate of interest and last known Owner of each Bond and
shall at all times be open to inspection by the City during regular business hours upon reasonable
notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on
said books, the ownership of the Bonds as hereinbefore provided. The City and the Fiscal Agent
will treat the Owner of any Bond whose name appears on the Bond Register as the absolute
Owner of such Bond for any and all purposes, and the City and the Fiscal Agent shall not be
affected by any notice to the contrary. The.City and the Fiscal Agent may rely on the address of
the Bondowner as it appears in the Bond Register for any and all purposes.
Section 2.10 Temporary Bonds. The Bonds may be initially issued in temporary form
exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such authorized denominations as may be
determined by the City, and may contain such reference to any of the provisions of this
Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon the
same conditions and in substantially the same manner as the definitive Bonds. If the City issues
temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the
temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at
the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall
designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary
Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations.
Until so exchanged, the temporary bonds shall be entitled to the same benefits under this .
Agreement as definitive Bonds authenticated and delivered hereunder.
Section 2.11 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent
shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond
so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled by it
and destroyed by the Fiscal Agent who shall deliver a certificate of destruction thereof to the
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City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft
may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity for
the City and the Fiscal Agent satisfactory to the Fiscal Agent shall be given, the City, at the
expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a new
Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost,
.destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of
preparing each new Bond delivered under this Section and of the expenses which may be
incurred by the City and the Fiscal Agent for the preparation, execution, authentication and
delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to
be lost, destroyed or stolen shall constitute an original additional contractual obligation on the
part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time
enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this
Agreement with all other Bonds issued pursuant to this Agreement.
Section 2.12 Limited Obligation. The Bonds and interest thereon, together with any premium
paid thereon upon redemption, arc not obligations of the City, but are limited obligations of the
District secured by and payable from an irrevocable first lien on the Special Tax Revenues and
on the monies in the funds and accounts established herein (including the investment earnings
thereon) with the exception of the Rebate Fund, the Costs of Issuance Fund, the Administrative
Expense Fund and the Project Fund. Except for the Special Tax Revenues, neither the credit nor
the taxing power of the District or the City is pledged for the payment of the Bonds or the
interest thereon, and no Owner of the Bonds may compel the exercise of taxing power by the
District or the City or the forfeiture of any of their property. The principal of and interest on the
Bonds and premiums upon the redemption thereof, if any, are not a debt of the District or the
City, the State or any of its political subdivisions within the meaning of any constitutional or
statutory limitation or restriction. The Bonds are not a legal or equitable pledge, charge, lien or
encumbrance, upon any property of the City or the District, or upon any of income, receipts or
revenues of the City or the District, except the amounts which are, under this Agreement and the
Act, set aside for the payment of the Bonds and interest thereon and neither the members of the
Legislative Body, the City Council of the City, nor any persons executing the Bonds are liable
personally on the Bonds by reason of their issuance. Notwithstanding anything contained in this
Agreement, neither the City nor the District shall be required to advance any money derived
from any source of income other than the Special Tax Revenues for the payment of the interest
on or the principal of the Bonds or for the performance of any covenants herein contained.
Nothing in this Agreement or in any Supplemental Agreement shall preclude the
redemption prior to maturity of any Bonds subject to call and redemption or the payment of the
Bonds from proceeds of refunding bonds issued under the Act or under any other law of the
State.
Section 2.13 No Acceleration. The principal of the Bonds shall not be subject to
acceleration hereunder. Nothing in this Section shall in any way prohibit the prepayment or
redemption of Bonds under Section 2.3 hereof, or the defeasance of the Bonds and discharge of
this Agreement under Section 10.3 hereof.
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Section 2.14 Book-Entry System. DTC shall act as the initial Depository for the Bonds.
One Bond for each maturity of the Bonds shall be initially executed, authenticated, and delivered
as set forth herein with a separate fully registered certificate (in print or typewritten form). Upon
initial execution, authentication, and delivery, the ownership of the Bonds shall be registered in
the Bond Register kept by the Fiscal Agent for the Bonds in the name of Cede & Co., as nominee
of DTC or such nominee as DTC shall appoint in writing. The representatives of the City and the
Fiscal Agent are hereby authorized to take any and all actions as may be necessary and not
inconsistent with this Agreement to qualify the Bonds for the Depository's book-entry system,
including the execution of the Depository's required representation letter.
With respect to Bonds registered in the Bond Register in the name of Cede & Co., as
nominee of DTC, neither the City nor the Fiscal Agent shall have any responsibility or obligation
to any broker-dealer, bank, or other financial institution for which DTC holds Bonds as
Depository from time to time (the "DTC Participants") or to any Person for which a DTC
Participant acquires an interest in the Bonds (the `Beneficial Owners"). Without limiting the
immediately preceding sentence, neither the City, the District nor the Fiscal Agent shall have
any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede &
Co., or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery
to any DTC Participant, any Beneficial Owner, or any other Person, other than DTC, of any
notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the
Depository of the beneficial interests in the Bonds to be redeemed in the event the City, on
behalf of the District, elects to redeem the Bonds in part, (iv) the payment to any DTC
Participant, any Beneficial Owner, or any other Person, other than DTC, of any amount with
respect to the principal of or interest on, or premium on, the Bonds, or (v) any consent given or
other action taken by the Depository as Owner of the Bonds.
Except as set forth above, the Fiscal Agent may treat as and deem DTC to be the absolute
Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the
principal of and interest on such Bonds, for the purpose of giving notices of prepayment and
other matters with respect to such Bonds, for the purpose of registering transfers with respect to.
such Bonds, and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and
interest on the Bonds only to or upon the order of the Owners as shown on the Bond Register,
and all such payments shall be valid and effective to fully satisfy and discharge all obligations
with respect to the principal of and interest on the Bonds to the extent of the sums or,sums so
paid.
No Person other than an Owner, as shown on the Bond Register, shall receive a physical
Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to the transfer
provisions in Section 2.7 hereof, references to "Cede & Co." in this Section 2.14`shall refer to
such new nominee of DTC.
DTC may determine to discontinue providing its services with respect to the Bonds at any
time by giving written notice to the Fiscal Agent during any time that the Bonds are Outstanding,
and discharging its responsibilities with respect thereto under applicable law. The City may
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terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to
discharge its responsibilities with respect to the Bonds or that continuation of the system of
book-entry_ transfers through DTC is not in the best interest of the Beneficial Owners, and the
City shall mail notice of such termination to the Fiscal Agent.
Upon the termination of the services of DTC as provided in the previous paragraph, and
if no substitute Depository willing to undertake the functions hereunder can be found which is
willing and able to undertake such functions upon reasonable or customary terms, or if the City
determines that it is in the best interest of the Beneficial Owners of the Bonds that they be able to
obtain certificated Bonds, the Bonds shall no longer be restricted to being registered in the Bond
Register of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be
registered in whatever name or name the Owners shall designate at that time, in accordance with
Section 2.7.
To the extent that the Beneficial Owners are designated as the transferee by the Owners,
in accordance with Section 2.7, the Bonds will be delivered to such Beneficial Owners as soon as
practicable.
ARTICLE III
ISSUANCE OF BONDS
Section 3.1 Issuance and Delivery of Bonds. At any time after the execution of this
Agreement, the City may issue the Bonds for the District in the aggregate principal amount set
forth in Section 2.1 and deliver the Bonds to the Original Purchaser. The Authorized Officers of
the City are hereby authorized and directed to deliver any and all documents and instruments
necessary to cause the issuance of the Bonds in accordance with the provisions of the Act, the
Resolution and this Agreement, to authorize the payment of Costs of Issuance and costs of the
Project by the Fiscal Agent from the proceeds of the Bonds and to do and cause to be done any
and all acts and things necessary or convenient for delivery of the Bonds to the Original
Purchaser. .
Section 3.2 Pledge of Special Tax.Revenues. The Bonds shall be secured by a first
pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of
the Special Tax Revenues (except Special Tax Revenues deposited in the Administrative
Expense Fund) and all moneys deposited in the Bond Fund and, until disbursed as provided
herein, in the Redemption Fund and the Special Tax Fund. The Bonds are further secured by a
first pledge of all of the moneys deposited in the Reserve Fund. The Special Tax Revenues and
all moneys deposited into said funds (except as otherwise provided herein) are hereby dedicated
to the payment of the principal of, and interest and any premium on, the Bonds as provided
herein and in the Act until all of the Bonds have been paid and retired or until moneys or Federal
Securities have been set aside irrevocably for that purpose in accordance with Section 10.3.
Amounts in the Administrative Expense Fund, the Rebate Fund, the Costs of Issuance Fund and
the Project Fund are not pledged to the repayment of the Bonds. The facilities acquired or
constructed with the proceeds of the Bonds are not in any way pledged to pay the Debt Service
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on the Bonds. Any proceeds of condemnation or destruction of any facilities financed with the
proceeds of the Bonds are not pledged to pay the Debt Service on the Bonds and are free and
clear of any lien or obligation imposed hereunder.
Section 3.3 Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be dependent upon the completion of the Project or upon the performance by any
Person of such Person's obligation(s) with respect to the Project.
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ARTICLE IV
FUNDS AND ACCOUNTS
Section 4.1 Deposits of Bond Proceeds. The proceeds of the purchase of the Bonds by
the Original Purchaser thereof shall be paid to the Fiscal Agent, who shall forthwith set aside,
pay over and deposit such proceeds on the Closing Date for the Bonds as follows:
(A) to the Interest Account of the Bond Fund $ ;
(B) to the Reserve.Fund $
(C) to the Costs of Issuance Fund $ ;
(D) to the Acquisition Account of the Project Fund $ ;
(E) to the Agency Account of the Project Fund $ ;
(F) to the Water District Account of the Project Fund $ ;
(G) to a temporary expense account hereby created for such purpose for immediate
transfer to the Finance Director for deposit by the. Finance Director in the Administrative
Expense Fund $25,000.00.
Section 4.2 Project Fund.
(A) Establishment of Project Fund. There is hereby established as a separate fund to
be held by the Fiscal Agent, the City of Rancho Cucamonga Community Facilities District No.
2006-02 (Amador on Route 66) 2006 Special Tax Bonds, Project Fund, and with such Fund three
accounts, the Acquisition Account, the Agency Account and the Water District Account, to the
credit of which deposits shall be made as required by Section 4.1(D), (E) and (F). The Fiscal
Agent may establish such other temporary funds or accounts on its records as it may deem
appropriate to facilitate such deposits and transfers.
Moneys in the Acquisition Account of the Project Fund shall be held in trust by the Fiscal
Agent for the benefit of the City, and shall be disbursed, except as otherwise provided in
subsection (C) of this Section, solely for the payment or reimbursement of costs of the Project
and Costs of Issuance not paid from the Costs of Issuance Fund prior to the closure thereof
pursuant to Section 4.3(B).
Moneys in the Agency Account of the Project Fund shall be held in trust by the Fiscal
Agent for the benefit of the City, the Agency and the Water District, and shall be disbursed,
except as otherwise provided in subsection (C) of this Section, solely for the funding of the
Agency Capacity Facilities Proceeds pursuant to the Water District JCFA.
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Moneys in the Water District Account of the Project Fund shall be held in trust by the
Fiscal Agent for the benefit of the City and the Water District, and shall be disbursed, except as
otherwise provided in subsection (C) of this Section, solely for the funding of the Water District
Capacity Facilities Proceeds and the acquisition of the Owner Constructed Water District
Facilities pursuant to the Water District JCFA.
(B) Procedure for Disbursement from the Project Fund Accounts.
(i) Acquisition Account. The Fiscal Agent shall make disbursements from
the Acquisition Account upon receipt of an Officer's Certificate, in substantially the form
set forth in Exhibit C to this Agreement, attached hereto and incorporated herein by
reference, which shall:
(a) set forth the amount required to be disbursed; the purpose for
which the disbursement is to be made; that the disbursement is a proper
expenditure from the Acquisition Account; and the Person to which the
disbursement is to be paid; and
(b) certify that no portion of the amount then being requested to be
disbursed was set forth in any Officer's Certificate previously filed requesting a
disbursement.
(ii) Agency Account. The Fiscal Agent shall make disbursements from the
Agency Account upon receipt of an Officer's Certificate, in substantially the form set
forth in Exhibit C which shall:
.(a) set forth the amount required to be disbursed; the purpose for
which the disbursement is to be made; that the disbursement is a proper
expenditure from the Agency Account; and the Person to which the disbursement
is to be paid; and
(b) certify that no portion of the amount then being requested to be
disbursed was set forth in any Officer's Certificate previously filed requesting a
disbursement.
(iii) Water District Account. The Fiscal Agent shall make disbursements from
the Water.District Account upon receipt of an Officer's Certificate, in substantially the
form set forth in Exhibit C which shall:
(a) set forth the amount required to be disbursed; the purpose for
which the disbursement is to be made; that the disbursement is a proper
expenditure from the Water District Account; and the Person to which the
disbursement is to be paid; and
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(b) certify that no portion of the amount then being requested to be
disbursed was set forth in any Officer's Certificate previously filed requesting a
disbursement.
(C) Investment. Moneys in the accounts of the Project Fund shall be invested and
deposited in accordance with Section 6.1. Interest earnings and profits resulting from the
investment of moneys in an account of the Project Fund shall.be invested and deposited and shall
be retained in such account to be used for the purposes thereof.
(D) Transfer of Funds not Required.
(i) Agency Account. Upon the filing of an Officer's Certificate stating that
all Agency Capacity Facilities Proceeds have been disbursed to the Water District
pursuant to the Water District JCFA, or that any such funds are not required to be
disbursed from the Agency Account, the Fiscal Agent shall transfer the amount, if any,
remaining in the Agency Account to the Acquisition Account.
(ii) Water District Account. Upon the filing of an.Officer's Certificate stating
that all Water District Capacity Facilities Proceeds have been disbursed to the Water
District and that all Owner Constructed Water District Facilities have been acquired
pursuant to the Water District JCFA, or that any such funds are not required to be
disbursed or paid from the Water District Account, the Fiscal Agent shall transfer the
amount, if any, remaining in the Water District Account to the Acquisition Account.
(iii) Acquisition Account. Upon the filing of an Officer's Certificate stating
that the Project has been completed and that all costs of the Project and all Costs of
Issuance have been paid, or that such costs are not required to be paid from the
Acquisition Account, the Fiscal Agent shall transfer the amount, if any, remaining in the
Acquisition Account to the Special Tax Fund.
Upon the filing of an Officer's Certificate stating that the City has terminated the
Acquisition/Financing Agreement pursuant to the provisions thereof and that the City has
elected not to advertise and bid the balance of the Owner Constructed City Improvements
following such a termination, any monies remaining in the Acquisition Account and not
appropriated or subject to appropriation to pay costs of the Project or Costs of Issuance
previously incurred shall be transferred to the Special Tax Fund.
Section 4.3 Costs of Issuance Fund.
(A) Establishment of Costs of Issuance Fund. There is hereby established as a
separate fund to be held by the Fiscal Agent, the City of Rancho Cucamonga Community
Facilities District No. 2006-02 (Amador on Route 66) 2006 Special Tax Bonds, Costs of
Issuance Fund, to the credit of which a deposit shall be made as required by Section 4.1(C).
Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be
disbursed as provided in subsection (B) of this Section for the payment or reimbursement of
Costs of Issuance.
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(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from
time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts
to be paid to the designated payees, signed by an Authorized Officer and delivered to the Fiscal
Agent concurrently with the delivery of the Bonds. The Fiscal Agent shall pay all Costs of
Issuance after receipt of an invoice from any such payee which requests payment in an amount
which is less than or equal to the amount set forth with respect to such payee pursuant to an
Officer's Certificate requesting payment of Costs of Issuance. The Fiscal Agent shall maintain
the Costs of Issuance Fund for a period of 180 days from the date of delivery of the Bonds and
then shall transfer any moneys remaining therein, including any investment earnings thereon, to
the Acquisition Account of the Project Fund.
(C) Investment. Moneys in the Costs of Issuance Fund shall be invested and
deposited in accordance with Section 6.1. Interest earnings and profits resulting from said
investment shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the
purposes of such fund.
Section 4.4 Reserve Fund.
(A) Establishment of Fund. There is hereby established as a separate fund to be held
by the Fiscal Agent the City of Rancho Cucamonga Community Facilities District No. 2006-02
(Amador on Route 66) 2006 Special Tax Bonds, Reserve Fund, to the credit of which Fund a
deposit shall be made as required by Section 4.1(B) which deposit is equal to the Reserve
Requirement as of the Closing Date for the Bonds, and deposits shall be made as provided in
Section 4.6(B)3. Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the
benefit of the Owners of the Bonds as a reserve for the payment of principal of, and interest and
any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.
(B) Use of Funds. Except as otherwise provided in this Section, all amounts
deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the
purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the
Bond Fund of the amount then required for payment of the principal of, and interest and any
premium on, the Bonds or, in accordance with the provisions of this Section, for the purpose of
redeeming Bonds from the Bond Fund.
(C) Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the
Reserve Fund to the Bond Fund due to a deficiency.in the Bond Fund, the Fiscal Agent shall
provide written notice thereof to the Finance Director, specifying the amount withdrawn.
(D) Transfer of Excess of Reserve Requirement. If on any August 15, or the first
Business Day thereafter if August 15 is not a Business Day, of each year, the amount in the
Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent shall, as directed in an
Officer's Certificate, transfer an amount equal to the excess from the Reserve Fund to the
Interest Account of the Bond Fund to be used for the payment of interest on the Bonds on the
next Interest Payment Date in accordance with Section 4.5.
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(E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in
the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds,
including interest accrued to the date of payment or redemption and premium, if any, due upon
redemption, the Fiscal Agent shall, upon receiving an Officer's Certificate (upon which the
Fiscal Agent may conclusively rely) so directing the Fiscal Agent, transfer the amount in the
Reserve Fund to the Redemption Fund to be applied to the payment and redemption, in
accordance with Section 2.3(A) of all of the Outstanding Bonds. In the event that the amount so
transferred from the Reserve Fund to the Redemption Fund exceeds the amount required to pay
and redeem the Outstanding Bonds, the balance in the Redemption Fund shall be transferred to
the District to be used for any lawful purpose of the District.
Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund
pursuant to this Section 4.4(E) until after (i) the calculation of any amounts due to the federal
government pursuant to Section 5.13 following payment of the Bonds and withdrawal of any
such amount from the Reserve Fund for purposes of making such payment to the federal
government, and (ii) payment of any fees and expenses due to the Fiscal Agent.
(F) Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and
Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.3(A)(ii)
and 4.9(B) hereof, a proportionate amount in the Reserve Fund (determined on the basis of the
principal of Bonds to be redeemed and the then principal of the Bonds Outstanding) shall be
transferred upon such prepayment by the Fiscal Agent to the Redemption Fund or the Interest
Account of the Bond Fund, as applicable, to be applied to the redemption of the Bonds pursuant
to written instructions contained in an Officer's Certificate in accordance with Section 4.9(B)
hereof.
(G) Investment and Transfer to Pav Rebate. Moneys in the Reserve Fund shall be
invested and deposited in accordance with Section 6.1. All Permitted Investments in the Reserve
Fund shall be valued at their Fair Market Value at least semiannually on March 1 and September
1. Interest earnings and profits resulting from said investment shall be used as required by the
District to comply with Section 5.13. No earnings on amounts in the Reserve Fund shall be used
by the District to comply with Section 5.13 unless the amount on deposit in the Reserve Fund is
equal to the Reserve Requirement.
Section 4.5 Bond Fund.
(A) Establishment of Bond Fund and Interest Account and Principal Account. There
is hereby established as a separate fund to be held by the Fiscal Agent, the City of Rancho
Cucamonga Community Facilities District No. 2006-02 (Amador on Route 66) 2006 Special Tax
Bonds, Bond Fund, and within such Fund two accounts, the Interest Account and the Principal
Account, to the credit of which deposits shall be made as required by Sections 4.1(A), 4.2(C),
4A(B), 4.4(D), 4.4(F) and 4.6(B), and any other amounts required to be deposited therein by this
Agreement or the Act.
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Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the benefit of the
Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any
premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a
lien in favor of the Owners of the Bonds.
(B) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw
from the Interest Account of the Bond Fund and pay to the Owners of the Bonds the interest then
due and payable on the Bonds, including any interest due on the Bonds being redeemed pursuant
to Section 2.3(A).
On each Interest Payment Date, the Fiscal Agent shall withdraw from the Principal
Account of the Bond Fund and pay to the Owners of the Bonds the principal of the Bonds at the
maturity thereof or the principal of the term Bonds upon the mandatory sinking fund redemption
thereof pursuant to this Agreement.
(C) Investment. Moneys in the Bond Fund shall be invested and deposited in
accordance with Section 6.1. Interest earnings and profits resulting from the investment and
deposit of amounts in the Bond Fund shall be retained in the Bond Fund and used for purposes of
such fund.
Section 4.6 Special Tax Fund.
(A) Establishment of Special Tax Fund. There is hereby established as a separate
fund to be held by the Fiscal Agent, the City of Rancho. Cucamonga Community Facilities
District No. 2006-02 (Amador on Route 66) 2006 Special Tax Bonds, Special Tax Fund to the
credit of which deposits shall be made as required pursuant to this Section 4.6 and may be made
as permitted by Section 4.2(D). Moneys in the Special Tax Fund shall be held in trust by the
Fiscal Agent for the benefit of the District and the Owners of the Bonds, shall be disbursed as
provided below and, pending disbursement, shall be subject to a lien in favor of the Owners of
the Bonds and the District. No later than the tenth (10th) Business Day after which Special Tax
Revenues have been received by the City, and in any event not later than February 15th and
August 15th of each year, the City shall transfer such Special Tax Revenues to the Fiscal Agent,
less an amount equal to the Administrative Expense Requirement, and, except as set forth in the
following sentence, such amounts shall be deposited in the Special Tax Fund.
(B) Disbursements. With the exception of the Special Tax Revenues representing
Special Tax Prepayments which shall be transferred pursuant to Section 4.6(C), below, the
Special Tax Revenues deposited in the Special Tax Fund shall be deposited in the following
accounts of the Special Tax Fund or transferred to the following other funds and accounts on the
dates and in the amounts set forth in the following paragraph and in the following order of
priority:
1. The Fiscal Agent shall deposit in the Interest Account of the Bond Fund, on each
Interest Payment Date and date for redemption of the Bonds, an amount required
to cause the aggregate amount on deposit in the Interest Account to equal the
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amount of interest due or becoming due and payable on such Interest Payment
Date on all Outstanding Bonds or to be paid on the Bonds being redeemed on
such date.
2. The Fiscal Agent shall deposit in the Principal Account of the Bond Fund, on
each Interest Payment Date and redemption date on which principal of the Bonds,
including sinking fund payments, shall be payable an amount required to cause
the aggregate amount on deposit in the Principal Account to equal the principal
amount of, and premium (if any) on, the Bonds coming due and payable on such
Interest Payment Date, or required to be redeemed on such date pursuant to this
Agreement.
3. On or after March 2 and September 2 of each year after making the transfer and
deposits required under paragraphs 1 and 2 above, the Fiscal Agent shall transfer
the amount, if any, necessary to replenish the amount then on deposit in the
Reserve Fund to an amount equal to the Reserve Requirement.
4. On or after September 2 of each year After making the deposits and transfers
required under paragraphs 1 through 3 above, upon receipt of written instructions
from an Authorized Officer, the Fiscal Agent shall transfer from the Special Tax
Fund to the Rebate Fund the amount specified in such request.
5. On or after September 2 of each year after making the deposits and transfers
required under paragraphs I through 4 above, upon receipt of a written request of
an Authorized Officer, the Fiscal Agent shall transfer from the Special Tax Fund
to the Finance Director for deposit in the Administrative Expense Fund the
amounts specified in such request to pay those Administrative Expenses which
the District reasonably expects (a) will become due and payable during such
Fiscal Year or the cost of which Administrative Expenses have previously been
incurred and paid by the District from funds other than the Administrative
Expense Fund and (b) the cost of which Administrative Expenses will be in
excess of the Administrative Expense Requirement for such Fiscal Year.
6. If, on or after September 2 of each year, after making the deposits and transfers
required under paragraphs 1 through 5 above, monies remain in the Special Tax
Fund, such monies shall remain on deposit in the Special Tax Fund and shall be
subsequently deposited or transferred pursuant to the provisions of paragraphs I
through 5 above.
(C) Prepayments. The Fiscal Agent shall, upon receipt of Special Tax Revenues
representing Special Tax Prepayments together with written instructions of the District executed
by an Authorized Officer, immediately transfer such Special Tax Prepayments pursuant to such
written instructions into the Interest Account of the Bond Fund and the Redemption Fund, as
applicable, and utilize such funds to pay the interest and premium, if any, on and principal of
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Bonds to be redeemed pursuant to Section 2.3(A)(ii). The Fiscal Agent may conclusively rely
upon such instructions.
(D) Investment. Moneys in the Special Tax Fund shall be invested and deposited in
accordance with Section 6.1. Interest earnings and profits resulting from such investment and
deposit shall be transferred to the Special Tax Fund to be used for the purposes thereof.
(E) Transfer to Redemption Fund. Any Officer's Certificate issued pursuant to
Section 4.2(D)(iii) of this Agreement (other than an Officer's Certificate issued more than one
year prior to the first date on which optional redemption of Bonds is permitted pursuant to
subsection 2.3(A)(i) of this Agreement) may direct that all or any portion of the funds which
would otherwise be transferred to the Special Tax Fund be transferred to the Redemption Fund,
in which case the Fiscal Agent shall apply such amounts in accordance with Section 4.9 of this
Agreement as directed in an Officer's Certificate.
(F) Transfer to the District. When there are no longer any Bonds Outstanding, any .
amounts then remaining on deposit in the Special Tax Fund shall be transferred to the District
and used for any lawful purpose under the Act.
Section 4.7 Administrative Expense Fund.
(A) Establishment of Administrative Expense Fund. There is hereby established as a
separate fund to be held by the Finance Director, the City of Rancho Cucamonga Community
Facilities District No. 2006-02 (Amador on Route 66) 2006 Special Tax-Bonds, Administrative
Expense Fund to the credit of which deposits shall be made as required by Section 4.1(G) and
4.6(B)(5). In addition to the foregoing deposits, the City shall each Fiscal Year deposit in the
Administrative Expense Fund from Special Tax Revenues received by the City an amount equal
to the Administrative Expense Requirement for such Fiscal Year. Moneys in the Administrative
Expense Fund shall be held in trust by the Finance Director for the benefit of the City and the
District and shall be used to pay Administrative Expenses from time to time.
(B). Investment_ Moneys in the Administrative Expense Fund shall be invested and
deposited in accordance with Section 6.1. Interest earnings and profits resulting from said
investment shall be retained by the Finance Director in the Administrative Expense Fund to be
used for the purposes thereof.
Section 4.8 Rebate Fund. There is hereby established as a separate fund to be held by
the Fiscal Agent, the City of Rancho Cucamonga Community Facilities District No. 2006-02
(Amador on Route 66) 2006 Special Tax Bonds, Rebate Fund. The Rebate Fund shall be held
and maintained.by the Fiscal Agent. On September 15 of each year (or at such other times and
or such other intervals as may be required or permitted by regulations of the United States
Internal Revenue Service), the City shall determine whether any portion of investment earnings
from any account established by this Agreement must be rebated to the United States pursuant to
Section 148 of the Code. At the written direction of the District, any amounts required to be
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rebated will be transferred from any available source, including the Special Tax Fund pursuant to
Section 4.6, to the Rebate Fund.
The City is authorized to retain independent attorneys, accountants and other consultants
to assist in complying with the requirements of the Code, and the fees of such consultants may be
paid from the Administrative Expense Account. The Fiscal Agent may rely conclusively upon
the City's determinations, calculations and certifications required by this Section 4.8. The Fiscal
Agent shall have no responsibility to make any independent calculation or determination or to
review the City's calculations hereunder.
Amounts in the Rebate Fund shall be invested without yield restriction and shall be held
in trust for rebate to the United States at the written direction of the Finance Director. Earnings
on the Rebate Fund are to remain in that account and shall similarly be held in trust for rebate to
the United States.
Section 4.9 Redemption Fund.
(A) Establishment of Redemption Fund. There is hereby established as a separate
fund to beheld in trust by the Fiscal Agent for the Owners of the Bonds, the Community
Facilities District 2006-02 (Amador on Route 66) 2006 Special.Tax Bonds, Redemption Fund, to
the credit of which deposits shall be made from funds received by the City representing Special
Tax Prepayments and other funds required for redemptions, other than mandatory sinking fund
redemptions and which shall be administered as provided below.
(B) Disbursement. Monies shall be deposited into the Redemption Fund by the Fiscal
Agent pursuant to the terms of Section 4.4(E), 4.4(F), 4.6(C), 4.6(E) and/or 10.3 and an Officer's
Certificate filed with the Fiscal Agent in accordance with Section 2.3 hereof and shall be set
aside and used solely for the purpose of redeeming Bonds in accordance with such Officer's
Certificate. Following the redemption of any Bonds, if any funds remain in the Redemption
Fund, such funds shall be transferred to the Special Tax Fund.
(C) Investment. Moneys in the Redemption Fund shall be invested and deposited in
accordance with Section 6.1. Interest earnings and profits resulting from such investment and
deposit shall be retained in the Special Tax Fund to be used for the purposes thereof.
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.1 Punctual Payment. The City will punctually pay or cause to be paid the
principal of, and interest and any premium on, the Bonds when and as due in strict conformity
with the terms of this Agreement and any Supplemental Agreement, and it will faithfully observe
and perform all of the conditions covenants and requirements of this Agreement and all
Supplemental Agreements and of the Bonds.
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Section 5.2 Extension of Time for Payment. In order to prevent any accumulation of
claims for interest after maturity, the City shall not on the District's behalf, directly or indirectly,
extend or consent to the extension of the time for the payment of any claim for interest on any of
the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement
by purchasing or funding said claims for interest or in any other manner. In case any such claim
for interest shall be extended or funded, whether or not with the consent of the City, such claim
for interest so extended or funded shall not be entitled, in case of default hereunder, to the
benefits of this Agreement, except subject to the prior payment in full of the principal of all of
the Bonds then Outstanding and of all claims for interest which shall not have so extended or
funded.
Section 5.3 Against Encumbrances. Neither the City nor the District will encumber,
pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts
pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the
benefit of the Bonds, except as permitted by this Agreement.
Section 5.4 Books and Records. The City will keep, or cause to be kept, on behalf of
the District proper books of record and accounts, separate from all other records and accounts of
the District, in which complete and correct entries shall be made of all transactions relating to the
expenditure of amounts disbursed from the Administrative Expense Fund. Such books of record
and accounts shall at all times during normal business hours of the City be subject to the
inspection of the Fiscal Agent, the Owners of not less than ten percent (10%) of the principal
amount of the Bonds then Outstanding, or their representatives duly authorized in writing, and
the payors of the Special Taxes, or their representatives duly authorized in writing.
The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts,
separate from all other records and accounts of the Fiscal Agent, in which complete and correct
entries shall be made of all transactions relating to the expenditure of amounts disbursed from
the Special Tax Fund, the Bond Fund, the Redemption Fund, the Project Fund, the Reserve Fund,
the Costs of Issuance Fund and the Rebate Fund. Such books of record and accounts shall at all
times during normal business hours of the Fiscal Agent be subject to the inspection of the City,
the Owners of not less than ten percent (10%) of the principal amount of the Bonds then
Outstanding, or their representatives duly authorized in writing, and the payors of the Special
Taxes, or their representatives duly authorized in writing.
Section 5.5 Protection of Security and Rights of Owners. The City will preserve and
protect the security of the Bonds and the rights of the Owners, and will warrant and defend their
rights against all claims and demands of all Persons. From and after the delivery of any of the
Bonds by the City, the Bonds shall be incontestable by the City acting either on its own behalf or
on behalf of the District.
Section 5.6 Compliance with Law. The City will comply with all applicable
provisions of the Act_and law in completing the construction or acquisition of the Project.
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Section 5.7 Collection of Special Tax Revenues. The City shall comply with all
requirements of the Act so as to assure the timely collection of Special Tax Revenues, including
without limitation, the enforcement of delinquent Special Taxes.
On or within five (5) Business Days of each June 1, the Fiscal Agent shall provide the
Finance Director with a notice stating the amount then on deposit in the Interest Account and
Principal Account of the Bond Fund, the Special Tax Fund and the Reserve Fund, and informing
the City that the Special Taxes may need to be levied pursuant to the Ordinance as necessary to
provide for Annual Debt Service and Administrative Expenses and replenishment (if necessary)
of the Reserve Fund so that the balance therein equals the Reserve Requirement. The receipt of
or failure to receive such notice by the Finance Director shall in no way affect the obligations of
the Finance Director under the following two paragraphs. Upon receipt of such notice, the
Finance Director shall communicate with the Auditor to ascertain the relevant parcels on which
the Special Taxes are to be levied, taking into account any parcel splits during the preceding and
then current year.
The Finance Director shall effect the levy of the Special Taxes each Fiscal Year in .
accordance with the Ordinance by each August 1 that the Bonds are Outstanding, or otherwise
such that the computation of the levy is complete before the final date on which Auditor will
accept the transmission of the Special Tax amounts for the parcels within the District for
inclusion on the next real property tax roll. Upon the completion of the computation of the
amounts of the levy, the Finance Director shall prepare or cause to be prepared, and shall
transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes
on the next real property tax roll.
The Finance Director shall fix and levy the amount of Special Taxes within the District
required for the payment of principal of and interest on any Outstanding Bonds of the District
becoming due and payable during the ensuing year, including any necessary replenishment or
expenditure of the amount within the Reserve Fund for the Boods and an amount estimated to be
sufficient to pay the Administrative Expenses (including amounts necessary to discharge any
obligation under Section 5.13) during such year, taking into account the balances in such funds
and in the Bonds Fund, the Redemption Fund and the Special Tax Fund. The Special Taxes so
levied shall not exceed the authorized amounts as provided in the Ordinance.
The Special Taxes shall be payable and be collected in the same manner and at the same
time and in the same installment as the general taxes on real property are payable, and have the
same priority, become delinquent at the same time and in the same proportionate amounts and
bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes
on real property.
Notwithstanding the foregoing, the Finance Director shall, not later than July 15 of each
Fiscal Year, determine whether or not to cause the collection of any Special Taxes by direct, first
class mail billing to the then owner of each parcel of property in lieu of billing for such Special
Taxes in the same manner as general taxes as aforesaid. Such direct mail billing shall be made
not later than November 1 of the Fiscal Year and shall direct the owner of the property affected
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to pay the Special Taxes directly to the Finance Director in two equal installments, the first of
which shall be due and delinquent if not paid on December 10 and the second of which may be
paid with the first and which, in any event, shall be due and delinquent if not paid.on April 10 of
the Fiscal Year. Any such Special Taxes so billed shall have the same priority and bear the same
proportionate penalties and interest after delinquency as do the ad valorem taxes on real
property.
Notwithstanding the foregoing, the Legislative Body may waive delinquency penalties
and redemption penalties if it makes all of the determinations set forth in Section 53340(f) of the
Act.
Section 5.8 Reduction in Maximum Annual Special Tax. The District finds and
determines that, historically, delinquencies in the payment of special taxes authorized pursuant to
the Act in community facility districts in Souther California have from time to time been at
levels requiring the levy of special taxes at the maximum authorized rates in order to make
timely payment of principal of and interest on the outstanding indebtedness of such community
facilities districts. For this reason, the City has determined that; absent the certification
described below, a reduction in the Maximum Annual Special Tax (as such term is defined in the
Rate and Method) authorized to be levied below the levels provided would interfere with the
timely retirement of the Bonds. The City has determined it to be necessary in order to preserve
the security for the Bonds to covenant and, to the maximum extent that the law permits it to do
so, the City does covenant, that it shall not initiate proceedings to reduce the Maximum Special
Tax Rates(as such term is defined in the Rate and Method) unless, in connection therewith; (i)
the City receives a certificate from one or more Tax Consultants which, when taken together,
certify that, on the basis of the parcels of land and improvements existing in the City as of the
July 1 preceding the reduction, the Maximum Annual Special Tax which may be levied on all
Assessor's Parcels (as such term is defined in the Rate and Method) of taxable property on which
a completed structure is located in each Fiscal Year will equal at least 110% of the gross debt
service on all Bonds to remain Outstanding after the reduction is approved and will not reduce
the Maximum Annual Special Tax payable from _parcels on which a completed structure is
located to less than 110% of Maximum Annual Debt Service; and (ii) the Legislative Body finds
pursuant to this Agreement that any reduction made under such conditions will not adversely
affect the interests of the Bondowners. Any reduction in the Maximum Annual Special Tax
approved pursuant to the preceding sentence may be approved without the consent of the
Bondowners.
The City covenants that, in the event that any initiative is adopted by the qualified
electors which purports to reduce the Maximum Annual Special Tax below the levels authorized
pursuant to the Rate and Method or to limit the power or authority of the City to levy Special
Taxes pursuant to the Rate and Method, the City shall, from funds available hereunder,
commence and pursue legal action in order to preserve the authority and power of the City to
levy Special Taxes pursuant to the Rate and Method.
Section 5.9 Covenant to Foreclose. On or before March 1 and June 1 of each Fiscal
year, the City will review the public records of the County in connection with the Special Taxes
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levied in such Fiscal Year to determine the amount of Special Taxes actually collected in such
Fiscal Year. If the City determines that (a) any single parcel subject to the Special Taxes is
delinquent in the payment of Special Taxes in the aggregate of$4,000 or more or (b) any parcels
under common ownership subject to the Special Taxes are delinquent in the payment of Special
Taxes in the aggregate of$20,000 or more, the City shall, not later than forty-five (45) days of
such determination, send or cause to be sent a notice of delinquency (and a demand for
immediate payment thereof) to the property owner. The City shall cause judicial foreclosure
proceedings to be commenced and filed in the Superior Court not later than ninety (90) days of
such determination against any parcel for which a notice of delinquency was given pursuant to
this section and for which the Special Taxes remain delinquent. With respect to aggregate
delinquencies throughout the District, if the City determines that it has collected less than 95% of
the Special Taxes levied in the such Fiscal Year, then the City shall, not later than forty-five (45)
days of such determination, send or cause to be sent a notice of delinquency (and a demand for
immediate payment thereof) to the owner of each delinquent parcel (regardless of the amount of
such delinquency). The City will cause judicial foreclosure proceedings to be commenced and
filed in the Superior Court not later than ninety (90) days of such determination against any
parcel for which a notice of delinquency was given pursuant to this section and for which the
Special Taxes remain delinquent.
Section 5.10 Further Assurances. The City will adopt, make, execute and deliver any
and all such.further resolutions, instruments and assurances as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance of this Agreement, and for the
better assuring and confirming unto the Owners of the rights and benefits provided in this
Agreement.
Section 5.11 Private Activity Bond Limitations. The City shall assure that the proceeds
of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of section
141(b)of the Code or the private loan financing test of section 141(c) of the Code.
Section 5.12 Federal Guarantee Prohibition. The City shall not take any 'action or
permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be
"federally guaranteed" within the meaning of Section 149(b) of the Code.
Section 5.13 Rebate Requirement. The City shall take any and all actions necessary to
assure compliance with section 148(f) of the Code, relating to the rebate of excess investment
earnings, if any, to the federal government, to the extent that such section is applicable to the
Bonds. Funds shall be transferred to a Rebate Fund, to be held by the Fiscal Agent, in
accordance with this Agreement. .
If necessary, the City may use (i) earnings on amounts in the Reserve Fund if the amount
on deposit in the Reserve Fund, following the proposed transfer, is equal to the Reserve
Requirement, (ii) amounts on deposit in the Administrative Expense Fund, and (iii) any other
funds available to the District, including amounts advanced by the City, in its sole discretion, to
be repaid by the District in connection with the District as soon as practicable from amounts
described in the preceding clauses (i), (ii) and (iii), to satisfy its obligations under this Section
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5.13. The Finance Director shall take note of any investment of monies hereunder in excess of
the yield on the Bonds, and shall take such actions as are necessary to ensure compliance with
this Section 5.13; such as increasing the portion of the Special Tax levy for Administration
Expenses as appropriate to have funds available in the Administrative Expense Fund to satisfy
any rebate liability under this Section 5.13.
Section 5.14 No Arbitrage. The City shall not take, or permit or suffer to be taken by
the Fiscal Agent or otherwise, any action with respect to the proceeds of the Bonds which, if
such action had been reasonably expected to have been taken, or had been deliberately and
intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be
"arbitrage bonds"within the meaning of section 148 of the Code.
Section 5.15 Yield of the Bonds. In determining the yield of the Bonds to comply with
Section 5.13 and 5.14 hereof, the City will take into account redemption (including premium, if
any) in advance of maturity based on the reasonable expectations of the City, as of the Closing
Date, regarding prepayments of Special Taxes and use of prepayments for redemption of the
Bonds, without regard to whether or not prepayments are received or Bonds redeemed.
Section 5.16 Maintenance of Tax-Exemption. The City shall take all actions necessary
to assure the exclusion of interest on the Bonds from the gross income of the Owners of the
Bonds to the same extent as such interest is permitted to be excluded from gross income under
the Code as in effect on the date of issuance of the Bonds.
Section 5.17 Continuing Disclosure to Owners.
(A) In addition to its obligations under Section 10.7, the City covenants and agrees
that it will comply with and carry out all of the provisions of that certain Continuing Disclosure
Agreement dated as of December 1, 2006 between the City and the Fiscal. Agent (the
"Continuing Disclosure Agreement"). Notwithstanding any other provision of this Agreement,
failure of the City to comply with the Continuing Disclosure Agreement shall not be considered
a breach of the provisions of this Agreement; however, upon the written direction of the owners
of at least 25% aggregate principal amount of the Bonds Outstanding, the Fiscal Agent shall, or
any Bondowner may, take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the City to comply with its obligations
under this Section.
The Finance Director shall provide copies of any reports prepared pursuant to the
Continuing Disclosure Agreement to any Bondowner upon the written request of a Bondowner,
delivered to the Finance Director accompanied by payment by the Person requesting the
information of the cost of the City to photocopy and pay any postage or other delivery cost to
provide the same, as determined by the Finance Director.
(B) The City further agrees, in addition to the foregoing, to provide to any Bondowner
upon the written request of such Bondowner delivered to the Finance Director accompanied by
payment by such Bondowner of the cost of the City to photocopy and pay any postage or other
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delivery cost to provide the same, as determined by the Finance Director, the following: an
annual report regarding the District which report shall include the amount of Special Taxes
levied on each County Assessor's Parcel of real property in the District in the preceding year, the
then delinquency status of Special Taxes with respect to each such parcel as known to the
Finance Director, and a summary of any deposits to and/or withdrawals from the Special Tax
Fund and the Reserve Fund in the prior year.
(C) As used in this Section and Section 10.7, where the Bonds are held in book-entry
form, the term `Bondowner" shall be deemed to include any Beneficial Owner of Bonds who
provides to the Finance Director a written request accompanied by payment of costs to provide
information, as described in Section 5.17(A) and (B) and the final paragraph of Section 10.7
countersigned by the relevant DTC participant acting on behalf of such Beneficial Owner or such
similar evidence of beneficial ownership reasonably satisfactory to the Finance Director.
(D) None of the City and its officers, agents and employees, the Finance Director, the
Original Purchaser or the Fiscal Agent shall be liable for any inadvertent error in reporting the
information required by this Section 5.17.
Section 5.18 Tender of Bonds. The City covenants that it will not adopt any policy
pursuant to Section 53341.1 of the Act permitting.tender of Bonds in full payment or partial
payment of any Special Taxes unless it first receives a certificate of a Tax Consultant that
accepting such tender will not result in the District having insufficient Special Tax Revenues to
pay the principal of and interest on the Bonds when due.
Section 5.19 No Parity Bonds. The City will issue no additional bonds on a parity with
the Bonds; provided, that nothing contained herein shall limit the issuance of any Special Tax
Bonds of the District if(a) the rights and claims of such bonds to the Special Tax Revenues and
the funds and accounts established or described in this Agreement are in all respects subordinate
to the rights and claims of the Bonds, or (b) after the issuance and delivery of such Special Tax
Bonds, none of the Bonds shall be Outstanding. Defeased Bonds, or Bonds in exchange for or in
lieu of which other bonds have been delivered, shall not be considered Outstanding.
ARTICLE VI
INVESTMENTS,DISPOSITION OF INVESTMENT PROCEEDS, LIABILITY OF THE
CITY
Section 6.1 Deposit and Investment of Moneys in Funds. Moneys in . the
Administrative Expense Fund shall be invested by the Finance Director in Permitted
Investments, which will, by their terms, mature as close as practicable to the date the Finance
Director estimates the moneys represented by the particular investment will be needed for
withdrawal from the Administrative Expense Fund. Except as otherwise specified herein,
moneys in the Special Tax Fund, the Bond Fund, the Project Fund, the Reserve Fund and the
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Costs of Issuance Fund shall at the written direction of the District contained in an Officer's
Certificate given at least two (2) days prior, be invested and reinvested by the Fiscal Agent in
Permitted Investments (including investments with the Fiscal Agent or an affiliate of the Fiscal
Agent or investments for which the Fiscal Agent or an affiliate of the Fiscal Agent acts as
investment advisor or provides other services so long as the investments are Permitted
Investments). Moneys in the Redemption Fund and the Rebate Fund shall, as set forth in an
Officer's Certificate, be invested by the Fiscal Agent in Government Obligations. In the absence
of any such Officer's Certificate, the Fiscal Agent shall invest solely in Permitted Investments
described in paragraph 7 of the definition thereof. The Finance Director shall make note of any
investment of funds hereunder in excess of the yield on the Bonds, so that appropriate actions
can be taken to assure compliance with Section 5.13.
The District acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the District the right to receive brokerage
confirmations of security transactions as they occur, the District specifically waives receipt of
such confirmations to the extent permitted by law. The Fiscal Agent will furnish the District
periodic cash transaction statements, which include detail for all investment transactions made
by the Fiscal Agent hereunder.
Obligations purchased as an investment of moneys in any fund shall be deemed to be part
of such fund or account. Any income realized on or losses resulting from investments in any
fund or account shall be credited or changed to such fund or account. Whenever in this
Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such
transfer may be accomplished by transferring a like amount of Permitted Investments.
The Fiscal Agent and its affiliates or the Finance Director may act as sponsor, advisor,
depository, principal or agent in the acquisition or disposition of any investment. The Fiscal
Agent shall not incur any liability for losses arising from any investments made pursuant to this
Section The Fiscal Agent shall not be required to determine the legality of any investments.
Except as otherwise provided in the next sentence, all investments of amounts deposited
in any fund or account created by or pursuant to this Agreement, or otherwise containing gross
proceeds of the Bonds (within the meaning of section 148 of the Code) shall be acquired,
disposed of, and valued (as of the date that valuation is required by this Agreement of the Code)
at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a
yield restriction under the applicable provisions of the Code and (unless valuation is undertaken
at least annually) investments in the Reserve Fund shall be valued at their present value (within
the meaning of section 148 of the Code). The Fiscal Agent shall not be liable for verification of
the application of such sections of the Code.
Investments in any and all funds and accounts may be commingled in a separate fund or
funds for purposes of making, holding and disposing of investments, notwithstanding provisions
herein for transfer to or holding in or to the credit of particular funds or accounts of amounts
received or held by the Fiscal Agent hereunder, provided that the Fiscal Agent shall at all times
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account for such investments strictly in accordance with the funds and accounts to which they
are credited and otherwise as provided in this Agreement.
Subject to the restrictions set forth herein and/or any written investment instructions
received by Fiscal Agent pursuant to this Section 6.1, monies in said funds and accounts may be
from time to time invested by the Fiscal Agent in any manner so long as:
(1) Monies in the Project Fund shall be invested in obligations which will by their
terms mature as close as practicable to the date the District estimates the monies
represented by the particular investment will be needed for withdrawal from such
Fund; and
(2) Monies in the Special Tax Fund, the Bond Fund, the Redemption Fund and the
Reserve Fund shall be invested only in obligations which will by their terms
either mature or allow for withdrawals at par on such dates so as to ensure the
payment of principal and interest on the Bonds as the,same become due; provided,
however, that except for investment agreements as described in paragraph 11 of
the definition of Permitted Investments which permit withdrawal at par,
investment of monies on deposit in the Reserve Fund shall have an average
aggregate weighted term not greater than five (5) years.
The Fiscal Agent or Finance Director, as applicable shall sell at Fair Market Value, or
present for redemption, any investment security whenever it shall be necessary to provide
moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or
account to which such investment security is credited and neither the Fiscal Agent nor the
Finance Director shall be liable or responsible for any loss resulting from the acquisition or
disposition of such investment security in accordance herewith.
Section 6.2 Liability of City. The City shall not incur any responsibility in respect of
the Bonds or this Agreement other than in connection with the duties or obligations explicitly
herein or in the Bonds assigned to or imposed upon it on behalf of the District. The City shall
not be liable in connection with the performance of its duties hereunder, except for its own
negligence or willful default. The City shall not be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions covenants or agreements of the Fiscal
Agent herein or of any of the documents executed by the Fiscal Agent in connection with the
Bonds, or as to the existence of a default or event of default thereunder.
In the absence of gross negligence or bad faith, the City, including the Finance Director,
may conclusively rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the City and conforming to the
requirements of this Agreement. The City, including the Finance Director, shall not be liable for
any error of judgment made in good faith unless it shall be proved that it was negligent in
ascertaining the pertinent facts.
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No provision of this Agreement shall require the City to expend or risk its own general
Rinds or otherwise incur any financial liability (other than with respect to the Special Tax
Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured to it.
The City and the Finance Director may rely and shall be protected in acting or refraining
from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond
or other paper or document believed by it to be genuine and to have been signed or presented by
the proper party or proper parties. The City may consult with counsel, who may be the City
Attorney, with regard to legal questions, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered by it hereunder
in good faith and in accordance therewith.
Neither the City nor the District shall be bound to recognize any Person as the Owner of a
Bond unless and until such Bond is submitted for inspection, if required, and title thereto
satisfactory established, if disputed.
Whenever in the administration of its duties under this Agreement the City or the Finance
Director shall deem it necessary or desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of willful misconduct on the part of the City, be
deemed to be conclusively proved and established by a certificate of the Fiscal Agent, an
Independent Financial Consultant, an Appraiser or a Tax Consultant, as appropriate, and such
certificate shall be full warranty to the City and the Finance Director for any action taken or
suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith
thereof, but in its discretion the City or the Finance Director may, in lieu thereof, accept other
evidence of such matter or may require such additional evidence as to it may seem reasonable.
Section 6.3 Employment of Agents by City. In order to perform its duties and
obligations hereunder, the City and/or the Finance Director may employ such persons or entities
as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions
of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely,
and shall be fully protected in doing so, upon the opinions, calculations, determinations and
directions of such persons or entities.
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ARTICLE VII
THE FISCAL AGENT
Section 7.1 Appointment of Fiscal Agent. Wells Fargo Bank, National Association, is
hereby appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to
perform such duties, and only such duties, as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.
Any company into which the Fiscal Agent may be merged or converted or with which it
may be consolidated or any company resulting from any merger, conversion or consolidation to
which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or
substantially all of its corporate trust business, provided such company shall be eligible under the
following paragraph of this Section, shall be the successor to such Fiscal Agent without the
execution or filing of any paper or any further act, anything herein to the contrary
notwithstanding.
Upon thirty (30) days prior written notice, the City may remove the Fiscal Agent initially
appointed, and any successor thereto, and may appoint a successor or successors thereto, but any
such successor shall be a bank or trust company having a combined capital (exclusive of
borrowed capital) and surplus of at least Fifty Million Dollars (550,000,000), and subject to
supervision or examination by federal or state authority. If such bank or trust company publishes
a report of condition at least annually, pursuant to law or to the requirements of any supervising
or examining authority above referred to, then for the purposes of this Section 7.1, combined
capital and surplus of such bank or trust company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by
giving to the Owners notice by mail of such resignation. Upon receiving notice of such
resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing.
Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of
appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of this Section within forty-five (45) days after the Fiscal Agent shall have given to
the City written notice of its resignation or after a vacancy in the office of the Fiscal Agent shall
have occurred by reason of its inability to act, the Fiscal Agent or any Owner may apply to any
court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon,
after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
If, by reason of the judgment of any court, or regulatory agency, the Fiscal Agent is
rendered unable to perform its duties hereunder, all such duties and all of the rights and powers
of the Fiscal Agent hereunder shall be assumed by and vest in the Finance Director of the City in
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trust for the benefit of the Owners. The City covenants for the direct benefit of the Owners that
its Finance Director in such case shall be vested with all of the rights and powers of the Fiscal
Agent hereunder, and shall assume all of the responsibilities and perform all of the duties of the
Fiscal Agent hereunder, in trust for the benefit of the Owners of the Bonds. In such event, the
Finance Director may designate a successor Fiscal Agent qualified to act as Fiscal Agent
hereunder.
Section 7.2 Liability of Fiscal Agent. The recitals of facts, covenants and agreements
herein and in the Bonds contained shall be taken as statements, covenants and agreements of the
City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes
any representations as to the validity or sufficiency of this Agreement or of the Bonds, or shall
incur any responsibility in respect thereof, other than in connection with the duties or obligations
herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in
connection with the performance of its duties hereunder, except for its own negligence or willful
default. The Fiscal Agent assumes no responsibility or liability for any information, statement or
recital in any offering memorandum or other disclosure material prepared or distributed with
respect to the issuance of the Bonds.
In the absence of bad faith or gross negligence, the Fiscal Agent may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this
Agreement; but in the case of any such certificates or opinions by which any provision hereof are
specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to
examine the same to determine whether or not they conform to the requirements of this
Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and
shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith,
reasonably and in accordance with the terms of this Agreement, upon any resolution, order,
notice, request, consent or waiver,certificate, statement, affidavit, or other paper or document
which it shall in good faith reasonably believe to be genuine and to have been adopted or signed
by the proper Person or to have been prepared and furnished pursuant to any provision of this
Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or
inquiry as to any statements contained or matters referred to in any such instrument.
The Fiscal Agent shall not be liable for any error of judgment made in good faith unless it
shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers
vested in it by this Agreement at the request or direction of any of the Owners pursuant to this
Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or
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indemnity against the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
The Fiscal Agent may become the Owner of the Bonds with the same rights it would
have if it were not the Fiscal Agent.
Section 7.3 Information. The Fiscal Agent shall provide to the City such information
relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the
City shall reasonably request, including but not limited to, quarterly statements reporting funds
held and transactions by the Fiscal Agent.
Section 7.4 Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected
in acting or refraining from acting upon any notice, resolution, request, consent, order,
certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or proper parties. The Fiscal Agent may
consult with counsel, who may be counsel to the City, with regard to legal questions, and the
opinion of such counsel shall be full and complete authorization and protection in respect of any
action taken or suffered by it hereunder in good faith and in accordance therewith.The Fiscal
Agent shall not be bound to recognize any Person as the Owner of a Bond unless and until such
Bond is submitted for inspection, if required, and title thereto satisfactorily established, if
disputed.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed
to be conclusively proved and established by an Officer's Certificate, and such certificate shall
be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this
Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal
Agent may, in lieu thereof, accept other evidence of such matter or may require such additional
evidence as to it may seem reasonable.
Section 7.5 Compensation; Indemnification. The City shall pay to the Fiscal Agent
from time to timeyeasonable compensation for all services rendered as Fiscal Agent under this
Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements,
including those of their attorneys, agents and employees, incurred in and about the performance
of their powers and duties under this Agreement, but the Fiscal Agent shall not have a lien
therefor on any funds at any time held by it under this Agreement. The City further agrees, to
the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers,
employees, directors and agents harmless against any liabilities which it may incur in the
exercise and performance of its powers and duties hereunder which are not due to its negligence
or willful misconduct. The obligation of the City under this Section shall survive resignation or
removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of
this Agreement, but any monetary obligation of the City arising under this Section shall be
limited solely to amounts on deposit in the Administrative Expense Fund.
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ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.1 Amendments Permitted. This Agreement and the rights and obligations of
the City and/or District and of the Owners of the Bonds may be modified or amended at any time
by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with
the written consent without a meeting, of the.Owners of at least sixty percent (60%) in aggregate
principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in
Section 8.4. No such modification or amendment shall (i) extend the maturity of any Bond or
reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the
principal of, and the interest and any premium on, any Bond, without the express consent of the
Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the
Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the
Bonds (except as otherwise permitted by the Act, the laws of the State of California or this
Agreement), or reduce the percentage of Bonds required for the amendment hereof. Any such
amendment may not modify any of the rights or obligations of the. Fiscal Agent without its
written consent.
This Agreement and the rights and obligations of the City and of the Owners may also be
modified or amended at any time by a Supplemental Agreement, without the consent of any
Owners, only to the extent permitted by law and only for any one or more of the following
purposes:
(A) to add to the covenants and agreements of the District or City in this Agreement
contained, other covenants and agreements thereafter to be observed, or to limit or surrender any
right or power herein reserved to or conferred upon the City or District;
(B) to make modifications not adversely affecting any Outstanding Bonds of the City
or the District in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity,-or of curing,
correcting or supplementing any defective provision contained in this Agreement, or in regard to
questions arising under this Agreement, as the District or City and the Fiscal Agent may deem
necessary or desirable and not inconsistent with this Agreement, and which shall not adversely
affect the rights of the Owners of the Bonds; and
(D) to make such additions, deletions or modifications as may be necessary or
desirable to assure exemption from gross federal income taxation of interest on the Bonds.
Section 8.2 Owners' Meetings. The City on behalf of the District may at any time call
a meeting of the Owners. In such event the City is authorized to fix the time and place of said
meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations
for the conduct of said meeting. .
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Section 8.3 Procedure for Amendment with Written Consent of Owners. The City on
behalf of the District and the Fiscal Agent may at any time adopt a Supplemental Agreement
amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to
the extent that such amendment is permitted by Section 8.1, to take effect when and as provided
in this Section. A copy of such Supplemental Agreement, together with a request to Owners for
their consent thereto, shall be mailed by first class mail, by the Fiscal Agent to each Owner of
Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall
not affect the validity of the Supplemental Agreement when assented to as in this Section
provided.
Such Supplemental Agreement shall not become effective unless there shall be filed with
the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate
principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in
Section 8.4) and a notice shall have been mailed as hereinafter in this Section provided each such
consent shall be effective only if accompanied by proof of ownership of the Bonds for which
such consent is given, which proof shall be such as is permitted by Section 10.4. Any such
consent shall be binding upon.the Owner of the Bonds giving such consent and on any
subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such
consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing
such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section
provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to
the Supplemental Agreement, the City shall mail a notice to the Owners in the manner
hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in
substance that the Supplemental Agreement has been consented to by the Owners of the required
percentage of Bonds and will be effective as provided in this Section (but failure to mail copies
of said notice shall not affect the validity of the Supplemental Agreement or consents thereto).
Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of
the papers required by this Section 8.3 to be filed with the Fiscal Agent, shall be proof of the
matters therein stated until the contrary is proved. The Supplemental Agreement shall become
effective upon the filing with the Fiscal Agent of.the proof of mailing of such notice, and the
Supplemental Agreement shall be deemed conclusively binding (except as otherwise
hereinabove specifically provided in this Article) upon the District, City and the Owners of all
Bonds at the expiration of thirty (30) days after such filing, except in the event of a final decree
of a court of competent jurisdiction setting aside such consent in a legal action or equitable
proceeding for such purpose commenced within such thirty-day period.
Section 8.4 Disqualified Bonds. Bonds owned or held for the account of the District
or City, excepting any pension or retirement fund, shall not be deemed Outstanding for the
purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided
for in this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action
provided for in this Article VIII.
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Section 8.5 Effect of Supplemental ARTeement. From and after the time any
Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall
be deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations under this Agreement of the City, District, and all Owners of Bonds Outstanding
shall thereafter be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such Supplemental
Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and
all purposes.
Section 8.6 Endorsement or Replacement of Bonds Issued After Amendments. The
City or District may determine that Bonds issued and delivered after the effective date of any
action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise,
in form approved by the City or District, as to such action. In that case, upon demand of the
Owner of any Bond Outstanding at such effective date and presentation of his Bond for that
purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select
and designate for that purpose, a suitable notation shall be made on such Bond. The City on
behalf of the District may determine that new Bonds, so modified as in the opinion of the City on
behalf of the District is necessary to conform to such Owner's action, shall be prepared, executed
and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such
new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any
Owner, for Bonds then Outstanding, upon surrender of such Bonds.
Section 8.7 Amendatory Endorsement of Bonds. The provisions of this Article VIII
shall not prevent any Owner from accepting any amendment as to the particular Bonds held by
him, provided that due notation thereof is made on such Bonds.
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ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Section 9.1 Events of Default. Any one or more of the following events shall
constitute an "event of default":
(A) Default in the due and punctual payment of the principal of or redemption
premium, if any, on any Bond when and as the same shall become due and payable, whether at
maturity as therein expressed, by declaration or otherwise;
(B) Default in the due and punctual payment of the interest on any Bond when and as
the same shall become due and payable; or
(C) Default by the City or the District in the observance of any of the agreements,
conditions or covenants on its part in this Agreement or in the Bonds contained (other than a
payment default referred to in subparagraph (A) and (B) above), and the continuation of such
default for a period of 60 days after the City and the District shall have been given notice in
writing of such default by the Fiscal Agent or by the Owners of 25% aggregate principal amount
of Bonds Outstanding, provided that if within 60 days the City or the District, as applicable, has
commenced curing of the default and diligently pursues elimination thereof, such period shall be
extended to permit such default to be eliminated.
Section 9.2 Remedies of Owners. Following the occurrence of an event of default,
any Owner shall have the right for the equal benefit and protection of all Owners similarly
situated:
(A) By mandamus or other suit or proceeding at law or in equity to enforce his or her
rights against the City or the District and any of the members, officers and employees of the City
or the District, and to compel the City or District, as applicable, or any such members, officers or
employees to perform and carry out their duties under the Act and their agreements with the
Owners as provided in this Agreement;
(B) By suit in equity to enjoin any actions or things which are unlawful or violate the
rights of the Owners; or
(C) . By a suit in equity to require the City or the District, as applicable, and its
members, officers and employees to account as the trustee of an express trust.
Nothing in this article or in any other provision of this Agreement, or in the Bonds, shall
affect or impair the obligation of the District, which is absolute and unconditional, to pay the
interest on and principal of the Bonds to the respective Owners of the Bonds at the respective
dates of maturity, as herein provided, out of the Special Tax Revenues pledged for such payment,
or affect or impair the right of action, which is also absolute and unconditional, of such Owners
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to institute suit to enforce such payment by virtue of the contract embodied in the Bonds and in
this Agreement.
A waiver of any default or breach of duty or contract by any Owner shall not affect any
subsequent default or breach of duty or contract, or impair any rights or remedies on any such
subsequent default or breach. No delay or omission by any Owner to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a
waiver of any such default or an acquiescence therein, and every power and remedy conferred
upon the Owners by the Act or by this article may be enforced and exercised from time to time
and as often as shall be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned
or determined adversely to the Owners, the City, the District and the Owners shall be restored to
their former positions, rights and remedies as if such suit, action or proceeding had not been .
brought or taken.
No remedy herein conferred upon or reserved to the Owners is intended to be exclusive
of any other remedy. Every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or
otherwise, and may be exercised without exhausting and without regard to any other remedy
conferred by the Act or any other law. The Fiscal Agent shall not be obligated to take any action
on behalf of the Owners if the City or the District defaults under this Agreement.
Section 9.3 Application of Special Tax Revenues and Other Funds After Default. All
amounts received by the Fiscal Agent pursuant to any right given or action taken by the Owners
under the provisions of this Agreement shall be applied by the Fiscal Agent in the following
order upon presentation of the several Bonds, and the stamping thereon of the amount of the
payment if only partially paid, or upon the surrender thereof if fully paid -
First, to the payment of the costs and expenses of the Fiscal Agent, including reasonable
compensation to its agents, attorneys and counsel;
Second, to the payment of the whole amount of interest on and principal of the Bonds
then due and unpaid, with interest on overdue installments of principal and interest to the extent
permitted by law at the net effective rate of interest then borne by the Outstanding Bonds;
provided, however, that in the event such amounts shall be insufficient to pay in full the full
amount of such interest and principal, then such amounts shall be applied in the following order
of priority:
(i) to the payment of all installments of interest on the Bonds then due and
unpaid, on a pro rata basis in the event that the available amounts_are insufficient to pay all such
interest in full;
(ii) to the payment of all installments of principal of the Bonds then due and
payable, on a pro rata basis in the event that the available amounts are insufficient to pay all such
principal in full; and
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(iii) to the payment of interest on overdue installments of principal and interest
with respect to the Bonds, on a pro rata basis in the event that the available amounts are
insufficient to pay all such interest in full.
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ARTICLE X
MISCELLANEOUS
Section 10.1 Benefits of Agreement Limited to Parties. Nothing in this Agreement,
expressed or implied, is intended to give to any Person other than the City, the District, the Fiscal
Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any
covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of
the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.
Section 10.2 Successor is Deemed Included in All References to Predecessor.
Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent
is named or referred to, such reference shall be deemed to include the successors or assigns
thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the
City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and
assigns thereof whether so expressed or not.
Section 10.3 Discharge of Agreement. The City shall have the option to pay and
discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or
more of the following ways:
(A) . by well and truly paying or causing to be paid the principal of, and interest
and any premium on, such Bonds Outstanding, as and when the same become due and
payable;
(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money
which, together with the amounts then on deposit in the funds and accounts provided for
in Sections 4.4 and 4.5 is fully sufficient to pay such Bonds Outstanding, including all
principal, interest and redemption premiums; or
(C) by irrevocably depositing with the Fiscal,Agent, in trust, cash and Federal
Securities in such amount as the City on behalf of the District shall determine as
confirmed by an independent certified public accountant will, together with the interest to
accrue thereon and moneys then on deposit in the fund and accounts provided for in
Sections 4.4 and 4.5, be fully sufficient to pay and discharge the indebtedness on such
Bonds (including all .principal, interest and redemption premiums) at or before their
respective maturity dates.
If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if
such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have
been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have
been made for the giving of such notice, then, at the election of the City, and notwithstanding
that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and
other funds provided for in this Agreement and all other obligations of the City under this
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Agreement with respect to such Bonds Outstanding shall cease and terminate. Notice of such
election shall be filed with the Fiscal Agent. Notwithstanding the foregoing, the obligation of
the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all
sums due thereon, all amounts owing to the Fiscal Agent pursuant to Section 7.5, and otherwise
to assure that no action is taken or failed to be taken if such action or failure adversely affects the
exclusion of interest on the Bonds from gross income for federal income tax purposes, shall
continue in any event.
Upon compliance by the City with the foregoing with respect to all Bonds Outstanding,
any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent,
which are not required for the purposes of the preceding paragraph, shall be paid over to the City
and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal Agent
but shall be retained by the City to be used for any purpose permitted under the Act.
Section 10.4 Execution of Documents and Proof of Ownership by Owners. Any
request, declaration or other instrument which this Agreement may require or permit to be
executed by Owners may be in one or more instruments of similar tenor, and shall be executed
by Owners in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such request, declaration or other instrument, or of such writing
appointing such attorney; may be proved by the certificate of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in the state in which he purports to
act, that the Person signing such request, declaration or other instrument or writing
acknowledged to him the execution thereof, or by an affidavit of a witness of such execution,
duly sworn to before such notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered Bonds and the
amount, maturity, number and date of holding the same shall be proved by the registry books.
Any request, declaration or other instrument or writing of the Owner of any Bond shall
bind all future Owners of such Bond in respect of anything done or suffered to be done by the
City or the Fiscal Agent in good faith and in accordance therewith.
Section 10.5 Waiver of Personal Liabilitv. No member, officer, agent or employee of
the City shall be individually or personally liable for the payment of the principal of, or interest
or any premium on, the Bonds; but nothing herein contained shall relieve any such member,
officer, agent or employee from the performance of any official duty provided by law.
Section 10.6 Notices to and Demands on City and Fiscal Agent. Any notice or demand
which by any provision of this Agreement is required or permitted to be given or served by the
Fiscal Agent to or on the City may be given or served by being deposited postage prepaid in a
post office letter box addressed (until another address is filed by the City with the Fiscal Agent)
as follows:
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City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga, California 91730
Attention: Finance Director
Any notice or demand which by any provision of this Agreement is required or permitted
to be given or served by the City to or on the Fiscal Agent may be given or served by being
deposited postage prepaid in a post office letter box addressed (until another address is filed by
the Fiscal Agent with the City) as follows: .
Wells Fargo Bank
707 Wilshire Boulevard, 17`' Floor
Los Angeles, California 90071
Attention: Corporate Trust Services
Section 10.7 State Reporting Requirements. The following requirements shall apply to
the Bonds, in addition to those requirements under Section 5.17:
(A) Annual Reporting. Not later than October 30 of each calendar year, beginning
with the October 30 first succeeding the date of the Bonds, and in each calendar year thereafter
until the October 30 following the final maturity of the Bonds, the Finance Director shall cause
the following information to be supplied to CDIAC and to the other entities specified in Section
5.17(A): (i) the principal amount of the Bonds Outstanding; (ii) the balance in the Reserve Fund;
(iii) the balance in the Interest Account of the Bond Fund representing capitalized interest; (iv)
the number of parcels in the District which are delinquent in the payment of Special Taxes, the
amount of each delinquency, the length of time delinquent and when foreclosure was "
commenced for each delinquent parcel; (v) the balance in the Project Fund; and (vi) the assessed
value of all parcels in the District subject to the levy of the Special Taxes as shown in most
recent equalized roll. The annual reporting shall be made using such form or forms as may be
prescribed by CDIAC.
(B) Other Reporting. If at any time the Fiscal Agent fails to pay principal and interest
due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve
Fund to pay principal and interest on the Bonds beyond levels set by CDIAC, the Fiscal Agent .
shall notify the Finance Director of such failure or withdrawal in writing. The Finance Director
shall notify CDIAC and the Original Purchaser of such failure or withdrawal within 10 days of
such failure or withdrawal.
(C) Amendment. The reporting requirements of this Section 10.7 shall be amended
from time to time, without action by the District, City or the'Fiscal Agent, to reflect any
amendments to Section 53359.5(b) or Section 53359.5(c) of the Act.
(D) No Liability. None of the District, City and its officers, agents and employees,
the Finance Director or the Fiscal Agent shall be liable for any inadvertent error in reporting the
information required by this Section 10.7.
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The Finance Director shall provide copies of any of such reports to any Bondowner upon
the written request of a Bondowner and payment by the Person requesting the information of the
cost of the City to photocopy and pay any postage or other delivery cost to provide the same, as
determined by the Finance Director. The term `Bondowner" for purposes of this Section 10.7
shall include any beneficial owner of the Bonds as described in Section 5.17(B).
Section 10.8 Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of
this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect
the validity of the remaining portions of this Agreement. The City hereby declares that it would
have adopted this Agreement and each and every other Section, paragraph, sentence, clause or
phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that
any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be
held illegal, invalid or unenforceable.
Section 10.9 Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of
the principal of, and the interest and any premium on, the Bonds which remains unclaimed for
two (2) years after the date when the payments of such principal, interest and premium have
become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by the
Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall
thereupon be released and discharged with respect thereto and the Owners shall look only to the
City for the payment of the principal of, and interest and any.premium on, such Bonds.
Section 10.10 Applicable Law. This Agreement shall be governed by and enforced in
accordance with the laws of the State of California applicable to contracts made and performed
in the State of California.
Section 10.11 Conflict with Act. In the event of a conflict between any provision of this
Agreement with any provision of the Act as in effect on the Closing Date, the provision of the
Act shall prevail over the conflicting provision of this Agreement.
Section 10.12 Conclusive Evidence of Regularity. Bonds issued pursuant to this
Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act
relative to their issuance and the levy of the Special Taxes.
Section 10.13 Payment on Business Day. In any case where the date of the maturity of
interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of
any Bonds or the,date any action is to be taken pursuant to this Agreement is other than a
Business Day, the payment of interest or principal (and premium, if any) or the action need not
be made on such date but may be made on the next succeeding day which is a Business Day with
the same force and effect as if made on the date required and no interest shall accrue for the
period after such date.
Section 10.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
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IN WITNESS WHEREOF, the City caused this Agreement to be executed and the Fiscal Agent
has caused this Agreement to be executed.
CITY OF RANCHO CUCAMONGA, for and on
behalf of City of Rancho Cucamonga Community
Facilities District No. 2006-02 (Amador on Route
66)
By:
Title: City Manager
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By:
Authorized Officer
SDPUB\WDNEN\339385.1 S-1
Resolution No. 06-402
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EXHIBIT A
FORM OF BOND
No. $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
CITY OF RANCHO CUCAMONGA
COMMUNITY FACILITIES DISTRICT NO. 2006-02
(AMADOR ON ROUTE 66)
2006 SPECIAL TAX BOND
INTEREST RATE MATURITY DATE BOND DATE CUSIP
September 1, , 2007
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Rancho Cucamonga (the "City") for and on behalf of City of Rancho
Cucamonga Community Facilities District No. 2006-02 (Amador on Route 66) (the "District'),
for value received, hereby promises to pay solely from the Special Taxes (as hereinafter defined)
to be collected in the District or amounts in the funds and accounts held under the Agreement (as
hereinafter defined), to the registered owner named above, or registered assigns, on the maturity
date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount
set forth above, and to pay interest on such principal amount from the Bond Date set forth above,
or from the most recent interest payment date to which interest has been paid or duly provided
for, semiannually on March 1 and September 1, commencing March 1, 2007, at the interest rate
set forth above, until the principal amount hereof is paid or made available for payment. The
principal of this Bond is payable to the registered owner hereof in lawful money of the United
States of America upon presentation and surrender of this Bond at the Principal Office (as
defined in the Agreement referred to below) of Wells Fargo Bank, National Association (the
"Fiscal Agent). Interest on this Bond shall be paid by check of the Fiscal Agent mailed on each
interest payment date to the registered owner hereof as of the close of business on the 15th day of
the month preceding the month in which the interest payment date occurs (the "Record Date") at
Exhibit A
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such registered owner's address as it appears on the registration books maintained by the Fiscal
Agent, or (i) if the Bonds are in book-entry-only form, or (ii) otherwise upon written request
filed with the Fiscal Agent prior to any Record Date by a registered owner of at least $1,000,000
in aggregate principal amount of Bonds, by wire transfer in immediately available funds to the
depository for the Bonds or to an account in the United States designated by such registered
owner in such written request, respectively.
This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of
$3,100,000 designated "City of Rancho Cucamonga Community Facilities District No. 2006-02
(Amador on Route 66) 2006 Special Tax Bonds" (the "Bonds"). The issuance of the Bonds was
approved by the qualified electors of the CFD on October 18, 2006, pursuant to the Mello-Roos
Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California
Government Code (the "Mello-Roos Act") for the purpose of financing the acquisition or
construction of certain public facilities within the District, and the financing of certain incidental
expenses. The creation of the Bonds and the terns and conditions thereof are provided for by a
resolution adopted by the City Council of the City on December 6, 2006 (the "Resolution"), and
the Fiscal Agent Agreement, dated as of December 1, 2006, between the City and the Fiscal
Agent (the "Agreement") and this reference incorporates the Resolution and the Agreement
herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions.
The Resolution is adopted and the Agreement is entered into under and this Bond is issued
under, and all are to be construed in accordance with, the laws of the State of California.
Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and
interest on the Bonds are payable solely from the annual special tax authorized under the Mello-
Roos Act to be collected within the District (the "Special Taxes") and certain funds held under
the Agreement.
Interest on this Bond shall be payable from the interest payment date next preceding the
date of authentication hereof, unless (i) it is authorized on an interest payment date, in which
event it shall bear interest for such interest payment date, or (ii) such date of authentication is
after a Record Date but on or prior to an interest payment date, in which event interest will be
payable from such interest payment date, or (iii) such date of authentication is prior to the first
Record Date, in which event interest will be payable from the Bond Date set forth above;
provided however, that if at the time of authentication of this Bond, interest is in default hereon,
this Bond shall bear interest from the interest payment date to which interest has previously been
paid or made available for payment hereon.
Any tax for the payment hereof shall be limited to the Special Taxes, except to the extent
that provision for payment has been made by the City of Rancho Cucamonga, as may be
permitted by law. The Bonds do not constitute obligations of the City of Rancho Cucamonga for
which said City is obligated to levy or pledge, or has levied or pledged, general or special
taxation other than described hereinabove.
The Bonds are subject to optional redemption prior to their stated maturity on any Interest
Payment Date, as a whole or in part, at the following redemption prices (expressed as
Exhibit A
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percentages of the principal amount of the Bonds to be redeemed), together with accrued interest
thereon to the date of redemption:
Redemption Date Redemption Price
March 1, 2007 through March 1, 20 10—%
September 1, 20 and March 1, 20 10_%
September 1, 20 and March 1, 20_ 10_%
September 1, 20_and thereafter 100%
The Bonds shall be subject to redemption on any Interest Payment Date, prior to
maturity, as a whole or in part on a pro rata basis among maturities from amounts deposited to
the Redemption Fund representing Special Tax Prepayments. An Authorized Representative
shall deliver written instructions to the Fiscal Agent not less than 60 days prior to the redemption
date directing the Fiscal Agent to utilize the Special Tax Revenues transferred to the Redemption
Fund and the Interest Account of the Bond Fund pursuant to the Fiscal Agent Agreement. Such
mandatory redemption of the Bonds shall be at the following redemption prices (expressed as
percentages of the principal amount of the Bonds to be redeemed), together with accrued interest
thereon to the date of redemption:
Redemption Date Redemption Price
March 1, 2007 through March 1, 20 10 %
September 1, 20_and March 1, 20_ 10_%
September 1, 20_and March 1, 20_ 10_%
September 1, 20_and thereafter 100%
The Bonds maturing on September 1, 20 are subject to mandatory sinking fund
payment redemption in part on September 1, 20 , and on each September I thereafter to
maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed,
together with accrued interest to the date fixed for redemption, without premium, from sinking
fund payments as follows:
Redemption Date
(September 1) Sinking Fund Payments
Exhibit A
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The Bonds maturing on September 1, 20 are subject to mandatory sinking fund
payment redemption in part on September 1, 20 , and on each September 1 thereafter to
maturity, by lot, at a redemption price equal to the principal amount thereof to be
redeemed, together with accrued interest to the date fixed for redemption, without
premium, from sinking fund payments as follows:
Redemption Date
(September 1) Sinking Fund Payments
For any redemption of any of the Bonds, notice of redemption with respect to the Bonds
to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and
subject to the provisions of the Agreement. In the event of a redemption of less than all of the
Bonds, the Bonds shall be redeemed in inverse order of maturity and by lot within a maturity.
Each registration and transfer of registration of this Bond shall be entered by the Fiscal
Agent in books kept by it for this purpose and authenticated by its manual signature upon the
certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be valid for any purpose unless made by the
registered owner, by execution of the form of assignment endorsed hereon, and authenticated as
herein provided, and the principal hereof, interest hereon and any redemption premium shall be
payable only to the registered owner or to such Owner's order. The Fiscal Agent shall require
the registered owner requesting transfer or exchange to pay any tax or other governmental charge
required to be paid with respect to such transfer or exchange. No transfer or exchange hereof
shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for
selection of Bonds for redemption, (ii) with respect to a Bond after such Bond has been selected
for redemption, or(iii)between a Record Date and the succeeding Interest Payment Date.
. The Agreement and the rights and obligations of the City thereunder may be modified or
amended as set forth therein.
Exhibit A
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The Bonds are not general obligations of the City, but are limited obligations payable
solely from the revenues and funds pledged therefor under the Fiscal Agent Agreement. Neither
the faith and credit of the City or the State of California or any political subdivision thereof is
pledged to the payment of the Bonds.
This Bond shall not become valid or obligatory for any purpose until the certificate of a
authentication and registration hereon endorsed shall have been dated and signed by the Fiscal
Agent.
Unless this certificate is presented by an authorized representative of The Depository
Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or such other name as requested by
an authorized representative of The Depository Trust Company and any payment is made to
Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond have existed, happened and been performed in due time, form and manner as required by
law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or
Constitution of the State of California.
Exhibit A
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IN WITNESS WHEREOF, City of Rancho Cucamonga has caused this Bond to be dated
the Bond Date set forth above, to be signed by the facsimile signature of its Mayor and
countersigned by the facsimile signature of its City Clerk.
CITY OF RANCHO CUCAMONGA
Mayor
ATTEST
City Clerk
Exhibit A
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FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the Resolution and in the Agreement which has
been authenticated on
Fiscal Agent
By:
Authorized Officer
Exhibit A
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ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
(Name,Address and Tan Identification or Social Security Number of Assignee)
the within-registered Bond and hereby irrevocably constitute(s) and appoints(s)
attorney, to
transfer the same on the registration books of the Fiscal Agent with full power of substitution in
the premises.
Dated:
Signature Guaranteed:
Note:Signature(s)must be guaranteed by an eligible Note:The signature(s)on this Assignment must
guarantor. cortespond with the name(s)as written on the face of
the within Bond in every particular without alteration or
enlargement or any change whatsoever
Exhibit A
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EXHIBIT B
FORM OF REQUEST FOR DISBURSEMENT-
OFFICER'S CERTIFICATE
with reference to
City of Rancho Cucamonga
Community Facilities District No. 2006-02 (Amador on Route 66) .
2006 Special Tax Bonds
Date:
To Wells Fargo Bank, National Association:
This Officer's Certificate is issued to you pursuant to the Fiscal Agent Agreement dated as of
December 1, 2006, by and between the City of Rancho Cucamonga and you, as fiscal agent, with
respect to the above-referenced issue (the"Fiscal Agent Agreement"). Except where the context
requires otherwise, all capitalized terms shall have the meanings ascribed to them in the Fiscal
Agent Agreement.
Pursuant to Section 4.2(C)(insert applicable subjection) of the Fiscal Agent Agreement, you are
instructed to disburse $ from the[insert applicable account]of the Project Fund.
This Disbursement shall be made to: The
purpose of this disbursement is: and
the disbursement is a proper expenditure from the account show above.
The undersigned certifies that no portion of the amount being requested to be disbursed has been
set forth in any prior certificate requesting disbursement.
CITY OF RANCHO CUCAMONGA COMMUNITY
FACILITIES DISTRICT NO. 2006-02 (AMADOR ON ROUTE 66)
By:
Authorized Officer
Exhibit B
Page 1
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BOND PURCHASE AGREEMENT Page 77 of 203
City of Rancho Cucamonga
Community Facilities District No. 2006-02
(Amador on Route 66)
2006 Special Tax Bonds
January 2007
City of Rancho Cucamonga
Community Facilities District No. 2006-02
(Amador on Route 66)
c/o City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga, CA 91730
Ladies and Gentlemen:
Stone & Youngberg LLC (the "Underwriter') offers to enter into this Bond Purchase Agreement
(this "Purchase Agreement") with the City of Rancho Cucamonga (the "City"), for itself and on behalf of
the City of Rancho Cucamonga Community FacilitiesDistrict No. 2006-02 (Amador on Route 66) (the
"District") which will be binding upon the City and the Underwriter upon the acceptance hereof by the
City. Upon your acceptance of this offer, this Purchase Agreement will be binding upon the City and the
Underwriter. This offer is made subject to its acceptance by the City by execution of this Purchase
Agreement and its delivery to the Underwriter on or before 5:00 p.m., California time, on the date hereof.
Terms not otherwise defined herein shall have the same meanings as set forth in the Fiscal Agent
Agreement described below.
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements, hereinafter set forth, the Underwriter hereby agrees to
purchase from the City for offering to the public, and the City, for itself and on behalf of the District,
hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of the City of Rancho
Cucamonga Community Facilities District No. 2006-02 (Amador on Route 66) 2006 Special Tax Bonds
(the "Bonds"). The purchase price for the Bonds is $ (representing the aggregate principal
amount of the Bonds of$ less an underwriter's discount of$ and an original issue
discount of$ ). The Bonds will mature on the dates and in the amounts, and bear interest at the
rates, and be subject to mandatory redemption as set forth in Appendix A attached hereto.
Section 2. Description of the Bonds. The Bonds will be issued pursuant to the following:
• the Mello-Roos Community Facilities Act of 1982 (constituting Sections 53311
et seq. of the California Government Code) (the"Act"),
• a resolution adopted on December_, 2006(the "Resolution of Issuance") by the
City Council of the City, acting as the legislative body of the District, and
• a Fiscal Agent Agreement dated as of January 1, 2007 (the "Fiscal Agent
Agreement"), by and between the City and Wells Fargo Bank, National Association, as fiscal
agent(the "Fiscal Agent').
The Bonds will mature on the dates and in the principal amounts, and will bear interest at the
rates, as set forth in Appendix A hereto, and will be as described in the Fiscal Agent Agreement and the
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Official Statement dated the date hereof relating to the Bonds(together with all appendices, amendments
and supplements thereto,the"Official Statement').
The City shall apply the proceeds of the Bonds to finance the purchase of the Facilities described
in the Official Statement.
Section 3. Public Offering. The Underwriter agrees to make a bona fide public offering of
all the Bonds initially at the public offering prices (or yields) set forth on the cover of the Official
Statement. Subsequent to the initial public offering, the Underwriter reserves the right to change the
public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds,
provided that the Underwriter shall not change the interest rates set forth on the cover of the Official
Statement. The Bonds may be offered and sold to certain dealers at prices lower than such initial public
offering prices.
Section 4. Official Statement; Continuing Disclosure. The City has delivered or caused
to be delivered to the Underwriter prior to the execution of this Purchase Agreement or the first offering
of the Bonds, whichever first occurs, copies of the Preliminary Official Statement. Such Preliminary
Official Statement is the official statement deemed final by the City for purposes of Rule 15c2-12 under
the Securities Exchange Act of 1934 (the "Rule") (except for the omission certain information as
permitted by the Rule) and approved for distribution by resolution of the City. The City shall have
executed and delivered to the Underwriter a certification to such effect in the form attached as Appendix
B.
Within 7 business days after the date of this Purchase Agreement, and in sufficient time to
accompany any confirmation that requests payment from a customer, the City shall deliver to the
Underwriter a final Official Statement, executed on behalf of the City by an authorized representative of
the City and dated the date hereof, which shall include information permitted to be omitted by paragraph
(b)(1) of the Rule and with such other amendments or supplements as shall have been approved by the
City and the Underwriter.
The City, for itself and on behalf of the District, will undertake, pursuant to the Fiscal Agent
Agreement and a Continuing Disclosure Agreement(the"Continuing Disclosure Agreement'), to provide
certain annual financial information and notices of the occurrence of certain events, if material. A
description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth
in the final Official Statement.
Section 5. The Closing. At 8:00 a.m., California time, on January _, 2007, or at such
other time or on such earlier or later business day as are mutually agreed upon by the City and the
Underwriter, the City will deliver (i) the Bonds in definitive form to the Underwriter at The Depository
Trust Company in New York, New York, or such other location as may be specified by the Underwriter,
with CUSIP identification numbers printed thereon, in fully registered form and registered in the name of
Cede & Co., and (ii) the closing documents hereinafter mentioned at the offices of Best Best & Krieger
LLP, San Diego, California or another place to be mutually agreed upon by the City and the Underwriter.
The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section
I hereof by federal funds wire payable to the order of the Fiscal Agent on behalf of the City. This
payment and delivery, together with the delivery of the aforementioned documents, is herein called the
"Closing." The Bonds will be delivered in such denominations and deposited in the account or accounts
specified by the Underwriter pursuant to written notice not later than five business days prior to Closing.
The Bonds will be made available to The Depository Trust Company for inspection not less than 24 hours
prior to the Closing.
Section 6. Representations, Warranties and Covenants. The City, for itself and on
behalf of the District represents, warrants and covenants to the Underwriter that:
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'(a) Due Organization. Existence and Authority. The City, is a duly organized
municipal corporation and existing under the laws of the State of California, with full right,
power and authority, on behalf of itself and the District, to execute, deliver and perform its
obligations under this Purchase Agreement, the Fiscal Agent Agreement and the Continuing
Disclosure Agreement (together, the "City Documents") and to issue the Bonds and otherwise
carry out and consummate the transactions contemplated by the City Documents and the Official
Statement.
(b) Due Authorization and Approval. By all necessary official action, the City
Council, as legislative body of the District,has:
(i) held a public hearing and adopted resolutions (collectively with the
Resolution of Issuance the "City Resolutions") forming the District, authorizing the levy
of the Special Taxes and the incurrence of bonded indebtedness by the District;
(ii) called, held and conducted an election within the District to approve the
levy of the Special Taxes on parcels of property within the District and the issuance of
the Bonds;
(iii) adopted the Resolution of Issuance and approved and authorized the
execution and delivery of the Bonds, the Fiscal Agent Agreement, this Purchase
Agreement, the Official Statement and the Continuing Disclosure Agreement (as
hereinafter defined); and
(iv) authorized and approved the performance by the City and the District of
their obligations contained in, and the taking of any and all action on their part as may be
necessary to carry out, give effect to and consummate the transactions on the part of the
City and/or the District contemplated by each of said documents;and at the Closing Date,
the Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, this Purchase
Agreement, the Continuing Disclosure Agreement and any other applicable documents
will constitute legal, valid and binding obligations of the District, enforceable against the
District in accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer and other laws affecting
the enforcement of creditors' rights generally and to the application of equitable.
principles and the exercise ofjudicial discretion in appropriate cases.
As of the date hereof, such authorizations and approvals are in full force and effect and have not
been amended, modified or rescinded.
(c) Official Statement Accurate and Complete. The Preliminary Official Statement
was as of its date, and the final Official Statement is, and at all times subsequent to the date of the
final Official Statement up to and including the Closing will be, true and correct.in all material
respects, and the Preliminary Official Statement and the final Official Statement contain, and up
to and including the Closing will contain, no misstatement of any material fact and do not, and up
to and including the Closing will not, omit any statement necessary to make the statements
contained therein, in the light of the circumstances in which such statements were made, not
misleading.
(d) Underwriter's Consent to Amendments and Supplements to Official Statement.
The City will advise the Underwriter promptly of any proposal to amend or supplement the
Official Statement and will not effect or.consent to any such amendment or supplement without
the consent of the Underwriter, which consent will not be unreasonably withheld. The City will
advise the Underwriter promptly of the institution.of any proceedings known to it by any
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governmental authority prohibiting or otherwise affecting the use of the Official Statement in
connection with the offering, sale or distribution of the Bonds.
If, at any time prior to the earlier of(i)receipt of notice from the Underwriter that the
Official Statement is no longer required to be delivered under Rule 15c2-12 or (ii)the Closing
Date (as described in Section 5 above), any event known to the officers of the City participating
in the issuance of the Bonds occurs with respect to the District or the City as a result of which the
final Official Statement as then amended or supplemented might include an untrue statement of a
material fact, or omit to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, the District shall promptly
notify the Underwriter in writing of such event. Any information supplied by the City for
inclusion in any amendments or supplements to the final Official Statement will not contain any
untrue or misleading statement of a material fact relating to the District or the City or omit to state
any material fact relating to the District or the City necessary to make the statements therein, in
the light of the circumstances under which they were made,not misleading.
(e) No Breach or Default. As of the time of acceptance hereof and as of the time of
the Closing, except as otherwise disclosed in the Official Statement, the District and the City are
not and will not be in breach of or in default under any applicable constitutional provision, law or
administrative rule or regulation of the State of California or the United States, or any applicable
judgment or decree or any fiscal agent agreement, loan agreement, bond, note, resolution,
ordinance, agreement or other instrument to which the District or the City is a party or is
otherwise subject, and no event has occurred and is continuing which,with the passage of time or
the giving of notice, or both, would constitute a default or event of default under any such
instrument.
As of the time of acceptance hereof and as of the time of the Closing, except as disclosed
in the Official Statement, the authorization, execution and delivery of the City Documents and
compliance with the provisions of each of such agreements or instruments do not and will not
conflict with or constitute a breach of or default under any applicable constitutional provision,
law or administrative rule or regulation of the State of California or the United States, or any
applicable judgment, decree, license, permit, fiscal agent agreement, loan agreement, bond, note,
resolution, ordinance, agreement or other instrument to which the City (or any of its officers in
their respective capacities as such) is subject, or by which it or any of its properties is bound, nor
will any such authorization, execution, delivery or compliance result in the creation or imposition
of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any
of its assets or properties or under the terms of any such law, regulation or instrument, except as
may be provided by the City Documents.
The City, acting as the administrator for and on behalf of certain other community
facilities districts, has on two occasions not met the continuing disclosure requirements on a
timely basis. In each instance the City failed to timely file reports on behalf of these community
facilities districts, due on February 1, 2001 for the Community Facilities District No. 2000-01
(South Etiwanda) Special Tax Bonds, Series 2000 and for the Community Facilities District No.
2000-02 (Rancho Cucamonga Corporate Park) Special Tax bonds, Series 2001: Such reports
were subsequently filed on June 12, 2001. It should be noted that these bond issues closed in
December 2000 and the information that was contained in the annual reports filed on June 12,
2001 was identical to the information contained in the official statements relating to these bond
issues distributed to the purchasers of the Bonds.
(f) No Litigation. As of the time of acceptance hereof and the Closing, except as
may be disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, government authority, public board or body, pending or
threatened (i) in any way questioning the corporate existence of the District or the City, or the
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titles of the officers of the District or the City to their respective offices; (ii) affecting, contesting
or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the
payment or collection of any amounts pledged or to be pledged to pay the principal of and interest
on the Bonds, or in any way contesting or affecting the validity of the Bonds or City Documents
or the consummation of the transactions contemplated thereby, or contesting the exclusion of the
interest on the Bonds from taxation or contesting the powers of the City or the District and either
of their authority to pledge the revenues securing the Bonds; (iii) which may result in any
material adverse change relating to the District or the City; or(iv)contesting the completeness or
accuracy of the Preliminary Official Statement or the final Official Statement or any supplement
or amendment thereto or asserting that the Preliminary Official Statement or the final Official
Statement,contained any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and there is no basis for any action,
suit, proceeding, inquiry or investigation of the nature described in clauses (i)through (iv)of this
sentence. -
(g) Compliance with Local Goals and Policies. The issuance of the Bonds by the
District conforms with the "Statement of Goals and Policies for the Use of the Mello-Roos
Community Facilities Act of 1982"as amended and restated by the City on July 21, 1999.
(h) Blue Skv Laws. The City and the District shall cooperate with the Underwriter in
endeavoring to qualify the Bonds for offering and sale under the securities or blue sky laws of
such jurisdictions of the United States as the Underwriter may request; provided, however, that
the City shall not be required to execute a special or general consent to service of process in any
jurisdiction in which it is not now so subject or to qualify to do business in any jurisdiction where
it is not now so qualified.
(i) Neither the District nor the City shall take or omit to take, as appropriate, any
action that would cause the interest on the Bonds to be subject to California personal income
taxation or affect the exclusion of interest on the Bonds from gross income for federal income tax
purposes.
Section 7. Closing Conditions. The Underwriter has entered into this Purchase Agreement
in reliance upon the representations, warranties and covenants herein and the performance by the City and
the District of their obligations hereunder, both as of the date hereof and as of the date of the Closing.
The Underwriter's obligations under this Purchase Agreement to purchase and pay for the Bonds are
subject to the following additional conditions:
(a) Bring-Down Representation. The representations, warranties and covenants of
the City contained in this Purchase Agreement must be true, complete and correct at the date
hereof and at the time of the Closing,as if made on the date of the Closing.
(b) Effectiveness of City Documents, Official Statement and City Resolutions. At
the time of the Closing:
(i) the City Documents must be in full force and effect, and neither the City
Documents nor the Official Statement may have been amended, modified or
supplemented except with the written consent of the Underwriter,and
(ii) there shall be in full force and effect such resolutions as, in the opinion
of Bond Counsel, shall be necessary in connection with the transactions contemplated by
this Purchase Agreement,the Official Statement and the City Documents.
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(c) Closing Documents. At or prior to the Closing, the Underwriter shall receive
each of the documents identified in Section 8.
Section 8. Closing Documents. In addition to the other conditions to the Underwriters
obligations under this Purchase Agreement to purchase and pay for the Bonds, at or before the Closing the
Underwriter shall receive each of the following documents, provided that the actual payment for the
Bonds by the Underwriter and the acceptance of delivery thereof shall be conclusive evidence that the
requirements of this Section 8 shall have been satisfied or waived by the Underwriter.
(a) Bond Opinion and Reliance Letter. An approving opinion of Bond Counsel
dated the date of the Closing and substantially in the form appended to the Official Statement,
together with a letter from such counsel, dated the date of the Closing and addressed to the
Underwriter, to the effect that the foregoing opinion addressed to the City may be relied upon by
the Underwriter to the same extent as if such opinion were addressed to the Underwriter.
(b) implemental Opinion. A supplemental opinion or opinions of Bond Counsel
addressed to the Underwriter, in form and substance acceptable to the Underwriter, and dated the
date of the Closing substantially to the following effect:
(i) The City Documents, the Bonds and the Official Statement have been
duly authorized, executed and delivered by the City, and the City Documents and the
Bonds constitute the valid, legal and binding agreements of the District, enforceable in
accordance with their respective terms.
(ii) The statements contained in the Official Statement (including the cover
page and the Appendices thereto) that purport to summarize certain provisions of the
Bonds, the Fiscal Agent Agreement, the City Resolutions and the City Documents, the
approving opinion of Bond Counsel or federal tax law, are accurate; provided that Bond
Counsel need not express any opinion with respect to any financial or statistical
information contained in the Official Statement.
(iii) . The Bonds are exempt from registration under the Securities Act of
1933, as amended,and the Fiscal Agent Agreement is exempt from qualification pursuant
to the Trust Indenture Act of 1939,as amended.
(iv) The District is a community facilities district duly organized and validly
existing under the laws of the State of California, including the Act.
(c) District Counsel Opinion. An opinion of Richards, Watson & Gershon, counsel
to the City,dated the date of the Closing and addressed to the Underwriter, in form and substance
acceptable to Bond Counsel substantially to the following effect:
(i) The City is a municipal corporation duly organized and existing under
the laws of the State of California.
(ii) The City is duly authorized to approve and execute the City Resolutions
and City Documents.
(iii) The individuals executing the City Documents and Official Statement on
behalf of the City are officers of the City holding the offices set forth after their
respective signatures, and are lawfully authorized to execute and deliver such documents
on behalf of the City.
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(iv) The City Resolutions and City Documents have been duly adopted by the
District, and are in full force and effect and have not been modified, amended or
rescinded.
(v) Without conducting an independent investigation, except as otherwise
disclosed in the Official Statement and to the best knowledge of such counsel after due
inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity
before or by any court,governmental authority or body, pending or threatened against the
District challenging the creation, organization or existence of the District, or the validity
of the City Documents or seeking to restrain or enjoin the repayment of the Bonds or in
any way contesting or affecting the validity of the City Documents or contesting the
authority of the City to enter into or perform its obligations under any of the City
Documents, or under which a determination adverse to the City would have a material
adverse effect upon the financial condition or the revenues of the District, or which, in
any manner, questions the right of the City to pledge the Revenues to the payment of the
Bonds.
(d) Fiscal Agent Counsel Opinion. The opinion of counsel to the Fiscal Agent, dated
the date of the Closing,addressed to the Underwriter,to the effect that:
(i) The Fiscal Agent is a national banking association duly organized and
validly existing under the laws of the United States of America, having full power to
enter into, accept and administer the trust created under the Fiscal Agent Agreement and
obligations as Dissemination Agent under the Continuing Disclosure Agreement.
(ii) The Fiscal Agent Agreement and Continuing Disclosure Agreement have
been duly authorized, executed and delivered by the Fiscal Agent and Dissemination
Agent and constitute the legal, valid and binding obligations of the Fiscal Agent and
Dissemination Agent enforceable in accordance with their respective terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the
enforcement of creditors'rights generally and by the application of equitable principles, if
equitable remedies are sought.
(e) Disclosure Counsel CiRjr6m. An opinion of Best Best& Krieger, LLP, a limited
liability partnership ("Disclosure Counsel"), dated the Closing Date, and addressed to the City
And Underwriter, to the effect that during the course of serving as Disclosure Counsel in
connection with the execution and delivery of the Bonds and without having undertaken to
determine independently or assuming any responsibility for the accuracy, completeness or
fairness of the statements contained in the Official Statement, no information came to the
attention of the attorneys in such firm rendering legal services in connection with the issuance of
the Bonds that would lead them to believe that the Official Statement (excluding therefrom the
financial statements, any financial or statistical data, or forecasts, charts, numbers, estimates,
projections, assumptions or expressions of opinion included in the Official Statement,
information regarding DTC, and the appendices to the Official Statement as to which.no opinion
need be expressed), as of the date thereof or the Closing Date, contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
(f) District 15c2-12 Certificate. A certificate of the City, dated the date of the
Preliminary Official Statement, signed by the City for itself and on behalf of the District by a duly
authorized officer of the City, in the form attached as Appendix B or such other form approved by
the Underwriter.
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(g) District Closing Certificate. A certificate of the City, dated the date of the
Closing, signed by the City and for itself and on behalf of the District by a duly authorized officer
of the City, in the form attached as Appendix C or such other form approved by the Underwriter.
(h) Fiscal Agent's Certificate. A certificate of the Fiscal Agent, dated the date of the
Closing, signed on behalf of the Fiscal Agent by a duly authorized officer of the Fiscal Agent, in
the form attached as Appendix D or such other form approved by the Underwriter.
(i) Fiscal Agent Resolution and Incumbency Certificate. A copy of the general
resolution of the Fiscal Agent authorizing the execution and delivery of certain documents by
certain officers of the Fiscal Agent, which resolution authorizes the authentication and delivery of
the Bonds and the execution and delivery of the Fiscal Agent Agreement and Continuing
Disclosure Agreement, along with an incumbency certificate with respect to the officers of the
Fiscal Agent.
(j) Developers' 10b-5 Certificates. Certificates from William Lyon Homes, Inc., a
California corporation (the"Developer")and Lewis Investment, LLC("Lewis"); dated the date of
the Preliminary Official Statement, signed on behalf of such Developer or Lewis, as applicable,
by duly authorized officers of the Developer and Lewis, as applicable, in the form attached as
Appendix E or such other form approved by the Underwriter.
(k) Developers' Closing Certificate. A Certificate from the Developer, dated the
date of the Closing, signed on behalf of such Developer by duly authorized officers of such
Developer in the form attached as Appendix F or such other form approved by the Underwriter.
(1) No-Litigation Letter of Developer A No-Litigation Letter of the Developer,
dated the date of the Closing, signed on behalf of such Developer by a Senior Vice President of
such Developer, in form and substance satisfactory to the Underwriter and the District.
(m) Developers' Counsel. One or more opinions of in-house or special counsel to the
Developer, dated the date of the Closing, addressed to the Underwriter and the District, to the
effect that:
(i) The Developer has been incorporated and is validly existing in good
standing under the laws of the State of the State of California.
(ii) The Developer Continuing Disclosure Agreement has been duly and
validly authorized, executed and delivered by the Developer, and, assuming due
authorization and execution by the other parties thereto, constitutes a legally valid and
binding obligation of the Developer, enforceable against the Developer in accordance
with its terms, subject to certain equitable, legal or statutory principles affecting the
enforcement of contractual rights generally, regardless of whether such enforcement is
considered in a proceeding in equity or at law, including, without limitation, concepts of
notice, materiality, impairment of security, reasonableness, good faith and fair dealing,
jurisdiction, service of process, venue and applicable statues of limitation and judicial
discretion or statutory limitations with respect to the availability of equitable remedies or
defenses,the calculation of damages, and the entitlement to attorneys' fees and other fees
and costs.
(iii) In the course of acting as special counsel to the Developer in connection
with the preparation of the final Official Statement, he reviewed those sections of the
Official Statement relating to the Developer and its proposed development plans in the
District, and participated in conferences and telephone conversations with officers and
other representatives of the Developer, during which conferences and conversations the
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contents of the Official Statement and related matters were discussed. Based solely on
our knowledge and written statements of the Developer, we advise you that no
information came to the attention of the attorney in our firm rendering services as special
counsel to the Developer that caused us to believe that,as of the date thereof and the date
hereof, the statements contained in the final Official Statement relating to the Developer,
its proposed development of property in the District, its property ownership in the District
and its contractual arrangements (except that no opinion or belief is expressed as to (i)
any financial statements and other financial, statistical, economic, or engineering data or
forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or
expressions of opinion, or (ii) any information about valuation, appraisals, markets
absorption, archaeological or environmental matters) under the sections of the Official
Statement entitled "INTRODUCTORY STATEMENT — The District and the
Development," "THE DEVELOPER AND THE PROPOSED DEVELOPMENT —
General," "—The Developer and the Housing Project," and "—The Proposed Housing
Development," and "CONCLUDING INFORMATION — Continuing Disclosure," (only
as to the last paragraph), contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made,not misleading.
(n) Opinion of Counsel to Lewis. An opinion of counsel to Lewis dated the date of
the Closing addressed to the Underwriter and the District, in form and substance similar to the
opinion of counsel to the Developer in(m)above.
(o) Special Tax Consultant's Certificate. A certificate of the Special Tax Consultant,
dated the date of the Closing, in the form attached as Appendix G or such other form approved by
the Underwriter,relating to the Official Statement. .
(p) Market Absorption Consultant's Certificate. A certificate of the Market
Absorption Consultant dated the date of the Closing in the form attached as Appendix H or such
other form approved by the Underwriter,relating to the Official Statement.
(q) Appraiser's Certificate. A certificate of the Appraiser, dated the date of the
Closing, in the form attached as Appendix I or such other form approved by the Underwriter,
relating to the Official Statement.
(r) Original Executed Documents. An original executed copy of the Official
Statement, the City Resolutions and each of the City Documents.
(s) Developer Continuing Disclosure Agreement. An original executed copy of the
Developer Continuing Disclosure Agreement.
(t) Additional Documents. Such additional certificates, instruments and other
documents as Bond Counsel, Disclosure Counsel, the District or the Underwriter may reasonably
deem necessary.
If the City is unable to satisfy the conditions contained in this Purchase Agreement, or if the
obligations of the Underwriter are terminated for any reason permitted by this Purchase Agreement, this
Purchase Agreement shall terminate and neither the Underwriter nor the District shall be under further
obligation hereunder, except as further set forth in Section 10.
Section 9. Termination Events. The Underwriter may terminate this Purchase Agreement,
without liability, by notification to the City if at any time between the date hereof and prior to the
Closing:
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(a) any event occurs which causes any statement contained in the Official Statement
to be materially misleading or results in a failure of the Official Statement to state a material fact
necessary to make the statements in the Official Statement, in the light of the circumstances under
which they were made, not misleading;
(b) the marketability of the Bonds or the market price thereof, in the opinion of the
Underwriter, has been materially adversely affected by an amendment to the Constitution of the
United States or by any legislation in or by the Congress of the United States or by the State, or
the amendment of legislation pending as of the date of this Purchase Agreement in the Congress
of the United States, or the recommendation to Congress or endorsement for passage (by press
release, other form of notice or otherwise)of legislation by the President of the United States,the
Treasury Department of the United States, the Internal Revenue Service or the Chairman or
ranking minority member of the Committee on Finance of the United States Senate or the
Committee on Ways and Means of the United States House of Representatives, or the proposal
for consideration of legislation by either such Committee or by any member thereof, or the
presentment of legislation for consideration as an option by either such Committee,or by the staff
of the Joint Committee on Taxation of the Congress of the United States, or the favorable
reporting for passage of legislation to either House of the Congress of the United States by a
Committee of such House to which such legislation has been referred for consideration, or any
decision of any Federal or State court or any ruling or regulation(final,temporary or proposed)or
official statement on behalf of the United States Treasury Department, the Internal Revenue
Service or other federal or State authority materially adversely affecting-the federal or State tax
status of the District, or the interest on bonds or notes or obligations of the general character of
the Bonds;
(c) any legislation, ordinance, rule or regulation is introduced in, or enacted by any
governmental body, department or authority of the State,or a decision by any court of competent
jurisdiction within the State or any court of the United States is rendered which, in the reasonable
opinion of the Underwriter,materially adversely affects the market price of the Bonds;
(d) legislation is enacted by the Congress of the United States, or a decision by a
court of the United States is rendered, or a stop order, ruling, regulation or official statement by,
or on behalf of, the Securities and Exchange Commission or any other governmental district
having jurisdiction of the subject matter is issued or made to the effect that the issuance, offering
or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the
Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement,
is in violation or would be in violation of, or that obligations of the general character of the
Bonds, or the Bonds, are not exempt from registration under, any provision of the federal
securities laws, including the Securities Act of 1933,as amended and as then in effect, or that the
Fiscal Agent Agreement needs to be qualified under the Trust Fiscal Agent Agreement Act of
1939, as amended and as then in effect;
(e) additional material restrictions not in force as of the date hereof are imposed
upon trading in securities generally by any governmental authority or by any national securities
exchange which restrictions materially adversely affect the Underwriter's ability to trade the
Bonds;
(f) a general banking moratorium is established by federal or California authorities;
(g) the United States becomes engaged in hostilities that resulted in a declaration of
war or a national emergency or any other outbreak of hostilities or a national or international
calamity or crisis occurs, or any escalation of existing hostilities, calamity or crisis occurs,
financial or otherwise, the effect of which on the financial markets of the United States being
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such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the
ability of the Underwriter to market the Bonds;
(h) any action, suit or proceeding described in Section 6(0 is commenced with
respect to either the District or the City which, in the judgment of the Underwriter, materially
adversely affects the market price of the Bonds; or
(i) a general suspension of trading on the New York Stock Exchange is in force.
Section 10. Expenses. The Underwriter has no obligation to pay, and the City shall pay or
cause to be paid, the expenses incident to the performance of the obligations of the City under this
Purchase Agreement, including but not limited to (a) the costs of the preparation and printing, or other
reproduction (for distribution on or prior to the date hereof) of the City Documents and the cost of
preparing, printing, issuing and delivering the definitive Bonds; (b) the fees and disbursements of any
counsel, financial advisors, appraisers, market consultants, accountants or other experts or consultants
retained by the District and the City; (c) the fees and disbursements of Bond Counsel and Disclosure
Counsel; and (d) the cost of printing of the Preliminary Official Statement and any supplements and
amendments thereto and the cost of printing of the Official Statement, including the requisite number of
copies thereof for distribution by the Underwriter..
The Underwriter shall pay, and the District has no obligation to pay,all expenses incurred by it in
connection with the public offering and distribution of the Bonds, including but not limited to (a)
reporting fees chargeable by the California Debt and Investment Advisory Commission; (b) the fee of
Underwriter Counsel's;and(c)CUSIP Service Bureau fees.
Section 11. Notice. Any notice or other communication to be given to the City under this
Purchase Agreement may be given by delivering the same in writing to the address set forth above. Any
notice or other communication to be-given to the Underwriter under this Purchase Agreement may be
given by delivering the same in writing to: Stone&Youngberg LLC, One Ferry Building, San Francisco,
CA 94111, Attention: Mr.Jim Cervantes.
Section 12. Entire Agreement. This Purchase Agreement, when accepted by the City,
constitutes the entire agreement between the City and the Underwriter and is made solely for the benefit
of the City and the Underwriter(including the successors or assigns of any Underwriter). No other person
shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the City's
representations, warranties and agreements in this Purchase Agreement shall remain operative and in full
force and effect,regardless of any investigation made by or on behalf of the Underwriter.
Section 13. Counterparts. This Purchase Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 14. Severability. In case any one or more of the provisions contained herein shall
for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
Section 15. Governing Law. The validity, interpretation and performance of this Purchase
Agreement shall be governed by the Bond Laws of the State of California.
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Section 16. No Assignment. The rights and obligations created by this Purchase Agreement
shall not be subject to assignment by the Underwriter or the District without the prior written consent of
the other parties hereto.
STONE &YOUNGBERG LLC, as Underwriter
By:
Managing Director
Accepted as of the date first stated above:
CITY OF RANCHO CUCAMONGA. for
itself and on behalf of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
By:
City Manager
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APPENDIX A
Maturity Schedule of Bonds
Principal
Payment Date Principal Interest
(September 1) Amount Rate Yield Price
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APPENDIX B
CITY RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies and represents that he or she is a duly appointed and acting
authorized officer of the City of Rancho Cucamonga (the "City"), the city council of which is the
legislative body of the City of Rancho Cucamonga Community Facilities District No. 2006-02 (Amador
on Route 66) (the "District'), and as such is duly authorized to execute and deliver this Certificate on
behalf of the City in connection with the issuance of its 2006 Special Tax Bonds (the "Bonds"), and
further hereby certifies and reconfirms on behalf of the District as follows:
(i) This Certificate is delivered in order to enable the underwriter of the Bonds to
comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange
Act of 1934(the "Rule");
(ii) In connection with the offering and sale of the Bonds, there has been prepared a
Preliminary Official Statement(the"Preliminary Official Statement');
(iii) As used herein, "Permitted Omissions" shall mean the offering price(s), interest
rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery
dates, ratings and other terms of the Bonds depending on such matters, all with respect to the
Bonds;and
(iv) The Preliminary Official Statement is, except for the Permitted Omissions,
deemed final within the meaning of the Rule.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth
below.
Dated: December 2006
CITY OF RANCHO CUCAMONGA, for
itself and on behalf of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
By:
-City Manager
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APPENDIX C
CITY CLOSING CERTIFICATE
The undersigned hereby certifies and represents that he or she is a duly appointed and acting
authorized officer of the City of Rancho Cucamonga (the "City"), the city council of which is the
legislative body of the City of Rancho Cucamonga Community Facilities District No. 2006-02 (Amador
on Route 66) (the "District'), and as such is duly authorized to execute and deliver this Certificate on
behalf of the City and District in connection with the issuance of, its 2006 Special Tax Bonds (the
"Bonds"),and further hereby certifies and reconfirms on behalf of the City and District as follows:
(i) The representations, warranties and covenants of the District contained in the
Bond Purchase Agreement by and between the City and Stone & Youngberg LLC, dated
December_, 2006 (the "Purchase Agreement") are true and correct in all material respects on
and as of the date of the Closing as if made on the date of the Closing and the District has
complied with all of the terms and conditions of the Purchase Agreement required to be complied .
with by the District or the City at or prior to the date of the Closing;
(ii) No event affecting the District or the City_has occurred since the date of the
Official Statement which has not been disclosed therein or in any supplement or amendment
thereto which event should be disclosed in the Official Statement in order to make the statements
therein, in the light of the circumstances under which they were made,not misleading; and
(iii) Except as otherwise disclosed in the Official Statement and to the best
knowledge of such signing officer without conducting an independent investigation, there is no
litigation, proceeding, action, suit, or investigation at law or in equity before or by any court,
governmental authority or body, pending or threatened against the District or the City challenging
the creation, organization or existence of the City or the District, or the validity of the City
Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting
or affecting the validity of the City Documents or contesting the authority of the City or the
District to enter into or perform its obligations under any of the City Documents, or under which
a determination adverse to the District or the City would have a material adverse effect upon the
financial condition or the revenues of the District, or which, in any manner, questions the right of
the District to pledge the Revenues to the payment of the Bonds.
Capitalized terms not defined herein shall have the same meaning as is set forth in the Purchase
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth
below.
Dated: January_,2007
CITY OF RANCHO CUCAMONGA, for
itself and on behalf of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
By:
City Manager
RVPUB\KSNO W V22329.1 C-1
Resolution No. 06-402
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APPENDIX D
FISCAL AGENT CERTIFICATE
The undersigned hereby certifies and represents that he or she is a duly appointed and acting .
authorized officer of Wells Fargo Bank,National Association, a national banking association (the "Fiscal
Agent'), and as such is duly authorized to execute and deliver this Certificate on behalf of the Fiscal
Agent in connection with the issuance by the City of Rancho Cucamonga Community Facilities District
No. 2006-02 (Amador on Route 66) of its 2006 Special Tax Bonds (the `Bonds"), and further hereby
certifies and reconfirms on behalf of the Fiscal Agent as follows:
(i) The Fiscal Agent is duly organized and existing as a national banking association
in good standing under the laws of the United States of America, having the full power and
authority to enter into and perform its duties under the Fiscal Agent Agreement and Continuing
Disclosure Agreement(the"Fiscal Agent Documents");
(ii) The Fiscal Agent is duly authorized to enter into the Fiscal Agent Documents;
and
(iii) To its best knowledge after due inquiry, there is no action, suit, proceeding or
investigation, at law or in equity, before or by any court or governmental district, public board or
body pending against the Fiscal Agent or threatened against the Fiscal Agent which, in the
reasonable judgment of the Fiscal Agent, would affect the existence of the Fiscal Agent, contests
or affects the validity or enforceability of the Fiscal Agent Documents, or contests the powers of
the Fiscal Agent or its authority to enter into and perform its obligations under the Fiscal Agent
Documents.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth
below.
Dated: January 2007
WELLS FARGO BANK,NATIONAL
ASSOCIATION
By:
Authorized Officer
RVPUB\KSNOW\722329.1 D-I
Resolution No. 06-402
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APPENDIX E
106-5 CERTIFICATE OF DEVELOPER
William Lyon Homes, Inc. (the"Developer"), hereby certifies that:
I. The Developer is the developer of certain land ("Land), in City of Rancho Cucamonga
Community Facilities District No. 2006-01 (Vintner's Grove) (the "District"), as described in the
Preliminary Official Statement of the District dated December _, 2006 (the "Preliminary Official
Statement")relating to the above-referenced Bonds.
2. Any and all information, as updated and amended from time to time prior to the date
hereof, submitted by the Developer to the District and its counsel in connection with the preparation of
the Preliminary Official Statement was, to the Actual Knowledge of the Developer, true and correct in all
material respects when given and, as it may have been updated or amended or as included in the
Preliminary Official Statement,remains true and correct in all material respects as of the date hereof.
3. Statements relating to the Developer, its proposed development of property in the
District, its property ownership in the District and its contractual arrangements contained in the sections
of Preliminary Official Statement entitled "INTRODUCTORY STATEMENT — The District and the
Development," "THE DEVELOPER AND THE PROPOSED DEVELOPMENT - General," "—The
Developer and the Housing Project," and "—The Proposed Hosing Development,"and "CONCLUDING
INFORMATION — Continuing Disclosure," (only as to the last paragraph) do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
4. Except as disclosed in the Preliminary Official Statement, the Developer has not entered
into a contract to sell, nor is it in the process of selling, any portion of the Land to any person or entity
other than as described in the Preliminary Official Statement.
For purpose of this Certificate, the term "Actual Knowledge of the Developer" shall mean the
knowledge that the undersigned currently have or have obtained from interviews with such officers and
responsible employees of the Developer as the undersigned have reasonably determined are likely, in the
ordinary course of their respective duties,to have knowledge of the matters set forth herein. Other than as
set forth in the immediately preceding sentence, the undersigned have not conducted any additional
inspection or inquiry. The undersigned make the representations in this Certificate for, and on behalf of,
the Developer,and as officers of the Developer.
Dated: December—,2006
WILLIAM LYON HOMES,INC.,a
California corporation
By:
Name:
Title:
By:
Name:
Title:
RVPUB\KSNOW\722329.1 E-I
Resolution No. 06-402
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APPENDIX F
CLOSING CERTIFICATE OF DEVELOPER
The undersigned are authorized officers of William Lyon Homes, Inc., a California corporation
(the "Developer"), and as such are duly authorized to execute and deliver this Certificate on behalf of the
Developer in connection with the issuance by the City of Rancho Cucamonga of its Community Facilities
District No. 2006-01 (Vintner's Grove) (the "District')of its 2007 Special Tax Bonds(the "Bonds"), and
further hereby certify and reconfirm on behalf of the Developer as follows:
(1) The Developer has duly authorized, by all necessary action, the execution,
delivery and due performance of the Developer Continuing Disclosure Agreement. Except as
described in the final Official Statement, the Developer has never failed to comply in all material
respects with any continuing disclosure undertakings with regard to Rule 15c2-12 under the
Securities and Exchange Act of 1934, as amended, to provide annual reports or notices of
material events specified in such rule.
(2) The Developer Continuing Disclosure Agreement has been duly executed and
delivered by the Developer.
(3) The information contained in the sections of the final Official Statement entitled
"INTRODUCTORY STATEMENT — The District and the Development" "THE DEVELOPER
AND THE PROPOSED DEVELOPMENT - General," "—The Developer and the Housing
Project," and "—The Proposed Housing Development," and "CONCLUDING INFORMATION
— Continuing Disclosure" (only as to the last paragraph), as they relate to the Developer, its
proposed development of property in the District (the "Development"), its property ownership in
the District and its contractual arrangements, is true and correct in all material respects and does
not contain any untrue or incorrect statement of a material fact and does not omit to state a
material fact necessary in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(4) The Developer has full power and authority to own its property (including,
without limitation, the Development) and to carry on its business as presently conducted and as
described in the final Official Statement.
(5) There are no pending (based on proper service of process to the Developer
having been accomplished) or, to the Actual Knowledge of the Developer, threatened legal or
administrative proceedings against the Developer or to which property of the Developer is
subject, which if decided adversely to the Developer could materially and adversely affect the
transactions contemplated by the final Official Statement or which could materially and adversely
affect the validity or enforceability of the Bonds, the Issuance Resolution, the Fiscal Agent
Agreement, the Developer Continuing Disclosure Agreement or the Bond Purchase Agreement
dated December _, 2006, between the City and Stone & Youngberg, LLC (the "Purchase
Agreement').
(6) Except as disclosed in the final Official Statement, to the Actual Knowledge of
the Developer, no event has occurred since the date of the Preliminary Official Statement which
would cause statements relating to the Developer, its proposed development of property in the
District, its property ownership in the District and its contractual arrangements under the captions
"INTRODUCTORY STATEMENT —The District and the Development," "THE DEVELOPER
AND THE PROPOSED DEVELOPMENT — General," "—The Developer and the Housing
Project," and "—The Proposed Housing Development," and "CONCLUDING INFORMATION
— Continuing Disclosure" (only as to the last paragraph) to contain any untrue or incorrect
RVPUB\KSNOW\722329.1 F-I
Resolution No. 06-402
Page 95 of 203
statement of material fact necessary in order to make the statements made therein in light of the
circumstances under which they are made,not misleading.
(7) The Developer is solvent and no proceedings are pending (based on property
service of process having been accomplished) or, to the Actual Knowledge of the Developer
threatened against the Developer may be adjudicated as bankrupt, or become the debtor in a
bankruptcy proceeding, or discharged from any or all of its debts or obligations or granted an
extension of time to pay its debts or a reorganization or readjustment of its debts.
(8) To the Actual Knowledge of the Developer, the Developer has not been
delinquent in the payment of special taxes or assessments with respect to property within an
assessment or community facilities district that was not cured within the fiscal year in which the
special tax or assessment was levied within the past five years.
(9) Except as disclosed in the final Official Statement, the Developer has not
submitted an application for, nor received actual notice of, (i)the formation or authorization of
any assessment district or community facilities district which would include any portion of the
land within the District, or (ii)the authorization or issuance of any debt secured by a special tax
to be levied on any portion of the land within the District, other than the Special Tax.
Capitalized terms not defined herein shall have the same meaning as is set forth in the Purchase
Agreement.
For purposes of this Certificate, the term "Actual Knowledge of the Developer" shall mean the
knowledge that the undersigned currently have or have obtained from interviews with such officers and
responsible employees of the Developer as the undersigned have reasonably determined are likely, in the
ordinary course of their respective duties,to have knowledge of the matters set forth herein. Other than as
set forth in the immediately preceding sentence, the undersigned have not conducted any additional
inspection or inquiry. The undersigned make the representations in this Certificate for, and on behalf of,
the Developer,and as officers of the Developer.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth
below.
Dated: January_ 2007
WILLIAM LYON HOMES,INC.
By:
Name:
Title:
By:
Name:
Title:
RVPUB\KSNOW\722329.1 F-2
Resolution No. 06-402
Page 96 of 203
APPENDIX G
CERTIFICATE OF SPECIAL TAX CONSULTANT
The undersigned hereby certifies and represents that he or she is a duly appointed and acting
authorized officer of David Taussig & Associates (the "Special Tax Consultant"), and as such is duly
authorized to execute and deliver this Certificate on behalf of the Special Tax Consultant in connection
with the issuance by the City of Rancho Cucamonga of its Community.Facilities District No. 2006-02
(Amador on Route 66) (the "District") of its 2006 Special Tax Bonds (the "Bonds"), and further hereby
certifies and reconfirms on behalf of the Special Tax Consultant as follows:
(i) Based upon the Special Tax Consultant's review of the Rate and Method of
Apportionment of the Special Tax (the "Rate and Method") set forth in Appendix B to the
Official Statement, the Special Tax Consultant hereby certifies that the Special Tax, if levied in
the maximum amounts permitted pursuant to the Special Tax formula set forth in the Rate and
Method, would be levied in an amount equal to at least 110%of the gross annual debt service on
the Bonds, provided that the annual debt service figures on the attached debt service schedule,
which were relied upon by Special Tax Consultant,are substantially true and correct;
(ii) Although the Special Tax, if levied in the maximum amounts under the Special
Tax formula set forth in the Rate and Method, would be levied in an amount equal to at least
110% of the gross annual debt service payable with respect to the Bonds each year, no
representation is made herein as to actual amounts that will be collected in future years; and
(iii) All information provided by or related to materials provided by the Special Tax
Consultant in the Official Statement, including but not limited to information regarding Rate and
Method.are true and correct as of the date of the Official Statement and as of the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth
below.
Dated: January_, 2007
DAVID TAUSSIG& ASSOCIATES
By:
Its:
RVPUB\KSNOW\722329.1 Ci-1
Resolution No. 06-402
Page 97 of 203
DEBT SERVICE SCHEDULE
Period Ending Special Tax Aggregate Debt
(September 1) Bonds Service
RVPUB\KSNOW\722329.1 Ci-2
Resolution No. 06-402
Page 98 of 203
APPENDIX H
CERTIFICATE OF MARKET ABSORPTION CONSULTANT
The undersigned hereby certifies and represents that he or she is a duly appointed and acting
authorized officer of Empire Economics, Inc. (the "Market Absorption Consultant"), and as such is duly
authorized to execute and deliver this Certificate on behalf of the Market Absorption Consultant in
connection with the issuance by the City of Rancho Cucamonga of its Community Facilities District
No. 2006-02 (Amador on Route 66) (the "District") of its 2006 Special Tax Bonds (the "Bonds"), and
further hereby certifies and reconfirms on behalf of the Market Absorption Consultant as follows:,
(i) The Market Absorption Consultant prepared a market absorption study relating to
the absorption of properties within the District dated September 21, 2006 (the "Market
Absorption Study"). The Market Absorption Study is described and- summarized in the
Preliminary Official Statement dated (the "Preliminary Official Statement")
and the Official Statement dated (the"Official Statement'), including Appendix
A thereto,relating to the Bonds;
(ii) The Market Absorption Consultant hereby certifies that all information with
respect to the Market Absorption Study in the Official Statement is true and correct as of the date
of the Official Statement and as of the date hereof; and
(iii) The Market Absorption Consultant hereby consents to the use of the Market
Absorption Study in connection with the distribution and use of the Preliminary Official
Statement and Official Statement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth
below.
Dated: January 2007
EMPIRE ECONOMICS,INC.
By:
Its:
RVPUB\KSNOW\722329.1 H-I
Resolution No. 06-402
Page 99 of 203
APPENDIX I
CERTIFICATE OF APPRAISER
The undersigned hereby certifies and represents that he or she is a duly appointed and acting
authorized officer of Bruce W. Hull & Associates, Inc. (the "Appraiser"), and as such is duly authorized
to execute and deliver this Certificate on behalf of the Appraiser in connection with the issuance by the
City of Rancho Cucamonga of its Community Facilities District No. 2006-02 (Amador on Route 66) (the
"District") of its 2006 Special Tax Bonds (the "Bonds"), and further hereby certifies and reconfirms on
behalf of the Appraiser as follows:
(i) The Appraiser prepared an appraisal of the properties within the District dated
November _, 2006 (the "Appraisal"). The Appraisal is described and summarized in the
Preliminary Official Statement dated December_, 2006 (the"Preliminary Official Statement')
and the Official Statement dated December _, 2006 (the "Official Statement'), including
Appendix A thereto,relating to the Bonds;
. (ii) The Appraiser hereby certifies that all information with respect to the Appraisal
in the Official Statement is true and correct as of the date of the Official Statement and as of the
date hereof; and
(iii) The Appraiser hereby consents to the use of the Appraisal in connection with the
distribution and use of the Preliminary Official Statement and Official Statement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth
below.
Dated: January 2007
BRUCE W.HULL& ASSOCIATES, INC.
By:
Its:
RVPUBUCSNON\722329.1 I-1
'Resolution No. 06-402
Page 100 of 203
PRELIMINARY OFFICIAL STATEMENT DATED JANUARY_,2007
O'c
s NEW ISSUE-BOOK-ENTRY ONLY _ NOT RATED
u o In the opinion of Best Best&Krieger LLP,San Diego, California,Bond Counsel,under existing statures,regulations,rulings and judicial decisions and
s assuming the accuracy of terrain representations and compliance with certain covenants and requirements discussed herein, interest on the bonds is
excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative
minimum tar imposed on individuals and corporations. In rhe further opinion of Bond Counsel,interest on the Bonds is exempt from California personal
income tax See"TAX MATTERS."
$2,925,000`
City of Rancho Cucamonga
Community Facilities District No. 2006-02
y (Amador on Route 66)
2007 Special Tax Bonds
a Dated: Date of Delivery Due: September 1,as shown below
The City of Rancho Cucamonga(the"City"),for itself and on behalf of the City of Rancho Cucamonga Community Facilities District No.
W o 2006-02(Amador on Route 66)(the"District")is issuing its 2007 Special Tax Bonds(the"Bonds")to(i)finance certain street,landscaping,storm drains
and park facilities to be owned by the City and certain water and sewer facilities to be owned by the Cucamonga County Valley Water District and the
w
Inland Empire Utilities Agency(collectively,the"Facilities"),(ii)provide for capitalized interest on the Bonds through September 1,2007,(iii)fund a
Reserve Fund;(iv)pay the costs of issuance relating to the Bonds;and(v)pay certain administrative costs of the District. The proceeds of the Bonds will
9 r also provide funds to fund a Reserve Fund for the Bonds and to pay costs associated with the issuance of the Bonds.
�
.o`o The Bonds are being issued under the Mello-Roos Community Facilities Act of 1982,as amended(the"Act"),and a Fiscal Agent Agreement
dated as of December 1,2006(the"Fiscal Agent Agreement"),by and between the City and Wells Fargo Bank,National Association,as fiscal agent(the
c "Fiscal Agent").
oThe Bonds are payable from the proceeds of annual special taxes to be levied on property located within the District and from certain other
funds pledged under the Fiscal Agent Agreement. The special taxes authorized to be levied on the taxable property in the District are to be levied
o E according to the rate and method of apportionment approved by a vote of the qualified electors within the District. See Appendix B--Rate and Method of
Apportionment of Special Taxes." The special taxes are to be collected in the same manner and at the same time as ad valorem property taxes are
collected by the County of San Bernardino and,when received,will be placed in the Special Tax Fund established and maintained by the Fiscal Agent.
o The special taxes are secured by liens on taxable real property within the District and do not constitute a personal indebtedness of the respective
o 'h landowners. Accordingly,in the event of delinquency in the payment of special taxes when due,proceedings to recover such delinquent special taxes may
be directed only against such real property securing the delinquent special taxes. Thus,the value of the land in the District that is subject to the levy of
u n special taxes by the District is a critical factor in determining the investment quality of the Bonds. See'SECURITY FOR THE BONDS"and"THE _
v c DISTRICT-Appraisal of Parcels".
g `o
73
0
The Bonds will be issued in fully registered forth only,and,when executed and delivered,will be registered in the name of Cede&Co.,as
nominee of The Depository Trust Company,New York,New York(collectively referred to as"DTC"). DTC will act m securities depository for the
p"F Bonds. Ownership interest in the Bonds may be purchased in book-entry form only,in denominations of$5,000.
3
o Interest on the Bonds accrues from their date,and is payable on March I and September 1 of each year,commencing March 1,2007. Principal,
.a premium(if any),and interest due on the Bonds will be paid by the Fiscal Agent to DTC or its nominee,which will in tum remit such payments in its
'g participants for subsequent disbursement to the beneficial owners of interest in the Bonds. See"Appendix D—Book-Entry Only System'.
� The Bands are subject to redemption prior to maturity,as mare fully described in This Official Statement See"THE BONDS—Redemption of
y Bonds" '
� v
3 NEITHER THE FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE CITY, THE COUNTY OF SAN
BERNARDINO,THE STATE OF CALIFORNIA,NOR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF
`3 THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE DISTRICT OR THE CITY.
`o
o THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE PROCEEDS OF THE
` �_ SPECIAL TAX LEVIED WITHIN THE DISTRICT AND CERTAIN FUNDS ESTABLISHED UNDER THE FISCAL AGENT AGREEMENT
v " AND HELD BY THE FISCAL AGENT,AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.
€ This cover page contains information for quick reference only. It is not a summary of the Bonds. Prospective purchasers must read the entire
o Official Statement to obtain information essential to the making of an informed investment decision.See"BONDOWNERS'RISKS"for a discussion of
factors that should be considered,in addition to the other matters set forth in this Official Statement,in evaluating the investment quality of the Bonds.
r- F
3 The Bonds are offered,when,as and if issued,subject to approval as to their legality by Best Best&Krieger LLP,San Diego,California,Bond
Counsel, and certain other conditions. Certain legal matters will be passed on for the City by Best Best& Krieger LLP, Riverside, California, as
v c Disclosure Counsel, and by Richards Watson& Gershon,a professional corporation, Los Angeles, California. Additionally, it is anticipated that the
Bonds in book-entryform will be available for delivery through the book-entry system of DTC in New York,New York on or about January 1007.
c a
STONE & YOUNGBERG LLC
� A
The date of this Official Statement is 2007 -
Preliminary,subject to change.
RVPUBVCSNOW\722113.1
Resolution No. 06-402
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$2,925,000
City of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
2007 Special Tax Bonds
Maturity Schedule
(Base CUSIP X01*
$ Serial Bonds
Maturity Date Principal Interest CUSIPI') Maturity Date Principal Interest CUSIPO1
(September 1) Amount Rate Yield Suffix (September 1) Amount Rate Yield Suffix
2007 2015
2008 2016
2009 2017
2010 2018
2011 2019
2012 2020
2013 2021
2014
$ _%Term Bonds Due September 1,20.Price to Yield %CUSIPI'1
Term Bonds Due September 1,20_,Price to Yield %CUSIP(')—
Preliminary,subject to change.
t'1 Copyright 2006, American Bankers Association. CUSIP data herein is provided by Standard & Poor's, CUSIP
Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and
does not serve in any way as a substitute for the CUSIP services. .
RV PURUCSNO W\722113.1
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Page 102 of 203
CITY OF RANCHO CUCAMONGA
MAYOR AND CITY COUNCIL
Donald J.Kurth,M.D.,Mayor
Diane Williams,Mayor Pro Tem
Rex Gutierrez, Councilmember
L. Dennis Michael, Councilmember
Sam Spagnolo, Councilmember
CITY STAFF
Jack Lam, City Manager
Pamela S. Easter,Assistant City Manager _
Tamara L.Layne,Finance Director
Ingrid Y.Bruce, GIS/Special Districts Manager
James L. Markman, Esq., City Attorney
Joe O'Neil, City Engineer
BOND COUNSEL FINANCIAL ADVISOR TO THE CITY
Best Best&Krieger LLP Fieldman, Rolapp&Associates
San Diego,California Irvine,California
APPRAISER SPECIAL TAX CONSULTANT
Bruce W. Hull&Associates, Inc. David Taussig&Associates, Inc.
Ventura,California Newport Beach, California
FISCAL AGENT/ DISCLOSURE COUNSEL
DISSEMINATION AGENT
Best Best&Krieger LLP
Wells Fargo Bank,National Association Riverside,California
Los Angeles,California
MARKET ABSORPTION CONSULTANT
Empire Economics,Inc.
Capistrano Beach, California
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TABLE OF CONTENTS
Page_ Page
INTRODUCTORY STATEMENT...........................1 The Proposed Housing Development.............26
General..............................................................1 Lewis Investment and Off-Site Infrastructure.30
Authority for Issuance......................................1 BONDOWNERS'RISKS.......................................31
The District and the Development....................1 Not a General Obligation of the District or the
Purposeof the Bonds........................................2 City.................................................................31
Description of the Bonds..................................2 Levy of the Special Taxes...............................31
Security for the Bonds......................................2 Exempt Properties...........................................32
Risk Factors......................................................3 Collection of the Special Taxes......................32
Tax Matters.......................................................3 Concentration of Property Ownership............33
Professionals Involved in the Offering.............3 Not a Personal Obligation...............................33
Continuing Disclosure......................................4 Parity Taxes and Special Assessments............33
Other Information.............................................4 Land Values and Development.......................33
FINANCING PLAN..................................................4 Notice of Special Taxes;Disclosures To Future
Estimated Sources And Uses Of Funds............5 Purchasers.......................................................36
THE BONDS.............................................................5 Bankruptcy and Foreclosure Delays...............36
Authority for Issuance......................................5 Limitation on Remedies of Bondholders;No
Description of the Bonds..................................6 Acceleration....................................................37 _
Redemption of Bonds.......................................6 Loss of Tax Exemption...................................38
Parity Bonds......................................................9 Secondary Markets and Prices........................38
Debt Service Schedule....................................10 CONCLUDING INFORMATION..........................38
SECURITY FOR THE BONDS .............................11 Tax Matters.....................................................38
General......................................................:.....l l Legal Opinions................................................39
Limited Obligation..........................................11 Litigation........................................................39
The Special Taxes...........................................11 Continuing Disclosure....................................39
The Rate and Method......................................14 No Rating........................................................40
Reserve Fund..................................................17 Underwriting...................................................40
Delinquent Special Taxes; Covenant To Professional Fees............................................40
Foreclose.........................................................18 Miscellaneous.................................................41
THE DISTRICT......................................................19
General Description and Location of the Districtl9 Appendix A—Summary Appraisal Report............A-1
Acquisition/Financing Agreement..................19 Appendix B—Rate and Method of
Facilities to be Financed with the Bonds........20 Apportionment of Special Taxes......................B-1
Absorption Study............................................20 Appendix C—Summary of the Fiscal Agent
Appraisal of Parcels........................................21 Agreement........................................................C-1
Direct and Overlapping Debt..........................21 Appendix D—Book-Entry Only System...............D-1
Estimated Value-to-Lien Ratios......................22 Appendix E—Form of Continuing Disclosure
Cumulative Tax,Assessment and Fee Burden Agreements.......................................................E-1
on Property......................................................22 Appendix F—Form of Bond Counsel Opinion......F-1
THE DEVELOPER AND THE PROPOSED Appendix G—General Information of the City
DEVELOPMENT...................................................24 of Rancho Cucamonga......:..............................G-1
General............................................................24 Appendix H-Summary Absorption Study...........H-1
The Developer and the Housing Development25
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No Offering May be Made Except by this Oficial Statement. No dealer, broker, salesperson or other person
has been authorized to give any information or to make any representations with respect to the Bonds other than
as contained in this Official Statement, and if given or made, such other information or representation must not
be relied upon as having been authorized.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the
solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the
person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make
such offer or solicitation.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of
opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this
Official Statement nor any sale of the Bonds will,under any circumstances,create any implication that there has
been no change in the affairs of the City, the District,any other parties described in this Official Statement,or in
the condition of property within the District since the date of this Official Statement.
Use of this Oficial Statement. This Official Statement is submitted in connection with the sale of the Bonds
referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official
Statement is not a contract with the purchasers of the Bonds.
Preparation of this Official Statement. The information contained in this Official Statement has been obtained
from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or
completeness.
The Underwriter has provided the following sentence for inclusion in this Official Statement: The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this
transaction,but the Underwriter does not guarantee the accuracy or completeness of such information.
Document References and Summaries. All references to and summaries of the Fiscal Agent Agreement or
other documents contained in this Official Statement are subject to the provisions of those documents and do not
purport to be complete statements of those documents.
Stabilization of and Charges to Offering Prices. The Underwriter may overallot or take other steps that
stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the
open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The
Underwriter may offer and sell the Bonds to certain dealers, dealer banks and banks acting as agent at prices
lower than the public offering prices stated on the cover page of this Official Statement, and those public
offering prices may be changed from time to time by the Underwriter.
Bonds are Exempt from Securities Laws Registration. The issuance and sale of the Bonds have not been
registered under the Securities Act of 1933,as amended, or the Securities Exchange Act of 1934,as amended, in
reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the
Securities Act of 1933 and Section 3(a)(12)of the Securities Exchange Act of 1934.
Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement
constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation
Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and
Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable
by the terminology used such as"plan,""expect,""estimate,""budget"or other similar words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO
THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS,
CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.
RVPU13\KSN0W\722113.1 -
Resolution No. 06-402
Page 105 of 203
REGIONAL LOCATION MAP
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San Bernardino County, California
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RVPUB\ICSNO W\722113.1
Resolution No. 06-402
Page 106 of 203
AERIAL LOCATION MAP
City of Rancho Cucamonga
San Bernardino County, California
R V P UBVCS NO W\722113.1
Resolution No. 06-402
Page 107 of 203
OFFICIAL STATEMENT
$2,925,000
City of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
2007 Special Tax Bonds
INTRODUCTORY STATEMENT
General
The purpose of this Official Statement, which includes the cover page and attached Appendices, is to
provide certain information concerning the issuance by the City, for itself and on behalf of the District, of its
City of Rancho Cucamonga Community Facilities District No. 2006-02 (Amador on Route 66) 2007 Special
Tax Bonds (the `Bonds"). The Bonds are.being issued under a Fiscal Agent Agreement (the "Fiscal Agent
Agreement") dated as of December 1, 2006, by and between the City and Wells Fargo Bank, National
Association,a national banking association,as fiscal agent(the"Fiscal Agent").
This introduction is subject in all respects to the more complete information set forth in this Official
Statement. All capitalized terms used in this Official Statement and not otherwise defined have the same
meaning as in the Fiscal Agent Agreement. See "Appendix C - Summary of the Fiscal Agent Agreement -
Definitions."
Authority for Issuance
The Bonds will be issued under the Mello-Roos Community Facilities Act of 1982, as amended,
constituting Sections 53311 et seq. of the California Government Code (the "Act"), the approving vote of the
eligible landowner voters of the District, a resolution of the City Council of the City(the"City Council'), acting
in its capacity as the legislative body of the District adopted on December . 2006, and the Fiscal Agent
Agreement. The City Council has authorized the issuance and delivery of the Bonds in the maximum principal
amount of$3,100,000*. See"THE BONDS—Authority for Issuance."
The District and the Development
The District was formed by the City on October 16,2006, under the Act following a public hearing held
on such date. Following the formation of the District, the City conducted a special election at which the
qualified electors of the District approved the levy of special taxes within the District and the issuance of bonds
secured by such special taxes. The amount of bonded indebtedness and levy of special taxes were subsequently
amended. See"THE BONDS—Authority for Issuance."
The District encompasses approximately 10 gross acres of land in the southerly portion of the City of
Rancho Cucamonga. Of this acreage, approximately 4 acres are expected to be developed into uses subject to
the special tax. At buildout, it is currently expected the District will contain approximately 99 attached
residential dwelling units ranging in size from 1,328 to 1,905 square feet.
All of the Property within the District was acquired by William Lyon Homes, Inc., a California
corporation (the "Developer") under a.purchase agreement with Lewis Investment Company, LLC ("Lewis
Investment'). Under the purchase arrangement Lewis Investment agreed to finance and construct certain off-
site'public improvements. Bond proceeds will be used to acquire these public improvement on behalf of the
City and the Cucamonga Valley Water District. The Developer has extensive experience in developing homes
in a variety of Southern California communities and plans on building 99 triplex homes within the District. See
"THE DEVELOPER AND THE PROPOSED DEVELOPMENT."
Preliminary,subject to change.
RVPUB\KSN0W\722113.1 I -
Resolution No. 06-402
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Purpose of the Bonds
The Bonds are being issued to (a) provide funds for the acquisition and construction of certain public
improvements (See "THE DISTRICT—Facilities to be Financed with the Bonds"), (b) fund a reserve fund for
the Bonds, (c) pay certain administrative expenses of the District, (d) provide for capitalized interest on the
Bonds through September 1,2007,and(e)pay costs associated with the issuance of the Bonds.
Description of the Bonds
The Bonds are being issued in the aggregate principal amount of$2,925,000 and are dated their date of
delivery and mature in the amounts and in the years, and bear interest at the rates set forth on the cover page of
this Official Statement. Interest on the Bonds will be payable on each March 1 and September 1 each year,
beginning March 1,2007.
Registration, book-entry provisions, denominations. The Bonds will be delivered in fully registered
form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository
Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the Bonds.
Ownership interests in the Bonds may be purchased in book-entry form only in the principal amount of$5,000
or any integral multiple. See"Appendix D-Book-Entry Only System."
Transfer and exchange. If the book-entry only system described below is no longer used with respect
to the Bonds, the Bonds may be transferred and exchanged in accordance with the Fiscal Agent Agreement.
Redemption provisions. The Bonds are subject to optional and mandatory sinking fund redemption
prior to their respective maturity dates. See"THE BONDS -Redemption of Bonds."
Security for the Bonds
Limited Obligation.
Neither the full faith and credit nor the general taxing power of the City, the County of San Bernardino
(the "County"), the State of California (the "State"), or any political subdivision of the State is pledged to the
payment of the Bonds. Except for the Special Taxes (defined below),no other taxes are pledged to the payment
of the Bonds. The Bonds are not general obligations of the District or the City.
The Bonds are limited obligations of the District payable solely from the proceeds of the Special Taxes
levied within the District and other sources described in the Fiscal Agent Agreement and held by the Fiscal
Agent.
The Special Taxes.
Payments of interest on and principal of the Bonds are to be made from the proceeds of the Special Tax,
as defined in the Rate and Method, as defined below,authorized to be levied annually by the District pursuant to
the Rate and Method on all taxable property within the District (the "Special Taxes"). The Special Taxes are
authorized to be levied under the Act and in accordance with the special election held in the District and the
Rate and Method. See"SECURITY FOR THE BONDS -The Special Taxes"and"-The Rate and Method"and
Appendix B—Rate and Method of Apportionment of Special Taxes.
Appraised Value of Property within the District,Absorption and Value to Debt Ratio.
An appraisal dated October 23, 2006 of the market value of the fee simple estate in the land within the
District that is subject to the levy of Special Taxes (the "Appraisal') has been prepared by Bruce W. Hull &
Associates, Inc. (the"Appraiser")of Ventura,California and is attached as Appendix A.
Preliminary,subject to change.
RVPUB\KSNOWN722113.1 2
Resolution No. 06-402
Page 109 of 203
Subject to the assumptions contained in the Appraisal, the Appraiser estimated that the fee simple
market value of the properties in the District as of October 15, 2006 was$9,000,000.
A Market Absorption Study dated September 20, 2006, regarding the proposed development within the
District was conducted by Empire Economics, Inc., Capistrano Beach, California. This report indicates that
absorption of the proposed development is expected to begin in the forth quarter of 2007 and full absorption to
occur by the third quarter of 2009. See"Appendix H—Summary Absorption Study."
The aggregate market values reported in the Appraisal results in estimated overall value-to-debt ratio of
3.06 to 1, calculated with respect to all applicable direct and overlapping tax and fixed lien assessment debt, if
any, as of the projected closing date for the Bonds. The value-to-debt ratios of individual parcels within the
District will differ from the foregoing aggregate ratios.
See "THE DISTRICT— Appraisal of Parcels" and "THE DISTRICT—Value to Debt Ratio." See also
"THE DISTRICT — Cumulative Tax, Assessment and Fee Burden on Property" for a description of certain
additional debt or other obligations secured by liens on the property within the District.
Reserve Fund.
The Fiscal Agent Agreement establishes a Reserve Fund for the Bonds which is required to be funded in
an amount equal to the Reserve Requirement. The Reserve Requirement is (a) as of any date of calculation, an
amount not to exceed the lesser of(i)the Maximum Annual Debt Service on the Outstanding Bonds, (ii) 125%
of Average Annual Debt Service on the Outstanding Bonds, or(iii) 10% of the face amount of the Outstanding
Bonds. See"SECURITY FOR THE BONDS -Reserve Fund."
Risk Factors
Certain events could affect the ability of the District to pay debt service on the Bonds when due. See
the section of this Official Statement entitled `BONDOWNERS' RISKS" for a discussion of special factors
which should be considered, in addition to the other matters set forth herein, in considering the investment
quality of the Bonds.
Tax Matters
In the opinion of Bond Counsel, under existing laws, regulations, rulings and court decisions, the
interest on the Bonds is exempt from personal income taxes of the State and, assuming certain representations
and compliance with certain covenants and requirements described in the section entitled "CONCLUDING
INFORMATION —Tax Matters," is excluded from gross income for federal income tax purposes and is not a
specific preference item for purposes of the federal alternative minimum tax on individuals and corporations.
See Appendix F hereto for the form of the opinion of Bond Counsel expected to be delivered in connection with
the issuance of the Bonds. For a more complete discussion of such opinion, see "CONCLUDING
INFORMATION-Tax Matters."
Professionals Involved in the Offering
Wells Fargo Bank, National Association, will serve as Fiscal Agent for the Bonds. The Bonds will be
delivered subject to approval as to their validity by Best Best & Krieger LLP, San Diego, California, Bond
Counsel. Certain legal matters will be passed upon for the Underwriter by disclosure counsel, Best Best &
Krieger LLP, Riverside, California, and for the City and the District by Richards Watson & Gershon, a
professional corporation, Los Angeles, California. Certain legal matters will be passed upon for the Developer
by its counsel, Goodwin Procter LLP, Los Angeles, California and for Lewis Investments by Hewitt &O'Neil,
LLP, Irvine, California. An appraisal of the property within the District has been prepared by Bruce W. Hull &
Associates, Inc., Ventura, California. Fieldman, Rolapp & Associates of Irvine, California, has served as
financial advisor to the City and the District for the financing. David Taussig & Associates, Inc. of Newport
Beach, California, has served as special tax consultant to the District for the financing, and Empire Economics,
Inc.,Capistrano Beach,California,has acted as market absorption consultant.
RVPUBUCSNOWV22113.1 3
Resolution No. 06-402
Page 110 of 203
For information concerning circumstances in which certain of the above — named professionals may
have a financial or other interest in the offering of the Bonds, see "CONCLUDING INFORMATION —
Professional Fees."
Continuing Disclosure
The District has agreed to provide, or cause to be provided, to each nationally recognized municipal
securities information repository ("NRMSIR") and any public or private repository or entity designated by the
State as a state repository("State Repository")periodic reports,commencing October 31, 2007 as to the District,
containing certain financial information and operating data relating to the District, and to provide notices of the
occurrence of certain enumerated events,if material.
The Developer has also agreed for the benefit of the Owners of the Bonds to provide or cause to be
provided, to each NRMSIR and any State Repository semi-annual reports containing certain financial
information and operating data relating to the development of their respective properties, and to provide notices
of the occurrence of certain enumerated events,if material,regarding their respective properties.
The timing of such reports and the specific nature of the information required to be contained in each of
these reports and the notices of material events are set forth in "Appendix E—Forms of Continuing Disclosure
Agreements." See also"CONCLUDING INFORMATION—Continuing Disclosure."
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to
change.
Brief descriptions of the Bonds, certain sections of the Fiscal Agent Agreement, security for the Bonds,
special risk factors, the District, the City, the Developer and its proposed plan of development and other
information are included in this Official Statement. Such descriptions and information do not purport to be
'comprehensive or definitive. The descriptions of the Bonds, the Fiscal Agent Agreement, and other resolutions
and documents are qualified in their entirety by reference to the forms thereof and the information with respect
thereto included in the Bonds, the Fiscal Agent Agreement, such resolutions and other documents. All such
descriptions are further qualified in their entirety by reference to laws and to principles of equity relating to or
affecting generally the enforcement of creditors' rights:
Copies of such documents may be obtained from the office of the City Clerk of the City, 10500 Civic
Center Drive,Rancho Cucamonga, California 91730.
FINANCING PLAN
Facilities to be Financed. Bond proceeds in the estimated amount of $2,200,890 will be used to
construct or acquire public facilities to be owned by the City, the Cucamonga Valley Water District and the
Inland Empire Utilities Agency. See "THE DISTRICT — Facilities to be Financed with Bonds." The City
anticipates acquiring $1,770,890* of public facilities with Bond proceeds including, street improvements,
landscaping improvements,drainage improvements and certain dry utilities with Bond proceeds.
Joint Financing Agreements. In connection with the formation of the District, the City has entered into
separate Joint Community Facilities Financing Agreements with the Cucamonga Valley Water District (the
"Water District") and the Inland Empire Utilities Agency (the "Utilities Agency"). Under each of these
agreements, the City and the respective public agencies have agreed that a portion of the proceeds of the Bonds
will be used to finance public facilities that will be owned by such public agencies. The amount of bond
proceeds and the facilities or property to be financed for the Water District and the Utilities Agency are as
follows:
Preliminary, subject to change.
RVPUBVCSNO W V 22113.1 4
Resolution No. 06-402
Page 111 of 203
Public Agency Bond Proceeds Facilities/Use
Inland Empire Utilities Agency $156,000 Wastewater
Cucamonga Valley Water District 284,000 Water and Sewer
TOTAL $430,000
Estimated Sources And Uses Of Funds
The following table sets forth the estimated sources and uses of the Bond proceeds:
TABLE 1
City of Rancho Cucamonga,
Community Facilities District No.2006-02
(Amador on Route 66)
2007 Special Tax Bonds
Estimated Sources and Uses of Funds
SOURCES OF FUNDS
Principal Amount of the Bonds
Less Underwriter's Discount
Less Original Issue Discount
Total Sources of Funds
USES OF FUNDS
Deposit to the Project Fund(()
Deposit to the Interest Account(2) "
Deposit to Reserve Fund
Deposit to Costs of Issuance Fund
Deposit for Administrative Expenses(3)
Total Uses of Funds
Includes amounts payable to the Water District and the Utility Agency.
-(2) Represents capitalized interest on the Bonds through September 1,2007.
(3) Represents the anticipated administrative expenses of the District for Fiscal Year 2006-2007.
THE BONDS
Authority for Issuance . .
The Act was enacted by the California Legislature to provide an alternate method of financing certain
public capital facilities and services, especially in developing areas of the State. Once duly established, a
community facilities district is a legally,constituted governmental entity within defined boundaries, with the
governing board or legislative body of the local agency that established the district acting on its behalf. Subject
to approval by a two-thirds vote of qualified electors and compliance with the provisions of the Act,a legislative
body of a local agency may issue debt securities for a community facilities district and may levy and collect a
special tax within such district to repay such indebtedness.
Under the Act,the City Council has taken the following actions:
On August 16, 2006,the City Council adopted the following resolutions:
• Resolution No. 06-246 declaring the intention of the City Council to establish the District and to
authorize the levy of special taxes therein to finance the acquisition and construction of certain
public facilities.
• Resolution No. 06-248 declaring the intention of the City Council to issue bonds secured by
special taxes to pay for the acquisition of certain facilities in the District.
RVPUBVSSNOW\722113.1 5
Resolution No. 06-402
Page 112 of 203
On October 18,2006,the City Council, following a public hearing held on such date,adopted:
• Resolution No: 06-327 forming and establishing Community Facilities District No. 2006-02
(Amador on Route 66) and authorizing submittal of levy of special taxes therein to the qualified
electors thereof.
• Resolution No. 06-328 declaring the necessity to incur a bonded indebtedness, submitting to the
qualified electors of the District a proposition to incur a bonded indebtedness secured by a
special tax to pay for certain facilities in the District and a proposition to establish an
appropriations limit for such District,and giving notice thereof.
On October 18, 2006, the qualified electors within the District, authorized the issuance of bonds in a
maximum principal amount of $3,100,000 to be secured by the levy of the special taxes to finance the
acquisition and construction of such facilities, established an annual appropriations limit for the District, and
approved the levy of the special taxes pursuant to a rate and method of apportionment of special taxes(the"Rate
and Method").
The City Council, following the certification of the election results by the City Clerk, adopted
Resolution No. 06-329 on October 18, 2006 declaring the results of the special election within the District.
On October 18, 2006, the CityCouncil also introduced and waived the first reading of Ordinance
No. 770 authorizing the levy of a special tax within the District. The City Council adopted Ordinance No. 770
(the"Ordinance")on November 1,2006,and such Ordinance became effective on December 1,2006.
On , 2006, the City Council also adopted Resolution No. authorizing the issuance
of the Bonds and approving the forms of the Fiscal Agent Agreement, Bond Purchase Agreement, Preliminary
Official Statement and Continuing Disclosure Agreement.
Description of the Bonds
The Bonds will mature on the dates and in the principal amounts and will bear interest at the rates per
annum set forth on the inside cover page of the Official Statement. Interest on the Bonds will accrue from their
date, and will be payable semiannually on March 1 and September 1 each year (each an "Interest Payment
Date") commencing March 1, 2007. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
The Bonds will be issued in fully registered form without coupons in the denomination of$5,000 or any
integral multiple.. All of the Bonds, when issued, will be registered in the name of Cede & Co., as nominee of
DTC, New York, New York, which will act as securities depository for the Bonds. Purchasers will not receive
physical certificates representing their interests in the Bonds. Principal of and interest on the Bonds will be paid
by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants, who will remit such payments to
the beneficial owners of the Bonds. See"Appendix D-Book-Entry Only System."
Redemption of Bonds
Optional Redemption. The Bonds are subject to optional redemption prior to their stated maturity on
any Interest Payment Date,as a whole or in part,at the following redemption prices(expressed as percentages of
the principal amount of the Bonds to be reduced), together with accrued interest thereon to date of redemption:
Redemption Date Redemption Price
RVPUBUCSNO W V 221 13.1 6
Resolution No. 06-402
Page 113 of 203
Mandatory Redemption from Proceeds of Special Tax Prepavments. The Bonds shall be subject to
redemption on any Interest Payment Date, prior to maturity, as a whole or in part on a pro rata basis among
maturities from amounts deposited to the Redemption Fund representing Special Tax Prepayments. An
Authorized Representative shall deliver written instructions to the Fiscal Agent not less than 60 days prior to the
redemption date directing the Fiscal Agent to utilize the Special Tax Revenues transferred to the Redemption
Fund and the Interest Account of the Bond Fund pursuant to the Fiscal Agent Agreement. Such mandatory
redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal
amount of the Bonds to be redeemed),together with accrued interest thereon to the date of redemption:
Redemption Date Redemption Price
The Bonds will be subject to such mandatory redemption as a result of a Special Tax Buydown (as such
term is used in the Rate and Method) in the event of certain changes in development. See "APPENDIX B —
Rate and Method of Apportionment of Special Taxes—Special Tax Buydown."
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20_ are subject to
mandatory sinking fund redemption in part on September 1, 20 , and on any date thereafter each September 1
thereafter to maturity, by lot, at a redemption price equal to the principal amount of the Bonds to be redeemed,
together with accrued interest to the date fixed for redemption,without premium, from sinking fund payments as
follows:
Redemption Date Principal Amount
(September 1) Redeemed
The Bonds maturing on September 1,20_are subject to mandatory sinking fund redemption in part on
September 20_, and on each September 1 thereafter to maturity by lot, at a redemption price equal to the
principal amount of the Bonds to be redeemed, together with accrued interest to the date fixed for redemption,
without premium, from sinking fund payments as follows:
Redemption Date Principal Amount
(September 1) Redeemed
RV PUBUCSNO W V 22113.1 7
Resolution No. 06-402
Page 114 of 203
The principal amounts of the Bonds subject to mandatory sinking fund redemption in the preceding
tables shall be reduced, as a result of any prior partial optional redemption or mandatory redemption from the
proceeds of Special Tax Prepayments, in reverse order of sinking fund payment date.
Selection of Bonds for Redemption.
Whenever provision is made for the redemption of less than all of the Bonds or any given portion
thereof, the Fiscal Agent shall select the Bonds to be redeemed, from each maturity in any manner the City.
specifies, with such selection within a maturity to be done in any manner which the Fiscal Agent deems fair.
Notice of Redemption.
The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail,postage prepaid,
at least 30 days but not more than 60 days prior to the date fixed for redemption, to the Original Purchaser, to
the Securities Depositories,to one or more Information Services, and to the respective registered Owners of any
Bonds designated for redemption, at their addresses appearing on the Bond Register in the Principal Office of
the Fiscal Agent;but such mailing shall not be a condition precedent to such redemption and failure to mail or to
receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption
of such Bonds.
Such notice shall state the redemption date and the redemption price and, if less than all of the then
Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of
the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be
redeemed or shall state that all Bonds between two stated Bond numbers,both inclusive, are to be redeemed or
that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called
in part the principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the
Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further
interest on such Bonds will not accrue from and after the redemption date.
Effect of Redemption.
From and after the date fixed for redemption, if funds available for the payment of the principal of, and
interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund or
Redemption Fund, such Bonds so called shall cease to be entitled to any benefit under the Fiscal Agent
Agreement other than the right to receive payment of the redemption price and interest thereon through the date
of redemption, and no interest shall accrue thereon on or after the redemption date specified in the notice of
redemption.
All Bonds redeemed will be canceled immediately by the Fiscal Agent and will not be reissued.
Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall
authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same
series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion
of the Bond or Bonds.
RVPUB\KSNOW\722113.1 8
Resolution No. 06-402
Page 115 of 203
Purchase in Lieu of Redemption.
In lieu of optional mandatory or mandatory sinking fund redemption, moneys in the Bond Fund or
Redemption Fund may be used and withdrawn by the Fiscal Agent for purchase of outstanding Bonds,upon the
filing with the Fiscal Agent of an Officer's Certificate requesting such purchase, at public or private sale as and
when, and at such prices (including brokerage and other charges) as such Officer's Certificate may provide,but
in no event may Bonds be purchased at a price in excess of the principal amount thereof,plus interest accrued to
the date of purchase and any premium which would otherwise be due if such Bonds were to be redeemed in
accordance with the Fiscal Agent Agreement.
In lieu of optional redemption, the District may elect to purchase Bonds at public or private sale at such
prices as the District may in its discretion determine; provided, that, unless otherwise authorized by law, the
purchase price (including brokerage and other charges) of Bonds so purchased may not exceed the principal
amount of those Bonds plus accrued interest to the purchase date.
Parity Bonds
The City will covenant in the Fiscal Agent Agreement that it will issue no additional bonds on a parity
with the Bonds; provided, however, nothing in the Fiscal Agent Agreement limits the issuance of any bonds on
behalf of the District if(a) the rights and claims of such bonds to the Special Tax Revenues and the funds and
accounts established and described in the Fiscal Agent Agreement are in all respects subordinate to the rights
and claims of the Bonds, or (b) after the issuance and delivery of such bonds, none of the Bonds shall be
Outstanding. The Bonds defeased pursuant to the Fiscal Agent Agreement or Bonds in exchange or in lieu of
which other bonds have been delivered are not considered to be Outstanding.
RVPUBUCSNO W V 22113.1 9
Resolution No. 06-402
Page 116 of 203
Debt Service Schedule
The table below sets forth the scheduled payments of principal and interest for the Bonds, including
annual debt service totals.
TABLE 2
City of Rancho Cucamonga,
Community Facilities District No. 2006-02
(Amador on Route 66)
2007 Special Tax Bonds
Debt Service Schedule
Year Ending Total Debt
(September 1) Principal Interest Service
200701
2008
2009
2010
2011
2012
.2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
TOTAL
tll Interest for the 2007 Bond Year will be paid from moneys deposited to the Interest Account on the Closing Date.
RVPUBUCSNOWV22113.1 10
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SECURITY FOR THE BONDS
General
.The Bonds are secured by and payable from an irrevocable first lien on the Special Tax Revenues
(defined below) and moneys on deposit in the following funds established pursuant to the Fiscal Agent
Agreement: the Bond Fund, the Reserve Fund, and the Redemption Fund, until disbursed as provided in the
Fiscal Agent Agreement. Amounts.in the Project Fund, the Cost of Issuance Fund, the Special Tax Fund, the
Administrative Expense Fund and the Rebate Fund established pursuant to the Fiscal Agent Agreement are not
pledged to the repayment of the Bonds.
"Special Tax Revenues" include the proceeds of Special Taxes received by the City, including any
scheduled payments and any prepayments of such Special Taxes, accrued interest and proceeds of the
redemption or sale of property sold as a result of foreclosure of the lien of such Special Taxes to the amount of
such lien and accrued interest; provided, however, such Special Tax Revenues do not include amounts retained
by the Finance Director for deposit in the Administrative Expense Fund and any penalties collected in
connection with any Special Taxes that are delinquent. Such Special Tax Revenues and all moneys deposited
into the above referenced funds (except as otherwise provide in the Fiscal Agent Agreement) are dedicated to
the payment of.the principal of, and interest and premium on, the Bonds as provided in the Fiscal Agent
Agreement and the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities
have been set aside irrevocably for that purpose in accordance with the provisions of the Fiscal Agent
Agreement.
No Pledge of the Facilities.
The Facilities constructed and acquired with the proceeds of the Bonds are not in any way pledged to
pay the debt service on, nor do such Facilities secure in any way payment of debt service on the Bonds. Any
proceeds of condemnation or destruction of any Facilities financed with the proceeds of the Bonds are not
pledged to pay debt service on the Bonds.
Limited Obligation
Neither the full faith and credit nor the general taxing power of the City,the County, the State,or
any political subdivision is pledged to the payment of the Bonds. The Bonds are not general obligations of
the District or the City. The Bonds are limited obligations of the District payable solely from the proceeds
of the Special Taxes and other sources described in the Fiscal Agent Agreement and held by the.Fiscal
Agent.
The Special Taxes
Approval of the Special Tax.
On October 18, 2006, the City Council established the District in accordance with the provisions of the
Act. In a special election held following the establishment of the District, the qualified electors within the
District, the owners of land within the District, authorized the issuance of Bonds in the maximum principal
amount of$3,100,000. The City Council, acting as the legislative body of the District,will establish tax rates to
levy and apportion the special tax against property within the District onan annual basis.
r
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District Covenant to Levy the Special Tax.
Under the Fiscal Agent Agreement,the City is required to comply with all requirements of the Act so as
to assure the timely collection of the Special Tax Revenues, including without limitation, the enforcement of
delinquent Special Taxes.
On or within five Business Days of each June 1, the Fiscal Agent shall provide the Finance Director of
the City with a notice stating the amount then on deposit in the Interest Account and Principal Account of the
Bond Fund, and the Reserve Fund,and informing the City that the Special Taxes may need to be levied pursuant
to the Ordinance as necessary to provide for Annual Debt Service and Administrative Expenses and
replenishment (if necessary) of the Reserve Fund so that the balance equals the Reserve Requirement. The
receipt of or failure to receive such notice by the Finance Director in no way affects the obligations of the
Finance Director described below. Upon receipt of such notice, the Finance Director shall communicate with
the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any
parcel splits during the preceding and then current year.
The Finance Director shall effect the levy of the Special Taxes within the District each Fiscal Year in
accordance with the Ordinance by"each July 15 that the Bonds are Outstanding, or otherwise such that the
computation of the levy is complete before the final date on which the Auditor will accept the transmission of
the Special Tax amounts for the parcels within the District for inclusion on the next real property tax roll. Upon
the completion of the computation of the amounts of the levy, the Finance Director shall prepare or cause to be
prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special
Taxes on the next real property tax roll.
The Finance Director shall fix and levy the amount of Special Taxes within the District required for the
payment of principal of and interest on any Outstanding Bonds becoming due and payable during the ensuing
year, including any necessary replenishment or expenditure of the amount within the Reserve Fund for such
Bonds and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts
necessary to discharge any rebate obligation owing to the federal government) during such year, taking into
account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied shall not exceed
the authorized amounts as provided in the proceedings pursuant to the Rate and Method.
Duration of Special Tax Levy.
The Special Taxes shall be levied for a period not to exceed 50 years commencing with Fiscal Year
2007-2008; provided,however, Special Taxes will cease to be levied within the District in an earlier Fiscal Year
if the CFD Administrator (as such term is defined in the Rate and Method) has determined that all required
interest and principal payments on the Bonds secured by and payable from such Special Taxes have been paid.
Covenant not to Reduce Special Tax Rates Unless Certain Conditions are Met.
The City has covenanted in the Fiscal Agent Agreement, that to the maximum extent that the law
permits it to do so,that the City shall not initiate proceedings to reduce the Maximum Special Tax Rate(as such
term is defined in the Rate and Method) unless, in connection therewith, (i) the City receives a certificate from
one or more Tax Consultants which, when taken together, certify that, on the basis of the parcels of land and
improvements existing in the District as of the July 1 preceding the reduction, the Maximum Annual Special
Tax which may be levied on all Assessor's Parcels (as such term is defined in the Rate and Method) of taxable
property within the District on which a completed structure is located in each Fiscal Year will equal at least
110% of the sum of the gross debt service on all Bonds to remain Outstanding plus the Administrative Expense
Requirement after the reduction is approved and will not reduce the Maximum Annual Special Tax payable
from parcels within the District on which a completed structure is located to less than the sum of 110% of
Maximum Annual Debt Service,and(ii) the City Council finds pursuant to the Fiscal Agent Agreement that any
reduction made under such conditions will not adversely affect the interests of the Bondowners. Any reduction
in the Maximum Annual Special Tax approved pursuant to the preceding sentence may be approved without the
consent of the Bondowners.
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The City has covenanted in the Fiscal Agent Agreement that,if any initiative is adopted by the qualified
electors which purports to reduce the Maximum Annual Special Tax below the levels authorized under the Rate
and Method, or to limit the power or authority of the District to levy Special Taxes under the Rate and Method,
the District will commence and pursue legal action in order to preserve the authority and power of the District to
levy Special Taxes, from funds available under the Fiscal Agent Agreement.
Manner of Collection.
The Special Taxes will be collected in the manner and at the same time as ad valorem property taxes are
collected by the County;provided,however,the City may directly bill the Special Taxes at a different time or in,_
a different manner if necessary to meet its financial obligations. In cases of delinquency, the Special Taxes will
generally be subject to the same penalties and the same procedures, sale and lien priority as is provided for ad
valorem property taxes.
Taxes are levied by the County for each Fiscal Year on taxable real property that is situated in the
County as of the preceding January 1. Property taxes on the secured roll (that is, taxes against real property
having a tax lien that is sufficient,in the opinion of the County Assessor,to secure payment of the taxes)are due
in two installments, on November 1 and February 1 of each Fiscal Year. If unpaid, such taxes become
delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment.
Property on the secured roll with respect to which taxes are delinquent become tax defaulted on June 30 of the
Fiscal Year; such property may thereafter be redeemed by-payment of the penalty set forth in the Revenue and
Tax Code, together with the defaulted taxes, the delinquency penalty, costs, and a redemption fee: If taxes are
unpaid for a period of five years or more,the property is subject to auction sale by the County.
Because the District does not participate in the"Teeter Plan"(which is the County's Alternative Method
of Distribution of Tax Levies and Collections and of Tax Sale Proceeds, as provided for in Section 4701 et seq.
of the California Revenue and Taxation Code), collections of assessments and Special Taxes will reflect actual
delinquencies.
Deposit and Application of Special Taxes.
Under the Fiscal Agent Agreement, all proceeds of the annual Special Taxes (except prepayments of
Special Taxes and amounts retained by the Finance Director for deposit into the Administrative Expense
Account in the amounts of each applicable Administrative Expense Requirement to pay Administrative
Expenses) are to be deposited in the Special Tax Fund established by the Fiscal Agent Agreement, and applied
as follows:
1. The Fiscal Agent shall deposit in the Interest Account of the Bond Fund, on each
Interest Payment Date and date for redemption of the Bonds, an amount required to cause the aggregate
amount on deposit in the Interest Account to equal the amount of interest due or becoming due and
payable on such Interest Payment Date on all Outstanding Bonds or to be paid on the Bonds being
redeemed on such date.
2. The Fiscal Agent shall deposit in the Principal Account of the Bond Fund, on each
Interest Payment Date and redemption date on which principal of the Bonds, including sinking fund
payments, shall be payable, including sinking fund payments, an amount required to cause the aggregate
amount on deposit in the Principal Account to equal the principal amount of, and premium (if any) on,
the Bonds coming due and payable on such Interest Payment Date, or required to be redeemed on such
date pursuant to the Fiscal Agent Agreement.
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3. On or after March 2 and September 2 of each year after making the transfer and
deposits required under paragraphs I and 2 above,the Fiscal Agent shall transfer the amount, if any,
necessary to replenish the amount then on deposit in the Reserve Fund to an amount equal to the
Reserve Requirement.
4. On or after September 2 of each year after making the deposits and transfers required
under paragraphs 1 through 3 above, upon receipt of written instructions from an Authorized Officer,
the Fiscal Agent shall transfer from the Special Tax Fund to the Rebate Fund the amount specified in
such request.
5. On or after September 2 of each year after making the deposits and transfers required
under paragraphs 1 through 4 above, upon receipt of a written request of an Authorized Officer, the
Fiscal Agent shall transfer from the Special Tax Fund to the Administrative Expense Fund the amounts
specified in such request to pay those Administrative Expenses which the District reasonably expects
(a)will become due and payable during such Fiscal Year or the cost of which Administrative Expenses
have previously been incurred and paid by the District from funds other than the Administrative
Expense Fund and(b)the cost of which Administrative Expenses will be in excess of the Administrative
Expense Requirement for such Fiscal Year.
6. If,on or after September 2 of each year,after making the deposits and transfers required
under paragraphs 1 through 5 above, moneys remain in the Special Tax Fund, such moneys shall remain
on deposit in the Special Tax Fund and shall be subsequently deposited or transferred pursuant to the
provisions of paragraphs 1 through 5 above.
Special Taxes are not a Personal Obligation.
Although the Special Taxes will constitute a lien on property subject to taxation within the District in
which such property is located, it does not constitute a personal indebtedness of the owners of such property.
There is no assurance that the property owners will be financially able to pay the annual Special Tax or that they
will pay such tax even if financially able to do so. The risk of the property owners not paying the annual Special
Tax is more fully described in`BONDOWNERS' RISKS -Collection of the Special Taxes."
The Rate and Method
The District is legally authorized in the Fiscal Agent Agreement to cause the levy of special taxes within
the District in accordance with the Rate and Method. The Rate and Method apportions the total amount of
Special Tax to be collected among the Taxable Property(as defined in the Rate and Method) within the District
as more particularly described therein. Excerpts from the Rate and Method are provided below. All capitalized
terms used in the following summary and not otherwise defined in this Official Statement shall have the
meanings given to such terms in the Rate and Method as set forth in Appendix B.
The Special Tax shall be levied on all Assessor's Parcels of Taxable Property in the District and
collected each Fiscal Year commencing in Fiscal Year 2007-08, in an amount determined through the
application of the Rate and Method. All of the real property in the District, unless exempted by law or by the
provisions of the Rate and Method, shall be taxed for the purposes, to the extent and in the manner herein
provided.
Assignment to Land Use Categories. Each Fiscal Year, all Taxable Property within the District will be
classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or
Undeveloped Property, and shall be subject to Special Taxes in accordance with the Rate and Method.
Residential Property shall be assigned to Land Use Classes 1 through 4, as listed in Table A below, and Non-
Residential Property shall be assigned to Land Use Class 5.
Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel of Residential Property
shall be based on the Residential Floor Area of the dwelling unit(s) located on such Assessor's Parcel. The
RVPUMONOM722113.1 14
Resolution No. 06-402
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Maximum Special Tax for each Assessor's Parcel of Non-Residential Property shall be based on the Acreage of
such Assessor's Parcel. The Maximum Special Tax for any Assessor's Parcel of Developed Property containing
more than one Land Use Class shall be determined pursuant to Section C below.
Developed Property
(a) Maximum Special Tax. The Maximum Special Tax for each Assessor's Parcel classified as
Developed Property is shown below in Table A.
Land Use Class Description Residential Floor Area Maximum Special Tax
1 Residential Property More than 1,850 SF $2,816 per unit
2 Residential Property . 1,601 — 1,850 SF $2,697 per unit
3 Residential Property 1,351 — 1,600 SF $2,469 per unit
4 Residential Property Less than 1,351 SF $2,241 per unit
5 Non-Residential Property N/A $64,747 per Acre
(b) Multiple Land Use Classes. In some instances an Assessor's Parcel of Developed Property may
contain more than one Land Use Class. The Maximum Special Tax levied on such an Assessor's Parcel shall be
the sum of the Maximum Special Taxes for all Land Use Classes located on that Assessor's Parcel. 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, or equivalent
entitlement, designated for each land use as determined by reference to the site plan approved by the City for
such Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final.
Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property
(a) Maximum Special Tax. The Maximum Special Tax for Undeveloped Property, Taxable Public
Property, and Taxable Property Owner Association Property shall be$71,889 per Acre.
Special Tax Buydown. The Rate and Method provides for a Special Tax Buydown that can occur based
upon a change in development after the issuance of the Bonds. See "APPENDIX B - Rate and Method of
Apportionment of Special Taxes — Special Tax Buydown" and "THE BONDS — Redemption — Mandatory
Redemption from Proceeds of Special Tax Prepayments."
Medved of Apportionment of the Special Tax.' Commencing with Fiscal Year 2007-08 and for each
following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax
until the total Special Tax levy 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 Maximum Special Tax;
Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first
step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of
Undeveloped Property at up to 100%of the Maximum Special Tax for Undeveloped Property;
Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first
two steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's
Parcel of Taxable Public Property and Taxable Property Owner Association Property at up to the
Maximum Special Tax for Taxable Public Property and Taxable Property Owner Association Property;
Notwithstanding the above the Council may, in any Fiscal Year, levy Proportionately less than
100% of the Maximum Special Tax in step one (above), when (i) the Council is no longer required to
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Resolution No. 06-402
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levy the Special Tax pursuant to steps two and three above in order to meet the Special Tax
Requirement; and (ii) all authorized District Bonds have already been issued or the Council has
covenanted that it will not issue any additional District Bonds(except refunding bonds)to be supported
by the Special Tax.
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 by increased by more than ten percent as a consequence of delinquency or default by the
owner of any other Assessor's Parcel within the District.
Exemptions. No Special Tax shall be levied on up to 6.0 Acres of Public Property and/or Property
Owner Association Property. A tax-exempt status will be assigned by the CFD Administrator in the
chronological order in which property becomes Public Property or Property Owner Association Property.
However, should an Assessor's Parcel no longer be classified as Public Property or Property Owner Association
Property, its tax-exempt status will be revoked.
Public Property or Property Owner Association Property that is not exempt from the Special Tax under
this section shall be subject to the levy of the Special Tax and shall be taxed proportionately as part of the third
step in Section E above, at up to 100% of the applicable Maximum Special Tax for Taxable Public Property and
Taxable Property Owner Association Property.
Manner of Collection. The Special Tax will be collected in the same manner and at the same time as
ordinary ad valorem property taxes; provided, however, that the District may directly bill the Special Tax; may
collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations,
and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the
Act.
Prepayment of Special Tax. Only an Assessor's Parcel of Developed Property, or Undeveloped
Property for which a building permit has been issued, may be prepaid. The Special Tax obligation applicable to
an Assessor's Parcel in the District may only be prepaid after all authorized District Bonds have already been
issued, or after the Council has covenanted that it will not issue any additional District Bonds(except refunding
bonds) to be supported by Special Taxes levied under the Rate and Method of Apportionment. The manner in
which the Special Tax may be prepaid is set forth in"Exhibit B—Rate and Method of Apportionment of Special
Tax—Prepayment."
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Special Taxes for Project The annual levy of Special Taxes at buildout of the proposed development
within the District, which is anticipated to occur in the third quarter of 2009 is summarized on the basis of the
anticipated floor plan of each lot. See "THE DISTRICT" for additional information. Table 3 on the following
page provides a summary of residential development and special taxes within the District.
TABLE3
City of Rancho Cucamonga,
Community Facilities District No.2006-02
(Amador on Route 66)
Residential Development and Special Tax Summary
Total Percent
Floor Home Size Number Special Special of
Tract Plan in scl.ft.)(,) of Units1�1 Tax Taxes Total
TTM 1688210 Tri-Plex Plan 1 1,335 33 $2,241 $73,953 29%
Tri-Plex Plan 2 1,803 33 2,697 89,001 35
Tri-Plex Plan 3 1 920 33 2 816 92928 36
Total 99 $255,882 100%
All property within the District is located in Tentative Tract Map 16882. -
(2) Provided by the Developer
Source: David Taussig and Associates,Inc.
Special Tax Revenue-Debt Service Coverage.
For fiscal year 2007-08, and in each year thereafter, the annual Maximum Special Tax that may be
levied on Taxable Property in the District, less administrative expenses, will be no less than 110% of the annual
debt service expected to be due on the Bonds.
Reserve Fund
The Fiscal Agent Agreement requires that the Fiscal Agent establish and maintain a Reserve Fund for
the Bonds in an amount equal to the Reserve Requirement. Except as otherwise provided in the Fiscal Agent
Agreement, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely
for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond
Fund of the amount then required for payment of the principal of,and any interest and premium on, the Bonds.
If Special Taxes for any property within the District are prepaid and Bonds are to be redeemed with the
proceeds of such prepayment, a proportionate amount of the Reserve Fund will be applied to the redemption of
such Bonds.
The Reserve Requirement for the Bonds will be funded initially from the proceeds of the sale of the
Bonds. See"Appendix C—Summary of The Fiscal Agent Agreement."
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Delinquent Special Taxes; Covenant To Foreclose
Sale of Properlyfor Nonpayment of Real Property Taxes.
The Fiscal Agent Agreement provides that the Special Taxes are to be levied within the District and
collected in the same manner as ordinary ad valorem property taxes are collected; provided,however,the Fiscal
Agent Agreement further provides that the District may directly bill the Special Taxes or may collect the Special
Taxes at a different time or in a different manner if necessary to meet its financial obligations. Except as
provided in the special covenant for foreclosure described below and in the Act, the Special Taxes that are
collected in the same manner as ordinary ad valorem property taxes are subject to the same penalties and the
same procedure, sale and lien priority in case of delinquency as is provided for ad valorem property taxes.
Under these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by
the County.
Judicial Foreclosure Proceedings.
Under Section 53356.1 of the Act, if any payment of the Special Tax for a taxable parcel is delinquent,
the City may order the institution of a court action to foreclose the lien on the Taxable Parcel within specified
time limits. In such an action,the real property subject to the unpaid amount maybe sold at judicial foreclosure
sale. The ability of the City to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain
instances and may require prior consent of the property owner if the property is owned by or in receivership of
the Federal .Deposit Insurance Corporation (the "FDIC"). See `BONDOWNERS' RISKS - Bankruptcy and
Foreclosure Delays."
Such judicial foreclosure action is not mandatory. However, the City has covenanted(the "Foreclosure
Covenant").in the Fiscal Agent Agreement that on or before March 1 and June I of each Fiscal year, the City
will review the public records of the County in connection with the Special Taxes levied in such Fiscal Year to
determine the amount of Special Taxes actually collected in such Fiscal Year. If the City determines that(a)any
single parcel subject to the Special Taxes is delinquent in the payment of Special Taxes in the aggregate of
$4,000 or more or (b) any single parcel or parcels under common ownership subject to the Special Taxes are
delinquent in the payment of Special Taxes in the aggregate of$20,000 or more, the City shall, not later than 45
days of such determination, send or cause to be sent a notice of delinquency (and a demand for immediate
payment thereof) to the owners of all such delinquent payments. The City shall cause judicial foreclosure
proceedings tobe commenced and filed in the Superior Court not later than 90 days after such determination
against any parcel for which a notice of delinquency was given and for which the Special Taxes remain
delinquent. If the City determines that it has collected less than 95% of the Special Taxes levied in the such
Fiscal Year,then the City shall,not later than 45 days of such determination, send or cause to be sent a notice of
delinquency (and a-demand for immediate payment thereof) to the owner of each delinquent parcel (regardless
of the amount of such delinquency). The City will cause judicial foreclosure proceedings to be commenced and
filed in the Superior Court not later than 90 days after such determination against any parcel for which a notice
of delinquency was given pursuant to this section and for which the Special Taxes remain delinquent.
Subject to the maximum rates, the Rate and Method is designed to generate from all non-exempt
property within the District the current year's debt service on the Bonds, administrative and other expenses, and
replenishment of the Reserve Fund for the Bonds to the Reserve Requirement. However, if foreclosure
proceedings are necessary, and the Reserve Fund has been depleted, there could be a delay in payments to
Owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the District of the
proceeds of the foreclosure sale.
Priority of Lien.
The Act specifies that the Special Taxes will have the same lien priority as ad valorem property taxes in
the case of delinquency but does not further specify the priority relationship, if any, between the Special Taxes
and other special taxes, assessments and ad valorem taxes on a taxed parcel. The District (and other
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jurisdictions)may levy additional special taxes to finance other infrastructure needed for the development of the
property in the District. See"THE DISTRICT-Cumulative Tax,Assessment and Fee Burden on Property."
If foreclosure proceedings were ever instituted, any holder of a mortgage or deed of trust on the affected
property could, but would not be required to, advance the amount of the delinquent Special Tax payment to
protect its security interest.
Sufficiency of Foreclosure Sale Proceeds.
No assurances can be given that a judicial foreclosure action, once commenced, will be completed or
that it will be completed in a timely manner. See `BONDHOLDER'S RISKS - Bankruptcy and Foreclosure
Delays."If a judgment of foreclosure and order of sale is obtained, the judgment creditor, i.e., the District or the
City acting on behalf of the District, must cause a Notice of Levy to be issued. Under current law, a judgment
debtor, i.e., the property owner, has 120 days for residential property (up to a fourplex) and 20 days for other
property from the date of the service of the Notice of Levy and 20 days.from the subsequent notice of sale in
which to redeem the property to be sold. If a judgment debtor fails to so redeem and the property is sold, the
former owner's only remedy is an action to set aside the sale, which must be brought within 90 days of the date
of the sale. If, as a result of such action,a foreclosure sale is set aside,the judgment is revived and the judgment
creditor is entitled to interest on the revived judgment as if the sale had not been made. The constitutionality of
the aforementioned legislation, which repeals the former one-year redemption period, has not been tested; and
there can be no assurance that, if tested, such legislation will be upheld. Any parcel subject to foreclosure sale
must be sold at the minimum bid price unless a lesser minimum bid price is authorized by the Owners of 75%of
the principal amount of the Bonds.
No assurance can be given that the real property subject to sale or foreclosure will be sold or, if
sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. The Act
does not require the City or the District to purchase or otherwise acquire any parcel of property offered
for sale or subject to foreclosure if there is no other purchaser at such sale or if the bid of any prospective
purchaser is less than the minimum bid price.
If the Reserve Fund for the Bonds is depleted and delinquencies in the payment of Special Taxes exist,
there could be a default or delay in payments to the owners of the affected Bonds pending prosecution of
foreclosure proceedings and receipt by the District or the City of the foreclosure sale proceeds, if any.
THE DISTRICT
General Description and Location of the District
The District.
The District encompasses approximately 10 gross acres of land in the southerly portion of the City of
Rancho Cucamonga. Of this acreage, approximately 4 acres are expected to be developed into uses subject to
the special tax. At buildout, it is currently expected the District will contain approximately 99 attached
residential dwelling units ranging in size from 1,335 to 1,920 square feet.
The District was formed by the City on October 18, 2006 under the Act following a public hearing held
on such date. Following the formation of the District, the City conducted a special election at which the
qualified electors of the District approved the levy of special taxes within the District and the issuance of bonds
secured by such special taxes. Following the adoption of the resolutions,the City conducted a special election at
which qualified electors of the District approved such amendments.
Acquisition/Financing Agreement
The City, the District, the Developer and Lewis Investment entered into an Acquisition/Financing
Agreement dated as of 2006 (the "Acquisition Agreement"). Under the Acquisition Agreement,
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Lewis Investment is to construct certain public improvements to be acquired by the City and the Cucamonga
Valley Water District. The Acquisition Agreement provides that the City will acquire the facilities from Lewis
Investment with proceeds of the Bonds. See"THE DEVELOPER AND THE DEVELOPMENT—General."
Facilities to be Financed with the Bonds
The proceeds of the Bonds are intended to provide financing for a portion of the cost of the acquisition
and construction of the Facilities undertaken by Lewis Investment, the City, the Water District and the Utilities
Agency. Any costs of the Facilities not financed through the use of Bonds proceeds will be financed by Lewis
Investment. The cost of the Facilities will include the costs of engineering, design, planning, permitting, and
construction, coordination,together with other incidental costs.
The following table summarizes the estimated costs of the Facilities to be acquired with Bond proceeds
as of December 1,2006:
TABLE 4
City of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
Estimated Facilities Costs
Sources Estimated Cost
Bond Proceeds - - $2,200,890*
Lewis Investment Equity 802.882
Total $3,003,772
Facilities Description
Transportation $526,300
Landscaping 408,629
Dry Utilities 114,808
Parks and Recreation 267,291
Drainage 230,627
Water(') - 436,206
Sewer(') 574,461
Miscellaneous Costs and Contingency 445.450
Total $3,003,772
(1) Of such amounts, $284,000 will be used by Cucamonga Valley Water District to construct water and sewer
facilities and$145,000 will be used by Inland Empire Utilities Agency to construct wastewater facilities.
*Preliminary,subject to change.
Absorption Study
The Market Absorption Study dated September 20, 2006 for the District has been prepared by Empire
Economics, Inc., Capistrano Beach, California (the "Market Absorption Consultant"). A copy of the Market
Absorption Study Summary and Conclusions is included as Appendix H. The Market Absorption Consultant
has estimated,based upon the analysis of relevant demographic and economic conditions in the San Bernardino
area, the number and proportion of housing units in the District that can be expected to be marketed annually
using the estimated absorption schedules for each of the product types: The Market Absorption Study concludes
that absorption will begin by the fourth quarter of 2007 with final absorption occurring in the third quarter of
2009.
The Market Absorption Study assumes that all required governmental approvals will be obtained, that
there are no physical impediments to construction such as earthquakes and hazardous waste, that the public
infrastructure necessary to develop will be provided in a timely manner, that the Developer will respond to
market conditions with products that are competitively priced and have the features and amenities desired by
purchasers, that the developers and their lenders have sufficient financial strength to fund adequately the
RVPUBUCSNOM722113.1 20
Resolution No: 06-402
Page 127 of 203
projects and that they have sufficient cash flow reserves to supplement their cash flow positions in the event that
adverse economic or market conditions occur. The actual absorption of units could be adversely affected if one
or more of the foregoing assumptions is not realized. See"Appendix H—Absorption Study."
Appraisal of Parcels
An Appraisal dated October 23, 2006 was prepared by the Appraiser to ascertain the market value of the
fee simple estate of the property in the District subject to the levy of the Special Taxes. The Appraisal was
intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform
Standards of Professional Appraisal Practice for a Surimmary Appraisal Report, and with the California Debt and
Investment Advisory Commission Appraisal Standards for Land Secured Financing. The Appraiser determined
that as of October 15,2006,the property within the District had an estimated market value of$9,000,000.
The Appraisal is attached as Appendix A. The City and the District make no representation as to the
accuracy or completeness of the Appraisal.
Direct and Overlapping Debt
The District is subject to existing authorized indebtedness payable from taxes and assessments that are
Authorized to be levied on property within the District. In addition, other public agencies may issue additional
indebtedness at any time, without the consent or approval of the City or the District. The direct and overlapping
indebtedness of the District, as of November 1,2006, is shown in Table 5 below.
The Bonds are secured by the Special Taxes which may include amounts realized upon foreclosure sale
of delinquent parcels. Therefore,the ability of the District to meet debt service on the Bonds may depend on the
ability of delinquent parcels to generate sufficient proceeds upon foreclosure sale to pay delinquent Special
Taxes.
TABLE 5
City of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
Estimated Direct and Overlapping Debt Summary
Amount of Percent of
Levy on Levy on District Share
2005-2006 Parcels in Parcels in Total Debt of Total Debt
Overlaooine District(" Total Le". the District the District Outstandinet'i Outstandine
Chaffey Community College District G.O.Bonds $11,711,469 $544 0.0046% $110,995,000 $5,155
Chaffey Joint Union High School District G.O.Bonds 7,164,769 629 0.0088% 109,710,000 9,626
Metropolitan Water District G.O.Bonds 103,904,001 153 0.0001% 389,565,000 574
Total Overlapping Dept $15,355
Plus:The Bonds $2,925.0001'1
Estimated Share of Direct and Overlapping Debt $2,940,355
Source: David Taussig and Associates,Inc.;County of San Bernardino Auditor/Controller's Office.
co Includes ad valorem,general obligation,special taxes,and standby charges that support any type of outstanding debt.
(2) As of September 30,2006.
(a) Preliminary,subject to change.
RVPUBUCSNOWV22113.1 21
Resolution No. 06-402
Page 128 of 203
Estimated Value-to-Lien Ratios'
The$2,925,000 principal amount of Bonds constitutes direct debt for the property in the District. As set
forth in Table 5, as of September 30, 2006, there is approximately $15,355 of other outstanding public
indebtedness applicable to the property in the District. Thus,the estimated direct and overlapping debt allocable
to property in the District is approximately$2,940,355.
The Market Value of the property in the District as of October 15, 2006, as estimated by the Appraiser
in the Appraisal, is $9,000,000, which is approximately 3.06 times the sum of the principal amount of the
Bonds,plus the amount of all the other outstanding public indebtedness allocable thereto,under the assumptions
listed in Table 5.
Cumulative Tax,Assessment and Fee Burden on Property
In addition to paying the Special Tax, property owners within the District will be obligated to pay ad
valorem property taxes and other existing and any additional special taxes, assessments, and fees (some of
which secure other debt issued by the City and overlapping jurisdictions). Under the City's"Statement of Goals
and Policies for the Use of the Mello-Roos Community Facilities Act of 1982" (the "Goals and Policies")
adopted on July 21, 1999,projected special taxes, when added to the existing ad valorem property tax and other
direct and overlapping debt for any parcel within a community facilities district, may not exceed 2% of the
projected assessed value of each improved parcel within the district upon completion of improvements to the
parcel. The District has determined that the projected tax, assessment and fee burden (including the Special
Taxes)conforms to the requirements of the Goals and Policies.
The following Sample Property Tax Bill generally includes long term obligations sold in the public
credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part.
Such long term obligations generally are not payable from property taxes,assessment or special taxes on land in
the District. In many cases long term obligations issued by a public agency are payable only from the general.
fund or other revenues of such public agency. Additional indebtedness could be authorized by other public
agencies at any time.
Preliminary,subject to change.
RVPUB\KSNOW\722113.1 22
Table 6 below shows the estimated Tax Rates within the District for the 2006-07 Fiscal Year.
TABLE 6
City of Rancho Cucamonga
Community Facilities District No. 2006-02
(Amador on Route 66)
Sample Property Tax Bill
Projected Amount
Percent Home Size Home Size Home Size
Estimated Assessed Valuation and Property Taxes of Total AV 1,335S 1,803 SF 1,920S .
Estimated Sales Price(') $375,000 $432,500 $447,500
Less:Homeowner's Exemption ($7,000) ($7,000) ($7,000)
Estimated Assessed Value(2) $368,000 $425,500 $440,500
AD VALOREM PROPERTY TAXES(')
Basic Levy - 1.00000% $3,680 $4,255 $4,405
Chaffey Community College District G.O.Bonds 0.01670% .$61 $71 $74
Chaffey Joint Union High School District G.O.Bonds 0.01930% $71 - $82 $85
Metropolitan Water District Mid-Valley G.O.Bonds 0.00470% $17 $20 $21
Total General Property Taxes and Overrides 1.04070% $3,830 $4,428 $4,584
ASSESSMENTS,SPECIAL TAXES AND PARCEL CHARGES
County Vector Control Charge $5 $5 $5
MWD Water Standby Charge - $8 $8 $8
Landscape Maintenance District No.9 $376 $376 $376
Street Lighting Maintenance District No. 1 $18 $18 $18
Street Lighting Maintenance District No.8 $194 $194 $194
City of Rancho Cucamonga Fire Protection CFD No.85-1 $138 $138 $138
City of Rancho Cucamonga CFD No.2006-02(4) $2,241 $2,697 $2,816
Total Assessments,Special Taxes and Parcel Charges $2,979 $3,435 $3,554
PROJECTED TOTAL PROPERTY TAXES $6,809 $7,864 $8,139
Projected Total Effective Tax Rate(as%of Estimated Sales Price) 1.8158% 1.8182% 1.8187% ,"D
ro
N
`Source: David Taussig and Associates,Inc.;City of Rancho Cucamonga;and County of San Bernardino Auditor/Controller's Office. 0
(() Provided by the Developer and consistent with Price Point Study prepared by Empire Economics. -03
�.
(�) Assessed Value and ad valorem taxes incorporate owner-occupied AV exemption of$7,000. - (o j
CD
(n Based on FY 2006-07 ad valorem rates for Tax Rate Area 15022 for which all property in CFD No.2006-02 are located within. Z
(°) Based on FY 2006-07 Maximum Special Tax. N o
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N A
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RVPUBucsNown722113.1 23
Resolution No. 06-402
Page 130 of 203
THE DEVELOPER AND THE PROPOSED DEVELOPMENT
The information contained in this Official Statement regarding the ownership and the development
of property in the District has been included because it is considered relevant to an informed evaluation of
the Bonds. The inclusion in this Official Statement of information related to property ownership should not
be construed to suggest that the Bonds, or the Special Taxes that will be used to pay debt service on the
Bonds, are recourse obligations of any property owner in the District. The Developer and any other property
owner may sell or otherwise dispose of land within the District or a development at any time.
As the proposed land development progresses and parcels are sold, it is expected that the ownership
of the land within the District will become more diversified. No assurance can be given that the proposed
development of the land within the District will occur, or that it will occur in a timely manner or in the
configuration or intensity described in this Official Statement, or that the Developer will retain ownership of
any of the undeveloped lard within the District. The Bonds and the Special Taxes are not personal
obligations of the Developer and its proposed development within the District and, in the event that the
Developer or any subsequent landowner defaults in the payment.of the Special Taxes, the District may
proceed witli judicial foreclosure but has no direct recourse to the assets of the Developer or airy subsequent
landowner. As a result, other than as provided herein, no financial statement or information is, or will be,
provided about the Developer. The Bonds are secured solely by the Special Taxes and other amounts pledged
under the Fiscal Agent Agreement
Unless otherwise indicated, the information about the Developer contained in this Official Statement
has been provided by the Developer and information about Lewis Investment has been provided by Lewis
Investment. The information has been provided by sources that are believed by the Underwriter, the District
and the City to be reliable, but has not been independently confirmed or verified by either the Underwriter,
the District or the City. No representation is made by the Underwriter, the District or the City as to the
accuracy or adequacy of such information or as to the absence of material adverse changes in such
information subsequent to the date of this Official Statement, or that the information given below or
incorporated herein by reference is correct as of any time subsequent to its date.
General
The Developer acquired all the property within the District from Lewis Investment under the terms of a
Purchase Agreement(described below). While the Developer is responsible for the ultimate construction of the
detached and attached housing units within the District, Lewis Investment is required under the terms of the
Purchase Agreement to construct certain off-site infrastructure improvements. These off-site improvements will
be financed with proceeds of the Bonds and the Developer is responsible for financing the remainder of the
proposed development and related infrastructure from internal equity sources and from the sale of homes.
Sale of Property from Lewis Investment Company, LLC to the Developer. On November 7, 2005,
Lewis Investment and the Developer into a purchase and sale agreement for the Property (as amended, the
"Purchase Agreement'). Pursuant to the Purchase Agreement, Lewis Investment sold the Property to the
Developer in consideration for (a) the payment of the purchase price for the Property, a portion of which was
paid through a purchase money note by the Developer to Lewis Investment(the "Note"), which is secured by a
deed of trust encumbering the Property; and(b)a profit participation for each phase payable by the Developer to
Lewis Investment from its sale of each unit to individual homeowners in accordance with a schedule set forth in
the Purchase Agreement. The Note requires payment by the Developer to Lewis Investment on a pro-rata basis
(based upon the number of units in each phase as a percentage of all lots provided for on the project tentative
map) to release each respective phase from the deed of trust. In the event of a default under the Note, Lewis
Investment, as the holder of the Note, has the right to declare the entire unpaid balance of the Note, together
with accrued interest thereon,immediately due and payable.
R V PUBUCSNOWV 22 t 13.1 24
Resolution No. 06-402
Page 131 of 203
The Developer and the Housing Development
William Lyon Homes, Inc. All of the property within the District is currently owned by William Lyon
Homes, Inc., a California corporation (the "Developer"). The Developer is a wholly owned subsidiary of
William Lyon Homes, a Delaware corporation("Delaware Lyon"). Delaware Lyon's principal executive offices
are located in Newport Beach, California. Delaware Lyon and its subsidiaries are primarily engaged in
designing, constructing and selling single family detached and attached homes in California, Arizona and
Nevada. Since the founding of its predecessor in 1956, Delaware Lyon has sold over 65,000 homes. Delaware
Lyon conducts its homebuilding operations through five geographic divisions (Southern California, San Diego,
Northern California, Arizona and Nevada) including both wholly owned projects and projects being developed
in unconsolidated joint ventures.
Home sales in California accounted for approximately 63% of Delaware Lyon's home deliveries in
Fiscal Year 2005, which runs from January 1 through December 31. Delaware Lyon and its unconsolidated
joint ventures delivered 3,196 homes in Fiscal Year 2005, compared with 3,471 home deliveries in Fiscal Year
2004. Revenues from home sales were approximately $1.745 billion in Fiscal Year 2005 generating a net
income of approximately $190.6 million, compared to revenues from home sales of approximately $1.786
billion with a net income of approximately $171.6 million in Fiscal Year 2004. In Fiscal Year 2005, Delaware
Lyon's average home selling price was approximately $546,000, ranging from approximately $197,000 to
approximately $2,070,000, compared to Fiscal Year 2004 where Delaware Lyon's average selling price was
approximately$514,400,ranging from approximately$119,000 to approximately$2,070,000.
In the Form 8-K which was filed on October 11, 2006, for the first three quarters of 2006 (ending
September 30, 2006), Delaware Lyon reported that new home orders were 1,698, a decrease of 41% as
compared to 2.961 for the same time period in 2005. In addition, the cancellation rate was 33% for the first
three quarters of 2006(compared to 13% for the same time period in 2005).
Delaware Lyon was a publicly traded company with its stock listed on the New York Stock Exchange
(the "NYSE") under the symbol "WLS." However, Delaware Lyon recently converted to a privately-held
company,as discussed further below.
The Tender Offer. On March 17, 2006, General William Lyon, Chairman of the Board and Chief
Executive Officer of Delaware Lyon, announced that he had commenced a. tender offer to purchase all
outstanding shares of common stock of Delaware Lyon not already owned by him, The William Harwell Lyon
1987 Trust,or The William Harwell Lyon Separate Property Trust.
On May 18, 2006, General Lyon announced the completion of the tender offer and that he had accepted
for payment all shares validly tendered in the offer, a portion of which remain subject to guaranteed delivery
procedures. The shares tendered in the offer, together with the shares already owned by General Lyon, The
William Harwell Lyon 1987 Trust and The William Harwell Lyon Separate Property Trust, represent over 90%
of the outstanding shares of Delaware Lyon. Accordingly, upon completion of the purchase of the tendered
shares (including those still subject to guaranteed delivery procedures) and contribution of all shares held by
General Lyon and the aforementioned trusts into a newly formed Delaware corporation (the "Acquisition
Corporation"), the Acquisition Corporation would hold.a sufficient number of shares to enable General Lyon to
effect a short-form merger between the Acquisition Corporation and Delaware Lyon under Delaware law. The
merger occurred on July 25, 2006 with Delaware Lyon continuing as the surviving corporation of the merger.
At the time of the merger,each outstanding share of Delaware Lyon common stock(except for shares owned by
the Acquisition Corporation and by stockholders who properly exercised their appraisal rights in accordance
with Delaware law)was cancelled and converted into a right to receive$109 per share in cash without interest.
Informational Renorting, Delaware Lyon is currently subject to certain informational requirements of
the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports and other
information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent
Quarterly Report on Form 10-Q,may be inspected and copied at the public reference facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such files can also be accessed
RVPUBVCSNOW\722113.1 25
Resolution No. 06-402
Page 132 of 203
over the Internet at the SEC's website at www.sec.gov. Copies of such material can be obtained from the public
reference section of the SEC at 450 Fifth Street,N.W., Washington, D.C. 20549 at prescribed rates. In addition,
the aforementioned material may also be inspected at the office of the NYSE at 20 Broad Street, New York,
New York 10005. Copies of Delaware Lyon's Annual Report and related financial statements are available on
its website at www.lyonhomes.com.
The Internet addresses and references to filings with the SEC are included for reference only, and the
information on these Internet sites and on file with the SEC are not a part of this Official Statement and are not
incorporated by reference into this Official Statement.
Development Experience. In addition to the Project,recent projects developed or under development by
the Developer include the following:
Planned Estimated Estimated Estimated/Actual
Number of Square Average Completion
Project Name Location Units Footage Selling Price Date(i)
Garland Park Irvine 166 1,355-1,971 $500,000 December 2006
Lombard Court Irvine 150 1,086-1,635 400,000 December 2006
Ambridge Irvine. 128 1,205-1,833 400,000 June 2006
Sea Cove Huntington 106 1,619-2,693 700,000 March 2006
Beach
F1Hearthstonelisa San Juan 80 4,874-5,500 1,600,000 May 2007
Capistrano
Mimdor San Clemente 76 3,705-4,539 1,100,000 July 2006
Amarante Ladera Ranch 71 2,907-3,764 1,000,000 November 2006
Estrella Rosa San Juan 40 3,3634,383 1,200,000 March 2007
Capistrano
The Proposed Housing Development
Amador on Route 66
The Developer intends to construct 99 triplex homes within a gated development to be known as
Amador on Route 66. The development is located close to Interstates 10, 15 and 210 and the Rancho
Cucamonga Community Center. The homes will be marketed in three separate plans.
Plan One is expected to have 33 homes that are anticipated to be priced at approximately $375,000 for
1,328 sq. ft. of living area. Plan Two is expected to have 33 homes that are anticipated to be priced at
approximately $432,500 for 1,728 sq. ft. of living area. Plan Three is expected to have 33 homes that are
anticipated to be priced at approximately $447,500 for 1,905 sq. ft. of living area. The homes will have from 2
to 4 bedrooms, 2 to 3 bathrooms and 2-car garages.
Proiect Approval
All master infrastructure plans with the exception of landscaping have been obtained.
On January 11, 2006, the City of Rancho Cucamonga adopted a Mitigated Negative Declaration for the
Amador on Route 66 project.
On January 11,2006, the City of Rancho Cucamonga, by Resolution No. 06-04, approved Tentative
Tract Map No. 16882. The final map for Tract Map is expected to be recorded by mid-December.
RVPUBT-SNOWV22113.1 26
Resolution No. 06-402
Page 133 of 203
Permits and Geotechnical Report
The Developer has represented that all necessary permits to proceed with the proposed project have
been received,except the final map and building permits for production homes.
Petra Geotechnical, Inc. was engaged by the Developer to complete a geotechnical investigation of the
property within the District. In September 2006,Petra Geotechnical, Inc. delivered its report describing the site
condition, results of their field exploration and laboratory testing, conclusions and recommendations. Based
upon the specific data and information contained in its report, Petra Geotechnical, Inc. found in their
-professional opinion that the proposed development is geologically and geotechnically feasible subject to
implementation of the recommendations contained in such report.
The District is not located in an Alquist-Priola Earthquake Fault Zone. There are earthquake faults in
the area, including the Cucamonga fault zone, the San Andreas fault zone and the San Jacinto fault zone. All
properties in California are subject to some degree of seismic risk. See "APPENDIX A— Summary Appraisal
Report-Bondowner's Risk,Land Value and Development,Natural Disasters."
In-Tract Infrastructure Status and Financing
The Developer is currently undertaking the ground preparation and in-tract improvements to proceed
with home construction. The following table shows the status, cost and estimated completion dates for the in-
tract improvements to be constructed by the Developer all of which will be paid from Developer sources and not
from Bond proceeds:
Table 7
William Lyon Homes
Amador on Route 66
Estimated In-Tract Grading and Infrastructure Costs and Scheduled Completion Dates
Improvements Estimated Cost %Complete as of 12/1/06 Expected Completion Date
Grading $577,544 100 Completed
Water 240,000 100 Completed
Sewer 130,000 100 Completed
Storm Drain 650,090 100 Completed
Street 370,575 0 1/3/07
Dry Utilities 183,150 50 12/15/06
Landscaping and Walls 249,400 0 1/15/07
Total $2,151,269
Financing of In-Tract Infrastructure.
The Developer expects that the aggregate acquisition and construction costs for its proposed
development will cost approximately $39,546,500. The foregoing sum does not include (i) the costs of the off-
site improvements being constructed by Lewis Investment and funded by the proceeds of the Bonds or (ii) any
governmental fees otherwise payable by the Developer in connection with the development of the project which
are also being financed by the proceeds of the Bonds. The Developer plans to finance the costs of the
development with internal sources of cash and lot and home sales revenues. Bond proceeds will not be used to
finance the construction of the in-tract improvements. The Developer's parent company, Delaware Lyon,
reported net income of$30,381,000 as of June 30, 2006. Delaware Lyon is involved in the construction and
financing of many projects in addition to the proposed development in the District.
If and to the extent this source of financing is inadequate to complete the planned development of the
property, there can be no assurance of the willingness or ability of the Developer or Delaware Lyon to make
such funds available in the future, or the ability of Developer to obtain financing from other sources. In
RVI'MONOW722113.1 27
Resolution No. 06-402
Page 134 of 203
addition, if and to the extent that internal financing and home sales revenues are inadequate to pay the costs to
complete Developer's planned development within the District and other financing by Developer is not put into
place, there could be a shortfall in the funds required to complete the proposed development by the Developer
and portions of the project may not be developed.
As discussed below, Lewis Investment is required under the Purchase Agreement to construct certain
off-site improvements for the project. Under the terms of the Purchase Agreement, Lewis Investment is
required to cause the construction of the off-site improvements within 6 months after commencing the
construction thereof. However, if Lewis Investment does not use commercially reasonable efforts to construct
the off-site improvements, the Developer may assume control of the construction of the off-site improvements.
In such an event, Lewis Investment will remain responsible for the off-site improvement costs, and reimburse
the Developer for any costs relating to the construction of the off-site improvements and pay an administration
and supervision fee.
RVPUBIKSNOK5722113.1 28
Pro Forma of the Developer.
The following shows the Developer's pro forma cash flow summary and projected home sales within the District. The Developer's pro forma does
not include any bond proceeds, which will be used to finance certain off-site improvements to be constructed by Lewis Investment and to pay impact fees to
the City, the Utilities Agency, and the Water District.
TABLE 8
City of Rancho Cucamonga
Community Facilities District No.2006-02
(Amador on Route 66)
William Lyon Homes,Inc.(2)
Summary of Cash Flows From August 31,2006 through Fiscal Year 2009
Through October Nov. 1,2006- .
31,2006 Dec.2006 2007 2008 2009 Total
Sources of Funds
Equity Contributions(l) $6,399,500 $1,130,600 $17,205,900 $10,285,700 $2,901,000 $37,922,700
Home Sales Revenue 3,236,900 21,309,600 16,049,700 40,596,200
Total Sources of Funds $6,399,500 $1,130,600 $20,442,860 $31,595,300 $18,950,700 $78,518,900
Uses of Funds
Home Construction $0 $0 $3,403,300 $6,701,600 $2,089,300 $12,194,200
Engineering,Fees&Mapping - 1,128,636 0 977,354 1,026,700 0 3,132,690
Land Cost/Seller Note Repayment 3,821,200 0 5,725,100 0 0 9,546,300
Financing Cost 142,800 68,200 856,000 900,900 169,800 21137,700
Preliminary Design&Planning 910,060 0 0 0 0 910,060
Grading 311,613 265,931 0 0 0 577,544
Sewer System 0 130,000 -0 0 0 - 130,000
Storm Drain Systems 0 318,569 331,521 0 0 650,090
Water System 0 0 240,000 0 0 240,000
Street Improvements 0 0 370,575 0 0 370,575
Dry Utilities _ 0 0 183,150 0 0 183,150
Landscaping&Walls 0 0 249,400 0 . 0 249,400
Common Area Costs 15,791 229,800 2,757,800 0 0 3,003,391
Other Costs 3,400 44,900 510,800 510,400 235,700 1,305,200
Property Taxes and Special Taxes 36,700 73,100 146,100 96,200 17,000 369,100
Sales and Marketing 29,300 100 1,340,400 1,023,600 413,200 2,806,600 cMo
General&Administrative 0 0 243,900 878,700 617,900 1,740,500 m
0
Equity Repayment 0 0 3,107,400 20,457,200 14,358,100 37,922,700C
Total Uses of Funds $6,399,500 $1,130,600 $20,442,800 $31,595,300 $17,901,000 $77,469,200 C) 0
Net Cash Flow $0 $0 $0 $0 $1,049,700 $1,049,700 Z
(0 William Lyon Homes Inc.may obtain a loan,the proceeds of which may be used to substitute Equity Contributions,in the future. W o
(z7 Estimated costs do not reflect the off-site improvements to be constructed by Lewis Investment and paid with Bond proceeds. p rn
N A
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Resolution No. 06-402
Page 136 of 203
Lewis Investment and Off-Site Infrastructure
Lewis Investment is owned by The Lewis Group of Companies. The Lewis Group of Companies is a
collection of affiliated entities including partnership, joint ventures, wholly-owned subsidiaries and partially
owned subsidiaries collectively referred to herein as "The Lewis Group of Companies." The Lewis Group of
Companies is one of the nation's largest privately-held affiliated group of real estate development companies.
The Lewis Group of Companies mainly plans and develops mixed-use planned communities and residential
subdivisions in California and Nevada, as well as building multi-family communities, shopping centers, office
parks and industrial space. The Lewis Group of Companies works with major landowners, other developers,
financial institutions and companies in other businesses which have real estate holdings. The arrangements vary
depending on many circumstances. The Lewis Group of Companies will manage for a fee commercial and
residential real estate or, contribute equity, or joint venture in the development of such real estate.
The Lewis Group of Companies originated in 1955 in Claremont, California. Since 1955, The Lewis
Group of Companies has developed over 56,000 homes, 9,000 apartment units, 7.4 million square feet of retail,
office and industrial developments, and has developed and sold 6,000 lots to other builders in California,
Nevada,Arizona and Utah.
As of October 15, 2006, The Lewis Group of Companies, owned or controlled approximately 16,000
acres of land to potentially be developed into residential communities, owned or managed approximately 7,500
apartment units,and owned or managed approximately 4 million square feet of investment property.
Recent Projects. Some of the projects currently under active development by The Lewis Group of
Companies in the Southern California area include:
Project Name Approximate Location (CA) Expended Buildout Units Closed as of
Number of Units October 15,2006
Sierra Lakes 1,821 Fontana Built Out 1,821
The Preserve at Chino 7,000 Chino 2016 384
Citrus Heights 487 Fontana February 2007 408
Source: Lewis Investment. _
Off-Site Infrastructure Status and Financine
Under the Purchase Agreement, Lewis Investment is required to construct certain off-site improvements
for the Project. The off-site improvements consist of the improvements necessary to provide water, sewer,
drainage, electricity, gas, phone and CATV services to the property sufficient to serve all of the units in the
Project. The following table shows the status,cost and estimated completion dates for the off-site improvements
to be constructed by Lewis Investment:
Table 9
Lewis Investment
Amador on Route 66
Estimated Infrastructure Costs and Scheduled Completion Dates
Improvements Estimated Cost %Complete as of 11/1/06 Expected Completion Date
Street $812,354 0 April 23, 2007
Landscaping 367,584 0 May 25, 2007
Drainage 65,000 0 January 31,2007
Water 120,000 0 January 31,2007
Sewer. 36,000 0 January 31,2007
Total $1,400,938
RVPt1BUtSNONN22113.1 30
Resolution No. 06-402
Page 137 of 203
Financing of Off-Site Infrastructure.
Lewis Investment expects that its remaining infrastructure costs for the proposed development will cost
approximately $1.4 million. Lewis Investment plans to finance the costs of the infrastructure improvements
with internal sources of cash and proceeds of the Bonds. There is no assurance that amounts necessary to
finance its remaining site development costs within the District will be available from Lewis Investment, The
Lewis Group of Companies or any of their affiliates, or any other source, when needed. Lewis Investment, The
Lewis Group of Companies or any of its affiliates are not under any legal obligation of any kind to expend funds
for the development of the property within the District. Any contributions by Lewis Investment, The Lewis
Group of Companies or any of their affiliates to fund costs of infrastructures within the District are entirely
voluntary.
BONDOWNERS'RISKS
The following is a discussion of certain risk factors that should be considered, in addition to other
matters set forth in this O,fieial Statement, in evaluating the investment quality of the Bonds. This discussion
does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed in
this Official Statement could adversely affect the ability or willingness ofproperty owners in the District to
pay their Special Taxes when due. Such failures to pay Special Taxes could result in a rapid depletion of the
Reserve Fund and/or a default in payments of the principal of, and interest on, the Bonds. /n addition, the
occurrence of one or more of the events discussed in this Section could adversely affect tire value of the
property in the District.
Not a General Obligation of the District or the City
The Bonds are not general obligations of the District or the City but are limited obligations of the
District payable solely from proceeds of the Special Taxes and, to a limited extent, proceeds of the Bonds,
including amounts in the Reserve Fund and investment income on funds held under the Fiscal Agent Agreement
(other than funds held in the Costs of Issuance Fund,the Project Fund, the Administrative Expense Fund and the
Rebate Fund as to the Fiscal Agent Agreement).
Levy of the Special Taxes
The principal source of payment of debt service on the Bonds is the proceeds of the annual levy and
collection of the Special Taxes. The annual levy of the Special Tax is subject to the maximum tax rates
authorized in the Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means
that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds,
will not be sufficient to pay debt service on the Bonds. Other funds that might be available to pay debt service
on the Bonds include funds derived from the payment of delinquent special taxes and funds derived from the
foreclosure and sale of parcels on which the Special Taxes levied are delinquent.
The levy of the Special Tax will rarely, if ever,result in a uniform relationship between the value of the
Taxable Property (as such term is defined in the Rate and Method) and the amount of the levy of the Special
Tax. Thus, there will rarely, if ever, be a uniform relationship between the value of a parcel and the
proportionate share of Bond debt service levied on the parcel,and certainly not a direct relationship.
The Special Tax levied in any particular tax year on a Taxable Property is based upon the application of
the Rate and Method. See Appendix B — Rate and Method of Apportionment. Application of the Rate and
Method will, in turn, be dependent upon certain development factors with respect to each Taxable Property by
comparison with similar development factors with respect to other Taxable Properties within the District. Thus,
the following are some of the factors that might cause the levy of the Special Tax on any particular Taxable
Property to vary from the Special Tax that might otherwise be expected:
(i) Reduction in the number of parcels of Taxable Property, for such reasons as acquisition
of Taxable Property by a government and failure of the government to pay the Special Tax based upon a
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claim of exemption, thereby resulting in an increased tax burden on the remaining Taxable Property;
and
(ii) Failure of the owners of Taxable Property to pay the Special Tax and delays in the
collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent
parcels,thereby resulting in an increased tax burden on the remaining parcels of Taxable Property.
Exempt Properties
Certain private properties owned by Property Owner Associations are exempt from the Special Tax in
accordance with the Rate and Method. In addition, the Rate and Method provides that certain properties of the
state, federal or local governments are exempt from the Special Taxes. Therefore,property acquired by a public
entity following the issuance of the Bonds will be exempt from the Special Tax. See "SECURITY FOR THE
BONDS -The Special Tax"herein and"Appendix B—Rate and Method of Apportionment of Special Taxes."
In particular, insofar as the Rate and Method requires payment of the Special Tax by a federal entity
acquiring a parcel of Taxable Property, it may be unconstitutional. If for any reason a parcel of Taxable
Property becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal
government, another public agency or a religious organization, subject to the limitation of the maximum rate,
the Special Tax will be reallocated to the remaining Taxable Properties within the District in which the parcel is
located. This would result in the owners of such property paying a greater amount of the Special Tax and could
have an adverse impact upon the timely payment of the Special Tax. Moreover, if a substantial portion of the
Taxable Property within the District becomes exempt from the Special Tax because of public ownership, or
otherwise, the maximum rate that could be levied upon the remaining acreage might not be sufficient to pay
principal of and interest on Series of the Bonds secured by such Special Tax when due and a default would
occur with respect to the payment of such principal and interest.
Collection of the Special Taxes
The District has no obligation to pay debt service on the Bonds in the event Special Tax installments are
delinquent,nor is the District obligated to advance funds to pay such debt service.
The Rate and Method provides that the Special Taxes are to be collected in the same manner as ordinary
ad valorem property taxes are collected and,except as provided in the special covenant for foreclosure described
below, are to be subject to the same penalties and the same procedure, sale, and lien priority in case of
delinquency as is provided for ad valorem property taxes. Under these procedures, if taxes are unpaid for a
period of five years or more,the property is subject to sale by the County.
Under the Fiscal Agent Agreement, in the event of any delinquency in the payment of the Special Tax,
the District may order the institution of a superior court action to foreclose the lien in the amount of the
delinquent Special Taxes plus penalties, interest, and costs (including attorney's fees) within specified time
limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale.
Such judicial foreclosure action is not mandatory. However, the District has covenanted to cause foreclosure
proceedings to be commenced and prosecuted against those properties that are delinquent in the payment of the
Special Tax. For a description of the foreclosure covenant and the limitations upon foreclosure, see
"SECURITY FOR THE BONDS -Delinquent Special Taxes; Covenant To Foreclose."
In the event that sales or foreclosures of property within the District are necessary as a result of the
delinquency in the payment of Special Taxes, there could be a delay in payment of the Bonds if the Reserve
Fund is depleted pending such sales or the prosecution of foreclosure proceedings against such delinquent
property and receipt by the District of the proceeds of such a sale. In addition,there can be no assurance that the
sale of delinquent parcels in foreclosure will produce sufficient proceeds to cover such delinquencies. Although
below,peak delinquency rates experienced in 1996, delinquency rates have been increasing in the State of
California, Southern California and the County of San Bernardino over the last several years. See "APPENDIX
H—Summary Absorption Study—Delinquency Rates and Types of Loans."
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Concentration of Property Ownership
As of the date of this Official Statement, all of the property in the District subject to the levy of the
Special Tax is owned by the Developer. The willingness and ability of the Developer to pay property taxes and
the Special Taxes could be adversely affected by changes in general or local economic conditions, fluctuations
in the real estate market and other factors.
Failure of the Developer (or any future owner of significant property within the District subject to the
levy of the Special Taxes) to pay installments of such Special Taxes when due could cause the depletion of the
Reserve Fund for the Bonds prior to reimbursement from the resale of foreclosed property or payment.of the
delinquent Special Tax and, consequently, result in the delinquency rate reaching a level that would cause an
insufficiency in collection of the Special Tax to meet the District's obligations under the Fiscal Agent
Agreement. For a description of the Developer, see "THE DEVELOPER AND THE PROPOSED
DEVELOPMENT." In that event, there could be a delay or failure in payments on the Bonds. See
"BONDOWNERS- Bankruptcy and Foreclosure Delays" and "SECURITY FOR THE BONDS - Delinquent
Special Taxes;Covenant to Foreclose"for a further discussion.
Not a Personal Obligation
An owner of Taxable Property is not personally obligated to pay the Special Tax. Rather, the Special
Tax is an obligation only against the Taxable Property. If the value of the Taxable Property is not sufficient,
taking into account other obligations also payable thereby to fully secure the Special Tax, the District has no
recourse against the property owner.
Parity Taxes and Special Assessments_
The Special Taxes and any related penalties will constitute a lien against the lots and parcels of land on
which they will be annually imposed until they are paid. This tax lien is on a parity with all special taxes and
special assessments levied by other agencies and is co-equal to and independent of the lien for general property
taxes regardless of when they are imposed upon the same property. The Special Taxes have priority over all
existing and future private liens imposed on the property. However, neither the District nor the City has any
control over the ability of other entities and districts to issue indebtedness secured by special taxes or
assessments payable from all or a portion of the property within the District. If any additional improvements or
fees are financed by an assessment district or another district formed under the Act, any taxes or assessment
levied to finance such improvements will have a lien on a parity with the lien of the Special Tax.
For information concerning existing direct and overlapping public indebtedness within the District, see
"THE DISTRICT — Cumulative Tax, Assessment and Fee Burden on Property." The existence of general
property taxes, other special taxes, and assessments may reduce the value-to-debt ratio of the affected parcels
and increases the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes or
the principal of and interest on the Bonds when due.
The City has covenanted that it will not issue additional bonds having a lien upon the Special Taxes
superior to or on a parity with the lien of the Bonds.
Land Values and Development
The development of the Taxable Property within the District and the value of such Taxable Property is a
critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of
the Special Tax, the City's only remedy is to foreclose on the delinquent property in an attempt to obtain funds
with which to pay the delinquent Special Tax. Land values could be adversely affected by economic factors
beyond the City's control, such as relocation of employers out of the area, stricter land use regulations, the
absence of water, or destruction of property caused by, among other eventualities, earthquake, flood or other
natural disasters, or by environmental pollution or contamination. In addition, a major risk to Bondowners is
that development by the Developer of property within the District may be subject to unexpected delays,
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disruptions and changes that may affect the willingness and ability of the property owners to pay Special Taxes
when due.
Land Development
Land values are influenced by the level of development in the area in many respects. First, partially
developed land is generally less valuable than developed land and provides less security to the owners of the
Bonds should it be necessary for the City to foreclose on undeveloped property due to the nonpayment of
Special Taxes. Moreover, failure to complete development on a timely basis could adversely affect the land
values of those parcels that have been completed. Lower land values would result in less security for the
payment of principal of and interest on the Bonds and lower proceeds from any foreclosure sale necessitated by
delinquencies in the payment of the Special Tax. Currently, the property within the District is under
development. As of October 15, 2006, the appraised value of the Property was $8,500,000. No assurance can
be given that the property within the District will be developed, and in assessing the investment quality of the
Bonds,prospective purchasers should evaluate the risks of non-completion.
Special Tax Buydown.
Change in development plans for the proposed housing project could result in a Special Tax Buydown
causing a redemption of the Bonds. See "APPENDIX B — Rate and Method of Apportionment of Special
Taxes-Special Tax Buydown."
Risks of Real Estate Investment Generally.
Continuing development of land within the District may be adversely affected by changes in general or
local economic conditions, fluctuations in the real estate market, increased construction costs, development,
financing and marketing capabilities of individual property owners, water shortages and other similar factors.
Development in the District may also be affected by development in surrounding areas,which may compete
with the District. In addition, land development operations are subject to comprehensive federal, state and local
regulations, including environmental, land use, zoning and building requirements. There can be no assurance
that proposed land development operations within the District will not be adversely affected by future
government policies, including, but not limited to, governmental policies to restrict or control development, or
future growth control initiatives. There can be no assurance that land development operations within the District
will not be adversely affected by these risks. The City has not evaluated development risks. Since these are
largely business risks of the type that property owners customarily evaluate individually, and inasmuch as
changes in land ownership may well mean changes in the evaluation with respect to any particular parcel, the
City is issuing the Bonds without regard to any such evaluation. Thus, the creation of the District and the
issuance of the Bonds by the City in no way implies that the City has evaluated these risks or the reasonableness
of these risks even though such risks may be serious and may ultimately halt or slow the progress of land
development and forestall the realization of Taxable Property values.
The Market Absorption Study indicates certain risks associated with increasing home loan interest rates,
other inflationary factors and adjustable interest rate mortgages which have been utilized in the past several
years by homeowners and are subject to reset at higher rates. See Appendix H—"Summary of Absorption Study
- POTENTIAL "FINANCIAL" RISK FACTORS UNDERLYING THE CREDIT QUALITY AND BOND
SIZING FOR LAND SECURED FINANCINGS IN SOUTHERN CALIFORNIA."
Natural Disasters.
The value of the Taxable Property in the future can be adversely affected by a variety of natural
occurrences, particularly those that may affect infrastructure and other public improvements and private
improvements on the Taxable Property and the continued habitability and enjoyment of such private
improvements. For example,the areas in and surrounding the District, like those in much of California,may be
subject to unpredictable seismic activity. Other such occurrences could include, without limitation, landslides,
floods, droughts,and tornadoes. Although the District is not located within the boundaries of a state established
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Earthquake Fault Study Zone, several known faults are in the area,including the Cucamonga fault zone,the San
Andreas fault zone and the San Jacinto fault zone. All properties in California are subject to some degree of
seismic risk. See"APPENDIX A—Summary of Appraisal Report."
One or more of such natural disasters, including earthquake and flood, could occur and could result in
damage to improvements of varying seriousness. The damage may entail significant repair or replacement costs
and that repair or replacement may never occur either because of the cost, or because repair or replacement will
not facilitate habitability or other use, or because other considerations preclude such repair or replacement.
Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and
the value of the Taxable Property may well depreciate or disappear.
Fire Hazard. -
Like the natural disasters discussed above, fire damage entail significant repair and replacement costs.
If such repairs are not made after a fire, there could be significant delinquencies in the payment of Special
Taxes, and the value of the Taxable Property may well depreciate or disappear. The District is not located in-a
"Very High Fire Hazard Security Zone" based on map produced by the California Department of Forestry and
Fire.
Legal Requirements.
Other events that may affect the value of a Taxable Property include changes in the law or application of
the law. Such changes may include, without limitation, local growth control initiatives, local utility connection
moratoriums and local application of statewide tax and governmental spending limitation measures.
Development in the District may also be adversely affected by the application of laws protecting endangered or
threatened species. See"CONCLUDING INFORMATION—Litigation."
Hazardous Substances.
One of the most serious risks in terms of the potential reduction in the value of a Taxable Property is a
claim with regard to a hazardous substance. In general, the owners and operators of a Taxable Property may be
required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous
substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980,
sometimes referred to as "CERCLA" or the "Superfund Act," is the most well-known of these laws, but
California laws with regard to hazardous substances are also stringent and similar. Under many of these laws,
the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the
owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore,
should any of the Taxable Property be affected by a hazardous substance, is to reduce the marketability and
value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will
become obligated to remedy the condition just as is the seller.
The values set forth in the Appraisal do not take into account the possible reduction in marketability and
value of any of the Taxable Property by reason of the possible liability of the owner or operator for the remedy
of a hazardous substance condition of the parcel. Although the City is not aware that the owner or operator of
any of the Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible
that such liabilities do currently exist and that the City is not aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the Taxable Property
resulting from the existence, currently,on the parcel of a substance presently classified as hazardous but that has
not been released or the release of which is not presently threatened, or may arise in the future resulting from the
existence, currently on the parcel of a substance not presently classified as hazardous but that may in the future
be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but
from the method of handling it. All of these possibilities could significantly affect the value of a Taxable
Property that is realizable upon a delinquency.
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Notice of Special Taxes; Disclosures To Future Purchasers
The willingness or ability of an owner of a Taxable Property to pay the Special Taxes even if the value
is sufficient may be affected by whether or not the owner was given due notice of the Special Tax authorization
at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should .
the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a levy,has
the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special
Tax to be recorded in the Office of the Recorder for the County against each Taxable Property. While title
companies normally refer to such notices in title reports, there can be no guarantee that such reference will be
made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the
purchase of a property within the District or lending of money thereon.
The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective
purchaser or long-term lessor of any lot,parcel, or unit subject to a special tax levied pursuant to the Act of the
existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code
Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the
seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format
prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by
a purchaser or lessor to consider or understand the nature and existence of the Special Taxes, could adversely
affect the willingness and ability of the purchaser or lessor to pay the Special Taxes when due.
Bankruptcy and Foreclosure Delays
General
The payment of the Special Taxes and the ability of the City to foreclose the lien of a delinquent unpaid
tax, as discussed under "SECURITY FOR THE BONDS," may be limited by bankruptcy, insolvency or other
laws generally affecting creditors' rights or by the laws of the State of California relating to judicial foreclosure.
In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or
delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the
Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the
various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights and by the application of equitable principles and by the exercise of judicial discretion
in appropriate cases.
Although bankruptcy proceedings would not cause the lien of the, Special Taxes to become
extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure
proceedings. The federal bankruptcy laws provide for an automatic stay of foreclosure and tax sale proceedings,
thereby delaying such proceedings, perhaps for an extended period. Any such delays would increase the
likelihood of a delay or default in payment of the principal of and interest on the Bonds secured by the levy of
Special Taxes in which such property is located and the possibility of delinquent tax installments not being paid
in full.
To the extent that bankruptcy or similar proceedings were to involve a large property owner, the
chances would increase the likelihood that the Reserve Fund could be fully depleted during any resulting delay
in receiving payment of delinquent Special Taxes. As a result, sufficient moneys would not be available in such
Reserve Fund for transfer to the Bond Fund to make up any shortfalls resulting from delinquent payments of the
Special Tax and thereby to pay principal of and interest on the Bonds on a timely basis.
Property Owned by the FDIC.
The ability of the City to foreclose upon the lien relating to property on which Special Taxes have not
been paid may be limited in certain respects with regard to properties in which the FDIC has an interest. On
November 26, 1996, the FDIC adopted a Statement of Policy Regarding the Payment of State and Local
Property Taxes (the "Policy Statement") (which superseded a prior statement issued by the FDIC and the
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Resolution Trust Corporation in 1991). The Policy Statement applies to the FDIC when it is liquidating an asset
in its corporate and receivership capacities. The Policy Statement provides, in part, that owned real property of
the FDIC is subject to state and local real property taxes if those taxes are assessed according to the property's
value, and that the FDIC is immune from ad valorem real property taxes assessed on other bases. The Policy
Statement also provides that the FDIC will pay.its proper tax obligations when they become due and will pay
claims for delinquencies as promptly as is consistent with sound business practice and the orderly administration
of the institution's affairs, unless abandonment of the FDIC interest in the property is appropriate. It further
provides that the FDIC will pay claims for interest on delinquent property taxes owned at the rate provided
under state law, but only to the extent the interest payment obligation is secured by a valid lien. The FDIC will
not pay for any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts.
The Policy Statement also provides that if any property taxes (including interest) on FDIC-owned property are
secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those
claims. No property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the
FDIC's consent. In addition, a lien for taxes and interest may attach, but the FDIC will not permit a lien or
security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent.
With respect to challenges to assessments, the Policy Statement provides: "The [FDIC] is only liable for
state and local taxes which are based on the value of the property during the period for which the tax is imposed,
notwithstanding the failure of any person, including prior record owners, to challenge an assessment under the
procedures available under state law. In the exercise of its business judgment, the [FDIC] may challenge
assessments which do not conform with the statutory provisions, and during the challenge may pay tax claims
based on the assessment level deemed appropriate,provided such payment will not prejudice the challenge. The
[FDIC] will generally limit challenges to the current and immediately preceding taxable year and to the pursuit
of previously filed tax protests. However, the [FDIC] may, in the exercise of its business judgment, challenge
any prior taxes and assessments provided that (1) the [FDIC's] records (including appraisals, offers or bids
received for the purchase of the property, etc.) indicate that the assessed value is clearly excessive, (2) a
successful challenge will result in a substantial savings to the [FDIC],(3)the challenge will not unduly delay the
sale of the property,and(4)there is a reasonable likelihood of a successful challenge."
The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including
special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time the
FDIC acquires its fee interest in the property,nor will the FDIC recognize the validity of any lien to the extent it
purports to secure the payment of any such amounts.
Because the Special Taxes are neither ad valorem taxes nor special assessments, the City is unable to
predict what effect the application of the Policy Statement would have in the event of a delinquency on a parcel
included in the District in which the FDIC has an interest, although prohibiting the lien of the FDIC to be
foreclosed on at ajudicial foreclosure sale would likely reduce the number of or eliminate the persons willing to
purchase a parcel at a foreclosure sale. Owners of the.Bonds should assume that the City will be unable to
foreclose on parcels of land in the District owned by the FDIC. Such an outcome would cause a draw on the
Reserve Fund and perhaps,ultimately,a default in payment of the Bonds:
Limitation on Remedies of Bondholders; No Acceleration
Remedies available to Bondholders may be limited by a variety of factors and may be inadequate to
assure the timely payment of principal of and interest on the Bonds, or to preserve the tax-exempt status of the
Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds and the Fiscal Agent
Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, or similar laws affecting
generally the enforcement of creditors' rights. Additionally, the Bonds are not subject to acceleration in the
event of the breach of any covenant or duty under the Fiscal Agent Agreement. Lack of remedies may entail
risks of delay, limitation, or modification of Bondowner rights. Judicial remedies, such as foreclosure and
enforcement of covenants, are subject to exercise of judicial discretion. A California court may not strictly
apply certain remedies or enforce certain covenants if it concludes that application or enforcement would be
unreasonable under the circumstances and it may delay the application of such remedies and enforcement.
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Loss of Tax Exemption
As discussed under the caption "CONCLUDING INFORMATION - Tax Matters," interest on the
Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date
the Bonds were issued, as a result of future acts or omissions of the District or City in violation of the City's
covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement does not contain a special redemption
feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to be
includable in gross income for purposes of federal income taxation, the Bonds would continue to remain
outstanding until maturity unless earlier redeemed under the Fiscal Agent Agreement. See "THE BONDS —
Redemption of Bonds."
Secondary Markets and Prices
The Underwriter will not be obligated to repurchase any of the Bonds, and no representation is made
concerning the existence of any secondary market for the Bonds. No assurance can be given that any secondary
market will develop following the completion of the offering of the Bonds, and no assurance can be given that
the initial offering prices for the Bonds will continue for any period of time.
CONCLUDING INFORMATION
Tax Matters
In the opinion of Best Best & Krieger LLP, San Diego, California, Bond Counsel, under existing
statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for
federal income tax purposes and is not an item of tax preference for purposes of calculating the federal
alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel,
interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with
respect to corporations, interest on the Bonds will be included as an adjustment in the calculation of alternative
minimum taxable income,which may affect the alternative minimum taxable liability of such corporations.
Bond Counsel's opinion as to the exclusion from gross income for federal income tax purposes of
interest on the Bonds is based upon certain representations of fact and certifications made by the City, the
Underwriter and others and is subject to the condition that the City complies with all requirements of the
Internal Revenue Code of 1986, as amended (the "Code") that must be satisfied subsequent to the issuance of
the bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax
purposes. Failure to comply with such requirements of the Code might cause interest on the Bonds to be
included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The
City has covenanted to comply with all such requirements.
Should the interest on the Bonds become includable in gross income for federal income tax purposes,
the Bonds are not subject to early redemption as a result of such occurrence and will remain outstanding until
maturity or until otherwise redeemed in accordance with the Fiscal Agent Agreement.
The Internal Revenue Service(the "IRS") has initiated an extensive program for the auditing of tax-
exempt bond issues,including both random and targeted audits. It is possible that the Bonds will be selected for
audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an
audit of the Bonds(or by an audit of similar bonds).
Bond Counsel's opinion may be affected by action taken (or not taken) or events occurring (or not
occurring) after the date of issuance of the bonds. Bond Counsel has not undertaken to determine, or to inform
any person, whether any such action or events are taken or do occur, or whether such actions or events may
adversely affect the value of tax treatment of a Bond and Bond Counsel expresses no opinion with respect
thereto. '
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Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded from gross
income for federal income tax purposes provided the City continues to comply with certain requirements of the
Code, the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of the recipient. The
extent of these other tax consequences will depend upon the recipient's particular tax status and other items of
income or deductions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all
potential purchasers should consult their tax advisors before purchasing any of the Bonds.
- Legal Opinions
The legal opinion of Best Best & Krieger LLP, San Diego, California, approving the validity of the
Bonds in substantially the form set forth as Appendix F hereto, will be made available to purchasers at the time
of original delivery. A copy of the legal opinion for the Bonds will be provided with each definitive bond.
Certain legal matters will be passed upon for the City and the District by Richards Watson& Gershon, a
professional corporation, Los Angeles, California, City Attorney and by Best Best & Krieger LLP, Riverside,
California, as disclosure counsel to the City.
Litigation
At the time of delivery of and payment for the Bonds, the District will certify that, to the current actual
knowledge (after reasonable investigation) of the officer of the City executing the certificate, there is no action,
suit,proceeding, inquiry or investigation, at law or in equity,before or by any court or regulatory agency,public
board or body pending or overtly threatened in writing against the District or the City that in any way seeks to
affect the existence of the District or the City or the titles of their officers to their respective offices,or that seeks
to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds of the Bonds
in accordance with the Fiscal Agent Agreement, or in any way contests or seeks to affect the validity or
enforceability of the Bonds, the Fiscal Agent Agreement, or the Bond Purchase Agreement or any action of the
District or the City contemplated by any of said documents, or that in any way contests the completeness or
accuracy of this Official Statement or the powers of the District or the City or their authority with respect to the
Bonds or the Fiscal Agent Agreement or any action of the District or the City contemplated by any of said
documents, or that would adversely affect the exclusion from gross income for federal income tax purposes of
interest on the Bonds or the exemption of such interest for California personal income taxation.
Continuing Disclosure
The City, acting as the administrator for and on behalf of the District, will covenant for the benefit of
the Bondowners to provide annually,commencing February 1, 2008,certain financial information and operating
data relating to the District(the "District's Annual Reports"), and to provide notices of the occurrence of certain
enumerated events,if material. The District's Annual Report will be delivered not later than seven months after
the end of the City's fiscal year (which currently ends on June 30), commencing with the report for the 2005-
2006 fiscal year.
_The Developer will covenant for the benefit of the Bondowners to provide certain information and
operating data regarding their respective development of their property in the District on a semi-annual basis
(the "Property Owner's Semi-Annual Reports"), and to provide notices of the occurrence of certain enumerated
events, if material within their respective properties. The Property Owner's Semi-Annual Reports will be
distributed by the dissemination agent on April 30 and October 31 of each year, commencing, April 30, 2007.
See "APPENDIX E — Form of Continuing Disclosure Agreements — 'DEVELOPER CONTINUING
DISCLOSURE AGREEMENT."
The District's Annual Reports and the Property Owner's Semi-Annual Reports will be filed with each
Nationally Recognized Municipal Securities Information Repository and with the appropriate State information
depository, if any. The notices of material events will be filed with the Municipal Securities Rulemaking Board
(and with the appropriate State information depository, if any). The specific nature of the information to be
contained in the District's Annual Reports, the Property Owner's Semi-Annual Reports and the notices of
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material events is set forth in "Appendix E - Forms of Continuing Disclosure Agreements." These covenants
have been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5)(the"Rule").
The obligation of the property owners to provide information is limited to the type of information
described in its continuing disclosure undertakings. Neither the City nor the District will assume any
responsibility for the enforcement of the property owners' obligations under their continuing disclosure
undertakings nor for the accuracy of the information contained in the Property Owner's Semi-Annual Reports.
The City,acting as the administrator for and on behalf of certain other community facilities districts,has
on two occasions not met the continuing disclosure requirements under the Rule on a timely basis. In each
instance the City failed to timely file reports on behalf of these community facilities districts,due on February 1,
2001 for the Community Facilities District No. 2000-01 (South Etiwanda) Special Tax Bonds, Series 2000 and
for the Community Facilities District No. 2000-02 (Rancho Cucamonga Corporate Park) Special Tax Bonds,
Series 2001. Such reports were subsequently filed on June 12, 2001. It should be noted that these bond issues
closed in December 2000 and the information that was contained in the annual reports filed on June 12, 2001
was identical to the information contained in the official statements relating to these bond issues distributed to
the purchasers of the Bonds.
The Developer has not failed to comply in all material respects with any previous undertakings with
regard to said Rule to provide annual reports or notices of material events, however, the Developer observes that
it purchased certain property in Community Facilities District No. 98-1 (Chapman Heights) of the City of
Yucaipa from a property owner who had purchased such property from Chapman Heights, L.P., a Washington
limited partnership. Pursuant to developer continuing disclosure agreements relating to the Community
Facilities District No. 98-1 (Chapman Heights) 1998 Special Tax Bonds, 1999 Special Tax Bonds, and 2003
Special Tax Bonds, separate annual reports were due to be filed by March 1, 2005 by Chapman Heights, L.P.
Although the Developer was not obligated to file such annual reports pursuant to the terms of the developer
continuing disclosure agreements,it filed such annual reports in June 2005.
No Rating
The District has not made, and does not contemplate making, application to any rating agency for the
assignment of a rating to the Bonds.
Underwriting
Stone & Youngberg LLC, the Underwriter of the Bonds, has agreed to purchase.the Bonds from the
District at a purchase price of $ (representing the original principal amount of the Bonds of
$ ,less an underwriter's discount of$ and less an original issue discount of$ ).
The purchase contract under which the Underwriter is purchasing the Bonds provides that the Underwriter will
purchase all of the Bonds if any are purchased. The obligation of the Underwriter to make such purchase is
subject to certain terms and conditions set forth in such contract of purchase.
The public offering prices of the Bonds may be changed from time to time by the Underwriter. The
Underwriter may offer and sell Bonds to certain dealers and others at a price lower than the offering price stated
on the cover page of this Official Statement.
Professional Fees
In connection with the issuance of the Bonds, fees payable to certain professionals are contingent upon
the issuance and delivery of the Bonds, including: the Underwriter, Best Best& Krieger LLP, as bond counsel
and disclosure counsel; Wells Fargo Bank, National Association, as Fiscal Agent; and Fieldman Rolapp &
Associates,as financial advisor to the City(a portion of whose fee is contingent).
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Miscellaneous
All quotations from, and summaries and explanations of the Fiscal Agent Agreement, the Bonds, other
documents and statutes contained in this Official Statement do not purport to be complete,and reference is made
to said documents,the Fiscal Agent Agreement, and statutes for full and complete statements of their provisions.
This Official Statement is submitted only in connection with the sale of the Bonds by the District. The
information contained in this Official Statement should not be construed as representing all conditions affecting
the District,the City or the Bonds.
All information contained in this Official Statement pertaining to the District and the City has been
fumished by the City and the execution and delivery of this Official Statement has been duly authorized by the
District and the City.
CITY OF RANCHO CUCAMONGA, for itself and on behalf
of CITY OF RANCHO CUCAMONGA COMMUNITY
FACILITIES DISTRICT 2006-02 (AMADOR ON ROUTE
66)
By:
City Manager
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APPENDIX A
SUMMARY APPRAISAL REPORT
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APPENDIX B
RATE AND METHOD OF APPORTIONMENT FOR '
COMMUNITY FACILITIES DISTRICT NO. 2006-02
OF THE CITY OF RANCHO CUCAMONGA
(AMADOR ON ROUTE 66)
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APPENDIX C
SUMMARY OF THE FISCAL AGENT AGREEMENT
The following is a summary of certain provisions of the Fiscal Agent Agreement not otherwise described
in the text of this Official Statement. .This summary is not intended to be definitive, and reference is made to the
text of the Fiscal Agent Agreement for the complete provisions thereof.
DEFINITIONS
The following are some of the terms which are defined in the Fiscal Agent Agreement_(the
"Agreement"). Except as defined below, the terms previously defined in this Official Statement have the
- meanings previously given.
"Act" means the Mello-Roos Community Facilities Act of M2, as amended, being Sections 53311 et
seq. of the California Government Code.
"Administrative Expense Fund"means the fund by that name established by Fiscal Agent Agreement.
"Administrative Expenses" means the following actual or reasonably estimated costs directly related to
the administration of the District: the costs of computing the Special Taxes and preparing the annual Special
Tax collection schedules (whether by the City, a designee thereof or both); the costs of collecting the Special
Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Fiscal Agent; the
costs of the Fiscal Agent(including its legal counsel) in the discharge of the duties required of it under the Fiscal
Agent Agreement; the costs to the City, the District or any designee of either thereof of complying with
arbitrage rebate requirements; the costs to the City, the District or any designee of either thereof of complying
with City, District or obligated persons disclosure requirements; the costs associated with preparing Special Tax
disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, the
District or any designee of either thereof related to an appeal of the Special Tax; and the City's annual
administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or
advanced by the City or District for any other administrative purposes of the District, including reasonable
attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent
Special Taxes.
"Administrative Expense Requirement" means an annual amount, initially equal to $25,000, to be
allocated each Fiscal Year for payment of Administrative Expenses. This amount shall be annually adjusted
upward by 2%per year.
"Agreement" means the Fiscal Agent Agreement, as it may be amended or supplemented from time to
time by any Supplemental Agreement adopted pursuant to the provisions of the Fiscal Agent Agreement.
"Annual Debt Service" means, for each Bond Year, the sum of(i) the interest due on the Outstanding
Bonds in such Bond Year,assuming that the Outstanding Bonds are retired as scheduled (including by reason of
the provisions of the Fiscal Agent Agreement providing for mandatory sinking fund payments), and (ii) the
principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking fund
payment due in such Bond Year pursuant to the Fiscal Agent Agreement.
"Acquisition/Financing Agreement" means the Acquisition/Financing Agreement by and between the
City and the Developer,-dated as of 2006.
"Finance Director"means the Finance Director of the City,acting for and on behalf of the District.
"Affiliate" means any entity owned, controlled or under common ownership or control by or with, as
applicable, the Developer and includes all general partners of any entity which is a partnership. Control shall
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mean ownership of fifty percent (50%) or more of the voting power of or ownership interest in the respective
entity.
"Agency Account" means the account within the Project Fund by that name established pursuant to the
Fiscal Agent Agreement.
"Agency Capacity Facilities Amount"has the meaning given to such term in the Water District JCFA.
"Auditor"means the Auditor-Controller of the County.
"Authorized Officer" means the City Manager or the Finance Director, acting on behalf of the District,
or any person designated by the City Council, the City Manager or the Finance Director and authorized to act on
behalf of the District under or with respect to the Fiscal Agent Agreement and all other agreements related
thereto.
"Average Annual Debt Service" means the average over all Bond Years (from the date of the Bonds to
their maturity)of Annual Debt Service.
"Bond Counsel" means any attorney or firm of attorneys acceptable to the City and nationally
recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by
public entities.
"Bond Fund"means the fund by that name established by the Fiscal Agent Agreement.
"Bond Register" means the books for the registration and transfer of Bonds maintained by the Fiscal
Agent under the Fiscal Agent Agreement.
"Bond Year"means the one-year period beginning on September 1 st in each year and ending on the day
prior to September 1st in the following year, except that the first Bond Year shall begin on the Closing Date for
the Bonds and end on September 1,2007.
"Bonds" means the City of Rancho Cucamonga Community Facilities District No. 2006-02 (Amador
on Route 66) 2007 Special Tax Bonds at any time Outstanding under the Fiscal Agent Agreement or any
Supplemental Agreement.
"Business Day" means any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking
institutions in the state in which the Fiscal Agent has its Principal Office are authorized or obligated by law or
executive order to be closed.
"Cash Deposit"means a deposit of good funds by the Developer with the Fiscal Agent in the applicable
Stated Amount in lieu of depositing a Letter of Credit or Substitute Letter of Credit pursuant to the Fiscal Agent
Agreement.
"CDIAC" means the California Debt and Investment Advisory Commission of the office of the State
Finance Director of the State of California or any successor agency or bureau thereto.
"City Improvements"shall have the meaning given such term in the Acquisition/Financing Agreement.
"City Improvements Account"means the account by that name established pursuant to the Fiscal Agent
Agreement.
"City"means the City of Rancho Cucamonga, California, and any successor thereto.
"City Attorney" means any attorney or firm of attorneys employed by the City in the capacity of city
attorney.
"City Council"means the City Council of the City.
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"City Manager"means the City Manager of the City,acting for and on behalf of the District.
"Closing Date"means December , 2006,being the date upon which there is a delivery of the Bonds in
exchange for the amount representing the purchase price of the Bonds by the Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or
(except as otherwise referenced in the Fiscal Agent Agreement) as it may be amended to apply to obligations
issued on the date of issuance of the Bonds, together with applicable proposed, temporary and final regulations
Promulgated, and applicable official public guidance published,under the Code.
"Commission"means the United States Securities and Exchange Commission.
"Comptroller of the Currency"means the Comptroller of the Currency of the United States.
"Costs of Issuance" means items of expense payable or reimbursable directly or indirectly by the City
and related to the authorization, sale and issuance of the Bonds, which items of expense shall include,but not be
limited to, the printing costs, costs of reproducing and binding documents, closing costs, filing and recording
fees; initial fees and charges of the Fiscal Agent including its first annual administration fee, expenses incurred
by the City in connection with the issuance of the Bonds and the expenses of the City in connection with the
establishment of the District, special tax consultant fees and expenses, preliminary engineering fees and
expenses, legal fees and charges, including Bond Counsel fees, financial consultant fees, appraiser fees and
expenses, absorption consultant fees and expenses, charges for execution, transportation and safekeeping of the
Bonds and other costs,charges and fees in connection with the foregoing.
"Costs of Issuance Fund"means the fund by that name established by the Fiscal Agent Agreement.
"County"means the County of San Bernardino,California.
"Debt Service" means the scheduled amount of interest and amortization of principal payable by reason
of the Fiscal Agent Agreement on the Bonds during the period of computation, excluding amounts scheduled
during such period which relate to principal which has been retired before the beginning of such period.
"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as Depository
pursuant to the Fiscal Agent Agreement.
"Developer Property" means any Taxable Property (as such term is defined in the Rate and Method)
within the District which is owned or controlled by the Developer.
"District" or"District" means the City of Rancho Cucamonga Community Facilities District No. 2006-
02(Amador on Route 66),formed by the City under the Act and the Resolution of Formation. -
"DTC"means The Depository Trust Company,New York,New York,and its successors and assigns.
"Fair Market Value" means the price at which a willing buyer would purchase the investment from a
willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell
the investment becomes binding) if the investment is traded on an established securities market (within the
meaning of section 1273 of the Code) and, otherwise, the term"Fair Market Value" means the acquisition price .
in a bona fide arm's length transaction(as referenced above)if(i)the investment is a certificate of deposit that is
acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with
specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for
example, a guaranteed investment contract, a=forward supply contract or other investment agreement) that is
acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States
Treasury Security—State and Local Government Series that is acquired in accordance with applicable
regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment
Fund of the State of California but only if at all times during which the investment is held its yield is reasonably
expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United
States.
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"Federal Securities" means any of the following which are non-callable and which at the time of
investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent:
(i) direct general obligations of the United States of America(including obligations issued
or held in book entry form on the books of the United States Department of the Treasury) and
obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by
the United States of America, including, without limitation, such of the foregoing which are commonly
referred to as"stripped"obligations and coupons; or
(ii) any of the following obligations of the following agencies of the United States of
America: (a) direct obligations of the Export-Import Bank, (b) certificates of beneficial ownership
issued by the Farmers Home Administration,(c)participation certificates issued by the General Services
Administration, (d) mortgage-backed bonds or pass-through obligations issued and guaranteed by the
Government National Mortgage Association, (c) project notes issued by the United States Department
of Housing and Urban Development, and (f) public housing notes and bonds guaranteed by the United
States of America.
"Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an independent fiscal agent
with the duties and powers in the Fiscal Agent Agreement provided, its successors and assigns,and any other
corporation or association which may at any time be substituted in its place, as provided in the Fiscal Agent
Agreement.
"Fiscal Year"means the twelve-month period extending from July I in a calendar year to June 30 of the
succeeding year,both dates inclusive.
"Government Obligations" means obligations described in paragraph 1 of the definition of Permitted
Investments.
"Independent Financial Consultant" means any consultant or firm of such consultants appointed by the
City or the Finance Director, and who, or each of whom: (i) is judged by the Finance Director to have
experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact
independent and not under the domination of the City; (iii) does not have any substantial interest, direct or
indirect,with or in the City,or any owner of real property in the District, or any real property in the District; and
(iv) is not connected with the City as an officer or employee of the City, but who may be regularly retained to
make reports to the City.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30
Montgomery Street, 10th Floor,Jersey City,New Jersey 07302,Attention: Editor; Kenny Information Services'
"Called Bond Service", 65 Broadway, 16th Floor, New York, New York 10006; Moody's Investors Service
"Municipal and Government", 99 Church Street, New York, New York 10007, Attention: Municipal News
Reports; Standard&Poor's Corporation "Called Bond Record", 25 Broadway, 3rd Floor, New York,New York
10004; and, in accordance with then current guidelines of the Commission, such other addresses-and/or such
services providing information with respect to called bonds as the City may designate in an Officer's Certificate
delivered to the Fiscal Agent.
"Interest Account" means the account within the Bond Fund by that name established pursuant to the
Fiscal Agent Agreement.
"Interest Payment Dates"means March 1 and September 1 of each year,commencing March 1,2007.
"Legislative Body"means the City Council of the City acting as the legislative body of the District.
"Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the
calculation is made through the final maturity date of any Outstanding Bonds.
"Moody's"means Moody's Investors Service,and its successor's and assigns.
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"Officer's Certificate" means a written certificate of the City.signed by an Authorized Officer of the
City.
"Ordinance"means Ordinance No. 770 of the City of Rancho Cucamonga.
"Original Purchaser"means Stone&Youngberg LLC.
"Outstanding," when used as of any particular time with reference to Bonds, means (subject to the
provisions of the Fiscal Agent Agreement)all Bonds except:
(i) Bonds theretofore canceled by the.Fiscal Agent or surrendered to the Fiscal Agent for
cancellation;
(ii) Bonds paid or deemed to have been paid within the meaning of the Fiscal Agent
Agreement; and
(iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized,
executed,issued and delivered by the City pursuant to the Fiscal Agent Agreement or any Supplemental
Agreement.
"Owner" or "Bondowner" means any Person who shall be the registered owner of any Outstanding
Bond.
"Permitted Investments" means any of the following which at the time of investment are legal
investments under the laws of the State for the moneys proposed to be invested therein(the Fiscal Agent shall be
entitled to rely upon any written investment direction from an Authorized Officer of the District as a
certification to the Fiscal Agent that such investment constitutes a Permitted Investment):
1. A. Direct obligations(other than an obligation subject to variation in principal payment)of
the United States of America("United States Treasury Obligations");
B. Obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America; .
C. Obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by any agency or instrumentality of the United States of America when such
obligations are backed by the full faith and credit of the United States of America,or
D. Evidences of ownership of proportionate interests in future interest and principal
payments on obligations described above held by a bank or trust company as custodian,
under which the owner of the investment is the real party in interest and has the right to
proceed directly and individually against the obligor and the underlying government
obligations are not available to any Person claiming through the custodian or to whom
the custodian may be obligated.
2. Federal Housing Administration debentures.
3. The listed obligations of government-sponsored agencies which are not backed by the full faith
and credit of the United States of America:
A. Federal Home Loan Mortgage Corporation(FHLMC)
(1) Participation certificates (excluded are stripped mortgage securities which are
purchased at prices exceeding their principal amounts)
(2) Senior debt obligations
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B. Farm Credit Banks(formerly: Federal Land Banks,Federal Intermediate
Credit Banks and Banks for Cooperatives)
(1) Consolidated system-wide bonds and notes
C. Federal Home Loan Banks(FHL Banks)
(1) Consolidated debt obligations
D. Federal National Mortgage Association(FNMA)
(1) Senior debt obligations
(2) Mortgage-backed securities (excluded are stripped mortgage securities which
are purchased at prices exceeding their principal amounts)
E. Student Loan Marketing Association(SLMA)
(1) Senior debt obligations (excluded are securities that do not have a fixed par
value and/or whose terms do not promise a fixed dollar amount at maturity or
call date)
F. Financing Corporation(FICO)
(1) Debt obligations
G. Resolution Funding Corporation(REFCORP)
(1) Debt obligations
4. Unsecured certificates of deposit, time deposits, and bankers' acceptances(having maturities of
not more than 30 days)of any bank(including the Fiscal Agent and its affiliates) the short-term
obligations of which are rated"A-l"or better by S&P.
5. Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance
Corporation (FDIC), in banks which have capital and surplus of at least $5 million (including
the Fiscal Agent and its affiliates).
6. Commercial paper (having original maturities of not more than 270 days) rated "A-l" by S&P
and"Prime-1"by Moody's.
7. Money market funds rated"AAm-l"or"AAm-G"by S&P, or better. .
8. State Obligations, which means:
A. Direct general obligations of any state of the United States of America or any
subdivision or agency thereof to which is pledged the full faith and credit of a state the
unsecured general obligation debt of which is rated"A3"by Moody's and "A"by S&P,
or better, or any obligation fully and unconditionally guaranteed by any state,
subdivision or agency whose unsecured general obligation debt is so rated.
B. Direct general short-term obligations of any state agency or subdivision or agency
thereof described in(A)above and rated"A-W'by S&P and"Prime-1"by Moody's.
C. Special Revenue Bonds(as defined in the United States Bankruptcy Code) of any state,
state agency or subdivision described in (A) above and rated "AA" or better by S&P
and"AA"or better by Moody's.
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9. Pre-refunded municipal obligations rated "AAA"by S&P and "AAA"by Moody's meeting the
following requirements:
A. the municipal obligations are (1) not subject to redemption prior to maturity or (2) the
trustee/fiscal agent for the municipal obligations has been given irrevocable instructions
concerning their call and redemption and the issuer of the municipal obligations has
covenanted not to redeem such municipal obligations other than as set forth in such
instructions;
B. the municipal obligations are secured by cash or United States Treasury Obligations
which may be applied only to payment of the principal of interest and premium on such
municipal obligations;
C. the principal of and interest on the United States Treasury Obligations(plus any cash in
the escrow) has been verified by the report of independent certified public accountants
to be sufficient to pay in full all principal of, interest, and premium, if any, due and to
become due on the municipal obligations;
D. the cash or United States Treasury Obligations serving as security for the municipal
obligations are held,by an escrow agent or trustee/fiscal agent in trust for owners of the
municipal obligations;
E. no substitution of a United States Treasury Obligation shall be permitted except with
another United States Treasury Obligation and upon delivery of a new verification;and
F.. the cash or United States Treasury Obligations are not available to satisfy any other
claims,including those by or against the trustee/fiscal agent or escrow agent.
10. Investment agreements with a domestic or foreign bank or corporation the long-term debt or
financial strength of which, it or its guarantor is rated at least "AA-" by S&P and "AaY by
Moody's;provided that,by the terms of the investment agreement:
A. the invested funds are available for withdrawal without penalty or premium, upon not
more than seven days' prior notice; the District and the Fiscal Agent agree,pursuant to
the Fiscal Agent Agreement, to give or cause to be given notice in accordance with the
terms of the investment agreement so as to receive funds thereunder with no penalty or
premium paid;
B. the investment agreement shall state that it is the unconditional and general obligation
of and is not subordinated to any other obligation of, the provider thereof, or, in the case
of a bank, that the obligation of the bank to make payments under the agreement ranks
pan passu with the obligations of the bank to its other depositors and its other
unsecured and unsubordinated creditors;
C. the District and the Fiscal Agent receives the opinion of domestic counsel that such
investment agreement is legal, valid, binding and enforceable upon the provider in
accordance with its terms and of foreign counsel(if applicable);
D. the investment agreement shall provide that if during its term
(1) the provider's rating by either S&P or Moody's falls below "AA-" or "AaY,
respectively, the provider shall, at its option, within 10 days of receipt of
publication of such downgrade, either (a) collateralize the investment
agreement by delivering or transferring in accordance with applicable state and
federal laws (other than by means of entries on the provider's books) to the
District, the Fiscal Agent or a Holder of the Collateral free and clear of any
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third-party liens or claims the market value of which collateral is maintained at
levels and upon such conditions as would be acceptable to S&P and Moody's to
maintain an "A" rating in an "A" rated structured financing (with a market
value approach); or (b) transfer and assign the investment agreement to a then
qualifying counterparty, which is to be approved by the District, with ratings
specified above; and
(2) the provider's rating by either S&P or Moody's is withdrawn or suspended or
falls below"A-" or"A3",respectively,the provider must, at the direction of the
District or the Fiscal Agent, within 10 days of receipt of such direction, repay
the principal of and accrued but unpaid interest on the investment;
E. the investment agreement shall state and an opinion of counsel shall be rendered, in the
event collateral is required to be pledged by the provider under the terms of the
investment agreement, at the time such collateral is delivered, that the Holder of the
Collateral has a perfected first priority security interest in the collateral, any substituted
collateral and all proceeds thereof (in the case of bearer securities, this means the
Holder of the Collateral is in possession);
F. the investment agreement must provide that if during its term
(1) the provider shall default in its payment obligations, the provider's obligations
under the investment agreement shall, at the direction of the District or the
Fiscal Agent, be accelerated and amounts invested and accrued but unpaid
interest thereon shall be repaid to the District or Fiscal Agent, as appropriate,
and
(2) the provider shall become insolvent, not pay its debts as they become due, be
declared or petition to be declared bankrupt, etc.the provider's obligations shall
automatically be accelerated and amounts invested and accrued but unpaid
interest thereon shall be repaid to the District or Fiscal Agent,as appropriate.
11. The Local Agency Investment Fund(LAIF)administered by the Finance Director of the State to
the extent such deposits remain in the name of and control of the Fiscal Agent.
"Person" means an individual, a corporation, a partnership, a joint venture, a trust, an unincorporated
organization or a government or any agency or political subdivision thereof.
"Principal Account" means the account within the Bond Fund by that name established pursuant to the
Fiscal Agent Agreement.
"Principal Office"means the office of the Fiscal Agent at Los Angeles, California or such other offices
as may be specified to the City and the District by the Fiscal Agent in writing.
"Project"means the facilities more particularly described in the Acquisition/Financing Agreement.
"Project Fund" means the fund by that name created by and held by the Fiscal Agent pursuant to the
Fiscal Agent Agreement.
"Rate and Method" means the Rate and Method of Apportionment of the Special Taxes set forth in the
Ordinance.
"Rebate Fund"means the fund by that name established pursuant to the Fiscal Agent Agreement.
"Record Date"means the fifteenth day of the month next preceding the month of the applicable Interest
Payment Date, whether or not such day is a Business Day.
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"Redemption Fund"means the fund by that name established pursuant to the Fiscal Agent Agreement.
"Reserve Fund"means the fund by that name established pursuant to the Fiscal Agent Agreement.
"Reserve Requirement" means: as of any date of calculation, an amount not to exceed the lesser of
(i)Maximum Annual Debt Service on the Outstanding Bonds, (ii) one hundred twenty-five percent (125%) of
Average Annual Debt Service on the Outstanding Bonds, or (iii) ten percent (10%) of the face amount of the
Outstanding Bonds.
"Resolution means Resolution No. 06-_ adopted by the City Council of the City on December 6,
2006.
"Resolution of Formation"means Resolution No. 06-322 adopted by the City Council on October 18,
2006.
"S&P" means Standard & Poor's Rating Services, a division of the McGraw Hill Companies, Inc. and
its successors and assigns.
"Securities Depositories" means The Depository Trust Company, 55 Water Street, 50' Floor, New
York, New York 10041,'Attention: Call Notification Department, Fax-(212) 855-7232; and, in accordance with
then current guidelines of the Commission, such other addresses and/or such other securities depositories as the
City may designate in an Officer's Certificate delivered to the Fiscal Agent.
"Special Tax" or"Special Taxes"means the Special Tax as defined in the Rate and Method authorized
to be levied within the District pursuant to the Act, the Ordinance and the Fiscal Agent Agreement. "Special
Taxes"do not include Special Tax B as defined in the Rate and Method.
"Special Tax Fund"means the fund by that name established by the Fiscal Agent Agreement.
"Special Tax Prepayments" means the proceeds of any Special Tax prepayments received by the City,
as calculated pursuant to Section H of the Rate and Method,less any administrative fees or penalties collected as
part of any such prepayment.
"Special Tax Revenues" means the proceeds of the Special Taxes received by the City, including any
scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of
property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest
thereon. "Special Tax Revenues"does not include any penalties collected in connection with delinquent Special
Taxes.
"State"means the State of California.
"Stated Amount" means the amount available to be drawn under the Letter of Credit or Cash Deposit
from time to time. During each Fiscal Year in which the Letter of Credit is in effect, the Stated Amount of the
Letter of Credit shall equal the estimated amount of Special Taxes to be levied on the Developer Property during
that Fiscal Year.
"Supplemental Agreement" means an agreement the execution of which is authorized by a resolution
which has been duly adopted by the City Council under the Act and which agreement is amendatory of or
supplemental to.the Fiscal Agent Agreement, but only if and to the extent that such agreement is specifically
authorized thereunder.
"Tax Consultant" means David Taussig & Associates, Inc. or another independent financial or tax
consultant retained by the City for the purpose of computing the Special Taxes.
"Water District"means the Cucamonga Valley Water District.
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"Water District Account"means the account within the Project Fund by that name established pursuant
to the Fiscal Agent Agreement.
"Water District Capacity Facilities Proceeds" has the meaning given such term in the Water District
JCFA.
"Water District JCFA" means the Joint Community Facilities Agreement by and between the City and
the Water District pertaining to the funding by the District of the Water District Capacity Facilities Proceeds and
the Agency Capacity Facilities Proceeds and the acquisition of the Owner Constructed Water District Facilities.
FUNDS AND ACCOUNTS
Project Fund
Establishment of Project Fund. There is established by the Fiscal Agent Agreement, as a separate fund
to be held by the Fiscal Agent, the City of Rancho Cucamonga Community Facilities District No. 2006-02 '
(Amador on Route 66) 2007 Special Tax Bonds, Project Fund and within such Fund three accounts, the
Acquisition Account, the Agency Account and the Water District Account, to the credit of which deposits shall
be made as required by the Fiscal Agent Agreement. The Fiscal Agent may establish such temporary funds or
accounts on its records as it may deem appropriate to facilitate such deposits and transfers.
Moneys in the Acquisition Account of the Project Fund shall be held in trust by the Fiscal Agent for the
benefit of the City, and shall be disbursed, except as otherwise provided in the Fiscal Agent Agreement, solely
for the payment or reimbursement of costs of the Project and Costs of Issuance not paid from the Costs of
Issuance Fund prior to the closure thereof.
Moneys in the Agency Account of the Project Fund shall be held in trust by the Fiscal Agent for the
benefit of the City, the Agency and the Water District, and shall be disbursed, except as otherwise provided in
the Fiscal Agent Agreement of this Section, solely for the funding of the Agency Capacity Facilities Proceeds
pursuant to the Water District JCFA.
Moneys in the Water District Account of the Project Fund shall be held in trust by the Fiscal Agent for
the benefit of the City and the Water District, and shall be disbursed, except as otherwise provided in the Fiscal
Agent Agreement, solely for the funding of the Water District Capacity Facilities Proceeds and the acquisition
of the Owner Constructed Water District Facilities pursuant to the Water District JCFA.
Procedure for Disbursement from the Project Fund Accounts.
(i) Acquisition Account. The Fiscal Agent shall make disbursements from the Acquisition
Account upon receipt of an Officer's Certificate, in substantially the form set forth in the Fiscal Agent
Agreement which shall:
(a) set forth the amount required to be disbursed; the purpose for which the disbursement is
to be made; that the disbursement is a proper expenditure from the Acquisition Account; and the Person
to which the disbursement is to be paid;and
(b) certify that no portion of the amount then being requested to be disbursed was set forth
in any Officer's Certificate previously filed requesting a disbursement.
(ii) Agency Account. The Fiscal Agent shall make disbursements from the Agency Account upon
receipt of an Officer's Certificate which shall: .
(a) set forth the amount required to be disbursed; the purpose for which the disbursement is
to be made; that the disbursement is a proper expenditure from the Agency Account; and the Person to
which the disbursement is to be paid; and
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(b) certify that no portion of the amount then being requested to be disbursed set forth in
any Officer's Certificate previously filed requesting a disbursement.
(iii) Water District Account. The Fiscal Agent shall make disbursements from the Water District
Account upon receipt of an Officer's Certificate,which shall:
(a) set forth the amount required to be disbursed; the purpose for which the disbursement is
to be made; that the disbursement is a proper expenditure from the Water District Account; and the
Person to which the disbursement is to be paid; and
(b) certify that no portion of the amount then being requested to be disbursed was set forth
in any Officer's Certificate previously filed requesting a disbursement.
Transfers to the Bond Fund. On any Interest Payment Date, if there is a deficiency in the Bond Fund of
the amount then required for payment of the principal of, and interest and any premium on, the Bonds after all
available amounts in the Reserve Fund have been transferred to the Bond Fund pursuant to the Fiscal Agent
Agreement, the City may, but is not required to, direct the Fiscal Agent to transfer moneys from the Project
Fund to the Bond Fund pursuant to an Officer's Certificate which shall set forth the amount to be transferred.
Investment. Moneys in the Project Fund shall be invested and deposited in accordance with the Fiscal
Agent Agreement. Interest earnings and profits resulting from such investment shall be invested and deposited
and shall be retained in the Project Fund to be used for the purposes thereof.
Transfer of Funds not Required for Project. Upon the filing of an Officer's Certificate stating that the
Project has been completed and that all costs of the Project have been paid, or that any such costs are not
required to be paid from the Project Fund, the Fiscal Agent shall transfer the amount, if any, remaining in the
Project Fund to the Special Tax Fund.
Transfer of Funds in case of Abandonment. Upon the filing of an Officer's Certificate stating that the
Authorized Officer has determined in his sole discretion that work necessary to construct and complete the
Project has ceased for a continuous period of over six months such that the construction of the Project
effectively has been abandoned, or that for any reason all or any portion of the amounts then on deposit in the
Project Fund will not be expended for Project costs, the Fiscal Agent shall transfer the amounts in the Project
Fund as set forth in the Fiscal Agent Agreement.
Costs of Issuance Fund
Establishment of Costs of Issuance Fund. There is established by the Fiscal Agent Agreement, as a
separate fund to be held by the Fiscal Agent, the City of Rancho Cucamonga Community Facilities District No.
2006-02 (Amador on Route 66) 2007 Special Tax Bonds, Costs of Issuance Fund, to the credit of which a
deposit shall be made as required by the Fiscal Agent Agreement. Moneys in the Costs of Issuance Fund shall
be held in trust by the Fiscal Agent and shall be disbursed as provided in the Fiscal Agent Agreement for the
payment or reimbursement of Costs of Issuance.
Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay
Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees,
signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the Bonds.
The Fiscal Agent shall pay all Costs of Issuance after receipt of an invoice from any such payee which requests
payment in an amount which is less than or equal to the amount set forth with respect to such payee pursuant to
an Officer's Certificate requesting payment of Costs of Issuance. The Fiscal Agent shall maintain the Costs of
Issuance Fund for a period of 180 days from the date of delivery of the Bonds and then shall transfer any
moneys remaining therein, including any investment earnings thereon,to the Project Fund.
Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with
the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall be retained by the
Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund.
RVPUBUCSNOWV22113.1 C-1 I
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Reserve Fund
Establishment of Fund. There is established by the Fiscal Agent Agreement, as a separate fund to be
held by the Fiscal Agent the City of Rancho Cucamonga Community Facilities District No. 2006-02 (Amador
on Route 66) 2007 Special Tax Bonds, Reserve Fund, to the credit of which Fund a deposit shall be made as
required by the Fiscal Agent Agreement which deposit is equal to the Reserve Requirement as of the Closing
Date for the Bonds, and deposits shall be made as provided in the Fiscal Agent Agreement). Moneys in the
Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve
for the payment of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in
favor of the Owners of the Bonds.
Use of Funds. Except as otherwise provided in the Fiscal Agent Agreement, all amounts deposited in
the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to
the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for
payment of the principal of,and interest and any premium on,the Bonds or, in accordance with the provisions of
the Fiscal Agent Agreement, for the purpose of redeeming Bonds from the,Bond Fund.
Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the Reserve Fund to the
Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent shall provide written notice thereof to the
Finance Director, specifying the amount withdrawn.
Transfer of Excess of Reserve Requirement. If on any September 1, or the first Business Day thereafter
if September 1 is not a Business Day, of each year, the amount in the Reserve Fund exceeds the Reserve
Requirement, the Fiscal Agent shall, as directed in an Officer's Certificate, transfer an amount equal to the
excess from the Reserve Fund to the Interest Account of the Bond Fund to be used for the payment of interest on
the Bonds on the next Interest Payment Date in accordance with the Fiscal Agent Agreement. -
Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund
exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of
payment or redemption and premium, if any, due upon redemption,the Fiscal Agent shall transfer.the amount in
the Reserve Fund to the Redemption Fund to be applied to the payment and redemption, in accordance with the
Fiscal Agent Agreement, of all of the Outstanding Bonds. In the event that the amount so transferred from the
Reserve Fund to the Redemption Fund exceeds the amount required to pay and redeem the Outstanding Bonds,
the balance in the Redemption Fund shall be transferred to the District to be used for any lawful purpose of the
District.
Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund pursuant to the
Fiscal Agent Agreement the calculation of any amounts due to the federal government pursuant to the Fiscal
Agent Agreement following payment of the Bonds and withdrawal of any such amount from the Reserve Fund
for purposes of making such payment to the federal government, and(ii)payment of any fees and expenses due
to the Fiscal Agent.
Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and Bonds are to be
redeemed with the proceeds of such prepayment pursuant to the Fiscal Agent Agreement, a proportionate
amount in the Reserve Fund (determined on the basis of the principal of Bonds to be redeemed and the then
principal of the Bonds Outstanding) shall be transferred upon such prepayment by the Fiscal Agent to the
Redemption Fund or the Interest Account of the Bond Fund,as applicable, to be applied to the redemption of the
Bonds pursuant to written instructions contained in an Officer's Certificate in accordance with the Fiscal Agent
Agreement.
Investment and Transfer to Pay Rebate. Moneys in the Reserve Fund shall be invested and deposited in
accordance with the Fiscal Agent Agreement. All Permitted Investments in the Reserve Fund shall be valued at
their Fair Market Value at least semiannually on March 1 and September 1. Interest earnings and profits
resulting from said investment shall be used as required by the District to comply with the Fiscal Agent
Agreement. No earnings on amounts in the Reserve Fund shall be used by the District to comply with the Fiscal
Agent Agreement unless the amount on deposit in the Reserve Fund is equal to the Reserve Requirement.
RVPUB\KSNOW\722113.1 C-12
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Bond Fund
Establishment of Bond Fund and Interest Account and Principal Account. There is established by the
Fiscal Agent Agreement, as a separate fund to be held by the Fiscal Agent; the City of Rancho Cucamonga
Community Facilities District No. 2006-02 (Amador on Route 66) 2007 Special Tax Bonds, Bond Fund, and
within such Fund two accounts, the Interest Account and the Principal Account, to the credit of which deposits
shall be made as required by the Fiscal Agent Agreement, and any other amounts required to be deposited
therein by the Fiscal Agent Agreement or the Act.
Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the
Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as
provided below,and,pending such disbursement,shall be subject to a lien in favor of the Owners of the Bonds.
Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Interest
Account of the Bond Fund and pay to the Owners of the Bonds the interest then due and payable on the Bonds,
including any interest due on the Bonds being redeemed pursuant to the Fiscal Agent Agreement.
On each Interest Payment Date,the Fiscal Agent shall withdraw from the Principal Account of the Bond
Fund and pay to the Owners of the Bonds the principal of the Bonds at the maturity thereof or the principal of
the term Bonds upon the mandatory sinking fund redemption thereof pursuant to the Fiscal Agent Agreement.
Investment. Moneys in the Bond Fund shall be invested and deposited in accordance with the Fiscal
Agent Agreement. Interest earnings and profits resulting from the investment and deposit of amounts in the
Bond Fund shall be retained in the Bond Fund and used for purposes of such fund.
Special Tax Fund
Establishment of Special Tax Fund. There is established by the Fiscal Agent Agreement, as a separate
fund to be held by the Fiscal Agent, the City of Rancho Cucamonga Community Facilities District No. 2006-02
(Amador on Route 66) 2007 Special Tax Bonds, Special Tax Fund. Moneys in the Special Tax Fund shall be
held in trust by the Fiscal Agent for the benefit of the District and the Owners of the Bonds, shall be disbursed
as provided below and,pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds and
the District. No later than the tenth (W) Business Day after which Special Tax Revenues have been received
by the City, and in any event not later than February W and August 15" of each year, the City shall transfer
such Special Tax Revenues to the Fiscal Agent, less an amount equal to the Administrative Expense
Requirement, and, except as set forth in the following sentence, such amounts shall be deposited in the Special
Tax Fund.
Disbursements. With the exception of the Special Tax Revenues representing Special Tax Prepayments
which shall be transferred pursuant to the Fiscal Agent Agreement, below, the Special Tax Revenues deposited
in the Special Tax Fund shall be deposited in the following accounts of the Special Tax Fund or transferred to
the following other funds and accounts on the dates and in the amounts set forth in the following paragraph and
in the following order of priority:
1. The Fiscal Agent shall deposit in the Interest Account of the Bond Fund, on each Interest
Payment Date and date for redemption of the Bonds, an amount required to cause the aggregate
amount on deposit in the Interest Account to equal the amount of interest due or becoming due
and payable on such Interest Payment Date on all Outstanding Bonds or to be paid on the Bonds
being redeemed on such date.
2. The Fiscal Agent shall deposit in the Principal Account of the Bond Fund, on each Interest
Payment Date and redemption date on which principal of the Bonds, including sinking fund
payments, shall be payable an amount required to cause the aggregate amount on.deposit in the
Principal Account to equal the principal amount of, and premium(if any) on;the Bonds coming
due and payable on such Interest Payment Date, or required to be redeemed on such date
pursuant to the Fiscal Agent Agreement.
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3. On or after March 2 and September 2 of each year after making the transfer and deposits
required under paragraphs 1 and 2 above, the Fiscal Agent shall transfer the amount, if any,
necessary to replenish the amount then on deposit in the Reserve Fund to an amount equal to the
Reserve Requirement.
4. On or after September 2 of each year after making the deposits and transfers required under
paragraphs I through 3 above, upon receipt of written instructions from an Authorized Officer,
the Fiscal Agent shall transfer from the Special Tax Fund to the Rebate Fund the amount
specified in such request.
5. On or after September 2 of each year after making the deposits and transfers required under
paragraphs 1 through 4 above, upon receipt of a written request of an Authorized Officer, the
Fiscal Agent shall transfer from the Special Tax Fund to the Finance Director for deposit in the
Administrative Expense Fund the amounts specified in such request to pay those Administrative
Expenses which the District reasonably expects (a) will become due and payable during such
Fiscal Year or the cost of which Administrative Expenses have previously been incurred and
paid by the District from funds other than the Administrative Expense Fund and (b) the cost of
which Administrative Expenses will be in excess of the Administrative Expense Requirement
for such Fiscal Year.
6. If, on or after September 2 of each year, after making the deposits and transfers required under
paragraphs 1 through 5 above, moneys remain in the Special Tax Fund, such moneys shall
remain on deposit in the Special Tax Fund and shall be subsequently deposited or transferred
pursuant to the provisions of paragraphs,l through 5 above.
Prepayments. The Fiscal Agent shall, upon receipt of Special Tax Revenues representing Special Tax
Prepayments together with written instructions of the District executed by an Authorized Officer, immediately
transfer such Special Tax Prepayments pursuant to such written instructions into the Interest Account of the
Bond Fund and the Redemption Fund, as applicable, and utilize such funds to pay the interest and premium, if
any, on and principal of Bonds to be redeemed pursuant to the Fiscal Agent Agreement. The Fiscal Agent may
conclusively rely upon such instructions.
Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with the
Fiscal Agent Agreement. Interest earnings and profits resulting from such investment and deposit shall be
transferred to the Special Tax Fund to be used for the purposes thereof.
Transfer to Redemption Fund. Any Officer's Certificate issued pursuant to the Fiscal Agent Agreement
(other than an Officer's Certificate issued more than one year prior to the first date on which optional
redemption of Bonds is permitted pursuant to the Fiscal Agent Agreement) may direct that all or any portion of
the funds which would otherwise be transferred to the Special Tax Fund be transferred to the Redemption Fund,
in which case the Fiscal Agent shall apply such amounts in accordance with the Fiscal Agent Agreement as
directed in an Officer's Certificate.
Transfer to the District. When there are no longer any Bonds Outstanding,any amounts then remaining
on deposit in the Special Tax Fund shall be transferred to the District and used for any lawful purpose under the
Act.
Administrative Expense Fund
Establishment of Administrative Expense Fund. There is established by the Fiscal Agent Agreement, as
a separate fund to be held by the Finance Director, the City of Rancho Cucamonga Community Facilities
District No. 2006-02 (Amador on Route 66)2007 Special Tax Bonds,Administrative Expense Fund to the credit
of which deposits shall be made as required by the Fiscal Agent Agreement. Moneys in the Administrative
Expense Fund shall be held in trust by the Finance Director for the benefit of the District and shall be used to
pay Administrative Expenses from time to time.
RVPOBUCSNOWN722113.1 C-14
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Investment. Moneys in the Administrative Expense Fund shall be invested and deposited in accordance
with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall be retained
by the Finance Director in the Administrative Expense Fund to be used for the purposes thereof.
Rebate Fund
There is established by the Fiscal Agent Agreement, as a separate fund to be held by the Fiscal Agent,
the City of Rancho Cucamonga Community Facilities District No. 2006-02 (Amador on Route 66) 2007 Special
Tax Bonds,Rebate Fund. The Rebate Fund shall be held and maintained by the Fiscal Agent. On September 15
of each year(or at such other times and or such other intervals as may be required or permitted by regulations of
the United States Internal Revenue Service), the City shall determine whether any portion of investment
earnings from any account established by the Fiscal Agent Agreement must be rebated to the United States
pursuant to Section 148 of the Code. At the written direction of the District,any amounts required to be rebated
will be transferred from any available source, including the Special Tax Fund pursuant to the Fiscal Agent
Agreement,to the Rebate Fund.
The City is authorized to retain independent attorneys, accountants and other consultants to assist in
complying with the requirements of the Code, and the fees of such consultants may be paid from the
Administrative Expense Account. The Fiscal Agent may rely conclusively upon the City's determinations,
calculations and certifications required by the Fiscal Agent Agreement. The Fiscal Agent shall have no
responsibility to make any independent calculation or determination or to review the City's calculations
thereunder.
Amounts in the Rebate Fund shall be invested without yield restriction and shall be held in trust for
rebate to the United States at the written direction of the Finance Director. Earnings on the Rebate Fund are to
remain in that account and shall similarly be held in trust for rebate to the United States.
Redemption Fund
Establishment of Redemption Fund. There is established by the Fiscal Agent Agreement, as a separate
fund to beheld in trust by the Fiscal Agent for the Owners of the Bonds, the Community Facilities District 2006-
02 (Amador on Route 66) 2007 Special Tax Bonds, Redemption Fund, to the credit of which deposits shall be
made from funds received by the City representing Special Tax Prepayments and other funds required for
redemptions, other than mandatory sinking fund redemptions and which shall be administered as provided
below.
Disbursement. Moneys shall be deposited into the Redemption Fund by the Fiscal Agent pursuant to
the terms of the Fiscal Agent Agreement and shall be set aside and used solely for the purpose of redeeming
Bonds in accordance with written instructions of the District executed by an Authorized Officer given in
accordance with the Fiscal Agent Agreement. Following the redemption of any Bonds, if any funds remain in
the Redemption Fund, such funds shall be transferred to the Special Tax Fund.
Investment. Moneys in the Redemption Fund shall be invested and deposited in accordance with the
Fiscal Agent Agreement. Interest earnings and profits resulting from such investment and deposit shall be
retained in the Special Tax Fund to be used for the purposes thereof.
OTHER COVENANTS OF THE CITY
Punctual Payments
The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the
Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreement and any Supplemental
Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of the
Fiscal Agent Agreement and all Supplemental Agreements and of the Bonds.
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Extension of Time for Payment
In order to prevent any accumulation of claims for interest after maturity, the City shall not on the
District's behalf, directly or indirectly, extend or consent to the extension of the time for the payment of any
claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such
arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim
for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so
extended or funded shall not be entitled, in case of default thereunder, to the benefits of the Fiscal Agent
Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and
of all claims for interest which shall not have so extended or funded.
Against Encumbrances
Neither the City nor the District will encumber, pledge or place any charge or lien upon any of the
Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien
therein created for the benefit of the Bonds,except as permitted by the Fiscal Agent Agreement.
Books and Records
The City will keep, or cause to be kept, on behalf of the District proper books of record and accounts,
separate from all other records and accounts of the District, in which complete and correct entries shall be made
of all transactions relating to the expenditure of amounts disbursed from the Administrative Expense Fund. .
Such books of record and accounts shall at all times during normal business hours of the City be subject to the
inspection of the Fiscal Agent, the Owners of not less than ten percent (10%) of the principal amount of the
Bonds then Outstanding,or their representatives duly authorized in writing,and the payers of the Special Taxes,
or their representatives duly authorized in writing.
Protection of Security and Rights of Owners
The City will preserve and protect the security of the Bonds and the rights of the Owners, and will
warrant and defend their rights against all claims and demands of all Persons. From and after the delivery of
any of the Bonds by the City, the Bonds shall be incontestable by the City acting either on its own behalf or on
behalf of the District.
Compliance with Law
The City will comply with all applicable provisions of the Act and law in completing the construction or
acquisition of the Project.
Collection of Special Tax Revenues
The City shall comply with all requirements of the Act so as to assure the timely collection of Special
Tax Revenues,including without limitation,the enforcement of delinquent Special Taxes.
On or within five (5) Business Days of each June 1, the Fiscal Agent shall provide the Finance Director
with a notice stating the amount then on deposit in the Interest Account and Principal Account of the Bond
Fund, and the Reserve Fund, and informing the City that the Special Taxes may need to be levied pursuant to the
Ordinance as necessary to provide for Annual Debt Service and Administrative Expenses and replenishment(if
necessary) of the Reserve Fund so that the balance therein equals the Reserve Requirement. The receipt of or
failure to receive such notice by the Finance Director shall in no way affect the obligations of the Finance
Director under the following two paragraphs. Upon receipt of such notice, the Finance Director shall
communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied,
taking into account any parcel splits during the preceding and then current year.
The Finance Director shall effect the levy of the Special Taxes each Fiscal Year in accordance with the
Ordinance by each August 1 that the Bonds are Outstanding, or otherwise such that the computation of the levy
is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for
RVPUBUCSNOWV22113.1 - C-16
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the parcels within the District for inclusion on the next real property tax roll. Upon the completion of the
computation of the amounts of the levy, the Finance Director shall prepare or cause to be prepared, and shall
transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next
real property tax roll.
The Finance Director shall fix and levy the amount of Special Taxes within the District required for the
payment of principal of and interest on any Outstanding Bonds of the District becoming due and payable during
the ensuing year, including any necessary replenishment or expenditure of the amount within the Reserve Fund
for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts
necessary to discharge any obligation under the Fiscal Agent Agreement) during such year, taking into account
the balances in such funds and in the Bonds Fund, the Redemption Fund and the Special Tax Fund. The Special
Taxes so levied shall not exceed the authorized amounts as provided in the Ordinance.
The Special Taxes shall be payable and be collected in the same manner and at the same time and in the
same installment as the general taxes on real property are payable, and have the same priority, become
delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties
and interest after delinquency as do the ad valorem taxes on real property.
Notwithstanding the foregoing, the Finance Director shall, not later than July 15 of each Fiscal Year,
determine whether or not to cause the collection of any Special Taxes by direct, first class mail billing to the
then owner of each parcel of property in lieu of billing for such Special Taxes in the same manner as general
taxes as aforesaid. Such direct mail billing shall be made not later than November 1-of the Fiscal Year and shall
direct the owner of the property affected to pay the Special Taxes directly to the FinanceDirector.in two equal
installments, the first of which shall be due and.delinquent if not paid on December 10 and the second of which
may be paid with the first and which, in any event, shall be due and delinquent if not paid on April 10 of the
Fiscal Year. Any such Special Taxes so billed shall have the same priority and bear the same proportionate
penalties and interest after delinquency as do the ad valorem taxes on real property.
Notwithstanding the foregoing, the Legislative Body may waive delinquency penalties and redemption
penalties if it makes all of the determinations set forth in Section 53340(f)of the Act.
Reduction in Maximum Annual Special Tax
The District finds and determines that, historically, delinquencies in the payment of special taxes
authorized pursuant to the Act in community facility districts in Southern California have from time to time
been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely
payment of principal of and interest on the outstanding indebtedness of such community facilities districts. For
this reason, the City has determined that, absent the certification described below, a reduction in the Maximum
Annual Special Tax (as such term is defined in the Rate and Method) authorized to be levied below the levels
provided would interfere with the timely retirement of the Bonds. The City has determined it to be necessary in
order to preserve the security for the Bonds to covenant and, to the maximum extent that the law permits it to do
so, the City does covenant, that it shall not initiate proceedings to reduce the Maximum Special Tax Rates (as
such term is defined in the Rate and Method) unless, in connection therewith, (i)the City receives a certificate
from one or more Tax Consultants which, when taken together, certify that, on the basis of the parcels of land
and improvements existing in the City as of the July 1 preceding the reduction, the Maximum Annual Special
Tax which may be levied on all Assessor's Parcels (as such term is defined in the Rate and Method) of taxable
property on which a completed structure is located in each Fiscal Year will equal at least 110%of the gross debt
service on all Bonds to remain Outstanding after the reduction is approved and will not reduce the Maximum
Annual Special Tax payable from parcels on which a completed structure is located to less than 110% of
Maximum Annual Debt Service, and(ii)the Legislative Body finds pursuant to the Fiscal Agent Agreement that
any reduction made under such conditions will not adversely affect the interests of the Bondowners. Any
reduction in the Maximum Annual Special Tax approved pursuant to the preceding sentence may be approved
without the consent of the Bondowners.
The City covenants that, in the event that any initiative is adopted by the qualified electors which
purports to reduce the Maximum Annual Special Tax below the levels authorized pursuant to the Rate and
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Method or to limit the power or authority of the City to levy Special Taxes pursuant to the Rate and Method, the
City shall, from funds available thereunder,commence and pursue legal action in order to preserve the authority
and power of the City to levy Special Taxes pursuant to the Rate and Method.
Covenant to Foreclose
On or before March 1 and June 1 of each Fiscal year, the City will review the public records of the
County in connection with the Special Taxes levied in such Fiscal Year to determine the amount of Special
Taxes actually collected in such Fiscal Year. If the City determines that (a) any single parcel subject to the
Special Taxes is delinquent in the payment of Special Taxes in the aggregate of $4,000 or more or (b) any
parcels under common ownership subject to the Special Taxes are delinquent in the payment of Special Taxes in
the aggregate of$20,000 or more, the City shall, not later than forty-five (45) days of such determination, send
or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property
owner. The City shall cause judicial foreclosure proceedings to be commenced and filed in the Superior Court
not later than ninety (90) days of such determination against any parcel for which a notice of delinquency was
given pursuant to the Fiscal Agent Agreement and for which the Special Taxes remain delinquent. With respect
to aggregate delinquencies throughout the District, if the City determines that it has collected less than 95% of
the Special Taxes levied in the such Fiscal Year, then the City shall, not later than forty-five (45) days of such
determination, send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof)
to the owner of each delinquent parcel (regardless of the amount of such delinquency). The City will cause
judicial foreclosure proceedings to be commenced and filed in the Superior Court not later than ninety(90)days
of such determination against any parcel for which a notice of delinquency was given pursuant to the Fiscal
Agent Agreement and for which the Special Taxes remain delinquent.
Further Assurances
The City will adopt, make, execute and deliver any and all such further resolutions, instruments and
assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of
the Fiscal Agent Agreement, and for the better assuring and confirming unto the Owners of the rights and
benefits provided in the Fiscal Agent Agreement.
Private Activity Bond Limitations
The City shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the
private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the
Code.
Federal Guarantee Prohibition
The City shall not take any action or permit or suffer any action to be taken if the result of the same
would be to cause the Bonds to be"federally guaranteed"within the meaning of Section 149(6)of the Code..
Rebate Requirement
The City shall take any and all actions necessary to assure compliance with section 148(f) of the Code,
relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such
section is applicable to the Bonds. Funds shall be transferred to a Rebate Fund, to be held by the Fiscal Agent,
in accordance with the Fiscal Agent Agreement.
If necessary, the City may use(i) earnings on amounts in the Reserve Fund if the amount on deposit in
the Reserve Fund, following the proposed transfer, is equal to the Reserve Requirement, (ii)amounts on deposit
in the Administrative Expense Fund, and (iii) any other funds available to the District, including amounts
advanced by the City, in its sole discretion,to be repaid by the District in connection with the District as soon as
practicable from amounts described in the preceding clauses (i), (ii) and (iii), to satisfy its obligations under the
Fiscal Agent Agreement. The Finance Director shall take note of any investment of moneys thereunder in
excess of the yield on the Bonds, and shall take such actions as are necessary to ensure compliance with the
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Fiscal Agent Agreement, such as increasing the portion of the Special Tax levy for Administration Expenses as
appropriate to have funds available in the Administrative Expense Fund to satisfy any rebate liability under the
Fiscal Agent Agreement.
No Arbitrage
The City shall not take,or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with
respect to the proceeds of the Bonds which, if such action had been reasonably expected to have been taken, or
had been deliberately and intentionally taken,on the date of issuance of the Bonds would have caused the Bonds
to be"arbitrage bonds"within the meaning of section 148 of the Code.
Yield of the Bonds
In determining the yield of the Bonds to comply with the Fiscal Agent Agreement, the City will take
into account redemption (including premium, if any) in advance of maturity based on the reasonable
expectations of the City, as of the Closing Date, regarding prepayments of Special Taxes and use of
prepayments for redemption of the Bonds, without regard to whether or not prepayments are received or Bonds
redeemed.
Maintenance of Tax-Exemption
The City shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross
income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross
income under the Code as in effect on the date of issuance of the Bonds.
No Parity Bonds
The City will issue no additional bonds on a parity with the Bonds; provided, that nothing contained
therein shall limit the issuance of any Special Tax Bonds of the District if(a)the rights and claims of such bonds
to the Special Tax Revenues and the funds and accounts established or described in the Fiscal Agent Agreement
are in all respects subordinate to the rights and claims of the Bonds,or(b)after the issuance and delivery of such
Special Tax Bonds, none of the Bonds shall be Outstanding. Defeased Bonds, or Bonds in exchange for or in
lieu of which other bonds have been delivered, shall not be considered Outstanding.
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS
The District acknowledges that to the extent regulations of the Comptroller of the Currency or other
applicable regulatory entity grant the District the right to receive brokerage confirmations of security
transactions as they occur, the District specifically waives receipt of such confirmations to the extent permitted
by law. The Fiscal Agent will furnish the District periodic cash transaction statements, which include detail for
all investment transactions made by the Fiscal Agent thereunder.
Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund
or account. Any income realized on or losses resulting from investments in any fund or account shall be
credited or changed to such fund or account. Whenever in the Fiscal Agent Agreement any moneys are required
to be transferred by the City to the Fiscal Agent, such transfer may be accomplished by transferring a like
amount of Permitted Investments.
The Fiscal Agent and its affiliates or the Finance Director may act as sponsor, advisor, depository,
principal or agent in the acquisition or disposition of any investment. The Fiscal Agent shall not incur any
liability for losses arising from any investments made pursuant to the Fiscal Agent Agreement. The Fiscal
Agent shall not be required to determine the legality of any investments.
Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or
account created by or pursuant to the Fiscal Agent Agreement, or otherwise containing gross proceeds of the
Bonds(within the meaning of section 148 of the Code)shall be acquired, disposed of, and valued (as of the date
that valuation is required by the Fiscal Agent Agreement of the Code) at Fair Market Value. Investments in
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funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of
the Code and (unless valuation is undertaken at least annually) investments in the Reserve Fund shall be valued
at their present value (within the meaning of section 148 of the Code). The Fiscal Agent shall not be liable for
verification of the application of such sections of the Code.
Investments in any and all funds and accounts may be commingled in a separate fund or funds for
purposes of making, holding and disposing of investments,notwithstanding provisions therein for transfer to or
holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent
thereunder, provided that the Fiscal Agent shall at all times account for such investments strictly in accordance
with the funds and accounts to which they are credited and otherwise as provided in the Fiscal Agent
Agreement.
Subject to the restrictions set forth therein and/or any written investment instructions received by Fiscal
Agent pursuant to the Fiscal Agent Agreement, moneys in said funds and accounts may be from time to time
invested by the Fiscal Agent in any manner so long as:
(1) Moneys in the Project Fund shall be invested in obligations which will by their terms
mature as close as practicable to the date the District estimates the moneys represented by the particular
investment will be needed for withdrawal from such Fund; and
(2) Moneys in the Special Tax Fund,the Bond Fund,the Redemption Fund and the Reserve
Fund shall be invested only in obligations which will by their terms either mature or allow for
withdrawals at par on such dates so as to ensure the payment of principal and interest on the Bonds as
the same become due; provided, however, that except for investment agreements as described in
paragraph I I of the definition of Permitted Investments which permit withdrawal at par, investment of
moneys on deposit in the Reserve Fund shall have an average aggregate weighted term not greater than
five(5)years.
The Fiscal Agent or Finance Director, as applicable shall sell at Fair Market Value, or present for
redemption, any investment security whenever it shall be necessary to provide moneys to meet any required
payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is
credited and neither the Fiscal Agent nor the Finance Director shall be liable or responsible for any loss resulting.
from the acquisition or disposition of such investment security in accordance therewith.
THE FISCAL AGENT
Appointment of Fiscal Agent
Wells Fargo Bank, National Association, is appointed Fiscal Agent pursuant to the Fiscal Agent
Agreement and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such
duties, as are specifically set forth in the Fiscal Agent Agreement, and no implied covenants or obligations shall
be read into the Fiscal Agent Agreement against the Fiscal Agent. .
Any company into which the Fiscal Agent may be merged or converted or with which it may be
consolidated or any company resulting from any merger,conversion or consolidation to which it shall be a party
or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust
business, provided such company shall be eligible under the following paragraph of the Fiscal Agent
Agreement, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any
further act,anything therein to the contrary notwithstanding.
Upon thirty(30)days prior written notice, the City may remove the Fiscal Agent initially appointed,and
any successor thereto, and may appoint a successor or successors thereto,but any such successor shall be a bank
or trust company having a combined capital (exclusive of borrowed capital)and surplus of at least Fifty Million
Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank or
trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any
supervising or examining authority above referred to, then for the purposes of the Fiscal Agent Agreement,
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combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and
surplus as forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City' and by giving to the
Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly
appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent
shall become effective upon acceptance of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of the
Fiscal Agent Agreement within forty-five (45) days after the Fiscal Agent shall have given to the City written
notice of its resignation or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its
inability to act, the Fiscal Agent or any Owner may apply to any court of competent jurisdiction to appoint a
successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper,
appoint a successor Fiscal Agent.
Liability of Fiscal Agent
The recitals of facts, covenants and agreements therein and in the Bonds contained shall be taken as
statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the
correctness of the same, or makes any representations as to the validity or sufficiency of the Fiscal Agent
Agreement or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the
duties or obligations therein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable
in connection with the performance of its duties thereunder, except for its own negligence or willful default.
The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering .
memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.
In the absence of bad faith or gross negligence, the Fiscal Agent may conclusively rely,as to the truth of
the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to
the Fiscal Agent and conforming to the requirements of the Fiscal Agent Agreement; but in the case of any such
certificates or opinions by which any provision thereof are specifically required to be furnished to the Fiscal
Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to
the requirements of the Fiscal Agent Agreement. Except as provided above in this paragraph, the Fiscal Agent
shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good
faith, reasonably and in accordance with the terms of the Fiscal Agent Agreement, upon any resolution, order,
notice, request, consent or.waiver, certificate, statement, affidavit, or other paper or document which it shall in
good faith reasonably believe to be genuine and to have been adopted or signed by the proper Person or to have
been prepared and furnished pursuant to any provision of the Fiscal Agent Agreement, and the Fiscal Agent
shall not be under any duty to make any investigation or inquiry as to any statements contained or matters
referred to in any such instrument.
The Fiscal Agent shall not be liable for any error of judgment made in good faith unless it shall be
proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of the Fiscal Agent Agreement shall require the Fiscal Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties thereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by the
Fiscal Agent Agreement at the request or direction of any of the Owners pursuant to the Fiscal Agent Agreement
unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such request or direction.
The Fiscal Agent may become the Owner of the Bonds with the same rights it would have if it were not
the Fiscal Agent.
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MODIFICATION OR AMENDMENT OF THE AGREEMENT
Amendments Permitted
The Fiscal Agent Agreement and the rights and obligations of the City and/or District and of the Owners
of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative
vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty
percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as
provided in the Fiscal Agent Agreement. No such modification or amendment shall (i) extend the maturity of
any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the
principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such
Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a .
parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act,
the laws of the State of California or the Fiscal Agent Agreement), or reduce the percentage of Bonds required
for the amendment thereof. Any such amendment may not modify any of the rights or obligations of the Fiscal
Agent without its written consent.
The Fiscal Agent Agreement and the rights and obligations of the City and of the Owners may also be
modified or amended at any time by a Supplemental Agreement,without the consent of any Owners,only to the
extent permitted by law and only for any one or more of the following purposes:
(i) to add to the covenants and agreements of the District or City in the Fiscal Agent
Agreement contained, other covenants and agreements thereafter to be observed,or to limit or surrender
any right or power therein reserved to or conferred upon the City or District;
(ii) to make modifications not adversely affecting any outstanding series of Bonds of the
City or District in any material respect;
(iii) to make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained in the Fiscal Agent Agreement, or in
regard to questions arising under the Fiscal Agent Agreement, as the District or City and the Fiscal
Agent may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreement, and
which shall not adversely affect the rights of the Owners of the Bonds; and
(iv) to make such additions, deletions or modifications as may be necessary or desirable to
assure exemption from gross federal income taxation of interest on the Bonds.
Owners' Meetings
The City on behalf of the District may at any time call a meeting of the Owners. In such event the City
is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix
and adopt rules and regulations for the conduct of said meeting.
Procedure for Amendment with Written Consent of Owners
The City on behalf of the District and the Fiscal Agent may at any time adopt a Supplemental
Agreement amending the provisions of the Bonds or of the Fiscal Agent Agreement or any Supplemental
Agreement, to the extent that such amendment is permitted by the Fiscal Agent Agreement, to take effect when
and as provided in the Fiscal Agent Agreement. A copy of such Supplemental Agreement, together with a
request to Owners for their consent thereto, shall be mailed by first class mail, by the Fiscal Agent to each
Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not
affect the validity of the Supplemental Agreement when assented to as provided in the Fiscal Agent Agreement.
Such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal
Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the
Bonds then Outstanding (exclusive of Bonds disqualified as provided in the Fiscal Agent Agreement) and a
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notice shall have been mailed as hereinafter in this Section provided each such consent shall be effective only if
accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as
is permitted by the Fiscal Agent Agreement. Any such consent shall be binding upon the Owner of the Bonds
giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof)
unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing
such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for
has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to the
Supplemental Agreement,the City shall mail a notice to the Owners in the manner hereinbefore provided in this
Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement
has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in
this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement
or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record,
consisting of the papers required by the Fiscal Agent Agreement to be filed with the Fiscal Agent, shall be proof
of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective
upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement
shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article)
upon the District, City and the Owners of all Bonds at the expiration of thirty (30) days after such filing, except
in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or
equitable proceeding for such purpose commenced within such thirty-day period.
Effect of Supplemental Agreement
From and after the time any Supplemental Agreement becomes effective pursuant to the Fiscal Agent
Agreement, this Agreement shall be deemed to be modified and amended in accordance therewith, the
respective rights, duties and obligations under this Agreement of the City, District, and all Owners of Bonds
Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be
deemed to be part of the terms and conditions of this Agreement for any and all purposes.
DISCHARGE OF THE AGREEMENT
The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the
Bonds Outstanding in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of, and interest and any
premium on, such Bonds Outstanding,as and when the same become due and payable;
(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which,
together with the amounts then on deposit in the funds and accounts provided for in the Fiscal Agent
Agreement is fully sufficient to pay such Bonds Outstanding, including all principal, interest and
redemption premiums; or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in
such amount as the City on behalf of the District shall determine as confirmed by an independent
certified public accountant will, together with the interest to accrue thereon and moneys then on deposit
in the fund and accounts provided for in the Fiscal Agent Agreement, be fully sufficient to pay and
discharge the indebtedness on such Bonds(including all principal, interest and redemption premiums)at
or before their respective maturity dates.
If the City shall have taken any of the actions specified in (A), (B) or(C) above, and if such Bonds are
to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this
Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such
notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for
payment, the pledge of the Special Taxes and other funds provided for in the Fiscal Agent Agreement and all
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other obligations of the City under this Agreement with respect to such Bonds Outstanding shall cease and
terminate. Notice of such election shall be filed with the Fiscal Agent. Notwithstanding the foregoing, the
obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums
due thereon, all amounts owing to the Fiscal Agent pursuant to the Fiscal Agent Agreement, and otherwise to
assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of
interest on the Bonds from gross income for federal income tax purposes,shall continue in any event.
Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held
by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the
purposes of the preceding paragraph, shall be paid_over to the City and any Special Taxes thereafter received by
the City shall not be remitted to the Fiscal Agent but shall be retained by the City to be used for any purpose
permitted under the Act.
EVENTS OF DEFAULT;REMEDIES
Events of Default
Any one or more of the following events shall constitute an"event of default':
(i) Default in the due and punctual payment of the principal of or redemption premium, if
any, on any Bond when and as the same shall become due and payable, whether at maturity as therein
expressed,by declaration or otherwise;
(ii) Default in the due and punctual payment of the interest on any Bond when and as the
same shall become due and payable; or
(iii) Default by the City or the District in the observance of any of the agreements,
conditions or covenants on its part in the Fiscal Agent Agreement or in the Bonds contained (other than
a payment default referred to in subparagraph (A) and (B) above), and the continuation of such default
for a.period of 60 days after the City and the District shall have been given notice in writing of such
default by the Fiscal Agent or by the Owners of 25%aggregate principal amount of Bonds Outstanding,
.provided that if within 60 days the City or the District, as applicable, has commenced curing of the
default and diligently pursues elimination thereof; such period shall be extended to permit such default
to be eliminated.
Remedies of Owners
Following the occurrence of an event of default, any Owner shall have the right for the equal benefit and
protection of all Owners similarly situated:
(i) By mandamus or other suit or proceeding at law or in equity to enforce his or her rights
against the City or the District and any of the members, officers and employees of the City or the
District,and to compel the City or District,as applicable, or any such members,officers or employees to
perform and carry out their duties under the Act and their agreements with the Owners as provided in
the Fiscal Agent Agreement;
(ii) By suit in equity to enjoin any actions or things which are unlawful or violate the rights
of the Owners; or
(iii) By a suit in equity to require the City or the District, as applicable, and its members,
officers and employees to account as the trustee of an express trust.
Nothing in this article or in any other provision of the Fiscal Agent Agreement, or in the Bonds, shall
affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and
principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as therein
provided, out of the Special Tax Revenues pledged for such payment, or affect or impair the right of action,
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which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of
the contract embodied in the Bonds and in the Fiscal Agent Agreement.
A waiver of any default or breach of duty or contract by any Owner shall not affect any subsequent
default or breach of duty or contract,or impair any rights or remedies on any such subsequent default or breach.
No delay or omission by any Owner to exercise any right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and
every power and remedy conferred upon the Owners by the Act or by this article may be enforced and exercised
from time to time and as often as shall be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined
adversely to the Owners, the City, the District and the Owners shall be restored to their former positions, rights
and remedies as if such suit,action or proceeding had not been brought or taken.
No remedy therein conferred upon or reserved to the Owners is intended to be exclusive of any other
remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given under the
Fiscal Agent Agreement,at law or in equity or by statute or otherwise, and may be exercised without exhausting
and without regard to any other remedy conferred by the Act or any other law. The Fiscal Agent shall not be
obligated to take any action on behalf of the Owners if the City or the District defaults under the Fiscal Agent
Agreement.
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APPENDIX D
BOOK-ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC 's book-entry only system has been obtained
from DTC. The City takes no responsibility for the accuracy thereof. The City cannot and does not give any
assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a)
payments of interest or principal with respect to the Bonds, (b)certificates representing ownership interest in or
other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede
& Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis or that DTC,
DTC Participants or DTC Indirect Participants will act in the manner described in this Oficial Statement. The
current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current
"Procedures"of DTC to be followed in dealing with DTC Participants are on file with DTC.
DTC in New York,New York,will act as securities depository for the Bonds. The Bonds will be issued
as fully-registered securities registered initially in the name of Cede & Co. (DTC's partnership nominee). One
fully-registered bond certificate will be issued for each maturity of the Bonds in the aggregate principal amount
of such maturity,and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking law, a "banking
organization" within the meaning of the New York Banking law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered under the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts,thereby eliminating the need for physical movement
of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies,
clearing corporations,and certain other organizations. DTC is owned by a number of its Direct Participants and
by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and
dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of Bonds (a
"Beneficial Owner") is in tum to be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive physical certificates
representing their ownership interests in Bonds, except in the event that use of the book-entry system for the
Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the
name of DTC's partnership nominee, Cede &Co. The deposit of Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial
Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such
Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants
to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be
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governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
While Bonds are in the book-entry only system,redemption notices shall be sent to Cede & Co. If less
than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of
the interest of each Direct Participation in such maturity to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its usual
procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the
Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct
Participants' accounts on a payable date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Fiscal Agent, or the City, subject to any statutory or
regulatory requirements as may be in effect form time to time. Payment of principal and interest to DTC is the
responsibility of the Fiscal Agent, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility
of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds_at any
time by giving reasonable notice to the City or the Fiscal Agent. Under such circumstances, in the event that a
successor securities depository is not obtained,Bond certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, Bond certificates will be printed and delivered.
Procedures If Book-Entry-Only System Is Discontinued
If the book-entry-only system should be discontinued, the interest on, principal of and redemption
premium(if any) on the Bonds would be payable at the principal corporate trust office of the Fiscal Agent. The .
interest due on or before maturity or redemption would be payable only to the person whose name appears as
registered owner in the registration books required to be kept by the Fiscal Agent at the close of business as of
the 15th day of the month next preceding each interest payment date. Interest would be paid by check mailed by
first class mail to such registered owner at his or her address as it appears on such books, except that a registered
owner of$1,000,000 or more in aggregate principal amount of Bonds then outstanding may request with 15
days' prior notice that payment be made by wire transfer on each such interest payment date. The principal of
and redemption premium, if any, on the Bonds would be payable only to the person whose name appears in such
registration books as the registered owner, such principal and redemption premium, if any, to be paid only on
the surrender of each Bond to the Fiscal Agent at maturity or on redemption prior to maturity.
If the book-entry-only system should be discontinued, the Bonds will be delivered in certificated form to
the registered owners. Thereafter, any Bond may, in accordance with its terms, be transferred or exchanged on
such books by the person in whose name it is registered, in person or by his or her duly authorized attorney,
upon payment by the bondholder requesting such transfer or exchange of any tax or other governmental charge
required to be paid with respect to such transfer or exchange and upon surrender of such Bond for cancellation
accompanied by delivery of a duly executed written instrument of transfer of exchange in a form acceptable to
the Fiscal Agent. Neither the City nor the Fiscal Agent is required(i)to transfer or exchange any Bonds during
the 15-day period prior to the selection of any Bonds for redemption, or (ii) to transfer or exchange any Bond
that has been selected for redemption in whole or in part, except the unredeemed portion of such Bond selected
for redemption in part,from and after the day that such Bond has been selected for redemption.
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APPENDIX E
FORMS OF CONTINUING DISCLOSURE AGREEMENTS
CITY OF RANCHO CUCAMONGA
COMMUNITY FACILITIES DISTRICT NO.2006-02
(AMADOR ON ROUTE 66)
2007 SPECIAL TAX BONDS
CITY CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement(the "Disclosure Agreement') is executed and delivered by City
of Rancho Cucamonga, for itself and on behalf of the City of Rancho Cucamonga Community Facilities District
No. 2006-02 (Amador on Route 66) (the "Issuer"), and Wells Fargo Bank, National Association, a national
banking association duly organized and existing under the laws of the United States of America (the
"Dissemination Agent") in connection with the issuance of the S City of Rancho Cucamonga
Community Facilities District No. 2006-02 (Amador on Route 66)2007 Special Tax Bonds (the 'Bonds"). The
Bonds are being issued pursuant to a Fiscal Agent Agreement dated as of December 1, 2006 (the "Fiscal Agent
Agreement') between the Issuer and Wells Fargo Bank, National Association, as Fiscal Agent (the "Fiscal
Agent'). The Issuer and the Dissemination Agent covenant and agree as follows:
Section 1. Pumose of the Disclosure Agreement. This Disclosure Agreement is being executed
and delivered by the Issuer for the benefit of the Owners of the Bonds and in order to assist the Participating
Underwriters(as defined herein)in complying with S.E.C.-Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement,
which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section,
the following capitalized terms shall have the following meanings:
"Annual Renort"shall mean any Annual Reports provided by the Issuer pursuant to,and as described in,
Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries) or (b) is treated as the owner of any Bonds for federal income
tax purposes.
"District" shall mean the City of Rancho Cucamonga Community Facilities District No. 2006-02
(Amador on Route 66).
"Disclosure Representative"shall mean the Finance Director of the Issuer or his or her designee,or such
other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time.
"Dissemination Agent" shall mean Wells Fargo Bank, National Association, acting in its capacity as
Dissemination Agent, or any successor Dissemination Agent designated in writing by the Issuer and which has
filed with the Issuer a written acceptance of such designation.
"Fiscal Year" shall mean the twelve month period beginning on July 1 of each year and ending on June
30 of the following year.
"Listed Events"shall mean any of the events listed in Section 5(a)of this Disclosure Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities Repository for
purposes of the Rule. The Nationally Recognized Municipal Securities Information Repository for purposes of
the Rule are identified in the Securities and Exchange Commission website located at
http://www.sec.gov/consumer/nrmsir.htm.
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"Participating Underwriters" shall mean Stone & Youngberg LLC whose address is: One Ferry
Building, San Francisco, California 94111.
"Reoositorv" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934,as the same may be amended from time to time.
"State Renositorv" shall mean any public or private repository or entity designated by the State of
California as a state repository for the purpose of the Rule. As of the date of this Disclosure Agreement,there is
no State Repository.
"Tax-exemp " shall mean that interest on the Bonds is excluded from gross income for federal income
tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable
directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or
environmental tax.
Section 3. Provision of Annual Reports.
(a) The Issuer shall, or shall cause the Dissemination Agent to, not later than February 1 of each
year, commencing February 1, 2007, provide to each Repository an Annual Report which is consistent with the
requirements of Section 4 of this Disclosure Agreement; provided, however, that the Annual Report due on
February 1, 2008, shall consist solely of the Official Statement. Not later than fifteen (15) Business Days prior
to said date, the Issuer shall provide the Annual Report to the Dissemination Agent. In each case, the Annual
Report may be submitted as a single document or as separate documents comprising a package, and may cross-
reference other information as provided in Section 4 of this Disclosure Agreement. The information contained
or incorporated in each Annual Report shall be for the Fiscal Year which ended on the preceding June 30. The
Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the
effect that such Annual Report constitutes the Annual Report required to be fumished by it hereunder. The
Dissemination Agent may conclusively rely upon such certifications of the Issuer and shall have no duty or
obligation to review any such Annual Report.
(b) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the
Repositories by the date specified in subsection (a), the Dissemination Agent shall send a notice to each
Repository in substantially the form attached as Attachment A.
(c) The Dissemination Agent shall:
1. determine each year prior to the date for providing the Annual Report the name and
address of each National Repository and each State Repository, if any; and
2. to the extent it can confirm such filing of the Annual Report, file a report with the Issuer
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the
date it was provided and listing all the Repositories to which it was provided.
(d) Notwithstanding any statement to the contrary, any filing under this agreement may be made
solely by transmitting such filing to the Texas Municipal Advisory Council (the "MAC'), or any other central
post office approved by the Securities and Exchange Commission as provided at htti)://www.disclosureusa.org
unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter
to the MAC dated September 7,2004.
(e) The Issuer shall, or if received by the Dissemination Agent, the Dissemination Agent shall,
deliver a copy of each Annual Report to the Participating Underwriter at the time the Annual Report is provided
to the Repositories in accordance with this section.
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Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by
reference the information set forth in Exhibit B, any or all of which may be included by specific reference to
other documents, including official statements of debt issuances of the City, the District or related public
entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If
the document included by reference is a final official statement, it must be available from the MSRB. The City
shall clearly identify each such other document so included by reference.
Any or all of the items listed above may be incorporated by reference from other documents, including
official statements of debt issues of the Issuer or related public entities, which have been submitted to each of
the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a
final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall
clearly identify each such other document so incorporated by reference.
Audited financial statements of the Issuer shall be audited by such auditor as shall then be required or
permitted by the laws of the State of California or the Fiscal Agent Agreement. Audited financial statements, if
prepared by the Issuer, shall be prepared in accordance with generally accepted accounting principles as
prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that
the Issuer may from time to time, if required by federal or state legal requirements, modify the basis upon which
its financial statements are prepared. In the event that the Issuer shall modify the basis upon which its financial
statements are prepared, the Issuer shall provide a notice of such modification to each Repository, including the
reference to the specific federal or state law or regulation specifically describing the legal requirements for the
change in accounting basis.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Issuer shall give or cause to be given, notice of
the occurrence of any of the following events:
1. Delinquency in payment when due of any principal of or interest on the Bonds.
2. Occurrence of any default under the Fiscal Agent Agreement(other than as described in
clause(1)above).
3. Amendment to or modification of the Fiscal Agent Agreement or this Disclosure
Agreement modifying the rights of the Owners of the Bonds.
4. Giving of a notice of optional or unscheduled redemption of any of the Bonds.
5. Defeasance of the Bonds or any portion thereof.
6. Any change in any rating on the Bonds.
7. Adverse tax opinions or events affecting the Tax-exempt status of the Bonds.
8. Any unscheduled draw on the Reserve Fund or any account therein reflecting financial
difficulties.
9. Unscheduled draws on credit enhancements reflecting financial difficulties.
10. Substitution of credit or liquidity providers,or their failure to perform.
11. The release, substitution or sale of property securing repayment of the Bonds(including
property leased,mortgaged or pledged as such security).
(b) The Dissemination Agent shall, within one (1) Business Day of obtaining actual knowledge of
the occurrence of any of the•Listed Events (except events listed in clauses (a)(1), (4) or (5)), or as soon as is
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reasonably possible, with no obligation to determine the materiality thereof, contact the Disclosure
Representative, inform such person of the event, and request that the Issuer promptly notify the Dissemination
Agent in writing whether or not to report the event pursuant to subsection(f). For the purpose of this Disclosure
Agreement"actual knowledge"means actual knowledge at the corporate trust office of the Dissemination Agent
by an officer of the Dissemination Agent with responsibility for matters related to the administration of the
Fiscal Agent Agreement.
(c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event,whether because of
a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Issuer shall as soon as
possible determine if such event would constitute_material information for Owners of the Bonds under
applicable Federal securities law,provided that any event under subsection(a) (6) will always be deemed to be
material.
(d) If the Issuer has determined that knowledge of the occurrence of a Listed Event would be
material under applicable Federal securities law, the Issuer shall promptly notify the Dissemination Agent in
writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection(f).
(e) If in response to a request under subsection (b), the Issuer determines that the Listed Event
would not be material, the Issuer shall so notify the Dissemination Agent in writing and instruct the
Dissemination Agent not to report the occurrence pursuant to subsection(f).
(f) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed
Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking
Board and each State Repository. Notwithstanding the foregoing:
1. Notice of the occurrence of a Listed Event described in subsections (a)(1), (4) or (5)
shall be given by the Dissemination Agent unless the Issuer gives the Dissemination Agent affirmative
instructions not to disclose such occurrence; and
2. Notice of Listed Events described in subsections(a)(4) and(5)need not be given under
this subsection any earlier than the notice (if any) of the underlying event is given to Owners of the
affected Bonds pursuant to the Fiscal Agent Agreement.
Section 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure
Agreement shall terminate upon the defeasance,prior redemption or payment in full of all of the Bonds.
Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The
initial Dissemination Agent shall be Wells Fargo Bank, National Association. The Dissemination Agent may
resign by providing thirty (30) days written notice to the Issuer and the Fiscal Agent. If at any time there is no
designated Dissemination Agent appointed by the Issuer, or if the Dissemination Agent so appointed is
unwilling or unable to perform the duties of the Dissemination Agent hereunder, the Issuer shall be the
Dissemination Agent and undertake or assume its obligations hereunder.
Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Issuer may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any
amendment requested by the Issuer, provided the Dissemination Agent shall not be obligated to enter into any
amendment increasing or affecting its duties or obligations), and any provision of this Disclosure Agreement
may be waived, if such amendment or waiver is supported by an opinion of counsel expert in Federal securities
law, acceptable to both the Issuer and the Dissemination Agent, to the effect that such amendment or waiver
would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had
been effective on the date hereof but taking into account any subsequent change in or official interpretation of
the Rule.
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Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this
Disclosure Agreement or any other means of communication, or including any other information in any Annual
Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure
Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a
Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall
have no obligation under this Disclosure Agreement to update such information or include it in any future
Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this
Disclosure Agreement, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary
and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to
comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall
not be deemed an event of default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure
Agreement in the event of any failure of the Issuer or the Dissemination Agent to comply with this Disclosure
Agreement shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of the Dissemination Agent. Section 7.2 of the
Fiscal Agent Agreement is hereby made applicable to this Disclosure Agreement as if this Disclosure
Agreement were (solely for this purpose) contained in the Fiscal Agent Agreement. The Dissemination Agent
shall be entitled to the protections and limitations afforded to the Fiscal Agent under said Section 7.2. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and
the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents,
harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of its duties hereunder, including the costs and expenses (including attorneys' fees) of defending
against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful
misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided
hereunder in accordance with its schedule of fees as amended from time to time and shall be reimbursed by the
Issuer for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance
of its duties hereunder but solely from amounts in the Administrative Expense Fund established under the Fiscal
Agent Agreement. Neither the Dissemination Agent nor the Fiscal Agent shall have any duty or obligation to
review any information provided to it hereunder or shall be deemed to be acting in any fiduciary capacity for the
Issuer,the Owners of the Bonds or any other party. The obligations of the Issuer under this section shall survive
resignation or removal of the Dissemination Agent and payment of the Bonds. Any company succeeding to all
or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the
Dissemination Agent hereunder without the execution or filing of any document or any further act.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer,
the Dissemination Agent, the Participating Underwriters and the Owners from time to time of the Bonds, and
shall create no rights in any other person or entity.
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Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same instrument.
Dated: January 1, 2007
City.of Rancho Cucamonga, for itself and on behalf of City of
Rancho Cucamonga Community Facilities District 2006-02
(Amador on Route 66)
By:
City Manager
Wells Fargo Bank,National Association,
as Dissemination Agent
By:
Authorized Signatory
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ATTACHMENT A
NOTICE TO REPOSITORIES
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Rancho Cucamonga
Name of Bond Issue: CITY OF RANCHO CUCAMONGA
COMMUNITY FACILITIES DISTRICT NO. 2006-02(AMADOR ON ROUTE 66)
2007 Special Tax Bonds
Date of Issuance: January_, 2007
NOTICE IS HEREBY GIVEN that the Issuer of has not provided an Annual Report with respect to
the above-referenced Bonds as required by the Continuing Disclosure Agreement dated as of January 1, 2007
between the Issuer and Wells Fargo Bank,National Association, as Fiscal Agent. The Issuer anticipates that
the Annual Report will be filed by
Dated:
Wells Fargo Bank,National Association,
as Dissemination Agent on Behalf of the Issuer
By:
Authorized Signatory
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EXHIBIT B
ISSUER ANNUAL REPORT
City Of Rancho Cucamonga
Community Facilities District No.2006-02 (Amador on Route 66)
2007 Special Tax Bonds
This Annual Report is hereby submitted under Section 4 of the Continuing Disclosure Certificate
dated as of January 1, 2007 executed by the undersigned (the "District') in connection with the issuance by
the District of the above-captioned bonds.
(a) Financial Statements. Attached to this Annual Report are (i) audited financial statements of
the District and the City prepared in accordance with generally accepted accounting principles as
promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards
Board, or (ii) unaudited financial statements of the District and the City (because the audited financial
statements were not available by the Report Date), and the audited financial statements will be filed in the
same manner as this Annual Report when they become available.
(b) Yearly Report Provided to CDIAC. Attached to this Annual Report is copy of the most
recent Yearly Fiscal Status Report required to be filed by the District with the California Debt and
Investment Advisory Commission pursuant to the Act. The report includes the following information as of
the close of the most recent fiscal year:
I. The current minimum balance in the Reserve Fund.
2. The outstanding principal amount of the Bonds.
3. Balances in the Reserve Fund,Improvement Fund,and Bond Fund.
4. Assessed value of all parcels in the District subject to the Special Tax.
5. Total amount of Special Taxes due and total amount uncollected from properties within the
District.
6. Total number of delinquent parcels within the District, total amount of Special Taxes due on
delinquent parcels within the District, and information on foreclosure against delinquent
parcels within the District.
(c) Maturity and Redemption Schedule. Below is the maturity schedule for the outstanding
Bonds and a listing of Bonds redeemed prior to maturity.
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Maturity Schedule of the Bonds
Principal Early
Payment Date Principal Interest Redemption
(September 1) Amount Rate Price Yield Date
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
(d) Special Tax Prepayments. Below is a listing of all parcels within the District for which the
Special Tax obligation was fully or partially prepaid for the prior fiscal year, along with the Special Tax
prepayment amount.
Parcel APN - Full or Partial Prepayment Prepayment Amount
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(e) Additional Delinquency Information.
1. Below is a listing of all parcels within the District that were delinquent in the payment of the
Special Taxes,as applicable, in the aggregate of$4,000 or more for the prior fiscal year:
Parcel APN Delinquency Amount Length of Delinquency
Total:
2. Below is a listing of all parcels within the District that are under common ownership and
were delinquent in the payment of the Special Taxes, as applicable, in the aggregate of
$20,000 or more during the prior fiscal year:
Parcel APN Delinquency Amount Length of Delinquency
Total:
3. If the total delinquencies within the District as of the prior June 1 exceed 5% of the total
Special Tax levied for the prior fiscal year, below is a listing of all parcels that were
delinquent in the payment of the Special Taxes:
Parcel APN Delinquency Amount Length of Delinquency
Total:
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(f) Property Ownership. Below is a listing of all property owners responsible for more than 5% of
the Special Taxes levied within the District as shown on the San Bernardino County Assessor's last equalized
tax roll prior to the September next preceding the Report Date,and each owner's percentage share of the Special
Taxes.
Parcel APN Property Owner Share of Special
Taxes
(g) Value to Debt Ratio. Attached is an updated version of Table 5 in the final Official Statement
showing the value-to-debt calculation for the property in the District, but substituting assessed property values
for the appraised values of such property.
(h) Rate and Method. Below is a statement of any changes to the Rate and Method of
Apportionment of Special Tax for the District during the prior fiscal year.
Dated:
CITY OF RANCHO CUCAMONGA, acting for and on behalf
of COMMUNITY FACILITIES DISTRICT NO. 2006-02
(AMADOR ON ROUTE 66)
By:
Title:
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CITY OF RANCHO CUCAMONGA
COMMUNITY FACILITIES DISTRICT NO. 2006-02,
(AMADOR ON ROUTE 66)
2007 SPECIAL TAX BONDS
DEVELOPER CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (the "Continuing Disclosure Agreement")
is executed and delivered by William Lyon Homes, Inc., a California corporation (the "Developer"), and
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (the "Fiscal
Agent" and "Dissemination Agent") in connection with the issuance by the City of Rancho Cucamonga
(the"Issuer")of the$ aggregate principal amount Community Facilities District No. 2006-02
(Amador on Route 66) 2007 Special Tax Bonds(the`Bonds"). The Bonds are being issued pursuant to a .
Fiscal Agent Agreement dated as of December 1, 2006, between the Issuer and Wells Fargo Bank,
National Association,as Fiscal Agent(the "Fiscal Agent Agreement").
The Dissemination Agent, the Fiscal Agent and the Developer hereby covenant and agree as
follows:
Section 1. Purpose of the Continuing Disclosure Agreement. This Continuing Disclosure
Agreement is being executed and delivered by the Dissemination Agent, the Fiscal Agent and the
Developer for the benefit of the owners of the Bonds and in order to assist the Participating Underwriters
(as defined herein) in complying with S.E.C. Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement,
which apply to any capitalized term used in this Continuing Disclosure Agreement unless otherwise
defined in this Section,the following capitalized terms shall have the following meanings:
"Disclosure Representative" shall mean the officers executing this Continuing Disclosure
Agreement or such other officer or employee as the Developer shall designate in writing to the
Dissemination Agent and the Fiscal Agent from time to time.
"Dissemination Agent"shall mean Wells Fargo Bank,National Association, acting in its capacity
as the Dissemination Agent hereunder,or any successor Dissemination Agent designated in writing by the
Issuer and which has filed with the Dissemination Agent or the Fiscal Agent a written acceptance of such
designation.
"District"shall mean Community Facilities District No. 2006-02 (Amador on Route 66).
"Fiscal Agent Agreement" shall mean the Fiscal Agent Agreement referred to in the initial
paragraph of this Continuing Disclosure Agreement.
"Fiscal Year" shall mean the 12-month period commencing on July 1 of any year and ending on
June 30 of the following year.
"Issuer"shall mean City of Rancho Cucamonga for and on behalf of the District.
"National Repository' shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. Currently,the following are National Repositories:
RVI'MONOM722113.1 E-12
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Bloomberg Municipal Repository -
P. O.Box 840 .
Princeton,NJ 08542-0840
(609)279-3200
FAX(609)279-5962
Internet address: Munis@Bloomberg.com
Kenny Information Services,Inc.
The Repository
65 Broadway, 16th Floor
New York,NY 10006
Attn: Kenny Repository Service
(212)770-4595
FAX(212) 797-7994
DPC Data Inc.
One Executive Drive
Fort Lee,NJ 07024
(201)346-0701
FAX(201)947-0107
Internet address: nrmsir@dpcdata.com
Thomson NRMSIR
Attn: Municipal Disclosure
395 Hudson Street, 3d Floor
New York,NY 10014
(212)807-5001 or(800)689-8466
FAX(212) 989-2078
Internet address: Disclosure@Muller.com
"Participating Underwriters"shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with the offering of the Bonds. The Participating Underwriter is
Stone &Youngberg LLC whose address is: One Ferry Building, San Francisco,CA 94111.
"Repository' shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5),adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934,as the same may be amended from time to time.
"Semi-Annual Report" shall mean any Semi-Annual Report certified by the Developer pursuant
to, and as described in, Sections 3 and 4 of this Continuing Disclosure Agreement.
"Special Taxes" shall mean the Special Taxes levied by the Issuer on property in the District to
pay debt service on outstanding Bonds.
"State Repository" shall mean any public or private repository or entity designated by the State of
California as a state repository for the purpose of the Rule and recognized as such by the Securities
Exchange Commission. As of the date of this Continuing Disclosure Agreement, there is no State
Repository.
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Section 3. Provision of Semi-Annual Reports.
(a) The Dissemination Agent shall, not later than April 30 and October 31 of each year,
commencing on April 30, 2007, provide to each Repository a Semi-Annual Report which is consistent
with the requirements of Section 4 of this Continuing Disclosure Agreement. Not later than fifteen (15)
calendar days prior to said date, the Developer shall provide the Semi-Annual Report to the
Dissemination Agent and the Fiscal Agent(if the Fiscal Agent is not the Dissemination Agent). In each
case, the Semi-Annual Report may be submitted as a single document or as separate documents
comprising a package, and may cross-reference other information as provided in Section 4 of this
Continuing Disclosure Agreement. The Developer shall provide a written certification with each Semi-
Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such Semi-
Annual Report constitutes the Semi-Annual Report required to be furnished by the Developer hereunder.
The Dissemination Agent and the Fiscal Agent may conclusively rely upon such certifications of the
Developer and shall have no duty or obligation to review such Semi-Annual Report. The information
contained or incorporated in the Semi-Annual Reports due on April 30 shall be for the six-month period
from September 1 of the preceding calendar year to February 28 of the current calendar year, and the
information contained or incorporated in the Semi-Annual Reports due on October 31 shall be for the six
month period from March 1 to August 30 of the current calendar year.
(b) If by fifteen(15)calendar days prior to the date specified in subsection(a)for providing a
Semi-Annual Report to the Repositories, the Dissemination Agent has not received a copy of the Semi-
Annual Report, the Dissemination Agent shall contact the Developer to determine if the Developer is in
compliance with subsection(a).
(c) If the Dissemination Agent is unable to verify that a Semi-Annual Report has been
provided to the Repositories by the date required in subsection(a), the Dissemination Agent shall send a
notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing each Semi-Annual Report the
name and address of each National Repository and each State Repository, if any;
(ii) file with the Repositories any Semi-Annual Report that it receives from the
Developer; and
(iii) file a report with the Developer,the Issuer and(if the Dissemination Agent is not
the Fiscal Agent) the Fiscal Agent certifying that the Semi-Annual Report has been provided
pursuant to this Continuing Disclosure Agreement, stating the date it was provided and listing all
the Repositories to which it was provided.
(e) The Developer shall, or if received by the Dissemination Agent, the Dissemination Agent
shall, deliver a copy of each Semi-Annual Report to the Participating Underwriter at the time the Semi-
Annual Report is provided to the Repositories in accordance with this section.
Section 4. Content of Semi-Annual Reports. The Semi-Annual. Report shall contain or
incorporate by reference the following:
1. A statement summarizing the current status of construction and financing of the
development of property owned by the Developer in the District presented in the same general
format as the information in the Official Statement in the section entitled "THE DEVELOPER
AND THE PROPOSED DEVELOPMENT WITHIN THE DISTRICT — General," "— The
Developer and the Housing Project,"and"—The Proposed Housing Development;"
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2. The total number of subdivided lots in the District sold by the Developer in the
preceding Fiscal Year to homeowners and the number of subdivided lots and/or the acreage of
any parcels of property sold by the Developer in such Fiscal Year to a purchaser other than a
homeowner and the identification of each such purchaser;
3. The total number of parcels and the total acreage of property in the District which
were owned by the Developer at the end of the preceding calendar year;
4. For Semi-Annual Reports due on April 30, any audited financial statements of
the Developer, if such statements are prepared for the Developer in the ordinary course of
business;
5. Information regarding a failure by the Developer pay any real property taxes
(including the Special Taxes)levied on a parcel of property in the District which is owned by the
Developer;
6. Information regarding any material default by the Developer on any commercial
loan with respect to the construction or permanent financing of the improvements which are
necessary to the development of property then owned by the Developer in the District;
7. Information regarding any material default by the Developer on any commercial
loan secured by property within the District then owned by the Developer;
8. Information regarding any uncured payment default by the Developer on any
commercial loan as to which the Developer is a borrower or guarantor (whether or not such loan
is secured by property in the District) and as to which the lender has recourse against the
Developer;
9. Information regarding the filing by the Developer a petition in bankruptcy or any
determination by a court that the Developer is unable to pay its debts as they become due;
10. Information regarding the filing of any lawsuit with claim for damages in excess
of $1,000,000 against the Developer which may adversely affect the completion of the
development of property then owned by the Developer within the District,and
11. Any event that would constitute an Event of Default under the Purchase and Sale
Agreement between Lewis Investment Company,LLC and William Lyon Homes, Inc. dated as of
November 30, 2004.
Any or all of the items listed above may be incorporated by reference from other documents,
including official statements of debt issues of the Issuer or related public entities, which have been
submitted to each of the Repositories or the Securities and Exchange Commission or any offering
statement of any securities offering of the Developer or any related or affiliated entity of the Developer.
If the document incorporated by reference is a final official statement, it must be available from the
Municipal Securities Rulemaking Board.
Section 5. Termination of Reporting Obligation; Reporting Obligation of Transferees. The
Developer's obligations under this Continuing Disclosure Agreement, unless sooner terminated as
provided below, shall terminate upon the defeasance, prior redemption or payment in full of all of the
Bonds. The Developer shall have no further obligation under this Continuing Disclosure Agreement
when the Developer and any owner of a 25% or greater interest in the Developer or a subsidiary or
affiliated entity of the Developer no longer owns Undeveloped Property (as defined in the Rate and
Method of Apportionment of Special Tax) in the District which is responsible for payment of 10% or
more of the Special Taxes levied on property in the District. In such event, the Developer shall provide
RVPUBUCSNOWV22113.1 E-15
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written notice to the Fiscal Agent that the Developer has no further obligation under this Continuing
Disclosure Agreement.
Section 6. Amendment. (a)This Continuing Disclosure Agreement may be amended, by written
agreement of the parties, without the consent of the owners of the Bonds, if all of the following conditions
are satisfied: (1)such amendment is made in connection with a change in circumstances that arises from a
change in legal (including regulatory)requirements, a change in law(including rules or regulations) or in
interpretations thereof, or a change in the identity, nature or status of the Developer or the type of
business conducted by the Developer, (2) this Continuing Disclosure Agreement as so amended would
have complied with the requirements of the Rule as of the date of this Continuing Disclosure Agreement,
after taking into account any amendments or interpretations of the Rule, as well as any change in
circumstances, (3) the Issuer or Developer shall have delivered to the Fiscal Agent an opinion of
nationally recognized bond counsel or counsel expert in federal securities law, addressed to the Issuer and
the Fiscal Agent, to the same effect as set forth in clause (2)above, (4) the Issuer shall have delivered to
the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal
securities law, addressed to the Issuer and the Fiscal Agent, to the effect that the amendment does not
materially impair the interests of the owners of the Bonds, and(5) the Issuer or the Developer shall have
delivered copies of such opinion and amendment to each Repository.
(b) This Continuing Disclosure Agreement may be amended, by written agreement of the
parties,upon obtaining consent of the owners of at least 25%of the outstanding Bonds.
(c) To the extent any amendment to this Continuing Disclosure Agreement results in a
change in the type of financial information or operating data provided pursuant to this Continuing
Disclosure Agreement, the first Semi-Annual Report provided thereafter shall include a narrative
explanation of the reasons for the amendment and the effect of the change.
(d) If an amendment is made to the basis on which financial statements are prepared, the
Semi-Annual Report for the year in which the change is made shall present a comparison between the
financial statements or information prepared on the basis of the new accounting principles and those
prepared on the basis of the former accounting principles. Such comparison shall include a quantitative
and, to the extent feasible, qualitative discussion of the differences in the accounting principles and the
effect of the change in the accounting principles on the presentation of the financial information.
Section 7. Additional Information. Nothing in this Continuing Disclosure Agreement shall be
deemed to prevent the Issuer or the Developer from disseminating any other information,using the means
of dissemination set forth in this Continuing Disclosure Agreement or any other means of
communication, or including any other information in any Semi-Annual Report, in addition to that which
is required by this Continuing Disclosure Agreement. If the Issuer or the Developer chooses to include
any information in any Semi-Annual Report in addition to that which is specifically required by this
Continuing Disclosure Agreement, the Issuer or the Developer shall have no obligation under this
Continuing Disclosure Agreement to update such information or include it in any future Semi-Annual
Report. .
Section 8. Default. In the event of a failure of the Developer to comply with any provision of
this Continuing Disclosure Agreement, any beneficial owner of the Bonds may take such actions as may
be necessary and appropriate, including seeking mandate or specific performance by court order, to cause
the Developer to comply with its obligations under this Continuing Disclosure Agreement. A default
under this Continuing Disclosure Agreement shall not be deemed a default under the Fiscal Agent
Agreement and the sole remedy under this Continuing Disclosure Agreement in the event of any failure of
the Developer to comply with this Continuing Disclosure Agreement shall be an action to compel
performance.
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Section 9. Duties, Immunities and Liabilities of Fiscal Agent and Dissemination Agent:
Compensation. Article VII of the Fiscal Agent Agreement is hereby made applicable to this Continuing
Disclosure Agreement as if this Continuing Disclosure Agreement were (solely for this purpose)
contained in the Fiscal Agent Agreement. The Dissemination Agent and the Fiscal Agent shall have only
such duties as are specifically set forth in this Continuing Disclosure Agreement.The Developer agrees to
indemnify and save the Dissemination Agent, the Fiscal Agent, their officers, directors, employees and
agents, harmless (each an "Indemnified Party") against any loss, expense and liabilities which it may
incur to the extent arising out of the negligence or willful misconduct of the Developer in the performance
of its obligations hereunder, including the costs and expenses (including reasonable attorney's fees of
counsel acceptable to the Developer) of defending against any claim of such liability, but excluding
losses, expenses and liabilities, in any event, to the extent due to the negligence or willful misconduct of
an Indemnified Party. The Dissemination Agent shall be paid compensation by the Issuer for its services
provided hereunder in accordance with its schedule of fees as amended from time to time and all
expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its
duties hereunder. Neither the Dissemination Agent nor the Fiscal Agent shall have any duty or obligation
to review any information provided to it hereunder or shall be deemed to be acting in any fiduciary
capacity for the Issuer, the District the owners of the Bonds, or any other party. The obligations of the
Developer under this section shall survive resignation or removal of the Dissemination Agent or the
Fiscal Agent and payment of the Bonds.
Section 10. Resignation or Termination. The Dissemination Agent may resign upon 30 days'
notice. Upon the Dissemination Agent's resignation, the Developer and the Issuer shall appoint a
successor Dissemination Agent.
Section 11. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
If to the Issuer City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga,CA 91730
Attention: Deputy City Manager
Telephone: (909)477-2700
Telecopier: (909)477-2846
If to the Fiscal
Agent: Wells Fargo Bank,National Association
707 Wilshire Boulevard, 17t'Floor
Los Angeles,CA 90071
Telephone: (213)614-3353
Telecopier: (213)614-3355
If to the Developer: William Lyon Homes
4490 Von Karman Avenue
Newport Beach, CA 92660-2008
Telephone: (949)476-5467
Telecopier: (949)252-2566
Section 12. Beneficiaries. This Continuing Disclosure Agreement shall inure solely to the
benefit of the Issuer, the Developer, the Fiscal Agent, the Dissemination Agent, the Participating
Underwriters and beneficial owners from time to time of the Bonds,and shall create no rights in any other
person or entity.
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Section 13. Counterparts. This Continuing Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
Dated: January 1, 2007
WILLIAM LYON HOMES, INC.,
a California corporation
By:
Name:
Title:
By:
Name:
Title:
Date: January 1,2007
WELLS FARGO BANK,NATIONAL ASSOCIATION,
as Dissemination Agent and Fiscal Agent
By:
Authorized Officer
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EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE SEMI-ANNUAL REPORT
Name of Issuer: CITY OF RANCHO CUCAMONGA
Name of Bond Issue: COMMUNITY FACILITIES DISTRICT NO. 2006-02 (AMADOR ON ROUTE 66)
2007 Special Tax Bonds
Date of Issuance: January_,2007
NOTICE IS HEREBY GIVEN that (the "Developer") has not provided
an Semi-Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure
Agreement dated as of January 1, 2007 between the Developer and Wells Fargo Bank,National Association, as
Dissemination Agent. The Developer anticipates that the Semi-Annual Report will be filed by
Dated:
WELLS FARGO BANK,NATIONAL ASSOCIATION,
as Dissemination Agent on behalf of the Merchant
Builder
cc: Issuer By:
Authorized Officer
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APPENDIX F
FORM OF OPINION OF BOND COUNSEL
12006
Mayor and City Council
City of Rancho Cucamonga
10500 Civic Center Drive
P.O.Box 807
Rancho Cucamonga, CA 91730
BOND OPINION
S
CITY OF RANCHO CUCAMONGA
COMMUNITY FACILITIES DISTRICT NO.2006-02
(AMADOR ON ROUTE 66)
2007 SPECIAL TAX BONDS
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by the City of Rancho Cucamonga (the
"City") for and on behalf of Community Facilities District No. 2006-02 (Amador on Route 66) (the "District')
situated in and formed by the City, of S aggregate principal amount of the City of Rancho
Cucamonga Community Facilities District No. 2006-02 (Amador on Route 66) 2007 Special Tax Bonds (the
`Bonds"). The Bonds are issued pursuant to the provisions of the Mello-Roos Community Facilities Act of
1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the
Government Code of the State of California (the "Act'), a resolution adopted by the City Council on
December 6, 2006(the"Resolution"),and a Fiscal Agent Agreement, dated as of December 1, 2006 (the"Fiscal
Agent Agreement'), between the City and Wells Fargo, National Association, as fiscal agent (the "Fiscal
Agent').
We have examined the Act, the Resolution, the Fiscal Agent Agreement and certified copies of the
proceedings taken for the issuance and sale of the Bonds. As to questions of fact which are material to our
opinion, we have relied upon the representations of the City without having undertaken to verify the accuracy of
any such representations by independent investigation.
Based upon such examination, we are of the opinion, as of the date hereof, that the proceedings referred
to above have been taken in accordance with the laws and the Constitution of the State of California, and that
the Bonds,having been issued in duly authorized form and executed by the proper officials and delivered to and
paid for by the purchaser thereof, and the Fiscal Agent Agreement having been duly authorized and executed by
the proper official, constitute the legally valid and binding obligations of the City, for and on behalf of the
District, enforceable in accordance with their terms subject to the qualifications specified below. Except where
funds are otherwise available, as may be permitted by law, the Bonds are payable, as to both principal and
interest, solely from certain special taxes to be levied and collected within the District and other funds available
therefor held under the Fiscal Agent Agreement.
The Internal Revenue Code of 1986, as amended (the "Code"), sets forth certain investment, rebate and
related requirements which must be met subsequent to the issuance and delivery of the Bonds for the interest on
the Bonds to be and remain exempt from federal income taxation. Noncompliance with such requirements
could cause the interest on the Bonds to be subject to federal income taxation retroactive to the date of issuance
of the Bonds. Pursuant to the Fiscal Agent Agreement, the City has covenanted to comply with the
requirements of the Code and applicable regulations promulgated thereunder.
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We are of the opinion that, under existing statutes, regulations, rulings and court decisions, and
assuming compliance by the District with the aforementioned covenant, the interest on the Bonds is excluded
from gross income for purposes of federal income taxation and is exempt from personal income taxation
imposed by the State of California.
We are further of the opinion that interest on the Bonds is not a specific preference item for purposes of
the alternative minimum tax provisions of the Code. However, interest on the Bonds received by corporations
will be included in corporate adjusted current earnings, a portion of which may increase the alternative
minimum taxable income of such corporations.
The difference between the issue price of a Bond (the first price at which a substantial amount of the
Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect
to such Bond constitutes original issue discount, and the amount of original issue discount that accrues to the
owner of the Bond is excluded from the gross income of.such owner for federal income tax purposes, is not an
item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations,and is exempt from State of California personal income tax.
Although interest on the Bonds is excluded from gross income for purposes of federal income taxation,
the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the
recipient. The extent of these tax consequences will depend on the recipient's particular tax status or other items
of income or deduction. We express no opinion regarding any such consequences.
The opinions expressed herein may be affected by actions which may be taken (or not taken) or events
which may occur (or not occur) after the date hereof. We have not undertaken to determine, or to inform any
person,whether any such actions or events are taken or occur or are not taken or do not occur.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal Agent
Agreement may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights heretofore or hereafter enacted, and their enforcement may be subject to the exercise of judicial discretion
in accordance with general principles of equity.
Respectfully submitted,
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APPENDIX G
GENERAL INFORMATION ABOUT THE CITY OF RANCHO CUCAMONGA
General
The City of Rancho Cucamonga (the "City") is located in the foothills of the Los Angeles-San
Bernardino Basin in the western portion of San Bernardino County, approximately 40 miles east of the City of
Los Angeles and 18 miles west of the City of San Bernardino. The City covers approximately 40.2 square miles
and is bordered by Ontario on the south, Upland on the west and Fontana to the east; to the north are
Cucamonga Peak and Mount Baldy.
Municipal Government
The City was incorporated on November 30, 1977, as a general law city operating under the council-
manager form of government. It is governed by a five-member City Council (the "Council"), which includes a
Mayor who is elected at large for a four year term, and four Council Members are elected at large for staggered
four year terms. The Council appoints the City Manager and City Attorney. The City Manager is responsible
for the daily administration of City affairs and for implementing Council policy and program decisions. The
current Council members are as follows:
Donald J.Kurth, M.D., Mayor
Diane Williams,Mayor Pro Tem
Rex Gutierrez,Councilmember
L. Dennis Michael,Councilmember
Sam Spagnolo,Councilmember
The City's General Plan provides a coordinated policy of development planning, balancing residential,
commercial, and industrial expansion. Coordinated transportation planning with the Southern California
Regional Association of Governments and the County of San Bernardino is being provided by a traffic model
that sets forth the optimum size of streets and timing necessary to accommodate traffic on both existing and
future streets.
Population
Prior to incorporation,the area generally within the corporate boundaries of the City experienced a rapid
growth in population. Population figures for the City, the County and the State for the last six years along with
population figures for 1980, 1990 and 2000 are shown in the following table.
CITY OF RANCHO CUCAMONGA
Population Estimates
City of County of
Year Rancho Cucamonga San Bernardino State of California
1980 55,250 895,016 23,782,000
1990 98,500 1,418,380 29,758,213
2000 125,585 1,689,281 34,3 36,091
2001 130,842 1,741,137 35,037,000
2002 137,119 1,783,656 35,301,000
2003 147,462 1,842,904 35,691,442
2004 155,723 1,897,950 36,271,091
2005 161,830 1,946,202 36,810,358
2006 170,479 1,991,829 37,172,015
Source: State Department of Finance estimates(as of January 1).
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Employment
The City is included in the Riverside-San Bernardino Metropolitan Statistical Area ("MSA"). The
unemployment rate in the Riverside-San Bernardino MSA was an estimated 4.6% during May 2005. This
compares to the unadjusted unemployment rates of 5.5% for Los Angeles County and 5.3% for California for
the same month.
The following table summarizes the civilian labor force, employment and unemployment in the County
for the calendar years 2001 through 2005. These figures are Countywide. statistics and may not necessarily
accurately reflect employment trends in the City.
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
2001 2002 2003 2004 2005
Civilian Labor Force(l) 1,504,400 1,566,400 1,618,400 1,688,800 1,711,800
Civilian Employment 1,423,000 1,472,700 1,529,400 1,586,200 1,625,500
Civilian Unemployment 81,500 93,700 89,000 82,600 86,300
Civilian Unemployment Rate 5.4% 5.0% 5.5% 5.0% 5.0%
Wage and Salary Emplovment z1
Total All Industries 1,072,900 1,114,900 1,152,400 1,190,300 1,235,400
Total Farm 21,200 19,900 18,700 18,400 18,000
Total Nonfarm 1,051,700 1,095,000 1,133,700 1,171,900 1,217,100
Natural Resources and Mining 1,200 1,300 1,200 1,200 1,300
Construction 89,600 93,900 103,400 115,000 122,200
Manufacturing 114,900 115,600 118,500 119,600 120,200
Trade Transportation&Utilities 227,700 238,200 249,900 262,300 273,900
Wholesale Trade 40,100 42,900 43,100 45,200 49,200
Retail Trade 140,500 146,000 154,400 160,800 165,000
Information 14,700 14,000 13,900 13,600 14,400
Financial Activities 38,800 40,600 44,400 45,800 48,700
Professional and Business Services 102,500 111,800 121,600 126,800 132,500
Educational and Health Services 109,900 116,000 118,100 117,800 120,000
Leisure and Hospitality 106,000 109,500 113,200 116,600 122,400
Government 208,800 216,200 211,300 214,800 220,400
Source: State of California Employment Development Department.
(p Annual labor force data is by place of residence; includes self-employed individuals, unpaid family workers,
household domestic workers,and workers on strike. -
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household'
domestic workers,and workers on strike.
The total number of nonfarm jobs in Riverside and San Bernardino counties increased by 139,100 jobs
between 2001 and 2005 to reach 1,217,100 jobs. Construction employment grew by 30,400jobs. The
professional and business services industry division also added 27,600 jobs. Trade, transportation and utilities
grew by 38,000 jobs. Other industry divisions with year-over job gains between 2001 and 2005 include:
manufacturing(up 6,400 jobs); wholesale trade (up 5,300 jobs); retail trade (up 22,400 jobs); financial activities
(up 8,400 jobs); educational and health services (up 9,700 jobs), leisure and hospitality (up 10,500 jobs),
professional government(up 10,400 jobs).
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Major Employers
The following table lists the major manufacturing and non-manufacturing employers within the City of
Rancho Cucamonga and their estimated number of employees as of August 2005.
CITY OF RANCHO CUCAMONGA
Major Employers
As of August 2005
Number of
Emnlover Emnlovees Type of Business
Chaffey Community College 1,100 Education
Etiwanda School District 1,015 Education
Alta Loma School District 920 Education
Frito-Lay Inc. 600 Snack Food Manufacturer
C.W. Construction 600 Special Trades
Mission Foods 573 Nondurable Wholesale/Food Mfg.
Central School District 500 Education
Target 475 General Merchandise
Southern California Edison 450 Electric, Gas, Sanitation
Mercury Insurance Company 437 Insurance'
Wal-Mart Stores, Inc. 427 General Merchandise
City of Rancho Cucamonga 410 Government
Costco Wholesale Corp. 375 General Merchandise
Tamco 300 Metal Manufacturer
The Cheesecake Factory 300 Restaurant
Albertson's 278 Food Stores
I C Penney Corp., Inc. 270 Department Stores
Cucamonga School District 265 Education
Safetran Systems Corporation 250 Electronic equipment
Proficient Food Company 225 Wholesale
General Motors 205 Service and Parts Operations
Robinson's May 200 Department Stores
PAC-Rancho,Inc. 196 Metal Manufacturer
Wickes Furniture 182 Special Warehousing& Storage
Lucille's Smokehouse BBQ 180 Restaurant
Source: Rancho Cucamonga Redevelopment Agency.
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Commercial Activity
In the calendar year 2005, total taxable transactions in the City were $ or approximately 33%
greater than total taxable transactions of $ that occurred in the City in calendar year 2001. A
summary of historic taxable sales within the City during the past five years is shown in the following table.
CITY OF RANCHO CUCAMONGA
Taxable Transactions
(figures in thousands)
Retail Stores 2001 2002 2003 2004 2005
Apparel Stores $22,735 $19,553 $16,216 $42,400
General Merchandise 238,841 529 298,154 380,401
Food Stores 76,026 097 82,154 80,083
Eat and Drink 130,229 138,880 155,903 181,973
Furniture 19,448 22,202 39,702 99,573
Building Materials 125,897 142,899 162,629 200,152
Automotive 17,397 18,865 19,678 23,681
Service Station 72,899 67,778 89,451 105,112
Other Retail Stores 176,164 164,431 173,072 209,422
Total Retail $879,636 $912,234 $1,037,000 $1,322,813
Non-Store $329,102 - $380,386 $375,665 - $425,309
TOTAL OUTLETS $1,208,738 $1,292,620 $1,412,665 $1,748,122
Source: State Board of Equalization.
til Drug stores have been merged with general merchandise stores and packaged liquor stores have been merged with other
retail stores.
Construction Activity
Building activity for the past ten fiscal years in the City is shown in the following table.
CITY OF RANCHO CUCAMONGA
Construction Activity
Number of
Fiscal Permits Building Permit
Year Issued Valuation
1996-97 3,336 138,045,375
1997-98 3,330 185,119,239
1998-99 3,465 259,593,466
1999-00 3,841 370,105,582
2000-01 4,050 . 454,882,923
2001-02 4,549 498,964,341
2002-03 5,229 532,582,019
2003-04 5,327 754,911,074
2004-05 5,364 711,730,564
2005-06 4,790 558,062,563
Source:City of Rancho Cucamonga Comprehensive -
Annual Financial Report FY 2005-06.
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Public Utilities and Services
Police protection is contracted from the San Bernardino County Sheriff's Department. A Sheriff's
substation is located within the City limits. Fire protection and rescue service are provided by the City-managed
Fire Protection District, which covers an area of approximately 53 square miles. Southern California Edison
Company furnishes electricity and Southern California Gas Company furnishes natural gas to the City.
Industrial waste and sewer services are provided by the Inland Empire Utilities Agency (formerly, the Chino
Basin Municipal Water District), and water is furnished to the City by the Cucamonga Valley Water District.
Community Facilities
The City of Rancho Cucamonga currently has 26 parks and 7 community centers for residents. Library
services are provided by the City. Rancho Cucamonga Quakes baseball club (an Anaheim Angels minor league
affiliate)currently plays its home games at the City's sports complex,the Epicenter.
Education
Six school districts serve the residents of the City providing local educational opportunities from
kindergarten through junior college. Major colleges and universities are located within commuting distance to
the City providing residents with both public and private educational opportunities inmost of the major
professions.
Transportation
Two interstate highways traverse the area. Interstate 10 is located south of the City's boundary and runs
east and west, Interstate 210 is located north of the City's boundary and also runs east and west and Interstate 15
in the eastern section of the city runs north and south. Through these highways the City is linked by interstate
highways to all areas of the State and to other states to the east.
Three transcontinental railroads provide freight service to the City: Union Pacific Railroad, Southern
Pacific Railroad, and the Atchison, Topeka and Santa Fe Railroad. Amtrak and Metrolink provide passenger
service to the City. Several truck terminals are located nearby:
Airline service from Ontario International Airport, which is adjacent to the City's southern boundary, is
provided to approximately 50 cities in the United States. The airport has the capacity to serve wide-bodied jet
airplanes and has recently undergone an expansion. Los Angeles International Airport is located approximately
40 miles to the west of the City. The Port of Los Angeles is located approximately 45 miles to the west and the
Port of Long Beach is located approximately 75 miles to the southwest.
Greyhound and Continental Trailways provide transcontinental bus service. The Southern California
Rapid Transit District and Omnitrans furnish intercounty and local bus service.
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APPENDIX H
SUMMARY ABSORPTION STUDY
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