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HomeMy WebLinkAboutOrdinance No. 03-O40 0 ORDINANCE NO.03-04 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA LEVYING SPECIAL TAXES WITHIN THE CITY OF AZUSA COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MOUNTAIN COVE) WHEREAS, on April 15, 2002, this City Council adopted a resolution entitled "Resolution of Intention of the City Council of the City of Azusa with Respect to Establishment of Proposed City of Azusa Community Facilities District No. 2002-1 (Mountain Cove)" (the "Resolution of Intention") stating its intention to establish City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) (the "District') pursuant to Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing with Section 53311, of the California Government Code (the "Act'), to finance certain facilities described in the Resolution of Intention (the "Facilities"); and Notice was published as required by the Act relative to the intention of this City Council to form the District and to provide for the Facilities; and This City Council has held a noticed public hearing as required by the Act relative to the determination to proceed with the formation of the District and the rate and method of apportionment of the special tax to be levied within the District to finance a portion of the costs of the Facilities; and At said hearing all persons desiring to be heard on all matters pertaining to the formation of the District and the levy of said special taxes were heard, substantial evidence was presented and considered by this City Council and a full and fair hearing was held; and Subsequent to said hearing, this City Council adopted resolutions entitled "Resolution of the City Council of the City of Azusa Establishing City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) County of Los Angeles, State of California, and Establishing the Boundaries Thereof" (the "Resolution of Formation") and "Resolution of the City Council of the City of Azusa Calling a Special Election and Submitting to the Voters of City of Azusa Community Facilities District No. 2002-1 (Mountain Cove) a Proposition with Respect to the Annual Levy of Special Taxes Within the Community Facilities District to Pay Principal of and Interest on Bonds Thereof, and a Proposition with Respect to the Establishment of an Appropri- ations Limit for the Community Facilities District" which resolutions established the District, authorized the levy of a special tax within the District, and called an election within the District on the proposition of incurring indebtedness, levying a special tax, and establishing an appropriations limit within the District, respectively; and An election was held within the District in which eligible landowner electors approved said propositions by more than the two-thirds vote required by the Act. On October 21, 2002, additional territory was annexed into the District and the voters approved the levy of special taxes pursuant to the Rate and Method of Apportionment to pay bonded indebtedness at an election held on October 21, 2002. RVPUBIKAB\652406 rIL NOW, THEREFORE, The City Council of The City of Azusa ordains as follows: Section 1. By the passage of this Ordinance, this City Council hereby authorizes and levies special taxes within the District pursuant to the California Government Code Sections 53328 and 53340, at the rates and in accordance with the method of apportionment set forth in Exhibit A to the Resolution of Formation (the "Rate and Method of Apportionment'). The special taxes are hereby levied commencing in fiscal year 2003-04 and, in each fiscal year thereafter, until payment in full of any bonds of the City issued for the District (the "Bonds"), payment of all costs of the Facilities to be paid with such funds, and payment of all costs administering the District. Section 2. The City Treasurer or his/her designee is hereby authorized and directed each fiscal year to determine the specific special tax rate and amount to be levied for the next ensuing fiscal year for each parcel of real property, including leasehold interests, within the District, in the manner and as provided in the Rate and Method of Apportionment. Section 3. Properties or entities of the State, federal or local governments shall be exempt from any levy of the special taxes, except those properties subject to a leasehold interest, to the extent set forth in the Rate and Method of Apportionment. In no, event shall the special taxes be levied on any parcel within the District in excess of the maximum tax specified in the Rate and Method of Apportionment. Section 4. All of the collections of the special tax shall be used as provided for in the Act, the Municipal Code, the Rate and Method of Apportionment, and in the Resolution of Formation including, but not limited to, the payment of principal and interest on the Bonds, the replenishment of the reserve fund for the Bonds, the payment of the costs of the Facilities, the payment of the costs of the City in administering the District and the costs of collecting and administering the special tax. Section 5. The special taxes shall be collected from time to time as necessary to meet the financial obligations of the District on the secured real property tax roll in the same manner as ordinary ad valorem taxes are collected. The City Treasurer or his/her designee, pursuant to the Rate & Method of Apportionment, is hereby authorized and directed to provide all necessary information to the auditor/tax collector of the County of Los Angeles and to otherwise take all actions necessary in order to effect proper billing and collection of the special tax, so that the special tax shall be levied and collected in sufficient amounts and at the times necessary to satisfy the financial obligations of the District in each fiscal year until the Bonds are paid in full and provision has been made for payment of all of the administrative costs of the District. Notwithstanding the foregoing and notwithstanding the Rate & Method of Apportionment, the City Treasurer or his/her designee may collect one or more installments of the special taxes by means of direct billing by the City of the property owners, or leasehold interest holders, within the District, if, in the judgment of the City Treasurer or his/her designee, such means of collection will reduce the administrative burden on the City or is otherwise appropriate under the circumstances. In such event, the special taxes shall become delinquent if not paid when due as set forth in any such respective billing to the property owners, or leasehold interest holders. RVPUBT,AB1652406 0 The special taxes shall have the same lien priority, and be subject to the same penalties and the same procedure and sale in cases of delinquency as provided for ad valorem taxes. In addition, the provisions of Section 53356.1 of the Act shall apply to delinquent special tax payments. Section 6. If for any reason any portion of this ordinance is found to be invalid, or if the special tax is found inapplicable to any particular parcel within the District, by a Court of competent jurisdiction, the balance of this ordinance and the application of the special tax to the remaining parcels within the District shall not be affected. Section 7. This Ordinance shall be published and posted in the manner specified in the California Government Code, and shall become effective immediately upon its adoption. This ordinance shall be subject to referendum pursuant to the laws of the State of California. PASSED AND ADOPTED at the regular meeting oft City Council of the City of Azusa, State of California, on this 4th day of August , 2003. n Mayor I, Vera Mendoza, City Clerk of the City of Azusa, do hereby certify that the foregoing Ordinance No.03-04, was duly introduced and placed upon its first reading at a regular meeting of the City Council on the 7th day of July, 2003, and that thereafter, said Ordinance was duly adopted and passed at a regular meeting of the City Council on the 01 day of August, 2003, by the following vote, to wit: AYES: COUNCILMEMBERS: HARDISON, STANFORD, ROCHA, MADRID NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: CHAGNON City Clerk RVrUBHCAB1652406 L EXHIBIT A RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT NO. 2002-1 OF THE CITY OF AZUSA (MOUNTAIN COVE) A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels in Community Facilities District No. 2002-1 of the City of Azusa (Mountain Cove) ("CFD No. 2002-1") and collected each Fiscal Year commencing in Fiscal Year 2002-03, in an amount determined by the City Council of the City of Azusa, through the application of the Rate and Method of Apportionment as described below. All of the real property in CFD No. 2002-1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2002-1: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or 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 Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2002-1 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2002-1 or any designee thereof of complying with the City, CFD No. 2002-1 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2002-1 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from any escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2002-1 for any other administrative purposes of CFD No. 2002-1, 0 0 including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel map with an assigned Assessor's parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C below. "Backup Special Tax" means the Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C below. "Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 2002-1 under the Act. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD No. 2002-1" means Community Facilities District No. 2002-1 of the City of Azusa (Mountain Cove). "City" means the City of Azusa. "Council" means the City Council of the City. "County" means the County of Los Angeles. "Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Taxable Public Property, Taxable Property Owner Association Property, and Taxable River/Creek Property, for which a building permit for new construction was issued after January 1, 2001 and prior to March 1 of the prior Fiscal Year. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time. "Land Use Class" means any of the classes listed in Table 1 below. "Maximum Special Tax" means the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for a non-residential use. "Outstanding Bonds" mean all Bonds which are deemed to be outstanding under the Indenture. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property. "Property Owner Association Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2002-1, with the exception of River/Creek Property, that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year. "Public Property" means, for each Fiscal Year, any property within CFD No. 2002-1, with the exception of River/Creek Property, that is owned by, irrevocably offered for dedication to, or dedicated to the federal government, the State, the County, the City or any other public agency as of June 30 of the prior Fiscal Year; provided however that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use. To ensure that property is classified as Public Property in the first Fiscal Year after it is acquired by, irrevocably offered for dedication to, or dedicated to a public agency, the property owner shall notify the CFD Administrator in writing of such acquisition, offer, or dedication not later that June 30 of the Fiscal Year in which the acquisition, offer, or dedication occurred. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by reference to the building permit(s) issued for such Assessor's Parcel. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "River/Creek Property" means up to 24.789 Acres within the San Gabriel River and Roberts Creek, as identified on Attachment A to this Rate and Method of Apportionment, or as such area is modified pursuant to a final map for such property. "Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2002-1 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of CFD No. 2002-1 facilities eligible under the Act to the extend that inclusion of such amount does not increase the Special Tax levy on Undeveloped Property; (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2002-1 which are not exempt pursuant to Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of CFD No. 2002-1 which are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Taxable River/Creek Property" means all Assessor's Parcels of River/Creek Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or Taxable River/Creek Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2002-1 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, Taxable River/Creek Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections C and D below. • C. MAXIMUM SPECIAL TAX 1. Developed Property a. Maximum Special Tax 0 The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. b. Assigned Special Tax The Fiscal Year 2002-03 Assigned Special Tax for each Land Use Class is shown below in Table 1. TABLE 1 Fiscal Year 2002-03 Assigned Special Taxes for Developed Property in Community Facilities District No. 2002-1 (Mountain Cove) Land Use Class Description Residential Floor Area Assigned Special Tax 1 Residential Property > 3,100 s.f. $2,562.66 per unit 2 Residential Property 2,500 — 3,099 s.f. $2,097.29 per unit 3 Residential Property < 2,500 s.f. $1,891.66 per unit 4 Non -Residential Property NA $16,616 per Acre C. Backup Special Tax The Fiscal Year 2002-03 Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $16,616 per Acre. d. Increase in the Assigned Special Tax and Backup Special Tax 0 0 On each July 1, commencing on July 1, 2003, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. 2. Undeveloped Property, Taxable Public Property, Taxable Property Owner Association Property, and Taxable River/Creek Property a. Maximum Special Tax The Fiscal Year 2002-03 Maximum Special Tax for Undeveloped Property, Taxable Public Property, Taxable Property Owner Association Property, and Taxable River/Creek Property shall be $16,616 per Acre. b. Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2003, the Maximum Special Tax for Undeveloped Property, Taxable Public Property, Taxable Property Owner Association Property, and Taxable River/Creek Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-03 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equal the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property. Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to the maximum Special Tax for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special F_ Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property at up to the Maximum Special Tax for Taxable Property Owner Association Property; and Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property and Taxable River/Creek Property at up to the Maximum Special Tax for Taxable Public Property and Taxable River/Creek Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within CFD No. 2002-1. EXEMPTIONS No Special Tax shall be levied on up to 3.38 Acres of Public Property, up to 54.497 acres of Property Owner Association Property, and up to 24.789 Acres of River/Creek Property. Tax-exempt status will be irrevocably assigned by the CFD Administrator in the chronological order in which property becomes Public Property, Property Owner Association Property, or River/Creek Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property, Public Property, or River/Creek Property its tax-exempt status will be revoked. Public Property, Property Owner Association Property, or River/Creek Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fourth or fifth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Public Property, Taxable Property Owner Association Property, or Taxable River/Creek Property. APPEALS AND INTERPRETATIONS Any taxpayer may file a written appeal of the Special Tax on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the calculation of the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall eliminate or reduce the Special Tax on the appellant's property and/or provide a refund to the appellant. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the 0 0 Council by filing a written notice of appeal with the City clerk, provided that the appellant is current in his/her payments of Special Taxes. The second appeal must specify the reasons for its disagreement with the CFD Administrator's determination. G. 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 CFD No. 2002-1 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. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "CFD Public Facilities Cost" means either $7.9 million in 2002 dollars, which shall increase by the Construction Inflation Index on July 1, 2003, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the public facilities to be provided by CFD No. 2002-1 under the authorized bonding program for CFD No. 2002-1, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the annual percentage change in the Engineering News -Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News -Record Building Cost Index for the City of Los Angeles. "Future Facilities Cost" means the CFD Public Facilities Cost minus (i) public facility costs previously paid from the Construction Fund,, (ii) moneys currently on deposit in the Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance facilities costs. "Outstanding Bonds" means all Previously Issued Bonds which are deemed to be outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. 0 • "Previously Issued Bonds" means all Bonds that have been issued by CFD No. 2002-1 prior to the date of prepayment. 1. Prepayment in Full The obligation of an Assessor's Parcel to pay the Special Tax may be prepaid and permanently satisfied as described herein; provided that a prepayment may be made only for Assessor's Parcels of Developed Property or Undeveloped Property for which a building permit has been issued, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus' Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax applicable for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property (for which a building permit has been issued) to be prepaid, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. E L I (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Taxes for the entire CFD No. 2002-1 based on the Developed Property Special Taxes which could be charged in the current Fiscal Year on all expected development through buildout of CFD No. 2002-1, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the estimated Backup Special Taxes at buildout of CFD No. 2002-1 using the Backup Special Tax amount for the current Fiscal Year, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"), 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 9. Determine the Special Taxes levied on the Assessor's parcel in the current Fiscal Year which have not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. Verify the administrative fees and expenses of CFD No. 2002-1, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 9 0 13. If reserve funds for the Outstanding Bonds, if any, are at or above 100% of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit"). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the reserve requirement. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount"). 16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the construction fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 2002-1. The prepayment amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property within CFD No. 2002-1 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 0 411 2. Prepayment in Part The Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP=PE x F. These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section H.1, and (ii) indicate in the records of CFD No. 2002-1 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 — F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. TERM OF SPECIAL TAX The Special Tax shall be levied as long as necessary to meet the Special Tax Requirement, but in no event shall it be levied for more. than forty years commencing with Fiscal Year 2002-03.