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File 1 of 3 - City of Huntington Beach Community Facilites D
This Document was electronically recorded by Chicago Title Commercial RECORDING REQUESTED By Recorded in Official Records,Orange County CHICAGO TITLE COMPANY Tom Daly,Clerk-Recorder REQUEST TO BE RECORDEDOCUMENT AND TO BE EXEMPT 111®11111111IM1111111 NO FEE FROM RECORDING FEES 2005000414924 01:56pm 05/31/05 PER GOVERNMENT CODE §§ 6103 AND 2IM-1 G02 10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AND WHEN RECORDED MAIL TO: City of Huntington Beach 2000 Main Street l Post Office Box 190 ���r��4-L_ /A) Huntington Beach, CA 92648 Attention: Director of Economic Development c� 7� /G/L Space above this line for Recorder's use Documentary Transfer Tax is $ 0.00. This conveyance is exempt since Grantee is an exempt agency under R&T 11922 GRANT DEED (CFD No. 2003-1 -HUNTINGTON CENTER PARKING PARCEL) THIS GRANT DEED (CFD No. 2003-1 -Huntington Center Parking Parcel) (this "Deed"), is made this 2q day of Noy"-v 2004 by HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware limited liability company('Developer") in favor of CITY OF HUNTINGTON BEACH, CALIFORNIA, a California charter city("City"), with reference to the following facts: A. Pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311), Part 1,Division 2, Title 5 of the Government Code of the State of California, the City on January 6, 2003, adopted a Resolution of Intention to form a community facilities district over and including the Retail Parcel designated "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center)" (the "District") and a resolution of intention to issue bonds of the District for the purpose of providing through the sale of bonds proceeds in an amount not to exceed$30,000,000 for the financing (the "CFD Financing") of the design, construction and acquisition of certain public facilities, including a six-level parking structure on the Parking Structure Parcel consisting of 2.41 acres and containing.approximately 1,532 automobile parking spaces (the"Public Parking Structure") to be owned by City and available for parking use by the public; (b) Pursuant to that certain Funding and Construction Agreement Relating to City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) dated as of 650610.01/LA H4564-002/12-10-04/mjk/dg March 1, 2004, between City and Developer, Developer agreed to convey and the City agreed, subject to the terms and condition therein contained,to accept fee interest in that certain parcel of .real property located in the City of Huntington Beach, County of Orange, State of California, more particularly described on Exhibit "A", attached hereto (the "Property"), on which the , Public Parking Structure is to be constructed; (c) Concurrently herewith, Developer and the City have executed, acknowledged and caused to be recorded in the Official Records of Orange County, California(the "Official Records")that certain Parking and Reciprocal Easement Agreement and Option to Purchase dated as of March 1, 2004 (the "PREA"), covering the Property and the "Retail Parcel" (as defined therein),which is contiguous to the Property on all sides; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged: l. Grant of Property. Developer hereby_ GRANTS and conveys to the City a fee simple estate in and to the Property. 2. Grants Subject to All Matters of Record. The grant contained in this Deed is subject to all matters of record, including without limitation the PREA, and all easements, covenants, conditions and restrictions described in any of the foregoing as benefiting and/or burdening the Property or any portion thereof and to all other matters visible by an inspection or survey of land. 3. The conveyance of the Property is subject to the following covenants, conditions and restrictions which shall be binding upon City and its heirs, personal representatives, successors and assigns and all persons claiming under or through City: 3.1 There shall be no unlawful discrimination,harassment or allowance of harassment against or segregation of a person or of a group of persons on account of race, color, religion, creed, national origin, ancestry, physical handicap or disability(including HIV or AIDS),medical condition(cancer),mental disability, age(over 40), marital status, domestic partner status, sex or sexual orientation or disability, family and medical care leave or denial of pregnancy disability leave in the transfer,use, occupancy, tenure or enjoyment of the property herein conveyed or the construction, alteration, maintenance, repair, management or operation of . the improvements thereon; nor shall the grantee/assignee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of owners, lessees, sub-owners, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land. 3.2 All.deeds, assignments and subagreements or contracts made or entered into by any owner, its successors or assigns, as to any portion of the Property, shall contain therein the following language: (a) In Deeds and Assignments. "Grantee/Assignee herein covenants by and for itself, its heirs, personal representatives, successors and assigns and all persons claiming under or through grantee/assignee that there shall be no unlawful discrimination, harassment or allowance of harassment against or segregation of a person or of a group of 650610.01/LA H4564-002/12-10-04/mjk/dg -2- persons on account of race, color, religion, creed, national origin, ancestry, physical handicap or disability(including HIV and AIDS), medical condition(cancer),mental disability, age(over 40), marital status, domestic partner status, sex or sexual orientation or disability, family and medical care leave or denial of pregnancy disability leave in the _transfer, use, occupancy, tenure or enjoyment of the property herein conveyed or the construction, alteration,maintenance, repair, management or operation of the improvements thereon; nor shall the grantee/assignee or any person claiming under or through the grantee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of owners, lessees, sub-owners, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land." (b) In Leases. "The Lessee herein covenants by and for the Lessee and Lessee's heirs, personal representatives, successors and assigns and all persons claiming under or through Lessee that there shall be no unlawful discrimination, harassment or allowance of harassment against or segregation of a person or of a group of persons on account of race, color, religion,creed, national origin, ancestry,physical handicap or disability(including HIV or AIDS),medical condition(cancer), mental disability, age (over 40), marital status, domestic partner status, sex or sexual orientation or disability, family and medical care leave or denial of pregnancy disability leave in the transfer,use, occupancy,tenure or enjoyment of the land or improvements herein leased or the construction, alteration, maintenance, repair, management or operation of the improvements thereon; nor shall the Lessee or any person claiming under or through the Lessee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of owners, lessees, sub-owners, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land." 4. Notwithstanding anything to the contrary contained herein, so long as City and any successor or assignee of City is a governmental agency and has adopted its own nondiscrimination policy then City's (or its successors' or assigns') compliance with such nondiscrimination policy shall be deemed to comply with the foregoing covenants contained in Section 3 above. [SIGNATURES APPEAR ON FOLLOWING PAGE] 650610.01/LA H4564-002/12-10-04/mjk/dg -3- IN WITNESS WHEREOF, Developer has executed this Deed as of the day and year first written above. "Developer" HUNTINGTON CENTER ASSOCIATES, L.L.C., a Delaware limited liability company By: Huntington Management Ent., LLC, a Delaware limited liability company, its Manager By: BMLF/Huntington, LLC, a Delaware limited liability cornpwj, it anager Y: an Ezralow, Trustee of the Bryan Ezralow 1994 Trust, its Manager 650610.01/LA H4564-002/6-10-04/mjk/rp '�' CERTIFICATE OF ACCEPTANCE GOVERNMENT CODE SECTION 27281 This is to certify acceptance of the Property conveyed by the foregoing Grant Deed (CFD No. 2003-1 - Huntington Center Parking Parcel) ("Deed") from HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware limited liability company("Developer") to the CITY OF HUNTINGTON BEACH, CALIFORNIA, a California charter city("City") and consent by City to recordation of this Deed by its duly authorized officer, pursuant to the Funding Agreement, a duly authorized obligation of the City. Dated this day of p6&fi-A?"L,,2004, at Huntington Beach, California. "City" CITY OF HUNT GTON BEACH By: ATTEST: Cit lerk REVIEWED AND APPROVED: APPROVED AS TO FORM: ity Ad inistrator A--City Attorney 650610.01/LA H4564-002/12-10-04/mjk/dg -5- State of California ) County of On /o2/9 7/e before me, �txc �►' �`p�ersonally appeared personally known to me he oasis ^f cotig fa r.._e<.idpfirp)to be the personA whose name is are subscribed to the within instrument and acknowledged to me that sh they executed the same in '*Hoe heir authorized capacity(4%), and that by er signature(g) on the instrument the person'}, or the entity upon behalf of which the personA acted, executed the instrument. WITNESS my hand and official seal. lER1A.l L IWG ConNnt M#1/40M Hot"Pubic-caboft. Notary Pub is OMW County 101MVCOMMS"MOC112. State of California ) County of -/CS{rtJ ) On /o2�v>ZLO before me, �?�ersonally appeared s, f &tee%t/ personally known to me(or-proved )to be the person(,4 whose name isl ar-e subscribed to the within instrument and acknowledged to me that she ley executed the same in ' _ er their authorized capacity(ic&), and that by 14& �e tl signaturef o on the instrument the personA, or the entity upon behalf of which the persop< acted, executed the instrument. WITNESS my hand and official seal. IB!'Vll L KING Ccmmkdm#144M Notary Public.Cartonyo Notary P lic OmnaeCaurdy My Comm.E�Irat Oct 11 Z, 650610.0I/LA H4564-002/12-10-04/mjk/dg -6- State of California ) County of/.As 4,41 ) On 9Wq _before me,Tin 141 ,personally appeared Q personally known to me ( to be the personW whose name is/arg subscribed to the within instrument and acknowledged to me that he/,-3v6/tbq executed the same in his/l4lthpjj authorized capacity(io), and that by his/herZt4eir signature(i4on the instrument the person, or the entity upon behalf of which the personl�d acted, executed the instrument. WITNESS my hand and official seal. JUAN CARLOS HERNANDEZ C/�✓ 7 Commission#1380176 Z Notary Public-Califamia > N Public Los Angeles County 6,MyC(xwn.E0esOct1&U6r State of California ) County of ) On before me, ,personally appeared personally known to me(or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their . signature(s)on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public 650610.01/LA H4564-002/6-10-04/mjkhp -7- LD 1018 SHEET 1 OF 2 02-100 EXHIBIT "A" LEGAL DESCRIPTION FOR BELLA TERRA PARKING STRUCTURE THE LAND BEING REFERRED TO HEREIN IS SITUATED IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA. PARCEL "A" BEING A PORTION OF PARCELS 2 AND 6 AS SHOWN IN PARCEL MAP NO. 86-200, RECORDED IN BOOK 255, PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF ORANGE, SAID PORTION OF LAND ALSO SHOWN AS PARCEL 11 OF APPROVED TENTATIVE PARCEL MAP NO. 2003-163 DATED MARCH 5, 2004, DESCRIBED AS FOLLOWS: BEGINNING_ AT THE EASTERLY TERMINUS OF THE NORTH LINE OF SAID PARCEL 2, SHOWN AS "NORTH 89029'30" WEST 763.76 FEET" ON SAID PARCEL MAP NO. 86-200, SAID POINT ALSO BEING ALONG THE SOUTHERLY LINE OF THE SOUTHERN CALIFORNIA EDISON RIGHT OF WAY (150.00 FEET IN WIDTH) PER GRANT DEED RECORDED DECEMBER 18, 1958 IN BOOK 4519, PAGE 491 OF OFFICIAL RECORDS; THENCE ALONG SAID LINE NORTH 89032'06" WEST (N89°29'30"W) A DISTANCE OF 67.51 FEET TO THE TRUE POINT OF BEGINNING; THENCE DEPARTING SAID LINE SOUTH 00027'54" WEST (SO0030'30"W) A DISTANCE OF 334.58 FEET; THENCE NORTH 89032'06" WEST (N89029'30"W) A DISTANCE OF 135.12 FEET; THENCE SOUTH 70029'40" WEST (S70032'16"W) A DISTANCE OF 4.39 FEET; THENCE .NORTH 89032'06" WEST (N89029'30"W) :A DISTANCE OF 3.00 FEET; THENCE NORTH 00027'54" EAST (NO0030'30"E) A DISTANCE OF 126.75 FEET; THENCE NORTH 89032'06" WEST (N89029'30"W) A DISTANCE OF 274.25 FEET; THENCE NORTH 00027'54" EAST (NO0030'30"E) A DISTANCE OF 209.33 FEET TO ABOVE MENTIONED NORTH .LINE; THENCE EASTERLY ALONG SAID LINE SOUTH 89032'06" EAST (S89°29'30"E) A DISTANCE OF 416.50 FEET TO THE TRUE POINT OF BEGINNING. CONTAINING AN AREA OF 2.41 ACRES MORE OR LESS. BASIS OF BEARINGS USED FOR THIS LEGAL DESCRIPTION IS BASED ON THE BEARING BETWEEN O.C.S. HORIZONTAL CONTROL STATION GPS NO. 5110 AND STATION G.P.S. NO. 5112, BEING NORTH 89°32'06" WEST PER RECORDS ON FILE IN THE OFFICE OF THE COUNTY SURVEYOR. BEARINGS IN PARENTHESIS ARE BASED ON PARCEL MAP NO. 86-200. SEE EXHIBIT "B" SHEET 2 OF 2 ATTACHED HERETO AND BY THIS REFERENCE MADE A PART THEREOF. 0 �N CHRISTOPHER J W DANIELS CHRIST PHER W. DANIELS DSO.m �P -4� OF CAUFOP� --� SHEET 2 OF 2 LD1018 —' - - - - - - - -- - - -- 02-100 CENTER DRIVE _ N89'32'068W_ 534.08' SOUTHERN CALIFORNIA EDISON RIGHT OF WAY BK. 3159, I PG 483 O.R. - o ! BK. 4519, S'LY LINE OF THE N'LY 150' OF THE SOUTH 1/2 PG 491 O.R. OF THE SOUTHEAST 1/4 OF SECTION 14 BK. 3675, PG. 63 O.R.:/7 N8929'30"W N89'32'06"W (763.76') 416.50' 67.51' — M PARCEL AA' T.P.o.6. P.O.B. w^ 2.41 AC i.� `" RPARKING STRUCTURE LLJ A- Go a O _ v PROPOSED PARCEL 11 �rJ c PER T.P.M. NO. 2003-163 W Z (N89'29'30"W) 'J o O , N8932'06"W 274.25' � «CD , . 1l1 N u_ r•r'�` N O Z ` ;'7 O LA O n Z r. . r•.�r, i• N L1 PROPOSED PARCEL 2 Z (N89'29'30"W) PER T.P.M. NO. 2003-163 N89'32'06"W 135.12' SURVEY NOTES: ,",���• ( ) DENOTES BEARINGS BASED ON P.M. PROPOSED PARCEL 10 - 86-200, P.M.B. 255/40-45 PER T.P.M. NO. 2003-163 COURSE TABLE BASIS OF BEARINGS: BASED ON BASIS OF-BEARINGS BASED ON P.M. 86-200 BEARINGS SHOWN ARE BASED ON THE BEARING LINE BEARING LENGTH BETWEEN O.C.S. HORIZONTAL CONTROL STATION L1 N89'32'06"W 3.00' N89'29'30"W GPS NO. 5110 AND STATION GPS NO. 5112 l2 N70'29'40'E 4.39' N70'32'16"E BEING NORTH 89'32'06" WEST DATE: 11-29-04 E1Engineers/Planners/Surveyors EXHIBIT "B" 920 Mm STREET.SURE&.MWE CA OM14 : N ® �'�'s"�°�' F""' "°�°"' SKETCH TO ACCOMPANY LEGAL DESCRIPTION ENIGI NSF WARMSPRWGSROAD.SWIE,OO.LA9VECaAS,Rv99„9 FOR PARKING STRUCTURE SCALE: 1" 80' ❑ TEL(M)98&99W FAX(T02)3986905 BEL.LA TERRA MALL, HUNTINGTON BEACH, CA. & ���65 CcoN ate✓ p 0 deb 1��. I i �2 Council/Agency Meeting Held: _ -oZUO Ll &D�Z XAppro,ed ❑ Co ditionally Ap ";4 p,oved 9 Denied Pu� City CI s Sig tune Tr Council Meeting Date: January 5, 2004 Department ID Number: ED 03-29 s s CITY OF HUNTINGTON BEACH ` .` REQUEST FOR COUNCIL ACTION W o SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS — CD" Cr r,_- O7p SUBMITTED BY: RAY SILVER, City Administrator -'''r DAVIC C. BIGGS, Director of Economic Development PREPARED (CLAY MARTIN, Director of Administrative Services 0 SUBJECT: Approve Community Facilities District 2003-1 0(-a N0.�3t�31 Issuance of up to $25 Million in Bonds (Huntington Center)(ZQs.Na.avO F atement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) -1 Statement of Issue: On October 2, 2000, the Redevelopment Agency of the City of Huntington Beach entered into an Owner Participation Agreement (OPA) with Huntington Center Associates, LLC for the redevelopment of Huntington Center. A component of the financing for the project stipulates that the Developer and the Redevelopment Agency will cooperate in the issuance of Community Facilities District (CFD) bonds to pay for the costs associated with installing public improvements necessary for the project. The bonds are supported by a special property tax levy imposed on the owner of the property (Huntington Center Associates, LLC). On February 3, 2003, the City established Community Facilities District No. 2003-1 for that purpose. The actions recommended below are necessary to issue up to $25 million in CFD bonds. Funding Source: Funding for this CFD will come from bonds to be issued within the next 60 - 90 days. A special tax levy will be paid by Huntington Center Associates, LLC to pay the bonds over the life of these bonds. Neither the City nor the Redevelopment Agency has any responsibility for the repayment of the bonds. The costs associated with the issuance of the bonds are funded from the bonds. Recommended Action: Motion to: 1. Adopt City Council Ordinance No.3lLo , Levying Special Taxes Within the City of Huntington Beach Community Facilities District No. 2003-01 (Huntington Center). 2. Adopt City Council Resolution No.:�00q—� , Authorizing the Issuance of Special Tax Bonds for the City of Huntington Beach Community Facilities District No. 2003-01 (Huntington Center) in an Aggregate Principal Amount not to Exceed $2.5,000,000 and Approving Certain Documents and Taking Certain Other Actions in Connection Therewith, REQUEST FOR COUNCIL ACTION MEETING DATE: January 5, 2004 DEPARTMENT ID NUMBER: ED 03-29 Alternative Actions : The City Council has the option of not approving the sale of bonds for the Community Facilities.District. Currently the Redevelopment Agency's obligation to repay certain cash advances by the developer of Huntington Center (Bella Terra) accrues interest at the developer cost of funds, not to exceed 8%. Upon issuance of the CFD bonds, the interest rate on the Developer's Advance will be lowered. As such, the Redevelopment Agency will benefit from the developer's ability to access a lower cost source of funds. Analysis: Since entering into an Owner Participation Agreement with Huntington Center Associates, LLC, on October 2, 2000, the City and the Redevelopment Agency have been cooperating with the developer to secure a lower cost source of funds to finance the public improvements associated with redeveloping the center. The City earlier this year formed a Community Facilities District to provide the tax exempt financing for up to $30 million, thereby reducing the Agency's cost of repaying the developer advance of up to $16,750,000. Without the CFD, the Agency would pay an 8% interest rate on the pledged advance. With the CFD, the interest rate would be adjusted downward by one-half of the difference between the CFD interest rate and the 8%. For example, if the CFD interest rate were 6%, then one-half the difference between 8% and 6% would result in reducing the rate paid by the Agency by 1%. Moreover, a key purpose of the CFD is the financing of the parking structure within the center. This structure will be owned and maintained by the City, but the maintenance obligation and operation of the parking structure will be delegated to the developer. The Mello-Roos bond will include a maintenance obligation to be paid by the developer. On January 6, 2003 City Council adopted Resolution No. 2003-3 (Resolution of Intention) and Resolution No. 2003-4 (Resolution of Necessity) that initiated the formation of the Community Facilities District 2003-1 (Huntington Center). This was completed with the second reading of the ordinance on February 3, 2003. The actions recommended as part of this item specifically approves the issuance of up to $25 million in CFD bonds. The attached Ordinance and Resolution also authorizes the approval by the City Council of additional documents. These documents are listed below and available for review in the City Clerk's Office. 1. Funding and Construction Agreement; 2. Fiscal Agent Agreement; 3. Purchase Contract; 4. Reciprocal Easement Agreement; and 5. ' Operating Agreement. Just after the first of the year, the City underwriter will offer the bonds for. sale. Preliminary Official Statement within 15 -30 days thereafter, the bonds will be sold with the transaction closed. Environmental Status: Not Applicable. G:\Gus\HBMALL\CFD\RCABeIIaCFD.doc -2- 12/10/2003 5:02 PM REQUEST FOR COUNCIL ACTION MEETING DATE: January 5, 2004 DEPARTMENT ID NUMBER: ED 03-29 Attachment(s): City Clerk's . - Number No. Description 1. Ordinance No. 3�,D3 \ of the City Council Levying Special Taxes Within the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center). 2. Resolution of the City Council of the City of Huntington Beach Authorizing the Issuance of Special Tax Bonds for the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center). 3. ' Preliminary Official Statement. 4. Power Point Presentation. 5. List of Documents Available for Review in the City Clerk's Office. RCA Author: Gus Duran X1529 G:\Gus\HBMALL\CFD\RCABeIIaCFD.doc -3- 12/15/2003 2:24 PM ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH LEVYING SPECIAL TAXES WITHIN THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) WHEREAS, on January 6, 2003, this City Council adopted a Resolution entitled "Resolution of Intention of the City Council of the City of Huntington Beach with Respect to Establishment of Proposed City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center)" (the 'Resolution of Intention") stating its intention to establish City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (the "District") pursuant to Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Municipal Code") and 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 Municipal Code and 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 Municipal.Code and 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 Huntington Beach Establishing City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, and Establishing the Boundaries Thereof " (the "Resolution of Formation") and "Resolution of the City Council of the City of Huntington Beach Calling a Special Election and . Submitting to the Voters of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) 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 Proposi- tion with Respect to the Establishment of an Appropriations 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 &TIELMM No.2003-1(Huntington Center)\Ordinance.rtfl 1/17/2003 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; NOW, THEREFORE, The City Council of The City of Huntington Beach 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 Municipal Code and 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(being Resolution No. 2003- 10 of the City of Huntington Beach) (the 'Rate and Method of Apportionment"). The special taxes are hereby levied commencing in fiscal year 2004-05 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 written 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; 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, the operation and maintenance of the public parking garage 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 Orange 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. G TIELD\CM No.2003-1(Huntington Center)\Ordinance.rtfl 1/17:2003 Notwithstanding the foregoing and notwithstanding the Rate & Method of Apportionment, the City Treasurer or his/her written designee may collect one or more installments of the special taxes by means of direct billing by the City of the property owners, within the. District, if, in the judgment of the City Treasurer or his/her written 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. Notwithstanding the foregoing, the portion of the Special Tax relating to maintenance and operation of the public parking structure may be levied on the taxable real property within the District by direct billing on a monthly, bi-monthly or semi-annual basis as the Treasurer may determine in his/her discretion. 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 become effective thirty.(30) days.after its adoption PASSED Ati7D ADOPTED at a regular meeting of the City Council of the City -of Huntington Beach, State of California, on this 20th day of January , 20,_ Mayor of the of Huntington Beach ATTEST: APPROVED AS TO FORM: City Clerk C ty Attorney REVIEWED AND APPROVED INITIATED AND APPROVED OAvd / City Adm istrator Director of Economic Development G T ELUM No.2003-1(Hunt ion Center)t.Ordinance.rtfl 1/1W2003 Ord. No. 3631 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON.BEACH ) I, CONNIE BROCKWAY,the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing ordinance was read to said City Council at a regular meeting thereof held on the 5th day of January, 2004, and was again read to said City Council at a regular meeting thereof held on the 20th day of January,2004, and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council. AYES: Sullivan, Coerper,Hardy, Green, Boardman, Cook NOES None ABSENT: Houchen ABSTAIN: None I,Connie Brockway,CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City Council,do hereby certify that a synopsis of this ordinance has been published in the.Huntington Beach Fountain Valley Independent on January 29,2004.In accordance with the City Charter of said City Connie Brockway,City Clerk City Clerk and ex-officio C erk Deputy City Clerk of the City Council of the City of Huntington Beach, California RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $25,000,000 AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the City Council of the City of Huntington Beach (the "City") has heretofore undertaken proceedings and declared the necessity to issue bonds on behalf of the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California (the "Community Facilities District") pursuant to the terms and conditions of Chapter 3.56 of the Municipal Code of the City and the ("Municipal Code") and the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California(the "Act"); and Pursuant to Resolution No. 2003-12 adopted by the City Council on February 3, 2003, the questions of whether bonds should be issued to finance the costs of construction and acquisition of certain public facilities and a special tax.levy in order.to pay the principal of and interest on such bonds were submitted to the qualified electors within the Community Facilities District and were approved by a two-thirds majority of the qualified electors at an election held on February 3, 2003; and The City Council by its Resolution No. 2003-13 adopted on February 3, 2003, .declared that the propositions authorizing the issuance of bonds and the levy of special taxes, presented to ,the qualified electors of the Community Facilities District on February 3, 2003, received a two-thirds majority vote of the qualified electors voting at said election and each carried, and, accordingly, the Community Facilities District is hereby authorized to issue from time to time, as determined by the City Council, bonds for the benefit of the Community Facilities District and to take the necessary steps to levy the special tax; and The City Council is now considering the issuance of Bonds in the aggregate principal amount of not to exceed.$25,000,000 designated as the "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Special Tax Bonds, (the "Bonds") as permitted by the Municipal Code. the Act and Resolution No. 2003-10 establishing the Community Facilities District; and The City Council has determined in accordance with Section 53360.4 of the California Government Code that a negotiated sale of the Bonds with UBS Financial Services, Inc. (the "Underwriter") in accordance with the terms and conditions of the Bond Purchase Agreement(the "Purchase Contract") approved as to the form by the City Council will result in a lower overall cost to the Communit-,.-Facilities District than a public sale; and GARELD CFD No.200'-1(Huntington Centers Rexlution.rtf The City on behalf of the Community Facilities District, has caused to be prepared a Preliminary Official Statement (the "Preliminary Official Statement") containing certain information with respect to the Community Facilities District. NOW, THEREFORE, The City Council of The City of Huntington Beach resolves as follows: Section 1. Findings. The City Council finds as follows: (1) each of the above recitals is true and correct; (2) that the sale of the Bonds at a private sale will result in a lower overall cost to the Community Facilities District; and (3) based upon the appraisal report for the land within the Community Facilities District prepared by Integra Realty Resources hereby finds and determines that: (a) the Bonds do not present any unusual credit risk due to the provisions of the Fiscal Agent Agreement defined herein; (b) The value of the real property subject to the Special Tax and the improvements thereon is more than three times the aggregate principal amount of Bonds; and (c) the Bond issue should proceed for the following public policy reasons: (i) orderly development of the land within the Community Facilities District; (ii) there are significant public benefits as a result of development within the Community Facilities District;_(iii) the District's obligations under the developer funding agreements with respect to land in the Community Facilities District are satisfied by issuing the Bonds. Section 2. Approval of Issuance of Bonds. The issuance of the Bonds in a principal amount of not to exceed $25,000,000 is hereby authorized pursuant to the Act. The Bonds shall mature on the dates, pay interest at the rates and shall be substantially in the form set forth in the Fiscal Agent Agreement as executed. Section 3. Execution of Bonds. The Bonds shall be executed on behalf of the Community Facilities District by the manual or facsimile signature of the Mayor or the City Administrator and attested with the manual or facsimile signature of the City Clerk. Section 4. Appointing of Fiscal Agent. U.S.Bank National Association is hereby. .appointed to act as Fiscal Agent for the Bonds and to assume the duties and obligations of Fiscal Agent under the Fiscal Agent Agreement. Payment of principal of and interest on the Bonds shall be made at the principal offices of the Fiscal Agent. Section 5. Approval of Financing Documents. The forms of financing documents listed below in this Section 5 (the "Financing Documents") presented at this meeting are hereby approved and the Mayor, City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development is authorized to execute and deliver the Financing Documents in the name of and on behalf of the Community Facilities District and the City in said form with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof: G:\FIELD'•.CFD No.2003-1(Huntington Center)\Resolution.rtf 2 (a) Funding and Construction Agreement, between the City and Huntington Center Associates, LLC; (b) Fiscal Agent Agreement, between the City and U.S. Bank National Association, as fiscal agent; (c) Purchase Contract, by and between the City and UBS Financial Services, Inc.; (d) Reciprocal Easement Agreement, by and between the City and Huntington Center Associates, LLC; and (e) Operating Agreement, by and between the City and Huntington Center Associates, LLC. Section 6. City Administrator Authorized to Establish Final Terms of the Sale of the Bonds. The City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development, upon such advice of staff as they may deem necessary, is hereby authorized and directed to act on behalf of the City to establish and determine (i) the final principal amount of the Bonds. which amount shall not exceed $25,000,000, including Bonds which may be issued at an original issue discount, (ii)the final amounts of the various maturities and sinking fund payments of the Bonds the final maturity of such Bonds to be no later than.September 1, 2033, (iii)the final interest rate on the Bonds, which rate shall not exceed seven percent (7%) per annum for any maturity of the.Bonds, and:(iv) the Underwriter's discount for the purchase of the Bonds, which shall not exceed $13.75 per $1,000 principal amount of the Bonds. Section 7. Approval of Preliminary Official Statement; Preparation of Final Official Statement. The Preliminary Official Statement is approved, and the City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development, is authorized to consent to and assist in the preparation of such modifications thereto as may be specified by Disclosure Counsel. The City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development, is authorized to determine, with the assistance of Bond Counsel, when the Preliminary Official Statement is to be deemed final within the meaning of Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 and to deliver a certificate to that effect to the Underwriter. The Underwriter may distribute the Preliminary Official Statement as approved hereby, or as modified with the consent of the City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development, to prospective purchasers of the Bonds. The City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development, is authorized to participate in the preparation of the Final Official Statement, based on the Preliminary Official Statement, and such modifications thereto as may be agreed to by Disclosure Counsel and the Underwriter. The City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development, is authorized to sign the Final Official Statement on behalf of the City and the Community Facilities District. GAFIELD`.CFD No.2003-1(Hunnminon Center)\Resolution.rtf Section 8. Findings Regarding the Levy and Rates of Special Taxes. The City Council finds that the Community Facilities District will covenant in the Fiscal Agent Agreement, for the benefit of the owners of the Bonds, that to the extent it is legally permitted to do so (a) it will levy the Special Taxes for the payment of the Administrative Expenses (as defined therein) which are expected to be incurred in each fiscal year, and (b) it will not initiate proceedings under the Mello-Roos Community Facilities Act- of 1982 to reduce the maximum Special Tax Rates (the "Maximum Rates") on property below the amounts which are necessary to pay such Administrative Expenses and to provide Special Tax Revenues (as defined therein) in an amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service (as defined therein) on the outstanding Bonds. The City further finds and determines that any reduction or limitation of the Special Tax rates below the Maximum Rates would interfere with the timely retirement of the Bonds. Section 9. Approval of Continuing_Disclosure Certificate. The Continuing Disclosure Certificate-Issuer is approved in the form submitted to the City Council at the meeting at which this Resolution is adopted, and the City Administrator, Assistant City Administrator, Director of Administrative Services or Director of Economic Development, is authorized to execute and deliver said certificate on behalf of the Community Facilities District. Section 10. Other Acts. All actions heretofore taken by officers and agents of the City and the Community Facilities District with respect to the sale and issuance of Bonds are hereby approved, confirmed and ratified, and the City Administrator, Assistant City Administrator; Director of Administrative Services, Treasurer -and Director of. Economic Development, and the City.Clerk, and other appropriate officials of the City and the Community. Facilities District are hereby authorized and directed to take any actions and execute and deliver any and all documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on this 5th day of January , 2004. or ATTEST: APPROVED.AS TO FORM - c City Clerk ity Attorhey REVIEWED AND APPROVED INITLXTED AND APPROVED � c td C City Adm istrator Director of Economic Development G:\FIELD'•CFD No.2003-1(Huntinoon Center)\Resolution.rtf 4 Res. No. 2004-1' STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 5th day of January, 2004 by the following vote: AYES: Sullivan, Coerper, Hardy, Green, Boardman, Cook, Houchen NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio Jerk of the City Council of the City of Huntington Beach, California r a,`oo PRELIMINARY OFFICIAL STATEMENT DATED JANUARY J 2004. >m c NEW ISSUE NON-RATED BOOK-ENTRY ONLY O o In the opinion of Best Best&Krieger LLP,Riverside,California, Bond Counsel, subject to certain qualifications described herein, under w m 9 existing statutes,regguulations, rules and court decisions,and assuming certain representations and compliance with certain covenants and � . requirements desrn'bed herein,the interest on the 2004 Bonds is excluded hom gross income for federal income tax purposes and is not an row item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations,although for the purpose °='v of computing the alternative mmimum tax imposed on certain corporations,such interest is taken into account in determinm certain income m o and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See CONCLUDING ° INFORMATION —Tax MattersE. " herein. c 0 o•y $25,000,000* CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 o (HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS ccc Dated: Date of Issuance Due: September 1,as shown below Type of Bonds The City of Huntington Beach (the"City")Community Facilities District No. 2003-1 (Huntington Center),County of Co c Orange,State of California(the"District")2004 Special Tax Bonds (the"2004 Bonds")are being issued by the City for the District pursuant to Chapter 3.56 of the Municipal Code of the City of Huntington Beach (the"Municipal Code") and,where applicable,the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (constituting a)w:2 Section 53311 et seq. of the California Government Code), and a Fiscal Agent Agreement (the "Fiscal Agent o Agreement"), dated as of January 15, 2004, between the City and U.S. Bank National Association, Los Angeles, wit 3 California,as Fiscal Agent. See"THE 2004 BONDS"herein. tO Use of Proceeds The proceeds of the 2004 Bonds primarily will be used to pay costs of the acquisition of land for and construction of a v10i parking facility, and the construction of roadway and other improvements generally related to redevelopment c o occurring within the District. See"THE COMMUNITY FACILITIES DISOCT—Public Facilities"herein. E o Denominations Interest due with respect to the 2004 Bonds is payable on March 1 and September 1 of each year, commencing March 0 ti= 1,2004.Initial purchases of beneficial interests in the 2004 Bonds will be made in book-entry form and the 2004 Bonds will be registered in the name of Cede &Co., as nominee for The Depository Trust Company("DTC").2004 Bond E,5 denominations are $5,000 and any integral multiple in excess thereof. Purchasers of beneficial interests in the 2004 " y Bonds will not receive certificates representing their interests in the 2004 Bonds and will not be paid directly by the o m` Fiscal Agent. See APPENDIX H—The Book Entry System. o O Redemption The 2004 Bonds are subject to optional and mandatory redemption prior to their stated maturity,as described herein. 'y L (A See'THE BONDS —Redemption"herein. m 0 Reserve Fund To provide funds for payment of the 2004 Bonds and any Additional Bonds (as defined herein) which could result o«in from a shortfall of revenues caused by delinquent Special Tax payments, the City will establish a Reserve Fund Einitially funded from 2004 Bond proceeds. If revenues from the Special Taxes are insufficient to pay the debt service $`L on the 2004 Bonds,the monies in the Reserve Fund are available to cover the deficiency. There is no assurance that 3 funds will be available for this purpose and if,during the period of revenue shortfall,there are insufficient moneys in aa)o the Reserve Fund,there may be a delay in payment to the owners of the 2004 Bonds. See"SECURITY FOR THE 2004 o V)co c BONDS—Reserve Fund" herein. " THE 2004 BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS F THE TAX TO BE LEVIED ANNUALLY ON THE TAXABLE LAND AL o Cv WITHIN THE DISSTRICT AND AMOUNTS INCERTAIN FUNDS ESTABLISHED UNDERITHE FISCAL AGENT AGREEMENT. NEITHER THE FAITH AND M=)2 CREDIT NOR THE TAXING POWER OF THE CITY,THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN OF THE c � DISTRICT,TO THE LIMITED EXTENT SET FORTH IN THE FISCAL AGENT AGREEMENT) IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, .5 E PREMIUM,IF ANY,OR INTEREST ON THE 2004 BONDS. THE 2004 BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE t m OF R REDEMPTION PREMIUMS,IF ANY,ON THE 2004 BONDS IS NOT A GN ANY OF THE PROPERTY OR REVENUES OENERAL DEBT,LABILITY OR OBLIGATION OF THE THE PAYMENT OF THE INTEREST O�R PRINCIPAL y c•� This cover page contains certain information for quick reference only. It is not a complete summary of the terms of the 2004 Bond issue. 1=o Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision with w c-2 respect to the 2004 Bonds. See the section of this Official Statement entitled"SPECIAL RISK FACTORS"for a discussion of certain risk factors oD'c that should be considered, in addition to the other matters discussed herein,in considering the investment quality of the 2004 Bonds. N MATURITY SCHEDULE- o z $ Serial Bonds;CUSIP Prefix_•• fa 0 Maturity Date Principal Interest CUSIP Maturity Date Principal Interest CUSIP oE`c� (September 1) Amount RAIt< Yield •• (September 1) Amount $ Xid $da d X" c00 . _Eo Ya)ca f0 y T C(n CC caw00 C � $ _%Term 2004 Bonds due September 1,2033 Price_/a;CUSIP_•• EO y The 2004 Bonds are being offered when, as and if issued by the City for the District,subject to the approval as to their legality by Best a?y r Best&Krieger LLP,Riverside,California, Bond Counsel,and certain other conditions. Certain legal matters will be passed upon for the City ;o by the City Attorney, and by Quint&Thimmig LLP,San Francisco,Ca tifornia,Disclosure Counsel to the City. Certain legal matters will be ow cLi assed upon for the Landowner by Allen Matkins Leck Gamble& Mallory LLP, Los Angeles, California, and Christensen, Miller, Fink, E N y Jacobs,Glaser,Weil&Shapiro,LLP,Los Angeles, California; and for the Underwriter by Stradling Yocca Carlson& Rauth, a Professional Corporation, Newport Beach,California, Underwriter's Counsel. Delivery of the Bonds is expected to occur in New York, New York on or +EL c 0 about January 2004. °'3 UBS Financial Services Inc. c o 0 0 Dated: January_,2004 €or-= Z mt Preliminary,subject to change. ti0 N Copyright 2003,American Bankers Association. CUSIP data herein is provided by Standard&Poor's r� a) CUSIP Service Bureau,a division of The McGraw-Hill Companies,Inc. a. t GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the 2004 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 to be construed as a contract with the purchasers of the 2004 Bonds. Limit of Offering. No dealer,broker, salesperson or other person has been authorized by the City to give any information or to make any representations in connection with the offer or sale of the 2004 Bonds other than those contained herein and if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 2004 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has submitted the following statement for inclusion in this Official Statement: the Underwriter has reviewed the information in this Official Statement in accordance with, and as a 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. Information Subject to Change. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the District, the Landowner, the Developer or any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this Official Statement are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the 2004 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the 2004 Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof and said public offering prices may be changed from time to time by the Underwriter. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced herein, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" and similar expressions identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. THE 2004 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE 2004 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. -i- CITY OF HUNTINGTON BEACH City Council and Elected Officials Cathy Green,Mayor Jill Hardy, Mayor Pro Tem Connie Boardman, Councilmember Gil Coerper, Councilmember Debbie Cook, Councilmember Pam Houchen, Councilmember Dave Sullivan, Councilmember Jennifer McGrath, City Attorney Shari L. Freidenrich, City Treasurer Connie Brockway, City Clerk City Staff Ray Silver, City Administrator William Workman,Assistant City Administrator David Biggs, Director of Economic Development Clay Martin, Director of Administrative Services Robert Beardsley, Director of Public Works Gustavo A. Duran, Housing and Redevelopment Manager Daniel T. Villella, Finance Officer Carol Runzel, Assistant Project Manager PROFESSIONAL SERVICES Bond Counsel Disclosure Counsel Best Best&Krieger LLP Quint&Thimmig LLP Riverside, California San Francisco, California City s Consultant For Establishment of Underwriter Special Tax Formula UBS Financial Services Inc. Psomas Los Angeles, California Costa Mesa, California Market Feasibility Consultant Underwriter's Counsel Robert Charles Lesser& Company Stradling Yocca Carlson & Rauth, a Professional Los Angeles, California, Corporation Newport Beach, California A1212raiser Fiscal Agent Integra Realty Resources - Orange County U.S. Bank Trust National Association Rancho Santa Margarita, California Los Angeles, California -ll- TABLE OF CONTENTS INTRODUCTION...................................................................1 THE PROJECT, THE LANDOWNER AND General....................................................................................1 THE DEVELOPER...........................................................--24 Issuing Authority 1 The Project...........................................................................26 Application of Proceeds...................................................2 The Owner Participation Agreement.......................28 TheProject.............................................................................2 The Landowner.................................................................28 Sources of Payment for the 2004 Bonds.....................3 The Developer....................................................................30 LandValue............................................................................3 Financing Plan....................................................................30 Limited Liability..................................................................4 SPECIAL RISK FACTORS................................................31 Description of the 2004 Bonds.......................................4 Concentration of Ownership.......................................31 Tax Matters............................................................................5 Failure to Complete Project...........................................31 Continuing Disclosure......................................................5 Land Value..........................................................................32 Bond Owners' Risks..........................................................5 Dependence upon the Landowner and the Professionals Involved in the Offering......................6 Developer for Construction..........................................33 Additional Information....................................................6 Insufficiency of Special Tax Revenues.....................33 THE FINANCING PLAN...................................................6 Competition........................................................................34 Overview...............................................................................6 Bankruptcy and Foreclosure Delays..........................35 Uses of Bond Proceeds.....................................................7 Direct and Overlapping Indebtedness.....................37 Annual Debt Service of Bonds......................................8 Geologic,Topographic and Climatic THE 2004 BONDS...................................................................8 Conditions............................................................................38 Authority for Issuance......................................................8 Hazardous Materials.......................................................39 Description of the 2004 Bonds.......................................9 Property Controlled by Federal Deposit Redemption.........................................................................10 Insurance Corporation....................................................40 Selection of Bonds for Redemption...........................11 Disclosure to Future Property Owners or Noticeof Redemption.....................................................11 Lenders..................................................................................41 Effect of Redemption.......................................................11 Non-Cash Payments of Special Taxes......................41 Transfer or Exchange of Bonds...................................12 Payment of the Special Tax is not a Personal Additional Bonds..............................................................12 Obligation of the Owners..............................................42 SECURITY FOR THE 2004 BONDS..............................13 Limitations on Remedies...............................................42 Special Tax............................................................................13 Proceedings to Reduce or Terminate the LandValue..........................................................................14 Special Tax...........................................................................42 Covenant for Superior Court Foreclosure...............15 Loss of Tax Exemption...................................................43 Reserve Fund......................................................................16 Limited Secondary Market............................................43 Limited Liability................................................................17 No Acceleration Provision............................................44 THE COMMUNITY FACILITIES DISTRICT............17 CONCLUDING INFORMATION.................................44 Location.................................................................................17 Continuing Disclosure.....................................................44 Authorization.....................................................................19 Absence of Litigation.......................................................44 Rate and Method of Apportionment of Tax Matters..........................................................................45 Special Tax...........................................................................19 Legal Matters Incident to the Issuance of the PublicFacilities...................................................................21 2004 Bonds...........................................................................45 The Funding Agreement...............................................22 No Rating.............................................................................46 The Operating Agreement and the REA................23 Underwriting......................................................................46 THE CITY OF HUNTINGTON BEACH.....................24 Miscellaneous.....................................................................46 APPENDIX A SUMMARY OF THE FISCAL AGENT AGREEMENT APPENDIX B EXECUTIVE SUMMARY OF MARKET FEASIBILITY ANALYSIS APPENDIX C APPRAISAL REPORT APPENDIX D RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX APPENDIX E GENERAL INFORMATION REGARDING THE CITY OF HUNTINGTON BEACH APPENDIX F FORMS OF CONTINUING DISCLOSURE AGREEMENTS APPENDIX G PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX H THE BOOK ENTRY SYSTEM -iv- [insert area location map here] -v- OFFICIAL STATEMENT $25,000,000* CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) 2004 SPECIAL TAX BONDS INTRODUCTION This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in this entire Official Statement, including the cover page and appendices hereto, and the documents summarized or otherwise described herein. A full review should be made of this entire Official Statement and such documents prior to making an investment in the 2004 Bonds. The sale and delivery of the 2004 Bonds to potential investors is made only by means of the entire Official Statement. General This Official Statement, including the appendices hereto, sets forth certain information concerning the issuance by the City of Huntington Beach (the "City"), of the $25,000,000* City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California (the "District") 2004 Special Tax Bonds (the "2004 Bonds"). The 2004 Bonds are being issued by the City for the District under the provisions of Chapter 3.56 of the Municipal Code of the City and, where applicable, the provisions of the Mello-Ross Community Facilities Act of 1982, as amended (constituting Section 53311 et seq. of the California Government Code) (collectively, the "Law"), and a Fiscal Agent Agreement, dated as of January 15, 2004 (the "Fiscal Agent Agreement"), between the City and U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent"). The term 'Bonds" when used in this Official Statement means the 2004 Bonds and any Additional Bonds that may be issued under the Fiscal Agent Agreement. See "THE 2004 BONDS - Additional Bonds." Other capitalized terms used in this Official Statement and not defined herein have the meanings given such terms in the Fiscal Agent Agreement, some of which are set forth in Appendix A hereto. Issuing Authority Under the Law, the City Council (the "City Council") of the City is authorized to establish a community facilities district and act as the legislative body for the proposed district. Subject to approval by a two-thirds vote of the qualified electors voting, and compliance with the applicable provisions of the Law, the City Council may authorize the issuance of bonds and the levy and collection of a special tax within such a district to repay the 2004 Bonds and to pay for certain services permitted under the Law. The District was established by the City Council pursuant to proceedings under the Law on February 3, 2003. See "THE COMMUNITY FACILITIES DISTRICT - Authorization" herein. The 2004 Bonds were authorized to be issued by a resolution adopted by the City Council on January 5, 2004 (the "Resolution of Issuance"). The 2004 Bonds are being issued pursuant to the Fiscal Agent Agreement. See APPENDIX A - SUMMARY OF THE FISCAL AGENT AGREEMENT. * Preliminary, subject to change. -1- Application of Proceeds The net proceeds of the 2004 Bonds will be used to pay costs of the acquisition of land for and construction of a six level parking facility, and the construction of various roadway and other improvements (collectively, the "Public Facilities") generally related to redevelopment occurring within the District. The land within the District, consisting of approximately 41 net taxable acres, currently consists of a shopping center that is being reconfigured, redesigned and redeveloped to be an open air lifestyle retail center with an entertainment component known as Bella Terra (the "Project"). The land on which the Project is located will be subject to a Special Tax to be levied to pay debt service on the Bonds, as further described herein. See "THE COMMUNITY FACILITIES DISTRICT" herein. Huntington Center Associates, LLC, a Delaware limited liability company (the "Landowner"), is currently the sole owner of the land in the District. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER" herein. Proceeds of the 2004 Bonds will also be used to fund a reserve fund for the 2004 Bonds, to pay interest on the 2004 Bonds for a limited period of time, and to pay costs of issuance and certain administration expenses incurred in connection with the 2004 Bonds. See "THE FINANCING PLAN -Uses of Bond Proceeds" herein. The Project The Project, known as Bella Terra, when completed is expected to include over 770,000 square feet of gross leasable space in six major buildings, including four existing buildings with approximately 330,000 square feet of space and two new buildings which will add an additional approximately 440,000 square feet of space. The Project is expected to include approximately 60 shops and restaurants. As part of the Public Facilities being financed with proceeds of the 2004 Bonds, a six-level parking facility (the "Parking Structure") is being constructed, which will serve the general public and the businesses in the Project. A key component of the Project is the construction of a 20-screen multiplex movie theatre and various restaurant facilities. The City has obtained a Market Feasibility Analysis of the Project dated October 2003 (the "Market Analysis") from Robert Charles Lesser & Co., LLC ("RCL"), a copy of an Executive Summary of which is included in Appendix C. Redevelopment of the Project site has already commenced, with the rehabilitation of an existing building for a new Kohl's Department Store completed in March of 2003, as well as certain landscaping, utility and other site work completed. In addition to Kohl's, other existing major tenants of the Project, which are expected to remain in operation while additional construction work is undertaken, include Mervyn's, Burlington Coat Factory, Barnes & Noble and Circuit City. The Landowner has entered into a long-term lease with Century Theatres, Inc. and various other new tenants for the Project, and as of November 15, 2003 approximately 68% of the total leasable area of the Project is subject to executed leases. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER -The Project" herein. According to the Landowner, construction of the second phase of the Project, including the Public Facilities and the two new buildings for tenants, is expected to commence in the first quarter of 2004 and to be completed within approximately 18 months. The Parking Structure, when completed, will be owned by the City, but will be constructed at the direction of and will be operated by the Landowner pursuant to various agreements between the City and the Landowner. See "THE COMMUNITY FACILITIES DISTRICT - The Funding Agreement" and "- The Operating Agreement and the REA." As reported by the Landowner the total projected cost of the Project, including the cost of acquisition of the site and existing buildings, renovation of and tenant improvements for existing buildings, -2- construction of and tenant improvements for new buildings, and the cost of the Public Facilities to be financed with 2004 Bond proceeds, is over $160,500,000. The Landowner reports that as of December 1, 2003 it has expended approximately $70,200,000 towards the total Project costs, and has obtained financing for the remaining costs of the Project. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER" herein. The land within the District, as improved with the Project, will be subject to the levy of Special Taxes to be levied to pay debt service on the 2004 Bonds. See "THE COMMUNITY FACILITIES DISTRICT" herein. Sources of Payment for the 2004 Bonds Under the Fiscal Agent Agreement, the 2004 Bonds are payable from the Special Tax. See "SECURITY FOR THE 2004 BONDS — Special Tax" herein. As used in this Official Statement, the term "Special Tax" is the Special Tax which has been authorized pursuant to the Law to be levied against the real property located within the District in accordance with the Rate and Method of Apportionment of Special Taxes for the District approved by the City Council as the legislative body for the District (the "Special Tax Formula") to be used to pay debt service on the 2004 Bonds, to replenish the Reserve Fund for the 2004 Bonds established under the Fiscal Agent Agreement, and to pay administrative expenses of the District. See APPENDIX D —RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES. Under the Fiscal Agent Agreement, the City has agreed to levy the Special Tax, and to repay the 2004 Bonds from the Special Tax collected and received by the City and from amounts on deposit in the Bond Fund established under the Fiscal Agent Agreement. See APPENDIX A —SUMMARY OF THE FISCAL AGENT AGREEMENT. In the event that the Special Tax is not fully paid when due, the only source of funds to repay the 2004 Bonds will be the amounts held by the Fiscal Agent in certain of the funds established under the Fiscal Agent Agreement, including amounts held in the Reserve Fund, and the proceeds, if any, from a foreclosure sale of the property with delinquent Special Taxes. A portion of the proceeds of the 2004 Bonds will be deposited in the Reserve Fund to the extent necessary to make the amount on deposit therein equal to the Reserve Requirement for the 2004 Bonds. The moneys in the Reserve Fund will be used for, among other purposes permitted by the Fiscal Agent Agreement, payment of the principal of and interest on the 2004 Bonds in the event that moneys in the Bond Fund are insufficient therefore. See "SECURITY FOR THE 2004 BONDS —Reserve Fund." Land Value The City commissioned an appraisal report (the "Appraisal Report") from Integra Realty Resources - Orange County (the "Appraiser"), dated November 17, 2003, to determine the value of the land in the District that is subject to the levy of the Special Tax. The Appraisal Report summarizes the Appraiser's conclusion that the market value of the leased fee estate of the property in the District in its "as is" condition as of November 1, 2003 was $75,000,000. See "SECURITY FOR THE 2004 BONDS —Land Value." The Appraisal Report is based upon various assumptions and subject to various limiting conditions, as set forth in detail in the Appraisal Report. See "SPECIAL RISK FACTORS — Land Value," and APPENDIX C — APPRAISAL REPORT. Based upon the Appraisal, the appraised value of the leased fee estate in the property subject to the levy of the Special Taxes as of November 1,2003 was 3 times the initial principal amount of the 2004 Bonds. Upon completion of the Project, the value of the Project, based upon the Landowner's estimate of the over $160,500,000 total cost of the Project, less the portion of -3- such costs attributable to the Public Facilities, is expected to be in excess of 5.4 times the initial principal amount of the 2004 Bonds. Limited Liability Although the unpaid Special Taxes constitute a lien on the real property within the District, they do not constitute a personal indebtedness of the Developer, or any future owner of land in the District. There is no assurance that the Developer or any future landowner will be financially able to pay the Special Taxes or that it will pay the Special Taxes even though financially able to do so. THE 2004 BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX TO BE LEVIED ANNUALLY ON THE TAXABLE LAND WITHIN THE DISTRICT AND AMOUNTS IN CERTAIN FUNDS ESTABLISHED UNDER THE FISCAL AGENT AGREEMENT. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN OF THE DISTRICT, TO THE LIMITED EXTENT SET FORTH IN THE FISCAL AGENT AGREEMENT) IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE 2004 BONDS. THE 2004 BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OR REVENUES OF THE CITY, AND THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF OR REDEMPTION PREMIUMS, IF ANY, ON THE 2004 BONDS IS NOT A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE CITY. Description of the 2004 Bonds The 2004 Bonds will be issued and delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to actual purchasers of the 2004 Bonds (the "Beneficial Owners') in denominations of $5,000 or any integral multiple in excess thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the 2004 Bonds. In the event that the book-entry-only system described herein is no longer used with respect to the 2004 Bonds, the 2004 Bonds will be registered and transferred in accordance with the Bond Fiscal Agent Agreement. See "THE 2004 BONDS - Description of the 2004 Bonds" and APPENDIX H - THE BOOK ENTRY SYSTEM herein. Principal of, premium, if any, and interest on the 2004 Bonds is payable by the Fiscal Agent to DTC. Disbursement of.such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry-only system is no longer used with respect to the 2004 Bonds, the Beneficial Owners will become the registered owners of the 2004 Bonds and will be paid principal and interest by the Fiscal Agent, all as described herein. See "THE 2004 BONDS - Description of the 2004 Bonds" and APPENDIX H -THE BOOK ENTRY SYSTEM herein. So long as the 2004 Bonds are in book-entry-only form, all references in the Official Statement to the owners or holders of the 2004 Bonds shall mean DTC and not the Beneficial Owners of the 2004 Bonds. The 2004 Bonds are subject to optional redemption and mandatory redemption as described herein. For more complete descriptions of the 2004 Bonds and the Fiscal Agent Agreement pursuant to which they are being issued and delivered, see "THE 2004 BONDS" and APPENDIX A-SUMMARY OF THE FISCAL AGENT AGREEMENT herein. -4- Tax Matters In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject to certain qualifications described herein, under existing statutes, regulations, rules and court decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the 2004 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. A copy of the form of opinion of Bond Counsel is set forth in APPENDIX G hereto. Bond Counsel is further of the opinion that interest on the 2004 Bonds is not a specific preference item for purposes of federal individual or corporate alternative minimum taxes. However, Bond Counsel observes that interest on the 2004 Bonds is included in adjusted current earnings in calculating federal corporate alternative minimum taxable income. Although Bond Counsel is of the opinion that interest on the 2004 Bonds is excluded from federal gross income, the accrual or receipt of interest on the 2004 Bonds may otherwise affect a Bondholder's federal income tax liability. The nature and extent of these other consequences will depend upon the holder's particular tax status and the holder's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. See "CONCLUDING INFORMATION - Tax Matters" herein. Continuing Disclosure The City and the Landowner, in separate Continuing Disclosure Agreements, have agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any entity designated by the State as a state repository for purposes of Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission (the "Rule") certain information on an annual basis (in the case of the City), and on a semiannual basis (in the case of the Landowner). The City and the Landowner have further agreed to provide notice of the occurrence of certain events. These.covenants have been made in order to assist the Underwriter in complying with the Rule. See "CONCLUDING INFORMATION - Continuing Disclosure" and APPENDIX F -FORMS OF CONTINUING DISCLOSURE AGREEMENTS herein for a description of the specific nature of the reports to be filed by the City and the Landowner, and the notices of material events to be provided by the City and the Landowner. Bond Owners' Risks Certain events could affect the timely repayment of the principal of and interest on the 2004 Bonds when due. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the 2004 Bonds. The 2004 Bonds are not rated by any nationally recognized rating agency. The purchase of the 2004 Bonds involves significant risks,and the 2004 Bonds may not be appropriate investments for some investors. See "SPECIAL RISK FACTORS" herein. -5- Professionals Involved in the Offering U.S. Bank National Association, Los Angeles, California, will act as Fiscal Agent under the Fiscal Agent Agreement. UBS Financial Services Inc. is the Underwriter of the 2004 Bonds. The proceedings of the City Council in connection with the issuance, sale and delivery of the 2004 Bonds are subject to the approval of Best Best & Krieger LLP, Riverside, California, Bond Counsel. Psomas, Costa Mesa, California acted as Special Tax Consultant to the City in connection with the establishment of the Special Tax Formula. Certain legal matters will be passed on for the City and the District by the City Attorney, and for the City by Quint & Thimmig LLP, San Francisco, California, Disclosure Counsel to the City. Certain legal matters will be passed on for the Landowner by Allen Matkins Leck Gamble & Mallory LLP, Los Angeles, California, and Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, Los Angeles, California; and for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Underwriter's Counsel. Other professional services related to the 2004 Bonds have been performed by the Appraiser, Integra Realty Resources - Orange County, Rancho Santa Margarita, California and by the Market Feasibility Consultant, Robert Charles Lesser & Co., LLC, Los Angeles, California. Additional Information Brief descriptions of the 2004 Bonds, the Fiscal Agent Agreement, the security for the 2004 Bonds, the District, the Developer, the Project and certain other documents and information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. Any references to documents herein are qualified by reference to the complete text thereof. Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given them in the Fiscal Agent Agreement, some of which are set forth in APPENDIX A - SUMMARY OF THE FISCAL AGENT AGREEMENT. Copies of documents referenced herein may be obtained upon written request and payment of the cost of mailing and duplication from the office of the City Clerk of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California 92648. THE FINANCING PLAN Overview The financing plan anticipates that the 2004 Bonds will be issued to finance or reimburse the costs of the Public Facilities, consisting of (i) the acquisition of a site for and construction of the Parking Structure, (ii) construction of certain public utility and roadway improvements related to the Project, and (iii) construction of a police substation to be located within the Project. See "THE COMMUNITY FACILITIES DISTRICT - Public Facilities." The Special Tax is to be imposed on the real property (consisting of the land and the improvements thereon) within the District under the provisions of the Special Tax Formula at a rate which, within the limits of the Maximum Special Tax rate, is expected to be sufficient to pay the interest on and principal of and scheduled sinking fund payments for the 2004 Bonds, as they become due and payable, and to pay the administrative expenses related to the District and the 2004 Bonds as they become due and payable, all in accordance with the provisions in the Fiscal Agent Agreement. See "SECURITY FOR THE 2004 BONDS - Special Tax." The annual Special Tax to be levied in the District will also -6- include an amount necessary to pay the costs of operating and maintaining the Parking Structure. See "THE COMMUNITY FACILITIES DISTRICT — Rate and Method of Apportionment of Special Tax" herein. Uses of Bond Proceeds Under the provisions of the Fiscal Agent Agreement, the Fiscal Agent will receive the proceeds from the sale of the 2004 Bonds and will apply them as follows: SS urce of Funds Principal Amount of Bonds $ Less Underwriter's Discount Total $ Application of Funds Improvement Fund $ Costs of Issuance Fund(l) Reserve Fund(2) Capitalized Interest Sub-account(3) Total $ (1) To be used to pay costs of issuance of-the 2004 Bonds, including Bond Counsel fees,Disclosure Counsel fees, initial Fiscal Agent fees, Appraisal fees,Market Analysis fees,Landowner's Counsel fees, Landowner financial consultant fees, Official Statement printing and other costs of issuance. (2) An amount equal to the initial Reserve Requirement. See "SECURITY FOR THE 2004 BONDS— Reserve Fund." (3) To be deposited to the Capitalized Interest Sub-account of the Interest Account of the Bond Fund, and used for, and estimated to be sufficient together with investment earnings thereon to pay, interest on the 2004 Bonds through approximately July, 2005. -7- Annual Debt Service of Bonds The table below sets forth the scheduled annual debt service payments on the 2004 Bonds, assuming no optional redemption of the 2004 Bonds. Year Ending September 1 Principal Interest Total 2004 2005 2006 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 Totals $ $ $ * Indicates a scheduled mandatory sinking account payment. THE 2004 BONDS Authority for Issuance The District was established and bonded indebtedness in an amount not to exceed $30,000,000 was authorized to be issued pursuant to provisions of the Law. The ballot propositions related to the incurring of the indebtedness, the levying of the Special Tax and the establishment of an appropriations limit for the District were submitted to and approved by the Landowner,as the sole fee title owner of the property in the District at the time of the election, on February 3, 2003. The Special Tax Formula and the amount of the Special Tax that can be collected from levies on the land within the District is more fully described in the sections herein entitled "SECURITY FOR THE 2004 BONDS —Special Tax' and "THE COMMUNITY FACILITIES DISTRICT." -8- The 2004 Bonds will be issued pursuant to the Law, the Fiscal Agent Agreement and the Resolution of Issuance. The 2004 Bonds are secured under the Fiscal Agent Agreement. The Fiscal Agent Agreement allows for the issuance of Additional Bonds secured on a parity with 2004 Bonds by the Special Taxes and funds pledged to the repayment of the 2004 Bonds under the Fiscal Agent Agreement. The maximum principal amount of any Additional Bonds is $5,000,000, and the issuance of the Additional Bonds is subject to compliance with the applicable conditions of the Fiscal Agent Agreement. See "THE 2004 BONDS —Additional Bonds." Description of the 2004 Bonds The 2004 Bonds will be issued only as one fully registered bond for each maturity, in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), as registered owner of all the 2004 Bonds, and will be available to ultimate purchasers in denominations of $5,000 or any integral multiple thereof, under the book- entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the 2004 Bonds. So long as the 2004.Bonds are registered in the name of Cede & Co.,as nominee of DTC, references herein to the owners shall mean Cede & Co., and shall not mean the purchasers or Beneficial Owners of the 2004 Bonds. See APPENDIX H—THE BOOK ENTRY SYSTEM. - The 2004 Bonds will be issued as fully registered bonds without coupons in denominations of $5,000 and any integral multiple thereof (not exceeding the principal amount maturing at any one time), and shall be dated the date of delivery thereof. So long as the 2004 Bonds are held in book-entry only form, principal of, premium, if any, and interest on the 2004 Bonds will be paid directly to DTC for distribution to the beneficial owners of the 2004 Bonds in accordance with the procedures adopted by DTC. See APPENDIX H —THE BOOK ENTRY SYSTEM. The 2004 Bonds will mature on September 1, in the principal amounts and years, and bearing rates of interest, as shown on the inside cover of this Official Statement. Interest on the 2004 Bonds will be payable semiannually on March 1 and September 1 of each year, commencing March 1, 2004 (each, an "Interest Payment Date") and will be computed on the basis of a 360-day year comprised of twelve 30-day months. Each Bond will 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 Interest Payment Date, 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 its dated date; provided, that if at the time of authentication of a Bond, interest is then 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 is thereon; or from its.dated date, if no interest has previously been paid or made available for payment thereon. Payments of the principal of, premium, if any, and interest on the 2004 Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Fiscal Agent, so long as DTC or Cede & Co. is the registered owner of the 2004 Bonds. Disbursements of such payments to Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of Participants and Indirect Participants, as more fully described in APPENDIX H. -9- Redemption Optional Redemption. The 2004 Bonds maturing on or after September 1, are subject to redemption prior to their stated maturity dates on September 1, or any Interest Payment Date thereafter, on a pro rata basis among maturities (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source (including Special Tax Prepayments), at redemption prices (expressed as percentages of the principal amount of the 2004 Bonds to be redeemed), together with accrued interest to the date of redemption, as follows: Redemption Dates Redemption Price September 1, and March 1, % September 1, and March 1, September 1, and thereafter The Landowner (or any future owner of land in the District) is permitted to prepay the Special Taxes to be levied on land within the District. See "THE COMMUNITY FACILITIES DISTRICT -.Rate and Method of Apportionment of Special Tax" herein. Under the Fiscal.Agent Agreement, any prepayments of Special Taxes will be applied to effect a redemption of Bonds on the terms specified above. Notwithstanding the foregoing, the Landowner has agreed in a Parking and Reciprocal Easement Agreement and Option to Purchase, dated as of January 15, 2004 with the City entered into in connection with the Parking Structure to only prepay Special Taxes in certain circumstances. See "THE COMMUNITY FACILITIES DISTRICT -The Operating Agreement and the REA" herein. Mandatory Sinking Payment Redemption. The 2004 Bonds maturing on September 1, 2033 are subject to mandatory sinking fund redemption, in part, on September 1, , 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 of redemption, without premium, from sinking payments as follows: Redemption Date Sinking Redemption Date Sinking LSeptember 1) Payment (September U Payment The principal amount of Bonds to be redeemed pursuant to the foregoing schedule shall be reduced by the City pro rata among redemption dates, in order to maintain substantially level debt service on the 2004 Bonds as a result of any prior partial optional redemption of the 2004 Bonds maturing on September 1, 2033. Purchase of Bonds. In lieu of payment at maturity or redemption, moneys in the Bond 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 a 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 will Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. _10- Selection of Bonds for Redemption If less than all the 2004 Bonds outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the Fiscal Agent shall treat each such Bond as representing the number of Bonds of$5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000. Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2004 Bonds of a maturity or any given portion thereof, the Fiscal Agent shall select the 2004 Bonds of such maturity to be redeemed, from all Bonds of such maturity or such given portion thereof not previously called for redemption, by lot within a maturity, in any manner which the Fiscal Agent in its sole discretion shall deem appropriate. Upon surrender of Bonds redeemed in part only,the City will execute and the Fiscal Agent will authenticate and deliver to the Owner,at the expense of the District, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. Notice of Redemption The Fiscal Agent Agreement requires the Fiscal Agent to 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 Securities Depositories and to one or more Information Services selected by an Authorized Officer, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Fiscal Agent at its Principal Office; but such mailing will not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such Bonds. Such notice will state the date of such notice, the date of issue of the 2004 Bonds, the place'or places of redemption, the redemption date, the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, will designate the CUSIP numbers and Bond numbers of the 2004 Bonds to be redeemed, by giving the individual CUSIP number and Bond number of each Bond to be redeemed, or will state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the 2004 Bonds of one or more maturities have been called for redemption, will state as to any Bond called for redemption in part the portion of the principal of the Bond to be redeemed, will require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and will 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 redemption prices of the 2004 Bonds called for redemption have been deposited in the Bond Fund, such Bonds will 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 will cease to accrue on the 2004 Bonds to be redeemed on the redemption date specified in the notice of redemption. -11- Transfer or Exchange of Bonds So long as the 2004 Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Bonds shall be made in accordance with DTC procedures. See APPENDIX H - THE BOOK ENTRY SYSTEM. If the book-entry only system for the 2004 Bonds is ever discontinued, any Bond may, in accordance with its terms, be transferred or exchanged 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. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. 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 or exchange. No transfers or exchanges of Bonds shall be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption. Additional Bonds The Fiscal Agent Agreement provides that the City may issue Additional Bonds of the District at any time, without the consent of the Owners, subject to compliance with the applicable requirements of the Fiscal Agent Agreement which are summarized below: (a) The City and the District shall be in compliance with all covenants set forth in the Resolution and the Fiscal Agent Agreement, and a certificate of an Authorized Officer to that effect shall have been filed with the Fiscal Agent. (b) The issuance of such Additional Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Additional Bonds shall have been provided for by a Supplemental Agreement which shall specify, among other things, the following: (1) the purpose for which such Additional Bonds are to be issued which may include for the purpose of aiding in financing the Project, and/or for the purpose of refunding any Bonds, (2) the date and maturity date or dates of such Additional Bonds provided that each maturity date shall be September 1 of each year such Additional Bonds are due, and (3) the interest payment dates for such Additional Bonds which shall be on the same semiannual dates as the Interest Payment Dates for the 2004 Bonds unless the City determines that interest payment dates other than those for the 2004 Bonds will not adversely affect the interests of the owners of the Outstanding Bonds. (c) The Fiscal Agent shall have received the following documents: (1) a certified copy of the resolution authorizing the issuance of such Additional Bonds and the Supplemental Agreement pursuant to which such Additional Bonds are to be issued; (2) an opinion of Bond Counsel to the effect that the Fiscal Agent Agreement and all Supplemental Agreements are in full force and effect and are valid and binding upon the District, the Fiscal Agent Agreement and such Supplemental Agreement create the valid pledge which they purport to create of the of the Special Taxes as provided in the Fiscal Agent Agreement and such Supplemental Agreement, such Additional Bonds are valid and binding special obligations of the District, enforceable in accordance with their terms, and the issuance of the Additional Bonds will not adversely affect the exclusion from gross -12- income for federal income tax purposes of interest on the 2004 Bonds and, if then applicable, the 2004 Bonds or the exemption from State of California personal income taxation of interest on the Bonds; (3) a certificate of an Independent Financial Consultant certifying that the maximum Special Tax that may be levied in any Fiscal Year by the District pursuant to the Act and the applicable resolutions and Ordinances of the District is at least 1.10 times the amount required to pay Debt Service during the Applicable Bond Year on all Outstanding Bonds following the issuance of such Additional Bonds (excluding the Debt Service on any amount held in escrow) and at least 75% of the rentable square feet on property subject to the Special Tax shall be leased, and a certificate of the appraiser providing the original appraisal for the Bonds or a qualified MAI appraiser that the ratio of market value of land and improvements subject to the Special Tax to the aggregate principal amount of all Outstanding Bonds including the aggregate principal amount of such Additional Bonds (excluding any principal amount held in escrow) is not less than three (3) to one (1). See APPENDIX A - SUMMARY OF THE FISCAL AGENT AGREEMENT for the complete requirements of the Fiscal Agent Agreement pertaining to the Additional Bonds. If any Additional Bonds are issued for the District, they will be secured on a parity with the '2004 Bonds under the Fiscal Agent Agreement. SECURITY FOR THE 2004 BONDS The 2004 Bonds are payable from the Special Tax Revenues and amounts in the Bond Fund and the Reserve Fund established and held by the Fiscal Agent under the Fiscal Agent Agreement. The 2004 Bonds are not secured by amounts in the Improvement Fund or the Administrative Expense Fund established under the Fiscal Agent Agreement. Any improvements financed with the proceeds of the 2004 Bonds are not in any way pledged to pay the debt service on the 2004 Bonds. Special Tax In accordance with provisions of the Law, the District was established by the City Council on February 3, 2003. The Landowner, as the sole owner of the land within the District, voted to authorize the District to incur bonded indebtedness to finance costs of the Public Facilities, said indebtedness to be secured by the Special Tax. At the same time, the Landowner approved the levy of the Special Tax as provided in the Special Tax Formula to pay the principal and interest on the 2004 Bonds, to pay the administrative expenses of the District, to replenish the Reserve Fund to the amount of the Reserve Requirement and to pay the costs of operating and maintaining the Parking Structure, all consistent with the Special Tax Formula, the Law and the Fiscal Agent Agreement. See "THE COMMUNITY FACILITIES DISTRICT -Rate and Method of Apportionment of Special Tax" herein for a description of the Special Tax Formula, and APPENDIX D - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX for the complete text of the Special Tax Formula. In the Fiscal Agent Agreement, the City has agreed to effect the levy of the Special Taxes each Fiscal Year in accordance with the Law by August 1 of each year (or such later date as may be.authorized by the Law or any amendment thereof) that the 2004 Bonds are outstanding, such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the parcel within the District for inclusion on the tax roll for the Fiscal Year then beginning. Upon the completion of the computation of the amounts of the levy of the Special Taxes, the -13- City is obligated under the Fiscal Agent Agreement to prepare or cause to be prepared, and to transmit to the County Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the tax roll. The City Treasurer or her designee is directed to fix and levy the amount of Special Taxes within the District required for the payment of principal and of interest on the 2004 Bonds becoming due and payable on the next Interest Payment Date, including any necessary replenishment or expenditure of the Reserve Fund and an amount estimated to be sufficient to pay the Administrative Expenses during such year, taking into account the balances in the funds, and any transfer or expected transfers expected to occur for such purpose, under the Fiscal Agent Agreement. The Special Taxes may not exceed the authorized maximum amount in the Special Tax Formula. See "THE COMMUNITY FACILITIES DISTRICT — Rate and Method of Apportionment of Special Taxes" herein. The Fiscal Agent Agreement provides that the Special Tax shall be collected in the same manner as ordinary ad valorem property taxes are collected and, except as otherwise provided in the foreclosure covenant in the Fiscal Agent Agreement and in the Law, the Special Tax shall be subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. Notwithstanding the foregoing, the Fiscal Agent Agreement provides that the City Council may elect, as permitted by the Law, to collect the Special Taxes to be levied for any Fiscal Year directly from the owners of the parcels of taxable property upon which the Special Taxes are levied rather than by transmitting the Special Taxes to the Auditor for collection on the tax roll. The Special Taxes, other than the portion thereof levied to pay costs of operating and maintaining the Parking Structure which portion is not pledged to the payment of the 2004 Bonds, will be deposited in the Special Tax Fund established under the Fiscal Agent Agreement when received by the City. -See APPENDIX A — SUMMARY OF THE FISCAL AGENT AGREEMENT. In the Fiscal Agent Agreement, the City has covenanted that, to the extent it is legally permitted to do so, it will not initiate proceedings under the Mello-Roos Community Facilities Act of 1982 to reduce the maximum Special Tax rates (the "Maximum Rates") on then existing property subject to Special Taxes below the amounts which are necessary to provide Special Tax Revenues in an amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service on the outstanding Bonds. The City has further covenanted that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIIIC of the California Constitution, which purports to reduce or otherwise alter the Maximum Rates, it will commence and pursue legal action seeking to preserve its ability to comply with its covenant described in the preceding sentence. See "SPECIAL RISK FACTORS — Proceeding to Reduce or Terminate Special Tax" herein. Although the Special Tax will constitute a lien on the land within the District which is subject to taxation, it does not constitute a personal indebtedness of the Landowner or any future owner of such land. There is no assurance that the Landowner or any future owner of the land within the District 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 Landowner, or subsequent owner of the Project, if any, not paying the annual Special Tax is more fully described under the heading "SPECIAL RISK FACTORS — Insufficiency of Special Tax Revenues" below. Land Value The City commissioned the Appraisal Report from the Appraiser, dated November 17, 2003, to determine the value of the land in the District that is subject to the levy of the Special Tax. The Appraisal Report utilized the cost approach, the sales comparison -14- approach and the income capitalization approach in the valuation of the property. The Appraisal Report summarizes the Appraiser's conclusion that the market value of the leased fee estate of the property in the District in its "as is" condition as of November 1, 2003, but assuming completion of the improvements to be constructed to complete the Project, was $75,000,000. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER —The Project." Based upon the Appraisal, the appraised value of the real property subject to the levy of the Special Taxes as of November 1, 2003 was approximately 3 times the principal amount of the 2004 Bonds, and, upon completion of the Project, the cost of the Project (not including the Public Facilities), based upon the Landowner's estimate of the total cost of the Project, is expected to be in excess of 5.4 times the principal amount of the 2004 Bonds. The Appraisal Report is subject to certain assumptions, conditions and stipulations which are set forth in detail in the Appraisal Report included as Appendix C and which should be reviewed carefully. See also "SPECIAL RISK FACTORS —Land Value." If any of the assumptions made by the Appraiser prove not to be accurate, the market value of the property in the District may be adversely affected. The City and the District make no representation or warranty as to the accuracy or completeness of the Appraisal Report and purchasers of the 2004 Bonds should review the complete text of the Appraisal Report. See APPENDIX C—APPRAISAL REPORT. Covenant for Superior Court Foreclosure Pursuant to the Law, in the event any Special Tax or installment thereof or any interest thereon is not paid when due, the City may order the institution of a court action to foreclose the lien therefore. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory under the Law. However,in the Fiscal Agent Agreement, the City covenants with and for the benefit of the owners of the Bonds that, one Business Day after each Interest Payment Date for the Bonds, the City Treasurer or the Treasurer's designee will compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City, and if the amount collected is less than 100% of the amount of the Special Taxes to be collected for such installment of property taxes, then the City will undertake and diligently prosecute foreclosure proceedings not later than thirty (30) days after each Interest Payment Date in the manner prescribed in the Mello-Roos Community Facilities Act of 1982 to collect the amount of any delinquent Special Tax. In the event such superior court foreclosure or foreclosures are necessary, after the Reserve Fund has been depleted, there could be a delay in principal or interest payments being made to the Bondowners pending prosecution of the foreclosure proceedings and receipt by the District of the proceeds of the foreclosure sale, if any. No assurances can be given that a judgment ordering foreclosure will be granted or that the subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. Procedural delays, bankruptcy filings and necessary court and administrative actions incident to any foreclosure proceeding can result in an extended period of time (in some circumstances, more than two years) to complete any foreclosure sale. See "SPECIAL RISK FACTORS — Bankruptcy and Foreclosure Delays," and "— Property Controlled by Federal Deposit Insurance Corporation" herein. Although the Law authorizes the City to cause such an action to be commenced and diligently pursued to completion, the City is not obligated to -15- purchase or otherwise acquire the land sold at the execution sale if there is no other purchaser at such sale. Effective July 1,1983 a judgment debtor (property owner) has at least 140 days from . the date of service of the notice of levy in which to redeem the property to be sold. If a judgment debtor fails to so redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 6 months of the date of sale. If, as a result of such an action a foreclosure sale is set aside, the judgment is revived and the judgment creditor (i.e., the City) is entitled to interest on the revived judgment as if the sale had not been made. Reserve Fund In order to secure the payment of principal and interest on the Bonds, the City will initially deposit 2004 Bond proceeds in an amount equal to the initial Reserve Requirement into the Reserve Fund held by the Fiscal Agent. The term "Reserve Requirement" is defined in the Fiscal Agent Agreement, as of any date of calculation, as the least of (a) ten percent (10%)of the principal amount of the 2004 Bonds on the Closing Date, (b) Maximum Annual Debt Service on the Outstanding Bonds, or (c) one hundred twenty-five percent (125%) of average Annual Debt Service on the Outstanding Bonds, all as determined by the City. See APPENDIX A-SUMMARY OF THE FISCAL AGENT AGREEMENT. All money in the Reserve Fund will be used and withdrawn by the Fiscal Agent for the purpose of paying the interest on or principal of the Bonds in the event there is insufficient money in the Bond Fund available for this purpose, or in the event the Special Tax on a parcel is prepaid pursuant to the Fiscal Agent Agreement. In addition, the Fiscal Agent Agreement provides that whenever, on any September 2, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds therein which pursuant to the Fiscal Agent Agreement must be rebated to the United States, exceeds the Reserve Requirement, the Fiscal Agent shall provide written notice to the City of the amount of the excess and, upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), the Fiscal Agent shall, subject to the requirements of the rebate provisions of the Fiscal Agent Agreement, transfer an amount from the Reserve Fund which will reduce the amount on deposit therein to an amount equal to the Reserve Requirement to the Interest Account and the Principal Account, in the order of priority specified in the Fiscal Agent Agreement, to be used for the payment of the interest on and principal of the Bonds on the next succeeding Interest Payment Date. Notwithstanding the transfer provisions described in the preceding sentence, the Fiscal Agent Agreement provides that, prior to the closing of the Improvement Fund, the Fiscal Agent shall, on the Business Day after each Interest Payment Date transfer any such excess amount in the Reserve Fund which constitutes Investment Earnings which are not required to be rebated to the United States to the Improvement Fund. The Fiscal Agent Agreement provides that the Fiscal Agent is responsible for' valuation of all investments in the funds held by it under the Fiscal Agent Agreement. However, the Fiscal Agent Agreement further provides that investments, other than investment agreements, in which moneys in the Reserve Fund are invested, will be valued by the City at fair market value and marked-to-market at least once in each Fiscal Year. See APPENDIX A - SUMMARY OF THE FISCAL AGENT AGREEMENT for a description of the Permitted Investments for amounts in the Reserve Fund. -16- Limited Liability THE 2004 BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX TO BE LEVIED ANNUALLY ON THE TAXABLE LAND WITHIN THE DISTRICT AND AMOUNTS IN CERTAIN FUNDS ESTABLISHED UNDER THE FISCAL AGENT AGREEMENT. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE DISTRICT, TO THE LIMITED EXTENT SET FORTH IN THE FISCAL AGENT AGREEMENT) IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE 2004 BONDS. THE 2004 BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OR REVENUES OF THE CITY AND THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF OR REDEMPTION PREMIUMS, IF ANY, ON THE 2004 BONDS IS NOT A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE CITY. THE COMMUNITY FACILITIES DISTRICT Location The District, consisting of approximately 41 net taxable acres, is located on Edinger Avenue generally between Gothard Street and Beach Boulevard, just off of the 405 Freeway in the City. The District currently consists of eight County Assessor's parcels, but is being remapped by the Landowner to include ten parcels, eight of which will be subject to the Special Tax levy, with additional separate parcels for the land on which the Parking Structure is to be constructed and for certain easement areas (which additional parcels will not be subject to the Special Tax levy). The taxable land within the District is generally coterminous with the Project site. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER —The Project" herein. The following page contains the adopted boundary map for the District. -17- PROPOSED BOUNDARIES OF RE ACCEPT TME E° Qp"Af C CITY OF HUNTINGTON BEACH � �' DRVOF HUMSq,OH ecAa, COMMUNITY FACILITIES DISTRICT TDA cFFt No. 2003-1 WBTRLYENT' BOOK PAGE (HUNTINGTON CENTER) "mT"'AT MCIIDUa of OCIOCJ( COUNTY OF ORANGE W -2AG WFIIAPB OF ASSEFSIIENT AIO aON]AUWtt fAOUTIES STATE OF CALIFORNIA DISTRICTS,IN THECO DE OF THE COUF, RECORDER OF THE COIINtt OF ORANGE, RATE OF CAUFDRNM OARLENE 4 61.0011 WTERSICOIIMfYMERIORECORDER r-...... OEw / t!v RLE0 W THE OFFICE OF ME CRY CLERK J P•InF I OF THE m,O NTINDTON BEACH "a ,7 N / I I THECEBWHUN.AY,THECTTYCH. OF ME t]N OF XUMTINOTOM BEAIX R. SHOWING THE BOUNDARIES OF ME CITY I FEl1EBYCERfIFY I--- W DfLTAI�0' I OF HNMWOTON BEACH CONWINRY TNI� FACILITIES DISTRICT NO.] l (HUNTMTOINORANGE.STATE EE OFEW WUNI O.WAS /- VAIR• j AWROYED BV MECRY COWCILOF TI,E REO LARUE TINGTIEEACHATA SL70 REGULARYEETF THEREOF HELPON ppFF�� ME_OAY OF�]SW By ITS I RESOLUTION uO . 7Y.00 / •,� FnIRt CONNJE SRO-YAY,ME Gtt CLERK OF ••\ MEG OFMNTWOTONBEACH I j kw I b ��• N.R. I -�s i ppLtfL �,F ter• � j PNFR. ��S I �� IMrL, M0SS7700 j WSIRICf I N62SN-1. BASppelMlNO:I MRPA PARCEL OF W. M2W BEING NSP]I]TW MR PARCEL MAP MO.SS.]O] OF ME ECONTY RECOMEROF.OF PARCEL W�ENTT.—IFC ICE OF MECOUNtt REOpRDE110F g1NgE 000MV,GLIFORNM- LOCATION MAP i i I I PRO JECTL _ fi SITE ----------------O®GRAPHIC S ww FK SCALE FPC PIFNA mFYIN KW IFn PCAK aww KRAL OEFCWPTOM: PARCELS]MRWOH t AS SHOWN ON PARCEL IMP ND.M= FLED IN BOOR]SF,P OES NUL OF PARCEL NMB W ME OFFJOE W THE COUNTY RECORDER OF ORANGE COUNT".CWFOMW SHEET 1 OF 1 -IB- Authorization On May 3, 1999, the City Council of the City adopted Ordinance No. 3417 which added Chapter 3.56 to the Huntington Beach Municipal Code entitled "City of Huntington Beach Special Tax Financing Improvement Code." On March 18, 2002, the City Council of the City adopted Ordinance No. 3546 amending Chapter 3.56 of the City's Municipal Code to allow for the levy of special taxes to pay for the maintenance of facilities financed under said section of the City's Municipal Code. The proceedings to form the District have been conducted under said section of the City's Municipal Code and, where applicable by reason of the provisions of the Municipal Code, the Mello-Roos Community Facilities Act of 1982, as amended (collectively, the "Law"). Pursuant to the Law, the City Council adopted Resolution No. 2003-3 on January 6, 2003, stating its intention to establish the District and Resolution No. 2003-4 on January 6, 2003 declaring the necessity for the District to incur bonded indebtedness. Pursuant to Resolution Nos. 2003-10,2003-11 and 2003-12 adopted by the City Council on February 3, 2003, the District was formed, bonded indebtedness in an aggregate principal amount not to exceed $30,000,000 was determined necessary for the District and an election was called pursuant to the Law. The Landowner, as the then sole owner of the land within the District, voted in favor of the incurrence of bonded indebtedness in a principal amount not to exceed $30,000,000 to finance the Public Facilities and the levy of a special tax consistent with the Special Tax Formula on the land within the District to pay the principal and interest on the 2004 Bonds, to pay administrative expenses of-the District, to make any necessary replenishments to the Reserve Fund and to pay the Parking Structure Maintenance Special Tax. See "THE COMMUNITY FACILITIES DISTRICT - Rate and Method of Apportionment of Special Tax." On February 20, 2003, a Notice of Special Tax Lien with respect to the District was recorded as Instrument No. 2003000186478 in the Office of the Orange County Recorder. The 2004 Bonds were authorized to be issued by the Resolution of Issuance adopted by the City Council on January 5,2004. Rate and Method of Apportionment of Special Tax Special Tax will be levied on and collected from the land in the District as set forth in the Special Tax Formula, the complete text of which is contained in APPENDIX D - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. Under the Special Tax Formula, not less than fifteen business days prior to the beginning of each Fiscal Year, a representative of the City will determine the parcel(s) in the District which are subject to the Special Tax (the "Taxable Property"). The City Council will levy the Special Tax proportionately on each parcel of Taxable Property in the District up to 100% of the Maximum Special Tax, as needed to satisfy the Special Tax Requirement. Under the Special Tax Formula, the Maximum Special Tax for the land in the District constituting "Taxable Property" is the greater of (i) $65,050 per acre or (ii) the amount determined pursuant to the following steps: Step 1: determine the maximum annual debt service on all Outstanding Bonds; Step 2: multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: determine the Acreage of Taxable Property within the District; and Step 4: divide the amount from Step 2 by the acreage from Step 3 to determine the Maximum Special Tax per acre of Taxable Property. As there are approximately 41 acres of Taxable Property in the District, the Maximum Special Tax is at least$2,667,050, which amount is approximately 1.4 times the maximum annual debt services on the 2004 Bonds of $1,840,000*. Preliminary, subject to change. -19- The Special Tax Requirement is defined in the Special Tax Formula as the amount required in any Fiscal Year for the District necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay. Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Fiscal Agent Agreement, and (v) to pay the Parking Structure Maintenance Special Tax. Taxable Property includes all County Assessor's Parcels of land within the District, except real property which generally serves the development subject to the Development Agreement and is owned by a governmental agency for public right-of-way purposes including, but not limited to, parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by a representative of the City (the "Administrator") or any otherwise Taxable Property for which the Special Tax has been paid in full, or any property which is otherwise exempt from the Special Tax pursuant to law. The Special Tax Formula defines Administrative Expenses as any or all of the following actual or reasonably estimated costs directly related to the administration of the District: the fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under the Fiscal Agent Agreement or any similar undertaking with respect to the Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of the District. The Special Tax Formula defines the Parking Structure Maintenance Special Tax as the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for the District necessary to pay all actual, documented maintenance costs, management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs, fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues are subject to and limited by the provisions of the Reciprocal Easement Agreement and the Operating Agreement described under the heading "Public Facilities" below, and any amendments to such agreements. Under the Special Tax Formula, the Special Taxes applicable to any parcel of land within the District may be prepaid in whole or in part. See Appendix D for the detailed methodology related to any such prepayment. The Fiscal Agent Agreement contains covenants related to the prepayment of Special Taxes including the following: • The City shall cause all applications of owners of property in the District to prepay and satisfy the Special Tax obligation for their property to be reviewed by an independent Financial Consultant and shall not accept any such prepayment by the City and the redemption of Bonds. with such prepayment, the ratio of (i) the maximum amount of the Special Taxes that may be levied in the District following such prepayment to (ii) Maximum Annual Debt Service on the -20- 2004 Bonds which will remain Outstanding following such redemption (e.g., 1.15 to 1.0) will not be less than such ratio as it existed prior to such prepayment. • The City will not include in any calculation of the amount necessary to prepay and permanently satisfy the Special Tax obligation of any parcel of taxable property in the District a proportionate amount of the amount then on deposit in the Reserve Fund, if at the time of such calculation the amount on deposit in the Reserve Fund is less than the Reserve Requirement; provided, however; that in such event the City may pay to the owner of any such property who prepays and permanently satisfies the Special Tax obligation for his or her property, under such circumstances, such a proportionate amount if the amount on deposit in the Reserve Fund is thereafter increased to the Reserve Requirement. If a prepayment of the Special Tax is made with respect to any parcel in the District, the net proceeds of any such prepayment, together with a transfer of a portion of the amount in the Reserve Fund, will be used to redeem Bonds on the next Interest Payment Date following such prepayment for which notice of redemption can timely be given. See "THE 2004 BONDS - Redemption - Optional Redemption" herein. Any parcel in the District for which the Special Tax has been prepaid in full will thereafter be classified as Exempt Land under the Special Tax Formula. Notwithstanding the foregoing, the Landowner has agreed in a Parking and Reciprocal Easement Agreement and Option to Purchase, dated as of January 15, 2004 with the City entered into in connection with the Parking Structure to only prepay Special Taxes in certain circumstances. See "THE COMMUNITY FACILITIES DISTRICT The Operating Agreement and the REA" herein. Public Facilities Under the provisions of the Resolution of Formation for the District, the District is authorized to finance the following Public Facilities: Estimated Description of Improvement Cost* Edinger Avenue Improvements $3,400,000 Center Avenue Improvements 600,000 Design/Build Parking Structure 11,771,250 On-Site Public Utilities-Wet 1,200,000 Fire Sprinklers for Parking Structure 400,000 Technical Services, Fees & Permits 880,000 Parking Structure Land Value 1,600,000 Police Substation Improvements 165,000 Relocation of existing utilities for Parking Structure foundations 450,000 Total Estimated Cost $20,466,250 * Estimates provided by the Landowner. Any costs in excess of the available Bond proceeds in the Improvement Fund are to be paid for by the Landowner under the terms of the Funding Agreement described below, unless City agrees to issue Additional Bonds under the terms and conditions set forth in the Funding Agreement and the Fiscal Agent Agreement. See "THE 2004 BONDS-Additional Bonds." The proceeds of the 2004 Bonds held in the Improvement Fund to pay for the Public Facilities, and the Public Facilities when constructed or acquired, are not pledged as security for the payment of the 2004 Bonds. It is expected that the Public Facilities will be constructed at the direction of the Landowner under the provisions of the Funding Agreement described below, and, when completed, will be owned by the City (subject to, in -21- the case of the Parking Structure, the terms of the REA described below, including an option to purchase granted to the Landowner thereunder). The Funding Agreement The Landowner and the City have entered into a Funding and Construction Agreement, dated as of January 15, 2004 (the "Funding Agreement"), which contains provisions setting forth the process by which the construction of the Public Facilities will be paid for with Bond proceeds on deposit in the Improvement Fund established under the Fiscal Agent Agreement. The Landowner, in turn, has entered into a Development Agreement, dated as of September 6, 2001 (the "Development Management Agreement"), with Snyder Huntington Development, LLC (referred to herein as the "Developer") to develop, manage and supervise the redevelopment and the reconstruction of the Project, including the construction of the Public Facilities. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER -The Developer." On September 5, 2002, the Landowner received five bids for construction of the Parking Structure, and selected Bomel Construction Company, Inc., a southern California based general construction contractor located in Anaheim Hills, California ('Gomel") to construct the Parking Structure and related improvements. On December 3, 2002 the Landowner and Bomel entered into a contract for construction of the Parking Structure and related improvements. Founded over 30 years ago, Bomel has grown to be one of the largest concrete contractors in the United States. During the past 30 years Bomel has successfully completed hundreds of concrete projects ranging from parking structures, office buildings, hotels, stadiums, bridges and more, including: the Aquarium Public Parking Garage, located in Long Beach, California; the Shops at Mission Viejo, South West parking structure, located in Mission Viejo, California; Paris Resort, located in Las Vegas, Nevada; Arrowhead Pond, located in Anaheim California; and, Hughes Corporation Headquarters, located in Playa del Rey, California. The Landowner also caused contracts for construction of certain of the other Public Facilities to be bid out on November 25, 2002 and received four bids. The Landowner selected, from such bids, Bayley Construction Company ('Bayley") to construct such Public Facilities, and on December 18, 2002, the Landowner and Bayley executed a contract for construction of such Public Facilities. The contracts with Bomel and Bayley are expressly acknowledged in the Funding Agreement. The Landowner has estimated that the actual construction of the Parking Structure will commence with the installation of pilot piles and a foundation in the first quarter of 2004. The Landowner anticipates that the Parking Structure will be completed within approximately 13 months. Construction of the various roadway improvements that are part of the Public Facilities is expected by the Landowner to commence in June of 2004, and to be completed by February of 2005. The balance of the.Public Facilities will be constructed by contractors to be selected pursuant to a competitive bid process required by the Funding Agreement. The additional buildings within the Project will be constructed pursuant to a guaranteed maximum price construction contract to be entered into by Landowner. The Funding Agreement is subject to amendment by the City and the Landowner, without any requirement for notice to or the consent of the Bondowners. No assurance can be given that the Public Facilities will be completed by or on behalf of the Landowner as contemplated by the Funding Agreement, or that proceeds of the 2004 Bonds will be sufficient to pay all of the costs thereof. Any costs of the Public Facilities in excess of available 2004 Bond proceeds will be paid by the Landowner. Such excess costs may be reimbursed to the Landowner at such time,if ever, that Additional Bonds are issued by the City for the District. See "THE 2004 BONDS -Additional Bonds" herein. -22- In the event that amounts in the Improvement Fund are in excess of the amounts to be reimbursed to the Developer under the terms of the Funding Agreement, the excess will be transferred from the Improvement Fund to the Bond Fund, and will be used to pay debt service on the 2004 Bonds. The Operating Agreement and the REA In connection with the construction of the Parking Structure, and in order to provide for the operation and maintenance of the Parking Structure when it is completed, the City and the Landowner have entered into (i) a Parking and Reciprocal Easement Agreement and Option to Purchase, dated as of January 15, 2004 (the "REA"), and (ii) an Operating Agreement for Huntington Center Parking Structure, dated as of January 15, 2004 (the "Operating Agreement"). The REA and the Operating Agreement are subject to amendment by the City and the Landowner at any time without any requirement for notice to or the consent of the Bondowners. The REA provides for various easements related to the construction and use of the Parking Structure. The REA grants the Landowner an exclusive easement with respect to five percent (5%) of the parking spaces (the "Reserve Spaces") in the Parking Structure. Other easements are granted by the City and the Landowner for utilities necessary for the operation of the Parking Structure and that otherwise serve the Project, for common structural support and security, and for ingress and egress. The REA requires that the Parking Structure be used for public parking, other than the Reserve Spaces which will be used for parking as directed by the Landowner. The REA provides that the Landowner is to construct the Parking Structure pursuant to the terms of the Funding Agreement, and to rebuild or repair it in the case of any future damage or destruction. Any proceeds of any governmental condemnation of the Parking Structure will be used first to replace any public parking lost as a result of such condemnation, and second to redeem Bonds under the optional redemption provisions of the Fiscal Agent Agreement. The REA provides that the City is to operate and maintain the Parking Structure . from the proceeds of the portion of the Special Tax constituting the Parking Structure Maintenance Tax to be levied for such purpose. The City may delegate its operating responsibilities and has done so pursuant to the Operating Agreement described below. In the REA, the Landowner has agreed to provide for capital replacement and repairs to the Parking Structure, subject to the receipt of any applicable insurance proceeds. The REA grants the Landowner an option to purchase the Parking Structure, at its then fair market value, following the date that the Bonds have been fully paid and retired. In the REA, the Landowner acknowledges that the prepayment of the Special Tax prior to defeasance of the Bonds in full with respect to any parcel or portion thereof within the District may result in the expiration of the City's subsequent right to levy the Parking Structure Maintenance Special Tax (see THE COMMUNITY FACILITIES DISTRICT —Rate and Method of Apportionment of Special Tax") on such parcel or portion thereof. Accordingly, the Landowner has agreed in the REA that, at all times prior to defeasance of the Bonds, neither it nor its successor or assign with respect to any portion of the Project shall prepay the Special Tax with respect to any portion of the Retail Parcel (as defined in the REA) constituting less than the entire Retail Parcel, unless it provides the City with reasonable assurances that the Parking Structure Maintenance Special Tax collectible from the remainder of the Retail Parcel and the Parking Fund (as defined in the Operating -23- Agreement), will be sufficient to cover the reasonably estimated costs of operating and maintaining the Parking Structure. The Operating Agreement provides for the operation of the Parking Structure, when it has been completed, by the Landowner. The Operating Agreement provides for an annual fee of $1,500 to the Landowner, subject to cost of living increases, for its services in operating the Parking Structure. The term of the Operating Agreement extends to the date that is 15 years from the date when the City provides a certificate of occupancy for the Parking Structure, and the Landowner has unilaterally agreed to an additional 15 year extension at the option of the City, but the term will end in any event if the City no longer owns the Parking Structure. The liability of the City under the REA and the Operating Agreement is strictly limited to the proceeds of the Parking Structure Maintenance Tax. Cost of operating and maintaining the Parking Structure in excess of any proceeds of the Parking Structure Maintenance Tax (collected as a component of the Special Tax levy in the District) are to be borne by the Landowner. THE CITY OF HUNTINGTON BEACH Under the Law, the City Council of the City is authorized to establish and act as the legislative body for community facilities districts. However, the City has no obligations in connection with the District or the 2004 Bonds, other than with respect to the collection and enforcement of the Special Tax to the limited extent set forth in the Fiscal Agent Agreement. See "SECURITY FOR THE 2004 BONDS — Limited Liability" herein. See Appendix E hereto for general information regarding the City. THE PROJECT, THE LANDOWNER AND THE DEVELOPER Information set forth below regarding the Project, the Landowner and the Developer was provided by the Landowner and has not in most instances, been verified by the City or the Underwriter, and the City and the Underwriter make no representation as to its accuracy or completeness. -24- r. a _W �i„ SIItAI EtrY �-�,•\ llAt G • '4 JtiY i<t }E 3 q r) E - it E k d t GASS SpasZ1 all HIE: man SI AZT mv to E �- ✓ v `i.7 ��i I1.� k a E A• �'� Y, � � -�-�" � �'&•! ^r'ra r >s a r�: "�� �;• �� �E E E yy way Ing ':'i '. •'\'S �`'��\{ arAR g :, 3 i �. a .x- ..A: �... \\\� � � \; Ply t � ��r-s :�R r'� \`\ ` I e -at 1 fiC)KRI YLost yv\ 0 ARKEMI I� € '� ` 1 ' �V.- �` _smut Am ') ,m - �: { ,t L 12 . yr ya- swum All �, � G 8xa, .� - e J,w,. �v..,, 1..._L_ n..n Of "�...s E . �Dow. I [ l I af AWN Q Ono ME RMI �\ in to not,kit �1 _ Mt Arkpv, ski P The Project The Project consists of the reconfiguration, redesign and redevelopment of an existing shopping center into an open air lifestyle retail center with an entertainment component known as Bella Terra. The property on which the Project is located was originally developed in 1965 through 1969 with the construction of a Broadway Department store, a JC Penny Department Store, a Montgomery Wards Department Store, a JC Penny/Firestone Auto Center, and other mall shops and related businesses. The Landowner purchased the Project on November 16, 1999 for approximately $48,500,000. A portion of the acquisition price of the Project was funded with the proceeds of a bridge loan from Bank One, N.A. The Landowner entered into an Owner Participation Agreement with the Redevelopment Agency of the City of Huntington Beach (the "Agency") related to the redevelopment of the Project site on ,October 2, 2000, which agreement is more fully described below. The Landowner submitted a plan for partial demolition, facade remodel, renovation and new construction in connection with the Project and on March 29, 2002, the City .provided the Landowner with a Notice of Action conditionally approving the Landowner's plan for the Project. All water, sanitary sewer, power and telephone utilities necessary for the operation of the Project are available (although some are being relocated in connection with the Project), and the Project is within existing zoning approvals. The Project currently includes four buildings with approximately 447,000 square feet of leaseable space. The redevelopment of the Project, when completed, is expected to result in a total of over 770,000 square feet of gross leasable area in six major buildings, including the four existing buildings to include approximately 330,000 square feet of leasable space and two new buildings with an additional 440,000 square feet of leasable space. The Project is expected to include approximately 60 shops and restaurants. A key component of the Project is the construction of a 20-screen multiplex movie theatre and various restaurant facilities. Redevelopment of the Project site has already commenced, with the rehabilitation of an existing building for a new Kohl's Department Store completed, as well as certain landscaping, utility and other. site work completed. According to the Landowner, construction of the second phase of the Project, including the Public Facilities and the two new buildings for tenants, is expected to commence in the first quarter of 2004 and to be completed within approximately 18 months. See "THE LANDOWNER, THE DEVELOPER AND THE PROJECT— Financing Plan" below for information regarding the sources of funds that have been secured by the Landowner to pay the costs of the Project. In addition to Kohl's Department Store, other existing major tenants of the Project, which are expected to remain in operation while additional construction work is undertaken, include Mervyn's, Burlington Coat Factory, Barnes & Noble and Circuit City. The Landowner has entered into a long-term lease with Century Theatres, Inc. and various other new tenants for the Project, and as of November 15, 2003 approximately 68% of the total leasable area of the Project is subject to executed leases. The Landowner also has executed letters of intent with other prospective tenants for the Project involving an additional over 15% of the leaseable area of the Project. The following table sets forth the status of tenant leases for the Project as of November 15, 2003: -26- Project Leasing Status as of November 15, 2003 Percentage of Total Lease Term/ Square Project Expiration Tenant Footage GLA Use Date* Existing Tenants With Executed Leases Burlington 145,717 18.76% Retail Department Store 1/31/25 Kohl's 97,394 12.54 Retail Department Store 2/3/24 Mervyn's 82,000 10.55 Retail Department Store 7/31/17 Barnes&Noble 40,300 5.19 Retail Specialty-Books 1/31/11 Circuit City 31,614 4.07 Retail-Home Electronics 10 years Staples 19,012 2.45 Retail-Office Supplies 1/31/07 Zany Brainy 10,625 1.37 Retail Specialty-Toys 1/31/09 Bank of America 8,240 1.06 Bank 9/30/07 Macaroni Grill 7,288 0.94 Full Service Restaurant 1/31/12 General Store 4,536 0.58 Retail 3/31/09 See's Candy 1,083 0.14 Retail Specialty-Candy 12/31/08 Subtotal 447,809 7.649/6 New Tenants With Executed Leases Century Theatres 76,677 9.87% Cinema 15 years Ben&Jerry's 900 0.12 Quick Service Food 10 years Pizzarito 811 0.10 Quick Service Food 10 years Subtotal 78,388 10.09% New Tenants With Executed Letters of Intent Bed Bath&Beyond 41,880 5.39% Retail 10 years REI 22500 2.90 Retail Specialty-Sporting Goods 10 years ULTA 10,000 1.29 Specialty Retail-Cosmetics 10 years Bombay Kids 8,053 1.04 Retail Specialty-Home Decor 10 years Islands 7,062 0.91 Full Service Restaurant 10 years Calif. Pizza Kitchen 7,030 0.90 Full Service Restaurant 10 years Kabuki 5,002 0.64 Quick Service Food 10 years Krispy Kreme 3,880 0.50 Quick Service Food 10 years La Salsa 3,004 0.39 Quick Service Food 10 years Corner Bakery 3,000 0.39 Restaurant 10 years Pure Beauty 2,450 0.32 Specialty Retail 10 years Daphne's 1,900 0.24 Quick Service Food 10 years T-Mobile 1,400 0.18 Retail Specialty-Cellular Phone 10 years Coffee Bean 1,300 0.17 Quick Service Food 10 years Tacone 926 0.12 Quick Service Food 10 years Cingular Wireless 800 0.10 Retail Specialty-Cellular Phone 10 years Subtotal 120,187 15.479% TOTAL EXECUTED LEASES& LETTERS OF INTENT 646,384 83.20% Active Proposal Cost Plus 18,300 2.36°% Discount Retail TBD Gymboree/ Motherhood 7,591 0.98 Retail-Children's&Baby Clothing TBD Huntington Surf&Sport 5,000 0.64 Retail Specialty-Sporting Goods TBD Jos. Banks 4,325 0.56 Men's Clothing TBD Panda Express 3,200 0.41 Quick Service Food TBD Pasta Pomodora 3,000 0.39 Restaurant TBD Johnny Rockets 2,203 0.28 Quick Service Food TBD Jamba Juice 1,500 0.19 Quick Service Food TBD Cohiba 1,000 0.13 Specialty Retail-Tobacco TBD Sunglass Hut 1,000 0.13 Specialty Retail-Eyewear TBD Tummy Stuffers 781 0.10 Quick Service Food TBD Subtotal 47,900 6.179/6 To Be eased Retail-Specialty(22 locations in the Project) 70,624 9.09% TBD TBD Management Offices 10,000 1.29 Management&Operations TBD Nails/Salon 1,979 0.25 Specialty Retail-Beauty/Nails TBD Subtotal 82,603 10.63% TOTAL EXPECTED GROSS LEASABLE AREA 776,887 100.00% Source: The Landowner. "Does not include extension options. -27- No assurance can be give that the current Letters of Intent or any active proposals will result in executed leases, or that tenants under all executed leases will continue for their current terms or exercise any applicable renewal options. See APPENDIX B - EXECUTIVE SUMMARY OF MARKET FEASIBILITY ANALYSIS for additional information regarding the demand for the services offered by the Project and its position relative to competing facilities. The Owner Participation Agreement On October 2, 2000, the Agency and the Landowner entered into the Owner Participation Agreement (the "OPA"). The purpose of the OPA is to implement the Agency's Redevelopment Plan for its merged Redevelopment Project Areas (which include the site where the Project is located) by means of the rehabilitation and construction work related to the Project. The OPA provides for certain "Feasibility Gap Payments" to be made to the Landowner, in recognition of the substantial costs to redevelop the Project. Such payments are not in any way pledged as security for the 2004 Bonds, and the OPA can be amended at any time by the Landowner and the Agency without any requirement for notice to or the consent of the Bondowners. , The Feasibility Gap Payments are to be made by the Agency during a twenty year Reimbursement Term which begins on the Operating Commencement Date, as defined in the OPA. The Feasibility Gap Payments are to be made in amounts equal to a portion of the increase in tax increment revenues generated by the Project, and are more fully described in the Appraisal Report set forth in Appendix C. The OPA contains covenants of the Landowner regarding the redevelopment and use of the Project, and provides for various remedies upon the occurrence of an event of default as described therein. The Bondholders have no right to enforce the provisions of the OPA, and are not third party beneficiaries of the OPA. The Landowner The Landowner, Huntington Center Associates, LLC, is a Delaware limited liability company formed on October 14, 1999. Pursuant to the Amended and Restated Operating Agreement of the Landowner, effective as of September 6, 2001, the current members of the Landowner include (i) Snyder Huntington, LLC (with approximately a 7% interest), whose manager is Jerome H. Snyder; (ii) Huntington Management Ent., LLC ("HME, LLC," with approximately a 31% interest), whose manager is BMLF/Huntington, LLC, whose manager is Bryan Ezralow, as Trustee for the Bryan Ezralow 1994 Trust; (iii) Sunamerica, Inc. (with approximately a 31% interest); and (iv) Lubert-Adler Real Estate Fund 11, L.P., Lubert-Adler Real Estate Parallel Fund II, L.P. and Lubert-Adler Capital Real Estate Fund II, L.P. (collectively, the "Fund II Members," with total interests of approximately 31%), which Fund II Members have as their general partner Lubert-Adler Group, LLC, whose president is Dean S. Adler. The members of the Landowner made initial capital contributions to fund the Landowner totaling $21,000,000, have subsequently advanced an. additional $13,050,000 of capital contributions, and expect to advance an additional $1,450,000 of capital contributions. The current manager of the Landowner is HME, LLC. Jerome H. Snyder is the founder of the J.H. Snyder Company, LLC, reported by the Developer to be one of the largest real estate development firms in Los Angeles and one of the top one hundred development firms in the United States. The J.H. Snyder Company, LLC is also the manager of the Developer, as more fully described below. The Developer reports that the J.H. Snyder Company, LLC is a $1 billion enterprise, with more than 41,000 -28- homes, approximately 4,000,000 square feet of office space, and over 2 million feet of retail development to its credit. The J.H. Snyder Company has either completed or is in the process of completing thirteen shopping/entertainment centers. See the Company's website at http://www.jhsnyder.net for more information regarding J.H. Snyder Company, LLC. Nothing on the website shall in any way be or become a part of this Official Statement. In addition to Jerome H. Snyder, the members of J.H. Snyder Company, LLC, include Milton I. Swimmer, Michael E. Wise and Clifford P. Goldstein. Mr. Milton I. Swimmer is founder and former president of one of the nations top commercial interior design firms. The firm specialized in pre-architectural programming, and the design of office buildings and department stores, as well as retail and hotel developments. Mr. Swimmer is a graduate of the Pratt Institute in New York City, and is a former faculty member of the Art Center College of Design in Pasadena. Mr. Michael E. Wise, is responsible for administration, legal, property management and capitalization of both debt and equity for J.H. Snyder Company, LLC. Mr. Wise first began his career in real estate with J.H. Snyder Company 28 years ago. Several years later,he left the company to form his own real estate company to develop and manage commercial and residential projects. As principal and founder of L&S Property Management and' The Regency Group, the management and development arms of the company, Mr. Wise directed the financing, development and management of over 12,000 apartment units, retail centers, office buildings and industrial properties in Southern-California. In 1988, Mr. Wise rejoined J.H. Snyder Company, LLC. Mr. Wise graduated from John Carroll University in Cleveland, Ohio in 1970 with a Bachelor of Science degree in finance. Mr. Clifford P. Goldstein joined the J.H. Snyder Company in 1987 and has been a senior partner with the Company since 1993. Mr. Goldstein's primary responsibilities include project design, site acquisition, marketing and leasing. Mr. Goldstein holds an undergraduate and graduate degree from the University of Southern California. Bryan Ezralow has been a partner and the President of The Ezralow Company since 1987. The Ezralow Company is a privately-held real estate firm based in Southern California. The Ezralow Company established its reputation as a developer, owner and manager of multifamily residential properties in Southern California some 30 years ago. Building on that foundation, the Company reports that it has diversified into other geographic areas and product types including business parks, mid-rise office buildings, shopping centers, affordable housing, self storage facilities and luxury estate homes. To date, the Ezralow Company advises that it has developed or acquired over six million square feet of industrial/commercial space and more than twenty thousand apartment units. Mr. Ezralow holds a B.A. degree from the University of California at Berkeley and an M.B.A. degree from the University of Southern California, focusing on real estate finance. Sunamerica, Inc. is an investment entity related to AIG SunAmerica ("AIGSA"), which is a member of American International Group, Inc. ("AIG"). See the,website at http://www.sunamerica.com for more information regarding AIGSA and AIG. Nothing on the website shall in any way be or become a part of this Official Statement. Dean S. Adler is a founding principal of Lubert-Adler Partners, a private equity real estate investment group. Lubert-Adler manages three real estate equity funds with $1.3 billion in equity and$4 billion in total assets. Lubert-Adler executes its operations through a network of 40 operating partners nationwide. Prior to forming Lubert-Adler Partners, Mr. Adler was a principal and co-head of acquisitions of the private equity group of CMS Companies. During his 12 years at CMS, Mr. Adler specialized in acquiring operating businesses and real estate within private equity markets. Mr. Adler holds a B.S. from The Wharton School of the University of Pennsylvania and a J.D. degree from the University of -29- I Pennsylvania Law School. Mr. Adler was also a certified public accountant and was previously associated with the accounting firm of Ernst & Whinney and the law firm of Baker & Hostetler. See the website at http://www.lubertadler.com for more information regarding Mr. Adler and Lubert-Adler Partners. Nothing on the website shall in any way be or become a part of this Official Statement. The Developer The Landowner and the Developer have entered into the Development Management Agreement whereby the Developer will develop, manage and supervise the redevelopment and reconstruction of the Project, as more fully set forth in the Development Management Agreement. The Developer is Snyder Huntington Development, LLC, a California limited liability company. The manager of the Developer is J.H. Snyder Company, LLC. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER — The Landowner" above for a description of the J.H. Snyder Company, LLC. The Development Management Agreement provides for compensation to the Developer, in addition to reimbursement of out-of-pocket expenses,of $3,000,000. The fee is payable in monthly installments in accordance with the terms of the Development Agreement. The Development Management Agreement can be amended at any time by the Developer and the Landowner without any requirement for notice to or the consent of the Bondowners. Financing Plan The Landowner has estimated that the total cost of the Project, including the cost of the Public Facilities, will be in excess of $160,500,000. The Project budget includes (i) land acquisition costs of $48,489,807; (ii) land improvement costs, including the Parking Structure and other Public Facilities, totaling $37,097,807; (iii) building shell and tenant improvements costs totaling $45,169,533; (iv) a hard cost contingency of $2,903,011; (v) building permit fees of $2,112,973; (vi) soft costs, including architecture and engineering, consultant, legal, marketing, insurance and other similar costs of $16,372,459; (vii) other costs such as real estate taxes, Developer's fee, and loan fees of $6,803,856; (viii) a soft cost contingency of $700,000, and (ix) other interest costs, net of interest earnings, of $922,915. The Project budget is subject to change, and contracts for much of the work (other than work related to the Public Facilities) has,not yet been bid out. The Landowner has identified the following sources of funds to be used to pay Project costs: Source of Funds Description Amount Members of the Landowner Equity Contributions $35,500,000 Bank One, NA Construction Loan Facility 105,000,000 The District 2004 Bond Proceeds 20,000,000 Total $160,500,000 Bank One, NA, has entered into various documents related to the provision of up to $105,000,000 for costs of the Project (the "Construction Loan Facility"). A portion of the proceeds of the Construction Loan Facility will be used to repay a $38,000,000 bridge loan made by Bank One, NA to the Landowner in connection with the acquisition and initial redevelopment of the Project. The documents evidencing the Construction Loan Facility were executed by the Landowner and Bank One, NA on January_, 2004. Various members -30- of the Landowner and related parties have provided completion and/or payment guarantees to Bank One, NA, in connection with the Construction Loan Facility. Advances of funds by Bank One, NA in respect of the Construction Loan Facility are subject to various conditions precedent, including a minimum equity investment in the Project, loan-to-value requirements, as well as various preleasing and other requirements. The Landowner expects to satisfy each such requirement prior to the time funds are needed, but no assurance can be given that Construction Loan Facility advances will be made as expected. The Landowner understands that Bank One, NA has participated out its obligation to fund the Construction Loan Facility. The Loan Facility provides for a term of 36 months, subject to an extension at the option of the Landowner (upon the satisfaction of various requirements), of an additional 12 months. The Landowner has not yet arranged for any takeout financing. SPECIAL RISK FACTORS Investment in the 2004 Bonds involves risks which may not be appropriate for certain investors. The following is a discussion of certain risk factors, in no particular order of importance, all of which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the 2004 Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of the Landowner or any future owner of the land in the District to pay the Special Taxes levied in the District when due. Such failure to pay Special Taxes could result in the inability of the City to make full and punctual payments of debt service on the 2004 Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. Concentration of Ownership As of the date of issuance of the 2004 Bonds, all of the land in the District subject to the levy of the Special Taxes is owned by the Landowner. The Landowner reports that it has no present intention to sell any portion of the land in the District subject to the levy of Special Taxes for the term of the 2004 Bonds, although it may in the future sell one or more parcels or the entire Project to others. The only significant asset of the Landowner is its ownership interest in the Project. The lack of diversity in the obligation to pay the Special Tax represents a significant risk to the Owners in that the Landowner's ability to pay the Special Tax will be dependent in large measure on the success of the Project. Failure of the Landowner (or any future owner of the land, if any, within the District) to pay the annual Special Tax when due could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of the delinquent parcels of land upon a foreclosure or otherwise. In that event, there could be a default in payments of the principal of, and interest on, the 2004 Bonds. See "SPECIAL RISK FACTORS — Insufficiency of Special Tax Revenues" below. Failure to Complete Project The Project includes construction of over 440,000 additional square feet of leasable space, as well as the construction of the Public Facilities and other site work. While construction of the first phase of the Project (involving the rehabilitation of an existing building that houses a new Kohl's Department Store and other site and utility work) has -31- been completed, the remainder of the construction is expected to be completed in additional phases commencing in the first quarter of 2004 and extending into the third quarter of 2005. The Appraisal referenced under the heading "Land Value" below contains an express assumption to the effect that the improvements being constructed as part of the Project will be completed. Any event that significantly impacts the ability to complete the Project on a timely basis (such as strikes or other work stoppages, loan defaults, lease terminations or other failure to satisfy conditions to the release of loan and Bond funds, adverse weather conditions, catastrophic events such as earthquakes or other natural events, or other similar events) could cause the value of the land within the District to be less than that estimated by the Appraiser and could affect the willingness and ability of the Landowner to pay the Special Taxes when due. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER — The Project" for additional information regarding the status of development in the District. Land Value The value of the land within the District is a critical factor in determining the investment quality of the 2004 Bonds. If a landowner defaults in the payment of the Special Tax, the City's only remedy is to commence foreclosure proceedings on the delinquent parcels in an attempt to obtain funds to pay the delinquent Special Tax. As stated under the heading "SECURITY FOR The 2004 Bonds —Land Value" above, the City commissioned the Appraisal Report for the land in the District subject to the levy of the Special Tax in which the Appraiser "concluded that, as of November 1, 2003, the market value of the leased fee estate of the property in its "as is" condition is $75,000,000. See APPENDIX C — APPRAISAL REPORT. The City makes no representation as to the accuracy of the Appraisal Report. The Appraisal Report is subject to certain assumptions, limited conditions and stipulations contained in the Appraisal Report, the text of which is in Appendix C hereto. Prospective purchasers of the 2004 Bonds should not assume that the land within the District could be sold for the appraised amount described in the Appraisal Report at a foreclosure sale for delinquent Special Taxes. For example, it is possible that the aggregate appraised value of the land in the District will not be realized through a foreclosure sale because of general economic conditions at the time of sale and the possible inability of a purchaser to assume existing tenant leases and any construction contracts, and to secure necessary funding to complete the Project. Additionally, reductions in the land value of the land in the District could occur due to a severe downturn in the retail industry, physical events such as earthquakes or floods or other similar unforeseen events all of which will adversely impact the completion of the construction and/or successful operation of the Project. The Market Feasibility Analysis obtained by the City for the Project, the Executive Summary of which is included as Appendix B to this Official Statement, states that "... due to the very fluid and dynamic nature of the economy and the real estate market, it is critical to continually monitor the economy and the market ..." The Market Feasibility Analysis concludes that the Project should capture more than an otherwise "fair share" of the retail demand in the market area of the Project See APPENDIX B —EXECUTIVE SUMMARY OF MARKET FEASIBILITY ANALYSIS. The Appraiser considered the Market Feasibility Analysis in connection with the preparation of the Appraisal Report, so that a failure of the Project to achieve the results anticipated in the Market Feasibility Report could adversely affect the value of the land in the District reflected in the Appraisal Report. -32- Dependence upon the Landowner and the Developer for Construction Neither the City nor the Underwriter make any representation or give any assurance with respect to the ability of the Landowner to complete the Project. The Landowner has entered into a Development Agreement with Snyder Huntington Development, LLC, a California limited liability company (the "Developer") dated as of September 6, 2001 (the "Development Management Agreement"), pursuant to which the Landowner has engaged . the services of the Developer to plan, arrange, supervise, administer, coordinate and monitor on behalf of the Landowner all development and construction services for the Project. The Development Management Agreement contemplates that the Landowner will enter into construction contracts with various contractors selected by the Developer for work related to the Project, and that the Developer will coordinate various activities in connection with the work necessary to complete the Project. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER" herein. As already noted, the first phase of the rehabilitation of the Project has been completed. In addition, the Landowner has entered into a construction agreement with Bomel Construction Company, Inc. ('Gomel"), dated as of December 3, 2002 for construction of the Parking Structure and adjacent improvements. Also, on December 18, 2002, the Landowner entered into a construction contract with Bayley Construction Company ('Bayley") for construction of certain other components of the Public Facilities. Notwithstanding the foregoing, additional contracts must be bid and awarded for the construction of the two new buildings and the remaining Public Facilities to be constructed and other rehabilitation work on existing buildings comprising portions of the Project. While the Landowner believes that it has obtained all necessary construction financing for the Project (see "THE DEVELOPER AND THE DEVELOPMENT - Financing Plan"), no assurance can be given that the Developer, Bomel, Bayley and such additional contractors will timely perform their obligations under the Development Management Agreement and the various construction contracts to which such entities, respectively, are parties, and that the Project will be completed as anticipated. Insufficiency of Special Tax Revenues In order to pay debt service on the 2004 Bonds, it is necessary that the Special Tax levied within the District be paid in a timely manner. Should the Special Tax not be paid on time, the District has established a Reserve Fund in the initial amount specified under the heading "THE FINANCING PLAN -Uses Of Bond Proceeds" to pay debt service on the 2004 Bonds to the extent other funds are not available therefore. Under the Fiscal Agent Agreement, the City has covenanted to maintain in the Reserve Fund an amount equal to the Reserve Requirement, with the sole source of monies to replenish the Reserve Fund being Special Tax Revenues collected that are in excess of Bond debt service and Administrative Expenses. See Appendix D hereto. As a result, if the Landowner or any future owner of land in the District is delinquent in the payment of the Special Tax, the City most likely will be unable to replenish the Reserve Fund to the Reserve Requirement because the Landowner or subsequent landowner is not then making any Special Tax payments. If such defaults were to continue in successive years, the Reserve Fund would soon be depleted and a default on the 2004 Bonds would occur. The Law provides that, if any property within the District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. The Owners will be dependent on the ability and/or willingness of the public entity to pay the Special Tax levied on such property when due. In addition, the Law provides that, if property subject to the Special Tax is -33- acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Law have not been tested. If for any reason any portion of the land subject to the Special Tax becomes exempt from taxation by reason of ownership by a public agency such as the federal government, the Special Tax will be reallocated to the remaining portion, if any, of the non tax-exempt land within the District, but in no case more than the maximum authorized Special Tax for such remaining acreage, if any. If a substantial portion of land within the District became exempt from the Special Tax because of public ownership or otherwise, the maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the 2004 Bonds when due or the owner of the remaining taxable acreage may not have a viable operating Project which provides revenues sufficient to pay the Special Taxes and realize a reasonable return on investment, and a default could occur with respect to the payment of the principal and interest on the 2004 Bonds. The City has covenanted to institute foreclosure proceedings to sell any parcel with delinquent Special Taxes in order to obtain funds to pay debt service on the 2004 Bonds, subject to the limitations set forth in the Fiscal Agent Agreement. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder with respect to a deed of trust on the delinquent parcel could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest. See "SECURITY FOR THE 2004 BONDS—Covenant for Superior Court Foreclosure" for provisions which apply in the event foreclosure is required and which the City is required to follow in the event of delinquency in the payment of Special Taxes. In the event such superior court foreclosure or foreclosures are necessary, there could be a delay in payments to Owners pending prosecution of the foreclosure sale, if the Reserve Fund were depleted. No assurances can be given that any parcel subject to foreclosure and sale at a judicial foreclosure sale will be sold, or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax. Although the Law authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Law does not specify the obligations of the City with regard to purchasing or otherwise acquiring any parcel at the execution sale pursuant to the judgment in any such action if there is no other purchaser at such sale. The City has no obligation to be a bidder at a foreclosure sale and has no intention to do so. The District is not included within the "Teeter Plan." The Orange County Board of Supervisors utilizes the alternative method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as provided for in section 4701 et seq. of the California Revenue and Taxation Code. Generally, the Teeter Plan provides for a tax distribution procedure in which secured roll taxes and assessments are distributed to taxing agencies within the County on the basis of the tax and assessment levy, rather than on the basis of actual tax and assessment collections. The County, rather than the respective levying agency, then receives all future delinquent tax and assessment payments and penalties. As stated above, the District is not included within the Teeter Plan. Competition Because the District consists of only the parcels on which the Project is located being subject to the levy of the Special Taxes, the financial success of the Project is important to the ability and willingness of the Landowner to pay the Special Taxes when due. The Market Feasibility Analysis of Robert Charles Lesser & Co., LLC dated October 2003 obtained by the City, the Executive Summary of which is included in Appendix B to this -34- Official Statement, examines the competitive positioning of the Project, as well as various retail demand, lease rate and other factors related to the prospective successful operation of the Project. The Market Feasibility Analysis describes various other facilities that are expected to provide competition for retail, theatre, restaurant and other possible customers of the services to be offered by the tenants in the Project. Despite the many possible competing facilities identified in the Market Feasibility Analysis, the Market Feasibility Analysis concludes that the Project is estimated to achieve 25% to 50% above its fair share capture rate of retail expenditures in the Project's trade area and that the trade area generates a demand for approximately 30 additional movie screens. Notwithstanding the foregoing, the Market Feasibility Analysis also states that "... due to the very fluid and dynamic nature of the economy and the real estate market, it is critical to continually monitor the economy and the market..." The Market Feasibility Analysis is also subject to various critical assumptions and general limiting conditions, including that the information provided to the authors of the Market Feasibility Analysis in connection with its preparation was correct, complete and reliable, and that economic, employment and household growth will occur more or less in accordance with current expectations, and that competitive projects will be developed as planned. If any of the assumptions in the Market Feasibility Analysis prove to be incorrect, or any of the limiting conditions therein obviate a negative aspect of prospective competition on the success of the Project, the ability of the Project to compete in the identified trade area could be less than projected, which could result in an inability of the Project to generate a sufficient return to make it economically viable. Bankruptcy and Foreclosure Delays The payment of Special Taxes and the ability of the District to foreclose the lien of a delinquent unpaid Special Tax, as discussed in the section herein entitled "SECURITY FOR THE 2004 BONDS — Covenant for Superior Court Foreclosure," may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed due to crowded local court calendars or legal delaying tactics. The various legal opinions to be delivered concurrently with the delivery of the 2004 Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Regardless of the priority of the Special Taxes securing the 2004 Bonds over non- governmental liens on the land in the District, the exercise by the City of the foreclosure and sale remedy may be forestalled or delayed by bankruptcy, reorganization, insolvency, or other similar proceedings of the Landowner, or anyone else who claims an interest in the land in the District. The federal bankruptcy laws provide for an automatic stay of foreclosure and sale proceedings, thereby delaying such proceedings perhaps for an extended period. Delay in exercise of remedies or the institution of bankruptcy proceedings may cause Special Tax collections to be insufficient to pay debt service on the 2004 Bonds. This is especially true when ownership of the taxable land 'in the District is (and is, for the term of the 2004 Bonds, expected to be) concentrated with one owner, as is the case in the District. Further, should remedies be exercised under the bankruptcy law against the land in the District, payment of Special Taxes may be subordinated to other claims in the bankruptcy proceedings (such as claims for administrative expenses and post bankruptcy petition loans). Thus, certain claims may have priority over a claim for unpaid Special -35- Taxes, even though, in the absence of the bankruptcy proceedings, no such priority would exist. On July 30, 1992 the United States Court of Appeals for the Ninth Circuit issued an opinion in a bankruptcy case entitled In re Glasply Marine Industries holding that ad valorem property taxes levied by a county in the State of Washington after the date that the property owner filed a petition for bankruptcy would not be entitled to priority over the claims of a secured creditor with a prior lien on the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed subsequent to the filing of the bankruptcy petition were declared to be "administrative expenses" of the bankruptcy estate, payable after the claims of all secured creditors. As a result, the secured creditor was able to foreclose on the subject property and retain all the proceeds from the sale thereof except the amount of the pre-petition taxes. Pursuant to this holding, post-petition taxes would be paid only as administrative expenses and only if a bankruptcy estate has sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise) it would be subject only to current ad valorem taxes (i.e., not those accruing during the bankruptcy proceeding). Glasply was controlling precedent on bankruptcy courts in the State of California for several years subsequent to the date of the Ninth Circuit's holding. Pursuant to state law, the lien date for general ad valorem property taxes levied in the State of California is the January 1 preceding the Fiscal Year for which the taxes are levied. Under the Glasply holding, a bankruptcy petition filing would have prevented the lien for general ad valorem property taxes levied in Fiscal Years subsequent to the filing of a bankruptcy petition from attaching and becoming a lien so long as the property was a part of the estate in bankruptcy. However, the Glasply holding was for the most part subsequently rendered inoperative with respect to the composition of a lien for and the collection of ad valorem taxes by amendments to the federal Bankruptcy Code (Title 11 U.S.C.) which were part of the Bankruptcy Reform Act of 1994 (the "Bankruptcy Reform Act") passed by Congress during the later part of.1994. The Bankruptcy Reform Act added a provision to the automatic stay section of the Bankruptcy Code which, pursuant to Section 362(b)(18) thereof, excepts from the Bankruptcy Code's automatic stay provisions, "the creation of a statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state,if such tax comes due after the filing of the petition" by a debtor in bankruptcy court. The effect of this provision is to continue the secured interest of ad valorem' taxes on real property (i.e., post-petition taxes) in effect during the period following the filing of a bankruptcy petition, including during the period bankruptcy proceedings are pending. Without further clarification by the courts or Congress, the original rationale of the Glasply holding could, however, still result in the treatment of post-petition special taxes (and assessments) as "administrative expenses," rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings. First, special taxes have a different lien date than the lien date for general ad valorem taxes in the State of California. The lien of a Mello-Roos special tax attaches upon recordation of the notice of the special tax lien as provided for in Section 53328.3 of the Law, as opposed to the January 1 lien date for general ad valorem taxes. Thus, in deciding whether the original Glasply ruling is applicable to a bankruptcy proceeding involving special taxes rather than general ad valorem property taxes, a court might consider the differences in the statutory provisions for creation of the applicable tax lien (general ad valorem or special tax) in determining whether there is a basis for post-petition special taxes to be entitled to a lien on the property during pending bankruptcy proceedings. If a court were to apply Glasply to eliminate the priority of the special tax lien as a secured claim against property with respect to post petition levies of the Special Taxes made against an owner of land within the District who -36- files for bankruptcy, collections of the Special Taxes from such property owner could be reduced as the result of being treated as "administrative expenses" of the bankruptcy estate. Second, and most importantly, is the fact that the original holding in Glasply and the mitigation of that holding by the Bankruptcy Reform Act of 1994 both appear to be applicable only to general ad valorem taxes, and, therefore, the exemption from the automatic stay in Section 362(b)(18) discussed above may not be applicable to special taxes or assessments since they were not expressly mentioned or provided for in this section, nor defined to be included within the term "ad valorem taxes." Any prohibition of the enforcement of Special Tax lien, or any such non-payment or delay would increase the likelihood of a delay or default in payment of the principal of and interest on the 2004 Bonds. Because the Landowner is the sole owner of the land in the District, the payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax could be substantially curtailed by bankruptcy, insolvency, or other laws generally affecting creditors' rights applicable to an insolvency of the Landowner (or a successor in interest to the land in the District) or by the laws of the State relating to judicial foreclosure if the Landowner (or a successor in interest thereto) fails to pay the Special Tax levied in the District. No assurances can be given that any financial difficulties experienced by the Landowner in the future, or any other landowner within the District in the future, will not adversely affect the completion and operation of the Project. Direct and Overlapping Indebtedness The ability of the Landowner, or any subsequent owner of the land within the District, to pay the Special Tax could be affected by the existence of other taxes and assessments imposed upon the property in the District. In addition, other public agencies whose boundaries overlap those of the District could, without the consent of the City, and in certain cases without the consent of the owners of the land within the District, impose additional taxes or assessment liens on the property within the District in order to finance public improvements to be located inside of or outside of the District. The lien created on the property within the District through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Tax. -37- Set forth below is a table which sets forth the direct and overlapping debt for the District provided by California Municipal Statistics, Inc. on November 2003: CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 DST AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 11/ /03 Orange County Teeter Plan Obligations $ Metropolitan Water District City of Huntington Beach Community Facilities District No.2003-1 100.000 25,000,000 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ OVERLAPPING GENERAL FUND OBLIGATION DEBT: Orange County General Fund Obligations Orange County Pension Obligations Orange County Transit District Authority Coast Community College District Certificates of Participation City of Huntington Beach General Fund Obligations Municipal Water District of Orange County Water Facilities Corporation Orange County Water District Certificates of Participation Orange County Sanitation District No.11 Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT $ Less: Orange County Transit District Authority(80% self-supporting) MWDOC Water Facilities Corporation(100%self-supporting) Orange County Water District Certificates of Participation(100%self-supporting) TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT $ GROSS COMBINED TOTAL DEBT $ (2) NET COMBINED TOTAL DEBT $ (1) Issue to be sold. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non- bonded capital lease obligations. STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/03: $0 Geologic, Topographic and Climatic Conditions The market value of the real property subject to the levy of the Special Tax can be adversely affected by factors which may affect infrastructure and other public and private improvements in the District and the continued usability of such improvements. These factors include, without limitation, geologic conditions (such as earthquakes), topographic conditions (such as earth movements) and climatic conditions (such as floods, droughts and fire hazard). Like other areas of Southern California, property in the District is subject to the risk of major earthquake damage. Although the Huntington Beach area has not experienced any major earthquakes in the past 50 years, the Newport-Inglewood fault, at its closest, is about 1/2 mile from the boundary of the District. A significant earthquake along such fault is possible during the period the 2004 Bonds will be outstanding. The most recent major earthquake was in 1933, with a magnitude of 6.3 on the Richter scale and an epicenter in the Huntington Harbor area, approximately 5 miles from the boundary of the District. The Landowner has advised the City that the two new buildings being constructed as a part of the Project will be constructed in accordance with current State earthquake standards. Notwithstanding such construction, an earthquake or one or more of the other conditions described in the second preceding paragraph may occur and may cause damage to public and private improvements on parcels in the District of varying seriousness, and any such damage may entail significant repair or replacement costs (or such repair or -38- replacement may never occur either because of the cost or because repair or replacement will not-facilitate usability or because other considerations may preclude such repair or replacement). Consequently, the occurrence of any of these conditions could result in a significant decrease in the market value of the land in the District subject to the Special Tax levy or in the Project becoming uneconomical to operate or otherwise becoming unmarketable upon a failure to pay Special Taxes and a subsequent foreclosure sale. According to the Federal Emergency Management Agency (FEMA), the land in the District is located in an "A99" flood zone, as shown on the National Flood Insurance Program map 065034-0045F, dated January 3, 1997. An "A99" zone is identified as a special flood hazard area inundated by the 100-year flood to be protected from the 100-year flood by a Federal flood protection system under construction. Flood insurance is required by the Flood Disaster Protection Act of 1973. The Landowner has reported that it expects to obtain and maintain flood insurance as required by the documents relating to the Construction Loan Facility to be provided for the Project. See "THE PROJECT, THE LANDOWNER AND THE DEVELOPER — Financing Plan" herein. No assurance can be given that such insurance will be maintained as expected or that the proceeds of such insurance will be sufficient to fully repair any prospective flood damage to the Project. Hazardous Materials While government taxes, assessments and charges are a common claim against the value of a taxed parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to pay the Special Tax is a claim with regard to a hazardous substance. In general, the owners and operators of a taxed parcel 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 1989, sometimes referred to as "CERCLA" or "Superfund Act," is a well known one of these laws, but California laws with regard to hazardous substances are also stringent and somewhat similar. Under many of these laws, the owner (or operator) is obligated to remediate hazardous substances on, under or about the property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance; however, an owner (or operator) who is not at fault may seek recovery of its damages from the actual wrongdoer. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, may be to reduce the marketability and value of the parcel, because the purchaser, upon becoming an owner, may become obligated to remedy the condition just as is the seller. The appraised value of the land in the District referred to in this Official Statement does not take into account the possible reduction in marketability and value of any of the taxed parcels by reason of the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the parcel. In May of 2002, the Developer obtained a Preliminary Environmental Site Assessment — Phase 1 Update from California Environmental (the "May, 2002 Report"), the purpose of which was to provide information regarding the potential for hazardous material impacts to the soil and groundwater beneath the Project site. The May, 2002 Report identified various prior users of the Project site, including a former JC Penny/Firestone Auto Center, a Chevron Service Center, a dry cleaning facility and other users. The May, 2002 Report revealed several areas of impacted soil and groundwater. On November 18, 2002, California Environmental provided an additional report (the "November,2002 Report") to the Developer relating to the results of subsurface assessment work conducted at the Project site, including soil and groundwater sampling and a review -39- of updated environmental documentation for the Project site. The November, 2002 Report examined in detail various environmental site conditions, many of which were initially identified in the May,2002 Report, with five potential areas of remediation delineated. The November, 2002 Report referenced various indemnity agreements for the responsible parties related to certain of the areas, and provided estimates for future remedial treatment costs, The estimated remediation costs ranged from a total of $560,000 to a total of $960,000. On June 2, 2003, California Environmental provided to the Developer and the Landowner an updated cost estimate for remedial work at the Project site (the "June, 2003 Report"). The June, 2003 Report advised that, since the November, 2002 Report additional assessment work and/or site preparation work had occurred in the five identified potential remediation areas, which allowed for modification by California Environmental of assumptions used in connection with the November, 2002 Report. In certain areas, no contaminated soil was found and other environmental hazards were subject to remediation efforts. The June, 2003 Report recommended a total remediation contingency of $40,400. The Landowner reports that it has a plan to complete all recommended remediation, and expects to complete the same as it completes the other work related to the Project. No assurance can be given that the above-referenced reports identified all environmental hazards involved with the Project site. Property Controlled by Federal Deposit Insurance Corporation The City's ability to collect interest and penalties specified by State law and to foreclose the lien of a delinquent Special Tax payments may be limited in certain respects with regard to properties in which the Internal Revenue Service, the Drug Enforcement Agency, the Federal Deposit Insurance Corporation (the "FDIC") or other similar federal agencies has or obtains an interest. The City is not aware of any such interest of a' federal agency in the land within the District subject to the levy of Special Taxes, and all of such land is owned in fee by the Landowner. However, such an interest could arise, for example, if a loan secured by a deed of trust on the Project is made by an FDIC-insured lending institution which institution is subsequently dissolved by the FDIC so that the FDIC effectively becomes the lender. On June 4, 1991 the FDIC issued a Statement of Policy Regarding the Payment of State and Local Real Property Taxes. The 1991 Policy Statement was revised and superseded by a new Policy Statement effective January 9, 1997 (the "Policy Statement"). The Policy Statement provides that real property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. 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. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. -40- 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 that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Law and a special tax formula which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The United States Court of Appeals for the Ninth Circuit has issued an opinion regarding claims filed by the FDIC in the Orange County, California Chapter 9 bankruptcy proceedings seeking refunds of real property tax penalties for properties which were the subject of FDIC receiverships (In re: County of Orange, Debtor. Federal Deposit Insurance Corporation, Appellant-Cross-Appellee v. County of Orange, Appellee-Cross-Appellant, 262 F.3d 1014). The court affirmed a decision of the Bankruptcy Appellate Panel that the FDIC could not avoid pre-receivership liens for these penalties but that the FDIC is not liable for penalties that are not secured by liens both before and after the receivership or for post-receivership special taxes levied pursuant to the Act. This opinion is binding on federal courts in California. The Policy Statement is consistent with this opinion. The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to a parcel in which the FDIC has an interest, although prohibiting the lien of the FDIC to be foreclosed on at a judicial foreclosure sale would likely reduce the number of or eliminate the persons willing to purchase such a parcel at a foreclosure sale. Owners of the 2004 Bonds should assume that the City will be unable to foreclose on any parcel owned by the FDIC. Such an outcome would cause a draw on the Reserve Fund and perhaps, ultimately, a default in payment of the 2004 Bonds. The City has not undertaken to determine whether the FDIC or any FDIC- insured leading institution currently has, or is likely to acquire, any interest in the Landowner's fee interest in the land in the District, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the 2004 Bonds are outstanding. Disclosure to Future Property Owners or Lenders The City recorded a notice of Special Tax Lien with respect to the District in the Office of the County Recorder of the County of Orange on February 20, 2003. While title insurance and search 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 the Special Tax obligation in the purchase of the Project, or the lending of money thereon. Under the Law, the Landowner has an obligation to disclose the existence of the Special Tax to any future purchaser of the Project or any portion thereof. Failure to disclose the existence of the Special Tax may affect the willingness and ability of a future owner of the Project or any portion thereof to pay the Special Tax when due. Non-Cash Payments of Special Taxes Under the Law, the City Council may reserve to itself the right and authority to allow the owner of any taxable land to tender a Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of land in the District to pay the Special Tax applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the City to make payments with respect to Bonds then outstanding; and, unless the practice was -41- limited by the City, the Special Tax paid in cash could be insufficient to pay the debt service due with respect to Bonds. Payment of the Special Tax is not a Personal Obligation of the Owners The Landowner (or any future owner of land in the District) is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcels of land within the District. If the value of any such parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the payment of the Special Tax, the City has no recourse against the owner of the parcel. Limitations on Remedies Remedies available to the owners of the 2004 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the 2004 Bonds or to preserve the tax-exempt status of the 2004 Bonds. Bond Counsel has limited its opinion as to the. enforceability of the 2004 Bonds and of the Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditors' rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners of the 2004 Bonds. Proceedings to Reduce or Terminate the Special Tax An initiative measure commonly referred to as the"Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIIIC and Article MID to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes and property-related assessments, fees and charges." The provisions of the Initiative have not yet been interpreted by the courts, although several lawsuits have been filed requesting the courts to interpret various aspects of the Initiative. The Initiative could potentially impact the Special Tax available to the City to pay the principal of and interest on the 2004 Bonds as described below. Among other things, Section 3 of Article XIIIC states that ". . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Law provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Law prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Law unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1,1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that: "Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution." Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the -42- power to repeal or reduce the Special Tax if such reduction would interfere with the timely retirement of the 2004 Bonds. It may be possible, however, for voters or the City Council acting as the legislative body of the District to reduce the Special Tax in a manner which does not interfere with the timely repayment of the 2004 Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels, or that eliminates the portion of the Special Tax levy for maintenance and operation of the Parking Structure. Furthermore, no assurance can be given with respect to the future levy of the Special Tax in amounts greater than the amount necessary for the timely retirement of the 2004 Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses or for expenses of operating and maintaining the Parking Structure. Nevertheless, in the Fiscal Agent Agreement the City has covenanted that to the extent it is legally permitted to do so, it will levy the Special Taxes for the payment of Administrative Expenses which.are expected to be incurred in each Fiscal Year. Also, the City has covenanted in the Fiscal Agent Agreement that, to the extent it is legally permitted to do so, it will not initiate proceedings under the Mello-Roos Community Facilities Act of 1982 to reduce the maximum Special Tax rates (the "Maximum Rates") on then existing property subject to Special Taxes below the amounts which are necessary to provide Special Tax Revenues in an amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service on the outstanding Bonds. The City has further covenanted in the Fiscal Agent Agreement that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIII C of the California Constitution, which purports to reduce or otherwise alter the Maximum Rates, it will commence and pursue legal action seeking to preserve its ability to comply with its covenant described in the preceding sentence. No assurance can be given as to the enforceability of the foregoing covenants. The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS — Limitations on Remedies." Loss of Tax Exemption As discussed under the caption "CONCLUDING INFORMATION - Tax Matters" herein, interest on the 2004 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the 2004 Bonds were issued, as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement. Should such an event of taxability occur, the 2004 Bonds are not subject to a special redemption and will remain outstanding until maturity or until redeemed under one of the other redemption provisions contained in the Fiscal Agent Agreement. Limited Secondary Market The Underwriter will not be obligated to repurchase any of the 2004 Bonds, and no representation is made concerning the existence of any secondary market for the 2004 Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the 2004 Bonds, and no assurance can be given that the initial offering prices for the 2004 Bonds will continue for any period of time. Although the City and the Landowner each has committed to provide certain statutorily-required financial and operating information on an ongoing basis, there can be no assurance that such information will be available to Bondowners on a timely basis. See -43- "CONCLUDING INFORMATION - Continuing Disclosure." The failure to provide the required ongoing financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. No Acceleration Provision The Fiscal Agent Agreement does not contain a provision allowing for the acceleration of the unpaid principal of the 2004 Bonds in the event of a payment default or other default under the terms of the 2004 Bonds or the Fiscal Agent Agreement. CONCLUDING INFORMATION Continuing Disclosure The City has covenanted in a City Continuing Disclosure Agreement for the benefit of the Owners of the 2004 Bonds to provide annually certain financial information and operating data, and to provide notices of the occurrence of certain enumerated events, if material. The Landowner has covenanted in a separate Landowner Continuing Disclosure Agreement for the benefit of the Owners of the 2004 Bonds to provide semiannually certain financial and operating data, and to provide notice of the occurrence of certain specified events. The City and the Landowner have each agreed in their respective Continuing Disclosure Agreements to file, or cause to be filed, with each Nationally Recognized Municipal Securities Information Repository and each State Repository each report and each notice of events. See APPENDIX F - FORMS OF CONTINUING DISCLOSURE AGREEMENTS. The covenants of the City and the Landowner have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5) (the "Rule"). The City has never failed to comply in all material respects with any undertaking by the City under the Rule, and the Landowner has advised the City that the Landowner Continuing Disclosure Agreement is the first undertaking of the Landowner under the Rule. A default by the City or the Landowner under a Continuing Disclosure Agreement will not,in itself, constitute a default under the Fiscal Agent Agreement. The Fiscal Agent will act as the initial dissemination agent under the Continuing Disclosure Agreements. See APPENDIX F-FORMS OF CONTINUING DISCLOSURE AGREEMENTS. Absence of Litigation At the time of delivery of and payment for the 2004 Bonds the City will deliver a certificate to the effect that there is no known action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or regulatory agency against the City or the District affecting the existence of the City or the District or the title of their respective officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the 2004 Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Taxes to pay the principal of and interest on the 2004 Bonds, or in any way contesting or affecting the validity or enforceability of the 2004 Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, or -44- any other applicable agreements or any action of the City or the District or contemplated by any of said documents. Tax Matters In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, under existing statutes, regulations, rules and court decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the 2004 Bonds is excluded from gross income for federal income tax purposes and is exempt from personal income taxation imposed by the State of California. Bond Counsel is further of the opinion that interest on the 2004 Bonds is not a specific preference item for purposes of the alternative minimum tax provisions of the Internal Revenue Code of 1986, as amended (the "Code"). However, with respect to the 2004 Bonds owned by corporations (as defined for federal income tax purposes), interest on the 2004 Bonds may be included in adjusted current earnings, a portion of which may increase the alternative minimum taxable income of such corporations. In addition, although interest on the 2004 Bonds is excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the 2004 Bonds and the ownership of the 2004 Bonds may otherwise affect the federal income tax liability of certain persons or entities. Bond Counsel expresses no opinion regarding any such consequences. The Code sets forth certain requirements which must be met subsequent to the issuance and delivery of the 2004 Bonds for interest paid with respect thereto to be and remain exempt from federal income taxation. Noncompliance with such requirements might cause the interest paid on the 2004 Bonds to be subject to federal income taxation retroactive to the date of issue and the 2004 Bonds. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the 2004 Bonds and other amounts are to be invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the Treasury Department of the United States. Pursuant to the Fiscal Agent Agreement, the City has covenanted to comply with all such requirements. In rendering such opinions, Bond Counsel is assuming that the City will comply with its covenants in the Fiscal Agent Agreement to comply with the requirements of the Code. Noncompliance with the Code might cause the interest on the 2004 Bonds to be subject to federal income taxation retroactive to the date of issuance and delivery of the 2004 Bonds. The complete text of Bond Counsel's final opinion with respect to the 2004 Bonds is set forth in Appendix G hereto. Legal Matters Incident to the Issuance of the 2004 Bonds Certain legal matters incident to the authorization and issuance of the 2004 Bonds are subject to the approving opinion of Best Best & Krieger LLP, acting in its capacity as Bond Counsel. Certain legal matters related to the 2004 Bonds and the District will be passed upon for the City by the City Attorney, certain legal matters related to disclosure will be passed upon for the City by Quint & Thimmig LLP, acting as Disclosure Counsel to the City, and certain legal matters will be passed upon for the Landowner by Allen Matkins Leck Gamble & Mallory LLP, and Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro LLP, Los Angeles, California; and for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Underwriter's Counsel. Payment of Bond Counsel's and Disclosure Counsel's fees and expenses is contingent upon the sale and issuance of the 2004 Bonds. The various legal opinions to be delivered concurrently with the delivery of the 2004 Bonds will be qualified as to enforceability of the various legal instruments by -45- limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. No Rating The 2004 Bonds are not rated. No application has been made by the City to any rating agency for the assignment of a municipal bond credit rating on the 2004 Bonds. Underwriting The 2004 Bonds are being purchased by the Underwriter for a price of $ being equal to the initial principal amount of the 2004 Bonds of $ less an Underwriter's discount of $ . The Underwriter has committed to purchase all of the 2004 Bonds if any of the 2004 Bonds are purchased. The 2004 Bonds are being offered for sale to the public at the prices set forth on the cover page of this Official Statement, which prices may be changed by the Underwriter from time to time without notice. The 2004 Bonds may be offered and sold to dealers, including the Underwriter and dealers acquiring 2004 Bonds for their own account or an account managed by them, at prices lower than the public offering price. Miscellaneous Any statements made in this Official Statement involving matters of opinion or of estimates,whether or not expressly stated, are intended as such and not as representations of fact. No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract or agreement between any of the City, the District or the Underwriter and the purchasers or the owners of the 2004 Bonds. -46- The execution and delivery of this Official Statement has been duly authorized by the City Council. CITY OF HUNTINGTON BEACH By: City Administrator -47- APPENDIX A SUMMARY OF THE FISCAL AGENT AGREEMENT The following is a summary of certain provisions of the Fiscal Agent Agreement and is supplemental to the summary of other provisions of the Fiscal Agent Agreement contained elsewhere in this Official Statement. This summary is not intended to be definitive. Reference is made to the Fiscal Agent Agreement for the complete text thereof. Copies of the Fiscal Agent Agreement are available from the City. Definitions "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code. "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying out its duties in the Fiscal Agent Agreement (including, but not limited to, the levying and collection of the Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto, any amounts paid by the City from its general funds pursuant to the Fiscal Agent Agreement, the fees and expenses of the Financial Advisor, and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the discharge of their respective duties and, in the case of the City, in any way related to the administration of the District. "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, and (ii) the principal amount of the Outstanding Bonds scheduled to be paid. "Auditor" means the Auditor-Controller of the County of Orange. "Authorized Officer" means any officer or employee of the City authorized by the City Council or by an Authorized Officer to undertake the action referenced in the Fiscal Agent Agreement as required to be undertaken by an Authorized. Officer. "Bond Year" means the period beginning on the Closing Date and ending on September 1,2004 and thereafter the period beginning on each September 2 and ending on the following September 1. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of California or in any state in which the Fiscal Agent has its Principal Office are authorized or obligated by law or executive order to be closed. "Capitalized Interest Sub-account" means the sub-account by that name established in the Interest Account in the Bond Fund. "Closing Date" means the date upon which there is an exchange of the Bonds for the proceeds representing payment of the purchase price of the Bonds by the Original Purchaser. A-1 "Code" means the Internal Revenue Code of 1986, as amended. "Continuing Disclosure Agreement" means the Continuing Disclosure Certificate - Issuer between the City and the Fiscal Agent, as Dissemination Agent thereunder, dated as of the Closing Date, as originally executed and as it may be amended from time to time in accordance with the terms thereof. "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, printing costs, costs of reproducing and binding documents, including but not limited to the preliminary official statement and official statement regarding the Bonds, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee and the fees of its counsel, expenses incurred by the City in connection with the issuance of the Bonds and the establishment of the District, Bond (underwriter's) discount, legal fees and charges, including the fees of Bond Counsel, Disclosure Counsel and counsel to the Underwriter, Financial Advisor's fees, charges for authentication, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing. "Debt Service" means the amount of interest and principal payable on the Bonds scheduled to be paid during the period of computation, excluding amounts payable during such period which relate to principal of the Bonds which are scheduled to be retired and paid before the beginning of such period. "Defeasance Securities" means the following: (i) United States Treasury Certificates, Notes and Bonds (including State and Local Government Series -"SLGs"); and (ii) Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard & Poor's; provided, however, that if the issue is only rated by Standard & Poor's (i.e., there is no Moody's rating),then the pre-refunded bonds must have been pre-refunded with cash, direct United States or United States guaranteed obligations, or "AAA" rated pre-refunded municipal bonds. "Federal Securities" means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein: (i) Cash; and (ii) Direct general obligations of (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America and CATS and TIGRS), or obligations, the payment of principal of and interest on which is unconditionally guaranteed by, the United States of America. "Fiscal Year"means the twelve-month period extending from October 1 in a calendar year to September 30 of the succeeding year, both dates inclusive. "Independent Financial Consultant" means a firm of certified public accountants, a financial consulting firm, a consulting engineering firm or engineer on the Original Purchaser, which is not an employee of, or otherwise controlled by, the City. A-2 "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, loth 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, Inc.'s "Municipal and Government," 99 Church Street, 8th Floor,New York,New York 10007, Attention: Municipal News Reports; Standard & Poor's Corporation's "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004;and, in accordance with then current guidelines of the Securities and Exchange 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. "Investment Earnings" means all interest earned and any gains and losses on the investment of moneys in any fund or account created by the Fiscal Agent Agreement excluding interest earned and gains and losses on the investment of moneys in the Rebate Fund. "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. "Municipal Code" means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City. "Officer's Certificate" means a written certificate of the City signed by an Authorized Officer of the City. "Ordinance" means any ordinance of the City or resolution of the City Council levying the Special Taxes. "Original Purchaser" means the first purchaser of the Bonds from the City. "Outstanding," when used as of any particular time with reference to the Bonds, means all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds called for redemption which, are no longer entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price therefor; (iii) Bonds paid or deemed to have been paid within the meaning of the Fiscal Agent Agreement; and (iv) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City and authenticated by the Fiscal Agent pursuant to the Fiscal Agent Agreement or any Supplemental Agreement. "Owner" means any person who shall be the registered owner of any Outstanding Bond. "Permitted Investments" means: (i) Federal Securities; A-3 (ii) Bonds, debentures, notes or other evidence issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (a) Federal Intermediate Credit Bank (b) Federal Land Bank (c) Tennessee Valley Authorities (d) Government National Mortgage Association (iii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit United States government agencies: (a) Federal Home Loan Bank (b) Federal Home Loan Mortgage Corporation (c) Federal National Mortgage Association (d) Student Loan Marketing Association (e) Small Business Administration (iv) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor's of AAAm-G, AAA-m or AA-m and, if rated by Moody's, rated Aaa, Aa1 or Aa2 by Moody's with a minimum of $500 million in assets under management including funds for which the Trustee or its affiliates provide investment or other advisory services; (v) Certificates of deposit secured at all times by collateral described in clauses (i) and/or (ii) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks of which the short-term obligations are rated A-1 or better and P1 or better by Moody's or Standard & Poor's. The collateral must be held by a third party and the Fiscal Agent on behalf of the Owners of the Bonds must have a perfected first security interest in the collateral; (vi) Time deposits - certificates of deposit, which are fully insured by FDIC, including BIF and SAIF with banks with the rating of at least Al or P1 by Moody's or Standard & Poor's; (vii) Investment agreements with domestic or foreign banks, insurance companies other than a life or property casualty insurance company, or corporations the long-term debt or claims paying ability of which or, in the case of a guaranteed corporation, the long- term debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, claims paying ability or financial strength, of the guarantor is rated in at least the double A category by Standard & Poor's and Moody's; provided that, by the terms of the investment agreement: A-4 (a) interest payments are to be made to the Fiscal Agent at times and in amounts as necessary to pay debt service on the Bonds (if the funds invested pursuant to the investment agreement are from the Reserve Fund); (b) the invested funds are available for withdrawal without penalty or premium, upon not more than seven (7) days' prior notice; (c) the investment agreement shall provide that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof; (d) the City and the Fiscal Agent receive the opinion of domestic counsel (which opinion shall be addressed to the City) that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the City; (e) the investment agreement shall provide that if during its term (1) the provider's rating by either Standard & Poor's or Moody's falls below "AA-" or "AAY, respectively, the provider shall, at its option, within ten (10) days of receipt of publication of such downgrade, either (i) collateralize the investment agreement by delivering or transferring in accordance with the applicable state and federal laws (other than by means of entries on the provider's books) to the City, the Fiscal Agent or a third party acting solely as agent therefor (the "Holder of the Collateral") collateral free and clear of any third-party liens or claims, the market value of which collateral is maintained at one hundred four percent (104%) of securities identified in clauses (i) and (ii) of this definition; or (ii) assign the investment agreement and all of its obligations thereunder to a financial institution mutually acceptable to the Provider and the City which is rated either in the first or second highest category by Standard & Poor's and Moody's; and (2) the provider's rating by either Standard & Poor's or Moody's is withdrawn or suspended or falls below "A-" or "AY, respectively, the provider must,at the direction of the City or the Fiscal Agent, within ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid interest on the invested funds, in either case with no penalty or premium to the City or the Fiscal Agent; and (f) the investment agreement shall provide 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 shall mean the Holder of the Collateral is in possession of such collateral); and (g) the investment agreement shall 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 City or the Fiscal Agent, be accelerated and amounts invested and A-5 accrued but unpaid interest thereon shall be paid to the City or the 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 paid to the City or the Fiscal Agent, as appropriate; (viii) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's and "A-1" or better by Standard & Poor's having original maturity of not more than 270 days issued by a domestic corporation having assets in excess of $500 million; (ix) Bonds or notes issued by any state or municipality which are rated by Moody's and Standard & Poor's in one of the two highest rating categories assigned by them; (x) Federal funds or bankers acceptances with a maximum term of 270 days of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime -1" or "A3" or better by Moody's and "A-1" or better by Standard & Poor's; (xi) Repurchase agreements which satisfy the following criteria: (a) Repurchase agreements must be between the City or the Fiscal Agent and a dealer bank or securities firm which is: (1) A primary dealer on the Federal Reserve reporting dealer list which is rated "A" or better by two of the following Standard & Poor's, Moody's, or Fitch; or (2) A domestic bank or a domestic branch of a foreign bank rated "A" or above by two of the following: Standard & Poor's, Moody's or Fitch; or (3) Corporations the long-term debt or claims paying ability of which, or in the case of a guaranteed corporation, the long-term debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, claims paying ability or financial strength, is rated in at least the double A category by Standard & Poor's and Moody's; and (b) The written agreement must include the following: (1) Securities which are acceptable for transfer are, (A) direct obligations of the United States government, or (B) obligations of federal agencies backed by the full faith and credit of the United States of America (or the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC)), (2) The collateral must be delivered to the Fiscal Agent (if the Fiscal Agent is not supplying the collateral) or a third party:acting as agent for the Fiscal Agent (if the Fiscal Agent is supplying the collateral) before or A-6 simultaneous with payment (perfection by possession of certificated securities), (3) (A) The securities must be valued weekly, marked-to-market at current market price plus accrued interest, (B) The value of the collateral must be at least equal to one hundred four percent (104%) of the amount of money transferred by the Fiscal Agent to the dealer, bank or security firm under the agreement plus accrued interest. If the value of the securities held as collateral is reduced below one hundred four percent (104%) of the value of the amount of money transferred by the Fiscal Agent, then additional acceptable securities and/or cash must be provided as collateral to bring the value of the collateral to one hundred four percent (104%); provided, however, that if the securities used as collateral are those of FNMA or FHLMC, then the value of the collateral must equal to one hundred five percent (105%) of the amount of money transferred by the Fiscal Agent; and (c) A legal opinion must be delivered to the City and the Fiscal Agent that the repurchase agreement meets the requirements of California law with respect to the investment of public funds; and (d) Should the provider's rating by either Standard & Poor's or Moody's be withdrawn or suspended or fall below "A-" or "AY, respectively, the provider must,at the direction of the City or the Fiscal Agent, within ten(10)days of receipt of such direction, repay the principal of and accrued but unpaid interest on the invested funds, in either case with no penalty or premium to the City or the Fiscal Agent; and (xii) the Local Agency Investment Fund in the State Treasury of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code. "Principal Office" means the principal corporate trust office of the Fiscal Agent in Los Angeles, California or such other addresses may be specified in writing by the Fiscal Agent; provided, however, that for purposes of the transfer, registration, exchange, payment and surrender of Bonds "Principal Office" means the corporate trust office of the Fiscal Agent in St. Paul, Minnesota or such other address as may be specified in writing by the Fiscal Agent. "Proceeds," when used with reference to the Bonds, means the aggregate principal amount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if any. "Project" means the public facilities which are to be financed with the proceeds of the sale of the Bonds as described in Resolution No. 2003-10 adopted by the City Council on February 3, 2003. "Rebate Certificate" means the certificate delivered by the City upon the delivery of the Bonds relating to Section 148 of the Code, or any functionally similar replacement certificate. A-7 "Record Date" means the fifteenth (15th) day of the month next preceding the applicable Interest Payment Date whether or not such day is a Business Day. "Regulations" means the temporary and permanent regulations of the United States Department of the Treasury promulgated under the Code. "Representation Letter" means the representation letter which the City has delivered to The Depository Trust Company ("DTC") with respect to the utilization of the book-entry system maintained by DTC for the issuance and registration of bonds. "Reserve Requirement" means, as of any date of calculation, the lesser of (i) ten percent (10%) of the outstanding principal amount of the Bonds, (ii) Maximum Annual Debt Service on the Outstanding Bonds or (iii) 125 percent of average Annual Debt Service on the Outstanding Bonds, as determined by the City. "Resolution" means Resolution No. 2003-_, adopted by the City Council on January 5, 2004. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax (516) 227-4039 or -4190; Midwest Securities Trust Company, Capital Structures -Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax (312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Tel- (215) 496-5058; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other securities depositories as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Special Taxes" or "Special Tax" means the special taxes levied by the City Council on parcels of taxable property within the District pursuant to the Municipal Code, the Act, the Ordinance and the Fiscal Agent Agreement, but excluding the Parking Structure Maintenance Tax, as defined in the Rate and Method of Apportionment of the Special Tax attached as Exhibit A to Resolution No. 2003-10. "Special Tax Prepayments" means amounts received by the City as prepayments of all or a portion of the Special Tax obligation of a parcel of property in the District. "Special Tax Prepayments Account" means the account by that name established by the Fiscal Agent in the Bond Fund. , "Special Tax Revenues" means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon. Special Obligations All obligations of the City and the District under the Fiscal Agent Agreement and the Bonds shall be special obligations of the City and the District, payable solely from the Special Tax Revenues and the funds pledged therefor. Neither the faith and credit nor the taxing power of the City, the District (except to the limited extent set forth in the Fiscal Agent Agreement) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds. A-8 Issuance of Additional Bonds The City may on behalf of the District at any time after the issuance and delivery bf the Bonds hereunder issue Additional Bonds payable from the Special Taxes and secured by a lien and charge upon the Special Taxes equal to the lien and charge securing the Outstanding Bonds theretofore issued hereunder, but only subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such Additional Bonds. (A) The City and the District shall be in compliance with all covenants set forth in the Resolution and the Agreement, and a certificate of an Authorized Officer to that effect shall have been filed with the Fiscal Agent. (B) The issuance of such Additional Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Additional Bonds shall have been provided for by a Supplemental Agreement which shall specify the following: (1) The purpose for which such Additional Bonds are to be issued and the fund or funds into which the proceed thereof are to be deposited, including a provision requiring the proceeds of such Additional Bonds to be applied solely for (i) the purpose of aiding in financing the Project, including payment of all costs incidental to or connected with such financing, and/or (ii) the purpose of refunding any Bonds, including payment of all costs incidental to or connected with such refunding to the extent permitted by law; (2) The authorized principal amount of such Additional Bonds; (3) The date and maturity date or dates of such Additional Bonds; provided that (i) each maturity date shall be September 1 of each year such Additional Bonds are due, (ii) all such Additional Bonds of like maturity shall be identical in all respects, except as to number, and (iii) fixed serial maturities or mandatory sinking payments, or any combination thereof, shall be established to provide for the retirement of all such Additional Bonds on or before their respective maturity dates; (4) The interest payment dates for such Additional Bonds; provided that interest payment dates shall be on the same semiannual dates as the Interest Payment Dates for the Bonds unless the City determines that interest payment dates other than those for the Bonds will not adversely affect the interests of the owners of the Outstanding Bonds. (5) The denomination and method of numbering of such Additional Bonds; (6) The redemption premiums, if any, and the redemption terms, if any, for such Additional Bonds; (7) The amount and due date of each mandatory sinking payment, if any, for such Additional Bonds; (8) The amount, if any, to be deposited from the proceeds of such Additional Bonds in any interest account; A-9 (9) The amount, if any, to be deposited from the proceeds of such Additional Bonds in a reserve fund; (10) The form of such Additional Bonds; and (11) Such other provisions as are necessary or appropriate and not inconsistent with the Agreement. (C) The Fiscal Agent shall have received the following documents, all of such documents dated or certified, as the case may be, as of the date of delivery of such Additional Bonds by the Fiscal Agent (unless the City shall accept any of such documents bearing a prior date): (1) A certified copy of the resolution authorizing the issuance of such Additional Bonds and the Supplemental Agreement pursuant to which such Additional Bonds are to be issued; (2) An Officer's Certificate of the City on behalf of the District as to the delivery of such Additional Bonds; (3) An opinion of Bond Counsel to the effect that(a) the District has the right and power under the Act to execute and deliver the Agreement and all Supplemental Agreements thereto, and the Agreement and all such Supplemental Agreements have been duly and lawfully approved, executed and delivered by the District, are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights), and no other authorization for the Agreement or such Supplemental Agreement is required; (b) the Agreement and such Supplemental Agreement create the valid pledge which they purport to create of the of the Special Taxes as provided in the Agreement and such Supplemental Agreement, subject to the application thereof to the purposes and on the conditions permitted by the Agreement and such Supplemental Agreement; (c) such Additional Bonds are valid and binding special obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and the terms of the Agreement and all Supplemental Agreements thereto and entitled to the benefits of the Agreement and all such Supplemental Agreements, and such Additional Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws)and the Agreement and all such Supplemental Agreements; and (d) the issuance of the Additional Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and, if then applicable, the Bonds or the exemption from State of California personal income taxation of interest on the Bonds; (4) An Officer's Certificate of the City containing such statements as may be reasonably necessary to show compliance with the requirements of the Agreement; A-10 (5) A certificate of an Independent Financial Consultant certifying that the maximum Special Tax that may be levied in any Fiscal Year by the District pursuant to the Act and the applicable resolutions and Ordinances of the District is at least 1.10 times the amount required to pay Debt Service during the Applicable Bond Year on all Outstanding Bonds following the issuance of such Additional Bonds (excluding the Debt Service on any amount held in escrow) and at least 75% of the rentable square feet on property subject to the Special Tax shall be leased; (6) Such further documents as are required by the provisions of the Agreement and the Supplemental Agreement providing for the issuance of such Additional Bonds; and (7) A certificate of the appraiser providing the original appraisal for the Bonds or a qualified MAI appraiser that the ratio of market value of land and improvements subject to the Special Tax to the aggregate principal amount of all Outstanding Bonds including the aggregate principal amount of such Additional Bonds (excluding any principal amount held in escrow) is not less than three (3) to one (1). Issuance and Delivery of Bonds At any time after the execution of the Fiscal Agent Agreement, the City may issue the Bonds for the District and deliver the Bonds to the Original Purchaser. The Authorized Officers of the City are 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 Municipal Code, the Resolution and the Fiscal Agent Agreement, to authorize the payment of Costs of Issuance 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. Improvement Fund The Fiscal Agent Agreement establishes the "City of Huntington Beach Community Facilities District No. 2003-1 2004 Special Tax Bonds Improvement Fund," to be held by the Fiscal Agent. Moneys in the Improvement Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment or reimbursement of the costs of the design, acquisition and construction of the Project. Disbursements from the Improvement Fund shall be made by the Fiscal Agentupon receipt of an Officer's Certificate_which shall: W set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and (ii) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously, filed with the Fiscal Agent requesting disbursement, and that the amount being requested is an appropriate disbursement from the Improvement Fund. Moneys in the Improvement Fund shall be invested and deposited in Permitted Investments as directed under the Fiscal Agent Agreement. Investment Earnings shall be retained by the Fiscal Agent in the Improvement Fund to be used for the purposes of such A-11 fund. Upon the filing of an Officer's Certificate stating that the construction and acquisition of the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, and further stating that moneys on deposit in the Improvement Fund are not needed to complete the Project or reimburse the cost thereof, the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund to the Interest Account of the Bond Fund to be used to pay the interest on the Bonds. Special Tax Fund The "City of Huntington Beach Community Facilities District No. 2003-1 2004 Special Tax Bonds Special Tax Fund" to be held by the Fiscal Agent. The City shall remit to the Fiscal Agent, not later than five(5) Business Days after receipt, all Special Tax Revenues received by the City, and the Fiscal Agent shall deposit such amounts to the Special Tax Fund. Moneys in the Special Tax Fund shall be held in trust by the Fiscal Agent for the benefit of the City 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. Notwithstanding the foregoing, any amounts received by the City which constitute Special Tax Prepayments shall be transferred by the City immediately upon receipt to the Fiscal Agent for deposit by the Fiscal Agent in the Special Tax Prepayments Account. From time to time as needed to pay the obligations of the District, but no later than the Business Day before each Interest Payment Date, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund, the Reserve Fund and the Special Tax Prepayments Account to the Bond Fund such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on the next Interest Payment Date,and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is'equal to the Reserve Requirement: Amounts then in the Special Tax Fund shall also be transferred from time to time by the Fiscal Agent, at the written direction of the City, to the Administrative Expense Fund, but any such transfers shall not exceed, in any Fiscal Year, the amount included in the Special Tax levy for such Fiscal Year for Administrative Expenses. Moneys in the Special Tax Fund shall be invested and deposited in Permitted Investments as directed under the Fiscal Agent Agreement. Investment Earnings shall be retained in the Special Tax Fund to be used for the purposes of such fund. Administrative Expense Fund The Fiscal Agent Agreement establishes the "City of Huntington Beach Community Facilities District No. 2003-1 2004 Special Tax Bonds Administrative Expense Fund" to be held by the Fiscal Agent. Moneys in the Administrative Expense Fund shall be held in trust by the Fiscal Agent for the benefit of the City, and shall be disbursed by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer's Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense (or a Cost of Issuance) and the nature of such Administrative Expense (or Cost of Issuance). Moneys in the Administrative Expense Fund shall be invested in Permitted Investments pursuant to the Fiscal Agent Agreement. Investment Earnings shall be retained by the Fiscal Agent in the Administrative Expense Fund to be used for the purposes of such fund. A-12 Costs of Issuance Fund The Fiscal Agent Agreement establishes the "City of Huntington Beach Community Facilities District No. 2003-1 2004 Special Tax Bonds Costs of Issuance Fund" to be held by the Fiscal Agent. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed for the payment or reimbursement of Costs of Issuance. Moneys in the Costs of Issuance Fund shall be invested in Permitted Investments under the Fiscal Agent Agreement. Investment Earnings shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund. Pledge of Special Tax Revenues The Bonds shall be 'secured by a pledge of and lien upon all of the Special Tax Revenues and all moneys deposited in the Bond Fund and all moneys deposited in the Reserve Fund and the Special Tax Fund. The Bonds shall be equally secured by a pledge of and lien upon the Special Tax Revenues and such moneys without priority for number, date of Bond, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds and any premium upon the redemption of any thereof shall be and is secured by a pledge of and lien upon the Special Tax Revenues and such moneys. The Special Tax Revenues and all moneys deposited into such accounts are dedicated in their entirety to the payment of the principal of the Bonds, and-interest and any premium on, the Bonds, as provided in the Fiscal Agent Agreement and in the Act and the Municipal Code, until all of the Bonds have been paid and retired or until moneys or Defeasance Securities have been set aside irrevocably for that purpose as set forth in the Fiscal Agent Agreement. Bond Fund The Fiscal Agent Agreement establishes "City of Huntington Beach Community Facilities District No. 2003-1 2004 Special Tax Bonds Bond Fund" to be held by the Fiscal Agent. The Fiscal Agent Agreement also establishes in the Bond Fund, as a separate account to be held by the Fiscal Agent, the "Special Tax Prepayments Account" to the credit of which deposits shall be made as required in the Fiscal Agent Agreement. The Fiscal Agent Agreement also establishes in the Interest Account, as a separate sub-account to be held by the Fiscal Agent, the "Capitalized Interest Sub-account." 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 or before each Interest Payment Date, the Fiscal Agent shall transfer from the Special Tax Fund and deposit into the following respective accounts in the Bond Fund, the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Special Tax Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority: (1) Interest Account. On or before each Interest Payment Date, the Fiscal Agent shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on the Bonds on such date (taking into account any expected transfers from the Improvement Fund, the Reserve Fund and the Capitalized Interest Sub- account for any such date). No deposit need be made into the Interest Account on any Interest Payment Date if the amount on deposit therein is at least equal to the interest becoming due and A-13 payable on the Bonds on such date. All moneys in the Interest Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity). All amounts on deposit in the Interest Account on the first day of any Bond Year,to the extent not required to pay any interest then having become due and payable on the Outstanding Bonds shall be withdrawn therefrom by the Fiscal Agent and transferred to the Special Tax Fund. (a) Capitalized Interest Sub-account. On or before the Interest Payment Dates which occur between the Closing Date and September 1, 2003, the Fiscal Agent shall withdraw from the Capitalized Interest Sub-account and transfer to the Interest Account the amount which is necessary to cause the amount on deposit in the Interest Account to be equal to the amount of Debt Service which is due and payable on the Outstanding Bonds on such Interest Payment Date. The amount, if any, on deposit in the Capitalized Interest Sub-account on September 2, 2003 shall be withdrawn by the Fiscal Agent and transferred to the Special Tax Fund and the Capitalized Interest Sub-account shall be closed. (2) Principal Account. On or before each Interest Payment Date, the Fiscal Agent shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds becoming due and payable on such date pursuant or the redemption price of the Bonds (consisting of the principal amount thereof and any applicable redemption premium) required to be redeemed on such date. All moneys in the Principal Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of (i) paying the principal of the Bonds at the maturity thereof, or (ii) paying the principal of and premium (if any) on any Bonds upon the redemption thereof. All amounts on deposit in the Principal Account on the first day of any Bond Year, to the extent not required to pay the principal of any Outstanding Bonds then having become due and payable, shall be withdrawn therefrom and transferred to the Special Tax Fund. On the first Business Day following each Interest Payment Date, the Fiscal Agent shall transfer any moneys remaining on deposit in the Bond Fund, including the Interest Account (but not including the Capitalized Interest Sub-account) and the Principal Account, to the Special Tax Fund. In the event that moneys on deposit in the Special Tax Fund will be insufficient on any Interest Payment Date for the Fiscal Agent to deposit the required amounts in the Interest Account and the Principal Account of the Bond Fund as provided above, the Fiscal Agent shall deposit the available funds first to the Interest Account up to the full amount required to cause the aggregate amount on deposit therein to equal the amount of interest becoming due and payable on the Bonds on the Interest Payment Date, and shall then deposit the remaining available funds in the Special Tax Fund to the Principal Account up to the full amount required to cause the aggregate amount on deposit therein to equal the amount, if any, of principal becoming due and payable on the Bonds on the Interest Payment Date. If, after making such deposits to the Interest Account and the Principal Account, and after transferring moneys from the Reserve Fund to such accounts the amount on deposit in the Principal Account is insufficient to pay the full amount of the principal of each of the Bonds which is to be redeemed on the Interest Payment Date, the Fiscal Agent shall make a prorated payment of the principal of each of such Bonds as specified in an Officer's Certificate provided to the Fiscal Agent. Within five(5) Business Days after receiving a Special Tax Prepayment the City shall deliver the amount thereof to the Fiscal Agent, together with an Officer's Certificate A-14 notifying the Fiscal Agent that the amount being delivered is a Special Tax Prepayment which is to be deposited in the Special Tax Prepayments Account. Upon receiving a Special Tax Prepayment from the City and such an Officer's Certificate, the Fiscal Agent shall deposit the amount of the Special Tax Prepayment in the Special Tax Prepayments Account. Such an Officer's Certificate may be combined with the Officer's Certificate which the City is required to deliver to the Fiscal Agent. Moneys on deposit in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Principal Account on the next date for which notice of the redemption of the Bonds can timely be given and shall be used to redeem the Bonds on the redemption date selected. Pending such transfer, the moneys on deposit in the Special Tax Prepayments Account shall be invested by the Fiscal Agent as directed pursuant to an Officer's Certificate in Defeasance Obligations at such yield as Bond Counsel may determine is necessary to preserve the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. Moneys in the Bond Fund, including all accounts therein, shall be invested in Permitted Investments and Investment Earnings shall be retained in the Bond Fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate Fund. Reserve Fund The Fiscal Agent Agreement establishes the "City of Huntington Beach Community Facilities District No. 2003-1 2004 Special Tax Bonds Reserve Fund" to be held by the Fiscal Agent. 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 the 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. Except as otherwise provided in the Fiscal Agent Agreement all amounts on deposit in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Interest Account and the Principal Account of the Bond Fund in the event of any deficiency at any time in either of such accounts of the amount then required for payment of the principal of and interest and any premium on'the Bonds or for the purpose of redeeming all or a portion of the Bonds. Whenever transfer is made from the Reserve Fund to the Interest Account or the Principal Account due to a deficiency in either such account, the Fiscal Agent shall provide written notice thereof to the City. Whenever, on any September 2, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds therein which must be rebated to the United States, exceeds the Reserve Requirement, the Fiscal Agent shall provide written notice to the City of the amount of the excess. Upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), the Fiscal Agent shall transfer an amount from the Reserve Fund which will reduce the amount on deposit therein to an amount equal to the Reserve Requirement to the Interest Account and the Principal Account, in the priority specified in the Fiscal agent Agreement to be used for the payment of the interest on and principal of the Bonds on the next succeeding Interest Payment Date. Notwithstanding the preceding provisions of prior to the closing of the Improvement Fund, the Fiscal Agent shall on the Business Day after each Interest Payment Date, transfer any such excess amount in the Reserve Fund which constitutes Investment Earnings which are not then required to be rebated to the United States to the Improvement Fund. 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 written direction from an Authorized Officer, transfer the amount in the Reserve Fund to the Interest Account and the Principal Account, in the priority specified in the A-15 Fiscal Agent Agreement, to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the Outstanding Bonds. In the event that the amount available to be so transferred from the Reserve Fund to the Interest Account and the Principal Account exceeds the amount required to pay and redeem the Outstanding Bonds, the excess shall be transferred to the City to be used for any lawful purpose of the City. Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of such prepayment a proportionate amount in the Reserve Fund as specified in an Officer's Certificate provided to the Fiscal Agent (determined on the basis of principal amount of Bonds which will remain outstanding) shall be transferred on the Business Day prior_to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the Bonds. Moneys on deposit in the Reserve Fund shall be invested.in Permitted Investments which do not have maturities extending beyond five (5) years; provided, however, if the Reserve Fund is invested in an investment agreement (as defined in the definition of Permitted Investments) or a repurchase agreement (as defined in clause (ix) of such definition) such agreement may have a maturity longer than five(5) years if the Fiscal Agent is authorized by the provisions of such agreement to draw the full amount thereof, without penalty, if required for the purposes of the Reserve Fund. The City shall cause the Permitted Investments, other than such investment agreements,in which moneys on deposit in the Reserve Fund are invested to be valued at fair market value and marked-to-market at least once in each Fiscal Year. Covenants of the City 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 the Fiscal Agent Agreement and any Supplemental Agreement to the extent that the Special Tax Revenues are available therefor, 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. Special Obligation. The Bonds are special obligations of the City and the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund, the Reserve Fund and the Special Tax Fund. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, 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 under the Fiscal Agent Agreement, 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 been so extended or funded. Against Encumbrances. The City shall not 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 the Fiscal Agent Agreement. A-16 Books and Accounts. The City shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City 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 business hours, upon reasonable notice, be subject to the inspection of the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, 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. Collection of Special Tax Revenues. The City shall comply with all requirements of the Municipal Code and the Act, including the enactment of necessary Ordinances, so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of the payment or collection of delinquent Special Taxes. Not less than twenty (20) Business Days prior to each Interest Payment Date the Fiscal Agent shall provide the Director of Administrative Services with a notice stating the amount then on deposit in 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 is equal to the Reserve Requirement. The receipt of or failure to receive such notice by the Treasurer shall in no way affect the obligations of the Treasurer under the following two paragraphs, and the Fiscal Agent shall not be responsible for any inability or failure to provide such notice. The City shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Act and the Municipal Code by August 1 of each year (or such later date as may be authorized by the Act and the Municipal Code or any amendment thereof) that the Bonds are Outstanding, 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, and any leasehold interest therein, for inclusion on the tax roll for the Fiscal Year then beginning. Upon the completion of the computation of the amounts of the levy of the Special Taxes, the City 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 tax roll. Notwithstanding the preceding provisions of this paragraph, the City Council may elect,as permitted by the Act, and the Municipal Code, to collect the Special Taxes to be levied for any Fiscal Year directly from the owners or lessees of the parcels of taxable property, and any leasehold interest thereon, upon which the Special Taxes are levied rather than by transmitting the Special Taxes to the Auditor for collection on the tax roll. The Treasurer or the Treasurer's designee sha11 fix and levy the amount of Special Taxes within the District required for the payment of principal and of interest on any outstanding Bonds of the District becoming due and payable on the next Interest Payment Date, including any necessary replenishment or expenditure of the Reserve Fund and an amount estimated to be sufficient to pay the Administrative Expenses during such year, taking into account the balances in such accounts, any transfer or expected transfer from the Reserve Fund to the Bond Account and any balance or expected balance in the Special Tax Fund available for such purpose. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall have the same priority and bear the same proportionate A-17 penalties and interest after delinquency as do the ad valorem taxes on interests in real property. The City will not, in collecting the Special Taxes or in processing any such judicial foreclosure proceedings, exercise any authority which it has pursuant to Sections 53340, 53344.1, 53344.2, 53356.1 and 53356.5 of the California Government Code in any manner which would materially and adversely affect the interests of the Bondowners and, in particular, will not permit the tender of Bonds in full or partial payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds Outstanding following such tender. Levy of Special Taxes for Administrative Expenses. The City covenants that, to the extent that it is legally permitted to do so, (a) it will levy the Special Taxes for the payment of the Administrative Expenses which are expected to be incurred in each Fiscal Year, and (b) it will not initiate proceedings under the Act to reduce the Maximum Special Tax rates (the "Maximum Rates") on then existing property subject to Special Taxes below the amounts which are necessary to provide Special Tax Revenues in an amount equal to one hundred ten percent (110%) of Maximum Annual Debt Service on the Outstanding Bonds. The City further covenants that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIII C of the California Constitution, which purports to reduce or otherwise alter the Maximum Rates, it will commence and pursue legal action seeking to preserve its ability to comply with its covenant contained in the preceding paragraph. Further Assurances. The City will adopt, make, execute and deliver any and all such further ordinances, 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 better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in the Fiscal Agent Agreement. Tax Covenants. The City covenants that: (A) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of the initial issuance and delivery of the Bonds, would have caused any of the Bonds to be "arbitrage bonds" within the meaning of Section 103(b) and Section 148 of the Code; (B) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss of exclusion from gross income for purposes of federal income taxation under Section 103(a) of the Code of interest paid with respect to the Bonds; (C) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would have caused any of the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code; (D) It will comply with the Rebate Certificate as a source of guidance for achieving compliance with the Code; and A-18 (E) In order to maintain the exclusion from gross income for purposes of federal income taxation of interest paid with respect to the Bonds, it will comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Code. Covenant to Foreclose. Pursuant to Section 53356.1 of the Act, the City covenants with and for the benefit of the owners of the Bonds that it will order, and cause to be commenced and thereafter diligently prosecute to judgment (unless other delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following paragraph. The Administrative Services Director shall notify the City Attorney of any such delinquency of which it is aware, and the City Attorney shall commence, or cause to be commenced, such proceedings. One (1) Business Day after each Interest Payment Date, the Treasurer or the Treasurer's designee shall compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City, and if the amount collected is less than 100% of the amount of the Special Taxes to be collected for such installment of property taxes, then the City will undertake and diligently prosecute foreclosure proceedings not later than thirty (30) days after each Interest Payment Date in the manner prescribed in the Act to collect the amount of any delinquent Special Tax. Prepayment of Special Taxes. The City shall cause all applications of owners of property in the District to prepay and satisfy the Special Tax obligation for their property to be reviewed by an Independent Financial Consultant and shall not accept any such prepayment unless such consultant certifies in writing that following the acceptance of the proposed prepayment by the City and the redemption of Bonds with such prepayment, the ratio of (i) the maximum amount of the Special Taxes that may be levied in the District following such prepayment to (ii) Maximum Annual Debt Service on the Bonds which will remain Outstanding following such redemption (e.g., 1.15 to 1.0) will not be less than such ratio as it existed prior to such prepayment. Calculation of Prepayments. The City will not include in any calculation of the amount necessary to prepay and permanently satisfy the Special Tax obligation of any parcel of taxable property in the District a proportionate amount of the amount then on deposit in the Reserve Fund,if at the time of such calculation the amount on deposit in the Reserve Fund is less than the Reserve Requirement; provided, however, that in such event the City may pay to the owner of any such property who prepays and permanently satisfies the Special Tax obligation for his or her property, under such circumstances, such a proportionate amount if the amount on deposit in the Reserve Fund is thereafter increased to the Reserve Requirement. Use of Parking Structure. A portion of the proceeds of the Bonds will be used to pay for the construction of a 6 .story, approximately 1,400 parking space, public parking structure (the "Parking Structure"). The City hereby covenants with and for the benefit of the Owners of the Bonds that it shall not use the Parking Structure for any purpose other than public parking, unless the City obtains an MAI Appraisal which concludes that the property in the District subject to the Special Tax will not have a reduction in value. Continuing Disclosure and Filing of Reports. The City and the Fiscal Agent, as Dissemination Agent, hereby covenant and agree that they will comply with and carry out all of the provisions of the Continuing Disclosure Agreement which are specifically applicable to each of them. The City further agrees to comply with and file those reports required under Sections 50075.1, 50075.3, 53359.5(b), 53410(d), and 53411 of the California Government Code not later than March 31 of each year commencing- March 31, 2003. A-19 Deposit and Investment of Moneys in Funds Moneys in any fund or account created or established by the Fiscal Agent Agreement and held-by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least two(2) Business Days in advance of the making of such investments. In the absence of any such Officer's Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause (iv) of the definition of Permitted Investments. The Fiscal Agent shall not have 'any responsibility for determining the legality of any Permitted Investments. The Fiscal Agent shall have no obligation to pay additional interest or maximize investment income on any funds held by it. Neither the City nor the Owners of the Bonds shall have any claim of any kind against the Fiscal Agent in connection with investments properly made. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account, subject, however, to the requirements of the Fiscal Agent Agreement for transfer of Investment Earnings in funds and accounts. The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or agent in the holding, 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. For purposes of determining the amount on deposit in any fund or account held under the Fiscal Agent Agreement, all Permitted Investments or investments credited to such fund or account shall be valued at the cost thereof (excluding accrued interest and brokerage commissions, if any). Investments in any and all funds and accounts may be commingled in a single fund for purposes of making, holding and disposing of investments, notwithstanding provisions in the Fiscal Agent Agreement for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent, 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. The Fiscal Agent shall sell at the highest price reasonably obtainable (provided that the highest of any three bids received by the Fiscal Agent shall be deemed the highest price reasonably obtainable), 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 the Fiscal Agent shall not be liable or responsible for any loss resulting from the acquisition or disposition of any such investment security. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City or the District the right to receive brokerage confirmations of securities transactions as they occur, the City for itself and the District specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent shall furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent. Moneys credited to any fund or account under the Fiscal Agent Agreement which are uninvested pending disbursement or receipt of proper investment directions or as directed in the Fiscal Agent Agreement, may be deposited to and held in a non-interest bearing demand deposit account established with the commercial banking department of the Fiscal Agent or any bank affiliated with the Fiscal Agent. A-20 Rebate Fund; Rebate to the United States. The Fiscal Agent Agreement creates, to be held by the Fiscal Agent, as a separate account distinct from all other funds and accounts held by the Fiscal Agent under the Fiscal Agent Agreement, the Rebate Fund. The Fiscal Agent shall, in accordance with written directions received from an Authorized Officer, deposit into the Rebate Fund moneys transferred by the City to the Fiscal Agent pursuant to the Rebate Certificate or moneys transferred by the Fiscal Agent from the Reserve Fund. The Rebate Fund shall be held either uninvested or invested only in Federal Securities at the written direction of the City. Moneys on deposit in the Rebate Fund shall be applied only to payments made to the United States, to the extent such payments are required by the Rebate Certificate. The Fiscal Agent shall, upon written request and direction of the City, make such payments to the United States. The Fiscal Agent's sole responsibilities are to follow the written instructions of the City pertaining to the Fiscal Agent Agreement. The City shall be responsible for any fees and expenses incurred by the Fiscal Agent under the Fiscal Agent Agreement. The Fiscal Agent shall, upon written request and direction from the City, transfer to or upon the order of the City any moneys on deposit in the Rebate Fund in excess of the amount, if any, required to be maintained or held therein in accordance with the Rebate Certificate. Appointment of Fiscal Agent. U.S. Bank Trust National Association is hereby appointed Fiscal Agent, registrar 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 Fiscal Agent Agreement shall be the successor to the Fiscal Agent without the execution or filing of any paper or any further act, anything in the Fiscal Agent Agreement to the contrary notwithstanding. 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 $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, 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 A-21 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 within forty-five (45) days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent, at the expense of the City, 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. The recitals of facts, covenants and agreements in the Fiscal Agent Agreement and in the Bonds contained shall be taken as statements, covenants and agreements of the City and the District, and the Fiscal Agent assumes no responsibility for the correctness of the same, nor makes any representations as to the validity or sufficiency of the Fiscal Agent Agreement or of the Bonds, nor shall the Fiscal Agent incur any responsibility in respect thereof, other than in connection with the duties or obligations in the Fiscal Agent Agreement 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 under the Fiscal Agent Agreement, except for its own negligence or willful misconduct. 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, 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. 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 by the Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. Modification or Amendment of the Fiscal Agent Agreement The Fiscal Agent Agreement and the rights and obligations of the District and the City 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 the 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 disqualified bonds. No such modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the City on behalf of the District 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 of any pledge of or lien upon the Special Tax Revenues, or the moneys on deposit in the Bond Fund, the Reserve Fund, or the Special Tax Fund, superior to or on a parity with the pledge A-22 and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the Municipal Code, the laws of the State of California or the Fiscal Agent Agreement), (iii) reduce the percentage of Bonds required for the amendment to the Fiscal Agent Agreement, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon. 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 District and the City and 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: (1) to add to the covenants and agreements of the City in the Fiscal Agent Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power in the Fiscal Agent Agreement reserved to or conferred upon the City; (2) to make modifications not adversely affecting any Outstanding Bonds of the District in any material respect; (3) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provisions of the Fiscal Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement, as the 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; or (4) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of moneys to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. Discharge of Agreement If the City shall pay and discharge the entire indebtedness on all Outstanding Bonds 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 all such Bonds, as and when the same become due and payable; (B)by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of money which, together with the amounts then on deposit in the Bond Fund, the Special Tax Fund and the Reserve Fund, is fully sufficient to pay all such Bonds, including all principal, interest and redemption premiums, if any; or (C) by irrevocably depositing with the Fiscal Agent, in trust, cash or non-callable Defeasance Securities in such amount as the City shall determine, as confirmed by an Independent Financial Consultant, will, together with the interest to accrue thereon and amounts then on deposit in the Bond Fund, Special Tax Fund and the Reserve Fund, be fully sufficient to pay and discharge the indebtedness on all such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in the Fiscal Agent 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 Tax Revenues and other funds provided for in the Fiscal Agent Agreement and all other obligations of the City and the District under the Fiscal Agent Agreement with respect to such Bonds shall cease and terminate, except the obligation of the City to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon, the obligation of the City to pay all amounts owing to the Fiscal Agent and the obligations of the City pursuant to the covenants contained in the Fiscal Agent Agreement, and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. The satisfaction and discharge of the Fiscal Agent Agreement shall be without prejudice to the rights of the Fiscal Agent to charge and be reimbursed by the City for the expenses which it shall thereafter incur in that connection. A-23 APPENDIX B EXECUTIVE SUMMARY OF MARKET FEASIBILITY ANALYSIS B-1 APPENDIX D CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein CFD No. 2003-1) shall be levied and collected according to the tax liability determined by the Administrator through the application of the procedures described below. The real property in CFD No. 2003-1, 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 capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment: 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, or the other parcel map recorded with the County Recorder. If the Acreage of a particular Parcel is unclear after reference to available maps, the Administrator shall determine the appropriate Acreage for a Parcel. Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, of Title 5 of the Government Code of the State of California. Administrative Expenses means any or all of the following actual or reasonably estimated costs directly related to the administration of CFD No. 2003-1: the fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture or resolution with respect to the Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No. 2003-1. Administrator means the Director of Economic Development or such other person or entity designated by the City Administrative Officer or the City Council to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. D-1 Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's Parcel number. Bonds mean any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by the City for CFD No. 2003-1 under the Act. City means the City of Huntington Beach. City Council means the City Council of the City of Huntington Beach, acting as the legislative body of CFD No. 2003-1. County means the County of Orange. Development Agreement means the Owner Participation Agreement (OPA) between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates, LLC, dated October 2, 2000. Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1 which generally serves the development subject to the Development Agreement and is owned by a governmental agency for public right-of-way purposes including, but not limited to parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved. Fiscal Year means the period commencing on July 1 and ending on the following June 30, in any year in which the Bonds are outstanding. Indenture means the indenture, fiscal agent agreement, resolution or other instrument approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. Maximum Special Tax means, with respect to any Parcel of Taxable Property, the maximum Special Tax, determined in accordance with Section C, that can be levied in any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts payable under the Parking Structure Maintenance Special Tax. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Parking Structure Maintenance Special Tax means the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for CFD No. 2003-1 necessary to pay all actual, documented maintenance costs, management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs' fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues shall be subject to and limited by the provisions of the following documents, which documents shall be in the form approved by the City Council in connection the issuance of the Bonds, and which documents, upon such approval, shall be deemed to be incorporated herein by this D-2 reference: (i) any covenants, conditions or restrictions encumbering such parking structure and/or the real property upon which it is to be constructed as of the date of issuance of the Bonds, (ii) the initial parking management agreement governing the operation and maintenance of such parking structure (the provisions of such initial parking management agreement to govern the determination of the Parking Structure Maintenance Special Tax for so long as the Special Tax lien remains in effect, notwithstanding any earlier expiration or termination of such agreement), and (iii) any amendments to the foregoing covenants, conditions or restrictions or agreements. Reserve Fund means the fund of that name created under the Indenture. Resolution of Issuance means the resolution adopted by the City Council of the City, acting as the legislative body of CFD No.2003-1, authorizing the issuance of the Bonds in accordance with the Act. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within CFD No. 2003-1. Special Tax Requirement means the amount required in any Fiscal Year for CFD No. 2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance Special Tax. Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No.2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law, but in no circumstance shall the total amount of Taxable Property be less than 40.63 acres. Trustee means the trustee who is a party to the Indenture, if so approved. B. IDENTIFYING TAXABLE PROPERTY Not less than fifteen business days prior to the beginning of each Fiscal Year, the Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property. The Taxable Property shall be subject to Special Taxes in accordance with the rate and method of apportionment described in Sections C and D below. C. MAXIMUM SPECIAL TAX The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; D-3 Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005,and for each Fiscal Year thereafter, the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100%of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. E. LIMITATIONS No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, and until the date on which principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax may be levied and collected until such time as the City and the CFD No. 2003-01 have divested all remaining ownership interests in the parking structure. Upon .determination by the Administrator that such requirements have been met, the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that the City on behalf of CFD No. 2003-1 may directly bill the special tax or any portion thereof, may collect special taxes or any portion thereof at a different time or in a 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. Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax shall be directly billed in each instance and not billed with ad valorem property taxes. G. APPEALS The City Council shall establish as part of the proceedings and administration of CFD No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any appeals, as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming that the amount or application of the Special Tax is not correct may file a written notice of appeal with the Review/Appeal Committee not later than one calendar year after having paid the Special Tax that is disputed. The Review/Appeal Committee shall promptly review the appeal, and if necessary, meet with the owner, consider written and oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the Review/Appeal Committee's decision requires the Special Tax to be modified or changed in favor of the owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall be exclusive and its exhaustion by any owner shall be a condition precedent to any legal action by such owner. D-4 H. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section H: Amount of Current Special Taxes Paid means the amount of the Special Tax levied against the subject Assessor's Parcel that was paid to the County or the City by the owner of the subject Assessor's Parcel and would be applied to debt service payments on the Redemption Date and the Interest Payment Date. immediately following the Redemption Date, Outstanding Bonds means all Bonds that are deemed to be outstanding under the Indenture the day immediately preceding the next Interest Payment Date. Redemption Date means the Interest Payment Date on which Bonds are proposed to be redeemed from the prepayments of the Special Tax. 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein. The owner intending to prepay the Special Tax obligation on one or more Assessor's Parcel(s) shall provide the Administrator with written notice of intent to prepay. It shall be a condition precedent to prepayment that the owner intending to prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's Parcel to be prepaid and provide proof of payment to the Administrator. Promptly following receipt of such notice, the Administrator shall notify the owner of such Assessor's Parcel(s) of the prepayment amount of such Assessor's Parcel(s). The Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 90 days prior to the next occurring date that Bonds may be redeemed from the proceeds of such prepayment pursuant to the Indenture. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined above or below): Bond Redemption Amount Plus Redemption Premium Plus Defeasance Amount Plus Administrative Fees and Expenses Less Reserve Fund Credit Less Amount of Current Special Taxes Paid Total: Equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No. 1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year. 2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total Maximum Special Tax of all Assessor's Parcels of Taxable Property for the current Fiscal Year. D-5 3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding Bonds as defined in this Section G to compute the amount of Outstanding Bonds to be retired and prepaid, and round the result up to the nearest multiple of $5,000 (the Bond Redemption Amount). 4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled to mature on the Redemption Date by the applicable redemption premium (the Redemption Premium). 5. Compute the amount needed to pay interest on the Bond Redemption Amount from the Interest Payment Date immediately preceding the Redemption Date to the Redemption Date. 6. Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 7. Add the amounts computed pursuant to Paragraph 5 and subtract the amount computed pursuant to Paragraph 6(the Defeasance Amount). 8. Determine the administrative fees and expenses associated with 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. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal the lesser of: (a) the expected reduction in the Reserve Requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new Reserve Requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 10. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 3,4,7 and 8, less (i) the amounts computed pursuant to Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment Amount). 11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3, 4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments (as appropriate). The amount computed pursuant to Paragraph 8 shall be retained by the Administrator. With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii) notify the County that the Special Tax, if any, remaining on the secured tax roll for the Assessor's Parcel has been satisfied and that the County should remove such amounts from the D-6 secured tax roll, and (iii) refund the owner for any Special Tax payments made on the Assessor's Parcel after the date of prepayment. From and after the prepayment, 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 the Maximum Special Tax that may be levied on Taxable Property within CFD No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Special Tax on an Assessor's Parcel of Taxable Property 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 = (PH xF) + G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section H.1, minus the amounts determined in Paragraph No. 8 of Section H.1. F = the percent by which the owner of an Assessor's Parcel(s) is partially prepaying the Maximum Special Tax. G = the amounts determined in Paragraph No. 8 of Section H.1. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall be prepaid. The Administrator shall promptly provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel following receipt of the request. With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii) indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. D-7 APPENDIX E GENERAL INFORMATION REGARDING THE CITY OF HUNTINGTON BEACH The information in this Appendix is provided as general background data. The 2004 Bonds are payable solely from the proceeds of the levy of the Special Tax on land within the District and certain funds held under the Fiscal Agent Agreement as described in this Official Statement. The 2004 Bonds are not general obligations of the City, but are limited obligations payable solely from amounts pledged therefore under the Fiscal Agent Agreement. See the section in the Official Statement entitled "SECURITY FOR THE 2004 BONDS." General Information The City of Huntington Beach encompasses 27.2 square miles in the coastal area of Orange County, California, adjacent to the Cities of Costa Mesa, Fountain Valley, Westminster and Newport Beach, along 8.5 miles of beach along the Pacific Ocean. The City is approximately 30 miles southeast of Los Angeles and 90 miles northwest of San Diego. Huntington Beach holds the title of Surf City, USA and is host to the International Surfing Museum and many professional surfing competitions. Government Organization The City of Huntington Beach was incorporated as a charter city in 1909. The City has a council/administrator form of government. The City Council is comprised of seven members elected bi-annually at large to four-year terms and the Mayor is selected by the Council Members to a one-year term. The City Council appoints the City Administrator who is responsible for the day-to-day administration of City business and the coordination of all departments of the City. Huntington Beach employs 1,050 full-time employees. The members of the City Council, the expiration dates of their terms and key administrative personnel are set forth in the charts below. CITY COUNCIL Council Member Term Expires Cathy Green, Mayor November 2006 Jill Hardy, Mayor Pro Tern November 2006 Connie Boardman, Member November 2004 Gil Coerper, Member November 2006 Debbie Cook, Member November 2004 Pam Houchen, Member November 2004 Dave Sullivan, Member November 2006 E-1 KEY ADMINISTRATIVE PERSONNEL Ray Silver City Administrator William Workman Assistant City Administrator David Biggs Director of Economic Development Clay Martin Director of Administrative Services Daniel Villella Finance Officer Shari L. Freidenrich City Treasurer Jennifer McGrath City Attorney Connie Brockway City Clerk Governmental Services Public Safety and Welfare Law enforcement and fire protection services are provided by the City. The . Huntington Beach Police Department currently employs 220 sworn officers. The Huntington Beach Fire Department employs 131 sworn fire fighters operating out of eight fire stations and maintains a Hazardous Materials Response Unit operating as a part of a county-wide response team. Other services provided by the City include emergency medical aid, traffic safety.maintenance, and building safety regulation and inspection. Public Services Water service is provided to City residents through the City's municipal water department. Public Works/Planning Additional services include parkway. and median maintenance and improvements, refuse management, sewer and storm drain maintenance, zoning and development administration, environmenta 1 review, code enforcement and street tree maintenance. Leisure and Community Services The City operates the Huntington Beach Library which includes the central library and four branches. The City's Community Services Department provides citizens with a variety of park and recreational and marine safety (lifeguard) services on a year round basis. Facilities include the Huntington Beach Art Center, fifty-six park sites, 8.5 miles of public beach, a public golf course, an Equestrian Center and two senior centers. Community Information Public school education is available through four elementary school districts and one high school district. There are 26 elementary schools, 4 middle schools and 4 high schools. Students are also served by 10 parochial and private schools. Area colleges and universities include Orange Coast College, Goldenwest College and the University of California at Irvine. E-2 Health Care services available within the immediate area are provided by Huntington Beach Hospital in Huntington Beach, Hoag Memorial Hospital in Newport Beach and Fountain Valley Regional Hospital. Area attractions include Disneyland, Knott's Berry Farm, the Aquarium of the Pacific and Wild Rivers Aquatic Park. Locally, the City's public beaches are the site of the Men's and Womeri s Professional Beach Volleyball Tour and the International Surfing and World Cup event. Other attractions include the Bolsa Chica Ecological Reserve, a restored wetlands area known for winter bird watching, and the International Surf Museum. Population The following charts provide a comparison of population growth for Huntington Beach surrounding Cities and Orange County between 1999 and 2003. CHANGE IN POPULATION CITY OF HUNTINGTON BEACH, SURROUNDING CITIES AND ORANGE COUNTY 1999-2003 HUNTINGTON BEACH SURROUNDING CITIES* ORANGE COUNTY Percentage Percentage Percentage Year Population Change Population Change Population Change 1999 197,600 237,100 2,788,800 2000 190,300 (3.7)% 234,200 (1.2)% 2,867,700 2.8% 2001 193,700 1.8% 238,800 2.0% 2,925,700 2.0% 2002 194,100 0.2% 238,400 (1.0)% 2,930,500 0.2% 2003 197,000 1.5% 247,800 3.9% 2,978,800 1.6% *Surrounding cities include Costa Mesa, Fountain Valley and Newport Beach. Source: State of California Department of Finance, Population Research Unit, "Population Estimates for California Cities and Counties." Effective Buying Income Effective buying income information for Huntington Beach, Orange County, the State of California and the United States are summarized in the following charts. EFFECTIVE BUYING INCOME CITY OF HUNTINGTON BEACH, ORANGE COUNTY, STATE OF CALIFORNIA AND UNITED STATES 1998-2002 Year Huntington Beach Orange County State of California United States 1998 49,480 45,176 37,091 35,377 1999 50,939 48,773 39,492 37,233 2000 56,629 55,262 44,464 39,129 2001 55,379 53,277 43,532 38,365 2002 53,786 49,726 42,484 38,035 Source: Sales and Marketing Management, "Survey of Buying Power." E-3 Major Employers The major employers operating within the City and their respective number of employees as of June 30, 2003 are as follows: CITY OF HUNTINGTON BEACH LARGEST EMPLOYERS Number of Name of Company Employees Product/Service The Boeing Company 4,800 Aerospace Quiksilver 1,600 Manufacturing Dynamic Cooking Systems 706 Manufacturing C & D Aerospace 605 Manufacturing Hyatt Regency Resort and Spa 500 Hospitality Rainbow Disposal 420 Manufacturing Huntington Beach Hospital 375 Health Care Verizon 352 Communications E-Trade Mortgage 314 Electronic Mortgage Broker Eurodesign Cabinets 310 Manufacturing Home Depot USA/Expo Design 266 Retail Ricoh Business Systems 259 Manufacturing Royal Cabinets 250 Manufacturing Comcast Cablevision 234 Communications BSH Home Appliance 231 Retail Golden West College 212 Education Hilton Waterfront Beach Resort 200 Hospitality Source: City of Huntington Beach. Commercial Activity The following charts summarize the volume of retail sales and taxable transactions for the City of Huntington Beach for 1997 through 2001. CITY OF HUNTINGTON BEACH TOTAL TAXABLE TRANSACTIONS (in Thousands) 1997-2001 Retail Retail Total Taxable Issued Sales Sales Transactions Sales Year ($000's) % Change Permits ($000's) % Change Permits 1997 1,262,807 1,851 1,675,185 6,847 1998 1,341,259 6.2% 1,893 1,813,622 8.3% 6,730 1999 1,531,561 14.2% 2,004 2,043,221 12.7% 6,690 2000 1,696,957 10.7% 2,157 2,335,272 14.2% 6,712 2001 1,647,686 (3.0)% 2,313 2,113,445 (10.4)% 6,792 Source: State Board of Equalization, "Taxable Sales in California", published annually in November for prior year. E-4 The following -charts compare taxable transactions for the City of Huntington Beach and surrounding cities. CHANGE IN TOTAL TAXABLE TRANSACTIONS CITY OF HUNTINGTON BEACH AND SURROUNDING CITIES 1997-2001 %Change from City 1997 1998 1999 2000 2001 1997-2001 HUNTINGTON BEACH $1,675,185 $1,813,622 $2,043,221 $2,335,272 $2,113,445 26.2% Fountain Valley 747,375 779,984 801,623 809,965 840,033 12.3 Costa Mesa 2,528,479 2,656,273 2,825,793 3,108,323 3,160,603 25.0 Newport Beach 1,372,867 1,490,995 1,641,782 1,763,466 1,716,344 25.0 Source: State Board of Equalization, "Taxable Sales in California", published annually in November for prior year. Taxable transactions by type of business for the City of Huntington Beach for 1997 through 2001 are summarized in the table below. CITY OF HUNTINGTON BEACH TAXABLE TRANSACTIONS BY TYPE OF BUSINESS 1997-2001 1997 1998 1999 2000 2001 Retail Stores Apparel Stores $ 71,679 $ 72,084 $ 76,093 $ 80,763 $ 82,106 General Merchandise Stores 140,723 144,168 152,810 159,064 154,373 Food Stores 98,774 101,447 106,630 109,850 114,596 Eating/Drinking Places 167,671 178,565 189,740 199,428 211,448 Home Furnishings/Appliances 81,197 89,553 94,848 103,067 101,107 Building Materials/Farm Implements 122,239 121,506 165,281 187,158 170,961 Auto Dealers/Suppliers 258,289 303,496 349,601 408,833 396,889 Service Stations 113,232 103,220 121,357 138,004 141,585 Other Retail Stores 209,003 227,220 275,201 310,790 274,621 Total Retail Stores $ 1,262,807 $ 1,341,259 $ 1,531,561 $ 1,696,957 $ 1,697,686 All Other Outlets 412,378 472,363 511,660 638,315 465,759 Total All Outlets $ 1,675,185 $ 1,813,622 $ 2,043,221 $ 2,335,272 $2,113,445 Source: State Board of Equalization, "Taxable Sales in California", published annually in November for prior year. E-5 Building Activity The following charts summarize building activity valuations for the City of Huntington Beach for the five-year period from 1998 through 2002. CITY OF HUNTINGTON BEACH BUILDING ACTIVITY AND VALUATION (Valuation in Thousands of Dollars) 1998 1999 2000 2001 2002 Residential: New Single-Family $93,178 $110,093 $99,647 $ 88,791 $62,869 New Multi-Family 4,043 7,185 858 11,667 21,658 Total Residential $97,221 $117,278 $100,505 $100,458 $84,527 Commercial: New Commercial $ 17,233 $21,713 $ 18,538 $ 13,464 $ 14,787 New Industrial 13,464 11,340 6,526 1,961 745 Other 36,638 20,402 22,248 24,834 24,522 Additions,alterations 14,359 32,873 20,363 13,020 24,690 Total Nonresidential $81,694 $86,328 $ 67,855 53,279 64,744 Total Valuation $ 178,915 $203,606 $168,360 $153,737 $149,271 No. of New Dwelling Units: Single-Dwelling 421 425 427 356 202 Multi-Dwelling 32 44 6 23 24 Total New Units 453 469 433 379 226 Source: City of Huntington Beach. E-6 APPENDIX F FORMS OF CONTINUING DISCLOSURE AGREEMENTS [insert continuing disclosure agreements here] F-1 APPENDIX G PROPOSED FORM OF OPINION OF BOND COUNSEL [Closing Date] City of Huntington Beach 2900 Main Street Huntington Beach, CA 92648 Re: $25,000,000* City of Huntington Beach Community Facilities No. 2003-1 (Huntington Center) 2004 Special Tax Bonds Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California (the "District"), of $25,000,000* aggregate principal amount of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds (the 'Bonds"). The Bonds are issued pursuant to the provisions of Chapter 3.56 of the Municipal Code of the City of Huntington Beach (the "Municipal Code"), 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 of Huntington Beach on December 15, 2003 (the "Resolution"), and a Fiscal Agent Agreement, dated as of December 15, 2003 (the "Agreement"), between the City of Huntington Beach (the "City") and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"). We have examined the Municipal Code, the Act, the Resolution, the 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 opinions, we have relied upon the representations of the City contained in the Agreement and in certificates of its authorized officers which have been delivered to us for the purpose of supplying such facts, 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, constitute the legally valid and binding obligations of the District enforceable in accordance with their terms subject to the qualifications specified below and, except where funds are otherwise available, as may be permitted by law, 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 Agreement. * Preliminary, subject to change. G-1 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 Agreement, the City has covenanted to comply with the requirements of the Code and applicable regulations promulgated thereunder. We are of the opinion that, under existing statutes, regulations, rulings and court decisions, and assuming compliance by the City with the aforementioned covenants, 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. 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 rights of the owners of the Bonds and the enforceability of the Bonds and the 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, G-2 APPENDIX H THE BOOK ENTRY SYSTEM The following description of the procedures and record-keeping of the Depository Trust Company ("DTC") with respect to beneficial ownership interests in the 2004 Bonds, payment of principal, interest and other payments on the 2004 Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in such Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. DTC is a limited-purpose trust company organized under the laws of the State of New York, 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 pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds securities and facilitates the clearance and settlement of securities transactions through electronic book-entry changes in accounts of its participants (the "Participants"), thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of which (and/or their representatives) own DTC. Access to the DTC system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Purchases of the 2004 Bonds may be made through brokers and dealers who are, or act through, Participants. DTC or its nominee, and any successor securities depository, for all purposes under the Fiscal Agent Agreement, will be and will be considered to be the registered owner of the 2004 Bonds while the 2004 Bonds are in book-entry-only form. As long as a book-entry system is used, the Beneficial Owners of the 2004 Bonds or of interests in the 2004 Bonds will not receive or have the right to receive physical delivery of the 2004 Bonds, and will not be or be considered to be registered owners under the Fiscal Agent Agreement. The beneficial ownership of the 2004 Bonds, the transfer of ownership, and the payments to the Beneficial Owners is to be accomplished by records maintained by DTC, its Participants and certain persons acting through the Participants. DTC is responsible for maintaining records of the "positions" of Participants in the 2004 Bonds, and the Participants and persons acting through Participants are expected to maintain records of the purchasers of beneficial interests in those Bonds. Selling brokers and dealers are expected to send to their purchasers an initial transaction statement regarding and evidencing their purchase of beneficial interests in the 2004 Bonds and setting forth certain terms of the 2004 Bonds. The Fiscal Agent, as long as a book-entry method is used for the 2004 Bonds and the 2004 Bonds are retained in the custody of DTC, will only be responsible for sending Bondowners notices under the Fiscal Agent Agreement to DTC. Conveyance of notices and other communications by DTC to Participants, by Participants to persons acting through H-1 Participants and by Participants and persons acting through Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time. Any failure of DTC to advise any Participant, or of any Participant or person acting through a Participant to notify the Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the action premised on such notice. The Fiscal Agent, the City, the District and the Underwriter have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership of the 2004 Bonds. Payments of principal of or interest on the 2004 Bonds will be made only to DTC or its nominee, Cede & Co., as the registered owner of the 2004 Bonds. Upon receipt of moneys, DTC's current practice is to immediately credit the accounts of the-Participants in accordance with their respective holdings shown on the records of DTC. Payments by the Participants and persons acting through Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant or person acting through a Participant and not of DTC, the Fiscal Agent or the District, subject to any statutory and regulatory requirements as may be in effect from time to time. The City and the District cannot and do not give any assurances that DTC, Participants or others will distribute payments of debt service on Bonds paid to DTC or its nominee as the registered owner, or any notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will service and act in the manner described in this Official Statement. The City understands that the current "Rules" applicable to DTC are on file with the Securities and Exchange Commission, and that the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC may determine to discontinue providing its service with respect to the 2004 Bonds at any time by giving reasonable notice to the City and discharging its responsibility with respect thereto under applicable law. In the event (i) DTC determines not to continue to act as securities depository for the 2004 Bonds, or (ii) the City determines that continuation of the book-entry system would adversely affect the interest of the Beneficial Owners, the City will discontinue the book-entry only system with DTC. If the City determines to replace DTC with another qualified securities depository, the City shall prepare or direct the preparation of one or more fully registered Bonds, registered in the name of such successor or substitute qualified securities depository or its nominee. If the City fails to identify another qualified securities depository to replace DTC then the 2004 Bonds shall no longer be restricted to being registered in the Bond register in the name of Cede & Co.,but shall be registered in whatever name or names DTC or Cede & Co. shall designate, in accordance with the Fiscal Agent Agreement, and a new Bond or Bonds, for the same outstanding principal amount, maturity and interest rate and in authorized denominations will be issued. H-2 Huntington Center Community Facilities District No . 2003 - 1 (Bella Terra) City Council Meeting January 5, 2004 BACKGROUND • The Redevelopment Agency has a Owner Participation Development Agreement with Huntington Center Associates, LLC. • Huntington Center is being redeveloped into an Entertainment/Life style Center encompassing a 20 screen movie theater, a food court, restaurants and other retail establishments. 2 PURPOSE OF CFD • The CFD covers only the Huntington Center Associates, LLC property. It does not encompass the property formerly occupied by Montgomery Wards,now owned by Sears. • The CFD allows a private party to borrow funds through the City's issuance of tax-exempt bonds. • Bond proceeds will be used to pay for public improvements and other eligible project costs. These include a 6 story parking garage, enlarging of the water lines serving the center, median and street improvements on Edinger Avenue and storm drain installation on Edinger. 3 CFD SPECIAL PROPERTY TAX • Bonds will be repaid through a Special Property Tax levy only on the property covered by the CFD, which is now owned by Huntington Center Associates, LLC. • The City only serves as the conduit for issuance of the Bonds. • The City has no obligation for repayment of the Bonds. 4 CFD BONDS • Tonight' s City Council actions authorizes the City to issue the bonds for the CFD. • The CFD documents authorize the issuance of $25 million in bonds with a 30 year term. 5 REASONS/BENEFITS FOR THE CFD • Huntington Center Associates is advancing all funds to achieve the redevelopment of Huntington Center. • Under the terms of the OPA, the Redevelopment Agency will repay the Developer $ 15 million (Developer Advance) over 20 years at 8% or at a lower rate if CFD bonds are issued. • The Bonds are estimated to have an interest rate in the range of 6% to 6.5%, but not higher than 7%. 6 REASONS/BENEFITS FOR THE CFD • Upon issuance of the bonds, the interest rate on the Developer Advance will be lowered to the mid-point between 8% and the bond rate. • Since the Developer Advance is to be repaid from a portion of the public revenues (Property Tax Increment and Sales taxes), the City/Agency will be the beneficiaries of the lower interest rates obtained from the sale of these bonds. RECOMMENDED ACTIONS City Council: • Adopt Ordinance No. 36�,\ of the City Council Levying Special Taxes Within the City of Huntington Beach Community Facilities District No. 2003- 1 (Huntington Center). • Adopt Resolution No;o� - I of The City Council of the City of Huntington Beach Authorizing the Issuance of Special Tax Bonds for the City of Huntington Beach Community Facilities District Report No. 2003- 1 (Grand Coast Resort). 8 Documents Available for Review in The City Clerk's Office 1. Funding and Construction Agreement, 2. Fiscal Agent Agreement, 3. Purchase Contract, 4. Reciprocal Easement Agreement, 5. Operating Agreement i/j �✓ RCA ROUTING SHEET INITIATING DEPARTMENT: ECONOMIC DEVELOPMENT SUBJECT: Huntington Center CFD 2003-1 COUNCIL MEETING DATE: January 5, 2004 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS Available in the City Clerk's Office REVIEWED RETURNED FO DED Administrative Staff Assistant City Administrator Initial City Administrator (Initial) City Clerk EXPLANATION FOR RETURN OF ITEM: Only)(Below Space For City Clerk's Use RCA Author: Gus Duran X1529 I i i I He CITY OF HUNTINGTON BEACH Interoffice Communication Economic Development Department i (die i TO: Connie Brockway, City Clerk I ' FROM: David Biggs, Director of Economic Development DATE: April 12, 2004 SUBJECT: Printed Copy of Official Statement for the Huntington Center Community Facilities District Bond Issue Enclosed please find a printed copy of the Official Statement(OS) for the $25 million City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds. At the City Council meeting of January 5, 2004 the City Council approved the issuance of the bonds. Your role in administering and implementing the public improvements financed by these bonds is very much appreciated. Should you have any questions regarding this document, you can contact me at Ext. 5909 or Gus Duran at Ext. 1529. C: 2 LizYEhring < n 75 i� rn C 7._ o � cv Cr'sSAi:i`•HfsnfAl.i.\CF7)•.Ci1.BRKUti;.7FM1tU.DOC f ^pvr- `' TH=E CRY HUNTINGTON BEACH' .' fIT WIN The document you are viewing contains additional information that is not possible to produce electronically. For information on how to locate this document for viewing , please contact or visit the City Clerk's Office for assistance. 2000 Main Street 2nd Floor — City Hall Huntington Beach CA 92648 (714) 536-5227 ®� ice CITY OF HUNTINGTON BEACH Interoffice Communication Economic Development Department TO: Connie Brockway, City Clerk , FROM: David Biggs, Director of Economic Development JY DATE: April 12, 2004 SUBJECT: Printed Copy of Official Statement for the Huntington Center Community Facilities District Bond Issue Enclosed please find a printed copy of the Official Statement(OS) for the $25 million City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) 2004 Special Tax Bonds. At the City Council meeting of January 5, 2004 the City Council approved the issuance of the bonds. Your role in administering and implementing the public improvements financed by these bonds is very much appreciated. Should you have any questions regarding this document, you can contact me at Ext. 5909 or Gus Duran at Ext. 1529. C: Liz Ehring Q M U ���Q n I.LJpm 1�Lki • co 00— J � Q ~ C=2 s2 G � ev (.i:'•c,,lLi'HkIM.�LI_tCPD'•.i:is LE.RKUSME1tU.Di)C - sw r YiPw c(,fSP L- THE COPY OF HUNTtNGTON BEACH' ti i - The document you are viewing contains additional information that is not possible to produce electronically. For information on how to locate this document for viewing , please contact or visit the City Clerk's Office for assistance. 2000 Main Street 2nd Floor — City Hall Huntington Beach CA 92648 (714) 536-5227 A1014 OF POBLK HEA06 CITY OF HUNTINGTON BEACH NOTICE OF PUBLIC HEARBIG ON RESOI ITION OF INTEN- TION TO ESTABLISH PROPOSIRCOMMUNII I FAMES DISTRICT NO.2003-1 (HUNTINGTON CENTER)OF THE CRY OF HUNTINGTON BEACH,CALIFORNIA NOTICE IS HEREBY GIVEN that on January 6, 2003, the City Council of the City of Huntington Beach adopted Resolution No.2003-3,the resolution of intention with respect to the establishment of proposed Community Facilities District No.2003-1(Huntington Center)of the City of Huntington Beach, County of Orange, State of California, and that a public hearing on said resolution of intention and with respect to the establishment of said community facilities district will be held at 7:00 p.m. on, February 3, 2003, in the City Council Chambers located at the City Hall,2000 Main Street,Huntington Beach,California, a, erections (the "consolidated spate. Resolution No.2003-3 provides in summary as follows: conducted as a mail ballot election. 1.The name proposed for the community facilities district is"Community If at least 12 persons have been registered to vote within the territory Facilities District No.2003-1 (Hrntington Center)of the City of Huntington of the proposed community facilities,district for each of the 90 days Beach,County of Orange,Stated California." 2. The boundaries of the proposed community facilities district are Preceding the close el the public or protest hearing, the vote in the described and shown on the map entitled "Boundaries of Community consolidated special elections shell c by the havreging voters of the Facilities District No.2003-1 (Hultington Center)of the City of Huntington community facilities district with each voter haulm one vote. In that event,the consolidated special Beach, County of Orange, Statc:of California," which is on file with the elections shall be conducted by the Registrar of Voters of the County of City Clerk. 3.The types of public facilities proposed to be provided for and financed Orange and shall held on a date selected by the City Council and the by the proposed community facilities district are: ballots for the consolidated special elections shall be distributed t the (a) Street improvements ircluding costs of condemnation, removal, qualified electors of the community facilities district by mall with return turn demolition, grading, paving, cubs and gutters, sidewalks, street lights Postage prepaid,and the consolidated special elections shall be conducted and parkway and landscapingrelated thereto. as a mail ballot election. (b) Storm drains, drainage: storage ponds and drainage channels If at the time of the close of the protest hearing less than,12 persons including landscaping,if applicable. have been registered to vote within the territory of the, community (c) Sewers,sewer treatment facilities and sewer capacity acquisition. facilities district, the vote shall be by the landowners of the'community (d)Public parking facilities including a parking structure. facilities district, with each landowners of record at the close of the (a) Water distribution facililes, including fire hydrants and reclaimed protest hearing having one vote for,each acre or portion of an acre of water and water storage facilities land that he or she owns within the community'facilities district. In that (f)Street signalization and synage,including traffic fees. event, the consolidated special elections shall be conducted by the City (g)Fire facilities including stucture's and capital equipment Clerk. (h) Acquisition of land, riots-of-way and easements necessary.for The ballots for the consolidated special elections shall be distributed any of the facilitiesspecified in paragraphs(a)through(i)above. prepaid, the qualified electors ry the City Clerk by mail with return postage (i) The incidental expenseswhich will be incurred are: (i) the cost prepaid,or by personal service.The Citalso Clerk shall mail to each qualified of engineering, planning and 6signing such facilities and the cost of elector an official ballot,and shall also mall r all such qualified electors environmental evaluations theeof, (it) all costs associated with the other required election documents,includingt a return identification envelope urn with prepaid postage thereon addressed to the City Clerk for the return creation of the proposed community facilities district, issuance of the of voted official ballots. bonds thereof, the determinatin of the amount of and collection of Resolution No.2003-3 contains other provisions which are not summarized taxes,the payment of taxes,andcosts otherwise incurred in order tocarry above. A copy of Resolution No. 20034may be reviewed or obtained at out the authorized purposes of he community facilities district, and (iii) the office of the City Clerk of the City of Huntington Beach;2000 Main any other expenses incidental tothe construction,acquisition,completion, Street,Huntington Beach,California. And inspection of such facilities. , NOTICE IS FURTHER GIVEN that at the hearing the testimony of all (2) The proposed communitt facilities :district shall also pay for interested persons or taxpayers for or against the establishment of the maintenance of, and the provisbns of repair and replacement reserves community facilities district, the extent of the district, or the furnishing for,any of the publicly owned failities listed in clause(1)of this Section of specified types of public facilities or services will be heard. If 50 4. percent or more of the registered voters,or six registered voters,whichever 4. Special taxes sufficient totpay for all such facilities, to pay the is more, residing within the territory proposed to be included in the principal of and interest on the binds of the proposed community facilities proposed community facilities district or the owners of one-half or more district and the annual adminatrative expenses of the City and the of the area of the land in said territory and,hot exempt from the levy proposed community facilities dilrict In determining,apportioning,levying of special taxes, file written protests against the establishment of the and collecting such special taws, and In paying the principal of and proposed community facilities district,and protests are not withdrawn interest on such bonds, and,tk costs of registering, exchanging and so as to reduce the value of the probst to less than a majority, no transferring such bonds, securedby the recordation of a continuing lien further proceedings to create the commsnity facilities district or to levy against all taxable or nonexempt property in the proposed community the specified special taxes shall be taken for'a period of one year from facilities district, and maintaining a reserve fund for such bonds, and the date of the decision of the City Comcil. If majority protests of the paying any amounts that must,le paid to the United States in order to registered voters or of the landowners are only,against the furnishing of preserve the tax-exempt statusof such bonds shall be annually levied a specified type or types of public.facilities or services i within the within the proposed communitytlacilities district. Additionally, there shall community facilities district, or against.levying a-specified special tax, be levied special taxes sufficientto pay for the maintenance, repair and those types of facilities or services or :he specified special tax will be replacement of such public laciities. The rates and -method of eliminated from the resolution of formation establishing the community apportionment of said special taxes shall be as set forth in Exhibit "B" facilities district. to Resolution No.2003-3. The maximum amounts of special taxes which DATED:January 7,2003. may be annually levied on parcelswitkin the proposed community facilities /s/ CONNIE BROCKWAY, City Cleric of the City of Huntington Beach district which are used for privateresidentfal purposes are as follows: NPublished Huntington Beach dependent Luary 23 2003 014-059 MAXIMUM SPECIAL TAX The Maximum Special Tax for the leasehold interests in Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per'Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage ofi.Toxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. METHOD OF APPORTIONMENT OF THFSPECIAL TAX Commencing with Fiscal Year 200t-2005, and for each Fiscal Year thereafter, the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100%of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. 5. The officers of the City who wll'be responsible for providing the proposed types of public facilities to be provided within anWfinanced by the proposed community facilities district, if it Is established, shall study the proposed district, and, at or before the time of said hearing, file a report or reports with the City Council containing a brief description of the public facilities by type which will in their opinion be required to adequately meet the needs of the proposed,community facilities district and their estimate of the fair and reasonable cost of providing those public facilities and the incidental expenses to be incurred in connection therewith.Such reports shall be madea part of the record of the hearing. 6. Other property within the boundaries of the City may be annexed into the proposed community facilities district,upon the condition that parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed. 7. The consolidated special elections on (i) the proposition of the proposed community facilities district incurring a bonded indebtedness in an amount not to exceed $30,000,000 (ii) the proposition with respect to the levy of special taxes on the land within the community facilities district to pay the principal of and Interest on the bonds thereof and the maintenance, repair and replacement of the public facilities, and(iii) the proposition with respect to the establishment of an appropriations limit for the community facilities district In the amount of$4,000,000, if the community faeM4'-e district is established and such consolidated --ral elections") are held, shall be �. Q3 Jiila 28 8: PRdbfFjOFZPUBL AT10 STATE OF CALIFORNIA) .. SS. County of Orange ) I am a Citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the below entitled matter. I am a principal clerk of the HUNTINGTON BEACH INDEPENDENT, a newspaper of general circulation, printed and published in the City of Huntington Beach, ' County of Orange, State of California, and that attached Notice is a true and complete copy as was printed and published in the Huntington Beach and Fountain Valley issues of said newspaper to wit the issue(s) of: January 23, 2003 declare, under penalty of perjury, that the foregoing is true and correct. Executed on January 23 2003 at Costa Mesa, California. Signature BEST BEST & KRIEGER LLP A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS INDIAN WELLS LAWYERS SAN DIEGO (750) 568-261 1 3750 UNIVERSITY AVENUE (61 9) 525-1 300 - POST OFFICE BOX 1028 -- ONTARIO RIVERSIDE. CALIFORNIA 92502-1028 ORANGE COUNTY (909) 989-8584 (909) 686-1450 (949) 263-2600 (909) 686-3083 FAX - - - BBKLAW.COM SACRAMENTO (916) 325-4000 ' BARBARA J. SKINNER BJSKINNER,@BBKLAW.COM February 11, 2003 c VIA OVERNIGHT NIAIL. Connie Brockway City Clerk -- City of Huntington Beach 2000 Main Street ='0 Huntington Beach, CA 9648 Re: City of Huntington Beach Community Facilities District No. 2003-1 (Huntington.Center) Dear Connie: Enclosed are an original and two copies of a Notice of Special Tax Lien for Community Facilities District No.2003-1 (Huntington Center). We would appreciate it if you would date and sign the original and one copy of this document and return it to us as soon as possible, so that we can record it with the Orange County Recorder's office. The additional copy may be retained for your records. Sincerely yours, Barbara J. Skinner Legal Assistant for BEST BEST & KRIEGER LLP BJS:bjs Enclosures _ cc: Carol Runzel �. RVPUB\BJS\647676 EXEMPT FROM FILING FEES PURSUANT TO GOVERNMENT CODE SECTION 6103 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 SPACE ABOVE THLS LINE RESERVED FOR RECORDER'S USE NOTICE OF SPECIAL TAX LIEN Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code and Section 53328.3 of the Government Code, the undersigned City Clerk of the City of Huntington Beach, County of Orange, State of California, hereby gives notice that a lien to secure payment of special taxes is hereby imposed by the City Council of the City of Huntington Beach, County of Orange, State of California. The special taxes secured by this lien are authorized to be levied for the purpose of paying principal of and interest on bonds, the proceeds of which are being used to finance the public facilities described in Exhibit "A" attached hereto. The special taxes are.authorized to be levied within City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California (the "Community Facilities District"), the boundaries of which are described in Exhibit "B" attached hereto, which has now been officially formed and the lien of the special taxes is a continuing lien which shall secure each annual levy of the special taxes and shall continue in force and effect until the special tax obligation is prepaid,permanently satisfied,and canceled in accordance with law or until the special taxes cease to be levied and a notice of cessation of special tax is recorded in accordance with Section 53330.5 of the Government Code. RVPUB\BJS\647242 The rates, method of apportionment, and manner of collection of the authorized special taxes are as set forth in Exhibit "C" attached hereto. The conditions under which the obligation to pay the special taxes may be prepaid and permanently satisfied and the lien of the special taxes canceled are also set forth in Exhibit "C" hereto. Notice is further given that upon the recording of this notice in the office of the County Recorder,the obligation to pay the special tax levy shall become a lien upon all nonexempt real property within the Community Facilities District in accordance with Section 3115.5 of the Streets and Highways Code. The name(s)of the owner(s) and the assessor's tax parcel number(s) of the real property included within the Community Facilities District and not exempt from the special taxes are set forth in Exhibit "D" attached hereto. Reference is made to the boundary map(or the amended boundary map)ofthe Community Facilities District recorded on January 19, 2003, in Book 85 of Maps of Assessment and Community Facilities Districts, at Page 45, and as Instrument No. 2003-000028911, in the office of the County Recorder for the County of Orange, State of California,which map is now the final boundary map of the Community Facilities District. For further information concerning the current and estimated future tax liability of owners or purchasers of real property subject to this special tax lien,interested persons should contact the Office ofthe Director ofEconomic Development ofthe City ofHuntington Beach,2000 Main Street,Huntington Beach, California, telephone number(714) 536-5582. Dated: February /.z , 2003. City Clerk of the City of Huntingt Beach RVPUBWS\647242 -2- EXHIBIT "A" CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) DESCRIPTION OF PUBLIC FACILITIES The types of public facilities to be provided within and financed by the Community Facilities District are: (a) Street improvements including costs of condemnation, removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains, drainage storage ponds and drainage channels including landscaping, if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public parking facilities including parking structure. (e) Water distribution facilities,including fire hydrants and reclaimed water and water storage facilities. (f) Street signalization and signage, including traffic fees. (g) Fire facilities including structures and capital equipment. (h) Acquisition of land, rights-of-way and easements necessary for any of the facilities specified in paragraphs (a)through (g) above. (i) The incidental expenses which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof,(ii)all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof, the determination of the amount of and collection of taxes,the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and (iii) any other expenses incidental to the construction, acquisition, completion, and inspection of such facilities. (j) Maintenance of, and the provisions or repair and replacement reserves for, any of the publicly owned facilities listed above in (a)through (h). RVPUB\13JS\647242 A-1 MIBIT "B" LEGAL DESCRIPTION FOR COMMUNITY FACILITIES DISTRICT NO. 2003-1 PURPOSES FOR THE HUNTINGTON CENTER THE LAND REFERRED TO HEREIN LIES WITHIN PARCELS 2 THROUGH 9 INCLUSIVE OF PARCEL MAP NO. 86-200, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP RECORDED IN BOOK 255, PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF ORANGE WHOSE PERIMETER IS DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF EDINGER AVENUE AND BEACH BOULEVARD AS SHOWN ON SAID PARCEL MAP NO. 86-200, SAID INTERSECTION BEING SOUTH 000 19' 42" WEST 0.17 FEET FROM ORANGE COUNTY GPS # 5110, THENCE ALONG SAID CENTERLINE OF EDINGER AVENUE THE FOLLOWING: 1. NORTH 890 29' 30" WEST I11•.00 FEET; THENCE PERPENDICULAR TO SAID- CENTERLINE, MEASURED AT RIGHT ANGLES 2. NORTH 000 30' 30" EAST 50.00 FEET TO THE SOUTHEASTERLY CORNER OF PARCEL 8 OF SAID PARCEL MAP NO. 86-200 AND THE TRUE POINT OF BEGINNING; THENCE ALONG THE SOUTHERLY LINES OF PARCELS 8, 4, 3 AND 2 3. NORTH 890 29' 30" WEST 2053.69 FEET TO THE MOST SOUTHWESTERLY CORNER OF SAID PARCEL 2, SAID POINT BEING IN THE NORTHERLY LINE OF SAID EDINGER AVENUE; THENCE NORTHERLY ALONG THE WESTERLY LINES OF SAID PARCEL 2 THE FOLLOWING COURSES: 4. NORTH 000 30' 30" EAST 403.20 FEET, 5. SOUTH 890 29' 30"EAST 172.56 FEET, 6. NORTH 000 30' 30' EAST 210.00 FEET, 7. NORTH 890 29' 30"WEST 19.50 FEET, 8. NORTH 000 30' 30"EAST 169.00 FEET, 9. NORTH 890 29' 30"WEST 153.06 FEET, 10. NORTH 000 30' 30" EAST 338.61 FEET, TO THE SOUTHERLY LINE OF THE NORTHERLY 150.00 FEET OF THE SOUTH HALF OF THE SOUTHEAST QUARTER OF SECTION 14, SAID LINE ALSO BEING THE NORTH LINE OF SAID PARCELS, 3 AND 4; THENCE ALONG SAID NORTH LINE 11. SOUTH 890 29' 30" EAST 1333.15 FEET TO THE MOST NORTHEASTERLY CORNER OF SAID PARCEL 4, SAID POINT BEING ON THE SOUTHWESTERLY RIGHT OF WAY LINE OF CENTER DRIVE AND THE BEGINNING OF A NON- TANGENT CURVE CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 504.00 FEET TO WHICH POINT A RADIAL LINE BEARS SOUTH 430 16' 29" WEST; THENCE ALONG SAID SOUTHWESTERLY LINE AND SAID CURVE THROUGH A CENTRAL ANGLE OF 120 04' 12" AN ARC LENGTH OF 106.17 FEET AND A CHORD DISTANCE OF 105.98 FEET; THENCE TANGENT TO SAID CURVE 1 12. SOUTH 340 39' 19"EAST 208.54 FEET; THENCE 13. SOUTH 310 44' 20" EAST 249.92 FEET TO THE BEGINNING OF A NON- TANGENT CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 300.00 FEET TO WHICH POINT A RADIAL LINE BEARS NORTH 750 14' 40" EAST; THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 500 58' 58" AN ARC LENGTH OF 266.95 FEET AND A CHORD DISTANCE OF 258.23 FEET; THENCE TANGENT TO SAID CURVE 14. SOUTH 650 44' 18"EAST 233.07 FEET; THENCE 15. SOUTH 350 15' 38" EAST 70.56 FEET TO A POINT ON THE WEST LINE OF BEACH BOULEVARD AS DESCRIBED PER DEED TO THE CITY OF HUNTINGTON BEACH RECORDED AS INSTRUMENT NO. 91-209426 OF OFFICIAL RECORDS OF SAID COUNTY OF ORANGE; THENCE ALONG SAID WEST LINE 16. SOUTH 000 19' 42"WEST 273.61 FEET; THENCE 17. SOUTH 420 18' 58" WEST 41.42 FEET TO THE NORTH LINE OF EDINGER AVENUE AS SHOWN ON DEED TO THE CITY OF HUNTINGTON BEACH RECORDED IN BOOK 10418, PAGE 968 OF OFFICIAL RECORDS OF SAID COUNTY OF ORANGE; THENCE 18. SOUTH 890 29' 30"EAST 8.05 FEET; THENCE 19. SOUTH 420 1.8' 58"WEST 10.73 FEET TO THE TRUE POINT OF BEGINNING. CONTAINING AN AREA OF 44.00 ACRES MORE OR LESS COORDINATES SHOWN ARE BASED UPON THE CALIFORNIA STATE PLANE COORDINATE SYSTEM, 1983 DATUM. GPS#5110 N 2213732.692 E 6032865.319 FOUND REBAR DOWN 0.1'. STATION IS LOCATED AT APPARENT CENTERLINE INTERSECTION OF BEACH BOULEVARD AND EDINGER AVENUE. N CHRISTOPHER W DANIELS - * EXP. ,p NO. 6328 qrE OF CAI�F�Q� P:/PROJECPS/021DO/SURVEY/ADNUN/CFD LEGAL BELLA TERRA 112602.DOC 2 HB-PCLS2-9.txt --------------------------------------------------------------------------- Parcel name: PCLS-2-91 North: 2213791.4410 East : 6032761.9937 . Line Course: S 42-18-58 W . Length: 10.73 North: 2213783.5068 East : 6032754.7701 Line Course: N 89-29-30 W Length: 2053.69 North: 2213801.7271 East 6030701.1609 Line Course: N 00-30-30 E Length: 403.20 North: 2214204.9112 East 6030704.7381 Line Course: S 89-29-30 E Length: 172.56. North: 2214203.3803 East : 6030877.2913 Line Course: N 00-30-30 E Length: 210.00 North: 2214413.3720 East : 6030879.1544 Line Course: N 89-29-30 W Length: 19:50 North: 2214413.5450 East : 6030859.6552 Line Course: N 00-30-30 E Length: 169.00' North: 2214582.5384 East 6030861.1546 Line Course: N 89-29-30 W Length: 153.06 North: 2214583.8963 East 6030708.1006 Line Course: N 00-30-30 E Length: 338.61 North: 2214922.4930 East 6030711.1047 Line Course: S 89-29-30 E Length: 1333.15 North: 2214910.6653 East : 6032044.2022 Curve Length: 106.17 Radius: 504 .00 Delta: 12-04-12 Tangent: 53.28 Chord: 105.98 Course: S 40-41-25 E Course In: 5 '43-16-29 W Course Out: N 55-20-41 E RP North: 2214543.7154 East 6031698.7117 End North: 2214830.3087 East 6032113.2961 Line Course: S 34-39-19 E Length: 208.54 North: 2214658.7662 East 6032231.8798 Line Course: S 31-44-20 E Length: 249.92 North: 2214446.2207 East 6032363.3499 Curve Length: 266.95 Radius: 300.00 Delta: 50-58-58 Tangent: 143.04 Chord: 258.23 Course: S 40-14-49 E Course In: N 75-14-40 E Course Out: S 24-15-42 W RP North: 2214522.6294 East : 6032653.4563 End North: 2214249.1259 East : 6032530.1850 Line Course: S 65-44-18 E Length: 233.07 North: 2214153.3564 East 6032742.6698 Line Course: S 35-15-38 E Length: 70.56 North: 2214095.7416 • East 6032783.4038 Line Course: S 00-19-42 W Length: 273.61 North: 2213822.1361 East 6032781.8359 Line Course: S 42-18-58 W Length: 41.42 North: 2213791.5084 East 6032753.9511 Line Course: S 89-29-30 E Length:. 8.05 North: 2213791.4370 East 6032762.0008 Perimeter: 6321.78 Area: 1,916,606.9244 sq. ft. 43.9992 acres Mapcheck Closure - (Uses listed courses, radii, and deltas) Error Closure: 0.0081 Course: S 60-33-45 E Error North: -0.00398 East : 0.00706 Page 1 EXHIBIT "C" CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO, 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein CFD No. 2003-1) shall be levied and collected according to the tax liability determined by the Administrator through the application of the procedures described below. The real property in CFD No. 2003-1, 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 capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment: 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, or the other parcel map recorded tirzth the County Recorder. If the Acreage of a particular Parcel is unclear after reference to available maps, the Administrator shall determine the appropriate Acreage for a Parcel. Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, of Title 5 of the Government Code.of the State of California. Administrative Expenses means any or all of the following actual or reasonably estimated costs directly related to the administration of CFD No. 2003-1: the. fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its.counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture or resolution with respect to the Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees 1 ; and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No. 2003-1. Administrator means the Director of Economic Development or such other person or entity designated by the City Administrative Officer or the City Council to administer.the Special Tax according to this Rate and Method of.Apportionment of Special Tax. Assessor's Parcel or Parcel'means a lot, parcel or airspace parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's Parcel number. Bonds mean any bonds or other debt(as defined in Section 53317(d) of the Act), whether in one or more series,issued by the City for CFD No. 2003-1 under the Act. City means the City of Huntington Beach. City Council means the City Council of the City of Huntington Beach, acting as the legislative body of CFD No. 2003-1. County means the County of Orange. Development Agreement means the Owner Participation Agreement (OPA) between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates,LLC, dated October 2,2000. Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1 which generally serves the development subject to the Development Agreement and is owned by a governmental agency for public right-of-way purposes including, but not limited to parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved. Fiscal Year means the period commencing on July 1 and ending on the following June 30, in any year in which the Bonds are outstanding. Indenture means'the indenture, fiscal agent agreement, resolution or other instrument approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. 2 Maximum Special Tax means, with respect to any Parcel of Taxable Property, the maximum Special Tax, determined in accordance with Section C, that can be levied in any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts payable under the Parking Structure Maintenance Special Tax. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Parking Structure Maintenance Special Tax means the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for CFD No. 2003-1 necessary to pay all actual, documented maintenance costs,management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs, fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues shall be subject to and limited by the provisions of the follo%N ing documents,which documents shall be in the form approved by the City Council in connection the issuance of the Bonds, and which documents, upon such approval, shall be deemed to be incorporated herein by this reference: (i) any covenants, conditions or restrictions encumbering such parking structure and/or the real property upon which it is to be constructed as of the date of issuance of the Bonds, (ii) the initial parking management agreement governing the operation and maintenance of such parking structure(the provisions of such initial parking management agreement to govern the determination of the Parking Structure Maintenance Special Tax for so long as the Special Tax lien remains in effect, notwithstanding any earlier expiration or termination of such agreement), and(iii)any amendments to the foregoing covenants, conditions or restrictions or agreements. Reserve Fund means the fund of that name created under the Indenture. Resolution of Issuance means the resolution adopted by the City Council of the City, acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds in accordance with the Act. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within CFD No. 2003-1. Special Tax Requirement means the amount required in any Fiscal Year for CFD No. 2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance Special Tax. 3 r Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No. 2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law,but in no circumstance shall the total amount of Taxable Property be less than 40.63 acres. Trustee means the trustee who is a party to the Indenture, if so approved. B. IDENTIFYING TAXABLE PROPERTY Not less than fifteen business days prior to the beginning of each Fiscal Year, the Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property. The Taxable Property shall be subject to Special Taxes in accordance with the rate and method of apportionment described in Sections C and D below. C. MAXIMUM SPECIAL TAX The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City Council shall levy the Special Tax prop^rtionately on each Assessor's Parcel of Taxable Property at up to 100% of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. 4 E. LINnTATIONS No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, and until the date on which principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax may be levied and collected until such time as the City and the CFD No. 2003-01 have divested all remaining ownership interests in the parking structure. Upon determination by the Administrator that such requirements have been met, the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1. F. MANNER OF COLLECTION The Special.Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes,provided,however,that the City on behalf of CFD No. 2003-1 may directly bill the special tax or any portion thereof, may collect special taxes or any portion thereof at a different time or in a 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. Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax shall be directly billed in each instance and not billed with ad valorem property taxes. G. APPEALS The City Council shall establish as part of the proceedings and administration of CFD No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any appeals, as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming that the amount or application of the Special Tax is not correct may file a written notice of appeal with the Review/Appeal Committee not later than one calendar year after having paid the Special Tax that is disputed. The Review/Appeal Committee shall promptly review the appeal, and if necessary, meet with the owner, consider written and oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the Review/Appeal Committee's decision requires the Special Tax to be modified or changed in favor of the owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall be exclusive and its exhaustion by any owner shall be a condition precedent to any legal action by such owner. 5 H. PREPAYMENT OF SPECUL TAX The following definitions apply solely to this Section H: Amount of Current. Special Taxes Paid means the amount of the Special Tax levied against the subject Assessor's Parcel that was paid to the County or the City by the owner. of the subject Assessor's Parcel and would be applied to debt service payments on the Redemption Date and the Interest Payment Date immediately following the Redemption Date. Outstanding Bonds means all Bonds that are deemed to be outstanding under the Indenture the day immediately preceding the next Interest Payment Date. Redemption Date means the Interest Payment Date on which Bonds are proposed to be redeemed from the prepayments of the Special Tax. 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein. The owner intending to prepay the Special Tax obligation on one or more Assessor's Parcel(s) shall provide the Administrator with written notice of intent to prepay. It shall be a condition precedent to prepayment that the owner intending to prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's Parcel to be prepaid and provide proof of payment to the Administrator. Promptly following receipt of such notice, the Administrator shall notify the owner of such Assessor's Parcel(s) of the .prepayment amount of such Assessor's Parcel(s). The Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 90 days prior to the next occurring date that Bonds may be redeemed from the proceeds of such prepayment pursuant to the Indenture. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined above or below): Bond Redemption Amount . Plus Redemption Premium Plus Defeasance Amount Plus Administrative Fees and Expenses Less Reserve Fund Credit Less Amount of Current Special Taxes Paid Total: Equals Prepayment Amount 6 As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragyranh No. 1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year. 2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total Maximum Special Tax of all Assessor's Parcels of Taxable Property for the current Fiscal Year. 3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding Bonds as defined in this Section G to compute the amount of Outstanding Bonds to be retired and prepaid, and round the result up to the nearest multiple of$5,000 (the Bond Redemption Amount). 4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled to mature on the Redemption Date by the applicable redemption premium (the Redemption Premium). 5. Compute the amount needed to pay interest on the Bond Redemption Amount from the Interest Payment Date immediately preceding the Redemption Date to the Redemption Date. 6. Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 7. Add the amounts computed pursuant to Paragraph_5 and subtract the amount computed pursuant to Paragraph 6 (the Defeasance Amount). 8. Determine the administrative fees and expenses associated with 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. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal the lesser of. (a) the expected reduction in the Reserve Requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new Reserve Requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 10. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment Amount). 7 11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3, 4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments (as appropriate). The amount computed pursuant to Paragraph 8 shall be retained by the Administrator. With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii) notify the County that the Special Tax, if any, remaining on the secured tax roll for the Assessor's Parcel has been satisfied and that the County should remove such amounts from the secured tax roll, and (iii) refund the owner for any Special Tax payments made on the Assessor's Parcel after the date of prepayment. From and after the prepayment, 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 the Maximum Special Tax that may be levied on Taxable Property Mthin CFD No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds.. 2. Prepayment in Part_ The Maximum Special Tax on an Assessor's Parcel of Taxable Property 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=(PH xF) +G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section H.1, minus the amounts determined in Paragraph No. 8 of Section H.1. F = the percent by which the owner of an Assessor's Parcel(s) is partially prepaying the Maximum Special Tax. G = the amounts determined in Paragraph No. 8 of Section H.1. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall be prepaid. The Administrator shall promptly provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel following receipt of the request. 8 With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii) indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall jcontinue to be authorized to be levied on such Assessor's Parcel pursuant to.Section D. I . f f I I I i i i I j 9 EXHIBIT "D" CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (MOUNTAIN COVE) OWNERSHIP LIST ASSESSOR'S PARCEL NOS. OWNER'S NAME 142-071-53 Huntington Center Associates, LLC 142-071-61 142-071-80 142-071-85 142-071-93 142-071-97 142-071-98 147-071-99 RVPUB\BJS\647242 D-1 (7) February 3, 2003 - Council/Agency Agenda - Page 7 D. PUBLIC HEARINGS Anyone wishing to speak on an OPEN public hearing is requested to complete the attached pink form and give it to the Sergeant-at-Arms located near the Speaker's Podium. D-1. (City Council) Public Hearing to Consider Establishing Formation of the Huntington Center Community Facilities District No. 2003-1 (Per Resolution of Intention No. 2003-4 Adopted January 6. 2003 Re: Proposed Bonded Indebtedness) -Adopt Resolution Nos. 2003-10 through 2003-13 Inclusive: Forming and Setting Boundaries of the District; Calling for Special Election and Declaring Special Election Results (350.30) Public hearing for the purpose of considering proposed Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California, to incur a bonded indebtedness in an amount not to exceed $30,000,000, per Resolution No. 2003-4, a Resolution of Intention adopted by the City Council on January 6, 2003, in the City Council Chambers at the City Hall, 2000 Main Street, City of Huntington Beach, California. Said resolution determines that it is necessary for Resolution No. 2003-4 provides in summary as follows: 1. The City Council declares that it is necessary that bonded indebtedness be incurred by and for proposed Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California, in an aggregate principal amount not to exceed $30,000,000 for the purpose of financing the design, acquisition, construction, equipping and furnishing of the public facilities described in Resolution No. 2003-3, the Resolution of Intention. 2. The amount of the proposed bonded indebtedness shall include all costs and estimated costs incidental to, or connected with, the accomplishment of the purposes for which the proposed bonded indebtedness is to be incurred, including, but not limited to, the estimated costs of construction and acquisition of the public facilities which are proposed to be provided for the community facilities district. 3. All parcels of taxable property within the proposed community facilities district shall be subject to the levy of special taxes to pay the principal of and interest on the aggregate principal amount of the bonds of the community facilities district which may be issued and sold to finance public facilities for the benefit of parcels of property within the community facilities district. 4. A public hearing on the proposed bonded indebtedness for said proposed community facilities district shall be held at 7:00 p.m. on February 3, 2003 in the City Council Chambers of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California. Said hearing shall be conducted concurrently with the hearing on the establishment of the proposed community facilities district. (Continued on the next page) (8) February 3, 2003 - Council/Agency Agenda - Page 8 A copy of Resolution No. 2003-4 may be reviewed or obtained at the office of the City Clerk of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California. Notice is further given that at the time and place of said hearing all interested persons, including all persons owning property in the proposed community facilities district, for or against the proposed bonded indebtedness, will be heard. 1. Staff report 2. City Council discussion 3. Open public hearing 4. Following public input,close public hearing Recommended Action: Motion to:: 1. Open the public hearing, take public testimony, and close the public hearing on the formation of the Community Facilities District 2003-1 (Huntington Center); and 2. Approve the City of Huntington Beach Community Facilities District Report No. 2003-1 (Huntington Center) (ATTACHMENT 1); and 3. Adopt Resolution No. 2003-10— "A Resolution of the City Council of the City of Huntington Beach Establishing City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) and Establishing the Boundaries thereof." (ATTACHMENT NO. 2); and 4. Adopt Resolution No. 2003-11 — "A Resolution of the City Council of the City of Huntington Beach Determining the Necessity for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) to Incur a Bonded Indebtedness in an Aggregate Principal Amount not to Exceed$30,000,000 for Providing Public Facilities within and for the Community Facilities District and Calling a Special Election for the Community Facilities District on a Proposition for Incurring such Bonded Indebtedness." (ATTACHMENT NO. 3); and (Continued on the next page) (9) February 3, 2003 -Council/Agency Agenda - Page 9 5. Adopt Resolution No. 2003-12— A Resolution of the City Council of the City of Huntington Beach Calling a Special Election and Submitting to the Voters of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Propositions Regarding Incurrence of Bonded Indebtedness the Annual Levy of Special Taxes within the Community Facilities District to Pay Principal of and Interest on Bonds thereof, and the Establishment of an Appropriations Limit." (ATTACHMENT NO. 4); Exhibit "A" of Resolution No. 2003-12 - Official Ballot Consolidated Special Elections for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California PROPOSITION A*: "Shall a bonded indebtedness in an original [Proposition A] aggregate principal amount not to exceed $30,000,000 be incurred by and for City of Huntington Beach Community Facilities District No. 2003-1 YES ❑ (Huntington Center), County of Orange, State of California (the"Community Facilities District"),for a maximum term of not more than 35 years and with interest at a rate or rates not to exceed the maximum interest rate permitted NO ❑ by law, for the purposes of providing: (1) The types of public facilities listed in the Resolution of Formation of the District adopted February 3, 2003, and (2)The incidental expenses which will be incurred are all costs associated with the creation of the Community Facilities District, issuance of the bonds thereof, the determination of the amount of and collection of taxes, and the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District?" PROPOSITION B*: "Shall special taxes be levied annually on taxable [Proposition B] property within City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California (the YES ❑ "Community Facilities District"), to pay the principal of and interest on the bonds of the Community Facilities District issued and sold to finance and refinance those purposes specified in Proposition A of this ballot, to NO ❑ establish and replenish the reserve fund for the bonds, or to accumulate funds for future bond payments, including any amount required by federal law to be rebated to the United States with regard to the bonds, and to pay expenses incidental thereto and to the levy and collection of the special taxes, so long as the special taxes are needed to pay the principal of and interest on the bonds and for such other purposes, together with the payment of, and the provisions of repair and replacement reserves for, maintenance of any of the publicly owned facilities financed with the proceeds of such bonds, at the special tax rates and pursuant to the method of apportioning the special taxes set forth in Exhibit"A"to the Resolution of Formation adopted by the City Council of the City of Huntington Beach on February 3, 20037' PROPOSITION C: "Shall an appropriations limit, as defined by [Proposition B] subdivision (h)of Section 8 of Article XIII B of the California Constitution, be established for City of Huntington Beach Communities Facilities District No. YES ❑ 2003-1 (Huntington Center), County of Orange, State of California, in the amount of$4,000,0007' NO ❑ *Propositions A& B are subject to the accountability Measures prescribed in California State Govt.Code§53410 (Continued on the next page) (10) February 3, 2003 -Council/Agency Agenda - Page 10 and 5. Adopt Resolution No. 2003-13 — "A Resolution of the City Council of the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California, on the Propositions with Respect to (i) Incurring Bonded Indebtedness in an Original Amount not to Exceed $30,000,000, (ii) the Annual Levy of Special Taxes to Pay Principal and Interest on Bonds, and (iii) the Establishment of an Appropriations Limit and Authorizing the Recordation of the Notice of Special Tax Lien." (ATTACHMENT NO. 5) Director of Economic Development Biggs presented PowerPoint slide show. Adopted all Resolutions 7-0 111�'j J�11 PROOF OF PUBLICATION 803 JAN 28 A 8: STATE OF CALIFORNIA) SS. County of Orange NOTICE OF e amoun 6f the am a Citizen of the United States and a — j_proposed bonded in- PUBUCHEARING debtedness shall include I CITY OF ._all costs and estimated -costs incidental to, or resident of the County aforesaid; I am HUNTINGTON BEACH .�connected with, the NOTICE OF PUBLIC HEARING '-accomplishment of the over the age of eighteen years, and not a ON RESOWTION TO IN I CUR' ipurposes for which the I 11'proposed bonded ' in- ,party to or interested in the below debted'ess is to be BONDED INDEBTEDNESS ,incurred;j I mc including, but IN AN AMOUNT NOT TO n.t 'limited d to, the entitledit. matter. I am a principal clerk of EXCEED$30,000,000 FOR ed• costs of�con-struction and Public HUNTINGTON BEACH INDEPENDENT, a XPOSEDCOMMUNITY -sition of the public � FACIUITIS DISTRICT facilities which are newspaper of general circulation, printed -Proposed to be-provided NO.2W3-I -for, the,community and published in the City of Huntington (HUNTINGTON CENTER)' -faciliti'es district. OF THE CITY OF 3. All parcels of Beach County taxable property within of Orange, State of HUNTINGTON BEACH, the propoied community California, and that attached Notice is a .(AUFORNIA facilities district shall be Y subject to the levy of NOTICE IS HEREBY -special taxes to pay the true and complete copy as was printed GIVEN that it 7:00 p.m- -.Principal.of and interest on February 3,2003,the on the' aggregate piin- and published in the Huntington Beach City Council'of the city Huntington Beach will -cipal amount of the City - conduct a hearing on -,bonds of the community acilities district which and Fountain Valley issues of said -Resolution No. 2003-4, nnay,be issued and sold �adopted by said City -to finance public facili- newspaper to wit the issue(s) of: °Council on January 6, -ties'for the benefit of 2003,in the City Council :-parcels. of 'property 'Cha mbers at the City within the community Hall, 2000 Main Street, facilities district. City of Huntington -4. A public'hearing on -Beach, California. Said, -.the pt6p°osed bonded 'resolution determines -indebtedness for said .that it is=riecessary for .,proposed community January 23 , 2003 proposed Community, -facilities,district shall be -Facilities District No. :held at,7:00 p.m. on -2003-1 '(Huntington February 3, 2003 in the Center) of the City of i ZCity Council' Chambers -Huntington. Beach, i sof the City of Huntington ,County of Orange, State I 'Beach,2000 Main Street, -Of California, to incur.a 'Huntington Beach, Cali- .=bond6d indebtedness in :foinia.�S�aid hearing shall of perjury, that :an amount not to -be conducted concur I declare, under penalty -exceed$30;000,000. with the hearing the foreaning is true and correct. 0- 0 Resolution No. 2003-4 1 -on the establishment of, Prov ides...in,summary I as• the proposed community .follows:.-- I facilities district. 1. The -City Council I ' A' copy of Resolution °declares that it' is -No. 2003-4 may be `riecissary`that bonded 'reviewed or obtained at Executed on January 23 2003 _indebtedness be incurredit the office of the Cityl by -and for proposed "Clerk 'of:.the City of at Costa Mesa, California. by Fac ilities I �Huntington Beach, 2000 Distri&t-'No. 2003-1 main Street, Huntington (Huntington Center) off Beach,California. -the City of.Huntington NOTICE IS FURTHER -Beach, County of Or- -GIVEN that at the time range,State of California, f ^and place'bf said hearing in an aggregate principal :all interested persons, vamount, not to exceed 'including all persons �$30,000�000 for the owning property in the :-purpose of financing the proposed- community rid e:sign A acquisition, ]'-facilities district, for or -constQ for, equipping 1,-agaihst the proposed and furnishing of the -bonded 'indebtedness, public facilities de.-. -,will b'e-hdard. ' Signature -scribed in*Reso ution No. 'DATED: January 7, 2003 2003-3; the R CONNIE BROCK- lesolution of Intention. /s/ L ,SWAY,C"Clerk of the -City ,of Huntington -Beach ' `Published Huntington .,Beach-independent Jan-. 23,;2003 014-058 —... conydducuc ted as a maiiballot eiecir — If at least 12 persons have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the public or protest hearing, the vote .in the consolidated special,elections shall be by the registered voters of the community facilities district with each voter having one vote. In that event,the consolidated special elections shall be conducted by the Registrar of Voters of the County of Orange and shall beheld on a date selected by the City Council and the ballots for the consolidated special elections shall be distributed to the 'qualified electors of he community facilities district by mail with return postage prepaid,and'he consolidated special elections shall be conducted as a mail ballot election. If at the time of the close of the protest hearing less than 12 persons have been registered to vote within the territory of the community facilities district, the 'ote shall be by the landowners of the community facilities district, with each landowners of record at the close of the protest hearing havingone vote for each acre or portion of an acre of land that he or she owls within the community facilities district. in that event, the consolidated special elections shall be conducted by the City Clerk. The ballots for the consolidated special elections shall be distributed to the qualified electory by the City Clerk by mail with return postage prepaid,or by personal�ervice The City Clerk shall mail to each qualified elector an official ballot,and shall also mail to all such qualified electors other required election dowmerts,including a return identification envelope with prepaid postage thereon addressed to the City Clerk for the return of voted official ballots. Resolution No.2003-3 containsother provisions which are not summarized above. A copy of Resolution Nc 2003-3 may be reviewed or obtained at the office of the City Clerk of he City of Huntington Beach, 2000 Main Street,Huntington Beach,Califoaia. NOTICE IS FURTHER GIVEN Vat at the hearing the testimony of all interested persons or tazpayer.for or against the establishment of the community facilities district, th'extent of the district, or the furnishing of specified types of'public feilities or services will be heard. If 50 percent or more of the registeredroters,or six registered voters,whichever is more, residing within the britory proposed to be included in the proposed community facilities dtrict or the owners of one-half or more of the area of the land in saiderritory and not exempt from the levy of-special taxes, file written pr}ests against the establishment-of the proposed community facilities ctrict, and protests are not withdrawn so as to reduce the value of t protest to less than a majority, no further proceedings to create thcommunity facilities district or to levy the specified special taxes shall: taken for a period of one year from the date of the decision of the ty Council. If majority protests of the registered voters or of the landorers are only against the Furnishing of a specified type or types of plic facilities or services within the community facilities district, or ainst levying a specified'special tax, those types of facilities or servis or the specified.special tax will be eliminated from the'resolution oiormation establishing the community facilities district. DATED:January 7,2003. /s/ CONNIE BROCKWAY,City erk of the City of Huntington Beach Published Huntin on Beach Indepeent January 23,2003 014-059 NOTTIC OF PUBU HEARING CITY OF NUNTINGTON BEACH NOTICE OF PUBII(HEARING ON RESOLUTION OF INTEN- �� o [� '6 �"'7' TION TO ESTABLISH PROPOSED COMMUNITY WAITIES DISTRICT N0.2003-1 (HUNTINGTON CENTER)OF THE CITT. HUNTINGTON BEACH,CAUFORNUI NOTICE IS HEREBY GIVEN that on January 6, 2003, the City Council of f (" the City of Huntington Beach adopted Resolution No.2003-3,the resolution of. intention with respect to the establishment of proposed Community e1 '.'�' Facilities District No.2003-1(Huntington Center)of the City of Huntington r r ' Beach, County of Orange, State of California, and that a public hearing �`li��i`:� � '-' '•�'' k"f'-j���4�• r on said resolution of intention and with respect to the establishment of said community facilities district will be held at 7:00 p.m. on, February p 3,2003, in the City Council Chambers located at the City.Hall,2000 Main CAT.J6 1AWl Ltd A 8 L} ` Street,Huntington Beach,California. PROOF OF PUBLI Resolution No.2003-3 provides in summary.as follows: 1.The name proposed for the community facilities district is"Community .acilities District No.2003-1(Huntington Center)of the City of Huntington 3each;County of Orange,State of California." 2. The boundaries of the proposed community facilities ,district are STATE O F CALIFORNIA) .. -ascribed and shown 0 the map gten Ced ")unthe Ci y f Community Facilities District No.2003-1(Huntington Center of the City of Huntington 3each, County of Orange, State of California," which is on file with the pity Clerk. f S S• 3.The types of public facilities proposed to be provided for and financed County of Orange ) by the proposed community facilities district-are: (a) Street improvements including costs of condemnation, removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscapingrelated thereto. ,I (b) Storm drains, drainage storage, ponds and drainage channels 1 am a Citizen of the United States and a includingSewers, selandscaping,if applicable. (c) Sewers, sewer treatment facilities and sewer capacity iacquisition. (d)Public parking facilities including a parking structure. resident of the County aforesaid 1 am (e) Water distribution facilities, including fire hydrants avid reclaimed " 3 water and water storage facilities. over the age of eighteen years, and not a (f)Street signalization and signage,including traffic fees. Y (g)Fire facilities including structure's and capital equipment. (h) Acquisition of land, rights-of-way and easements necessary for "party to or interested in the below any of the facilitiesspecified in paragraphs(a)through(i)above. entitled matter, 1 am a principal clerk of of t (I) The incidental expenses which will be incurred are: h the cost engineering, planning and.designing such facilities and the cost of the HUNTINGTON BEACH INDEPENDENT environmental .evaluations thereof, <if all costs associated` with the creation the proposed community facilities district, issuance of the , a bonds thereof, the determination of the'amount of and collection of newspaper of general circulation, printed taxes,the payment of taxes,and costs otherwise incurred in order tocarry b out the authorized purposes of the community facilities district, and (iii) and pu lished in the City of Huntington inspection neofsuchfaclitesto the construction,acquisition,completion, Beach, County of Orange, State of aim The proposed community facilities district shall also pay for maintenance of, and the provisions of repair and replacement reserves California, and that attached Notice is a for,any of the publicly owned facilities listed in clause(1)of this Section 4. 4. Special taxes sufficient to pay for all such facilities, to pay the principal of and interest on the bonds of the proposed community facilities true and complete copy as was printed district and the annual administrative expenses of,the City and the and published in the Huntington Beach proposed community facilities district in determining,apportioning,levying and collecting such special taxes, and in paying the principal of and and Fountain Valley issues Of said interest on such bonds; and the costs of registering, exchanging and transferring such bonds, secured by the recordation of a continuing lien against all taxable or nonexempt property in the proposed community newspaper to wit the issue(s) of: facilities district, and maintaining a reserve fund for such bonds, and paying any amounts that must be paid to the United States in order to preserve the tax-exempt status of such bonds shall be annually levied within the proposed community facilities district. Additionally, there shall be levied special taxes sufficient to pay for the maintenance, repair and replacement of such public facilities. The rates and method of apportionment of said special taxes shall be as set forth in Exhibit "B" to Resolution No.2003-3. The maximum amounts of special taxes which January23, 2003 may be annually levied on parcels within the proposed community facilities district which are used for private residential purposes are as follows: MAXIMUM SPECIAL TAX The Maximum Special Tax for the leasehold interests in Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined pursuant to the following steps:, Step 1: Determine the maximum annual debt service on all Outstanding l declare under Bonds; penalty of perjury, that Step 2: Multiply the'total debt service determined in Step 1 by 1.1 and the foregoing is true and correct. add the3: Determine Administrative e Acreage Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Executed On Commencing with Fiscal Year 2004-2005, and for each Fiscal Year _ January 2 3 2 0 0 3 thereafter, the City Council shall levy the Special Tax proportionately on at Costa Mesa, California. each Assessor's Parcel of Taxable Property at up to 100%of the Maximum Special Tax,as determined by reference to Section•C, above, as needed to satisfy the Special Tax Requirement. 5. The officers of the City who will be responsible for providing the proposed types of public facilities to be provided within and financed by the.proposed community facilities district, if it is established,shall study the proposed district, and, at or before the time of said hearing, file a report or reports with the City Council containing a brief description of the public facilities by type which will in their opinion be required to adequately meet the"needs of the proposed community facilities district and their estimate of the fair and reasonable cost of providing those public facilities and the incidental expenses to be incurred in connection therewith. Such repo,'rts shall be made a part of the record of the hearing. 6. Other property within the boundaries of the City may be annexed into the proposed community facilities district upon the condition that nature parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed. 7. The consolidated special elections on (i) the proposition of the proposed community facilities district incurring a bonded indebtedness in an amount not to exceed $30,000,000 (ii) the proposition with respect to the levy of special taxes on the land within the community facilities district to pay the principal of and interest on the bonds thereof and the maintenance, repair and replacement of the public facilities, and (iii) the proposition with respect to the establishment of an appropriations limit for the community facilities district in the amount of$4,000,000, if the community facilities district is established and such consolidated �.,e�i.Loicrtinnc (ihe "r—Midated sner-ial e1er-tinns"1 are held.sE,alv�f ti CONFQRMED COPY Not Oo s)—d wi1A Or;:104 p PROPOSED BOUNDARIES OF T THE CITY OF HUNTINGTON BEACH REQUEST OF THE CITY OF HUNTNOTON BEACN COMMUNITY FACILITIES DISTRICT No. 2003-1 �'E jm=~g.2�� THaE, ,000>NSTRUMENTM BOOK�_PACE�— (HUNTINGTON CENTER) FILEDTHIS_ OAYOfr3M 2 COUNTY OF ORANGE ATTHEHOUROF tt.d7 OClOC7c AM N BOOK��PAGE_ _OF NAPS OF ES STATE OF CALIFORNIA ASSESSM,IN THEAND OFFICE FTITY ECOU COUNTY DISTRICTS.N THE OFFICE Of THE COIMTY - - - RECORDER OF THE COUNTY OF ORANGE, . - - - STATE OF GW RORNLA r ------ $1�— COUNTY CLERIVEOCKDER % < f pFpljfY m�sy�o• '*a � o rare. �7a. � �„`•:r If N6Y?D'30'W FILED N THE OF-=OF THE CITY CISM / 547.61 i OF THHCDY OF FUMTPKrTON BEACH ThR6 DAY Cl: :Tt=!=; .2= R-AL-J00.00' l6.rovL B..aIL rf. -/' miTAN-0.3.W�- ft� �n�IUM?�ON BEAC�� I H EREBY CERTFYMiAT THE WITHIN MAP SMWING THE BOUKDMMS OF THE CITY OF HUNTINGTON BEACH COMMUNITY FAI;ILITIFS OISEN TF6T'f tK12003-t ON,WYINGTON CENTER)COUNTY OF ORANGE.STATE OF CALIFORNIA-WAS APPROVED BY THE CITY COUNCIL CIF THE ry TAN. S00.70 t CITY OF HUNM,TCH BEACH ATA 57-00 REGULAR ME£f2NG�HELD tlN I ��� SO.00' THE DAY OF 200.T BY ffb rAnm_a RESOLUTION TIO. jJ CONNE BR0"AY�C YY 14 OF A 6, THE CITY OF H I ffMTON BEACH 3 w I �I ralrn a i Ir.Rcti, f IINIW.7 t I t I1 .etcaa � N 1 �i 50 N00�0']O E z N89 aD . . 4Z—� AN1C6 t PROPOSED NORM FARIES OF BASIS OF BEARM, I CN I �(ENTFRLNE OF®ANGER AVE BEING NB9-03RY!t PER PARCEL MAP NO.06-M t r FILED IN BOOK 116,PACES 4045,OF PARCEL MAPS IN THE OFFICE I I I R (OF THE COUNTY RECORDER OF ORANGE COUMY,CALIFORNIA. t �n LOCATION MAP IIl I ' r l PROJECT Ile—SITE �,;�_- J_ r''CYT'C OF tNUNRNC70N BEACH FLOOD CP'NTROL CHANN P Loa 2w .DQ ORAPHICSCALE ..,,.c LEGAL DEBCRRTION: PARCELS 2 THROUGH B AS SHOWN ON PARCEL NAP NO.66nM0 FILED IN BOOK 256,PACES 40F40.OF PARCEL NAPS N THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFOR k SHEET 1 OF 1 CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK January 27,2003 Mayor and Members of the City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: City of Huntington Beach Community Facilities District No.2003-1 (Huntington Center) Ladies and Gentlemen: Pursuant to Section 53326 of the Government Code, I hereby agree to act as the election official to conduct the consolidated special elections within the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California. Pursuant to said Section 53326, I consent to the scheduling and conducting of said consolidated special elections of February 3,2003. Sincerely, CONNIE BROCKWAY, City Clerk APPROVED AS TO FORM: B e City Att mey jmp/03memo/connie (Telephone:714-536.5227) MAYOR'S AGENDA FOR PUBLIC HEARINGS FOR COMMUNITY FACILITIES DISTRICT NO.2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH,CALIFORNIA 1. MAYOR OPENS PUBLIC HEARINGS. 2. MAYOR CALLS ON CITY CLERK FOR PROOF OF PUBLICATION AND MAILING OF NOTICES OF HEARINGS. y s S u'g So 3. MAYOR CALLS FOR REPORT FROM PSOMAS WITH REGARD TO THE ESTABLISHMENT OF THE PROPOSED COMMUNITY FACILITIES DISTRICT, A BRIEF DESCRIPTION OF THE PUBLIC FACILITIES WHICH WILL BE REQUIRED TO ADEQUATELY MEET THE NEEDS OF THE COMMUNITY FACILITIES DISTRICT AND ESTIMATES OF COSTS OF PROVIDING THOSE PUBLIC FACILITIES. 4. MAYOR OPENS HEARINGS TO PROTESTS,COMMENTS AND QUESTIONS FROM INTERESTED PERSONS,INCLUDING PERSONS OWNING PROPERTY WITHIN THE PROPOSED COMMUNITY FACILITIES DISTRICT AND TAXPAYERS, WITH RESPECT TO THE ESTABLISHMENT OF THE COMMUNITY FACILITIES DISTRICT, THE PROPOSED METHOD OF DETERMINING AND APPORTIONING MAXIMUM AMOUNTS OF SPECIAL TAXES,AND THE PROPOSED BONDED INDEBTEDNESS FOR THE DISTRICT. 5. MAYOR INQUIRES OF CITY CLERK WHETHER ANY WRITTEN PROTESTS HAVE BEEN RECEIVED. ( n 6. IF WRITTEN PROTESTS HAVE BEEN RECEIVED,MAYOR CALLS ON CITY CLERK AS TO WHETHER OR NOT THE WRITTEN PROTESTS CONSTITUTE A MAJORITY PROTEST PURSUANT TO SECTION 53324 OF THE GOVERNMENT CODE. 7. MAYOR INQUIRES OF CITY CLERK AS TO WHETHER THERE ARE ANY PERSONS RtGISTERED TO VOTE WITHIN THE COMMUNITY FACILITIES DISTRICT,AND,IF SO,THE NUMBER THEREOF. 8. MAYOR INQUIRES OF CITY CLERK IF WRITTEN CONSENTS TO HOLDING THE COMMUNITY FACILITIES DISTRICT ELECTIONS ON FEBRUARY 3, 2002 HAVE BEEN RECEIVED FROM ALL LANDOWNERS WITHIN THE COMMUNITY FACILITIES DISTRICT. 9. MAYOR INQUIRES OF CITY CLERK IF SHE CONCURS IN THE HOLDING OF THE SPECIAL ELECTIONS FOR THE COMMUNITY FACILITIES DISTRICT ON FEBRUARY 3, 2003. RVPUB\13JS\646490 l 1 �1 10. IF A MAJORITY PROTEST HAS NOT BEEN FILED(WRITTEN PROTESTS AGAINST THE ESTABLISHMENT OF THE COMMUNITY FACILITIES DISTRICT FILED BY THE OWNERS OF ONE-HALF OR MORE OF THE AREA OF THE LAND PROPOSED TO BE INCLUDED IN THE COMMUNITY FACILITIES DISTRICT), THE CITY COUNCIL MAY PROCEED TO ESTABLISH THE COMMUNITY FACILITIES DISTRICT BY ADOPTING THE FOLLOWING RESOLUTIONS: (a) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ESTABLISHING COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA,AND ESTABLISHING THE BOUNDARIES THEREOF (b) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DETERMINING THE NECESSITY FOR COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) TO INCUR A BONDED INDEBTEDNESS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000 FOR PROVIDING PUBLIC FACILITIES FOR THE COMMUNITY FACILITIES DISTRICT AND CALLING A SPECIAL ELECTION FOR THE COMMUNITY FACILITIES DISTRICT ON A PROPOSITION FOR INCURRING SUCH BONDED INDEBTEDNESS (c) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH CALLING SPECIAL ELECTIONS AND SUBMITTING TO THE VOTERS OF COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) PROPOSITIONS WITH RESPECT TO THE ANNUAL LEVY OF SPECIAL TAXES WITHIN THE COMMUNITY FACILITIES DISTRICT TO PAY PRINCI- PAL AND INTEREST ON BONDS OF THE COMMUNITY FACILITIES DISTRICT WHICH MAY BE ISSUED AND SOLD TO FINANCE PUBLIC FACILITIES FOR THE COMMUNITY FACILITIES DISTRICT AND THE ESTABLISHMENT OF AN APPROPRIATIONS LIMIT FOR THE COMMUNITY FACILITIES DISTRICT 11. MAYOR CLOSES HEARINGS. RVPUB\13JS\646490 _2_ CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORN[A 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK January 27, 2003 Mayor and Members of the City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Ladies and Gentlemen: Pursuant to Section 53326 of the Government Code, I hereby agree to act as the election official to conduct the consolidated special elections within the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California. Pursuant to said Section 53326, 1 consent to the scheduling and conducting of said consolidated special elections of February 3, 2003. Sincerely, CONNIE BROCKWAY, City Clerk /k APPROVED AS TO FORM: B c City Att mey jmpl03memo/connie (Telephone:714-536-5227) BEST BEST & KRIEGER LLP A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS INDIAN WELLS LAWYERS SAN DIEGO (760) 568-261 1 3750 UNIVERSITY AVENUE (61 9) 525-1 300 - POST OFFICE BOX 1028 ONTARIO RIVERSIDE. CALIFORNIA 92502-1028 ORANGE COUNTY (909) 989-8584 (909) 686-1450 (714) 939-5940 (909) 686-3083 FAX BBKLAW.COM SACRAMENTO- - - - .(9 1 6)974-3400 - January 27, 2003 VIA OVERNIGHT DELIVERY Connie Brockway City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: Community Facilities District No. 2003-1 (Huntingten.Center) Dear Connie:. . . Enclosed for your records are the originals of the following documents: (1) A letter from.the Registrar of Voters certifying that there are no registered voters residing within the boundaries of City ofHuntington Beach Community Facilities District No. 2003-1(Huntington Center). (2) A Statement of Engineer with respect to property ownership within City of .Huntington Beach Community Facilities District No. 2003-1 (Huntington Center). (3 ) Also enclosed is a Statement as to the canvass of ballots and the results of the consolidated special elections. Please sign this document and have it available at the public hearing on February.3, 2003.. I The following documents should also be available at the public hearing on February 3: (1) A Declaration of Mailing of the Notice of Hearing. (2) Copies of an Affidavit of Publication of the Notices of Hearing. (3) A copy of the boundary map which was recorded in the Office of the Recorder of the County of Orange on January 9, 2003 as Instrument No. 2003-000028911. RVPG'B\BJS\646671 LAW OFFICES OF BEST BEST & KRIEGER LLP Connie Brockway City Clerk January 27, 2003 Page 2 (4) A signed waiver which will be mailed to you under separate cover from Huntington Center Associates, LLC, prior to February 3. All of these documents should be retained in the official records regarding the proceedings for the formation of the community facilities district. Sincerely yours, Barbara J. Skinner Legal Assistant for BEST BEST&KRIEGER LLP BJS:bjs Enclosures cc: Carol Runzel RVPUB\BJS\646671 CERTIFICATE OF REGISTRAR OF VOTERS State of California ) ) ss. County of Orange ) I, ROSALYN LEVER, Registrar of Voters of said County, hereby certify that: I have been furnished a map describing the boundaries of proposed Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California. On December 18, 2002, 1 conducted, or caused to be conducted, a review of the voter registration records of the County of Orange for the purpose of determining the number of voters registered to vote within the boundaries of proposed Community Facility District No. 2003-1 (Huntington Center). As of December 18, 2002, there were no registered voters residing with the boundaries of proposed Community Facilities District No. 2003-1 (Huntington Center). WITNESS my hand and official seal this 19th of December, 2002. • ROSALYNkSVER Jon Registrar of Voters STATEMENT OF SPECIAL TAX CONSULTANT WITH RESPECT TO PROPERTY OWNERSHIP WITHIN THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER), COUNTY OF ORANGE, STATE OF CALIFORNIA I, Michael D. Swan, employed by Psomas, the special tax consultant for the proceedings for the establishment of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center),County of Orange,State of California(the"Community Facilities District"), state as follows: (1) I prepared the rate and method of apportionment of special tax and supervised the preparation of the boundary map for the Community Facilities District. I am,therefore, familiar with the extent of the property which is included within the proposed Community Facilities District. (2) I have reviewed the legal description attached to the Preliminary Report issued by Chicago Title Company of Irvine dated October 22, 2002 (i.e. Order No. 23808536 - M08), which states that fee title to the property described therein is vested in Huntington Center Associates, LLC., a Delaware liability company. Said Preliminary Report describes all of the property located within the boundaries of the Community Facilities District. (3) The approximate gross acreage of the property within the boundaries of the Community Facilities District is 43.86 acres. (4) The aggregate net taxable acreage of the property described in the legal description attached to said Preliminary Report,excluding dedicated street rights-of way,and which is owned by the owner named therein is as follows: OWNER ACREAGE Huntington Center Associates, LLC 43.86 Dated: January 2003 ichael D. Swan RVPUB\BJS\645426 a 4- STATEMENT FROM THE CITY CLERK OF THE CITY OF HUNTINGTON BEACH(ACTING AS ELECTION OFFICIAL)TO THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AS TO THE CANVASS OF BALLOTS VOTED IN AND THE RESULTS OF THE CONSOLIDATED SPECIAL ELECTIONS FOR CITY. ..OF HUNTINGTON. BEACH. COMMUNITY FACILITIES DISTRICT NO, 200371 (HUNTINGTON CENTER) HELD. ON FEBRUARY 3, 2003 I, Connie Brockway, City Clerk of the City of Huntington Beach, acting as the election official pursuant to a resolution calling special elections for the Community Facilities District (the "Election Resolution") adopted by the City Council (the "City Council") of the City of Huntington Beach (the "City") on February 3, 2003, make the following statements regarding the consolidated special elections held on February 3, 2003 on (i) the proposition with respect to incurring a bonded indebtedness in an amount not to exceed $30,000,000 for financing public facilities within and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California(the "Community Facilities District"), (ii)the proposition with respect to the annual levy of special taxes on taxable property within the Community Facilities District for payment of principal of and interest on the bonds thereof, and(iii)the proposition with respect to the establishment of an appropriations limit for the Community Facilities District, and hereby certify that: (1) A signed written waiver entitled"Waiver of.Certain Election Procedures with Respect to Landowner Voter Elections Within and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California" was received from Huntington Center Associates,LLC,the owner of all of the land within the Community Facilities District. Said written waiver is on file in my office. (2) Said written waiver, among other matters, waived compliance with the provisions of Section 53326 of the California Government Code to the effect that a special election with respect to the levy of special taxes within the Community Facilities District must be held at least 90 days, but not more than 180 days, following the adoption of the Resolution of Formation establishing the Community Facilities District adopted by the City Council on February 3, 2003, and consented to the holding of such consolidated special elections on February 3, 2003. (3) I also received a written certification from the Registrar of Voters of the. County of Orange dated December 19, 2003 that there were no registered voters residing within the Community Facilities District. Accordingly,pursuant to Section 53326 ofthe California Government Code, and as determined by the City Council in the resolution calling a special election adopted by the City Council on February 3, 2003 (the "Election Resolution"), the vote in said consolidated special elections was to be by the landowners of the Community Facilities District, with each landowner having one vote for each acre, or portion thereof, of land that he or she owns within the Community Facilities District. (4) On January 10, 2003, I received a communication from Michael D. Swan of Psomas, the special tax consultant that supervised the preparation of the map and legal description RVPUB\BJS\646670 of the boundaries of the Community Facilities District, certifying that there are 43.86 acres of land within the Community Facilities District. (5) On January 27, 2003, I caused to be delivered to a representative of Huntington Center Associates,LLC,an Official Ballot in the form attached to the Election Resolution together with a Ballot Pamphlet and Instructions to Voter containing Instructions to Landowner Voter and a Sample Ballot. Copies of said Official Ballot and said Ballot Pamphlet and Instructions to Voter are on file in my office. I also caused to be delivered to said representative on said date, together with such other matters, an official identification envelope, with return postage affixed thereto, for returning the voted Official Ballot. (6) Pursuant to Section 53326 of the California Government Code, for purposes of said consolidated special elections, each owner of land within the Community Facilities District was entitled to one vote for each acre or portion thereof of land within the Community Facilities District which it owned. (7) According to the aforementioned certificate received from Michael D. Swan„ the acreage of land within the Community Facilities District, and the number of votes to which the owner is entitled to is as follows: ACREAGE VOTES Huntington Center Associates, LLC 43.86 44 (8) The voted Official Ballot was returned to me by Huntington Center Associates, LLC, sealed in the aforementioned identification envelope, prior to 7:00 p.m. on February 3, 2003. The Official Ballot which was returned was voted with a cross marked in the box after the word "YES"following each proposition set forth on the Official Ballot and had a signed statement attached that the signer was entitled to vote such ballot on behalf of the landowner whose name appeared thereon and that it was the intent of the landowner to vote all votes to which the landowner was entitled in the manner marked on the ballot. (9) I have canvassed the ballot returned in such consolidated special elections, being the Official Ballot referenced above,and determined that the results ofthe elections with respect to each proposition set forth in said Official Ballot are as follows: Proposition A: 44 YES votes 0 NO votes Proposition B: 44 YES votes 0 NO votes Proposition C: 44 YES votes 0 NO votes RVPliB\13JS\646670 -2- (10) More than two-thirds of the votes cast in said consolidated special elections are in favor of all such propositions. DATED: February 3, 2003 Connie Brockway City Clerk of the City of Huntington Beach RVPUB\BJS\646670 -3- DECLARATION OF MAILING NOTICES OF HEARING COMMUNITY FACILITIES DISTRICT NO. 2003-1.(HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, City Clerk of the City of Huntington Beach, County of Orange, State of California, hereby declare that on the _- day of January, 2003, pursuant to the provisions of law applicable herein,I caused copies of the attached Notices of Hearing on Resolution ofIntention to Establish Proposed Community Facilities District No.2003-1(Huntington Center)and Notice of Hearing on Resolution Declaring Necessity to Incur Bonded Indebtedness for Proposed Community Facilities District No.2003-1 (Huntington Center)to be placed in an envelope addressed to the owner of all of the real property within Community Facilities District No.2003-1 (Huntington Center),sealed such envelope and deposited it in the United States mail at Huntington Beach,Califor- nia, with postage thereon fully prepaid; and that there is a regular communication by mail between the place of mailing and the places so addressed. Copies of the Notices of Hearing and a list containing the name and address of the property owner to whom the notices were mailed are attached hereto. I declare under penalty of perjury that the foregoing is true and correct. Executed this /'yam day of January, 2003, at Huntington Beach, California. Connie Brockway City Clerk, City of Huntington Beach RVPUB\BJS'645437 1 - CONaVIUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH LIST OF PROPERTY OWNERS Huntington Center Associates, LLC c/o JH Snyder Development 5757 Wilshire Boulevard, Penthouse 30 Los Angeles, CA 90036 Attention: Mike Wise RVPUB\13JS\645437 -2- I BEST BEST & KRIEGER LLD Cl`�- t CI-AA—A A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS C- 60,D INDIAN WELLS LAWYERS S DIEGO llJ/lU/ (750) 568-261 1 3750 UNIVERSITY AVENUE (15 1 9) 525-1 300 POST OFFICE BOX 1028 ONTARIO RIVERSIDE, CALIFORNIA 92502-1 02 8 ORANGE COUNTY (909) 989-8584 (909) 685-1 450 (949) 253-2600 (909) 686-3083 FAX BBKLAW.CO SACRAMENTO M (9 16) 3 2 5-4000 BARBARA J. SKINNER BJSKINNER@BBKLAW.COM March 27, 2003 C7 Connie Brockway City Clerk City of Huntington Beach P.O. Box 190 2000 Main Street ;' n Huntington Beach, CA 92648 Re: Community Facilities District No. 2003-1 (Huntington Center) Dear Connie:: Enclosed are two originals of a Statement Regarding Creation of Community Facilities District No. 2003-1 (Huntington Center) which must be filed with the State Board of Equalization and the Orange County Assessor's office. Please date and sign both originals, attach a certified copy of Resolution No. 2003-10 to each Statement and return them to us for filing at your earliest convenience. Also, please include a check made payable to the State Board of Equalization in the amount of$1,200 to cover the cost of the processing fee. Since ely yours, Barbara J. Skinner Legal Assistant for BEST BEST & KRIEGER LLP BJS:bjs cc: Carol Runzel RVPUB\BJS\650096 STATEMENT PURSUANT TO SECTION 54900 et seq. OF THE GOVERNMENT CODE REGARDING CREATION OF COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE STATE OF CALIFORNIA Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California(the "District"),which is located in and will utilize the regular county assessment roll of the County of Orange for the collection of special taxes was created on February 3, 2003 by the adoption by the City Council of the City of Huntington Beach of Resolution No. 2003-10, which also established the boundaries of said District. A certified copy of Resolution No. 2003-10 and a legal description of the boundaries of the District and the map indicating those boundaries are attached hereto. The property within the District will be subject to the annual levy of special taxes pursuant to the Mello-Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code, for the payment of principal of an interest on the bonds of the District which have been authorized in the aggregate principal amount of$30,000,000. DATED: April„3 , 2003. CITY OF HUNTINGTON BEACH on behalf of COMMUNITY FACILITIES DISTRICT No.2003-1 (Huntington Center) thereof By: CONNIE BROCKWAY City Clerk RVPUB\BJS\648836 f RESOLUTION NO. 2003-10 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ESTABLISHING CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER)AND ESTABLISHING THE BOUNDARIES THEREOF WHEREAS, the City Council (the "City Council") of the City of Huntington Beach ("City") has heretofore adopted on January 6, 2003, Resolution No. stating that a proposed community facilities district to be known as "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California" (the "Community Facilities District"), is proposed to be established under the terms of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the.City of Huntington Beach (the "Code") and Chapter 2.5 (commencing with § 53311) . of Part 1 of Division 2 of Title 5 of the California Government Code, commonly known as the "Mello-Roos Community Facilities Act of 1982" (the "Act"), and fixing the time and place for a public hearing on the establishment of the Community Facilities District; and Notice was published and mailed to the owners of property in the Community Facilities District as required by law relative to the intention of the City Council to establish the Community Facilities District, the levy of the special taxes therein, the financing and refinancing of public facilities therein, and the incurring of a bonded indebtedness by the Community Facilities.District, and.of the time and place of said public hearing; and On February 3, 2003, at the time and place specified in said published and mailed notices, the City Council opened and held a public hearing as required by law relative to the formation of the Community Facilities District, the levy of the special taxes therein and the financing of facilities by the Community Facilities District; and On February 3, 2003, at the time and place specified in said published and mailed notices, the City Council opened and held a public hearing as required by law relative to the formation of the Community Facilities District, the levy of the special taxes therein and the financing of facilities by the Community Facilities District; and Prior to said hearing there was filed with.the City Council:a report.(the�"Report") containing a description of the services being financed within and for the Community Facilities District, and an estimate of the cost of such financing, as required by Section 53321.5 of the California Government Code; and At the public hearing all persons desiring to be heard on all matters pertaining to the establishment of the Community Facilities District, the levy of the special taxes and the financing of the public facilities therein were heard, and a full and fair hearing was held; and 1 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 The City Council may therefore proceed to establish the Community Facilities District; NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows. Section'1: Findings. The City Council finds as follows: (i) All of the preceding recitals are correct. (ii) On February 3, 2003, pursuant to notice thereof duly given as provided by law, the City Council conducted a public hearing with respect to the establishment of the Community Facilities District and the annual levying of specified special taxes on the taxable property within the Community Facilities District to pay for public facilities for the Community Facilities District which are described in Section 3 hereof. (iii) The boundary map of the Community Facilities District has been recorded pursuant to Sections 3111 and 3113 of the Streets and Highways Code as Instrument No. 2003000028911 in Book 85 of Book of Maps of Assessment and Community Facilities Districts at page 45 of the Official Records of the County of Orange. (iv)All prior proceedings with respect to the establishment of the Community Facilities District prior to and during the hearing with respect to the establishment of the Community Facilities District conducted by the City Council on February 3, 2003, were valid and in conformity with the requirements of Chapter 2.5 (commencing with § 53311) of Part 1 of Division 2 of Title 5 of the California Government Code. (v) No written protests were received at or prior to the time of said hearing against the establishment of the Community Facilities District or the levying of said special taxes by the Community Facilities District, and said special taxes have, therefore, not been limited by majority protest pursuant to Section 53324 of the California Government Code (vi).The City Council is, therefore, authorized to adopt a resolution of formation pursuant to Section 53325.1 of the California Government Code for the establishment of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, and the Community Facilities District should be established. Section 2. Establishment of District. City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California, is hereby established. The boundaries of the Community Facilities District are set forth in Exhibit "A" attached hereto and are also shown on the map entitled "Boundaries of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), 2 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 County of Orange, State of California" which is on file with the Clerk and said boundaries are hereby established. Section 3. Types of Facilities; Incidental Expenses; Maintenance. (1) The types of.public facilities proposed_to_be provided within and financed by the proposed Community Facilities District are: (a) Street imp rovements.including costs of condemnation, removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains, drainage storage ponds and drainage channels including landscaping, if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public parking facilities including a parking structure. (e) Water distribution facilities, including fire hydrants and reclaimed water and water storage facilities. (f) Street signalization and signage; including traffic fees. (g) Fire facilities including structures and capital equipment. (h) Acquisition of land necessary for any other facilities specified in paragraphs (a) through (g) above. (i) The incidental expenses-which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof, (ii) all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof, the determination of the amount of and collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and (iii).any other expenses incidental to the-construction, acquisition, completion, and inspection of such facilities. (2) The proposed community facilities district shall also pay for the maintenance of, and the provisions of repair and replacement reserves for, any of the publicly owned facilities listed in clause (1) of this Section 3. Section 4. Special Taxes. Except where funds are otherwise available, special taxes sufficient to pay for all such facilities and to pay the principal of and interest on the bonds of the Community Facilities District and any territory to be annexed in the future, and the annual administrative expenses of City and the Community Facilities District in 3 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 determining, apportioning, levying and collecting such special taxes, and in paying the principal of and interest on such bonds, and the costs of registering, exchanging and transferring such bonds, secured by the recordation of a continuing lien against all taxable or nonexempt property in the Community Facilities District, and maintaining a reserve fund for such bonds, and paying any amounts that must.be paid to the.United States in order to preserve the tax-exempt status of such bonds shall be.annually levied . within the Community Facilities District. Additionally, there shall be levied special taxes sufficient to pay for the maintenance, repair and replacement of such public facilities. The rate and method of apportionment of said special taxes shall be as set forth in Exhibit "B" attached hereto and by this reference made a part hereof. Section 5. Annexation of Territory. Other property within the boundaries of City may be annexed into the Community Facilities District upon the condition that parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed. Section 6. Exempt Property. Pursuant to Section 53340 of the California Government Code, properties of entities of the state, federal and local governments or used for public rights of way or other public uses, shall be exempt from the levy of special taxes of the Community Facilities District. Section 7. Report._ The Report is hereby approved and is made a part of the record of the public hearing regarding the formation.of the.Community.Facilities;District , and is ordered to be kept on file with the Clerk of the City as part of the transcript of these proceedings. Section 8. Repayment of Funds Advanced or Work-in-bind. Pursuant to Section 53314.9 of the California Government Code, the City Council may accept advances of funds or work-in-kind from private persons or private entities and may provide, by resolution, for the use of those funds or that work-in-kind, for any authorized purpose, including, but not limited to, paying any costs incurred by City in creating the Community Facilities District and may enter into an agreement by resolution, with the person or entity advancing funds or work-in-kind to repay funds advanced, or to reimburse the person or entity for the value or cost, whichever is less, of the work-in-kind, as determined by the City Council.. Section 9. Tender of Bonds. This City-Council hereby reserves the right, on behalf of the Community Facilities District to accept tenders of bonds in full or partial payment of special taxes to be levied within the Community Facilities District pursuant to Section 3.56.320 of the Code. Section 10. Description of Voting Procedures. The voting procedures to be followed in conducting the consolidated special elections on (i) the proposition of the Community Facilities District incurring a bonded indebtedness in an amount not to exceed $30,000,000, (ii) the proposition with respect to the levy of special taxes on the land within the Community Facilities District to pay the principal of and interest on the 4 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 bonds thereof and to pay the costs of maintenance, repair and replacement of public facilities, and (iii) the proposition with respect to the establishment of an appropriations limit for the Community Facilities District in the amount of$4,000,000, if the Community Facilities District is established and such consolidated special elections (the "consolidated.special elections") are.held., shall be as follows: (a) If at least 12 persons have been registered to vote within the territory of the Community Facilities District for each of the 90 days preceding the close of the public or protest hearing (the "protest hearing"), the vote in the consolidated special elections shall be by the registered voters of the Community Facilities District with each voter having one vote. In that event, the consolidated special elections shall be conducted by the Clerk, and shall be held on a date selected by the City Council in conformance with the provisions of Section 53326 of the California Government Code and pursuant to the provisions of the California Elections Code governing elections of cities, insofar as they may be applicable, and pursuant to said Section 53326 the ballots for the consolidated special elections shall be distributed to the qualified electors of the Community Facilities District by mail with return postage prepaid or by personal service, and the consolidated special elections shall be conducted as a mail ballot election. (b) If 12 persons have not been registered to vote within the territory of the community facilities district for each of the 90 days preceding the close of the protest hearing, and pursuant to Section 53326 of the California Government Code, the vote is therefore to be.by the landowners(as defined in Section 3.56.070 :of the Municipal Code of the City of Huntington Beach) of the Community. Facilities District,-. . with each landowner of record at the close of the protest hearing having one vote for each acre or portion of an acre of land that he or she owns within the Community Facilities District, the consolidated special elections shall be conducted by the City Clerk pursuant to the Municipal Code of the City of Huntington Beach and Section 53326 of the California Government Code as follows: (1) The consolidated special elections shall be held on the earliest date, following the adoption by the City Council of the resolution of formation establishing the Community Facilities District pursuant to Section 53325.1 of the California Government Code, and a resolution pursuant to Section 53326 of said Code submitting the.propositions with respect to (i) whether a bonded indebtedness shall be incurred for constructing and financing through the sale of bonds public facilities . necessary for the formation of the Community Facilities District; (ii) the levy of special taxes to pay the principal of and interest on the bonds of the Community Facilities District and (iii) the establishing of an appropriations limit therefor to the qualified electors of the Community Facilities District, upon which such elections can be held pursuant to said Section 53326 which may be selected by the City Council, or such earlier date as the owners of land within the Community Facilities District and the Clerk agree and concur is acceptable. (2) Pursuant to said Section 53326, the consolidated special elections may be held earlier than 90 days following the close of the protest hearing if PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 the qualified electors of the Community Facilities District waive the time limits for conducting the elections set forth in said Section 53326 by unanimous written consent and the Clerk concurs in such earlier election date as shall be consented to by the qualified electors. (3) Pursuant to said Section 53326i ballots.for.the consolidated special elections shall be distributed to the qualified electors by the Clerk by mail with return postage prepaid, or by personal service. (4) Pursuant to applicable sections of the California Elections Code governing the conduct of mail ballot elections of cities, and specifically Division 4 (commencing with §4000 of the California Elections Code with respect to elections conducted by mail), the Clerk shall mail (or deliver) to each qualified elector an official ballot in a form specified by the City Council in the resolutions calling and consolidating the consolidated special elections, and shall also mail to all such qualified electors a ballot pamphlet and instructions to voter, including a sample ballot identical in form to the official ballot but identified as a sample ballot, an impartial analysis by Counsel to City pursuant to Section 9280, as amended, of said Code with respect to the ballot propositions contained in the official ballot, arguments and rebuttals, if any, pursuant to Sections 9281, as amended, to 9287, as amended, inclusive, and 9295, as amended, of said Code, a return identification envelope with prepaid postage thereon addressed to the Clerk for the return of voted official ballots, and a copy of the form of Resolution of Formation establishing the Community-Facilities District, adopted by the City Council pursuant to Section 53325.1 of the_California Government Code,and the exhibits thereto; provided, however, that such analysis and arguments may be waived with the unanimous consent of all the landowners, and in such event a finding regarding such waivers shall be made in the resolution adopted by the City Council calling the consolidated special elections. (5) The official-ballot to be mailed (or delivered) by the Clerk to each landowner shall have printed or typed thereon the name of the landowner and the number of votes to be voted by the landowner and shall have appended to it a certification to be signed by the person voting the official ballot which shall certify that the person signing the certification is the person who voted the official ballot, and if the landowner is other than a.natural person, that he or she is-an officer of or other person affiliated with the landowner entitled to vote such.official ballot, that he or she has been authorized to vote such official ballot on behalf of the landowner, that in voting such official ballot it was his or her intent, as well as the intent of the landowner, to vote all votes to which the landowner is entitled based on its land ownership on the propositions set forth in the official ballot as marked thereon in the voting square opposite each such proposition, and further certifying as to the acreage of the landowner's land ownership within the Community Facilities District. (6) The return identification envelope delivered by the Clerk to each landowner shall have printed or typed thereon the following: (i) the name of the landowner, (ii) the address of the landowner, (iii) a declaration under penalty of perjury 6 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 stating that the voter is the landowner or the authorized representative of the landowner entitled to vote the enclosed ballot and is the person whose name appears on the identification envelope, (iv) the printed name and signature of the voter, (v) the address of the voter, (vi) the date of signing and place of execution of said declaration, and (vii) a notice that the envelope contains an official ballot.and is to.be opened only by..the Clerk. (7) The instruction to voter form to be mailed by the Clerk to the landowners shall inform them that the official ballots shall be returned to the Clerk properly voted as provided thereon and with the certification appended thereto properly completed and signed in the sealed return identification envelope with the certification thereon completed and signed and all other information to be inserted thereon properly inserted not later than 7:00 p.m. on the date of the election, or immediately after the Resolution Calling the Special Election is adopted (8) Upon receipt of the return identification envelopes which are returned prior to the voting deadline on the date of the elections, the Clerk shall canvass the votes cast in the consolidated special elections, and shall file a statement with the City Council as to the results of such canvass and the election on each proposition set forth in the official ballot. The procedures set forth in this section for conducting the consolidated special elections, if they are held, may be modified as the City Council may determine to be necessary or desirable by a resolution subsequently adopted by the City Council. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of February , 2003. Mayor ATTEST: APPROVED AS TO FORM: 1107 I046 City Clerk Attorney �,n3 t REVIEWED AND APPROVED: INITIATED AND APPROVED ��,� C�� 6 V) c W/ City Adrrffnistrator Dir ctor of Econo is Development PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 EXHIBIT A LEGAL DESCRIPTION CITY OF HUNTINGTON. BEACH COMMUNITY FACILITIES DISTRICT NO.2000-1 (HUNTINGTON CENTER), COUNTY OF ORANGE, STATE OF CALIFORNIA City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, includes the land situated in the State of California, County of Orange, City of.Huntington Beach, described as follows: Parcels 2 through 9 as shown on Parcel Map 86-200 filed in' Book 255, pages 40-45, of Parcel Maps in the Office.of the County Recorder of Orange County, California 8 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 CONFORMED DOPY P • W OO.W d ri@ ONG>,Y PROPOSED BOUNDARIES OF „CCEPTIMA„DMM CITY OF HUNTINGTON BEACHIE"TT REQUEST OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT No. 2003-1 T EmA FEe (HUNTINGTON CENTER) FAMTTfSy_CAY COUNTY OF ORANGE . NTHE HOUR OF STATE.OF CALIFORNIA AMD COMMUNTIY FAGLTIES _ D6TR1CT3.N THE OFFKE OF THE COUNTY _ .RECOROM OF THE CCtff"OF CRMlS, - . STATE OF CAUPDIWA__ ... . .TAM R!Ly COUMT CLOWIMCOMMIR DEP Wf oo�� PRIM. / TA1 i FLED N THE OFFICE OFTHE QTYCLERK OFTH�E CRY OF HUNT7JGTON BE THIS DAY OF 7 ON BE ,/' DE�TMTE83'S[a'�8' CC NIE BROCIOMAY.THE CLIMOF AN. THE CITY OP?QNnMWON SEACK 4 PRA®.• I I HEREBY CERTIYTHAT THE W THIN YAP SHOWNC THE BOUNDARIES 0FMIR CITY OF HUNTNGTCN BEACH COMMUNITY /. FACILITIES OIS N=la M03-1 1 0wM Ghl CEN1EfQ COUNTY OF /�. ORANGE.STATE OF CPLFOINUL WAS 7,M APP�SYTHECRY COUNCIL OFT}E AN.�� 37m I CRY OF HMTISGTON BEACH AT . % ••\ RYSiIRAR MEETBU3,�MELD ON 30.00' 711E�pAY OP 7fl0J BY DD ,`\ PRAM. RS90WT10N NO �� �� �I COME SMCMNAY.—THE CITY VLE NItOF II T I THE CRY OF MtNTOWON BEACH - I I 'I 1MI�t I. �rcis AMCL, DAM OF SEARING, CENTER E EC IGHN AVE BERq NS0RP.10W PER PARCEL MAP KM S63W FLEO N BOOK M MGM 40-I .OF PARCEL MAPS N THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY.CALFOPlM 1 � 1 1 LOCATION MAP *V PROJECT I � SITE � It�� NTMGTON BEAON FLOW CONTROL CK__._ i LI-L=----=-=-=---------_-_=--=--- lw 2W 4 b GRAPHIC BALE „a PARCELS 7 TMld1G1/B AS SHOWN ON PARCEL MAP NM Sl-=0 emraa FILM IN BOOKLSS,PAGES IDaS OF PARCEL NAM N THE OFFICE OF THE COLMIY RECORDER OF ORANGE COWIY,CAAKNUAk SHEET 10F 1 EXHIBIT B CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX 9 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein CFD No. 2003-1) shall be levied and collected according to the tax liability determined by the Administrator through the application of the procedures described below. The real property in CFD No. 2003-1, 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 capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment: 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, or the other parcel map recorded with the County Recorder. If the Acreage of a particular Parcel is unclear after reference to available maps,the Administrator shall determine the appropriate Acreage for a Parcel. Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, of Title 5 of the Government Code of the State of California. Administrative Expenses means any or all of the following actual or reasonably estimated costs directly related to the administration of CFD No. 2003-1: the fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture or resolution with respect to the Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No. 2003-1. Administrator means the Director of Economic Development or such other person or entity designated by the City Administrative Officer or the City Council to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's Parcel number. Bonds mean any bonds or other debt(as defined in Section 53317(d) of the Act), whether in one or more series,issued by the City for CFD No. 2003-1 under.the Act. City means the City of Huntington Beach. City Council means the City Council of the City of Huntington Beach, acting as the legislative body of CFD No. 2003-1. County means the County of Orange. Development Agreement means the Owner Participation Agreement(OPA) between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates, LLC, dated October 2, 2000. Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1 which generally serves the development subject to the Development Agreement and is owned by a governmental agency for public right-of-way purposes including, but not limited to parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved. Fiscal Year means the period commencing on July 1 and ending on the following June 30, in any year in which the Bonds are outstanding. Indenture means the indenture, fiscal agent agreement, resolution or other instrument approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. 2 Maximum Special Tax means, with respect to any Parcel of Taxable Property, the maximum Special Tax, determined in accordance with Section C, that can be levied in any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts payable under the Parking Structure Maintenance Special Tax. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Parking Structure Maintenance Special Tax means the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for CFD No. 2003-1 necessary to pay all actual, documented maintenance costs, management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs, fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues shall be subject to and limited by the provisions of the following documents, which documents shall be in the form approved by the City Council in connection the issuance of the Bonds, and which documents, upon such approval, shall be deemed to be incorporated herein by this reference: (i) any covenants, conditions or restrictions encumbering such parking structure and/or the real property upon which it is to be constructed as of the date of issuance of the Bonds, (ii) the initial parking management agreement governing the operation and maintenance of such parking structure(the provisions of such initial parking management agreement to govern the determination of the Parking Structure Maintenance Special Tax for so long as the Special Tax lien remains in effect, notwithstanding any earlier expiration or termination of such agreement), and(iii) any amendments to the foregoing covenants, conditions or restrictions or agreements. Reserve Fund means the fund of that name created under the Indenture. Resolution of Issuance means the resolution adopted by the City Council of the City, acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds in accordance with the Act. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within CFD No. 2003-1. Special Tax Requirement means the amount required in any Fiscal Year for CFD No. 2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance Special Tax. 3 Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No. 2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law,but in no circumstance shall the total amount of Taxable Property be less than 40.63 acres. Trustee means the trustee who is a party to the Indenture,if so approved. B.. IDENTIFYING TAXABLE PROPERTY Not less than fifteen business days prior to the beginning of each Fiscal Year, the Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property. The Taxable Property shall be subject to Special Taxes in accordance with the rate and method of apportionment described in Sections C and D below. C. MAXIMUM SPECIAL TAX The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100% of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. 4 E. LIMITATIONS _ No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land. The Special Tax.may be levied and collected.on Taxable Property commencing with Fiscal Year 2004-2005, and. for each Fiscal.Year.thereafter; and until the date on which principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax may be levied and collected until such time as the City and the CFD No. 2003-01 have divested all remaining ownership interests in the parking structure. Upon determination by the Administrator that such requirements have been met, the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided,however, that the City on behalf of CFD No. 2003-1 may directly bill the special tax or any portion thereof, may collect special taxes or any portion thereof at a different time or in a 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. Notwithstanding the foregoing, the Parking Structure Maintenance Special:Tax.shall be directly billed in each instance and not billed:. with ad valorem property taxes. G. APPEALS The City Council shall establish as part of the proceedings and administration of CFD No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal Committee shall interpret this 'Rate and Method of Apportionment and make determinations relative to the annual_administration of the Special Tax and any appeals, as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming that the amount or application of the Special Tax is not correct may file a written notice of appeal with the Review/Appeal Committee not later than one calendar year after having paid the Special Tax that is disputed. The Review/Appeal Committee:shall promptly review the appeal, and if necessary, meet with the owner, consider written.arid oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the Review/Appeal Committee's decision requires the Special Tax to be modified or changed in favor of the owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall be exclusive and its exhaustion by any owner shall be a condition precedent to any legal action by such owner. 5 H. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section H: Amount of Current Special Taxes Paid means the amount of the Special Tax levied against the subject Assessor's Parcel that was paid to the County or the City by the owner of the subject Assessor's Parcel and would be applied to debt service payments on the Redemption Date and the Interest Payment Date immediately following the Redemption Date. Outstanding Bonds means all Bonds that are deemed to be outstanding under the Indenture the day immediately preceding the next Interest Payment Date. Redemption Date means the Interest Payment Date on which Bonds are proposed to be redeemed from the prepayments of the Special Tax. 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein. The owner intending to prepay the Special Tax obligation on one or. more Assessor's Parcel(s) shall provide the Administrator with written notice of intent to prepay. It shall be a condition precedent to prepayment that the owner intending to prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's Parcel to be prepaid and provide proof of payment to the Administrator. Promptly following receipt of such notice, the Administrator shall notify the owner of such Assessor's Parcel(s) of the prepayment amount of such Assessor's Parcel(s). The Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 90 days prior to the next occurring date that Bonds may be redeemed from the proceeds of such prepayment pursuant to the Indenture. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined above or below): Bond Redemption Amount Plus Redemption Premium Plus Defeasance Amount Plus Administrative Fees and Expenses Less Reserve Fund Credit Less Amount of Current Special Taxes Paid Total: Equals Prepayment Amount 6 As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No. 1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year. 2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total Maximum Special Tax of all Assessor's Parcels of Taxable Property for the current Fiscal Year. 3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding Bonds as defined in this Section G to compute the amount of Outstanding Bonds to be retired and prepaid, and round the result up to the nearest multiple of$5,000 (the Bond Redemption Amount). 4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled to mature on the Redemption Date by the applicable redemption premium (the Redemption Premium). 5. Compute the amount needed to pay interest on the Bond Redemption Amount from the Interest Payment Date immediately preceding the Redemption Date to the Redemption Date. 6. Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 7. Add the amounts computed pursuant to Paragraph 5 and subtract the amount computed pursuant to Paragraph 6 (the Defeasance Amount). 8. Determine the administrative fees and expenses associated with 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. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal the lesser of: (a) the expected reduction in the Reserve Requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new. Reserve Requirement (as defimed in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 10. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment Amount). 7 11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3, 4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments (as appropriate). The amount computed pursuant to Paragraph 8 shall be retained by the Administrator. With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii) notify the County that the Special Tax, if any, remaining on the secured tax roll for the Assessor's Parcel has been satisfied and that the County should remove such amounts from the secured tax roll, and (iii) refund the owner for any Special Tax payments made on the Assessor's Parcel after the date of prepayment. From and after the prepayment, 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 the Maximum Special Tax that may be levied on Taxable Property within CFD No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Special Tax on an Assessor's Parcel of Taxable Property may 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=(PH xF)+G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section H.1, minus the amounts determined in Paragraph No. 8 of Section H.1. F = the percent by which the owner of an Assessor's Parcel(s) is partially prepaying the Maximum Special Tax. G = the amounts determined in Paragraph No. 8 of Section H.1 The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall be prepaid. The Administrator shall promptly provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel following receipt of the request. 8 With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii) indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. 9 Res. No. 2003-10 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 3`d day of February 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio C erk of the City Council of the City of Huntington Beach, California l EXEMPT FROM FILING FEES PURSUANT TO GOVERNMENT CODE SECTION 6103 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO Recorded in Official Records, County of Orange Tom Daly, Clerk-Recorder City of Huntington Beach IIIIIII IIIII IIIII IIIII IIIIIIIIII IIIII IIIII IIIII IIIII IIIIIIIIII IIIII NO FEE 2000 Main Street 200300018647812:39pm 02/20/03 Huntington Beach,CA 92648 115 27 N20 16 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 SPACE ABOE..THIS:LA FORRECORDER'SUSE NOTICE OF SPECIAL TAX LIEN Pursuant to the requirements of Section 3?114.5 of the Streets and Highways Code and Section 53328.3 of the Government Code, the undersigned City Clerk of the City of Huntington Beach, County of Orange, State of California, hereby gives notice that a lien to secure payment of special taxes is hereby imposed by the City Council of the City of Huntington Beach, County of Orange, State of California. The special taxes secured by this lien are authorized to be levied for the purpose of paying principal of and interest on bonds, the proceeds of which are being used to finance the public facilities described in Exhibit "A" attached hereto. The special taxes are authorized to be levied within City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California (the "Community Facilities District"), the boundaries of which are described in Exhibit "B" attached hereto, which has now been officially formed and the lien of the special taxes is a continuing lien which shall secure each annual levy of the special taxes and shall continue in force and effect until the special tax obligation is prepaid,permanently satisfied,and canceled in accordance with law or until the special taxes cease to be levied and a notice of cessation of special tax is recorded in accordance with Section 53330.5 of the Government Code. RVPUB\BJS\647242 The rates, method of apportionment, and manner of collection of the authorized special taxes are as set forth in Exhibit "C" attached hereto. The conditions under which the obligation to pay the special taxes may be prepaid and permanently satisfied and the lien of the special taxes canceled are also set forth in Exhibit "C" hereto. Notice is further given that upon the recording of this notice in the office of the County Recorder, the obligation to pay the special tax levy shall become a lien upon all nonexempt real property within the Community Facilities District in accordance with Section 3115.5 of the Streets and Highways Code. The name(s) of the owner(s) and the assessor's tax parcel number(s) of the real property included within the Community Facilities District and not exempt from the special taxes are set forth in Exhibit "D" attached hereto. Reference is made to the boundary map(or the amended boundary map)ofthe Community Facilities District recorded on January 19, 2003, in Book 85 of Maps of Assessment and Community Facilities Districts, at Page 45, and as Instrument No. 2003-000028911, in the office of the County Recorder for the County of Orange, State of California, which map is now the final boundary map of the Community Facilities District. For further information concerning the current and estimated future tax liability of owners or purchasers of real property subject to this special tax lien,interested persons should contact the Office ofthe Director ofEconomic Development ofthe City ofHuntington Beach,2000 Main Street,Huntington Beach, California, telephone number(714) 536-5582. Dated: February ZL 2003. �tiuQ City Clerk of the City of lyntington Beach RVPUB\13JS\647242 -2- EXHIBIT "A" CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) DESCRIPTION OF PUBLIC FACILITIES The types of public facilities to be provided within and financed by the Community Facilities District are: (a) Street improvements including costs of condemnation, removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains, drainage storage ponds and drainage channels including landscaping, if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public parking facilities including parking structure. (e) Water distribution facilities,including fire hydrants and reclaimed water and water storage facilities. (f) Street signalization and signage, including traffic fees. (g) Fire facilities including structures and capital equipment. (h) Acquisition of land, rights-of-way and easements necessary for any of the facilities specified in paragraphs (a)through (g) above. (i) The incidental expenses which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof,(ii)all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof,the determination of the amount of and collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and (iii) any other expenses incidental to the construction,. acquisition, completion, and inspection of such facilities. (j) Maintenance of, and the provisions or repair and replacement reserves for, any of the publicly owned facilities listed above in (a) through (h). RVPUB\13JS\647242 A-1 EMIIBIT "B" LEGAL DESCRIPTION FOR COMMUNITY FACILITIES DISTRICT NO. 2003.1 PURPOSES FOR THE HUNTINGTON CENTER THE LAND REFERRED TO HEREIN LIES WITHIN PARCELS 2 THROUGH 9 INCLUSIVE OF PARCEL MAP NO. 86-200, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP RECORDED IN BOOK 255, PAGES 40 THROUGH 45 INCLUSIVE OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF ORANGE WHOSE PERIMETER IS DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF EDINGER AVENUE AND BEACH BOULEVARD AS SHOWN ON SAID PARCEL MAP NO. 86-200, SAID INTERSECTION BEING SOUTH 000 19' 42" WEST 0.17 FEET FROM ORANGE COUNTY GPS # 5110, THENCE ALONG SAID CENTERLINE OF EDINGER AVENUE THE FOLLOWING: 1. NORTH 890 29' 30" WEST 111.00 FEET; THENCE PERPENDICULAR TO SAID CENTERLINE, MEASURED AT RIGHT ANGLES 2. NORTH 000 30' 30" EAST 50.00 FEET TO THE SOUTHEASTERLY CORNER OF PARCEL 8 OF SAID PARCEL MAP NO. .86-200 AND THE TRUE POINT OF BEGINNING; THENCE ALONG THE SOUTHERLY LINES OF PARCELS 8, 4, 3 AND 2 3. NORTH 890 29' 30" WEST 2053.69 FEET TO THE MOST SOUTHWESTERLY CORNER OF SAID PARCEL 2, SAID POINT BEING IN THE NORTHERLY LINE OF SAID EDINGER AVENUE; THENCE NORTHERLY ALONG THE WESTERLY LINES OF SAID PARCEL 2 THE FOLLOWING COURSES: 4. NORTH 000 30' 30"EAST 403.20 FEET, 5. SOUTH 890 29' 30"EAST 172.56 FEET, 6. NORTH 000 30' 30' EAST 210.00 FEET, 7. NORTH 890 29' 30"WEST 19.50 FEET, 8. NORTH 000 30' 30"EAST 169.00 FEET, 9. NORTH 890 29' 30" WEST 153.06 FEET, 10. NORTH 000 30' 30" EAST 338.61 FEET, TO THE SOUTHERLY LINE OF THE NORTHERLY 150.00 FEET OF THE SOUTH HALF OF THE SOUTHEAST QUARTER OF SECTION 14, SAID LINE ALSO BEING THE NORTH LINE OF SAID PARCELS, 3 AND 4; THENCE ALONG SAID NORTH LINE 11. SOUTH 890 29' 30" EAST 1333.15 FEET TO THE MOST NORTHEASTERLY M CORNER OF SAID PARCEL 4, SAID POINT BEING ON THE SOUTHWESTERLY RIGHT OF WAY LINE OF CENTER DRIVE AND THE BEGINNING OF A NON- TANGENT CURVE CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 504.00 FEET TO WHICH POINT A RADIAL LINE BEARS SOUTH 430 16' 29" WEST; THENCE ALONG SAID SOUTHWESTERLY LINE AND SAID CURVE THROUGH A CENTRAL ANGLE OF 120 04' 12" AN ARC LENGTH OF 106.17 FEET AND A CHORD DISTANCE OF 105.98 FEET; THENCE TANGENT TO SAID CURVE 1 ' J b 12. SOUTH 340 39' 19" EAST 208.54 FEET; THENCE 13. SOUTH 310 44' 20" EAST 249.92 FEET TO THE BEGINNING OF A NON- TANGENT CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 300.00 FEET TO WHICH POINT A RADIAL LINE BEARS NORTH 75°-.14' 40" EAST; THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 500 58' 58" AN ARC LENGTH OF 266.95 FEET AND A CHORD DISTANCE OF 258.23 FEET; THENCE TANGENT TO SAID CURVE 14. SOUTH 650 44' 18"EAST 233.07 FEET; THENCE 15. SOUTH 350 15' 38" EAST 70.56 FEET TO A POINT ON THE WEST LINE OF BEACH BOULEVARD AS DESCRIBED PER DEED TO THE CITY OF HUNTINGTON BEACH RECORDED AS INSTRUMENT NO. 91-209426 OF OFFICIAL RECORDS OF SAID COUNTY OF ORANGE; THENCE ALONG SAID WEST LINE 16. SOUTH 000 19' 42"WEST 273.61 FEET; THENCE 17. SOUTH 420 18' 58" WEST 41.42 FEET TO THE NORTH LINE OF EDINGER AVENUE AS SHOWN ON DEED TO THE CITY OF HUNTINGTON BEACH RECORDED IN BOOK 10418, PAGE 968 OF OFFICIAL RECORDS OF SAID COUNTY OF ORANGE; THENCE 18. SOUTH 890 29' 30"EAST 8.05 FEET; THENCE 19. SOUTH 420 18' 58"WEST 10.73 FEET TO THE TRUE POINT OF BEGINNING. CONTAINING AN AREA OF 44.00 ACRES MORE OR LESS COORDINATES SHOWN ARE BASED UPON THE CALIFORNIA STATE PLANE COORDINATE SYSTEM, 1983 DATUM. GPS#5110 N 2213732.692 E 6032865.319 FOUND REBAR DOWN 0.1'. STATION IS LOCATED AT APPARENT CENTERLINE INTERSECTION OF BEACH BOULEVARD AND EDINGER AVENUE. ND CHRISTOPHER W DANIELS * EXP. s� NO. 6328 �P �rE OF CAI�F��� P:/PROJECPS/02100/SURVEY/ADNIIN/CFD LEGAL BELLA TERRA 112602.DOC 2 HB-PCLS2-9.txt --------------------------------------------------------------------------- Parcel name: PCLS-2-91 North: 2213791.4410 East 6032761.9937 Line Course: S 42-18-58 W Length: 10.73 North: 2213783.5068 East : 6032754.7701 Line Course: N 89-29-30 W Length: 2053.69 North: 2213801.7271 East : 6030701.1609 Line Course: N 00-30-30 E Length: 403.20 North: 2214204.9112 East : 6030704.7381 Line Course: S 89-29-30 E Length: 172.56- North: 2214203.3803 East : 6030877.2913 Line Course: N 00-30-30 E Length: 210.00 North: 2214413.3720 East : 6030879.1544 Line Course: N 89-29-30 W Length: 19:50 North: 2214413.5450 East : 6030859.6552 Line Course: N 00-30-30 E Length: 169.00- North: 2214582.5384 East : 6030861.1546 Line Course: N 89-29-30 W Length: 153.06 North: 2214583.8963 East : 6030708.1006 Line Course: N 00-30-30 E Length: 338.61 North: 2214922.4930 East 6030711.1047 Line Course: S 89-29-30 E Length: 1333.15 North: 2214910.6653 East : 6032044.2022 Curve Length: 106.17 Radius: 504 .00 Delta: 12-04-12 Tangent: 53.28 Chord: 105.98 Course: S 40-41-25 E Course In: S 43-16-29 W Course Out: N 55-20-41 E RP North: 2214543.7154 East 6031698.7117 End North: 2214830.3087 East 6032113.2961 Line Course: S 34-39-19 E Length: 208.54 North: 2214658.7662 East 6032231.8798 Line Course: S 31-44-20 E Length: 249.92 North: 2214446.2207 East 6032363.3499 Curve Length: 266.95 Radius: 300.00 Delta: 50-58-58 Tangent: 143.04 Chord: 258.23 Course: S 40-14-49 E Course In: N 75-14-40 E Course Out: S 24-15-42 W RP North: 2214522.6294 East : 6032653.4563 End North: 2214249.1259 East : 6032530.1850 Line Course: S 65-44-18 E Length: 233.07 - North: 2214153.3564 East 6032742.6698 Line Course: S 35-15-38 E Length: 70.56 North: 2214095.7416 East 6032783.4038 Line Course: S 00-19-42 W Length: 273.61 North: 2213822.1361 East 6032781.8359 Line Course: S 42-18-58 W Length: 41.42 North: 2213791.5084 East 6032753.9511 Line Course: S 89-29-30 E Length:. 8.05 North: 2213791.4370 East 6032762.0008 Perimeter: 6321.78 Area: 1, 916, 606.9244 sq. ft. 43.9992 acres Mapcheck Closure - (Uses listed courses, radii, and deltas) Error Closure: 0.0081 Course: S 60-33-45 E Error North: -0.00398 East : 0.00706 Page 1 I ' EXHIBIT "C" CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTION`IENT OF SPECIAL TAX A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein CFD No. 2003-1) shall be levied and collected according to the tax liability determined by the Administrator through the application of the procedures described below. The real property in CFD No. 2003-1, 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 capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment: 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, or the other parcel map recorded writh the County Recorder. If the Acreage of a particular Parcel is unclear after reference to available maps,the Administrator shall determine the appropriate Acreage for a Parcel. Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, of Title 5 of the Government Code of the State of California. Administrative Expenses means any or all of the following actual or reasonably estimated costs directly related to the administration of CFD No. 2003-1: the fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture or resolution with respect to the Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tar levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No. 2003-1. Administrator means the Director of Economic Development or such other person or entity designated by the City Administrative Officer or the City Council to administer-the Special Tax according to this Rate and Method of Apportionment of Special Tax. Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's Parcel number. Bonds mean any bonds or other debt (as defined in Section 53317(d) of the Act),whether in one or more series,issued by the City for CFD No. 2003-1 under the Act. City means the City of Huntington Beach. City Council means the City Council of the City of Huntington Beach, acting as the legislative body of CFD No. 2003-1. County means the County of Orange.. Development Agreement means the Owner Participation Agreement (OPA)between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates, LLC, dated October 2,2000. Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1 which generally serves the development subject to the Development Agreement and is owned by a governmental agency for public right-of-way purposes including, but not limited to parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the Special Tax has been paid-in full. Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved. Fiscal Year means the period commencing on July 1 and ending on the following June 30, in any year in which the Bonds are outstanding. Indenture means--the indenture, fiscal agent agreement, resolution or other instrument approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. 2 Maximum Special Tax means, with respect to any Parcel of Taxable Property, the maximum Special Tax, determined in accordance with Section C, that can be levied in any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts payable under the Parking Structure Maintenance Special Tax. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Parking Structure Maintenance Special Tax means the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for CFD No. 2003-1 necessary to pay all actual,documented maintenance costs, management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs, fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues shall be subject to and limited by the provisions of the following documents,which documents shall be in the form approved by the City Council in connection the issuance of the Bonds, and which documents, upon such approval, shall.be deemed to be incorporated herein by this reference: (i) any covenants, conditions or restrictions encumbering such parking structure and/or the real property upon which it is to be constructed as of the date of issuance of the Bonds, (ii) the initial parking management agreement governing the operation and maintenance of such parking structure(the provisions of such initial parking management agreement to govern the determination of the Parking Structure Maintenance Special Tax for so long as the Special Tax lien remains in effect, notwithstanding any earlier expiration or termination of such agreement), and(iii) any amendments to the foregoing covenants, conditions or restrictions or agreements. Reserve Fund means the fund of that name created under the Indenture. Resolution of Issuance means the resolution adopted by the City Council of the City, acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds in accordance with the Act. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within CFD No. 2003-1. Special Tax Requirement means the amount required in any Fiscal Year for CFD No. 2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance Special Tax. 3 Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No. 2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law,but in no circumstance shall the total amount of Taxable Property be less than 40.63 acres. Trustee means the trustee who is a party to the Indenture, if so approved. B. IDENTIFYING TAXABLE PROPERTY Not less than fifteen business days prior to the beginning of each Fiscal Year, the Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property. The Taxable Property shall be subject to Special Taxes in accordance with the rate and method of apportionment described in Sections C and D below. C. MAXIMUM SPECIAL TAX The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No. .2003-1 shall be:the greater of (1) $65,050.per Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City Council shall levy the Special Tax prop^rtionately on each Assessor's Parcel of Taxable Property at up to 100% of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. 4 E. LIMITATIONS No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land. The Special Tax_may be levied and.collected on Taxable Property commencing with Fiscal.Year 2004-2005, and for each Fiscal Year thereafter, and until the date on which principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax may be levied and collected until such time as the City and the CFD No. 2003-01 have divested all remaining ownership interests in the parking structure. Upon determination by the Administrator that such requirements have been met,the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes,provided,however,that the City on behalf of CFD No. 2003-1 may directly bill the special tax or any portion thereof, may collect special taxes or any portion thereof at a different time or in a 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. Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax shall be directly billed in each instance and not billed. with ad valorem property taxes. G. APPEALS The City Council shall establish as part of the proceedings and administration of CFD No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any appeals, as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming that the amount or application of the Special Tax is not correct may file a written notice of appeal with the Review/Appeal Committee not later than one calendar year after having paid the Special .Tax that is disputed. The Review/Appeal Committee shall promptly review the appeal, and if necessary, meet with the owner, consider written and oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the Review/Appeal Committee's decision requires the Special Tax to be modified or changed in favor of the owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall be exclusive and.its exhaustion by any owner shall be a condition precedent to any legal action by such owner. 5 H. PREPAYMENT OF SPECLAL, TAX The following definitions apply solely to this Section H: Amount of Current Special Taxes Paid means the amount of the Special Tax levied against the subject Assessor's Parcel that was paid to the County or the City by the owner. of the subject Assessor's Parcel and would be applied to debt service payments on the Redemption Date and the Interest Payment Date immediately following the Redemption Date. Outstanding Bonds means all Bonds that are deemed to be outstanding under the Indenture the day immediately preceding the next Interest Payment Date. Redemption Date means the Interest Payment Date on which Bonds are proposed to be redeemed from the prepayments of the Special Tax. 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein. The owner intending to prepay the Special Tax obligation on one or more Assessor's Parcel(s) shall provide the Administrator with written notice of intent.to prepay. It shall be a condition precedent to prepayment that the owner intending to prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's Parcel to be prepaid and provide proof of payment to the Administrator. Promptly following receipt of such notice, the Administrator shall notify the owner of such Assessor's Parcel(s) of the prepayment amount of such Assessor's Parcel(s). The Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 90 days prior to the next occurring date that Bonds may be redeemed from the proceeds of such prepayment pursuant to the Indenture. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined above or below): Bond Redemption Amount . Plus Redemption Premium Plus Defeasance Amount Plus Administrative Fees and Expenses Less . Reserve Fund Credit Less Amount of Current Special Taxes Paid Total: Equals Prepayment Amount 6 As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No. 1: For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year. 2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total Maximum Special Tax of all Assessor's Parcels of Taxable Property for the current Fiscal Year. 3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding Bonds as defined in this Section G to compute the amount of Outstanding Bonds to be retired and prepaid, and round the result up to the nearest multiple of$5,000 (the Bond Redemption Amount). 4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled to mature on the Redemption Date by the applicable redemption premium (the Redemption Premium). 5. Compute the amount needed to pay interest on the Bond Redemption Amount from the Interest Payment Date immediately preceding the Redemption Date to the Redemption Date. 6. Compute the amount the Administrator,reasonably expects to derive from the reinvestment of the Prepayment Amount from the date of prepayment until.the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 7. Add the amounts computed pursuant to Paragraph.5 and subtract the amount computed pursuant to Paragraph 6 (the Defeasance Amount). 8. Determine the administrative fees and expenses associated with 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. Determine the reserve fund credit (the Reserve'Fund Credit) which shall equal the lesser of: (a) the expected reduction in the Reserve Requirement (as defined in the Indenture), if any, associated.with.the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new Reserve Requirement (as defined in the Indenture) in effect after the redemption .of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 10. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment Amount). 11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3, 4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments (as appropriate). The amount computed pursuant to Paragraph 8 shall be retained by the Administrator. With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii) notify the County that the Special Tax, if any, remaining on the secured tax roll for the Assessor's Parcel has been satisfied and that the County should remove such amounts from the secured tax roll, and (iii) refund the owner for any Special Tax payments made on the Assessor's Parcel after the date of prepayment. From and after the prepayment, 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 the Maximum Special Tax that may be levied on Taxable Property within CFD No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Special Tax on an Assessor'.s Parcel of Taxable Property 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=(PH xF)+G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section H.l, minus the amounts determined in Paragraph No. 8 of Section H.1. F = the percent by which the owner of.an Assessor's Parcel(s) is partially prepaying the Maximum Special Tax: G = the amounts determined in Paragraph No. 8 of Section H.1. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall be prepaid. The Administrator shall promptly provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an .Assessor's Parcel following receipt of the request. 8 With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii) indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to_Section D. a I 4 9 EXHIBIT "D" CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (MOUNTAIN COVE) OWNERSHIP LIST ASSESSOR'S PARCEL NOS. OWNER'S NAME 1.42-071-53- _Huntington_Center_Associates,_LLC 142-071-61 142-071-80 142-071-85 142-071-93 142-071-97 142-071-98 147-071-99 I RVPUB\BJS\647242 D-1 e PROOF OF PUBLICATION led STATE OF CALIFORNIA) S S. cmr Of HUNTINGTON BUN -•_. County of Orange ) LEGALNOTICE '-'a ORDINANCE NO.3b31 , Adopted by the City(oli d I am a Citizen of the Unified States and a onJm,my20r201'. "AN ORDINANCE OF" resident of the County aforesaid I am THE CITY COUNCIL OF THECITY OF HUNTING- TON BEACH LEVYING; over the age of eighteen years, and not a SPECIAL TAXES WITHIN T4lE CITY OF HUNTING-, party to or interested in the below TON BEACH COMMUNITY entitled matter. I am a principal clerk of 2003-1FACILIT (HUSTINGTORICT . �2003-1 (HUNTINGTON CENTER the HUNTINGTON BEACH INDEPENDENT, a ' 'SYNOPSIS- On October 2, 2000, newspaper of general circulation, printed theRedevelopment Agency of the City of, and published in the City of Huntington Huntington Beach nee 'tered into an Owner Beach, County of Orange/ State of Participation Agreement .(OPA) with Huntington Center Associates, LLC California, and that attached Notice is a for the.redevelopment of Huntington true and complete copy as was printed ; Center. A ; component. the the fit 'nancing for e project and published in the Huntington Beach stipulatesthat. the and Fountain Valley issues of said ideveloa m and the YMI development Agency will i cooperate in the iss6- ' newspaper to wit the issue(s) of. Face of Community Facilities District (CFD) , bonds to pay for `the ' costs associated with installing public. 'im- provements necessary . for the project. The i bonds are supported by January 29, 2004 a special property tax levy imposed on the owner of the property (Huntington Center Associates, LLC). On February 3, 2003, the City established Com- munity Facilities District declare, under penalty of perjury, that pNo. urpose.se. far that purpose.the foregoing is true and correct. THE FULL TEXT OF THE ORDINANCE IS AVAILABLE IN THE CITY' CLERK'S OFFICE. COPIES OF THIS.OR- DINANCE ARE AVAIL- Executed on January 29 2004 ABLE IN THE CITY / CLERK'S OFFICE. ."PASS . at Costa Mesa California. the City Council of / by the City Council of the City of Huntington Beach at a regular meeting held January 20, 2004 by the following roll call vote: AYES: Sullivan, Co- erper, Hardy, Green, Boardman,Cook NOES:None ABSENT:Houchen This ordinance is effective 30 days after Signature adoption. CITY OF HUNTINGTON'BEACH, 2000 MAIN STREET, HUNTINGTON BEACH, CA 92648 714-536-5227 CONNIE BROCKWAY, CITY CLERK Published Huntington Beach Independent Jan- uary 29,2004 015-120 STATEMENT FROM THE CITY CLERK OF THE CITY OF HUNTINGTON BEACH(ACTING AS ELECTION OFFICIAL)TO THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AS TO THE CANVASS OF BALLOTS VOTED IN AND THE RESULTS OF THE CONSOLIDATED SPECIAL ELECTIONS FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) HELD ON FEBRUARY 3, 2003 I, Connie Brockway, City Clerk of the City of Huntington Beach, acting as the election official pursuant to a resolution calling special elections for the Community Facilities District (the "Election Resolution") adopted by the City Council (the "City Council") of the City of Huntington Beach (the "City") on February 3, 2003, make the following statements regarding the consolidated special elections held on February 3, 2003 on (i) the proposition withrespect to incurring a bonded indebtedness in an amount not to exceed $30,000,000 for financing public facilities within and for City of Huntington Beach Community Facilities. District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California (the "Community Facilities District"), (ii)the proposition with respect to the annual levy of special taxes on taxable property within the Community Facilities District for payment of principal of and interest on the bonds thereof, and(iii)the proposition with respect to the establishment of an appropriations limit for the Community Facilities District, and hereby certify that: (1) A signed written waiver entitled"Waiver of Certain Election Procedures with Respect to Landowner Voter Elections Within and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California" was received from Huntington Center Associates,LLC,the owner of all ofthe land within the Community Facilities District. Said written waiver is on file in my office. (2) Said written waiver, among other matters, waived compliance with the provisions of Section 53326 of the California Government Code to the effect that a special election with respect to the levy of special taxes within the Community Facilities District-must be held at least 90 days, but not more than 180 days, following the adoption of the Resolution of.Formation establishing the Community Facilities District adopted by the City Council on February 3, 2003, and consented to the holding of such consolidated special elections on February 3, 2003. (3) I also received a written certification from the Registrar of Voters of the County of Orange dated December 19, 2003 that there were no registered voters residing within the Community Facilities District. Accordingly,pursuant to Section 53326 ofthe California Government Code, and as determined by the City Council in the resolution calling a special.election adopted by the City Council on February 3, 2003 (the "Election Resolution"), the vote:in said consolidated special elections was to be by the landowners of the Community Facilities District, with each landowner having one vote for each acre, or portion thereof, of land that he or she owns within the Community Facilities District. (4) On January 10, 2003, 1 received a communication from Michael D. Swan of Psomas, the special tax consultant that supervised the preparation of the map and legal description RVPUB\BJS\646670 of the boundaries of the Community Facilities District, certifying that there are 43.86 acres of land within the Community Facilities District. (5) On January 27, 2003, I caused to be delivered to a representative of Huntington Center Associates,LLC,an Official Ballot in the form attached to the Election Resolution together with a Ballot Pamphlet and Instructions to Voter containing Instructions to Landowner Voter and a Sample Ballot. Copies of said Official Ballot and said Ballot Pamphlet and Instructions to Voter are on file in my office. I•also caused to be delivered to said representative on_said date, together with such other.matters, an official identification envelope, with.return postage affixed thereto, for returning the voted Official Ballot. (6) Pursuant to Section 53326 of the California Government Code,for purposes of said consolidated special elections, .each owner of land within the Community Facilities District was entitled to one vote for each acre or portion thereof of land within the Community Facilities District which it owned. (7) According to the aforementioned certificate received from Michael D. Swan„ -,the acreage of land within the Community Facilities District, and the number of votes to which the owner is entitled to is as follows: ACREAGE VOTES Huntington Center Associates, LLC 43.86 44 (8) The voted Official Ballot was returned to me byHuntington Center Associates, LLC, sealed in the aforementioned identification envelope, prior to 7:00 p.m. on February 3, 2003. The Official Ballot which was returned was voted with a cross marked in the box after the word "YES"following each proposition set forth on the Official Ballot and had a signed statement attached that the signer was entitled to vote such ballot on behalf of the landowner whose name-appeared thereon and that it was the intent of the landowner to vote all votes to which the landowner was entitled in the manner marked on the ballot. (9) I have canvassed the ballot returned in such consolidated special elections, being the Official Ballot referenced above,and determined that the results ofthe elections with respect to each proposition set forth in said Official Ballot are as follows: Proposition A: 44 YES votes 0 NO votes Proposition B: 44 YES votes 0 NO votes .Proposition C: 44 YES votes 0 NO votes RVPUB\13JS\646670 -2- (10) More than two-thirds of the votes cast in said consolidated special elections are in favor of all such propositions. DATED: February 3, 2003 = . Connie Brockway City Clerk of the City of Huntington Beach RVPUB\BJS\646670 -3- NOTICE OF PUBLIC HEARING CITY OF HUNTINGTON BEACH NOTICE OF PUBLIC HEARING ON RESOLUTION TO INCUR BONDED INDEBTEDNESS IN AN AMOUNT NOT TO EXCEED $30,000,000 FOR PROPOSED COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER)OF THE CITY OF HUNTINGTON BEACH, CALIFORNIA NOTICE IS HEREBY GIVEN that at 7:00 p.m.on February 3,2003,the City Council of the City of Huntington beach will conduct a hearing on Resolution No. 2003-4, adopted by said City Council on January 6, 2003,in the City Council Chambers at the City Hall,2000 Main Street, City of Huntington Beach, California. Said resolution determines that it is necessary for proposed Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California,to incur a bonded indebtedness in an amount not to exceed $30,000,000. Resolution No. 2003-4 provides in summary as follows: I. The City Council declares that it is necessary that bonded indebtedness be incurred by and for proposed Community Facilities District No. 2003-1 (Huntington Center)of the City of Huntington Beach, County of Orange, State of California,in an aggregate principal amount not to exceed $30,000,000 for the purpose of financing the design, acquisition, construction, equipping and furnishing of the public facilities described in Resolution No.2003-3,the Resolution of Intention. 2. The amount of the proposed bonded indebtedness shall include all costs and estimated costs incidental to, or connected with,the accomplishment of the purposes for which the proposed bonded indebtedness is to be incurred,including,but not limited to,the estimated costs of construction and acquisition of the public facilities which are proposed to be provided for the community facilities district. 3. All p arcels o f t axable p roperty w ithin t he p roposed c ommunity f acilities district shall be subject to the levy of special taxes to pay the principal of and interest on the aggregate principal amount of the bonds of the community facilities district which maybe issued and sold to finance public facilities for the benefit of parcels of property within the community facilities district. 4. A public hearing on the proposed bonded indebtedness for said proposed community facilities district shall be held at 7:00 p.m. on February 3, 2003 in the City Council Chambers of the City of Huntington Beach, 2000 Main Street,Huntington Beach, California. Said hearing shall be conducted concurrently with the hearing on the establishment of the proposed community facilities district. A copy of Resolution No.2003-4 maybe reviewed or obtained at the office of the City Clerk of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California. RVPUB\BJS\643467 NOTICE IS FURTHER GIVEN that at the time and place of said hearing all interested persons, including all persons owning property in the proposed community facilities district, for or against the proposed bonded indebtedness,will be heard. DATED: January 7, 2003. /s/ ONNIE BROCKWAY City Clerk of the City of Huntington Beach RVPU$\13JS\643467 _2_ Council/Agency Meeting Held: DefQrred/Continued to: � ,,y� ., Approved ❑ Conditionally Approved ❑ Denied City Clerk�S.Ignature Council Meeting Date: February 3, 2003 Department ID Number: ED 03-03 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL .;r� , SUBMITTED BY: RAY SILVER, City Administrators PREPARED BY: DAVID C. BIGGS, Economic Development Director. SUBJECT: Approve the Formation of the City of Huntington Beach Community Facilities District No. 2003-01 (Huntington Center) and Adopt Resolutions Forming the District ;/ - ,' Fs-;t-ement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachments) Statement of Issue: The Redevelopment Agency of the City of Huntington Beach has entered into an Owner Participation Agreement for the redevelopment of Huntington Center. A component of the financing for the project requires assistance in paying the cost of .installing public improvements surrounding the project. One method of accomplishing this is to have the City form a Community Facilities District (CFD) and to issue bonds supported by a special property tax levy imposed on the sole property owner of the property on which the shopping center is located. Funding Source: Funding for this CFD will come from bonds to be issued later this year when all appropriate actions have been taken by the City Council. The bonds will be repaid by the property tax levied through the CFD. Recommended Action: Move to: 1. Open the public hearing, take public testimony, and close the public hearing on the formation of the Community Facilities District 2003-1 (Huntington Center). 2. Approve the Community Facilities District Report for City of Huntington Beach, Community Facilities District No. 2003-1(Huntington Center). 3. Adopt Resolution No.v'A9o,3 r �® (Resolution of Formation) Establishing the Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach and Establishing Boundaries thereof. If I " REQUEST FOR COUNCIL ACTION MEETING DATE: February 3, 2003 DEPARTMENT ID NUMBER: ED 03-03- 4. Adopt Resolution No,-2 Of S // Determining the Necessity for the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) to incur a bonded indebtedness in an aggregate principal amount not to exceed $30 million for providing public facilities within and for the district and calling for a Special Election for the Community Facilities District on a proposition for incurring such bonded indebtedness. 5. Adopt Resolution No.;- 03 -1-2- Calling for a Special Election and submitting to the voters of the District the Propositions regarding the annual levy of special taxes and payment of principal and interest on bonds and establish the appropriations limit. 6. Adopt Resolution No. _�0D3 -/3 Declaring the Results of the Special Election for Community Facilities District No. 2003-1 (Huntington Center). Alternative Action(s): Move to not form the Community Facilities District 2003-1 (Huntington Center) Analysis: Since entering into an Owner Participation Agreement with Huntington Center Associates, LLC, on October 2, 2000, the City and the Redevelopment Agency are cooperating with the developer to secure lower costs to finance the public improvements associated with redeveloping the center. Forming a Community Facilities District would provide the tax exempt financing for up to $30 million, including up to $22 million in public improvements, and reducing the Agency's cost of repaying the developer advance of up to $16,750,000. Without the CFD, the Agency would pay an 8% interest rate. With the CFD, the true interest costs would be adjusted downward by one-half of the difference between the CFD interest rate and the 8%. For example, if the CFD interest rate were 6%, then one-half the difference between 8% and 6% would result in reducing the rate by 1%. On January 6, 2003 City Council adopted Resolution No. 2003-3 (Resolution of Intention) and Resolution No. 2003-4 (Resolution of Necessity) that initiated the formation of the Community Facilities District 2003-1 (Huntington Center). The resolutions described the boundaries of the district, the tax rate method, and set the date for the public hearing on forming the district and calling for a special election of the property owner, namely Huntington Center Associates, LLC. A public notice on the hearing was published in the Independent on January 23, 2003 and the notice was mailed to the property owner as required by law. After holding the public hearing and considering the Report on the District (Attachment #1), City Council will consider adopting Resolution No. -"9003-/0 (Resolution of Formation, Attachment #2) that formally sets the boundaries for the district. Resolution No.,-)�2 ,- i/ (Determining Necessity, Attachment #3) declares that the bonded indebtedness is necessary and that the District must be formed and Resolution No.6?cV3_/a;(Calling for Election, Attachment #4), sets into motion the elective process required to establish the district, as the consent of the property owners is required. Huntington Center Associates, sole owner of the property within the district, has waived the standard waiting period to hold the election. As the election officer, the City Clerk will hold the election at this meeting and announce the ED03-03.doc -2- 1/24/2003 1:47 PM REQUEST FOR COUNCIL ACTION MEETING DATE: February 3, 2003 DEPARTMENT ID NUMBER: ED 03-03 results. By adopting Resolution No. AO 3-1,3 (Declaring Results, Attachment #5), Council will approve the results of the election. The City Council has the option of not forming the Community Facilities District. This will result in higher financing costs to the Developer and the Redevelopment Agency will incur higher interest costs. Environmental Status: Not Applicable. Attachment(s): City Clerk's 'age Number No. Description 1. Community Facilities District Report. 2. Resolution No. 2003 /o Establishing the Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach and Establishing Boundaries. 3. Resolution No. o?aQ3- // Determining the Necessity for the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) to incur a bonded indebtedness in an aggregate principal amount not to exceed $30 million for providing public facilities within and for the district and calling for a Special Election for the Community Facilities District on a proposition for incurring such bonded indebtedness. 4. Resolution No. 03/a Calling for a Special Election and submitting to the voters of the District the Propositions regarding the annual levy of special taxes and payment of principal and interest on bonds and establish the appropriations limit. 5. Resolution No. 62A&-/3 of the City Council of the City of Huntington Beach Declaring the Results of the Special Election for Community Facilities District No. 2003-1 (Huntington Center). RCA Author: Runzel X5224 ED03-03.doc -3- 1/24/2003 1:47 PM PSOMAS January 24,2003 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) COMMUNITY FACILITIES DISTRICT REPORT CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) Introduction The City of Huntington Beach did, pursuant to the provisions of Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing with Section 53311, of the California Government Code (the "Act'), on January 6, 2003, adopt Resolution No. 2003-3 entitled "A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Therein" (the "Resolution of Intention"). In the Resolution of Intention, the City Council expressly ordered the preparation of a written Community Facilities District Report (the "Report") for the proposed City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (the "District'). Pursuant to Section 53350 of the Act, the City Council designated the District as "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center)". The Resolution of Intention ordering the Report did direct that the Report generally contain the following: 1. A brief description of the facilities by type required to adequately meet the needs of the District; and 2. An estimate of the fair and reasonable cost of the facilities, including the cost of incidental expenses in connection therewith, and the costs of the proposed bond financing and all other related costs as provided in Section 53345.3 of the Act. For particulars, reference is made to the Resolution of Intention, as previously adopted by the City Council. NOW, THEREFORE, I, Robert F. Beardsley, P.E., Director of Public Works for the City of Huntington Beach, directed to prepare the Report for the District, do hereby submit the following Report consisting of three(3)parts: Part I A description of the proposed District and Improvement Areas Part II A description of the proposed facilities Part III A cost estimate of the proposed facilities Robert F. Beardsley,P.E. Director of Public Works City of Huntington Beach. 1 PART I Description of District The proposed boundaries of the District are those properties and parcels on which special taxes may be levied to pay for the costs and expenses of the financing of needed facilities, and any indebtedness or administrative expenses of the District. The proposed District is generally located to the north and west of the intersection of Beach Boulevard and Edinger Avenue just south of the 405 Freeway in the City of Huntington Beach, County of Orange, State of California and includes the currently designated County Assessor's Parcel Numbers 142-071-53, 142-071-61, 142-071-80, 142-071-85, 142-071-93, 142- 071-97, 142-071-98 and 147-071-99. The District's boundaries are described as follows: Parcels 2 through 9 as shown on Parcel Map No. 86-200 filed in Book 255, pages 40-45, of Parcel Maps in the Office of the County Recorder of Orange County, California, and encompassing approximately 43.86 acres. For more particulars, reference is made to the boundary map entitled "Proposed Boundaries of the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California" approved by the City Council on January 6, 2003 and on file with the City Director of Public Works. 2 PART II Description of Facilities A brief description of the facilities required to adequately meet the needs of the District is as shown in Exhibit"A" attached hereto and hereby made a part hereof. 3 PART III Cost Estimate The estimate of the fair and reasonable cost of the proposed facilities required by the District and delineated on Exhibit "A" are deemed to be not to exceed $30,000,000. The estimate of the fair and reasonable cost of the proposed facilities required and delineated on Exhibit "A" are deemed to be not to exceed $21,875,547. In addition to the cost of construction, these costs include technical services related to design and construction, related permits and fees, the cost of acquisition of lands, and any physical facilities required in conjunction therewith, and incidental expenses in connection with said acquisition and construction. A detailed breakdown of the design, acquisition and construction cost estimate for the facilities corresponding to the line items in Exhibit "A" is shown on Exhibit `B". The cost of proposed bond financing and all other related costs, as provided in the Act is included at $8,124,453 and described below. A summary breakdown of the cost estimate for the District is shown below: DESIGN,ACQUISITION & CONSTRUCTION* $21,875,547 FINANCING EXPENSES** 8,124,453 TOTAL TO BE BOND FINANCED $30,000,000 *Design, acquisition and construction costs relate to those facilities described in Part H, herein. **The major bond related expenses include reserve fund and capitalized interest, with the remaining bond related expenses including underwriter's discount, financial advisor, appraisal, bond counsel, disclosure counsel, underwriter's counsel, special tax consultant, bond and official statement printing, fiscal agent, fiscal agent's counsel, city administration and legal services, developer administration and legal services, first year's tax administration and all other incidental expenses. 4 EXHIBIT A CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) DESCRIPTION OF IMPROVEMENTS ELIGIBLE TO BE FUNDED BY THE DISTRICT It is intended that the District will finance all or a portion of the costs of any of the following: 1. Street improvements on Edinger Avenue including costs of removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights, striping, guardrails, construction surveying, utility relocation, storm_ drain extension, signalization, traffic control and parkway and landscaping including irrigation related thereto. 2. Street improvements on Center Avenue including costs of removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights, striping, construction surveying, utility relocation, signalization, traffic control and parkway and landscaping including irrigation related thereto. 3. Design and construction of a parking structure under a designibuild contract including architectural and structural design, excavation, grading, striping, foundation work including piles and all related construction costs, also including an art program integration, audio video and security systems and fire control systems. 4. On-site public utility improvements, including demolition of existing water facilities and construction of a new public water system complete with fire hydrants and fire fighting devices, and new storm drain system and sewer system tie-ins. 5. Technical services for the above items including design, traffic engineering, architecture, landscape architecture, geotechnical, testing and public agency fees and permits related to the construction of the Improvements described above. 6. Land acquisition costs for the land under the parking structure described in item 3, above. 7. City of Huntington Beach Police substation facilities including structure, tenant improvements and capital equipment. 8. Finance and construction administration and management related to the construction and installation of the Improvements described in items 1 through 7, above. The Improvements to be financed shall include the costs of design, engineering and planning, the costs of any environmental or traffic studies, surveys or other reports, costs related to landscaping and irrigation, soils testing, permits, plan check and inspection fees, insurance, legal and related overhead costs, coordination and supervision and any other costs or appurtenances related to any of the foregoing. A-1 OTHER The District may also finance any of the following: 1. Bond related expenses, including underwriters discount, reserve fund, capitalized interest, letter of credit fees and expenses, bond and disclosure counsel fees and expenses, bond remarketing costs, and all other incidental expenses. 2. Administrative fees of the City of Huntington Beach and the Bond trustee or fiscal agent related to the District and the Bonds. 3. Reimbursement of costs related to the formation of the District advanced by the City of Huntington Beach, the landowner in the District, or any party related to any of the foregoing, as well as reimbursement of any costs advanced by the City of Huntington Beach, the landowner in the District or any party related to any of the foregoing, for facilities, fees or other purposes or costs of the District. A-2 EXHIBIT B CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT 2003-1 (HUNTINGTON CENTER) COST ESTIMATE Item No. Descrinton Cost 1 Edinger Ave. Improvements $ 3,200,536 2 Center Ave Improvements $ 556,239 3 Design/Build Parking Structure $ 11,579,279 4 On-Site Public Utilities $ 1,417,180 5 Technical Services, Fees & Permits $ 860,900 Subtotal Construction Items $ 17,614,134 Construction Contingency (10%) $ 1,761,413 Total Construction Items $ 19,375,547 6 Parking Garage Land Value $ 1,600,000 7 Police Substation Improvements $ 150,000 8 Finance & Construction Management $ 750,000 Total Project Costs $ 2198759547 B-1 RESOLUTION NO. 2nwi_ o RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ESTABLISHING CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. _2003-1 (HUNTINGTON CENTER) AND.. ESTABLISHING.THE BOUNDARIES THEREOF, WHEREAS, the City Council (the "City Council") of the City of Huntington Beach ("City") has heretofore adopted on January 6, 2003, Resolution No. ,200 stating that a proposed community facilities district to be known as "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California" (the "Community Facilities District"), is proposed to be established under the terns of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and Chapter 2.5 (commencing with § 53311) of Part 1 of Division 2 of Title 5 of the California Government Code, commonly known as the "Mello-Roos Community Facilities Act of 1982" (the "Act"), and fixing the time and place for a public hearing on the establishment of the Community Facilities District; and Notice was published and mailed to the owners of property in the Community Facilities District as required by law relative to the intention of the City Council to establish the Community Facilities District, the levy of the special taxes therein, the financing and.refinancing of public facilities therein, and the incurring of a bonded. - indebtedness by the Community Facilities District, and.of the.time and place of said public hearing; and On February 3, 2003, at the time and place specified in said published and mailed notices, the City Council opened and held a public hearing as required by law relative to the formation of the Community Facilities District, the levy of the special taxes therein and the financing of facilities by the Community Facilities District; and On February 3, 2003, at the time and place specified in said published and mailed notices, the City Council opened-and held a public hearing as required by law relative to the formation of the Community Facilities District, the levy of the special taxes therein and the financing of facilities by the Community Facilities District; and Prior to said hearing there was filed.with the City:Council.a report (the "Report") containing a description of the services being financed within and for the Community Facilities District, and an estimate of the cost of such financing, as required by Section 53321.5 of the California Govemment Code; and At the public hearing all persons desiring to be heard on all matters pertaining to the establishment of the Community Facilities District, the levy of the special taxes and the financing of the public facilities therein were heard, and a full and fair hearing was held; and 1 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 The City Council may therefore proceed to establish the Community Facilities District; NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows: Section 1. Findings. The City Council finds as follows: (i) All of the preceding recitals are correct. (ii) On February 3, 2003, pursuant to notice thereof duly given as provided by law, the City Council conducted a public hearing with respect to the establishment of the Community Facilities District and the annual levying of specified special taxes on the taxable property within the Community Facilities District to pay for public facilities for the Community Facilities District which are described in Section 3 hereof. (iii) The boundary map of the Community Facilities District has been recorded pursuant to Sections 3111 and 3113 of the Streets and Highways Code as Instrument No. 2003000028911 in Book 85 of Book of Maps of Assessment and Community Facilities Districts at page 45 of the Official Records of the County of Orange. (iv) All prior proceedings with respect to the establishment of the Community Facilities District prior to and during the hearing with respect to the establishment of the Community Facilities District conducted by the City Council on February 3, 2003, were valid and in conformity with the requirements of Chapter 2.5 (commencing with § 53311) of Part 1 of Division 2 of Title 5 of the California Government Code. (v) No written protests were received at or prior to the time of said hearing against the establishment of the Community Facilities District or the levying of said special taxes by the Community Facilities District, and said special taxes have, therefore, not been limited by majority protest pursuant to Section 53324 of the California Government Code (vi).The City Council is, therefore,.authorized to.adopt a resolution of formation pursuant to Section 53325.1 of the California Government Code for the establishment of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, and the Community Facilities District should be established. Section 2. Establishment of District. City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California, is hereby established. The boundaries of the Community Facilities District are set forth in Exhibit "A" attached hereto and are also shown on the map entitled "Boundaries of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), 2 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 County of Orange, State of California" which is on file with the Clerk and said _ boundaries are hereby established. Section 3. Types of Facilities: Incidental Expenses: Maintenance. (1.) The.types of public facilities proposed_to be.provided within and financed by the proposed Community Facilities District are: (a) Street improvements including costs of condemnation, removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains, drainage storage ponds and drainage channels including landscaping, if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public parking facilities including a parking structure. (e) Water distribution facilities, including fire hydrants and reclaimed water and water storage facilities. (f) Street signalization and signage, including traffic fees. (g) Fire facilities including structures and capital equipment. (h) Acquisition of land necessary for any other facilities specified in paragraphs (a) through (g) above. (i) The incidental expenses which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof, (ii) all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof, the determination of the amount of and collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and (iii) any other. expenses incidental to the construction, acquisition, completion, and inspection of such facilities. (2) The proposed community facilities district shall also pay for the maintenance of, and the provisions of repair and replacement reserves for, any of the publicly owned facilities listed in clause (1) of this Section 3. Section 4. Special Taxes. Except where funds are otherwise available, special taxes sufficient to pay for all such facilities and to pay the principal of and interest on the bonds of the Community Facilities District and any territory to be annexed in the future, and the annual administrative expenses of City and the Community Facilities District in 3 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 determining, apportioning, levying and collecting such special taxes, and in paying-the principal of and interest on such bonds, and the costs of registering, exchanging and transferring such bonds, secured by the recordation of a continuing lien against all taxable or nonexempt property in the Community Facilities District, and maintaining a reserve fund for such.bonds, and paying any amounts that must be. paid to the.United.. States in order to preserve the tax-exempt.status of such bonds.shall_be_annually levied within the Community Facilities District. Additionally, there shall be levied special taxes sufficient to pay for the maintenance, repair and replacement of such public facilities. The rate and method of apportionment of said special taxes shall be as set forth in Exhibit "B" attached hereto and by this reference made a part hereof. Section 5. Annexation of Territory. Other property within the boundaries of City may be annexed into the Community Facilities District upon the condition that parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed. Section 6. Exempt Property. Pursuant to Section 53340 of the California Government Code, properties of entities of the state, federal and local governments or used for public rights of way or other public uses, shall be exempt from the levy of special taxes of the Community Facilities District. Section 7. Report. The Report is hereby approved and is made a part of the record of the public hearing regarding the formation of the Community Facilities.District, and is ordered to be kept on file with the Clerk of the City as part of the transcript of these proceedings. Section 8. Repayment of Funds Advanced or Work-in-bind. Pursuant to Section 53314.9 of the California Government Code, the City Council may accept advances of funds or work-in-kind from private persons or private entities and may provide, by resolution, for the use of those funds or that work-in-kind, for any authorized purpose, including, but not limited to, paying any costs incurred by City in creating the Community Facilities District and may enter into an agreement by resolution, with the person or entity advancing funds or work-in-kind to repay funds advanced, or to reimburse"the person or entity for the value or cost, whichever is less, of the work-in-kind, as determined by the City Council. Section 9. Tender of Bonds. This City Council hereby reserves the right, on behalf of the Community Facilities District to accept tenders of bonds in full or partial payment of special taxes to be levied within the Community Facilities District pursuant to Section 3.56.320 of the Code. Section 10. Description of Voting Procedures. The voting procedures to be followed in conducting the consolidated special elections on (i) the proposition of the Community Facilities District incurring a bonded indebtedness in an amount not to exceed $30,000,000, (ii) the proposition with respect to the levy.of special taxes on the land within the Community Facilities District to pay the principal of and interest on the 4 PDA 2002 resolutions-.CFD 2003-1 (Establishment) RLS 2002-0669 bonds thereof and to pay the costs of maintenance, repair and replacement of public facilities, and (iii) the proposition with respect to the establishment of an appropriations limit for the Community Facilities District in the amount of$4,000,000, if the Community Facilities District is established and such consolidated special elections (the "consolidated special elections"),are held,.shall be as follows: (a) If at least 12 persons have been registered to vote within the territory of the Community Facilities District for each of the 90 days preceding the close of the public or protest hearing (the "protest hearing"), the vote in the consolidated special elections shall be by the registered voters of the Community Facilities District with each voter having one vote. In that event, the consolidated special elections shall be conducted by the Clerk, and shall be held on a date selected by the City Council in conformance with the provisions of Section 53326 of the California Government Code and pursuant to the provisions of the California Elections Code governing elections of cities, insofar as they may be applicable, and pursuant to said Section 53326 the ballots for the consolidated special elections shall be distributed to the qualified electors of the Community Facilities District by mail with return postage prepaid or by personal service, and the consolidated special elections shall be conducted as a mail ballot election. (b) If 12 persons have not been registered to vote within the territory of the community facilities district for each of the 90 days preceding the close of the protest hearing, and pursuant to Section 53326 of the California Government Code, the - vote is therefore to be bythe landowners (as defined in Section 3.56.070 of the Municipal Code of the City of Huntington Beach) of the Community Facilities District, with each landowner of record at the close of the protest hearing having one vote for each acre or portion of an acre of land that he or she owns within the Community Facilities District, the consolidated special elections shall be conducted by the City Clerk pursuant to the Municipal Code of the City of Huntington Beach and Section 53326 of the California Government Code as follows: (1) The consolidated special elections shall be on the earliest date, following the adoption by the City Council of the resolution of formation establishing the Community Facilities District pursuant to Section 53325.1 of the California Government Code, and a resolution pursuant to Section 53326 of said Code submitting the propositions with respect to (i) whether a bonded indebtedness shall be incurred for constructing and financing through the sale of bonds public facilities necessary for the formation of the Community Facilities District; (ii) the levy of special taxes to pay the principal of and interest on the bonds of the Community Facilities District and (iii) the establishing of an appropriations limit therefor to the qualified electors of the Community Facilities District, upon which such elections can be held pursuant to said Section 53326 which may be selected by the City Council, or such earlier date as the owners of land within the Community Facilities District and the Clerk agree and concur is acceptable. (2) Pursuant to said Section 53326, the consolidated special elections may be held earlier than 90 days following the close of the protest hearing if 5 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 the qualified electors of the Community Facilities District waive the time limits for conducting the elections set forth in said Section 53326 by unanimous written consent and the Clerk concurs in such earlier election date as shall be consented to by the qualified electors. (3) Pursuant to said Section 53326, ballots for the consolidated : special elections shall be distributed'to the qualified electors by the Clerk by mail with return postage prepaid, or by personal service. (4) Pursuant to applicable sections of the California Elections Code governing the conduct of mail ballot elections of cities, and specifically Division 4 (commencing with §4000 of the California Elections Code with respect to elections conducted by mail), the Clerk shall mail (or deliver) to each qualified elector an official ballot in a form specified by the City Council in the resolutions calling and consolidating the consolidated special elections, and shall also mail to all such qualified electors a ballot pamphlet and instructions to voter, including a sample ballot identical in form to the official ballot but identified as a sample ballot, an impartial analysis by Counsel to City pursuant to Section 9280, as amended, of said Code with respect to the ballot propositions contained in the official ballot, arguments and rebuttals, if any, pursuant to Sections 9281, as amended, to 9287, as amended, inclusive, and 9295, as amended, of said Code, a return identification envelope with prepaid postage thereon addressed to the Clerk for the return of voted official ballots, and a copy of the form of Resolution of Formation establishing the Community Facilities District, adopted by the City Council pursuant to Section 53325.1 of the California Government Code, and the exhibits. thereto; provided, however, that such analysis and arguments may be waived with the unanimous consent of all the landowners, and in such event a finding regarding such waivers shall be made in the resolution adopted by the City Council calling the consolidated special elections. (5) The official ballot to be mailed (or delivered) by the Clerk to each landowner shall have printed or typed thereon the name of the landowner and the number of votes to be voted by the landowner and shall have appended to it a certification to be signed by the person voting the official ballot which shall certify that the person signing the certification is the person who voted the official ballot, and if the landowner is other than a natural person, that he or she is an officer of or other person. affiliated with the landowner entitled to vote such official ballot, that he or she has been authorized to vote such official ballot on behalf of the landowner, that in voting such official ballot it was his or her intent, as well as the intent of the landowner, to vote all votes to which the landowner is entitled based on its land ownership on the propositions set forth in the official ballot as marked thereon in the voting square opposite each such proposition, and further certifying as to the acreage of the landowner's land ownership within the Community Facilities District. (6) The return identification envelope delivered by the Clerk to each landowner shall have printed or typed thereon the following: (i) the name of the landowner, (ii) the address of the landowner, (iii) a declaration under penalty of perjury 6 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 stating that the voter is the landowner or the authorized representative of the landowner entitled to vote the enclosed ballot and is the person whose name appears on the identification envelope, (iv) the printed name and signature of the voter, (v) the address of the voter, (vi) the date of signing and place of execution of said declaration, and (vii).a notice that the envelope contains an official ballot and is to be opened only by the Clerk. (7) The instruction to voter form to be mailed by the Clerk to the landowners shall inform them that the official ballots shall be returned to the Clerk properly voted as provided thereon and with the certification appended thereto properly completed and signed in the sealed return identification envelope with the certification thereon completed and signed and all other information to be inserted thereon properly inserted not later than 7:00 p.m. on the date of the election, or immediately after the Resolution Calling the Special Election is adopted (8) Upon receipt of the return identification envelopes which are returned prior to the voting deadline on the date of the elections, the Clerk shall canvass the votes cast in the consolidated special elections, and shall file a statement with the City Council as to the results of such canvass and the election on each proposition set forth in the official ballot. The procedures set forth in this section for conducting the consolidated special elections, if they are held, may be modified.as the City Council may determine to be necessary or desirable.by a.resolution subsequently adopted.by the.City Council: PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of February , 2003. Mayor ATTEST: APPROVED AS TO FORM: City Clerk Attomey ,a3 REVIEWED AND APPROVED: INITIATED AND APPROVED �. A C / G� �,.:% City Ad nistrator Dir ctor of Econo is Development 7 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 EXHIBIT A LEGAL DESCRIPTION CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2000-1 (HUNTINGTON CENTER), COUNTY OF ORANGE, STATE OF CALIFORNIA City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, includes the land situated in the State of California, County of Orange, City of Huntington Beach, described as follows: Parcels 2 through 9 as shown on Parcel Map 86-200 filed in Book 255, pages 40-45, of Parcel Maps in the Office of the County Recorder of Orange County, California 8 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 CONFORMED COPY Nut zb IS5F PROPOSED BOUNDARIES OF ACCEPTEDANDFIED CITY OF HUNTINGTON BEACH AT CITY OF HUNTNCTON BEACH COMMUNITY FACILITIES DISTRICT - No. 2003-1 DATE,]� TDE J!'.m A1V�FEE Fr�of (HUNTINGTON CENTER) D —P FLLIDTHS COUNTY OF ORANGE N«�S�PACSE�OF STATE OF CALIFORNIA A�ESSMB A11D 0p1eMUHfTY FHC LrfEB DISTRICTS,N THE OFFICE OF THE COUNTY RECORDER OF THE COUNTY OF ORANGE, STATE OF CAUFOf�" _ -mn DOILY COUNTY CLERWECORDER DEPLI CLVY 1aUlleltknts N o rum. FiID IN THE OFrHUNOF THE faE CKTHI 3 J of THCITY OF fR1NT4NGTON OEALH T}B6 111 ! DAY OF_ 3_�....-t_.4(IO3L AUy00, 68.6s G �` �._ DELTA-50art}8' I COrWE BROCpNAY,77E CLERK OF / TAN..1130s THE CITY OF HUNTNGTON BEACN. y'Ay � rums a I (HEREBY CERTIFYTHiAT THE WITHIN MAP 3HCWWG THE BOUNDARIES OF THE CITY OF HINIIN BEACH COMMUNITY FACLTrESGTON OISTRICY NO 2000-1 H JOrTF I p YMriCTON CENTER)COLOKTY OF ORANGE.STATE OF CALIFORNIA,WAS APPROVED BY THE CITY COUNCIL OF THE 1�F1TM1 Y TAN. CRY OF HUNTINGTON BEACH AT A �\ REGULAR MEE'7iNO HEIiE[f FETD ON CONNIE I / t 50.00' THg�OAY OP�100J BY RB `�� ru�t.LN RESOIUTiON NO, cui r OFC A THE CITY OFHUNTOOGTON BEAC14 'OF IE I ' � rNm b r � r.rm a I I I I PAR=7 INkib I i5 i N00'Jd�O'E MSC 2-50 D i � t PROP�DpSEyD1� A�R O�. BASIS OF BEARING, DSIIBC7 N0.�06T-1. I CENTERLINE OF EDINGERAVE....NBY'7T.IPW PER PARCEL MAP HQ 861= FlLEO IN BOOK 265.PAGES 40<6,OF PARCEL MAPS N THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY.CALIFORMA zp HI I ' I LOCATION MAP I I t PROJECT �__ � _--__ r C'-'OF NUNTMCTON BE/.p1 FLppp CONIfEOi C{tANH T I= 20C 409 I 'RIPHIC SCAiE LEM PiPT101w, PARCELS 2 THRiOUGH B AS SHOWN ON PARCEL HAAP NO.86-YG0 vm wa FILED IN BOOK 2-%PAGES b/(;OF PARC881APS N THE OFFICE OF THE COUNTY RECORDER OF ORA/GE COUNTY.CALIFORWA SHEET 1 OF 1 EXHIBIT B CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX 9 PDA 2002 resolutions:CFD 2003-1 (Establishment) RLS 2002-0669 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein CFD No. 2003-1) shall be levied and collected according to the tax liability determined by the Administrator through the application of the procedures described below. The real property in CFD No. 2003-1, 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 capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment: 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, or the other parcel map recorded with the County Recorder. If the Acreage of a particular Parcel is unclear after reference to available maps, the Administrator shall determine the appropriate Acreage for a Parcel. Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, of Title 5 of the Government Code of the State of California. Administrative Expenses means any or all of the following actual or reasonably estimated costs directly related to the administration of CFD No. 2003-1: the fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture or resolution with respect to the Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No. 2003-1. Administrator means the Director of Economic Development or such other person or entity designated by the City Administrative Officer or the City Council to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's Parcel number. Bonds mean any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by the City for CFD No. 2003-1 under the Act. City means the City of Huntington Beach. City Council means the City Council of the City of Huntington Beach, acting as the legislative body of CFD No. 2003-1. County means the County of Orange. Development Agreement means the Owner Participation Agreement (OPA) between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates, LLC, dated October 2, 2000. Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1 which generally serves the development subject to the Development Agreement and is owned by a governmental agency for public right-of-way purposes including, but not limited to parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved. Fiscal Year means the period commencing on July 1 and ending on the following June 30, in any year in which the Bonds are outstanding. Indenture means the indenture, fiscal agent agreement, resolution or other instrument approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. 2 Maximum Special Tax means, with respect to any Parcel of Taxable Property, the maximum Special Tax, determined in accordance with Section C, that can be levied in any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts payable under the Parking Structure Maintenance Special Tax. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Parking Structure Maintenance Special Tax means the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for CFD No. 2003-1 necessary to pay all actual, documented maintenance costs, management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs, fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues shall be subject to and limited by the provisions of the following documents, which documents shall be in the form approved by the City Council in connection the issuance of the Bonds, and which documents, upon such approval, shall be deemed to be incorporated herein by this reference: (i) any covenants, conditions or restrictions encumbering such parking structure and/or the real property upon which it is to be constructed as of the date of issuance of the Bonds, (ii) the initial parking management agreement governing the operation and maintenance of such parking structure (the provisions of such initial parking management agreement to govern the determination of the Parking Structure Maintenance Special Tax for so long as the Special Tax lien remains in effect, notwithstanding any earlier expiration or termination of such agreement), and(iii) any amendments to the foregoing covenants, conditions or restrictions or agreements. Reserve Fund means the fund of that name created under the Indenture. Resolution of Issuance means the resolution adopted by the City Council of the City, acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds in accordance with the Act. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within CFD No. 2003-1. Special Tax Requirement means the amount required in any Fiscal Year for CFD No. 2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance Special Tax. 3 Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No. 2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law, but in no circumstance shall the total amount of Taxable Property be less than 40.63 acres. Trustee means the trustee who is a party to the Indenture, if so approved. B. IDENTIFYING TAXABLE PROPERTY Not less than fifteen business days prior to the beginning of each Fiscal Year, the Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property. The Taxable Property shall be subject to Special Taxes in accordance with the rate and method of apportionment described in Sections C and D below. C. MAXIMUM SPECIAL TAX The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100% of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. 4 E. LIMITATIONS No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, and until the date on which principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax may be levied and collected until such time as the City and the CFD No. 2003-01 have divested all remaining ownership interests in the parking structure. Upon determination by the Administrator that such requirements have been met, the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes,provided, however, that the City on behalf of CFD No. 2003-1 may directly bill the special tax or any portion thereof, may collect special taxes or any portion thereof at a different time or in a 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. Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax shall be directly billed in each instance and not billed with ad valorem property taxes. G. APPEALS The City Council shall establish as part of the proceedings and administration of CFD No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any appeals, as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming that the amount or application of the Special Tax is not correct may file a written notice of appeal with the Review/Appeal Committee not later than one calendar year after having paid the Special Tax that is disputed. The Review/Appeal Committee shall promptly review the appeal, and if necessary, meet with the owner, consider written and oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the Review/Appeal Committee's decision requires the Special Tax to be modified or changed in favor of the owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall be exclusive and its exhaustion by any owner shall be a condition precedent to any legal action by such owner. 5 H. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section H: Amount of Current Special Taxes Paid means the amount of the Special Tax levied against the subject Assessor's Parcel that was paid to the County or the City by the owner of the subject Assessor's Parcel and would be applied to debt service payments on the Redemption Date and the Interest Payment Date immediately following the Redemption Date. Outstanding Bonds means all Bonds that are deemed to be outstanding under the Indenture the day immediately preceding the next Interest Payment Date. Redemption Date means the Interest Payment Date on which Bonds are proposed to be redeemed from the prepayments of the Special Tax. 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein. The owner intending to prepay the Special Tax obligation on one or more Assessor's Parcel(s) shall provide the Administrator with written notice of intent to prepay. It shall be a condition precedent to prepayment that the owner intending to prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's Parcel to be prepaid and provide proof of payment to the Administrator. Promptly following receipt of such notice, the Administrator shall notify the owner of such Assessor's Parcel(s) of the prepayment amount of such Assessor's Parcel(s). The Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 90 days prior to the next occurring date that Bonds may be redeemed from the proceeds of such prepayment pursuant to the Indenture. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined above or below): Bond Redemption Amount Plus Redemption Premium Plus Defeasance Amount Plus Administrative Fees and Expenses Less Reserve Fund Credit Less Amount of Current Special Taxes Paid Total: Equals Prepayment Amount 6 As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No. 1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year. 2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total Maximum Special Tax of all Assessor's Parcels of Taxable Property for the current Fiscal Year. 3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding Bonds as defined in this Section G to compute the amount of Outstanding Bonds to be retired and prepaid, and round the result up to the nearest multiple of$5,000 (the Bond Redemption Amount). 4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled to mature on the Redemption Date by the applicable redemption premium (the Redemption Premium). 5. Compute the amount needed to pay interest on the Bond Redemption Amount from the Interest Payment Date immediately preceding the Redemption Date to the Redemption Date. 6. Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 7. Add the amounts computed pursuant to Paragraph 5 and subtract the amount computed pursuant to Paragraph 6 (the Defeasance Amount). 8. Determine the administrative fees and expenses associated with 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. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal the lesser of: (a) the expected reduction in the Reserve Requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new Reserve Requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 10. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment Amount). 7 11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3, 4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments (as appropriate). The amount computed pursuant to Paragraph 8 shall be retained by the Administrator. With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii) notify the County that the Special Tax, if any, remaining on the secured tax roll for the Assessor's Parcel has been satisfied and that the County should remove such amounts from the secured tax roll, and (iii) refund the owner for any Special Tax payments made on the Assessor's Parcel after the date of prepayment. From and after the prepayment, 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 the Maximum Special Tax that may be levied on Taxable Property within CFD No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Special Tax on an Assessor's Parcel of Taxable Property 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 =(PH xF) +G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section H.1, minus the amounts determined in Paragraph No. 8 of Section H.1. F = the percent by which the owner of an Assessor's Parcel(s) is partially prepaying the Maximum Special Tax. G = the amounts determined in Paragraph No. 8 of Section H.1. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall be prepaid. The Administrator shall promptly provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel following receipt of the request. 8 With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii) indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. 9 Res. No. 2003-10 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 3rd day of February 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio C erk of the City Council of the City of Huntington Beach, California RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DETERMINING THE NECESSITY FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT 2003-1.(HUNTINGTON CENTER) TO INCUR A , BONDED INDEBTEDNESS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000 FOR PROVIDING PUBLIC FACILITIES WITHIN AND FOR THE COMMUNITY FACILITIES DISTRICT AND CALLING A SPECIAL ELECTION FOR THE COMMUNITY FACILITIES DISTRICT ON A PROPOSITION FOR INCURRING SUCH BONDED INDEBTEDNESS WHEREAS, on January 6, 2003, the City Council (the "City Council") of the City of Huntington Beach (the "City"), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code (the "Act"), adopted Resolution No.apm- declaring the necessity for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California (the "Community Facilities District"), to incur a bonded indebtedness for the purpose of providing public facilities which are necessary for the development of the property therein, and scheduling a hearing thereon; and Notice of the hearing was published and mailed as required bylaw;`and on February 3, 2003, at the time and place of the hearing as set forth in Resolution No. .2oM11 and the notice thereof, the City Council conducted the hearing and afforded all persons interested, including persons owning property within the Community Facilities District, an opportunity to be heard on the proposed authorization to incur bonded indebtedness, and no protests were received; and On February 3, 2003, at the conclusion of the hearing, the City Council adopted the resolution of formation pursuant to Section 53325.1 (a) of the California Government Code, establishing City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California; and The City Council has determined that it is necessary for the Community Facilities District to incur a bonded indebtedness for the purpose of providing public facilities, which are necessary to the development of the property therein; NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows: Section 1. Necessi . It is necessary for the Community Facilities District to incur a bonded indebtedness in an aggregate principal amount not to exceed $30,000,000 for the purposes of constructing and financing through the sale of bonds t PDA:2002 resolutions:CFD 2003-1(Determining Necessity To incur Debt) RLS 2002-0669 the construction, acquisition, fumishing and equipping of public facilities which are necessary to meet increased demands placed upon the City as specified in Resolution No. 20.03 4 the resolution of intention for the Community Facilities District, which Proceeds from the sale of the bonds of the Community Facilities District may be used to pay costs associated with the acquisition, construction, furnishing and equipping of facilities to.benefit the lands..within,the boundaries of the proposed community.facilities district. Section 2. Payment of Bonded Indebtedness. Pursuant to Section 3 of Resolution No.am3r-W, all parcels of taxable property within the Community Facilities District shall be subject to the levy of special taxes to pay the principal of and interest on the bonds thereof which may be issued and sold to finance the design, construction and acquisition of public facilities which are of benefit to all such parcels. Section 3. Amount of Debt: Terms of Bonds. The aggregate principal amount of the bonded indebtedness to be incurred by the Community Facilities District shall not exceed $30,000,000. The maximum term of the bonds shall not exceed 40 years. The maximum annual rate of interest to be paid semiannually on the bonds shall not exceed 12 percent per annum or such other rate as may be the maximum interest rate per- mitted by law. Section 4. Proposition to be Submitted to Voters. (a) The proposition to be.submitted to the voters within the Community Facilities District with respect to the proposed bonded indebtedness shall be as follows: Shall a bonded indebtedness in an aggregate principal amount not to exceed $30,000,000 be incurred by and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, for a maximum term of not more than 40 years and with interest at a rate or rates not to exceed 12 percent per annum, or such other rate as may be the maximum interest rate permitted by law, for the purpose of constructing and financing through the sale of bonds the construction, acquisition, furnishing and equipping of public facilities which are necessary to meet increased demands placed upon the City as a result of the development of said real property, and paying-costs incidental to the sale of bonds, the formation of the Community Facilities District,and the design, construction, and acquisition of the public facilities, including all costs and estimated costs of construction of the public facilities, acquisition of land and rights-of-way, satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the bonds are issued, architectural, engineering, inspection, legal, fiscal and financial consultant fees, bond and other reserve funds, bond discount, interest on any bonds of the Community Facilities District estimated to be due and payable within two years of the issuance of the bonds, election costs, and all costs of issuance of the bonds, including, 2 PDA:2002 resolutions:CFD 2003-I (Determining Necessity To Incur Debt) RLS 2002-0669 but not limited to, fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit or other credit " enhancement costs, and printing costs? Section 5. Elections. The.date of the special election with respect to the incurring.of the aforementioned bonded indebtedness, at which time the proposition set forth in Section 4 hereof shall be submitted to the voters of the Community Facilities District is February 3, 2003, and that special election is hereby called for that date. The special election shall-be consolidated with the special election with respect to the propositions for (i) the levy of special taxes for the payment of the principal of and interest on the bonds of the Community Facilities District, and (ii) establishing an appropriations limit for the Community Facilities District which have also been called for February 3, 2003. The consolidated special elections shall be conducted by mail ballot pursuant to applicable provisions of the California Elections Code with respect to mail- ballot elections of cities and specifically Division 4 (commencing with Section 4000) of that Code, insofar as they may be applicable. The official ballots are required to be received by the City Clerk by 7:00 o'clock p.m. on the said date of the election or immediately after the Resolution Calling the Special Election is adopted. If all qualified electors have voted, the election shall be closed. Section 6 . Accountability Measures. Pursuant to Section 53410 of the California Government Code, if the.voters.approve the propositions contained.in the official.ballots for the consolidated special elections with respect to.the Community Facilities District incurring bonded indebtedness for the purposes for which such indebtedness is to be incurred and bonds of the Community Facilities District are to be issued (the "Bond Propositions"), the incurring of such bonded-indebtedness and the issuance of bonds of the Community Facilities District shall be subject to the following accountability measures: (a) The Bond Propositions shall identify the specific purposes for which the bonds are to be issued; (b) The proceeds of the bonds shall be applied only for the specific purposes identified in the Bond Propositions; (c) An account or accounts shall be created pursuant to the fiscal agent agreement for such bonds into which the proceeds of the sale of such bonds, if any, shall be deposited; and (d) The chief financial officer of the City shall file a report with the City . Council no later than January 2 of the calendar year beginning after the year in which the bonds are issued and annually thereafter, which shall contain the information required by Section.53411 of the California Government Code. 3 PDA:2002 resolutions:CFD 2003-1(Determining Necessity To Incur Debt) RLS 2002-0669 PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a_ regular meeting thereof held on the 3rd day of February , 2003. Mayor ATTEST: APPROVED AS TO FORM: City Clerk C Attorn REVIEWED AND APPROVED: INITI TED AND APPROVED City AdmThistrator Director of Economic Development 4 PDA:2002 resolutions:CFD 2003-1(Determinin.- Necessity To Incur Debt) RLS 2002-0669 Res. No. 2003-11 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 3�d day of February 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio C rk of the City Council of the City of Huntington Beach, California RESOLUTION NO. 2b03-12 RESOLUTION OF-THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH CALLING A SPECIAL ELECTION AND SUBMITTING TO THE VOTERS OF CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) PROPOSITIONS REGARDING INCURRENCE OF BONDED INDEBTEDNESS THE ANNUAL LEVY OF SPECIAL TAXES WITHIN THE COMMUNITY FACILITIES DISTRICT TO PAY PRINCIPAL OF AND INTEREST ON BONDS THEREOF, AND THE ESTABLISHMENT OF AN APPROPRIATIONS LIMIT WHEREAS, pursuant to Section 53325.1 of the California Government Code and Chapter 3.56 of the Municipal Code of the City of Huntington Beach (the "Code") the City Council (the "City Council") of the City of Huntington Beach (the "City") has adopted the resolution of formation for the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California (the "District"), establishing the District and the boundaries thereof(the`Resolution of Formation"); and WHEREAS, pursuant to Section.53351:of the California .Government Code.and the provisions of the.Code,.the City Council has also adopted a resolution determining.that it is. necessary that the District incur a bonded indebtedness in an original aggregate amount not to exceed $30,000,000 for the purposes of refinancing certain public facilities of the District; and WHEREAS, by that resolution, the City Council called special elections on the propositions to be submitted to the voters of the District with respect to the District incurring bonded indebtedness for the refinancing of such public facilities; and WHEREAS, pursuant to Section 53326 and 53350 of the California Government Code and the provisions of the Code, it is necessary that the City Council submit to the voters of the District the annual levy of special taxes on taxable property within the District to pay the principal of and interest on the bonds thereof and to fund the reserve fund, if such bonds are authorized and issued; and WHEREAS, pursuant to Section 53325.7 of the California Government Code and the provisions of the Code, the City Council may also submit to the voters of the District a proposition for the establishment of an appropriations limit for the District; and WHEREAS, the City Clerk has advised the City Council that she has received a statement from the Registrar of Voters of the County of Orange that no persons are registered to vote in the territory of the District; 03reso/calling election/1/2 4/03 1 NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE CITY.COUNCIL OF THE CITY OF HUNTINGTON BEACH AS FOLLOWS: Section 1. Findings. The City Council finds that: (i) the foregoing recitals are true and correct; (ii) 12 persons have not been registered to vote within the territory of the District for each of the 90 days preceding the close of the public hearing on February 3, 2003- (iii)pursuant to Section 53326 of the California Government Code, as a result of the findings set forth in clause (ii) above, the vote in the special election called by this resolution shall be by the landowners of the District whose property would be subject to the special taxes if they were levied at the time of the election, and each landowner shall have one vote for each acre, or portion thereof, which he or she owns within the District which would be subject to the proposed special taxes if they were levied at the time of the election; (iv)the sole owner of all of the land in the District has by written consent (a)waived the time limits set forth in Section 53326 of the California Government Code for holding the election called by this resolution and the election on the propositions of the District incurring bonded indebtedness, which pursuant to Section 4 hereof is consolidated with the election called hereby, (b) consented to the holding of the consolidated special elections on February 3, 2003, (c)waived notice and mailed notice of the time and date of the consolidated special elections, (d) waived an impartial analysis by the City Attorney of the ballot propositions pursuant to Section 9280 of the California Elections Code and arguments and rebuttals pursuant to.Sections 9281 to 9287, inclusive, and 9295 of that Code, and. mailing of a statement pursuant to Section 9401 of that Code, and(e) waived a synopsis of the measures to be included in the official ballot for said elections pursuant to Section 12111 of that Code; and (v)the City Clerk (the "City Clerk") has consented to the holding of the consolidated special elections on February 3, 2003. Section 2. Call of Election. The City Council hereby calls and schedules a special election for February 3, 2003, on the proposition of the annual levy of special taxes within the District for the payment of principal of and interest on the bonds of the District, and on the proposition of the establishment of an appropriations limit for the District. Section 3. Propositions. (a) The propositions to be submitted to .the_ voters of the District.at .such special election shall be as follows: First Proposition: Shall special taxes be levied annually on taxable property within City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California (the "Community Facilities District"), to pay the principal of and interest on the bonds of the Community Facilities District issued and sold to finance and refinance those purposes specified in Proposition-A of this ballot, to establish and replenish the reserve fund for the bonds, or to accumulate funds for future bond payments, including any amount required by federal law to be rebated to the United States with regard to the bonds, and to pay expenses incidental thereto and to the levy 03reso/calling election/124/03 2 and collection of the special takes, so long as the special taxes are needed to pay the principal of and interest on the bonds and for.such.other_purposes,.together. with the payment of; and the provisions of repair and replacement reserves for,' maintenance of any of the publicly owned facilities financed with the proceeds of such bonds, at the special tax rates and pursuant to the method of apportioning the special taxes set forth in Exhibit "A" to the Resolution of Formation adopted by the City Council of the City of Huntington Beach on February 3, 2003? Second Proposition: Shall an appropriations limit, as defined by subdivision(h) of Section 8 of Article XIII B of the California Constitution, be established for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, in the amount of$4,000,000? Section 4. Consolidation of Elections. The special election called hereby on the propositions to be submitted to the voters of the District, as set forth in Section 3 hereof, shall be consolidated with the special election on the proposition of the District incurring bonded indebtedness. The ballots for said consolidated elections shall be in the forms attached hereto as Exhibit "A." Section 5. Conduct of Election.- Except as otherwise provided in ..Section: 6. hereof, the consolidated special elections shall be conducted by the City Clerk in accordance with the provisions of the California Elections Code governing mail ballot elections of cities, and in particular the provisions of Division 4 (commencing with Section 4000), of that Code, insofar as they may be applicable. Section 6. Election Procedures. The procedures to be followed in conducting the consolidated special elections on (i)the proposition of the District incurring a bonded indebted- ness in an original aggregate amount not to exceed $30,000,000, (ii) the proposition with respect to the levy of special taxes on taxable property within the Community Facilities District to pay the principal of and interest on the bonds of the Community Facilities District and maintenance of public facilities, and(iii) the proposition with respect to the establishment of an appropriations limit for the District in the amount of$4,000,000 (the "Consolidated Special Elections") shall be as follows:. (a) Pursuant to Section 53326 of the California Government Code, ballots for the Consolidated Special Elections shall be distributed to the qualified electors by the City Clerk by mail or by personal service. (b) Pursuant to applicable sections of the California Elections Code governing the conduct of mail ballot elections of cities, and in particular Division 4 (commencing with Section 4000) of that Code with respect to elections conducted by mail, the City Clerk shall mail or deliver to each qualified elector an official ballot in the appropriate form attached hereto as Exhibit "A," and shall also mail or deliver to all such qualified electors a ballot pamphlet and 03reso/calling election/I/34/03 3 instructions to voter, including a sample ballot identical in form to the official ballot but identified as a sample.ballot,.a return identification.envelope addressed to the City Clerk for the return of voted official ballots and a copy of the Resolution of Formatiori adopted:by the City Council on February 3,2003 (c) The official ballot to be mailed or delivered by the City Clerk to each landowner-voter shall have printed or typed thereon the name of the landowner-voter and the number of votes to be voted by the landowner-voter and shall have appended to it a certification to be signed by the person voting the official ballot which shall certify that the person signing the certification is the person who voted the official ballot, and if the landowner-voter is other than a natural person, that he or she is an officer of or other person affiliated with the landowner-voter entitled to vote such official ballot, that he or she has been authorized to vote such official ballot on behalf of the landowner-voter, that in voting such official ballot it was his or her intent, as well as the intent of the landowner-voter, to vote all votes to which the landowner-voter is entitled based on its land ownership on the propositions set forth in the official ballot as marked thereon in the voting square opposite each such proposition, and further certifying as to the acreage of the landowner-voter's land ownership within the District. (d) The return identification envelope mailed or delivered by the City Clerk to each landowner-voter shall,have printed or typed thereon the following: :(i)the name of the land- . owner, (ii)the address of-the landowner, (iii) a declaration under penalty of perjury stating that the voter is the landowner or the authorized representative of the landowner entitled to vote the enclosed ballot and is the person whose name appears on the identification envelope, (iv)the printed name and signature of the voter, (v) the address of the voter, (vi)the date of signing and place of execution of the declaration, and (vii) a notice that the envelope contains an official ballot and is to be opened only by the City Clerk. (e) The information to voter form to be delivered by the City Clerk to the landowner-voters shall inform them that the official ballots shall be returned to the City Clerk properly voted as provided thereon and with the certification appended thereto properly completed and signed in the sealed return identification envelope with the certification thereon completed and signed and all other information to be inserted thereon properly inserted by 7:00 p.m. on the date of the elections; provided.that if.all qualified electors have voted, the elections shall be closed with the concurrence of the City Clerk: (f) Upon receipt of the return identification envelopes which are returned prior to the voting deadline on the date of the elections, the City Clerk shall canvass the votes cast in the Consolidated Special Elections, and shall file a statement with the City Council as to the results of such canvass and the election on each proposition set forth in the official ballot. Section 7 . Accountabilitv Measures. Pursuant to Section 53410 of the California Government Code, if the voters approve the propositions contained in the official ballots for the consolidated special elections with respect to the District incurring bonded 03reso/calling election]1/24/03 4 indebtedness for the purposes for which such indebtedness is to be incurred and bonds of the District are to be issued (the 'Bond Propositions"), the incurring of such bonded indebtedness and the issuance of bonds of the District shall be subject to the following accountability measures: (a) The Bond Propositions shall identify the specific purposes for which the bonds are to be issued; (b) The proceeds of the bonds shall be applied only for the specific purposes identified in the Bond Propositions; (c) An account or accounts shall be created pursuant to the fiscal agent agreement for such bonds into which the proceeds of the sale of such bonds, if any, shall be deposited; and (d) The City Administrator of the City shall file a report with the City Council no later than January 2 of the calendar year beginning after the year in which the bonds are issued and annually thereafter, which shall contain the information required by Section 53411 of the California Government Code. The City Council finds that the Bond Propositions which are set forth in the official ballots for the consolidated special elections, which are attached as Exhibit "A" hereto, identify the specific purposes for which the District will incur bonded indebtedness and issue bonds. 03reso/calling election/124/03 5 PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3`d day of February,2003. Mayor ATTEST: APPROVED AS TO FORM: t City Clerk C y Attorne t, i,ZN� REVIEWED AND APPROVED: INITIATED AND APPROVED City AdnrKnistrator Director of Economic Development 03reso/calling election/1/24/03 6 EXHIBIT "A" OFFICIAL BALLOT CONSOLIDATED SPECIAL ELECTIONS FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) COUNTY OF ORANGE STATE OF CALIFORNIA To vote, mark a cross (+) in the voting square after the word "YES" or after the word "NO." All marks otherwise made are forbidden. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Huntington Beach and obtain another. PROPOSITION A: Shall a bonded indebtedness in an original aggregate principal amount not to exceed $30,000,000 be incurred by and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of [Proposition A] California (the "Community Facilities District"), for a maximum term of not more than 35 years and with interest at a rate or rates not to YES ❑ exceed the maximum interest rate permitted by law, for the purposes of providing; (1) The types of public facilities listed in the Resolution of Formation of the District adopted February 3, 2003, and (2) The NO ❑ incidental expenses which will be incurred are all costs associated with the creation of the Community Facilities District, issuance of the bonds thereof, the determination of the amount of and collection of taxes, and the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District? RVPUB\KAB`636553 PROPOSITION B: Shall special taxes be levied annually on taxable property within City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California (the "Community Facilities District"), to pay the [Proposition B] principal of and interest on the bonds of the Community Facilities District issued and sold to finance and refinance those purposes YES ❑ specified in Proposition A of this ballot, to establish and replenish the reserve fund for the bonds, or to accumulate funds for future bond payments, including any amount required by federal law to be rebated NO ❑ to the United States with regard to the bonds, and to pay expenses inci- dental thereto and to the levy and collection of the special taxes, so long as the special taxes are needed to pay the principal of and interest on the bonds and for such other purposes, together with the payment of, and the provisions of repair and replacement reserves for, maintenance of any of the publicly owned facilities financed with the proceeds of such bonds, at the special tax rates and pursuant to the method of apportioning the special taxes set forth in Exhibit "A" to the Resolution of Formation adopted by the City Council of the City of Huntington Beach on February 3, 2003? PROPOSITION C: Shall an appropriations limit, as defined by [Proposition C] subdivision (h) of Section 8 of Article XIII B of the .California Constitution, be established for City of Huntington Beach Community YES ❑ Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, in the amount of$4,000,000? NO ❑ PROPOSITION A AND PROPOSITION B ARE SUBJECT TO THE ACCOUNTABILITY MEASURES PRESCRIBED IN SECTION 53410 OF THE GOVERNMENT CODE OF THE STATE OF CALIFORNIA. RVPUB\KAB`,646553 2 Res. No. 2003-12 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 3rd day of February 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio C rk of the City Council of the City of Huntington Beach, California RESOLUTION NO. 2003-13 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DECLARING THE RESULTS OF THE CONSOLIDATED SPECIAL ELECTIONS FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. (HUNTINGTON CENTER) COUNTY.OF ORANGE, STATE OF CALIFORNIA, ON THE PROPOSITIONS WITH RESPECT TO (1) INCURRING BONDED INDEBTEDNESS IN AN ORIGINAL AMOUNT NOT TO EXCEED $30,000,000, (ii) THE ANNUAL LEVY OF SPECIAL TAXES TO PAY PRINCIPAL AND INTEREST ON BONDS, AND (iii) THE ESTABLISHMENT OF AN APPROPRIATIONS LIMIT AND AUTHORIZING THE RECORDATION OF THE NOTICE OF SPECIAL TAX LIEN WHEREAS, on January 6, 2003, the City Council (the "City Council") of the City of Huntington Beach (the "City") adopted a Resolution determining the necessity for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California (the "Community Facilities District"), to incur a bonded indebtedness in an original aggregate principal amount not to exceed $30,000,000 and calling a special election on the proposition of incurring such a bonded indebtedness for February. 3, 2003,.providing for the consolidation of that"election with the election on the propositions with respect to the annual levy of special taxes on taxable property within the Community Facilities District to pay principal of and interest on such bonds, together with the maintenance, repair and replacement of public facilities, and the establishment of an appropriations limit for the Community Facilities District; and On January 6, 2003, the City Council also adopted a resolution calling a special election (the "Election Resolution") for February 3, 2003, for submitting to the voters of the Community Facilities District the proposition with respect to the.annual levy of special taxes on taxable property within the Community Facilities District to pay the principal of and interest on the bonds thereof, and the proposition with respect to the establishment of an appropriations limit for the Community Facilities District, and providing for the consolidation of that election with the election on the proposition of the Community Facilities District incurring a bonded indebtedness; and 1 PDA:2002 resolutions:CFD 2003-1 (Declaring Results of Election) RLS 2002-0669 The City Council has received a statement from the City Clerk (the "City Clerk"), who pursuant to the Election Resolution was authorized to conduct the consolidated special elections and act as the election official therefor, with respect to the canvass of the ballots returned in and the:results of the consolidated special elections,•:certifying that more than two-thirds of the votes cast upon the propositions submitted to the voters in the consolidated special elections were cast in favor of approving all such propositions; NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve, determine and order as follows: Section 1. Findings. The City Council finds that: (i) there were no persons registered to vote within the boundaries of the Community Facilities District at the time of the close of the protest hearing on February 3, 2003, and pursuant to Section 53326 of the California Government Code ("Section 53326")the vote in the consolidated special elections was, therefore, to be.by the landowners owning land within the Community Facilities District, with each landowner having one vote for each acre or portion of an acre of land that he or she owned within the Community Facilities District which would have been subject to the special tax if levied at the time of the consolidated special elections; (ii) pursuant to Section 53326 and the Election Resolution, the City Clerk distributed the ballots for the consolidated special elections to Huntington Center Associates, LLC the owner of all of the land included within the boundaries of the Community Facilities District (the "Property Owner") by overnight mail with return postage prepaid; , (iii) the Property Owner waived the time limits:for holding the consolidated special elections and the election dates specified in Section 53326, and consented to the calling and holding of the consolidated special elections on February 3, 2003; (iv) the consolidated special elections have been properly conducted in accordance with all statutory requirements and the provisions of the Election Resolution; (v) pursuant to Section 53326, the Property Owner, which owned 2 PDA:2002 resolutions:CFD 2003-1 (Declaring Results of Election) RLS 2002-0669 approximately r3_jL6acres, was entitled to a total of 44 votes; (vi) the ballot was returned to the City Clerk prior to 7:00 p.m. on February 3, 2003, by.the Property Owner; (vii) the ballot retumed..to the City Clerk by the Property Owner voted.all, votes to which it was entitled'in favor of all propositions set forth therein; (viii) more than two-thirds of the votes cast in the consolidated special elections on each such proposition were cast in favor thereof, and pursuant to Sections 53328, 53329 and 53355 of the California Government Code, all such propositions carried; (ix) the City Council, as the legislative body of the Community Facilities District, is therefore authorized to take the necessary action to have the Community Facilities District incur a bonded indebtedness in an original aggregate amount not to exceed $30,000,000; (x) the City may annually levy special taxes on taxable property within the Community Facilities District in amounts sufficient to pay the principal of and interest on . the bonds of.the,Community Facilities District; and (xi) an appropriations limit for the Community Facilities District has been established in the amount of$4,000,000. Section 2. Declaration of Results. All votes voted in the consolidated special elections on the propositions with respect to the Community Facilities District incurring a bonded indebtedness in an original aggregate amount not to exceed $30,000,000, the annual levy of special taxes on taxable property within the Community Facilities District to pay the. principal of and interest on the bonds thereof.and to pay for maintenance, repair and replacement of public facilities; and the establishment of an appropriations limit in the amount of$4,000,000 for the Community Facilities District were voted in favor thereof, and all such propositions carried. Section 3. Effect of Elections. The effect of the results of the consolidated special elections, as specified in Section 2 hereof, is that the City Council, as the legislative body of the Community Facilities District, is authorized to have the 3 PDA:2002 resolutions:CFD 2003-1 (Declaring Results of Election) RLS 2002-0669 Community Facilities District incur a bonded indebtedness in an original aggregate amount not to exceed $30,000,000 for the purposes set forth in Proposition A of the Official Ballot for the consolidated special elections, and, after the Community Facilities District has.incurred a bonded indebtedness.and issued bonds therefor,.to annually levy special taxes on taxable property within-the Community Facilities District in an amount suffcient to pay the principal of and interest on the bonds including funding a reserve fund, and to pay for maintenance, repair and replacement of public facilities, at the special tax rates and pursuant to the methodology for determining and apportioning such special taxes which are set forth in Exhibit "A" to the Resolution of Formation adopted by the City Council on February 3, 2003, and an appropriations limit has been established for the Community Facilities District in the amount of$4,000,000. Section 4. Notice of Soecial Tax Lien. The City Clerk shall record a notice of special tax lien pursuant to Section 53328.3 of the California Government Code and Section 3114.5 of the California Streets and Highways Code.. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of February , 2003. Mayor ATTEST: APPROVED AS TO FORM: tl.ryI03 City Clerk J�ity Attom y Q REVIEWED AND APPROVED: INITIATED AND APPROVED City A f inistrator Director of Economic Development 4 PDA:2002 resolutions:CFD 2003-1 (Declaring Results of Election) RLS 2002-0669 Res. No. 2003-13- STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 3rd day of February 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio Cferk of the City Council of the City of Huntington Beach, California U CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK January 27,2003 Mayor and Members of the City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Ladies and Gentlemen: Pursuant to Section 53326 of the Government Code, I hereby agree to act as the election official to conduct the consolidated special elections within the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California. Pursuant to said Section 53326, I consent to the scheduling and conducting of said consolidated special elections of February 3, 2003. Sincerely, CONNIE BROCKWAY, City Clerk /k APPROVED AS TO FORM: B e_ City Att mey jmp/03memo/connie (Telephone:714-536-5227) RCA ROUTING SHEET INITIATING DEPARTMENT: ECONOMIC DEVELOPMENT SUBJECT: Approve the Formation of the City of Huntington Beach Community Facilities District No. 2003-01 (Huntington Center) and Adopt Resolutions COUNCIL MEETING DATE: February 3, 2003 . RCA ATTACHMENTS - STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the Cit Aftomeyj Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement Unbudget, over$5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Ap licable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED .-.: FORWARDED Administrative Staff J Assistant City Administrator Initial City Administrator Initial City Clerk ) EXPLANATION FOR RETURN OF ITEM: SpaceOnly) RCA Author: Runzel, Ext. 5224 r, Network Blitz Page 1 of 1 Ross, Rebecca From: Ross, Rebecca Sent: Thursday, February 13, 2003 10:35 AM To: Runzel, Carol Subject: RE: Conformed Copies of Resolutions Sure, Carol. Connie is assigning the follow up. We will get these to you as soon as possible. r Thanks, Rebecca -----Original Message----- From: Runzel, Carol Sent: Thursday, February 13, 2003 9:28 AM To: Ross, Rebecca Cc: Brockway, Connie Subject: Conformed Copies of Resolutions Hi Rebecca, When executed, could you please have three conformed sets of the last four approved resolutions sent to me? This was item D-1 on February 3rd. They were Agency Resolutions: 2003-10, -11, -12, & -13. As always, thank you. - Carol Runzel, Econ Dev 2/13/2003 CITY j[ HU F!,,aG 0,� L,EAruri, CA 3 A io: 4 iry Formation of w Community Facilities District No. 2003-1 (Huntington Center) City Council Meeting February 3, 2003 D-1 =4 Purpose of CFD ♦ The Redevelopment Agency approved an Owner Participation Agreement (OPA) with Huntington Associates, LLC, Oct. 2, 2000. �,a ♦ The OPA provides for the formation of a CFD as a method for financing public improvements and reducing costs. ♦ The Agency has agreed to pay for certain costs through a Developer Advance of funds of up to $16.75 million if the Wards parcel is included, and up to $15 million without the Wards parcel. Slide 2 Late N mmv!m' Wt 1 oft 1 Purpose of CFD • A CFD allows a private party to borrow funds through the issuance of tax-exempt bonds. • Bond proceeds will be used to pay for public improvements and other eligible project costs. ♦ Bonds are repaid through a Special Property Tax levy on the property within the CFD. Slide 3 4 r _ Purpose of CFD X �- ♦ The proposed CFD covers only the Huntington Center property owned by Huntington Center Associates, LLC (excluding the Wards parcel owned by Sears) _- -------........ v CFD Zoo ---=�lj 1 � Hwnthi tonon z � iBl ppll V tp `o � w I Slide 4 2 CFD Special Property Tax K. d • The Special Property Tax levy will be on the real property interest of Huntington Center Y Associates, LLC. • The property owner is solely responsible for paying the bonds through a property tax levy. ♦ The City serves as the conduit for issuance of the Bonds. • The City has no obligation for repayment of the Bonds. Slide 5 Reasons/Benefits for ` CFD Formation • CFD Bonds will allow the Developer to secure a lower Cost Source of Funds for the Developer Advance. ♦ Since the Developer Advance is to be repaid from a portion of the Huntington Center public revenues (Property Tax Increment & Sales Tax), the City/Agency will be the beneficiaries of the lower interest rate. Slide 6 3 CFD Formation ♦ Tonight's actions will finalize the formation of the CFD. — Hold the Public Hearing Approve the Community Facilities District Report Approve establishing the CFD and establish its boundaries. — Request the City Clerk to conduct a special election on the formation of the Community Facilities District — Determine the necessity for the CFD and call for a Special Election of the property owners to incur the indebtedness Conduct the Special Election &Approve the Results Slide 7 Next Steps r� 7 ♦ Acquisition Agreement for the Public Improvements will be considered by a separate City Council action. ♦ Bonds will be issued for the CFD by a separate City Council action. — The size of bond issue will be determined at that time. Slide 8 4 Recommended Actions R 'f ♦ Hold the Public Hearing c ♦ Approve the CFD Report ♦ Approve Resolution No. 2003-10 (Resolution of Formation) Establishing the CFD and establishing the boundaries i Slide 9 y Recommended Actions ♦ Approve Resolution No. 2003-11 Determining the Necessity for the City of Huntington Beach ` j Community Facilities District No. 2003-1 (Huntington Center) to incur a bonded indebtedness in an aggregate principal amount not to exceed $30 million for providing public facilities within and for the district and calling for a Special Election for the Community Facilities District on a proposition for incurring such bonded indebtedness Slide 10 5 Recommended Actions ♦ Approve Resolution No. 2003-12 Calling for a Special Election and submitting to the voters of the District j the Propositions regarding the annual levy of special taxes and payment of principal and interest on bonds and establish the appropriations limit. ♦ Approve Resolution No.2002-13 Declaring the Results of the Special Election Slide 1 I x� r The End Slide 12 6 OFFICIAL BALLOT CONSOLIDATED SPECIAL ELECTIONS FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.-2003-1 (HUNTINGTON CENTER) COUNTY OF ORANGE STATE OF CALIFORNIA To vote,mark a cross(+)in the voting square after the word"YES" or after the word "NO." All marks otherwise made are forbidden. If you wrongly mark,tear, or deface this ballot, return it to the City Clerk of the City of Huntington Beach and obtain another. PROPOSITION A: Shall a bonded indebtedness in an original aggregate principal amount not to exceed$30,000,000 be incurred by and for City of Huntington Beach Community. Facilities District No.2003-1 (Huntington Center), County ofOrange,.StateofCalifor-- nia(the "Community Facilities District"), for a maximum term of not more than 35 years and with interest at a rate or rates not.to exceed the maximum interest rate permitted by law, for the purposes of providing; (1) The types of public facilities listed in the Resolution of Formation of the District adopted February 3, 2003, and (2) The [Proposition A] incidental expenses which will be incurred are all costs associated with the creation of the Community Facilities District, issuance of the YES bonds thereof, the determination of the amount of and collection of taxes,and the payment of taxes, and costs otherwise incurred in order NO to carry out the authorized purposes of the Community Facilities District? Huntington Center Associates, LLC. 43.86 acres, 44 votes RVPL'B\BJS\646643 Pagel of 2 NMEIER 4E1,55 i it I i City Clerk of the City of Huntington Beach 2000 Main Street I. Huntington Beach, CA 92648 THIS ENVELOPE CONTAINS AN> OFFICIAL BALLOT TO BE OPENED ONLY BY THE CITY CLERK OF THEN CITY'.OF HUN TING TON BEACH I I - PROPOSITION B: Shall special taxes be levied annually on taxable property within City of Huntington •Beach Community Facilities District No.2003-1 (Huntington Center),County ofOrange, State of California (the "Community Facilities District"), to pay the principal of and interest on the bonds of the Community Facilities District issued and sold to finance and refinance those purposes specified in Proposition A of this ballot,to establish and replenish the reserve fund for the bonds, or to accumulate funds for future bond payments, including any amount required by federal law to be rebated to the United States with regard to the bonds, and to pay expenses incidental thereto and to the levy and collection of the special taxes, so long as the special taxes are needed to pay the principal of and interest on the bonds and for such other purposes, together with the payment of,and the provisions of repair and replacement reserves for, [Proposition B] maintenance of any of the publicly owned facilities financed with the proceeds of such bonds, at the special tax rates and pursuant to the YES -+- method of apportioning the special taxes set forth in Exhibit "A" to the Resolution of Formation adopted by the City Council of the City NO of Huntington Beach on February 3, 2003? PROPOSITION C: Shall an appropriations limit, as defined [Proposition C] by subdivision (h) of Section 8 of Article XIII B of the California Constitution,be established for City of Huntington Beach Community YES —}- Facilities District No.2003-1(Huntington Center),County ofOrange, State of California, in the amount of$4,000,000? NO PROPOSITION A AND PROPOSITION B ARE SUBJECT TO THE ACCOUNTABILITY MEASURES PRESCRIBED IN SECTION 53410 OF THE GOVERNMENT CODE OF THE STATE OF CALIFORNIA. Huntington Center Associates, LLC. 43.86 acres, 44 votes RVPUB\13JS\646643 Page 2 of 2 4 - • CERTIFICATION I, c kola fz hE�rtify that I am the authorized representative ofHuntington Center Associates, LLC., a Delaware corporation, the owner of all of the property included within the boundaries of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California(the "Owner"), and that I am authorized to vote the .Official Ballot to which this certification is attached. I further certify that in voting said ballot it was my intent, as well as the intent of the Owner, to vote all votes to which the Owner is entitled on Propositions A, B and C set forth in said ballot as marked in the voting square opposite each proposition. I further certify that the Owner owns 43.86 acres of land within said community facilities district, and that in voting said ballot I intended to vote each vote to which such acreage would entitle the Owner in the manner marked on said ballot. I certify that this certification was executed on February 3, 2003, at a s , California. HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware limited liability company By: Huntington Management Ent., LLC, a Delaware limited liability company, its Manager By: BMLF/Huntington, LLC, a Delaware limited liability company, its Manager By: — Title: Huntington Center Associates, LLC. 43.86 acres, 44 votes RVPUB\BJS\646643 Page 3 of 2 BEST BEST & KRIEGER LLP A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS INDIAN WELLS LAWYERS SAN DIEGO (750) 568-251 1 3750 UNIVERSITY AVENUE (619) 5 25-1 300 POST OFFICE BOX 1 028 ONTARIO RIVERSIDE. CALIFORNIA 92 502-1 02 8 ORANGE COUNTY (909) 989-8584 (909) 686-1450 (714) 939-5940 (909) 686-3083 FAX BBKLAW.COM SACRAMENTO (91 6) 974-3400 January 31, 2003 T 1.' 7 4•, J VIA OVERNIGHT DELIVERY o-I- r Connie Brockway City Clerk City of Huntington Beach �, 2000 Main Street Huntington Beach, CA 92648 Re: Community Facilities District No. 2003A (Huntington Center) Dear Connie: Enclosed for your records is the original Waiver from Huntington Center Associates, LLC. Please have this document available at the public hearing on February 3. Sincerely yours, Barbara J. Skinner Legal Assistant for BEST BEST & KRIEGER LLP BJS:bjs Enclosure cc: Carol Runzel Lax C ' e to m. at ca ti, ' RVPUB\BJS\647019 / WAIVER OF CERTAIN ELECTION PROCEDURES WITH RESPECT TO LANDOWNER VOTER ELECTIONS WITHIN AND FOR COMMUNITY FACILITIES DISTRICT NO.2003-1 (HUNTINGTON CENTER)OF THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA The undersigned, on behalf of Huntington Center Associates, LLC, a Delaware limited liability company(the"Owner"),hereby certifies to the City of Huntington Beach(the"City"), as follows: 1. The undersigned is authorized and possesses all-authority necessary to execute this waiver on behalf of the Owner and to vote on behalf of the Owner in the consolidated special elections to be held within the territory of proposed Community Facilities District No.2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California (the 'District"). 2. The Owner is the owner of parcels of land located within the territory of the District consisting of a total of 43.86 acres. 3. There are currently no registered voters residing within the territory of the District;and there will not have been 12 persons registered to vote in the territory of the District for each of the 90 days preceding the close of the public hearing which is to be conducted by the City Council of the City(the "City Council") on February 3, 2003. 4. The Owner received mailed notice regarding said public hearing, the establishment of the District,the apportionment and levy of special taxes on taxable property therein to pay the principal of and interest on bonds thereof, and the necessity of the District incurring a bonded indebtedness in an aggregate principal amount not to exceed $30,000,000. The Owner waives the time limitation which applies for mailing of the notice of hearing at least 15 days before the public hearing as set forth in Section 53322.4 of the Government Code. 5. The Owner has received necessary and relevant information from the City regarding the establishment of the District, the levy of the special taxes on taxable property therein, and the incurring of a bonded indebtedness by the District, and the City has made available to the Owner adequate opportunity to obtain such information. The Owner has received a copy of Resolution No. 2003-3, adopted by the City Council on January 6, 2003, with all exhibits attached thereto, including Exhibit "A", the Rate and Method of Apportionment of Special Taxes for the District. 6. The undersigned is informed and understands that in order for the District to incur a bonded indebtedness in an aggregate principal amount not to exceed $30,000,000 and for the City Council to annually levy special taxes on taxable property within the District to pay the principal of and interest on bonds issued to represent such bonded indebtedness, it is necessary that RVPUMB.M643793 1 ti elections be held within the territory of the District on(i) the proposition of the District incurring a bonded indebtedness in an amount not to exceed $30,000,000,-and(ii)the proposition with respect to the levy of special taxes on the taxable property within the District to pay the principal of and- interest on the bonds thereof, and that.two-thirds of the votes cast upon such propositions must be -in.favor thereof:-The undersigned,is.further..':informed.and:understands that-the City.intends.to.also submit to the qualified electors-of,the,-District:.iny,said elections the- proposition-of-whether-an appropriations limit.shall be established for.the District in the amount of $4,000,000,-,and.to - consolidate the elections on all such propositions. 7. - The undersigned is-further informed and understands that,.pursuant to Section 53326 of the Government Code, elections on such propositions must be held at the next ._ general election-or at a special election to be held at least 90 days, but not more than 180 days, following the adoption by the City Council of the resolution of formation establishing the District, which is expected to occur on February 3, 2003, unless such time limits are waived with the unanimous consent of the qualified electors of the District and the concurrence of the City Clerk of the City. The Owner desires that the time limits for conducting said elections set forth in said Section 53326 be waived, and that said elections be held prior to March 31, 2003. 8. The Owner waives the time limits set forth in Section 53326 of the Government.Code with respect to said elections and.consents to the holding of said elections prior . to March 31, 2003. The Owner further consents to the holding of said elections on the same date as the aforementioned public hearing and the adoption of the aforementioned resolution of formation or as soon thereafter as the City Clerk determines is possible. 9. The Owner waives the mailing by the City Clerk to the Owner of a (i) synopsis of the measures to be included in the official ballot for said elections pursuant to Section 12111 of the Elections Code and (ii) a notice of said elections and a sample ballot pursuant to Sections 4101 and 4102 of the Elections Code, and compliance with other applicable notice require- . ments of the Elections Code. 10. The Owner further waives an impartial analysis by the City Attorney of the ballot measures to be contained in the Official Ballot for said elections pursuant to Section 9280 of the Elections Code, and further waives ballot arguments and rebuttals pursuant to Sections 9281 to 9287, inclusive, and 9295 of the Elections Code. The Owner further waives mailing of a statement pursuant to Section 9401 of the Elections Code. 11. The Owner further waives mailing of the official ballot by the tenth (IOth) day before the date of said elections pursuant to Section 4101 of the Elections Code and receipt of a ballot pamphlet as required by Section 3023 of the Elections Code, and consents to the City Clerk delivering the official ballot to be voted by the Owner to the Owner on any date prior to the date of said elections, including on the date of said elections if they are held on the same date as the public hearing. 12. The undersigned hereby represents that compliance with the procedural requirements for conducting said elections,including the mailing and receipt ofthe notices,statements RVPUB\BJS\643793 -2- and other documents waived by paragraphs 9, 10 and 11 above and the time limitations which apply in connection with the-scheduling and mailing notices of said elections are unnecessary because the undersigned has received information regarding the establishment of the District, the levy of special taxes on taxable property therein to pay the.principal of and interest on.the bonds.thereof,-and.the necessity of the District incurring�a!bonded indebtedness:in-an.•aggregate•principal amount..not-,to- - =. exceed $30,000,000.to=enable himAo:properly.vote the Official:Ballot.for<such:special=electi_ons.on the propositions mentioned in paragraph 6 above. The undersigned.certifies that the foregoing is true a d correct-and that he.executed this document on 2003, at e California. OWNER: HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware limited liability company By: . Huntington Management Ent., LLC, a Delaware limited liability company, its Manager By: BMLF/Huntington, LLC, a Delaware limited liability company, its Manager By: — Title: l/ RVPUB\BJS\643793 -3- BEST BEST & KRIEGER LLP A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS INDIAN WELLS LAWYERS SAN DIEGO (760) 568-261 1 3750 UNIVERSITY AVENUE (61 9) 525-1 300 - POST OFFICE BOX 1 028 ONTARIO RIVERSIDE, CALIFORNIA 92502-1028 ORANGE COUNTY (909) 989-8584 (909) 686-1 450 - - (7 1 4) 939-5940 (909) 686-3083 FAX BBKLAW.COM SACRAMENTO (916) 974-3400 January 27, 2003 VIA OVERNIGHT DELIVERY cam• Connie Brockway City Clerk City of Huntington Beach 2000 Main Street y r: Huntington Beach, CA 92648 (' } Re: Community Facilities District No. 2003-1 (Huntington renter) Dear Connie: Enclosed for your records are-the originals of the following documents: (1) A letter from.the Registrar of Voters certifying that there are no registered voters residing within the boundaries of City of Huntington Beach Community Facilities District No. 2003A(Huntington Center). (2) A Statement of Engineer with respect to property ownership within City of .Huntington Beach Community Facilities District No. 2003-1 (Huntington Center). (' ) Also enclosed is a Statement as to the canvass of ballots and the results of the consolidated special elections. Please sign this document and have it available at the public hearing on February 3, 2003. The following documents should also be available at the public hearing on February 3 (1) A Declaration of Mailing of the Notice of Hearing. (2) Copies of an Affidavit of Publication of the Notices of Hearing. - (3) A copy ofthe boundary map which was recorded in the Office ofthe Recorder of the County of Orange on January 9, 2003 as Instrument No. 2003-000028911. RXPliB\BJS\646671 LAW OFFICES OF BEST BEST & KRIEGER LLP Connie Brockway City Clerk January 27, 2003 Page 2 (4) A signed waiver which will be mailed to you under separate cover from Huntington Center Associates, LLC, prior to February 3. All of these documents should be retained in the official records regarding the proceedings for the formation of the community facilities district. Sincerely yours, Barbara J. Skinner Legal Assistant for BEST BEST&KRIEGER LLP BJS:bjs Enclosures cc: Carol Runzel RVPUB\BJS\646671 CERTIFICATE OF REGISTRAR OF VOTERS State of California ) ) ss. County of Orange ) I, ROSALYN LEVER, Registrar of Voters of said County, hereby certify that: I have been furnished a map describing the boundaries of proposed Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California. On December 18, 2002, 1 conducted, or caused to be conducted, a review of the voter registration records of the County of Orange for the purpose of determining the number of voters registered to vote within the boundaries of proposed Community Facility District No. 2003-1 (Huntington Center). As of December 18, 2002, there were no registered voters residing with the boundaries of proposed Community Facilities District No. 2003-1 (Huntington Center). WITNESS my hand and official seal this 191h of December, 2002. • � K. ROSALYN kEVER ti Registrar of Voters • v STATEMENT OF SPECIAL TAX CONSULTANT WITH RESPECT TO PROPERTY OWNERSHIP WITHIN THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER), COUNTY OF ORANGE, STATE OF CALIFORNIA I, Michael D. Swan, employed by Psomas, the special tax consultant for the proceedings for the establishment of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center),County of Orange,State of California(the"Community Facilities District"), state as follows: (1) I prepared the rate and method of apportionment of special tax and supervised the preparation of the boundary map for the Community Facilities District. I am,therefore, familiar with the extent of the property which is included within the proposed Community Facilities District. (2) I have reviewed the legal description attached to the Preliminary Report issued by Chicago Title Company of Irvine dated October 22, 2002 (i.e. Order No. 23808536 - M08), which states that fee title to the property described therein is vested in Huntington Center Associates, LLC., a Delaware liability company. Said Preliminary Report describes all of the property located within the boundaries of the Community Facilities District. (3) The approximate gross acreage of the property within the boundaries of the Community Facilities District is 43.86 acres. (4) The aggregate net taxable acreage of the property described in the legal description attached to said Preliminary Report,excluding dedicated street rights-of way,and which is owned by the owner named therein is as follows: OWNER ACREAGE Huntington Center Associates,LLC 43.86 Dated: January L, 2003 ichael D. Swan RVPUB\B1S\645426 DECLARATION OF MAILING NOTICES OF HEARING COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, City Clerk of the City of Huntington Beach, County of Orange, State of California, hereby declare that on the_a day of January, 2003, pursuant to the provisions of law applicable herein,I caused copies of the attached Notices of Hearing on Resolution ofintention to Establish Proposed Community Facilities District No.2003-1(Huntington Center)and Notice of Hearing on Resolution Declaring Necessity to.Incur Bonded Indebtedness for Proposed Community Facilities District No.2003-1 (Huntington Center)to be placed in an envelope addressed to the owner of all of the real property within Community Facilities District No.2003-1 (Huntington Center),sealed such envelope and deposited it in the United States mail at Huntington Beach,Califor- nia, with postage thereon fully prepaid; and that there is a regular communication by mail between the place of mailing and the places so addressed. Copies of the Notices of Hearing and a list containing the name and address of the property owner to whom the notices were mailed are attached hereto. I declare under penalty of perjury that the foregoing is true and correct. Executed this 1 7607 day of January, 2003, at Huntington Beach, California. Connie Brockway City Clerk, City of Huntington Beach RVPUB\BJS\645437 BARBARA J. SKINNER LEGAL ASSISTANT (909)686-1450 FAX (909)686.3083 400 MISSION SQUARE LAW OFFICES 3750 UNIVERSITY AVENUE P.O.BOX 1028 BEST, BEST & KRIEGER RIVERSIDE,CALIFORNIA 92502 COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH LIST OF PROPERTY OWNERS Huntington Center Associates, LLC c/o JH Snyder.Development 5757 Wilshire Boulevard, Penthouse 30 Los Angeles, CA 90036 Attention: Mike Wise { RVPUB\13JS\645437 -2- CONFORMED COPY Nul Comm-d-nu Or -19 PROPOSED BOUNDARIES OF ACCEPTIDµDFIED HE CITY OF HUNTINGTON BEACH R OFTHE, CITY OF HUNTNCTON BEACH COMMUNITY FACILITIES DISTRICT nAm jarinuaN g:zM No. 2003-1 R nQ - (HUNTINGTON CENTER) FREDTm Q DAY COUNTY OF ORANGE NBooK_ PAOE11APB DF STATE OF CALIFORNIA DISTRICTS, µDR ffICE OF THE DISRtlCie,w THE OFFICE of THE COUNTY RECORDER OF YHe COUNTY OF ORANGE, STATE OF CAUFORAA .GUM QAW r ...... COUNTY CLERIURE00RDER Dew I �,yw1�II[JlI1Je _ NW g'y W I FILED IN THE OFFICE OF THE CRY CLERK / -8�Y61 i OF TH.jCNY Y OF HUMPIGTON BEACH THIS J ! DAOF- ;Taw=; .2WX µR��3gg0Y0.�0g0' .C��( DELTA 60�'�B' I CONIDB BROCNWAY.THE C CLERK& TAN.1 �p,I► THE CITY OF HUNTINGTON BEACH. nl®. - �8�. I I HEREBY CERTIFY THAT THE WITHIN NAP . 444 SHOWING THE BOUNDARIES OF THE CITY OF HUNTINGTON REACH CONOYUNRY FACILITIES NCENTER) DISTRICT R)COUNTOF TAN.�H' "• u w 1 ORANGE. STATE CENIEA)(FORTY W ORANGE.STATE OF CALIPDiWIA.WAS q APPROVED BY THE CRY COUNCIL OF THE I CITY OF HUNTINGTON BEACH AT % 37.00 REGULAR uEfiTNO/i�HEREOF HELD ON ``� Sp,OO' THE�jGAY OPA"""'7r IDOJ BY ITS `�\ ..Ame R[SOLUTION NO. j-Y COME BROCIONAY.THE CITY GLERKOF /I THE cm OF HUN INOTON BEACH o- nvca l I I I PAA41 T .NICE N I F;� N —� IAleb 1 ��y AAgpt��7�9 I P CT N0.706S-I. CENT OP BEAMS:OFED CENTERLINE OF EDIN06i AVE 8ER10 NAB98•JOW PER PARCEL MAP Na SO-ZO is FILED IN BOOK 256,PAGES 4046,OF PARCEL MAPS N THE OFFICE OF THE OOUHTY RECORDER OF ORANGE COUNTY.CAUFORNI& � 1 I LOCAT=MAP h I `a PROJECT LL`'__1�__—___ TINCTON BEA01 FL000 CONTROL—ANN- ' SITE } P GOP 2W 4OD _ ,Q GRA ICSOALE ..� LEGAL DEBOUPDON: -® PARCELS 2 THROUGH B AS SHOWN ON PARCEL NNAP NO.88-M omr� FILED IN BOOK255,PAOEB 40d6.OF PARCEL NAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY.CK POWAA SHEET 1 OF 1 "Iff CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK January 27, 2003 Mayor and Members of the City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Ladies and Gentlemen: Pursuant to Section 53326 of the Government Code, I hereby agree to act as the election official to conduct the consolidated special elections within the City of Huntington Beach Community Facilities District No. 20034 .(Huntington Center), County of Orange, State of California. Pursuant to said Section 53326, 1 consent to the scheduling and conducting of said consolidated special elections of February 3, 2003. Sincerely, CONNIE BROCKWAY, City Clerk /k APPROVED AS TO FORM: B c City Att mey jmp/03memo/connie (Telephone:714-536-5227) J� City of Huntington Beach P. O.Box 190-2000 Main Street * Huntington Beach,California 92648 ` HUNTINGTON BEACH From the desk of Liz Ehring Deputy City Clerk t Telephone: (714) 374-1559 Fax: (714) 374-1557 i 1- 71 e BEST BEST & KRIEGER LLP A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS LAWYERS 3750 UNIVERSITY AVENUE RANCHO MIRAGE POST OFFICE BOX 1028 (760) 568-261 1 RIVERSIDE. CALIFORNIA 92 502-1 028 SAN DIEGO TELEPHONE (909) 686-1 450 (6 1 9) 525-1 300 ONTARIO TELECOPIER (909) 686-3083 (909) 989-8584 WWW.BBKLAW.COM January 23, 2003 Connie Brockway City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: Community Facilities District No. 2003-1 (Huntington Center) Dear Connie- We are enclosing a letter to be typed on City letterhead stationery wherein you agree to act as the election official and consent to the scheduling and conducting of the special elections on February 3, 2003. Please prepare this letter and have it available at the public hearing on February 3, 2003. We would also appreciate receiving a copy for our file. Yours sincerely, 1 j•V Barbara Skinner Legal Assistant for BEST BEST & KRIEGER LLP BJS:bjs Enclosure cc: Carol Runzel RVPUB\BJS\646538 I [To be typed on City letterhead stationery] February 3, 2003 Mayor and Members of the City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648. Re: City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Ladies and Gentlemen: Pursuant to Section 53326 of the Government Code, I hereby agree to act as the election official to conduct the consolidated special elections within and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California. Pursuant to said Section 53326, I consent to the scheduling and conducting of said consolidated special elections on February 3, 2003. Sincerely, City Clerk City of Huntington Beach RVPUB\BJS\646542 AA € y A LJ t D � U, p MEETING DATE: January 211 2003 DEPARTMENT l► REQUESTING: t ` Economic Development l 11 -1d Community G� - Econcomic Development r amount not to e � � �'J � 's District .. f - / - L Poe. , 2003 AD IV---- STRATION: APPROVED BY: Ray Silver City Administrator 1/2/2003 3:29 PM NOTICE OF PUBLIC HEARING CITY OF HUNTINGTON BEACH NOTICE OF PUBLIC HEARING ON RESOLUTION TO INCUR BONDED INDEBTEDNESS IN AN AMOUNT NOT TO EXCEED $30,000,000 FOR PROPOSED COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER)OF THE CITY OF HUNTINGTON BEACH, CALIFORNIA NOTICE IS HEREBY GIVEN that at 7:00 p.m.on February 3,2003,the City Council of the City of Huntington beach will conduct a hearing on Resolution No. 2003-4, adopted by said City Council on January 6,2003, in the City Council Chambers at the City Hall,2000 Main Street, City of Huntington Beach, California. Said resolution determines that it is necessary for proposed Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California, to incur a bonded indebtedness in an amount not to exceed $30,000,000. Resolution No. 2003-4 provides in summary as follows: 1. The City Council declares that it is necessary that bonded indebtedness be incurred by and for proposed Community Facilities District No. 2003-1 (Huntington Center)of the City of Huntington Beach, County of Orange, State of California,in an aggregate principal amount not to exceed $30,000,000 for the purpose of financing the design, acquisition, construction, equipping and furnishing of the public facilities described in Resolution No.2003-3,the Resolution of Intention. 2. The amount of the proposed bonded indebtedness shall include all costs and estimated costs incidental to,or connected with,the accomplishment of the purposes for which the proposed bonded indebtedness is to be incurred,including,but not limited to,the estimated costs of construction and acquisition of the public facilities which are proposed to be provided for the community facilities district. 3. All parcels of taxable property within the proposed community facilities district shall be subject to the levy of special taxes to pay the principal of and interest on the aggregate principal amount of the bonds of the community facilities district which may be issued and sold to finance public facilities for the benefit of parcels of property within the community facilities district. 4. A public hearing on the proposed bonded indebtedness for said proposed community facilities district shall be held at 7:00 p.m. on February 3, 2003 in the City Council Chambers of the City of Huntington Beach,2000 Main Street,Huntington Beach, California. Said hearing shall be conducted concurrently with the hearing on the establishment of the proposed community facilities district. A copy of Resolution No.2003-4 maybe reviewed or obtained at the office of the City Clerk of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California. RVPUB\BJS\643467 NOTICE IS FURTHER GIVEN that at the time and place of said hearing all interested persons, including all persons owning property in the proposed community facilities district, for or against the proposed bonded indebtedness, will be heard. DATED: January 7, 2003. /s/ COB W' Cit hAi y of H ngton Beach RVPU13\13M643467 -2- NOTICE OF PUBLIC HEARING CITY OF HUNTINGTON BEACH NOTICE OF PUBLIC HEARING ON RESOLUTION OF INTENTION TO ESTABLISH PROPOSED COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH, CALIFORNIA NOTICE IS HEREBY GIVEN that on January 6, 2003,the City Council of the City of Huntington Beach adopted Resolution No. 2003-3,the resolution of intention with respect to the establishment of proposed Community Facilities District No. 2003-1 (Huntington Center)of the City of Huntington Beach, County of Orange, State of California, and that a public hearing on said resolution of intention and with respect to the establishment of said community facilities district will be held at 7:00 p.m. on February 3, 2003, in the City Council Chambers located at the City Hall, 2000 Main Street, Huntington Beach, California. Resolution No. 2003-3 provides in summary as follows: 1. The name proposed for the community facilities district is "Community Facilities District No.2003-1 (Huntington Center)of the City of Huntington Beach, County of Orange,State of California." 2. The boundaries of the proposed community facilities district are described and shown on the map entitled"Boundaries of Community Facilities District No.2003-1 (Huntington Center)of the City of Huntington Beach,County of Orange, State of California,"which is on file with the City Clerk. 3. The types of public facilities proposed to be provided for and financed by the proposed community facilities district are: (a) Street improvements including costs of condemnation,removal,demolition,grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains,drainage storage ponds and drainage channels including landscaping,if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public parking facilities including a parking structure. (e) Water distribution facilities, including fire hydrants and reclaimed water and water storage facilities. RVPUB\BJS\643459 (f) Street signalization and signage, including traffic fees. (g) Fire facilities including structures and capital equipment. (h) Acquisition of land, rights-of-way and easements necessary for any of the facilities specified in paragraphs (a) through(i) above. (i) The incidental expenses which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof,(ii)all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof, the determination of the amount of and collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and (iii) any other expenses incidental to the construction,acquisition,completion,and inspection of such facilities. (2) The proposed community facilities district shall also pay for maintenance of,and the provisions of repair and replacement reserves for,any of the publicly owned facilities listed in clause (1) of this Section 4. 4. Special taxes sufficient to pay for all such facilities, to pay the principal of and interest on the bonds of the proposed community facilities district and the annual administrative expenses of the City and the proposed community facilities district in determining, apportioning, levying and collecting such special taxes, and in paying the principal of and interest on such bonds, and the costs of registering,exchanging and transferring such bonds,secured by the recordation of a continuing lien against all taxable or nonexempt property in the proposed community facilities district,and maintaining a reserve fund for such bonds,and paying any amounts that must be paid to the United States in order to preserve the tax-exempt status of such bonds shall be annually levied within the proposed community facilities district. Additionally, there shall be levied special taxes sufficient to pay for the maintenance,repair and replacement of such public facilities.The rates and method of apportionment-of said special taxes shall be as set forth in Exhibit "B" to Resolution No.2003-3. The maximum amounts of special taxes which maybe annually levied on parcels within the proposed community facilities district which are used for private residential purposes are as follows: MAXIMUM SPECIAL TAX The Maximum Special Tax for the leasehold interests in Taxable Property in CFD No.2003-1 shall be the greater of(1) $65,050 per Acre or(2)the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; RVPUB\BJS\643459 Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005,and for each Fiscal Year thereafter,the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100%of the Maximum Special Tax, as determined by reference to Section C,above,as needed to satisfy the Special Tax Requirement. 5. The officers of the City who will be responsible for providing the proposed types of public facilities to be provided within and financed by the proposed community facilities district,if it is established,shall study the proposed district,and,at or before the time of said hearing,file a report or reports with the City Council containing a brief description of the public facilities by type which will in their opinion be required to adequately meet the needs of the proposed community facilities district and their estimate of the fair and reasonable cost of providing those public facilities and the incidental expenses to be incurred in connection therewith. Such reports shall be made a part of the record of the hearing. 6. Other property within the boundaries of the City may be annexed into the proposed community facilities district upon the condition that parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed. 7. The consolidated special elections on(i)the proposition of the proposed community facilities district incurring a bonded indebtedness in an amount not to exceed$30,000,000 (ii) the proposition with respect to the levy of special taxes on the land within the community facilities district to pay the principal of and interest on the bonds thereof and the maintenance, repair and replacement of the public facilities, and(iii)the proposition with respect to the establishment of an appropriations limit for the community facilities district in the amount of $4,000,000, if the community facilities district is established and such consolidated special elections(the"consolidated special elections") are held, shall be conducted as a mail ballot election. If at least 12 persons have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the public or protest hearing, the vote in the consolidated special elections shall be by the registered voters of the community facilities district with each voter having one vote. In that event,the consolidated special RVPUB\13JS\643459 -3- elections shall be conducted by the Registrar of Voters of the County of Orange and shall be held on a date selected by the City Council and the ballots for the consolidated special elections shall be distributed to the qualified electors of the community facilities district by mail with return postage prepaid, and the consolidated special elections shall be conducted as a mail ballot election. If at the time of the close of the protest hearing less than 12 persons have been registered to vote within the territory of the community facilities district, the vote shall be by the landowners of the community facilities district, with each landowner of record at the close of the protest hearing having one vote for each acre or portion of an acre of land that he or she owns within the community facilities district. In that event, the consolidated special elections shall be conducted by the City Clerk. The ballots for the consolidated special elections shall be distributed to the qualified electors by the City Clerk by mail with return postage prepaid, or by personal service. The City Clerk shall mail to each qualified elector an official ballot, and shall also mail to all such qualified electors other required election documents, including a return identification envelope with prepaid postage thereon addressed to the City Clerk for the return of voted official ballots. Resolution No.2003-3 contains other provisions which are not summarized above. A copy of Resolution No. 2003-3 may be reviewed or obtained at the office of the City Clerk of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California. NOTICE IS FURTHER GIVEN that at the hearing the testimony of all interested persons or taxpayers for or against the establishment of the community facilities district,the extent of the district, or the furnishing of specified types of public facilities or services will be heard. If 50 percent or more of the registered voters,or six registered voters,whichever is more,residing within the territory proposed to be included in the proposed community facilities district or the owners of one-half or more of the area of the land in said territory and not exempt from the levy of special taxes,file written protests against the establishment of the proposed community facilities district,and protests are not withdrawn so as to reduce the value of the protest to less than a majority,no further proceedings to create the community facilities district or to levy the specified special taxes shall be taken for a period of one year from the date of the decision of the City Council. If majority protests of the registered voters or of the landowners are only against the furnishing of a specified type or types of public facilities or services within the community facilities district, or against levying a specified special tax, those types of facilities or services or the specified special tax will be eliminated from the resolution of formation establishing the community facilities district. DATED: January 7, 2003. /s/ CONNIE BROCKWAY City Clerk of the City of Huntington Beach RVPUB\13JS\643459 -4- NOTICE OF PUBLIC HEARING CITY OF HUNTINGTON BEACH .NOTICE OF. PUBLIC HEARING :ON RESOLUTION .OF INTENTION_ TO ESTABLISH PROPOSED COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH, CALIFORNIA NOTICE IS HEREBY GIVEN that on January 6,2003,the City Council of the City of Huntington Beach adopted Resolution No.2003-3,the resolution of intention with respect to the establishment of proposed Community Facilities District No. 2003-1 (Huntington Center)of the City of Huntington Beach, County of Orange, State of California, and that a public hearing on-said resolution of intention and with respect to the establishment of said community facilities district will be held at 7:00 p.m. on February 3, 2003, in the City Council Chambers located at the City Hall,.2000 Main Street,Huntington Beach, California. Resolution No. 2003-3 provides in summary as follows: 1. The name proposed for the community facilities district is "Community Facilities. District No.2003-1 (Huntington Center).of the City of Huntington Beach,.County of Orange,.State " of California." 2. The boundaries of the proposed community facilities district are described and shown on the map entitled"Boundaries of Community Facilities District No.2003-1 (Huntington Center)of the City of Huntington Beach,County of Orange,State of California,"which is on file with the City Clerk. 3. The types of public facilities proposed to be provided for and financed by the proposed community facilities district are: (a) Street improvements including costs of condemnation,removal,demolition,grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains,drainage storage ponds and drainage channels including landscaping,if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public parking facilities including a parking structure. (e) Water distribution facilities, including fire hydrants and reclaimed water and water storage facilities. RVPUB\B]S\643459 (f) Street signalization and signage, including traffic fees. (g) Fire facilities including structures.and capital equipment. (h) Acquisition of land, rights-of-way and easements necessary for any of the facilities specified in paragraphs (a) through(i) above. (i) The incidental expenses which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof,(ii)all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof, the determination of the amount of and collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and(iii) any other expenses incidental to the construction,acquisition,completion,and inspection of such facilities. (2) The proposed community facilities district shall also pay for maintenance of,and the provisions of repair and replacement reserves for,any of the publicly owned facilities listed in clause (1)of this Section 4. 4. Special taxes sufficient' to pay for all such facilities, to pay the principal of and; interest on the bonds of the proposed community facilities district and the annual administrative expenses of the City and the proposed community facilities district in determining, apportioning, levying and collecting such special taxes, and in paying the principal of and interest on such bonds, and the costs of registering,exchanging and transferring such bonds,secured by the recordation of a continuing lien against all taxable or nonexempt property in the proposed community facilities district,and maintaining a reserve fund for such bonds,and paying any amounts that must be paid to the United States in order to preserve the tax-exempt status of such bonds shall be annually levied within the proposed community facilities district. Additionally, there shall be levied special taxes sufficient to pay for the maintenance,repair and replacement of such public facilities.The rates and method of apportionment of said special taxes shall be as set forth in Exhibit "B" to Resolution No.2003-3. The maximum amounts of special taxes which may be annually levied on parcels within the proposed community facilities district which are used for private residential purposes are as follows: MAXIMUM SPECIAL TAX The Maximum Special Tax for the leasehold interests in Taxable Property in CFD No.2003-1 shall be the greater of(1) $65,050 per Acre or(2)the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; RVPUB\BJS\643459 Step 2: Multiply the total debt service determined.in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005,and for each Fiscal Year thereafter,the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100%of the Maximum Special Tax,as determined by reference to Section C,above,as needed to satisfy the Special Tax Requirement. 5. The officers of the City who will be responsible for providing the proposed types of public facilities to be provided within and financed by the proposed community facilities district,if it is established,shall study the proposed district,and,at or before the time of said hearing,file a report or reports with the City Council containing a brief description of the public facilities by type.which will in their opinion be required to adequately meet the needs of the proposed community facilities district and their estimate of the fair and reasonable cost of providing those public facilities and the incidental expenses to be incurred in connection therewith. Such reports shall be made a part of the record of the hearing. 6. Other property within the boundaries of the City may be annexed into the proposed community facilities district upon the condition that parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed. 7. The consolidated special elections on(i)the proposition of the proposed community facilities district incurring a bonded indebtedness in an amount not to exceed$3.0,000,000 (ii) the proposition with respect to the levy of.special taxes on the land within the community facilities . district to pay the principal of and interest on the bonds thereof and the maintenance, repair and replacement of the public facilities, and(iii)the proposition with respect to the establishment of an appropriations limit for the community facilities district in the amount of $4,000,000, if the community facilities district is established and such consolidated special elections(the"consolidated special elections") are held, shall be conducted as a mail ballot election. If at least 12 persons have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the public or protest hearing, the vote in the consolidated special elections shall be by the registered voters of the community facilities district with each voter having one vote. In that event,the consolidated special RVPUB\B!S\643459 _3_ elections shall be conducted by the Registrar of Voters of the County of Orange and shall be held on a date selected by the City Council and the ballots for the consolidated special elections shall be distributed to the qualified electors of the community facilities district.by mail with return postage prepaid, and the consolidated special elections shall be conducted as a mail ballot election. If at the time of the close of the protest hearing less than 12 persons have been registered to vote within the territory of the community facilities district, the vote shall be by the landowners of the community facilities district, with each landowner of record at the close of the protest hearing having one vote for each acre or portion of an acre of land that he or she owns within the community facilities district. In that event, the consolidated special elections shall be conducted by the City Clerk. The ballots for the consolidated special elections shall be distributed to the qualified electors by the City Clerk by mail with return postage prepaid, or by personal service. The City Clerk shall mail to each qualified elector an official ballot, and shall also mail to all such qualified electors other required election documents, including a return identification envelope with prepaid postage thereon addressed to the City Clerk for the return of voted official ballots. Resolution No.2003-3 contains other provisions which are not summarized above. A copy of Resolution No. 2003-3 may be reviewed or obtained at the office of the City.Clerk of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California. NOTICE IS FURTHER GIVEN that at the hearing the testimony of all interested persons or taxpayers for or against the establishment of the community facilities district,the extent of the district, or the furnishing of specified types of public facilities or services will be heard. If 50 percent or more of the registered voters,or six registered voters,whichever is more,residing within the territory proposed to be included in the proposed community facilities district or the owners of one-half or more of the area of the land in said territory and not exempt from the levy of special taxes,file written protests against the establishment of the proposed community facilities district,and protests are not withdrawn so as to reduce the value of the protest to less than a majority,no further proceedings to create the community facilities district or to levy the specified special taxes shall be taken for period of one year from the date of the.decision of the City Council. If majority protests of the registered voters or of the landowners are only against the furnishing of a specified type or types of public facilities or services within the community facilities district, or against levying a specified special tax, those types of facilities or services or the specified special tax will be eliminated from the resolution of formation establishing the community facilities district. DATED: January 7, 2003. /s/ CONNIE BROCKWAY City Clerk of the City of Huntington Beach RVPUB\BJS 643459 _4_ w , BEST BEST & KRIEGER LLP A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS INDIAN WELLS LAWYERS SAN DIEGO (760) 568-251 1 c 3750 UNIVERSITY AVENUE (619) 525-1 300 — POST OFFICE BOX 1028 ONTARIO RIVERSIDE, CALIFORNIA 92502-1028 ORANGE COUNTY (909) 989-8584 (909) 686-1 450 (949) 263-2600 (909) 686-3083 FAX BBKLAW.COM SACRAMENTO (9 1 6) 325-4000 BARBARA J. SKINNER BJSKINNER@BBKLAW.COM FILE No. 60306,00002 January 8, 2003 VIA OVERNIGHT MAIL Ms. Carol Runzel Assistant Project Manager Department of Economic Development City of Hunrington Beach P.O. Box 190 Huntington Beach, CA 92648 Re: Community Facilities District No. 2003-1 (Huntington Center) Dear Carol: We received your e-mail message advising that the date ofthe public hearing has been changed to February 3, 2003. It is our understanding that you will change the hearing date in the Notices that will be published and mailed to the property owner. The Notices should be mailed to the property owner no later than January 17 (15 days before the hearing date) and published on January 23, 2003 (no later than 7 days before the public hearing). We are enclosing a Declaration of Mailing of the Notices of Hearing for execution by the City Clerk. Please ask the City Clerk to execute this Declaration after the notices have been mailed to the property owner. Please forward copies of the proofs of publication and executed Declaration of Mailing for our record of these proceedings. The originals should be retained with the City's records of these proceedings. Sincerely yours, Barbara J. Skinner Legal Assistant for BEST BEST& KRIEGER LLP BJS:bjs Enclosures cc: Connie Brockway RVPUffiBJS\645537 ti . DECLARATION OF MAILING NOTICES OF HEARING COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, City Clerk of the City of Huntington Beach, County of Orange, State of California, hereby declare that on the _ day of January, 2003, pursuant to the provisions of law applicable herein,I caused copies ofthe attached Notices of Hearing on Resolution of Intention to Establish Proposed Community Facilities District No.2003-1 (Huntington Center)and Notice of Hearing on Resolution Declaring Necessity to Incur Bonded Indebtedness for Proposed Community Facilities District No. 2003-1 (Huntington Center)to be placed in an envelope addressed to the owner of all of the real property within Community Facilities District No. 2003-1 (Huntington Center), sealed such envelope and deposited it in the United States mail at Riverside,California,with postage thereon fully prepaid; and that there is a regular communication by mail between the place of mailing and the places so addressed. Copies of the Notices of Hearing and a list containing the name and address of the property owner to whom the notices were mailed are attached hereto. I declare under penalty of perjury that the foregoing is true and correct. Executed this day of January, 2003, at Huntington Beach, California. Connie Brockway City Clerk, City of Huntington Beach RVPUB\BJS\645437 f 'r J 'S 1 COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH LIST OF PROPERTY OWNERS Huntington Center Associates, LLC c/o JH Snyder Development 5757 Wilshire Boulevard, Penthouse 30 Los Angeles, CA 90036 Attention: Mike Wise RVPUB\13JS\645437 -2- MAYOR'S AGENDA FOR PUBLIC HEARINGS FOR _ COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH, CALIFORNIA 1. MAYOR OPENS PUBLIC HEARINGS. 2. MAYOR CALLS ON CITY CLERK FOR PROOF OF PUBLICATION AND MAILING OF NOTICES OF HEARINGS. 3. MAYOR CALLS FOR REPORT FROM PSOMAS WITH REGARD TO THE ESTABLISHMENT OF THE PROPOSED COMMUNITY FACILITIES DISTRICT, A BRIEF DESCRIPTION OF THE PUBLIC FACILITIES WHICH WILL BE REQUIRED TO ADEQUATELY MEET THE NEEDS OF THE COMMUNITY FACILITIES DISTRICT AND ESTIMATES OF COSTS OF PROVIDING THOSE PUBLIC FACILITIES. 4. MAYOR OPENS HEARINGS TO PROTESTS,COMMENTS AND QUESTIONS FROM INTERESTED PERSONS,INCLUDING PERSONS OWNING PROPERTY WITHIN THE PROPOSED COMMUNITY FACILITIES DISTRICT AND TAXPAYERS, WITH RESPECT TO THE ESTABLISHMENT OF THE COMMUNITY FACILITIES DISTRICT, THE PROPOSED METHOD OF DETERMINING AND APPORTIONING MAXIMUM AMOUNTS OF SPECIAL TAXES,AND THE PROPOSED BONDED INDEBTEDNESS FOR THE DISTRICT. 5. MAYOR INQUIRES OF CITY CLERK WHETHER ANY WRITTEN PROTESTS HAVE BEEN RECEIVED. 6. IF WRITTEN PROTESTS HAVE BEEN RECEIVED,MAYOR CALLS ON CITY CLERK AS TO WHETHER OR NOT THE WRITTEN PROTESTS CONSTITUTE A MAJORITY PROTEST PURSUANT TO SECTION 53324 OF THE GOVERNMENT CODE. 7. MAYOR INQUIRES OF CITY CLERK AS TO WHETHER THERE ARE ANY PERSONS REGISTERED TO VOTE WITHIN THE COMMUNITY FACILITIES DISTRICT,AND,IF SO, THE NUMBER THEREOF. 8. MAYOR INQUIRES OF CITY CLERK IF WRITTEN CONSENTS TO HOLDING THE COMMUNITY FACILITIES DISTRICT ELECTIONS ON FEBRUARY 3, 2002 HAVE BEEN RECEIVED FROM ALL LANDOWNERS WITHIN THE COMMUNITY FACILITIES DISTRICT. 9. MAYOR INQUIRES OF CITY CLERK IF SHE CONCURS IN THE HOLDING OF THE SPECIAL ELECTIONS FOR THE COMMUNITY FACILITIES DISTRICT ON FEBRUARY 3, 2003. R V PUB\BJS\646490 10. IF A MAJORITY PROTEST HAS NOT BEEN FILED(WRITTEN PROTESTS AGAINST THE ESTABLISHMENT OF THE COMMUNITY FACILITIES DISTRICT FILED BY THE OWNERS OF ONE-HALF OR MORE OF THE AREA OF THE LAND PROPOSED TO BE INCLUDED IN THE COMMUNITY FACILITIES DISTRICT), THE CITY COUNCIL MAY PROCEED TO ESTABLISH THE COMMUNITY FACILITIES DISTRICT BY ADOPTING THE FOLLOWING RESOLUTIONS: (a) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ESTABLISHING COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) OF THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AND ESTABLISHING THE BOUNDARIES THEREOF (b) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DETERMINING THE NECESSITY FOR COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) TO INCUR A BONDED INDEBTEDNESS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000 FOR PROVIDING PUBLIC FACILITIES FOR THE COMMUNITY FACILITIES DISTRICT AND CALLING A SPECIAL ELECTION FOR THE COMMUNITY FACILITIES DISTRICT ON A PROPOSITION FOR INCURRING SUCH BONDED INDEBTEDNESS (c) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH CALLING SPECIAL ELECTIONS AND SUBMITTING TO THE VOTERS OF COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) PROPOSITIONS WITH RESPECT TO THE ANNUAL LEVY OF SPECIAL TAXES WITHIN THE COMMUNITY FACILITIES DISTRICT TO PAY PRINCI- PAL AND INTEREST ON BONDS OF THE COMMUNITY FACILITIES DISTRICT WHICH MAY BE ISSUED AND SOLD TO FINANCE PUBLIC FACILITIES FOR THE COMMUNITY FACILITIES DISTRICT AND THE ESTABLISHMENT OF AN APPROPRIATIONS LIMIT FOR THE COMMUNITY FACILITIES DISTRICT 11. MAYOR CLOSES HEARINGS. RVPUB\13JS\646490 -2- BEST BEST & KRIEGER LLP A CALIFORNIA LIMITED LIABILITY PARTNERSHIP INCLUDINO PROFESSIONAL CORPORATIONS LAWYERS 3750 UNIVERSITY AVENUE INDIAN WELLS POST OFFICE BOX 1 028 SAN DIEGO (760) 568-261 1 RIVERSIDE, CALIFORNIA 92502-1028 (619) 525-1300 TELEPHONE(909) 686-1 450 ONTARIO TELECOPIER (909) 686-3083 ORANGE (909) 989-8584 WWW.BBKLAW.COM (714)939-5940 January 28, 2003 VIA UPS NEXT DAY AIR Huntington Center Associates, LLC c/o JH Snyder Development 5757 Wilshire Boulevard, Penthouse 30 Los Angeles, CA 90036 Attention: Mike Wise Re: City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Dear Mr. Wise: This firm is acting as bond counsel to the City of Huntington Beach in connection with the proceedings for the establishment of the above-referenced Community Facilities District (the"District"). At its meeting on February 3,2003,commencing at 7:00 p.m.,the City Council will conduct consolidated public hearings regarding the formation of the District and the authorization of bonded indebtedness for the District.Immediately following that hearing,the Council will adopt a resolution calling and scheduling consolidated special elections on February 3,2003,regarding the District incurring bonded indebtedness,the levy of special taxes on taxable property in the District to pay debt service on bonds,and the establishment of an appropriations limit for the District.That resolution will instruct the City Clerk to deliver an official ballot and other election documents to the landowner-voter in the District.This would necessitate the City Clerk delivering the ballot and other election materials to the landowner-voter at that time and the landowner voter voting and returning its ballot immediately thereafter.It is intended that the election will be completed and that the City Council will adopt a resolution declaring the results of the election at the February 3 meeting. In order to facilitate the election process and as a matter of convenience, we are enclosing herewith the Official Ballot for Huntington Center Associates, LLC, together with the following election documents: (a) Ballot Pamphlet and Instructions to Voter, (b) a Sample Ballot (which is identical to the Official Ballot), (c) an official return envelope for returning the voted ballot to the City Clerk and (d) a copy of the Resolution of Formation to be.adopted by the City Council on February 3, 2003. Attached to this resolution as Exhibit"A" is a copy of the Rate and Method of Apportionment of Special Taxes for the District. We are mailing this ballot and documents so that you can have the authorized representative of Huntington Center Associates,LLC, complete the voting of the ballot and so that you can return it to our office,and we can be prepared LAW OFFICES OF BEST BEST & KRIEGER LLP Huntington Center Associates, LLC January 28,2003 Page 2 to deliver the voted Official Ballot to the City Clerk at the appropriate time during the February 3. meeting. However, if you or your authorized representative would prefer to vote the ballot at the meeting,and you will so advise the undersigned,we will make arrangements to have the ballot and other election documents delivered to you by the City Clerk at the appropriate time during the meeting. Please read the following instructions regarding the voting of the Official Ballot carefully,so that we will not have any mistakes which might necessitate holding the election again. Assuming that you wish to proceed with the establishment of the District and the sale of bonds, the Official Ballot should be voted by placing a cross (+) in the voting square after the word "YES" opposite each proposition set forth in the ballot. Failure to vote for any of the three propositions on the ballot will necessitate starting over with the formation proceedings.Thereafter, the authorized officer should sign the certification which is attached as the last sheet to the Official Ballot.As a matter of convenience,we have predated the certification as of February 3,2003,as that is the date that should be inserted therein. Please do not make any changes or additions to the ballot. After the authorized officer has voted the ballot and signed the attached certification, the voted ballot should be enclosed in the official return envelope which is attached to the ballot and enclosed with this letter. Note that the certification on the back of the envelope must be completed as indicated and signed. The date that should be inserted in this certification is February 3, 2003, the date of the election. Please return the voted ballot, enclosed in the official return envelope, to Barbara Skinner,Best Best&Krieger, LLP, 3750 University Avenue, Riverside, CA 92502-1028 prior to the February 3 meeting, or if you prefer, you may bring the voted ballot, enclosed in the official return envelope,to the public hearing on February 3,2003, so that they can be delivered to the City Clerk at the appropriate time. If you prefer to bring the voted ballot to the meeting on February 3,please call Barbara Skinner at(909) 826-8253 and advise her of your intention. Please telephone the undersigned at the number listed above if you have any questions about how to vote and return the ballot. Your incerely, yrens of BEST BES &KRIEGER LLP cc: Carol Runzel Connie Brockway Michael Kiely,Esq. Dave Rodriquez OFFICIAL BALLOT CONSOLIDATED SPECIAL ELECTIONS FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) COUNTY OF ORANGE STATE OF CALIFORNIA To vote,mark a cross(+)in the voting square after the word"YES" or after the word "NO." All marks otherwise made are forbidden. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Huntington Beach and obtain another. PROPOSITION A: Shall a bonded indebtedness in an original aggregate principal amount not to exceed$30,000,000 be incurred by and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of Califor- nia(the "Community Facilities District"), for a maximum term of not .more than 35 years and with interest at a rate or rates not to exceed 'the maximum interest rate permitted by law, for the purposes of providing;(1) The types of public facilities listed in the Resolution of .Formation of the District adopted February 3, 2003, and (2) The [Proposition A] incidental expenses which will be incurred are all costs associated with the creation of the Community Facilities District, issuance of the :!NO± bonds thereof, the determination of the amount of and collection of taxes,and the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District? Huntington Center Associates, LLC. 43.86 acres, 44 votes RVPUB\13JS\646643 Page 1 of 2 PROPOSITION B: Shall special taxes be levied annually on taxable property within City of Huntington Beach Community Facilities District No.2003-1 (Huntington Center),County ofOrange, State of California (the "Community Facilities District"), to pay the principal of and interest on the bonds of the Community Facilities District issued and sold to finance and refinance those purposes specified in Proposition A of this ballot,to establish and replenish the reserve fund for the bonds, or to accumulate funds for future bond payments, including any amount required by federal law to be rebated to the United States with regard to the bonds, and to pay expenses incidental thereto and to the levy and collection of the special taxes, so long as the special taxes are needed to pay the principal of and interest on the bonds and for such other purposes, together with the payment of,and the provisions of repair and replacement reserves for, [Proposition B] maintenance of any of the publicly owned facilities financed with the proceeds of such bonds, at the special tax rates and pursuant to the YES method of apportioning the special taxes set forth in Exhibit "A" to the Resolution of Formation adopted by the City Council of the City NO of Huntington Beach on February 3, 2003? PROPOSITION C: Shall an appropriations limit, as defined. [Propositions] by subdivision (h) of Section 8 of Article XIII B of the California Constitution,be established for City of Huntington Beach Community YES Facilities District No.2003-1 (Huntington Center),County ofOrange, State of California, in the amount of$4,000,000? NO PROPOSITION A AND PROPOSITION B ARE SUBJECT TO THE ACCOUNTABILITY MEASURES PRESCRIBED IN SECTION 53410 OF THE GOVERNMENT CODE OF THE STATE OF CALIFORNIA. Huntington Center Associates, LLC. 43.86 acres, 44 votes RVPUB\13JS\646643 Page 2 of 2 CERTIFICATION certify that I am the authorized representative ofHuntington Center Associates, LLC., a Delaware corporation, the owner of all of the property included within the boundaries of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California(the "Owner"), and that I am authorized to vote the Official Ballot to which this certification is attached. I further certify that in voting said ballot it was my intent, as well as the intent of the Owner, to vote all votes to which the Owner is entitled on Propositions A, B and C set forth in said ballot as marked in the voting square opposite each proposition. I further certify that the Owner owns 43.86 acres of land within said community facilities district, and that in voting said ballot I intended to vote each vote to which such acreage would entitle the Owner in the manner marked on said ballot. I certify that this certification was executed on February 3, 2003, at California. HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware limited liability company By: Huntington Management Ent., LLC, a Delaware limited liability company, its Manager By: BMLF/Huntington, LLC, a Delaware limited liability company, its Manager By: Title: Huntington Center Associates, LLC. 43.86 acres, 44 votes RVPUB\13JS\646643 Page 3 of 2 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) COUNTY OF ORANGE, STATE OF CALIFORNIA Consolidated Special Elections with Respect to (i) Incurring a Bonded Indebtedness, (ii) Annual Levy of Special Taxes to Pay Principal and Interest on Bonds, and (iii)Establishment of an Appropriations Limit February 3, 2003 Ballot Pamphlet and Instructions to Voter RVPUB\BJS\646647 Dear Voter: The City Council of the City of Huntington Beach has called a special election for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center). This is an all- mailed ballot landowner election. The ballots are being mailed or delivered to the persons or entities listed on the County Assessor's latest equalized assessment roll, as updated based on more current information available to the City of Huntington Beach regarding ownership. YOU WILL RECEIVE ONE BALLOT FOR EACH GROUP OF PARCELS SHOWN ON THE ASSESSOR'S ROLL UNDER AN IDENTICAL NAME AND ADDRESS. The ballots will be distributed based on the names and addresses designated on the assessment roll or obtained from such other information. Any parcels with a common name and address were combined for-voting purposes. Each qualified voter has been issued one ballot which entitles that voter to vote his or her total acreage of land. Each ballot is allotted a specified number of votes depending on acreage. Each acre of portion thereof is worth one vote. Please note that your ballot must be received by the City Clerk of the City of Huntington Beach not later than 7:00 p.m. on February 3, 2003. A POSTMARK DATE IS NOT ACCEPTABLE. You must use the enclosed envelope for returning your ballot by mail; or your ballot may be delivered in the envelope, to the office of the City Clerk of the City of Huntington Beach located at 2000 Main Street, Huntington Beach, California 92648. Contained in this Ballot Pamphlet and Instructions to Voter are Instructions to Landowner Voter, a Sample Ballot, and a copy of the Resolution of Formation adopted by the City Council of the City of Huntington Beach on February 3, 2003. If you have any questions, please contact us at (714) 536-5224. Very truly yours, CITY CLERK CITY OF HUNTINGTON BEACH By: _ /s/ Connie Brockway RVPUB\13JS\646647 -2- INSTRUCTIONS TO LANDOWNER VOTER . HOW TO VOTE YOUR BALLOT Vote your official ballot by placing a cross (+) in the voting square opposite your choice with a pen or pencil, and by completing, dating and signing the certificate attached thereto. SPOILING YOUR BALLOT If you tear your ballot or make an error in voting you may secure another by surrendering the ballot you spoiled,in person or by mail at the address below,or by executing an affi- davit to the effect that you lost your ballot, and you will be given another ballot. RETURNING YOUR BALLOT Enclose your ballot in the Identification Envelope provided. Supply ALL information requested on the Identification Envelope. YOUR VOTE WILL BE DISQUALIFIED IF YOU DO NOT FILL IN ALL THE INFORMATION. LAST DAY TO RETURN TO THE CITY CLERK Your ballot must be returned to the office of the City Clerk of the City of Huntington Beach a not later than 7:00 p.m. on February 3, 2003, for it to be counted. YOUR BALLOT CANNOT BE ACCEPTED BEYOND THIS DEADLINE. Your ballot must be mailed in the envelope provided for this purpose, or it may be delivered in the envelope to the office of the City Clerk of the City of Huntington Beach located at 2000 Main Street, Huntington Beach, California 92648. RVPUB\BJS\646647 -3- 1 1 SAMPLE BALLOT - DO NOT VOTE OFFICIAL BALLOT CONSOLIDATED SPECIAL ELECTIONS FOR CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES-DISTRICT NO. 2003-1 (HUNTINGTON CENTER) COUNTY OF ORANGE STATE OF CALIFORNIA To vote,mark a cross(+)in the voting square after the word"YES" or after the word "NO." All marks otherwise made are forbidden. If you wrongly mark,tear, or deface this ballot, return it to the City Clerk of the City of Huntington Beach and obtain another. PROPOSITION A: Shall a bonded indebtedness in an original aggregate principal amount not to exceed$30,000,000 be incurred by and for City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of Califor- nia(the "Community Facilities District"), for a maximum term of not more than 35 years and with interest at a rate or rates not to exceed the maximum interest rate permitted by law, for the purposes of providing;(1)The types of public facilities listed in the Resolution of Formation of the District adopted February 3, 2003, and (2) The [Proposition A] incidental expenses which will be incurred are all costs associated with the creation of the Community Facilities District, issuance of the YES bonds thereof, the determination of the amount of and collection of taxes, and the payment of taxes, and costs otherwise incurred in order NO to carry out the authorized purposes of the Community Facilities District? Page 1 of 1 RVPUB\BJS\646647 PROPOSITION B: Shall special taxes be levied annually on taxable property within City of Huntington Beach Community Facilities District No.2003-1 (Huntington Center),County of Orange, State of California (the "Community Facilities District"), to pay the principal of and interest on the bonds of the Community Facilities District issued and sold to finance and refinance those purposes specified in Proposition A of this ballot,to establish and replenish the reserve fund for the bonds, or to accumulate funds for future bond payments,including any amount required by federal law to be rebated to the United States with regard to the bonds, and to pay expenses incidental thereto and to the levy and collection of the special taxes, so long as the special taxes are needed to pay the principal of and interest on the bonds and for such other purposes, together with the payment of,and the provisions of repair and replacement reserves for, [Proposition B] maintenance of any of the publicly owned facilities financed with the proceeds of such bonds, at the special tax rates and pursuant to the YES method of apportioning the special taxes set forth in Exhibit "A" to the Resolution of Formation adopted by the City Council of the City NO of Huntington Beach on February 3, 2003? PROPOSITION C: Shall an appropriations limit, as defined [Proposition C] by subdivision (h) of Section 8 of Article XIII B of the California Constitution,be established for City of Huntington Beach Community YES Facilities District No.2003-1(Huntington Center),County of Orange, State of California, in the amount of$4,000,000? NO PROPOSITION A AND PROPOSITION B ARE SUBJECT TO THE ACCOUNTABILITY MEASURES PRESCRIBED IN SECTION 53410 OF THE GOVERNMENT CODE OF THE STATE OF CALIFORNIA. Page 2 of 1 RVPUB\BJS\646647 INSTRUCTIONS TO LANDOWNER VOTER HOW TO VOTE YOUR BALLOT Vote your official ballot by placing a cross (+) in the voting square opposite your choice with a pen or pencil, and by completing, dating and signing the certificate attached thereto. SPOILING YOUR BALLOT If you tear your ballot or make an error in voting you may secure another by surrendering the ballot you spoiled, in person or by mail at the address below,or by executing an affi- davit to the effect that you lost your ballot, and you will be given another ballot. RETURNING YOUR BALLOT Enclose your ballot in the Identification Envelope provided. Supply ALL information requested on the Identification Envelope. YOUR VOTE WILL BE DISQUALIFIED IF YOU DO NOT FILL IN ALL THE INFORMATION. LAST DAY TO RETURN TO THE CITY CLERK Your ballot must be returned to the office of the City Clerk of the City of Huntington Beach not later than 7:00 p.m. on February 3, 2003, for it to be counted. YOUR BALLOT CANNOT BE ACCEPTED BEYOND THIS DEADLINE. Your ballot must be mailed in the envelope provided for this purpose, or it may be delivered in the envelope to the office of the City Clerk of the City of Huntington Beach located at 2000 Main Street, Huntington Beach, California 92648'. RVPUB\BJS\646647 -3- RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ESTABLISHING CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) AND ESTABLISHING THE BOUNDARIES THEREOF WHEREAS, the City Council(the "City Council")of the City of Huntington Beach ("City") has heretofore adopted on December 16, 2002, Resolution No. , stating that a proposed community facilities district to be known as "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California" (the "Community Facilities District"), is proposed to be established under the terms of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and Chapter 2.5 (commencing with § 53311) of Part 1 of Division 2 of Title 5 of the California Government Code, commonly known as the "Mello-Roos Community Facilities Act of 1982" (the "Act"), and fixing the time and place for a public hearing on the establishment of the Community Facilities District; and WHEREAS, notice was published and mailed to the owners of property in the Community Facilities District as required by law relative to the intention of the City Council to establish the Community Facilities District, the levy of the special taxes therein, the financing and refinancing of public facilities therein, and the incurring of a bonded indebtedness by the Community Facilities District, and of the time and place of said public hearing; and WHEREAS,on January 6, 2003, at the time and place specified in said published and mailed notices, the City Council opened and held a public hearing as required by law relative to the formation fo the Community Facilities District,the levy of the special taxes therein and the financing of facilities by the Community Facilities District; and WHEREAS, on January 6,2003, at the time and place specified in said published and mailed notices, the City Council opened and held a public hearing as required by law relative to the formation of the Community Facilities District,the levy of the special taxes therein and the financing of facilities by the Community Facilities District; and WHEREAS, prior to said hearing there was filed with the City Council a report(the "Report") containing a description of the services being financed within and for the Community Facilities District, and an estimate of the cost of such financing, as required by Section 53321.5 of the California Government Code; and WHEREAS, at the public hearing all persons desiring to be heard on all matters pertaining to the establishment of the Community Facilities District,the levy of the special taxes and the financing of the public facilities therein were heard, and a full and fair hearing was held; and RVPUB\KAB\643148 WHEREAS, the City Council may therefore proceed to establish the Community Facilities District, NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of Huntington Beach, the following: Section 1. Findings. The City Council finds as follows: (i) all of the preceding recitals are correct, (ii)on January 6,2003,pursuant to notice thereof duly given as provided by law, the City Council conducted a public hearing with respect to the establishment of the Community Facilities District and the annual levying of specified special taxes on the taxable property within the Community Facilities District to pay for public facilities for the Community Facilities District which are described in Section 3 hereof,(iii)the boundary map of the Community Facilities District has been recorded pursuant to Sections 3111 and 3113 of the Streets and Highways Code as Instrument No. in Book of Book of Maps of Assessment and Community Facilities Districts at page of the Official Records of the County of Orange, (iv) all prior proceedings with respect to the establishment of the Community Facilities District prior to and during the hearing with respect to the establishment of the Community Facilities District conducted by the City Council on January 6, 2003,were valid and in conformity with the requirements of Chapter 2.5(commencing with § 53311) of Part 1 of Division 2 of Title 5 of the California Government Code, (v) no written protests were received at or prior to the time of said hearing against the establishment of the Community Facilities District or the levying of said special taxes by the Community Facilities District, and.said special taxes have,therefore,not been limited by majority protest pursuant to Section 53324 of the California Government Code, (vi) the City Council is, therefore, authorized to adopt a resolution of formation pursuant to Section 53325.1 of the California Government Code for the establishment of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, and the Community Facilities District should be established. Section 2. Establishment of District. City of Huntington Beach Community Facilities District No.2003-1 (Huntington Center)County of Orange,State of California,is hereby established. The boundaries of the Community Facilities District are set forth in Exhibit "A" attached hereto and are also shown on the map entitled 'Boundaries of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Beach),County of Orange, State of California"which is on file with the Clerk and said boundaries are hereby established. Section 3. Types of Facilities, Incidental Expenses, Maintenance. (1) The types of public facilities proposed to be provided within and financed by the proposed Community Facilities District are: (a) Street improvements including costs of condemnation, removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. RVPUB\KAB\643148 -2- (b) Storm drains, drainage storage ponds and drainage channels including landscaping, if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public park and recreation facilities, including beach access facilities and pedestrian bridge. (e) Water distribution facilities, including fire hydrants and reclaimed water and water storage facilities. (f) Street signalization and signage, including traffic fees. (g) Fire facilities including structures and capital equipment. (h) Acquisition of land, rights-of-way and easements necessary for any of the facilities specified in paragraphs (a) through (i) above. (i) The incidental expenses which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof, (ii)all costs associated with the creation of the proposed community facili- ties district, issuance of the bonds thereof, the determination of the amount of and collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and (iii) any other expenses incidental to the construction, acquisition, completion, and inspection of such facilities. (2) The proposed community facilities district shall also pay for the maintenance of, and the provisions of repair and replacement reserves for, any of the publicly owned facilities listed in clause(1) of this Section 3. Section 6. Special Taxes. Except where funds are otherwise available, special taxes sufficient to pay for all such facilities and to pay the principal of and interest on the bonds of the Community Facilities District and any territory to be annexed in the 'future, and the annual administrative expenses of City and the Community Facilities District in determining, apportioning, levying and collecting such special taxes, and in paying the principal of and interest on such bonds, and the costs of registering, exchanging and transferring such bonds, secured by the recordation of a continuing lien against all taxable or nonexempt property in the Community Facilities District, and maintaining a reserve fund for such bonds, and paying any amounts that must be paid to the United States in order to preserve the tax-exempt status of such bonds shall be annually levied within the Community Facilities District. Additionally, there shall be levied special taxes sufficient to pay for the maintenance, repair and replacement of such public facilities. The rate and method of RVPUB\KAB\643148 -3- apportionment of said special taxes shall be as set forth in Exhibit "B" attached hereto and by this reference made a part hereof. Section 7. Annexation of Territory. Other property within the boundaries of City may be annexed into the Community Facilities District upon the condition that parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed. Section 8. Exempt Property. Pursuant to Section 53340 of the California Government Code,properties of entities of the state,federal and local governments or used for public rights of way or other public uses, shall be exempt from the levy of special taxes of the Community Facilities District. i Section 9. Report. The Report is hereby approved and is made a part of the record of the public hearing regarding the formation of the Community Facilities District, and is ordered to be kept on file with the Clerk of the City as part of the transcript of these proceedings. Section 10. Repayment of Funds Advanced or Work-in-Kind. Pursuant to Section 53314.9 of the California Government Code,the City Council may accept advances of funds or work- in-kind from private persons or private entities and may provide, by resolution, for the use of those funds or that work-in-kind,for any authorized purpose,including,but not limited to,paying any costs incurred by City in creating the Community Facilities District and may enter into an agreement by resolution, with the person or entity advancing funds or work-in-kind to repay funds advanced, or to reimburse the person or entity for the value or cost, whichever is less, of the work-in-kind,.as determined by the City Council. Section 11. Tender of Bonds. This City Council hereby reserves the right, on behalf of the Community Facilities District to accept tenders of bonds in full or partial payment of special taxes to be levied within the Community Facilities District pursuant to Section 3.56.320 of the Code. Section 12. Description of Voting Procedures. The voting procedures to be followed in conducting the consolidated special elections on (i) the proposition of the Community Facilities District incurring a bonded indebtedness in an amount not to exceed$20,000,000,(ii)the proposition with respect to the levy of special taxes on the land within the Community Facilities District to pay the principal of and interest on the bonds thereof and to pay the costs of maintenance ,repair and replacement of public facilities, and (iii) the proposition with respect to the establishment of an appropriations limit for the Community Facilities District in the amount of$4,000,000, if the Com- munity Facilities District is established and such consolidated special elections (the."consolidated special elections") are held, shall be as follows: (a) If at least 12 persons have been registered to vote within the territory of the RVPUB\KAB\643148 -4- Community Facilities District for each of the 90 days preceding the close of the public or protest hearing(the"protest hearing"),the vote in the consolidated special elections shall be by the registered voters of the Community Facilities District with each voter having one vote. In that event, the consolidated special elections shall be conducted by the Clerk, and shall be held on a date selected by the City Council in conformance with the provisions of Section 53326 of the California Government Code and pursuant to the provisions of the California Elections Code governing elections of cities, insofar as they may be applicable, and pursuant to said Section 53326 the ballots for the consolidated special elections shall be distributed to the qualified electors of the Community Facilities District by mail with return postage prepaid or by personal service, and the consolidated special elections shall be conducted as a mail ballot election. (b) If 12 persons have not been registered to vote within the territory of the community facilities district for each of the 90 days preceding the close of the protest hearing, and pursuant to Section 53326 of the California Government Code, the vote is therefore to be by the landowners (as defined in Section 3.56.070 of the Municipal Code of the City of Huntington Beach) of the Community Facilities District, with each landowner of record at the close of the protest hearing having one vote for each acre or portion of an acre of land that he or she owns within the Community Facilities District, the consolidated special elections shall be conducted by the City Clerk pursuant to the Municipal Code of the City of Huntington Beach and Section 53326 of the California Government Code as follows: (1) The consolidated special elections shall be held on the earliest date,following the adoption by the City Council of the resolution of formation establishing the Community Facilities District pursuant to Section 53325.1 of the California Government Code, and a resolution pursuant to Section 53326 of said Code submitting the propositions with respect to (i)whether a bonded indebtedness shall be incurred for constructing and financing through the sale of bonds public facilities necessary for the formation of the Community Facilities District; (ii)the levy of special taxes to pay the principal of and interest on the bonds of the Community Facilities District and (iii) the establishing of an appropriations limit therefor to the qualified electors of the Community Facilities District, upon which such elections can be held pursuant to said Section 53326 which may be selected by the City Council, or such earlier date as the owners of land within the Community Facilities District and the Clerk agree and concur is acceptable. (2) Pursuant to said Section 53326, the consolidated special elections may be held earlier than 90 days following the close of the protest hearing if the qualified electors of the Community Facilities District waive the time limits for conducting the elections set forth in said Section 53326 by unanimous written consent and the Clerk concurs in such earlier election date as shall be consented to by the qualified electors. RVPUB\KAB\643148 -5- (3) Pursuant to said Section 53326,ballots for the consolidated special elections shall be distributed to the qualified electors by the Clerk by mail with return postage prepaid, or by personal service. (4) Pursuant to applicable sections of the California Elections Code governing the conduct of mail ballot elections of cities, and specifically Division 4 (commencing with §4000 of the California Elections Code with respect to elections conducted by mail), the Clerk shall mail (or deliver) to each qualified elector an official ballot in a form specified by the City Council in the resolutions calling and consolidating the consolidated special elections, and shall also mail to all such qualified electors a ballot pamphlet and instructions to voter, including a sample ballot identical in form to the official ballot but identified as a sample ballot, an impartial analysis by Counsel to City pursuant to Section 9280, as amended, of said Code with respect to the ballot propositions contained in the official ballot, arguments and rebuttals, if any, pursuant to Sections 9281, as amended, to 9287, as amended, inclusive, and 9295, as amended, of said Code, a return identification envelope with prepaid postage thereon addressed to the Clerk for the return of voted official ballots, and a copy of the form of Resolution of Formation establishing the Community Facilities 'District, adopted by the City Council pursuant to Section 53325.1 of the California Government Code, and the exhibits thereto; provided, however, that such analysis and arguments may be waived with the unanimous consent of all the landowners, and in such event a finding regarding such waivers shall be made in the resolution adopted by the City Council calling the consolidated special elections. (5) The official ballot to be mailed(or delivered)by the Clerk to each landowner shall have printed or typed thereon the name of the landowner and the number of votes to be voted by the landowner and shall have appended to it a certification to be signed by the person voting the official ballot which shall certify that the person signing the certification is the person who voted the official ballot, and if the landowner is other than a natural person, that he or she is an officer of or other person affiliated with the landowner entitled to vote such official ballot, that he or she has been authorized to vote such official-ballot on behalf of the landowner, that in voting such official ballot it was his or her intent, as well as the intent of the landowner, to vote all votes 'to which the landowner is entitled based on its land ownership on the propositions set forth in the official ballot as marked thereon in the voting square opposite each such proposition, and further certifying as to the acreage of the landowner's land ownership within the Community Facilities.District. (6) . The return identification envelope delivered by the Clerk to each landowner shall have printed or typed thereon the following: (i)the name of the landowner, (ii)the address of the landowner,(iii)a declaration under penalty of perjury stating that the voter is the landowner or the authorized representative of the landowner entitled to vote the enclosed ballot and is the person whose name appears on the identification envelope, (iv)the printed name and signature of the voter, (v)the address of the voter,(vi)the date of signing and place of execution of said declaration, and(vii) a notice that the envelope contains an official ballot and is to be opened RVPL3B\KAB\643148 -6- only by the Clerk. (7) The instruction to voter form to be mailed by the Clerk to the landowners shall inform them that the official ballots shall be returned to the Clerk properly voted as provided thereon and with the certification appended thereto properly completed and signed in the sealed return identification envelope with the certification thereon completed and signed and all other information to be inserted thereon properly inserted not later than 7:00 p.m. on the date of the election, or immediately after the Resolution Calling the Special Election is adopted (8) Upon receipt of the return identification envelopes which are returned prior to the voting deadline on the date of the elections, the Clerk shall canvass the votes cast in the consolidated special elections,and shall file a statement with the City Council as to the results of such canvass and the election on each proposition set forth in the official ballot. The procedures set forth in this section for conducting the consolidated special elections, if they are held, may be modified as the City Council may determine to be necessary or desirable by a resolution subsequently adopted by the City Council. PASSED AND ADOPTED by the City Council of the City ofHuntington Beach at a regular meeting thereof held on the 6`' day of January, 2003. Mayor ATTEST: APPROVED AS TO FORM: City Clerk City Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED City Administrator Director of Public Works RVPLJB\KAB\643148 -7- EXHIBIT A LEGAL DESCRIPTION CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2000-1 (HUNTINGTON CENTER) COUNTY OF ORANGE City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, includes the land situated in the State of California, County of Orange, City of Huntington Beach, described as follows: Parcels 2 though 9 as shown on Parcel Map No. 86-200 filed in Book 255, pages 40-45, of Parcel Maps in the Office of the County Recorder of Orange County, California. (Map Attached) PDA:2002 resolutions: CFD 2003-1:(Intention to Establish) RLS 2002-0668 PROPOSED BOUNDARIES OF ACCEPTED AND FI`E° AT THE CITY OF HUNTINGTON BEACH CITY �, COMMUNITY FACILITIES DISTRICT — nAAENo. 2003-1 BOOK PAGE - (HUNTINGTON CENTER) FILED TH.S aYaF AT THE HOUR OF_OC O�,LOF O COUNTY OF ORANGE INBOON_PACE_OF MAPS AI@R MUOTY/SSESS AND COM FACNMESTIE4 DISTRICTS.NN THE OFFICE OF THE COUNTY STATE OF CALIFORNIA STATEi ��F THE COUNTY ORANGE, DARLENE.L BLOOM INTERIM COUNTY CLERWRECORDER /------��$�,5---� DEPUTY . `f.,273,151SIP / �" 7' '!.�• I BEACH TAR OF THE FILED IN THE OFFICE OF THE CITY CLERK rI °off .yrd. CITY OF A41Hi11JGT0.1 S .1 Y DAY OF 2= To JQ7- MA979'30'W i CO.NIE BROCKWAY.THE CITY CLERK OF THE CITY OF HL9RINGTON BEACH, R-30000 I I NEREBY CERTIFY THAT THE WITHIN MAP K 10. -tS6 v., M SHOWING THE BCUNDARIES OF THE CRY 0E{,TA-SCSG SS OF HUNnNGTCN BEACH COMJLY -I47 W FACTURES DISTRICT NO.�031 (HUNTINGTON CENTER)COUNTY OF APPROVEDDT T�CNJFQMdk w AS CITY COUNCIL OF THE CITY OF HUInNGTON BEACH AT NB9Z9"JO'111 REGULAR MEETING THEREOF2= ON BY ITS O O 504. RESOLAJTICN NO.' 0 ' R- p�yTL�10a.112� 'r �{ TAN- B' 37.00 i \ / SQ00' THEME THE CRY CLERK OF '•� ,.,.,d, THE CITY OF CP w HUNTIN xnNGTDN aF,Aom iz 3 i R, r•mm. I _I ..11CJLT NO 0 M0070�'E I rr SO. NB919.50 00" N00W30•E. r^ 9.50 �- N00•.1070.1- ]3661 i /Q11O PRCPSEO BOUNDARIES FACILITIES ES BASIB OF BEARING: C�yMI;I9TY FAOUR6 CENTERUHE OF ED NGER AVE.BEING N99 2=`W h5TPo R.0.2003-1. PER PARCEL MAP NO.96200 FILED IN BOOK 255.PAGES 401S OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY.CALIFORNIA. LOCATION MAP -------- N00'29"00-E J I PRGJECT F SITE _ �OTY Oi NOO.U�BN22TWCTb.BEACN ROOD CONTROL CNANNE�� L=-==------------- ---------_-- - 0 Iw tar A00 GRAPHIC SCALE Iota Fv r.&mma Ymi.0 Frir¢ .giro,male is in mdQ -•ro o. m aGu OESCRIPRON; PARCELS 2 T/fiOUGN 9 AS SHOWN ON PARCEL AMP NO 56270 FILED IN BOOK 255.PAGES AO<S.OF PARCEL MAPS IN THE CFFCE CF THE COUNTY RECORDER OF ORANGE COUNTY.CNJFORVA SHEET 1 OF 1 EXHIBIT B CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX RVPUB\KAB\643148 B-2 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein CFD No. 2003-1) shall be levied and collected according to the tax liability determined by the Administrator through the application of the procedures described below. The real property in CFD No. 2003-1, 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 capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment: 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, or the other parcel map recorded with the County Recorder. If the Acreage of a particular Parcel is unclear after reference to available maps, the Administrator shall determine the appropriate Acreage for a Parcel. Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, of Title 5 of the Government Code of the State of California. Administrative Expenses means any or all of the following actual or reasonably estimated costs directly related to the administration of CFD No. 2003-1: the. fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture or resolution with respect to the Bonds, including, but not limited to, the'levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No. 2003-1. Administrator means the Director of Economic Development or such other person or entity designated by the City Administrative Officer or the City Council to administer.the Special Tax according to this Rate and Method of Apportionment of Special Tax. Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's Parcel number. Bonds mean any bonds or other debt(as defined in Section 53317(d) of the Act),whether in one or more series,issued by the City for CFD No. 2003-1 under the Act. City means the City of Huntington Beach. City Council means the City Council of the City of Huntington Beach, acting as the legislative body of CFD No..2003-1. County means the County of Orange. Development Agreement means the Owner Participation Agreement (OPA) between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates, LLC, dated October 2,2000. j Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1 which generally serves the development subject to the Development.Agreement and is # owned by a governmental agency for public right-of-way purposes including, but not limited to parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the Special Tax has been paid in full. a jf Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved. 1 Fiscal Year means the period commencing on July 1 and ending on the following June 30, in any year in which the Bonds are" utstanding. Indenture means the indenture, fiscal agent agreement, resolution or other instrument approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. 2 Maximum Special Tax means, with respect to any Parcel of Taxable Property, the maximum Special Tax, determined in accordance with Section C, that can be levied in any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts payable under the Parking Structure Maintenance Special Tax. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Parking Structure Maintenance Special Tax means the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for CFD No. 2003-1 necessary to pay all actual, documented maintenance costs,management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs, fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues shall be subject to and limited by the provisions of the following documents,which documents shall be in the form approved by the City Council in connection the issuance of the Bonds, and which documents, upon such approval, shall be deemed to be incorporated herein by this reference: (i) any covenants, conditions or restrictions encumbering such parking structure and/or the real property upon which it is to be constructed as of the date of issuance of the Bonds, (ii) the initial parking management agreement governing the operation and maintenance of such parking structure(the provisions of such initial parking management agreement to govern the determination of the Parking Structure Maintenance Special Tax for so long as the Special Tax lien remains in effect, notwithstanding any earlier expiration or termination of such agreement), and(iii) any amendments to the foregoing covenants, conditions or restrictions or agreements. Reserve Fund means the fund of that name created under the Indenture. Resolution of Issuance means the resolution adopted by the City Council of the City, acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds -in accordance with the Act. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within CFD No. 2003-1. Special Tax Requirement means the amount required in any Fiscal Year for CFD No. 2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii)to pay Administrative Expenses, (iv) to pay costs.of any credit enhancement(including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Indenture, and (v) to pay the Parking-Structure Maintenance Special Tax. 3 Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No. 2003-1, whickare not Exempt Land or exempt from the Special Tax pursuant to law,but in no circumstance shall the total amount of Taxable Property be less than 40.63 acres. Trustee means the trustee who is a party to the Indenture, if so approved. B. IDENTIFYING TAXABLE PROPERTY Not less than fifteen business days prior to the beginning of each Fiscal Year, the Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property. The Taxable Property shall be subject to Special Taxes in accordance with the rate and method of apportionment described in Sections C and D below. C. MAXIMUM SPECIAL TAX The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No.. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each Fiscal. Year thereafter, the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100% of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. 4 E. LIMITATIONS No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, and until the date on which principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax may be levied and collected until such time as the City and the CFD No. 2003-01 have divested all remaining ownership interests in the parking structure. Upon determination by the Administrator that such requirements have been met,the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that the City on behalf of CFD No. 2003-1 may directly bill the special tax or any portion thereof, may collect special taxes or any portion thereof at a different time or in a 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. Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax shall be directly billed in each instance and not billed with ad valorem property taxes. G. APPEALS The City Council shall establish as part of the proceedings and administration of CFD No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any appeals, as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming that the amount or application of the Special Tax is not correct may file a written notice of appeal with the Review/Appeal Committee not later than one calendar year after having paid the Special Tax that is disputed. The Review/Appeal Committee shall promptly review the appeal, and if necessary, meet with the owner, consider written and oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the Review/Appeal Committee's decision requires the Special Tax to be modified or changed in favor of the owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall be exclusive and its exhaustion by any owner shall be a condition precedent to any legal action by such owner. 5 H. PREPAYMENT OF SPECUL TAX The following definitions apply solely to this Section H: Amount of Current Special Taxes Paid means the amount of the Special Tax levied against the subject Assessor's Parcel that was paid to the County or the City by the owner, of the subject Assessor's Parcel and would be applied to debt service payments on the Redemption Date and the Interest Payment Date immediately following the Redemption Date. Outstanding Bonds means all Bonds that are deemed to be outstanding under the Indenture the day immediately preceding the next Interest Payment Date. Redemption Date means the Interest Payment Date on which Bonds are proposed to be redeemed from the prepayments of the Special Tax. 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein. The owner intending to prepay the Special Tax obligation on one or more Assessor's Parcel(s) shall provide the Administrator with written notice of intent_to prepay. It shall be a condition precedent to prepayment that the owner intending to prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's Parcel to be prepaid and provide proof of payment to the Administrator. Promptly following receipt of such notice, the Administrator shall notify the owner of such Assessor's Parcel(s) of the prepayment amount of such Assessor's Parcel(s). The Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 90 days prior to the next occurring date that Bonds may be redeemed from the proceeds of such prepayment pursuant to the Indenture. The Prepayment Amount (defined below) shall be•calculated as summarized below (capitalized terms as defined above or below): Bond Redemption Amount Plus Redemption Premium Plus Defeasance Amount Plus Administrative Fees and Expenses Less Reserve Fund Credit Less Amount of Current Special Taxes Paid Total: Equals Prepayment Amount 6 As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragyraph No. 1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year. 2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total Maximum Special Tax of all Assessor's Parcels of Taxable Property for the current Fiscal Year. 3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding Bonds as defined in this Section G to compute the amount of Outstanding Bonds to be retired and prepaid, and round the result up to the nearest multiple of$5,000 (the Bond Redemption Amount). 4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled to mature on the Redemption Date by the applicable redemption premium (the Redemption Premium). 5. Compute the amount needed to pay interest on the Bond Redemption Amount from the Interest Payment Date immediately preceding the Redemption Date to the Redemption Date. 6. Compute the amount the Administrator. reasonably expects to derive from the reinvestment of the Prepayment Amount from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 7. Add the amounts computed pursuant to Paragraph 5 and subtract the amount computed pursuant to Paragraph 6 (the Defeasance Amount). 8. Determine the administrative fees and expenses associated with 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. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal the lesser of: (a) the expected reduction in the Reserve Requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new Reserve Requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 10. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment. Amount). 7 11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3, 4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments (as appropriate). The amount computed pursuant to Paragraph 8 shall be retained by the Administrator. With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii) notify the County that the Special Tax, if any, remaining on the secured tax roll for the Assessor's Parcel has been satisfied and that the County should remove such amounts from the secured tax roll, and (iii) refund the owner for any Special Tax payments made on the Assessor's Parcel after the date of prepayment. From and after the prepayment, 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 the Maximum Special Tax that may be levied on Taxable Property Niithin CFD No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Special Tax on an Assessor's Parcel of Taxable Property 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=(PHxF) +G Where these terns are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section H.1, minus the amounts determined in Paragraph No. 8 of Section H.1. F. = the percent by which the owner of an Assessor's Parcel(s) is partially prepaying the Maximum Special Tax. G = the amounts determined in Paragraph No. 8 of Section H.1. The owner of an Assessor's Parcel who:desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall be prepaid. The Administrator shall promptly provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel following receipt of the request. 8 With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i) distribute the funds remitted to it according, to Paragraph 11 of Section H.1, and (ii) indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to.Section D. 9 10�5 JAN 2� PROOF OF PUBLICATION STATE OF CALIFORNIA) -. SS. County of Orange ) C'"A:�1OTICEOF 2• TBe°amount of the 1 am a Citizen of the United States and a 'proposed-'.bonded'lid- PUBUC HEARING aebtedness shall include CIIYOF all costs and estimated 'connected, incidental to, ,or resident of the County aforesaid; I am HUNTINGTON BEACH 'connected, with, 'the, over the age of eighteen years, and not a NOTICE.OF PUBUC HEARING `accomplishment of. the ONRESOUITIONTO INCUR " ,purposes for which the proposed bonded in- party to or interested in the below BONDED INDEBTEDNESS debtedness, is to ;.tie entitled matter. i am a principal clerk of `IN AN AMOUNT NOT TO % not-em=including, but 'not,,limited '.to, the EXCEED P P EXCEED$30,000OOOFOR estimated costs of the HUNTINGTON BEACH INDEPENDENT a PROPOSED COMMUNITY .sitiotruofi and ublic � s�tion of the public newspaper of general circulation printed FACIUIHSDKTRICT rIiyoposeo which are b NO.2003_1 -for , be provided �� ,�f,or the,commugity and pu lished in the City of Huntington (HUNTINGTONCENTER) -facilitiesdistrict. Beach, Countyof Orange, State of OF THE CITY OF xa3. All—parcels of �taxable-property-Within g HUNTINGTONBEACH, Ahe'proposed community California, and that attached Notice is a CALFORNIA -facilities district shall be, NOTICE IS HEREBY -subject,to the levy,off true and complete copy as was printed "-TEN that at'7:00 p.m. special taxes to pay the principal„of and interest on February 3,2the C City gon.the"aggregate prin- and published In the Huntington Beach City Council of the Citythe'zcipal •'amount of .the of Huntington Beach will a bond$of the community and Fountain Valley issues of said conduct a hearing on, sfacilities district which' Resolution No. 2003-4,�Q ay be`issued and sold adopted by said City'i yto.finance public facili- newspaper to wit the issue(s) of. Council January 6,;,,ties for th benefit of "2003,in the City Council(,_Parcels of property: `Chambers.at, the City 14ithm the 'community Hall, 2060,Main'Street; t faciiitie's district. `\ "City of Huntington 4 A public hearing on 96each, .California. Said -the proposed .bonded =resolution determines 'indebtedness 'for. said. "that it is.n'ecessary for .proposed community _proposed' Community January 23 , 2003 facilities-districtshallbe .,Facilities District No; held at•-7:00 p.m. on 2003-1 of the 3,2l)03.in the Center) of.the City,`of "City Council..Chambers, Huntington Beach, FoftheCityof'Huntington -of California,of to incur a Beach,2000 Main Street; of Caliia, to incur a` Huntington Beach,'Cali I declare, under penalty of perjury, that ,bonded indebtedness in �fornia.Said hearing shall 'an__amount not .to be=_conducted, concur- exceed$30,000,000. the foregoing is true and correct. G Resolution,No.,2003-4 rently with the hearing` provides in summary,as on the,establishment of. `follows:"-•' the proposed community 6 facilities district. m.1. The City Council A copy of Resolution Executed on <declares that it is ,No. 2003-4 may' be January 23 "necessary''-that bonded reviewed or obtained at `indebtedness be incurred 2 0 0 3 the office' of the City by .and for. proposed at Costa Mesa, California. Community Facilities ,Clerk'. of.'the City of. Huntington Beach, 2000 District'-No. .2603-1 'Main Street,:Huntington -(Huntington Center) of Beach,California. the City of Huntington NOTICE IS FURTHER -Beach, County of Or-, GIVEN•that>,at the.time `ange,State of California, -and- ng �m.in aggregate principal ll 'interested sal persons, amount not to exceed all interested persons, �$30,000,000 for the. -including all, persons owning property in the spurpose of financing the proposed. community .design,,'acquisition, _facilities district, for or j construction; equipping o ;-against the proposed and furnishing, of the _bonded -indebtedness, Signature =public facilities de' :Will be heard. scribed in'Resolution No. DATED: January 7;,2003. -2003-3, the ,Resolution' s CONNIE BROCK- 'of Intention: �W Y,City'Clerk of the I 'City" of Huntington D 'Beach `Published.. Huntington `.Beach dndependent Jan `_uary 23;2003 .014-058. 711 NOTICI OF PUBIC HEARING s CITY OF HUNTINGTON BEACH NOTICE OF PUBIC HEARING ON RESOLUTION OF INTEN- TION TO ESTABLISH PROPOSED COMMUNIf'1 FACRITIES DISTRICT NO.2003-1 (HUNTINGTON CENTER)OF THE CITY OF HUNTINGTON BEACH,CAUFORNIA NOTICE IS HEREBY GIVEN that on January 6, 2003, the City Council of the City of Huntington Beach adopted Resolution No.2003-3,the resolution of intention with respect to the establishment of proposed Community ea only with the unanimous s Facilities District No.2003-1(Huntington Center)of the City of Huntington or the owner or owners of each parcel or parcel the time Beach, County of Orange, State of California, and that a public hearing ,, on'said resolution of intention and with respect to the establishment of that parcel or those parcels are annexed. said community facilities district will be held at 7:00 p.m. on, February 7• The consolidated special elections on (i) the proposition of the 3,2003, in the City Council Chambers located*at the City Hall,2000 Main proposed community facilities district incurring a bonded indebtedness in Street,Huntington Beach,California. an amount not to exceed $30,000,000 00 the proposition with respect Resolution No.2003-3 provides in summary as follows: to the levy of special taxes on the land within the community facilities 1.The name proposed for the community facilities district is"Community district to pay the principal of and interest on the bonds thereof and Facilities District No.2003-1(Huntington Center)of the City of Huntington the maintenance, repair and replacement of the public facilities, and (iii) Beach,County of Orange,State of California." the proposition with respect to the establishment of an appropriations 2. The boundaries of the proposed community facilities district are limit for the community facilities district in'the amount of$4,000,000, if described and shown on the map entitled "Boundaries of Community the community facilities district is established and such consolidated Facilities District No.2003-1(Huntington Center)of the City of Huntington special elections (the "consolidated special elections") are held, shall be Beach, County of Orange, Stater of California," which is on file with the conducted as a mail ballot election. j City Clerk, If at least 12 persons have been registered to vote within the territory 3.The types of public facilities proposed to be provided for and financed of the proposed community facilities district for each of the 90 days by the proposed community facilities district are: preceding the close of the public or protest hearing, the vote in the (a) Street improvements including costs of condemnation, removal, consolidated special.elections shall be by the registered voters of the demolition, grading, paving, curbs and gutters, sidewalks, street lights community facilities district with each voter having one vote. In that and parkway and landscapingrelated thereto. event,the consolidated special (b) Storm drains, drainage, storage ponds and drainage channels elections shall be conducted by the Registrar of Voters of the County of including landscaping,if applicable. Orange and shall be held on a date selected by the City Council and the (c) Sewers, sewer treatment facilities and sewer capacity acquisition. ballots for the consolidated special elections shall,be distributed to the (d)Public parking facilities including a parking structure. - qualified electors of the community facilities district by mail with return (a) Water distribution facilities, including fire hydrants and reclaimed postage prepaid,and the consolidated special elections shall be conducted water and water storage facilities. t as a mail ballot election. (f)Street signalization and signage,including traffic fees. ' If at the time of the close of the protest hearing less than,12 persons (g)Fire facilities including structure's and capital equipment. have been registered to vote within the territory of the, community (h) Acquisition of land, rights-of-way and easements necessary for facilities district, the vote shall be by the landowners of theicommunity any of the facilitiesspecified in paragraphs(a)through(i)above. facilities district, with each landowners of record at the close of the (i) The incidental expenses which will be incurred are: (i) the cost protest hearing having one vote for each acre or portion of an acre of of engineering, planning and designing such facilities and the cost of land that he or she owns within the-community facilities district. In that environmental evaluations thereof, (ii) all costs associated with the event, the consolidated special elections shall be conducted by the City creation of the proposed community facilities district, issuance of the Clerk. bonds thereof, the determination of the amount of and collection Of The ballots for the consolidated special elections shall be distributed taxes,the payment of taxes,and costs otherwise incurred in order tocarry to the qualified electors by the City Clerk by mail with return postage out the authorized purposes of the community facilities district, and (iii) prepaid,or by personal service.The City,Clerk shall mail to each qualified any other expenses incidental to.the construction,acquisition,completion, elector an official ballot, and shall also mail to all such qualified electors and inspection of such facilities. other required election documents,including a return identification envelope (2) The proposed community facilities district shall also pay for with prepaid postage thereon addressed to the City Clerk for the return maintenance of, and the provisions of repair and replacement reserves of voted official ballots. for,any of the publicly owned facilities listed in clause(1)of this Section Resolution No.2003-3 contains other provisions which are not summarized 4. above. A copy of Resolution No. 2003-31may be reviewed or obtained at 4. Special taxes sufficient to pay for all such facilities, to pay the the office of the City Clerk of the City of Huntington Beach,2000 Main principal of and interest on the bonds of the proposed community facilities Street,Huntington Beach,California. district and the annual administrative expenses of the City and the NOTICE IS FURTHER GIVEN that at the hearing the testimony of all proposed community facilities district in determining,apportioning,levying interested persons or taxpayers for or against the establishment of the and collecting,such special taxes, and in paying the principal of and community facilities district, the extent of the district, or the furnishing interest on such bonds, and the costs of registering, exchanging and of specified types of public facilities or services will be heard. If 50 transferring such bonds, secured by the recordation of a continuing lien percent or more of the registered voters,or six registered voters,whichever against all taxable or nonexempt property in the proposed community is more, residing within the territory proposed to be included in the facilities district, and maintaining a reserve fund for such bonds, and proposed community facilities district or the owners of one-half or more paying any amounts that must be paid to the United States in order to of the area of the land in said territory and not exempt from the levy preserve the tax-exempt status of such bonds shall be annually levied of special taxes, file written,protests against the establishment of the within the proposed community facilities district. Additionally, there shall proposed community facilities district, and protests are not withdrawn be levied special taxes sufficient'to pay for the maintenance, repair and so as to reduce the value of the protest to less than a majority, no replacement of such public -facilities. The' rates and method of I further proceedings to create the community facilities district or to levy apportionment of said special taxes shall be as set forth in Exhibit "B" the specified special taxes shall be taken for a period of one year from to Resolution No.2003-3. The maximum amounts of special taxes which the date of the decision of the City Council. If majority protests of the may be annually levied on parcels within the proposed community facilities registered voters or of the landowners are only against the furnishing of district which are used for private:residential purposes are as follows: a specified type or types of public facilities or services within the MAXIMUM SPECIAL TAX community facilities district, or against levying a specified special tax, The Maximum Special Tax for the leasehold interests in Taxable Property those types of facilities or services or the specified special`tax will be in CFD No. 2003-1 shall be the greater of,(1) $65,050 per Acre or (2) eliminated from the resolution of formation establishing the,community the amount determined pursuant to the following steps: facilities district. Step 1: Determine the maximum annual debt service on all Outstanding DATED:January 7,2003. Bonds; /s/ CONNIE BROCKWAY, City Clerk of-the City of Huntington Beach Step 2: Multiply the total debt service determined in Step 1 by 1.1 and Published Huntington Beach Independent J uary 23,2003 014-059 add the Administrative Expenses; Step 3: Determine the Acreage of..Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax perAcre of Taxable Property. METHOD OF APPORTIONMENT OF THUSPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100%of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. i 5. The officers of the City who will be responsible for providing the proposed types of public facilities to be provided within and financed by the proposed community facilities district, if it is established, shall study the proposed district, and, at or before the time of said hearing, file a report or reports with the City Council containing a brief description of the public facilities by type which will in their opinion be,required to adequately meet the needs of the proposed community facilities district and their estimate of the fair and reasonable cost of providing those public facilities and the incidental expenses to be incurred in connection therewith.Such reports shall be made a part of the record of the hearing. 6. Other property within the boundaries of the City may be annexed into the proposed community facilities district upon the condition parcels within that territory av_be= ^ angrn— ( 1 f U r� - ,,r,_.- i ,,... kClk CA ')�C a , �.i ., PR66FJ+�'F2RU�PLlCAT104 03 JAN 2 B S: : 3 STATE OF CALIFORNIA) .. SS. County of Orange ) I am a Citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the below entitled matter. I am a principal clerk of the HUNTINGTON BEACH INDEPENDENT, a newspaper of general circulation, printed and published in the City of Huntington Beach, , County of Orange, State of California, and that attached Notice is a true and complete copy as was printed and published in the Huntington Beach and Fountain Valley issues of said newspaper to wit the issue(s) of: January 23 , 2003 I declare, under penalty of perjury, that the foregoing is true and correct. Executed on January 23 , 2Q03 at Costa Mesa, California. Signature Council/Agency Meeting Held: 0 - 3 Deferred/Continued to: 1,j Wd Q R'A-p-proved ❑ Conditionally Approved ❑ Denied City Clerk's ign ture Council Meeting Date: January 6, 2003 Department ID Number: ED 03-01 d3-3 7_b CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION T N C O Q SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS C-> r:• _ SUBMITTED BY: RAY SILVER, City Administrator CW r") PREPARED BY: DAVID C. BIGGS, Director of Economic Development � SUBJECT: Adopt Resolution of Intention to Establish the proposed Huntington Beach Community Facilities District No. 2003-01 y (Huntington Center) and Resolution of Necessity to incur Bonded Indebtedness Res . Q f a�{s/,�a, �va� -3 �-- kes•,: 26o3 -Y Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: Huntington Center Associates, LLC requests City assistance in forming a Community Facilities District (CFD) for the redevelopment of Huntington Center ("Bella Terra"). CFD formations are increasingly common as they lower development costs by securing tax exempt financing for the costs of public improvements. Huntington Center Associates, LLC requests the funding authority limit of $30,000,000 for the CFD. The final amount of the CFD bonds will be established when City Council approves issuing the-bonds sometime in the spring of 2003. Funding Source: Funding for this CFD will come from bonds issued during 2003 after appropriate actions are considered by the City Council. Huntington Center Associates, LLC provided funds to the City-to reimburse for the expenses already incurred in the event that the Community Facilities District is_not approved by City Council or is not formed for some unforeseen reason. Recommended Action: Move to: 1. Adopt City Resolution o�bo3 3 (Resolution of Intention) describing the proposed Community Facilities District No. 2003-01 (Huntington Center) and its boundaries, the types of public facilities to be funded, the voting procedures, authorize the levy of special taxes, and establish the date and time for a public hearing as required by Section 53322 of the California Government Code. it REQUEST FOR COUNCIL ACTIO10 MEETING DATE: January 6, 2003 DEPARTMENT ID NUMBER: ED 03-01 2. Adopt City Resolution o3- declaring the necessity for the proposed City of Huntington Beach Community Facilities District No: 2003-1 (Huntington Center) and that the bonded indebtedness of an amount not to exceed $30,000,000 is necessary to finance the public facilities described in the Resolution of Intention. Alternative Action(s): Do not form the Community Facilities District. Analysis: Formation of a Community Facilities District is a method to finance approved public facilities in the redevelopment of Huntington Center at a reduced cost through the sale of tax-exempt CFD bonds. The Redevelopment Agency has a direct interest in reducing the cost of financing the redevelopment of the center. The Owner Participation Agreement (OPA) between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates, LLC (HCA), approved on October 2, 2000, proposed a Schedule of Feasibility Gap Payments that included the formation of a CFD. Forming the CFD and issuing bonds would ultimately lower the Agency's cost of financing the developer advance of up to $16,750,000. Without the CFD, the Agency would pay an 8% interest rate. With the CFD, the true interest costs would be adjusted downward by one-half of the difference between the CFD interest rate and the 8%. For example, if the CFD interest rate were 6%, then one-half the difference between 8% and 6% would result in reducing the rate by 1%. CFD bonds are secured solely by the property and are repaid by a supplemental property tax paid by property owners. The City has no liability or exposure for repayment of the bonds. Staff recommends City Council's approval of forming the Community Facilities District 2003-1 (Huntington Center) and holding a public hearing on January 21, 2003. Environmental Status: Not applicable. Attachment(s): City Clerk's . . - No. No. Description 1. Petition (Including Waiver) to Create a Community Facilities District from Huntington Center Associates. 2. Resolution No.,I, _3 describing the proposed Community Facilities District No. 2003-01 (Huntington Center) and its boundaries, the types of public facilities to be funded, the voting procedures, authorize the levy of special taxes, and establish the date and time for a public hearing as required by Section 53322 of the California Government Code. 3. City Resolution o2X3-Y declaring the necessity for the proposed City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center). G:\Carol\Administration\RCA\RCA03-01.doc -2- 12/17/2002 12:07 PM PETITION TO THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH REQUESTING INITIATION OF PROCEEDINGS FOR THE ESTABLISHMENT OF A COMMUNITY FACILITIES DISTRICT OF THE CITY OF HUNTINGTON BEACH AND CONSENTING TO THE ISSUANCE OF BONDS AND THE LEVY OF SPECIAL TAXES TO PAY DEBT SERVICE ON SUCH BONDS 1. Huntington Center Associates, LLC, a Delaware limited liability company ("Owner"), requests that the City Council of the City of Huntington Beach (the "City") initiate proceedings pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, Title 5 of the Government Code of the State of California, for the formation of a community facilities district over and including the property in the City of Huntington Beach described in Exhibit "A" attached hereto (the "Property") to be designated "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center)" (the "District") and for the issuance of bonds of the District for the purpose of providing through the sale of bonds in an amount not to exceed $30,000,000 for the financing of the design, construction and acquisition of the public facilities which are described in Exhibit "B" attached hereto (the "Facilities"). . 2. Owner represents to the City Council that it is the owner of all of the Property. 3. Owner consents to the levy of special taxes on the Property in amounts sufficient to pay the aggregate amount of the principal of and interest coming due each year on the bonds of the District and the costs incidental thereto in accordance with the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) Rate and Method of Apportionment of Special Tax. DATED: _ ��`M, 200 j;Z— OWNER: HUNTINGTON CENTER ASSOCIATES, LLC, a Delaware limited liability company By: Huntington Management Ent., LLC, a Delaware limited liability company, its Manager By: BMLF/Huntington, LLC, a Delaware limited liability company, its Manager By: — Cristina Agra u hes, Senior Vice P ident 6031%.02/LA H4564-002/12-19-WJmjk/mjk EXHIBIT "A" DESCRIPTION OF THE PROPERTY The proposed Community Facilities District No. 2003-1 (Huntington Center) includes the following eight Assessor Parcel Numbers owned by Huntington Center Associates,LLC, totaling 43.86 acres: 142-071-53; 142-071-61; 142-071-80; 142-071-85; 142-071-93; 142-071-97; 142-071-98; and 147-071-99. The legal description of the boundary of proposed Community Facilities District No. 2003-1 (Huntington Center) is: Parcels 2 through 9 as shown on Parcel Map No. 86-200 filed in Book 255, pages 40-45, of Parcel Maps in the Office of the County Recorder of Orange County, California, except those portions of Parcel A (being portions of said parcel 4 and 8) conveyed to the City of Huntington Beach, a municipal corporation by deed recorded May 1, 1991 as Instrument No. 91-209426 of Official Records. 603196.02/LA H4564-002112-19-02/mjk/mjk EXHIBIT"A" EXHIBIT "B" DESCRIPTION OF THE PUBLIC FACILITIES The types of public facilities proposed to be provided within and financed by the proposed community facilities district are: (a) Street improvements including costs of condemnation,removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains, drainage storage ponds and drainage channels including landscaping, if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Parking facilities including parking garage. (e) Water distribution facilities, including fire hydrants and reclaimed water and water storage facilities. (f) Street signalization and signage, including traffic fees. - (g) Fire facilities including structures and capital equipment. (h) City of Huntington Beach Police substation facilities including structure, tenant improvements and capital equipment. (i) Acquisition of land, rights-of-way and easements necessary for any of the facilities specified in paragraphs (a) through (h) above. (j) The incidental expenses which will be incurred are: (x) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof, (y) all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof, the determination of the amount of and collection of taxes, the payment of taxes, and costs otherwise incurred in order to carry out the authorized purposes of the community facilities district, and (z) any other expenses incidental to the construction, acquisition, completion, and inspection of such facilities. 6031%.02/LA H4564-002/12-19-02/mjk/mjk EXHIBIT"B" WRITTEN CONSENT OF MANAGER OF RMLF/HUNTINGTON, LLC, a Delaware limited liability company The undersigned, being the Manager of BMLF/Huntington, LLC, a Delaware limited liability company (the "company") , does hereby adopt the following resolutions: RESOLVED, that Cristina Agra-Hughes be, and she hereby is, appointed as Senior Vice President of the Company, to serve at the pleasure of the Manager, with such powers and duties as from time to time may be prescribed to her by the Manager. RESOLVED, FURTHER, that Cristina Agra-Hughes, as Senior Vice President of the Company, be, and she hereby is, authorized to enter into and execute on behalf of this Company in its capacity as Manager of Huntington Management Ent. , LLC, any and all documents and instruments to develop, redevelop, partially raze, remodel, lease, and operate the property located at 7777 Edinger Avenue, Huntington Beach, California (the "Property") . RESOLVED, FURTHER, that the Manager of the Company hereby ratifies, confirms and approves the actions previously taken by Cristina Agra-Hughes as Senior Vice President on behalf of this Company in its capacity as Manager of Huntington Management Ent. , LLC, in connection with the Property. This Written Consent shall become a part of the records of the Company. Dated effective: December 3, 1999 4 Z a zralow as Trustee of the Bryan Ezralow 1994 Trust, Manager 104W.1 RESOLUTION NO. 2003-3 RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH WITH RESPECT TO ESTABLISHMENT OF PROPOSED CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES.DISTRICT NO. 2003-4_ . (HUNTINGTON CENTER.) WHEREAS, the City Council (the "City Council") of the City of Huntington Beach may, by its own initiative, institute proceedings for the establishment of a community facilities district pursuant to Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code, commonly known as the "Mello-Roos Community Facilities Act of 1982," for the purposes of constructing and financing through the sale of bonds the construction, acquisition, furnishing and equipping of public facilities which are necessary to meet increased demands placed upon the City as a result of the development of said real property; and The City Council desires to issue bonds of the proposed community facilities district, the proceeds of which will be used to pay the cost of acquisition, construction, furnishing and equipping of public facilities; and The bonds will be repaid from special taxes to be.levied on the real property within the proposed community facilities district, as more fully described herein; NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows: Section 1. Findings. The City Council finds that the foregoing recitals are true and correct. Section 2. Proposed District. A community facilities district is proposed to be established under the terms of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the_California Government Code; commonly known as the "Mello-Roos Community Facilities Act of 1982" The name proposed for the community facilities district is "City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California." Section 3. Description and Map of Boundaries. The boundaries of the proposed community facilities district, are described in Exhibit "A" attached hereto, and are also shown on the map entitled "Proposed Boundaries of City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) County of Orange, State of California," which is on file with the City Clerk. Said map is approved and, pursuant to Section 3110 of the California Streets and Highways Code, the City Clerk shall, after 1 PDA:2002 resolutions:CFD 2003-1:(Intention to Establish) RLS 2002-0668 conforming with the other requirements of Section 3111 of said Code, file the original of said map in her office, and not later than 10 days prior to the date of the public hearing set forth in Section 8 hereof shall record a copy of said boundary map with the County Recorder of the County of Orange. section:4ges of Facilities: Incidental Expenses; Maintenance: (1) The types of public facilities proposed to be provided within and financed by the proposed community facilities district are: (a) Street improvements including costs of condemnation, removal, demolition, grading, paving, curbs and gutters, sidewalks, street lights and parkway and landscaping related thereto. (b) Storm drains, drainage storage ponds and drainage channels including landscaping, if applicable. (c) Sewers, sewer treatment facilities and sewer capacity acquisition. (d) Public parking facilities including a parking structure. (e) Water.distribution facilities, including fire hydrants and reclaimed water and water storage facilities. (f) Street signalization and signage, including traffic fees. (g) Fire facilities including structures and capital equipment. (h) Acquisition of land, rights-of-way and easements necessary for any of the facilities specified in paragraphs (a) through (g) above. (i) The incidental expenses which will be incurred are: (i) the cost of engineering, planning and designing such facilities and the cost of environmental evaluations thereof, (ii) all costs associated with the creation of the proposed community facilities district, issuance of the bonds thereof, the determination of the amount of and collection of taxes, the payment of taxes., and costs otherwise incurred-in order to carry out the authorized purposes of the community facilities district, and (iii) any other expenses incidental to the construction, acquisition, completion, and inspection of such facilities. (2) The proposed community facilities district shall also pay for maintenance . of, and the provisions of repair and replacement reserves for, any of the publicly owned facilities listed in clause (1) of this Section 4. Section 5. Special Taxes. Except where funds are otherwise available, special taxes sufficient to pay for all such facilities, to pay the principal of and interest on the 2 PDA:2002 resolutions:CFD 2003-1:(Intention to Establish) RLS 2002-0668 7 bonds of the proposed community facilities district and the annual administrative expenses of the City and the proposed community facilities district in determining, apportioning, levying and collecting such special taxes, and in paying the principal of and interest on such bonds, and the costs of registering, exchanging and transferring such bonds, secured by the recordation of a continuing lien against all taxable or nonexempt property in the proposed community facilities district, and maintaining a. reserve fund for such bonds, and paying any amounts that must be paid to the United States in order to preserve the tax-exempt status of such bonds shall be annually levied within the proposed community facilities district. Additionally, there shall be levied special taxes sufficient to pay for the maintenance, repair and replacement of such public facilities. The rates and method of apportionment of said special taxes shall be as set forth in Exhibit"B" attached hereto and by this reference made a part hereof. Section 6. Exempt Properties. Pursuant to Section 53340 of the California Government Code, properties of entities of the state, federal, and local governments shall be exempt from the levy of special taxes for the payment of the principal of and interest on the bonds of the proposed community facilities district. Section 7. Necessity. The City Council finds that the proposed public facilities described in Section-4 hereof are necessary to meet increased demands placed upon the City as a result of new development occurring within the boundaries of the proposed community facilities district. Section 8. Hearing. A public hearing on the establishment of the proposed community facilities district shall be held at 7:00 p.m. on February 3, 2003, in the City Council Chambers at the City Hall, 2000 Main Street, Huntington Beach, California. Section 9. Notice. The City Clerk shall publish a notice of the time and place of said hearing as required by Section 53322 of the California Government Code, and shall also give notice of the time and place of said hearing by first-class mail to each registered voter and to each landowner within the proposed community facilities district as prescribed by Section 53322.4 of said Code. Said notice shall be published at least seven (7) days and mailed at least 10 days before the date of the hearing, and shall contain the information required by said Section 53322. Section%10. Reports. The officers of the City-who will be responsible for. providing the proposed types of public facilities to be provided within and financed by . the proposed community facilities district, if it is established, shall study the proposed district, and, at or before the time of said hearing, file a report with the City Council containing a brief description of the public facilities by type which will in their opinion be required to adequately meet the needs of the proposed community facilities district and their estimate of the fair and reasonable cost of providing those public facilities and the incidental expenses to be incurred in connection therewith. All such reports shall be made a part of the record of the hearing to be held pursuant to Section 8 hereof. Section 11. Annexation of Territory. Other property within the boundaries of the 3 PDA:2002 resolutions:CFD 2003-1:(Intention to Establish) RLS 2002-0668 City may be annexed into the Community Facilities District upon the condition that parcels within that territory may be annexed only with the unanimous approval of the owner or owners of each parcel at the time that parcel or those parcels are annexed. Section 12. Repayment of Funds Advanced or Work-in-Kind. Pursuant to Section 53314.9 of the California Government.Code, the City Council proposes to accept advances of funds or work-in-kind from private persons or private entities and to provide, by resolution for the use of those funds or that work-in-kind, for any authorized purpose, including, but not limited to, paying any costs incurred by the City in creating the community facilities district and to enter into an agreement by resolution, with the- person or entity advancing funds or work-in-kind to repay funds advanced, or to reimburse the person or entity for the value or cost, whichever is less, of the work-in- kind, as determined by the City Council. Section 13. Description of Voting Procedures. The voting procedures to be followed in conducting the consolidated special elections on (i) the proposition of the proposed community facilities district incurring a bonded indebtedness in an amount not to exceed $30,000,000 (ii) the proposition with respect to the levy of special taxes on the land within the community facilities district to pay the principal of and interest on the bonds thereof and the maintenance, repair and replacement of the public facilities, and (iii) the proposition with respect to the establishment of an appropriations limit for the community facilities district in the amount of$4,000,000, if the community facilities district is established'and such consolidated special elections (the "consolidated special. elections") are held, shall be as follows: (a) If at least 12 persons have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the public or protest hearing (the "protest hearing"), the vote in the consolidated special elections shall be by the registered voters of the community facilities district with each voter having one vote. In that event, the consolidated special elections shall be conducted by the City Clerk, and shall be held on a date selected by the City Council in conformance with the provisions of Section 53326 of the California Government Code and pursuant to the provisions of the California Elections Code governing elections of cities, insofar as they may be applicable, and pursuant to said Section 53326 the ballots for the consolidated special elections shall be distributed to the qualified electors of the community facilities district by mail with return postage.prepaid or personal service, and the consolidated special elections shall be conducted as a-mail ballot election. (b) If 12 persons have not been registered to vote within the territory of the community facilities district for each of the 90 days preceding the close of the protest hearing, and pursuant to Section 53326 of the California Government Code, the vote is therefore to be by the landowners or owners of the leasehold interest in the land (as defined in Section 3.56.070 of the Municipal Code of the City of Huntington Beach) of the community facilities district, with each landowner or leaseholder of record at the close of the protest hearing having one vote for each acre or portion of an acre of land that he or she owns within the community facilities district, the consolidated special 4 PDA:2002 resolutions:CFD 2003-1:(Intention to Establish) RLS 2002-0668 elections shall be conducted by the City Clerk pursuant to the Municipal Code of the City of Huntington Beach and Section 53326 of the California Government Code. Section 14. Tender of Bonds. This City Council hereby reserves the right, on behalf of the proposed community facilities district to accept tenders of bonds in full or. partial payment of special taxes to be levied within the proposed community facilities. district pursuant to Section 3.56.320 of the Municipal Code of the City of Huntington Beach. The procedures for conducting the consolidated special elections, if they are held, may be determined as the City Council may determine to be necessary or desirable by a resolution subsequently adopted by the City Council. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 6th day of January, 2003. Mayor ATTEST: APPROVED AS TO.FORM: City Clerk �a ,Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED AAd C' `,fw City A inistrator Director of Economic Development 5 PDA:2002 resolutions:CFD 2003-1:(Intention to Establish) RLS 2002-0668 EXHIBIT A LEGAL DESCRIPTION CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2000-1 (HUNTINGTON CENTER) COUNTY OF ORANGE City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, includes the land situated in the State of California, County of Orange, City of Huntington Beach, described as follows: Parcels 2 though 9 as shown on Parcel Map No. 86-200 filed in Book 255, pages 40-45, of Parcel Maps in the Office of the County Recorder of Orange County, California. (Map Attached) PDA:2002 resolutions: CFD 2003-1:(Intention to Establish) RLS 2002-0668 Pi._--OSED BOUNDARIES OF ACCEPTED AND FILED Ar THE CITY OF HUNTINGTON BEACH REQUEST OF THE CITY OF HUNTINGT ON BEACH COMMUNITY FACILITIES DISTRICT DATE — TIME FEES— No. 2003-1 INSTRUMENT q _ BOOK PAGE (HUNTINGTON CENTER) AT THE HE HO DAY OF 2003. AT T HOUR OF_O'CLOCK_. INBOOKOF COUNTY OF ORANGE ASSESS_PAGE_OF CIU nES ASSESSMENT AND COMMUNITY FACILITIES DISTRICTS,IN THE OFFICE OF THE COUNTY STATE OF CALIFORNIA RECORDER OF THE COUNTY OF ORANGE. STATE OF CALIFORNIA DARLENE J.BLOOM INTERIM COUNTY CLERWRECORDER DEPUTY 5001942 / 27}.81 O 3 0A Sy'J�O ry�j,�� I FILED IN THE OFFICE OF THE CITY CLERK F• `, p OF THE CITY OF HUNTINGTON BEACH THIS Y DAY OF .2003. 7B'pw .Y I O N892930-W = J547 i CONNIE BROCKWAY,THE CITY CLERK OF i THE CITY OF HUNTINGTON BEACH. CD \l R�]00:00' I HEREBY CERTIFY THAT THE WITHIN MAP S, EELLF:Y88 pry SHOWING THE BOUNDARIES OF THE CITY ��/�E O TUI�1�430A� I OF HUNTINGTON FACILITIES 2003.1CH �ITV 1 (HUNTINGTON CENTER)COUNTY OF0/�j .Annla4 ORANGE,STATEOF CAUFORNIA WAS APPROVED BY THE CITY COUNCIL OF THECITY OF HUNTINGTON BEACH AT ANBy'29'3 REGULAR MEETING THEREOFHELD ON THE_DAY OF ,2003 BY ITS R-504. J2.� I RESOLUTION NO. 10 J AL-108.171 r `J DFLTA- 37.00 112Gi12' .{ ANC 8' 50.00' IE BROCKWAY.THE CITY CLERK OF THE CITY OF HUNTINGTON BEACH a cure,e 12 ;I g6�1 �I 3 ' - P�tE F�• Rm rNlods I I FA 7 � russs I N00'3030'E NO' 0'E 189A0 ft N89Z9'30' @�+n pp•}p yp ' 50.00' NDO'30630'E q^ 19.BO D{^ N 103.20' PROPOSED BOUNDARIES OF DI BASIS OF BEARING: 1 I OMMUNITYTN0.2003-1.FADUTIES CENTERLINE OF EDINGER AVE.BEING NE9.29'301W STRIC PER PARCEL MAP NO.86200 i� FILED IN BOOK 255,PAGES 4"5,OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA. I�• z I I LOCATION MAP I ' i i ! • N��. -E ,1I i PROJECT —CITY OF HUNTINGTON BEACH FLOOD CONTROL CHANNEf—/ I S� L'- --- - ----------- - --- - - U' 10O 20O Oar GRAPHIC SCALE Nola Far reduced W d pdm, oripiesl scab is b h hes { GAL OESCPJPTIONDESCPJP710K PARCELS 2 THROUGH 9 AS SHOWN ON PARCEL MAP NO.M200 FILED IN BOOK 255,PAGES 40-45,OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA SHEET 1 OF 1 EXHIBIT B CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX (Attached) 7 PDA:2002 resolutions:CFD 2003-1:(Intention to Establish) RLS 2002-0668 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax applicable to each Assessor's Parcel of Taxable Property in the City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) (herein CFD No. 2003-1) shall be levied and collected according to the tax liability determined by the Administrator through the application of the procedures described below. The real property in CFD No. 2003-1, 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 capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment: 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, or the other parcel map recorded with the County Recorder. If the Acreage of a particular Parcel is unclear after reference to available maps, the Administrator shall determine the appropriate Acreage for a Parcel. Act means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311), Part 1, Division 2, of Title 5 of the Government Code of the State of California. Administrative Expenses means any or all _of the following actual or reasonably estimated costs directly related to the administration of CFD No. 2003-1: the fees and expenses of any Fiscal Agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds; any costs associated with the marketing or remarketing of the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture or resolution with respect to the Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, charges levied by the County or any division or office thereof in connection with the levy and collection of Special Taxes, audits, continuing disclosure or other amounts needed to pay arbitrage rebate to the federal government with respect to Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for delinquent Special Taxes; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent or trustee related to the administration of CFD No. 2003-1. Administrator means the Director of Economic Development or such other person or entity designated by the City Administrative Officer or the City Council to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. Assessor's Parcel or Parcel means a lot, parcel or airspace parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's Parcel number. Bonds mean any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by the City for CFD No. 2003-1 under the Act. City means the City of Huntington Beach. City Council means the City Council of the City of Huntington Beach, acting as the legislative body of CFD No. 2003-1. County means the County of Orange. Development Agreement means the Owner Participation Agreement (OPA) between the Redevelopment Agency of the City of Huntington Beach and Huntington Center Associates, LLC, dated October 2, 2000. Exempt Land means (1) any real property within the boundaries of CFD No. 2003-1 which generally serves the development subject to the Development Agreement and is owned by a governmental agency for public right-of-way purposes including, but not limited to parking structures, streets, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator or (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent who is a party to the Indenture, if so approved. Fiscal Year means the period commencing on July 1 and ending on the following June 30, in any year in which the Bonds are outstanding. Indenture means the indenture, fiscal agent agreement, resolution or other instrument approved pursuant to the Resolution of Issuance and pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. 2 Maximum Special Tax means, with respect to any Parcel of Taxable Property, the maximum Special Tax, determined in accordance with Section C, that can be levied in any Fiscal Year on such Parcel. Maximum Special Tax shall not include the amounts payable under the Parking Structure Maintenance Special Tax. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Parking Structure Maintenance Special Tax means the portion of the Special Tax to be levied in an amount equal to the amount required in any Fiscal Year for CFD No. 2003-1 necessary to pay all actual, documented maintenance costs, management fees and other operating expenses of the parking structure being financed by a portion of the Bond proceeds to the extent such costs, fees and operating expenses exceed revenues generated by such parking structure. The calculation and inclusion or exclusion of particular items of expense or income into such costs, fees, expenses and revenues shall be subject to and limited by the provisions of the following documents, which documents shall be in the form approved by the City Council in connection the issuance of the Bonds, and which documents, upon such approval, shall be deemed to be incorporated herein by this reference: (i) any covenants, conditions or restrictions encumbering such parking structure and/or the real property upon which it is to be constructed as of the date of issuance of the Bonds, (ii) the initial parking management agreement governing the operation and maintenance of such parking structure (the provisions of such initial parking management agreement to govern the determination of the Parking Structure Maintenance Special Tax for so long as the Special Tax lien remains in effect, notwithstanding any earlier expiration or termination of such agreement), and(iii) any amendments to the foregoing covenants, conditions or restrictions or agreements. Reserve Fund means the fund of that name created under the Indenture. Resolution of Issuance means the resolution adopted by the City Council of the City, acting as the legislative body of CFD No. 2003-1, authorizing the issuance of the Bonds in accordance with the Act. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax in each Fiscal Year on Taxable Property within CFD No. 2003-1. Special Tax Requirement means the amount required in any Fiscal Year for CFD No. 2003-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the calendar year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay Administrative Expenses, (iv) to pay costs of any credit enhancement (including fees and expenses related to any letter of credit) for the Bonds, and less a credit for available funds determined pursuant to the Indenture, and (v) to pay the Parking Structure Maintenance Special Tax. 3 Taxable Property means all of the Assessor's Parcels within the boundaries of CFD No. 2003-1, which are not Exempt Land or exempt from the Special Tax pursuant to law, but in no circumstance shall the total amount of Taxable Property be less than 40.63 acres. Trustee means the trustee who is a party to the Indenture, if so approved. B. IDENTIFYING TAXABLE PROPERTY Not less than fifteen business days prior to the beginning of each Fiscal Year, the Administrator shall determine which Parcels in CFD No. 2003-1 are Taxable Property. The Taxable Property shall be subject to Special Taxes in accordance with the rate and method of apportionment described in Sections C and D below. C. MAXIMUM SPECIAL TAX The Maximum Special Tax for the Assessor's Parcels of Taxable Property in CFD No. 2003-1 shall be the greater of (1) $65,050 per Acre or (2) the amount determined pursuant to the following steps: Step 1: Determine the maximum annual debt service on all Outstanding Bonds; Step 2: Multiply the total debt service determined in Step 1 by 1.1 and add the Administrative Expenses; Step 3: Determine the Acreage of Taxable Property within the CFD No. 2003-1; Step 4: Divide the amount from Step 2 by the Acreage from Step 3 to determine the Maximum Special Tax per Acre of Taxable Property. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, the City Council shall levy the Special Tax proportionately on each Assessor's Parcel of Taxable Property at up to 100% of the Maximum Special Tax, as determined by reference to Section C, above, as needed to satisfy the Special Tax Requirement. 4 E. LIMITATIONS No Special Taxes shall be levied on any Parcel after such Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2004-2005, and for each Fiscal Year thereafter, and until the date on which principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax may be levied and collected until such time as the City and the CFD No. 2003-01 have divested all remaining ownership interests in the parking structure. Upon determination by the Administrator that such requirements have been met, the Special Tax lien shall be removed from all Parcels in CFD No. 2003-1. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes,provided, however, that the City on behalf of CFD No. 2003-1 may directly bill the special tax or any portion thereof, may collect special taxes or any portion thereof at a different time or in a 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. Notwithstanding the foregoing, the Parking Structure Maintenance Special Tax shall be directly billed in each instance and not billed with ad valorem property taxes. G. APPEALS The City Council shall establish as part of the proceedings and administration of CFD No. 2003-1, a special three-member Review/Appeal Committee. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any appeals, as herein specified. The owner of any Taxable Property within CFD No. 2003-1 claiming that the amount or application of the Special Tax is not correct may file a written notice of appeal with the Review/Appeal Committee not later than one calendar year after having paid the Special Tax that is disputed. The Review/Appeal Committee shall promptly review the appeal, and if necessary, meet with the owner, consider written and oral evidence regarding the amount of the Special Tax, and resolve the appeal. If the Review/Appeal Committee's decision requires the Special Tax to be modified or changed in favor of the owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. This procedure shall be exclusive and its exhaustion by any owner shall be a condition precedent to any legal action by such owner. 5 H. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section H: Amount of Current Special Taxes Paid means the amount of the Special Tax levied against the subject Assessor's Parcel that was paid to the County or the City by the owner of the subject Assessor's Parcel and would be applied to debt service payments on the Redemption Date and the Interest Payment Date immediately following the Redemption Date. Outstanding Bonds means all Bonds that are deemed to be outstanding under the Indenture the day immediately preceding the next Interest Payment Date. Redemption Date means the Interest Payment Date on which Bonds are proposed to be redeemed from the prepayments of the Special Tax. 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein. The owner intending to prepay the Special Tax obligation on one or more Assessor's Parcel(s) shall provide the Administrator with written notice of intent to prepay. It shall be a condition precedent to prepayment that the owner intending to prepay the Special Tax must pay to the County all past due Special Tax on the Assessor's Parcel to be prepaid and provide proof of payment to the Administrator. Promptly following receipt of such notice, the Administrator shall notify the owner of such Assessor's Parcel(s) of the prepayment amount of such Assessor's Parcel(s). The Administrator may charge a reasonable fee for providing this figure. Prepayment must be made not less than 90 days prior to the next occurring date that Bonds may be redeemed from the proceeds of such prepayment pursuant to the Indenture. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined above or below): Bond Redemption Amount Plus Redemption Premium Plus Defeasance Amount Plus Administrative Fees and Expenses Less Reserve Fund Credit Less Amount of Current Special Taxes Paid Total: Equals Prepayment Amount 6 As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: ParagrQh No. 1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's Parcels for the current Fiscal Year. 2. Divide the Maximum Special Tax computed pursuant to Paragraph 1 by the total Maximum Special Tax of all Assessor's Parcels of Taxable Property for the current Fiscal Year. 3. Multiply the quotient computed pursuant to Paragraph 2 by the Outstanding Bonds as defined in this Section G to compute the amount of Outstanding Bonds to be retired and prepaid, and round the result up to the nearest multiple of$5,000 (the Bond Redemption Amount). 4. Multiply the Bond Redemption Amount less the par amount of Bonds scheduled to mature on the Redemption Date by the applicable redemption premium (the Redemption Premium). 5. Compute the amount needed to pay interest on the Bond Redemption Amount from the Interest Payment Date immediately preceding the Redemption Date to the Redemption Date. 6. Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 7. Add the amounts computed pursuant to Paragraph 5 and subtract the amount computed pursuant to Paragraph 6 (the Defeasance Amount). 8. Determine the administrative fees and expenses associated with 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. Determine the reserve fund credit (the Reserve Fund Credit) which shall equal the lesser of. (a) the expected reduction in the Reserve Requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new Reserve Requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 10. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Paragraphs 3, 4, 7 and 8, less (i) the amounts computed pursuant to Paragraph 9 and (ii) the Amount of Current Special Taxes Paid (the Prepayment Amount). 7 11. From the Prepayment Amount, the amounts computed pursuant to Paragraphs 3, 4, 7 (if greater than zero), and 9 shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments (as appropriate). The amount computed pursuant to Paragraph 8 shall be retained by the Administrator. With respect to any Assessor's Parcel that is prepaid, the City Council shall (i) cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, (ii) notify the County that the Special Tax, if any, remaining on the secured tax roll for the Assessor's Parcel has been satisfied and that the County should remove such amounts from the secured tax roll, and (iii) refund the owner for any Special Tax payments made on the Assessor's Parcel after the date of prepayment. From and after the prepayment, 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 the Maximum Special Tax that may be levied on Taxable Property within CFD No. 2003-1 after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Special Tax on an Assessor's Parcel of Taxable Property 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= (PH xF) +G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section H.1, minus the amounts determined in Paragraph No. 8 of Section H.1. F = the percent by which the owner of an Assessor's Parcel(s) is partially prepaying the Maximum Special Tax. G = the amounts determined in Paragraph No. 8 of Section H.1. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, and (ii) the percentage by which the Maximum Special Tax shall be prepaid. The Administrator shall promptly provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel following receipt of the request. 8 With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2003-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section H.1, and (ii) indicate in the records of CFD No. 2003-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (i.e., 100% - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. 9 Res. No. 2003-3 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 6th day of January 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and ex-officio erk of the City Council of the City of Huntington Beach, California e� r V t i I RESOLUTION NO. 2003-4 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DECLARING NECESSITY FOR PROPOSED CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2003-1 (HUNTINGTON CENTER) TO INCUR:A BONDED INDEBTEDNESS. WHEREAS, pursuant to Section 53321 of the California Government Code, the City Council (the "City Council") of the City of Huntington Beach (the "City") has adopted a resolution of intention to establish proposed City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) of the County of Orange, State of California, for the purpose of providing and financing public facilities which are necessary to meet increased demands placed upon the City as a result of development which will occur within said proposed community facilities district; and The City Council desires to issue bonds of the proposed community facilities district, the proceeds of which will be used for purposes of construction, acquisition, furnishing and equipping of public facilities; and The City Council has determined that it. necessary for said proposed community facilities district to incur a bonded indebtedness to construct, acquire, furnish and equip the public facilities; and The repayment of the bonds are to be secured by special taxes levied on all property in the proposed community facilities district. NOW, THEREFORE, the City Council of the City of Huntington Beach, does hereby resolve as follows: Section 1. Bonded Indebtedness. The City Council of the City of Huntington Beach declares that it is necessary that a bonded indebtedness be incurred by and for the proposed City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center), County of Orange, State of California, in an amount not to exceed $30,00000 for the purpose of financing the design, acquisition, construction, equipping and furnishing of the public facilities described in the resolution of intention with respect to the establishment of said community facilities district heretofore adopted by the City Council. 1 PDA:2002 resolutions:CFD 2003-1 (Necessity re Debt) RLS 2002-0668 f Section 2. Costs Included. The amount of the proposed indebtedness shall include all costs and estimated costs incidental to, or connected with, the accomplishment of the purposes for which the proposed bonded indebtedness is to be incurred, including,,but not.limited to, the estimated costs of construction, acquisition, equipping and furnishing of the public facilities which are proposed to be provided within and for the proposed community facilities district, acquisition of land and rights of way, satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the bonds are issued, architectural, engineering, inspection, legal, appraisal, fiscal and financial consultant fees, bond and other reserve funds, discount fees, interest on any bonds of the proposed community facilities district due and payable prior to the expiration of one year from the date of completion of the construction, acquisition, equipping and furnishing of the public facilities, not to exceed two years, election costs, and all costs of issuance of the bonds, including, but not limited to fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs: Section 3. Payment of Bonded Indebtedness. All non-exempt parcels of property within the proposed community facilities district shall be subject to the levy of special taxes to pay the principal of and interest on the bonds thereof which may be issued and sold to finance the design and construction of public facilities described in the Resolution of Intention. The tax is to be apportioned in accordance with the formula set forth in Exhibit"B" to the Resolution of Intention. Section 4. Hearing. A public hearing on the proposed bonded indebtedness for said proposed community facilities.district shall be held at 7:00 p.m. on.February 3, 2003, in the City Council Chamber at 2000 Main Street, Huntington Beach; California. Said hearing shall be conducted concurrently with the hearing on the establishment of said proposed community facilities district. Section 5. Notice. The City Clerk shall publish a notice of the time and place of said hearing pursuant to Section 53346 of the California Government Code, and shall also give notice of the time and place of said hearing by first class mail to each 2 PDA:2002 resolutions:CFD 2003-1 (Necessity re Debt) RLS 2002-0668 registered voter and to each landowner or owner of leasehold interest in land within the proposed community facilities district. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular.meeting thereof held.on the 6th day of January,.2003. Mayor ATTEST: APPROVED AS TO FORM: City Clerk Ci �Aom - REVIEWED AND APPROVED: INITIATED AND APPROVED s City Adnftnistrator. Director.of Economic Development 3 PDA:2002 resolutions:CFD 2003-1 (Necessity re Debt) RLS 2002-0668 Res. No. 2003-4 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: . CITY OF HUNTINGTON BEACH I, CONNIE BROCKWAY, the duly elected, qualified City Clerk - of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 6th day of January 2003 by the following vote: AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy NOES: None ABSENT: None ABSTAIN: None City Clerk and. ex-ofFcio C14k of the City.Council of the City.of Huntington Beach, California CA • CITY OF HUNTINGTON BEACIP" J" -b A 11 2 INTER-DEPARTMENT COMMUNICATION Economic Development Department TO Mayor and City Council VIA Ray Silver, City Administrator FROM David C. Biggs, Director of Economic Development w SUBJECT Late Communication,Revised Pages to Resolutions pertaining to Item F-1 (Community Facilities District 2003-1 (Huntington Center)) DATE January 6, 2003 Due to the necessity to change the public hearing date for the Community Facilities District 2003-1 (Huntington Center) from January 21"to February P, the two resolutions for tonight's meeting needed to be revised. Attached are page 3 to the Resolution 2003-3 (Intention to Establish) and page 2 of Resolution 2003-4 (Necessity to Incur Debt). Please substitute these pages. Thank you. Lat& bmm u,i I d n- bonds of the proposed community facilities district and the annual administrative expenses of the City and the proposed community facilities district in determining, apportioning, levying and collecting such special taxes, and in paying the principal of and interest on such bonds, and the costs of registering, exchanging and transferring such bonds, secured by the recordation of a continuing lien against all taxable or nonexempt property in the proposed community facilities district, and maintaining a reserve fund for such bonds, and paying any amounts that must be paid to the United States in order to preserve the tax-exempt status of such bonds shall be annually levied within the proposed community facilities district. Additionally, there shall be levied special taxes sufficient to pay for the maintenance, repair and replacement of such public facilities. The rates and method of apportionment of said special taxes shall be as set forth in Exhibit"B" attached hereto and by this reference made a part hereof. Section 6. Exempt Properties. Pursuant to Section 53340 of the California Government Code, properties of entities of the state, federal, and local governments shall be exempt from the levy of special taxes for the payment of the principal of and interest on the bonds of the proposed community facilities district. Section 7. Necessity. The City Council finds that the proposed public facilities described in Section 4 hereof are necessary to meet increased demands placed upon the City as a result of new development occurring within the boundaries of the proposed community facilities district. Section 8. Hearing. A public hearing on the establishment of the proposed community facilities district shall be held at 7:00 p.m. on February 3, 2003, in the City Council Chambers at the City Hall, 2000 Main Street, Huntington Beach, California. Section 9. Notice. The City Clerk shall publish a notice of the time and place of said hearing as required by Section 53322 of the California Government Code, and shall also give notice of the time and place of said hearing by first-class mail to each registered voter and to each landowner within the proposed community facilities district as prescribed by Section 53322.4 of said Code. Said notice shall be published at least seven (7) days and mailed at least 10 days before the date of the hearing, and shall contain the information required by said Section 53322. Section 10. Reports. The officers of the City who will be responsible for providing the proposed types of public facilities to be provided within and financed by the proposed community facilities district, if it is established, shall study the proposed district, and, at or before the time of said hearing, file a report with the City Council containing a brief description of the public facilities by type which will in their opinion be required to adequately meet the needs of the proposed community facilities district and their estimate of the fair and reasonable cost of providing those public facilities and the incidental expenses to be incurred in connection therewith. All such reports shall be made a part of the record of the hearing to be held pursuant to Section 8 hereof. Section 11. Annexation of Territory. Other property within the boundaries of the 3 PDA:2002 resolutions:CFD 2003-1:(Intention to Establish) RLS 2002-0668 Section 2. Costs Included. The amount of the proposed indebtedness shall include all costs and estimated costs incidental to, or connected with, the accomplishment of the purposes for which the proposed bonded indebtedness is to be incurred, including, but not limited to, the estimated costs of construction, acquisition, equipping and furnishing of the public facilities which are proposed to be provided within and for the proposed community facilities district, acquisition of land and rights of way, satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the bonds are issued, architectural, engineering, inspection, legal, appraisal, fiscal and financial consultant fees, bond and other reserve funds, discount fees, interest on any bonds of the proposed community facilities district due and payable prior to the expiration of one year from the date of completion of the construction, acquisition, equipping and furnishing of the public facilities, not to exceed two years, election costs, and all costs of issuance of the bonds, including, but not limited to fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs. Section 3. Payment of Bonded Indebtedness. All non-exempt parcels of property within the proposed community facilities district shall be subject to the levy of special taxes to pay the principal of and interest on the bonds thereof which may be issued and sold to finance the design and construction of public facilities described in the Resolution of Intention. The tax is to be apportioned in accordance with the formula set forth in Exhibit "B" to the Resolution of Intention. Section 4. Hearing. A public hearing on the proposed bonded indebtedness for said proposed community facilities district shall be held at 7:00 p.m. on February 3, 2003, in the City Council Chamber at 2000 Main Street, Huntington Beach, California. Said hearing shall be conducted concurrently with the hearing on the establishment of said proposed community facilities district. Section 5. Notice. The City Clerk shall publish a notice of the time and place of said hearing pursuant to Section 53346 of the California Government Code, and shall also give notice of the time and place of said hearing by first class mail to each 2 PDA:2002 resolutions:CFD 2003-1 (Necessity re Debt) RLS 2002-0668 r'1iV rl _ ; .; fi U r, l.':vJi:, I r 1 MM 3 P 2. 51 Formation of Community Facilities District No. 2003-1 (Huntington Center) City Council Meeting January 6, 2003 F-1 Purpose of CFD ♦ The Redevelopment Agency approved an Owner Participation Agreement (OPA) with Huntington Associates, LLC, Oct. 2, 2000. ♦ The OPA provides for the formation of a CFD as a method for financing public improvements and reducing costs. ♦ The Agency has agreed to pay for certain costs through a Developer Advance of funds of up to $16.75 million if the Wards parcel is included, and up to $15 million without the Wards parcel. Slide 2 1 Purpose of CFD ♦ A CFD allows a private party to borrow funds through the issuance of tax-exempt bonds. ♦ Bond proceeds will be used to pay for public improvements and other eligible project costs. ♦ Bonds are repaid through a Special Property Tax levy on the property within the CFD. Slide 3 Purpose of CFD ♦ The proposed CFD covers only the Huntington Center property owned by Huntington Center Associates, LLC (excluding the Wards parcel owned bySears) s_....._....._._._....__..-----.__...___...._.._.-. -----..__.... ffi...� I.v CFD 20 jHuntington on r i p m ,s_ a E 31 � � I Slide 4 2 CFD Special Property Tax ♦ The Special Property Tax levy will be on the real property interest of Huntington Center Associates, LLC. ♦ The property owner is solely responsible for paying the bonds through a property tax levy. ♦ The City serves as the conduit for issuance of the Bonds. ♦ The City has no obligation for repayment of the Bonds. I Slide 5 CFD Formation/Bonds ♦ Tonight's actions will initiate the formation of the ry CFD. ♦ A public hearing on the CFD is scheduled for January 21, 2003 ♦ Bonds will be issued for the CFD in the future by separate City Council action. ♦ CFD formation documents authorize the issuance of up to $30 million in bonds to pay for public improvements. Size of bond issue will be determined prior to final City Council action. Slide 6 3 Reasons/Benefits for CFD Formation ♦ CFD Bonds will allow the Developer to secure a lower Cost Source of Funds for the Developer Advance. ♦ Since the Developer Advance is to be repaid from a portion of the Huntington Center public revenues (Property Tax Increment & Sales Tax), the City/Agency will be the beneficiaries of the lower interest rate. Slide 7 Next Steps ♦ January 21, 2003 1. Hold a the public hearing on the CFD formation. 2. Approve the Community Facilities District Report. 3. Approving establishing the CFD and Establish its Boundaries. 4. Request the City Clerk to conduct a special election on the formation of the Community Facilities District. 5. Determine the necessity for the CFD and call for a Special Election of the property owners to incur the indebtedness. 6. Conduct the Special Election &Approve the Results. ♦ Future City Council Meeting 1. Approve issuing the Bonds 2. Approve the size of the Bond Issue Slide 8 4 Recommended Actions ♦ Adopt Resolution No. 2003-3 (Resolution of Intention) of the City of Huntington Beach describing its boundaries, the types of public facilities, the voting procedures, authorize the levy of special taxes,and establishing the date and time for a public hearing. i Slide 9 Recommended Actions ♦ Adopt Resolution No. 2003-4 declaring the necessity for the formation of Community Facilities District No. 2003-1 to incur a bonded indebtedness in an amount not to exceed$30 million for providing public facilities. i Slide 10 5 DEC-20-2002 09:24 P.01iO3 BEST BEST & KRIEGER LLP A CALIFORNIA WMITeD LIA13ILM PARTNCRSPIIP INCLUDINC PQOf CSSIONAL CORPORATION LAWYERS 3%50 UNIVERSITY AVENUE RANCHO MIRAGE P05T OFFICE BOX 1028 (7050) 565-26I 1 RIVERSIDE, CALIFORNIA QZ302-1028 SAN DIEGO TEt.F.PHONE (90Q) 086-1 450 (C 1 9) 525-1 300 ONTARIO TELECOPIER (909) 866-3093 (909) 969-6564 WWW•BBKLAW.COM ��C t.7 AlC�2 December 17 , 2002 p�G15TAAB OF VOT��s VIA OVERNIGHT MAIL Ms. Rosalyn Lever Registrar of Voters County of Orange s 1300 South Grand Avenue, Building C Santa Ana, CA 92705 —' o - rn rj — Re: City of Huntington Beach `'K Community Facilities District No. 2003-1 (Huntington Center) > Dear leis. Lever: � '- 3 On January 6, 20 , the City of Huntington Beach will be initiating proceedings for the formation of Community Facilities District No. 2003-I. (Huntington Center) to be established under the provisions of the Mello-Roos Community Facilities Act of 1982. The :Mello-Roos Act requires that an election be held and the voting procedures are determined based on the number of registered voters that are residing within the territory of the community facilities district. Enclosed are copies of a map outlining the boundaries of Community Facilities District No. 2003-1 and a legal description for the property. We would appreciate it if you would ask a member of your staff to check the precinct index and prepare a letter addressed to the City Clerk of the City of Huntington Beach certifying to the number of registered voters residing within the boundaries of this community facilities district. To assist you and your staff in preparing the letter, we are enclosing a suggested draft of the letter which we will need in order to meet the legal requirements for these proceedings. If you determine that there are registered voters residing in this community facilities district, we will also need the names and addresses of the registered voters, We would appreciate receiving this letter prior to December 27,2002..Please call me or Barbara Skinner at (909) 686-1450 if you have any questions. Your assistance is appreciated. Yours sincerely, rm4tB4es of REST._RF..ST_B_KRTEGRR T T P -- KAB bjs Post-It"'brand fax transmittal memo 7 4 of pages► .Enclosures © CO• CO. pt, Phone+Y Fax# Fax M RVFUMBJS\643447 DEC-20-2002 09:24 P.02iO3 CERTIFICATE OF REGISTRAR OF VOTERS State of California ) ) ss. County of Orange ) I, ROSALYN LEVER, Registrar of Voters of said County, hereby certify that: I have been furnished a map describing the boundaries of proposed Community Facilities District No. 2003-1 (Huntington Center) of the City of Huntington Beach, County of Orange, State of California. On December 18, 2002, 1 conducted, or caused to be conducted, a review of the voter registration records of the County of Orange for the purpose of determining the number of voters registered to vote within the boundaries of proposed Community Facility District No. 2003-1 (Huntington Center). As of December 18, 2002, there were no registered voters residing with the boundaries of proposed Community Facilities District No. 2003-1 (Huntington Center). WITNESS my hand and official seal this 19'h of December, 2002. • ROSALYNkSVER Registrar of Voters • DEC-20-2002 09:25 P.03iO3 City of Huntington Beach Community Facilities District No. 2003-1 (Huntington Center) The CFD includes the following eight Assessor Parcel Numbers owned by Huntington Center Associates, LLC, totaling 43.86 acres: 142-071-53), 142-071-61, 142-071-80, 142-071-85, 142-071-93, 142-071-97, 142-071-98, and 147-071-99. The legal description of the proposed boundary of the CFD is: Parcels 2 through 9 as shown on parcel Map No. 86-200 filed in Book 255, pages 40-45, of Parcel Maps in the Office of the County Recorder of Orange County, California. TOTAL P.03 RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Approve the Resolution of Intention to Establish the proposed Huntington Beach Community Facilities District No. 2003-01 (Huntington Center) and Resolution of Necessity to incur Bonded Indebtedness COUNCIL MEETING DATE: r January 6, 2003 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbud et, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable. EXPLANATION FOR-MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff ) ) Assistant City Administrator Initial City Administrator Initial City Clerk ( ) EXPLANATION FOR RETURN OF ITEM: SpaceOnly) RCA Author: Runzel X 5224