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File 1 of 3 - City of Huntington Beach Community Facilities
co THE �z l�fY:OF HUNThIVGTON B£ACH- y�a7f �.2'C✓ „;tt ' t � t E 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 2"d Floor City Hall Huntington Beach CA 92648 (714) 536-5227 ° .-JAE CITY OF HUNTINGTON BEACH �- InterOffice Communication Economic Development Department TO: Honorable Mayor and City Council Members VIA: Ray Silver, City Administrator FROM: David C. Biggs, Director of Economic Development 1711Y DATE: July 1, 2002 SUBJECT: City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Attached is the Preliminary Official Statement for the McDonnell Centre Business Park Community Facilities District. The underwriter, Stone &Youngberg LLC, held an initial sale on June 26`h. During the three hour sale about 65%of the bonds were sold, $3,185,000 of the $4,900,000 total. A majority portion of the sold amount was purchased by PIMCO. The interest rate on the bonds ranged from 4.0% for short-term to 6.3%on the longest-term maturity date in 2023. The bonds are scheduled to close on July 17, 2002. If you have any questions,please contact me at 536-5909. Attachment Stephen J.Barker Boeing Realty Corporation President 15480 Laguna Canyon Rd,Ste 200 Irvine.CA 92618 March 14, 2003 0 3 C? Mr. Robert Beardsley N r Director of Public Works City of Huntington Beach 2000 Main Street BOF/NG Huntington Beach, CA 92648 l �, N D T RE: -Improvement Area A of-the-City of-Huntington Beach Community - Facilities District No. 2002-1 (McDonnell Centre Business Park)and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Dear Mr. Beardsley: Please be advised that Boeing Realty Corporation's corporate office has relocated. All future documents relating to the above referenced community facility district should be forwarded to the following address: Boeing Realty Corporation 15480 Laguna Canyon Road, Suite 200 Irvine, CA 92618 Attention: Jim Schulte If you should have any questions, please do not hesitate to contact Jim Schulte at 562-593- 8526. Sincerely, BOEING REALTY COR TION Stephen j Barker President sbj/nrf cc: Ray Silver, City Administrator, City of Huntington Beach David Biggs, Director of Economic Development, City of Huntington Beach Clay Martin, Director of Administrative Services, City of Huntington Beach Daniel Villella, Finance Officer, City of Huntington Beach Shari Freidenrich, City Treasurer, City of Huntington Beach Gail Hutton, City Attorney, City of Huntington Beach Connie Brockway, City Clerk, City of Huntington Beach Bill Workman, Assistant City Administrator, City of Huntington Beach James Schulte, Development Manager, PacifiCenter, Boeing Realty Corporation I'r CITY OF HUNTINGTON BEACH From The Desk Of Christy Teague Economic Development (714) 375-5088 teagueco@surfcity-hb-org CITY CLERIC'S ORIGINAL RrcLD of—ol—a Z PURCHASE CONTRACT $4,900,000 Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A June 27, 2002 City of Huntington Beach 2000 Main Street Huntington Beach,California 92648 Attention: City Administrator Ladies and Gentlemen: Stone &Youngberg LLC (the "Underwriter") offers to enter into this Purchase Contract (this "Purchase Contract") with the City of Huntington Beach, California (the "City"), which, upon your acceptance of this offer,will be binding upon the City and the Underwriter. Terms not otherwise defined herein shall.have the same meanings as set forth in the Fiscal Agent Agreement described below. This offer is made subject to the acceptance by the City of this Purchase Contract on or before 11:59 p.m.on June 27,2002 or such later time as is acceptable to the Underwriter. 1. Upon the terms and conditions and in reliance upon the representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the City,and the City hereby agrees to sell to the Underwriter, all (but not less than all) of the $4,900,000 aggregate principal amount of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Improvement Area A") Special Tax Bonds, Series 2002-A (the "Bonds"), at an aggregate purchase price (the "Purchase Price") of $4,805,862.30 (equal to the initial principal amount of the Bonds of $4,900,000.00 less an Underwriter's discount of$94,137.70). The Bonds will be issued pursuant to the City of Huntington Beach Special Tax Financing Improvement Code (constituting Chapter 3.56 of the City's Municipal Code), and, where applicable, the Mello-Ross Community Facilities Act of 1982, as amended (constituting Sections 53311 et seq. of the California Government Code) (collectively, the "Law") and Resolution No. 2002-63 adopted on June 17, 2002 by the City Council (the "City Council") of the City acting as the legislative body of Improvement Area A (collectively, with Resolution Nos. 2002-27 and 2002-28 of the City Council adopted on April 1, 2002 and Resolution Nos. 2002-38, 2002-39, 2002-40 and 2002-41 of the City Council adopted on June 3, 2002, the "Resolutions"). The Special Tax to provide a source of payment for the Bonds will be levied pursuant to Ordinance No. 3557 adopted by the City Council on June 17, 2002 (the "Ordinance"). The Bonds will be issued pursuant to the terms of a Fiscal Agent Agreement (the "Fiscal Agent Agreement"), dated as of June 1, 2002, between the City and BNY Western Trust Company, Los Angeles, California, as fiscal agent (the "Fiscal Agent"). The proceeds of the sale of the Bonds will be used by the District for (a) the acquisition and construction of public improvements identified in the proceedings to form the District, pursuant to an Acquisition Agreement, dated as of June 1, 2002 (the "Acquisition Agreement") between the City and Boeing Realty Corporation (the "Developer"), (b) to fund a reserve fund, (c) to fund capitalized interest for the Bonds for a limited period of time, and (d) to pay the costs of-issuance and administrative expenses related to the Bonds. The obligations of the Developer under the Acquisition Agreement will be guaranteed under a Guaranty of The Boeing Company (the "Guaranty") in the form attached to the Acquisition Agreement. 2. The Bonds will mature on the dates and in the principal amounts, and will bear interest at the rates, as set forth in Exhibit D hereto. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the offering prices set forth on the cover of the final Official Statement described below. 3. (a) The City agrees to deliver to the Underwriter as many copies of the Official Statement, dated the date hereof, relating to the Bonds (as supplemented and amended from time to time, the "Final Official Statement") as the Underwriter shall reasonably request as necessary to comply with paragraph (b)(4) of Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"). The City agrees to deliver such Final Official Statements within seven (7) business days after the execution hereof. The Underwriter agrees to deposit the Final Official Statement with a qualified national registered municipal securities information repository on or as soon as practicable after the Closing Date. The Underwriter agrees to deliver a copy of the Final Official Statement to each of its customers purchasing Bonds no later than the settlement date of the transaction. (b) The City has authorized and approved the Preliminary Official Statement dated June 18, 2002 and hereby authorizes and approves the Final Official Statement (the Final Official Statement, the Preliminary Official Statement and any amendments or supplements that may be authorized for use with respect to the Bonds are herein referred to collectively as the "Official Statement"), consents to their distribution and use by the Underwriter and authorizes the execution and approval of the Final Official Statement by a duly authorized officer of the City. 4. The City and Improvement Area A represent and warrant to the Underwriter that: (a) The City is duly organized and validly existing as a charter city and municipal corporation under the Constitution and laws of the State of California (the "State"), Improvement Area A is duly organized and validly existing as an improvement area of a community facilities district under the laws of the State, including the Law, with the City Council acting as Improvement Area A's legislative body, and the City has the full legal right, power and authority (i) upon satisfaction of the conditions in this Purchase Contract and the Fiscal Agent Agreement,to issue the Bonds,and (ii) to secure the Bonds in the manner contemplated in the Fiscal Agent Agreement. (b) The City Council, acting as the legislative body of Improvement Area A, has the full legal right,power and authority to adopt the Resolutions and the Ordinance, and the City has the full legal right, power and authority (i) to enter into this Purchase Contract, the Acquisition Agreement, the Fiscal Agent Agreement, and the Continuing Disclosure Certificate-Issuer relating to the Bonds (the "CFD Disclosure Certificate"), (ii) to issue,sell and deliver the Bonds to the Underwriter as provided herein,and (iii) to carry out and consummate all other transactions on its part and on the part of Improvement Area A contemplated by each of the aforesaid documents (such documents together with the Final Official Statement and such other certificates or -2- instruments required on the part of the City or Improvement Area A to carry out the transactions contemplated by such instruments are collectively referred to herein as the "Community Facilities District Documents"), and the City, Improvement Area A and the City Council have complied with all provisions of applicable law,including the Law, in all matters relating to such transactions. (c) The City and Improvement Area A have duly authorized (i) the execution and delivery by the City of the Bonds, (ii) the execution, delivery and due performance by the City and Improvement Area A of their obligations under the Fiscal Agent Agreement, the Acquisition Agreement and the CFD Disclosure Certificate, (iii) the distribution and use of the Preliminary Official Statement and execution, delivery and distribution of the Final Official Statement,and (iv) the taking of any and all such action as may be required on the part of the City or Improvement Area A to carry out, give effect to and consummate the transactions on the part of the City and Improvement Area A contemplated by such instruments. All consents or approvals necessary to be obtained by the City or Improvement Area A in connection with the foregoing have been received,and the consents or approvals so received are still in full force and effect. (d) The Resolutions and Ordinance have been duly adopted by the City Council and are in full force and effect; the Fiscal Agent Agreement, the Acquisition Agreement and the CFD Disclosure Certificate,when executed and delivered by the City and the other respective parties thereto, will constitute legal, valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors'rights generally. (e) When delivered to the Underwriter, the Bonds will have been duly authorized by the City Council (acting as the legislative body for Improvement Area A) and duly executed, issued and delivered by the City and will constitute legal,valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, and will be entitled to the benefit and security of the Fiscal Agent Agreement. (f) The information relating to the City and Improvement Area A contained in the Preliminary Official Statement is,and as of the date of closing such information in the Final Official Statement will be true and correct in all material respects, and the Preliminary Official Statement does not as of its date and the Final Official Statement will not as of the Closing Date contain any untrue or misleading statement of a material fact relating to the City and Improvement Area A or omit to state any material fact relating to the City and Improvement Area A necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. (g) If, at any time prior to the earlier of (i) receipt of notice from the Underwriter that Final Official Statement is no longer required to be delivered under the Rule or (ii) 90 days after the Closing, any event known to the officers of the City participating in the issuance of the Bonds occurs with respect to. the City or Improvement Area A as a result of which the Final Official Statement as then amended or supplemented might include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the City shall promptly notify the Underwriter in writing of such event. Any information supplied by the City for inclusion in any amendments or supplements to the Final Official Statement will not contain any -3- untrue or misleading statement of a material fact relating to the City or Improvement Area A or omit to state any material fact relating to the City or Improvement Area A necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. (h) To the best knowledge of the official of the City executing this Purchase Contract, neither the adoption of the.Resolutions or the Ordinance, the execution and delivery of the Community Facilities District Documents, nor the consummation of the transactions on the part of the City and Improvement Area A contemplated herein or therein or the compliance by the City and Improvement Area A with the provisions hereof or thereof will conflict with, or constitute on the part of Improvement Area A or the City a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which Improvement Area A or the City is a party or by which it is bound, (ii) any provision of the State Constitution, or (iii) any existing law, rule,regulation, ordinance, judgment, order or decree to which Improvement Area A or the City is subject. (i) The City has never been in default at any time, as to principal of or interest on any obligation which it has issued,which default may have an adverse effect on the ability of the City or Improvement Area A to consummate the transactions on their part under the Community Facilities District Documents,and other than the Fiscal Agent Agreement, neither the City nor Improvement Area A has entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on the Special Taxes. (j) Except as is specifically disclosed in the Final Official Statement, to the best knowledge of the official of the City executing this Purchase Contract, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the City or Improvement Area A has been served with process or threatened, which in any way questions the powers of the City Council,the City or Improvement Area A referred to in paragraph(b) above, or the validity of any proceeding taken by the City Council in connection with the issuance of the Bonds, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by this Purchase Contract, or of any other Community Facilities District Document, or which, in any way, could adversely affect the validity or enforceability of the Resolutions, the Ordinance, the Fiscal Agent Agreement,the Acquisition Agreement,the CFD Disclosure Certificate,the Bonds or this Purchase Contract or,to the knowledge of the official of the City executing this Purchase Contract,which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes or in any other way questions the status of the Bonds under federal or State tax laws or regulations. (k) Any certificate signed by an official of the City authorized to execute such certificate and delivered to the Underwriter in connection with the transactions contemplated by the Community Facilities District Documents shall be deemed a representation and warranty by the City and Improvement Area A to the Underwriter as to the truth of the statements therein contained. (1) Neither the City nor Improvement Area A has been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. -4- (m) The Bonds will be paid from the Special Tax (as defined in the Rate and Method of Apportionment of Special Taxes for Improvement Area A) received by the City and from amounts in certain funds established under the Fiscal Agent Agreement. (n) The Special Tax may lawfully be levied in accordance with the Rate and Method of Apportionment of Special Taxes for Improvement Area A,and, when levied, will be secured by a lien on the property on which it is levied. (o) The Fiscal Agent Agreement creates a valid pledge of, first lien upon and security interest in the Special Tax deposited thereunder, and the moneys in certain funds and accounts established pursuant to the Fiscal Agent Agreement including the investment earnings thereon, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein. (p) Neither the City nor Improvement Area A has failed to comply with any continuing disclosure obligations under Rule 15c2-12(b)(5) of the Securities and Exchange Commission. 5. The City covenants with the Underwriter that the City will cooperate with the Underwriter (at the cost of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may reasonably request; provided,however,that the City shall not be required to consent to suit or to service of process in any jurisdiction. The City consents to the use by the Underwriter of the Community Facilities District Documents in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds. 6. At 8:00 a.m. on July 17, 2002 or at such other time and/or date as shall have been mutually agreed upon by the City and the Underwriter,the City will deliver or cause to be delivered to the Underwriter the Bonds in definitive form duly executed and authenticated by the Fiscal Agent together with the other documents hereinafter mentioned;and the Underwriter will accept such delivery and pay the Purchase Price of the Bonds by delivering to the Fiscal Agent for the account of the City a check payable in federal funds or making a wire transfer in federal funds payable to the order of the Fiscal Agent. The activities relating to the final execution and delivery of the Bonds and the Fiscal Agent Agreement and the payment therefor and the delivery of the certificates, opinions and other instruments as described in Section 8 of this Purchase Contract shall occur at the offices of Quint &Thimmig LLP,One Embarcadero Center,Suite 2420,San Francisco, California. The payment for the Bonds and simultaneous delivery of the Bonds to the Underwriter is herein referred to as the "Closing." The Bonds will be delivered as definitive registered Bonds initially with one Bond for each maturity of the Bonds registered in the name of CEDE & CO., as nominee of The Depository Trust Company, and will be made available for checking and packaging by the Underwriter at such place as the Underwriter and the Fiscal Agent shall agree not less than 24 hours prior to the Closing. 7. The Underwriter shall have the right to cancel its obligations to purchase the Bonds if between the date hereof and the date of Closing: (a) the House of Representatives or the Senate of the Congress of the United States, or a committee of either, shall have pending before it, or shall have passed or recommended favorably, legislation introduced previous to the date hereof, which legislation,if enacted in its form as introduced or as amended,would have the purpose -5- or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the District,the City or by any similar body under the Fiscal Agent Agreement or upon interest received on obligations of the general character of the Bonds or the Bonds, or of causing interest on obligations of the general character of the Bonds, or the Bonds, to be includable in gross income for purposes of federal income taxation,and such legislation,in the Underwriter's opinion,materially adversely affects the market price of the Bonds;or (b) a tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States,or legislation shall be favorably reported or rereported by such a committee or be introduced, by amendment or otherwise, in or be passed by the House of Representatives or the Senate,or recommended to the Congress of the United States for passage by the President of the United States, or be enacted or a decision by a federal court of the United States or the United States Tax Court shall have been rendered, or a ruling,release,order,regulation or official statement by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency shall have been made or proposed to be made having the purpose or effect, or any other action or event shall have occurred which has the purpose or effect, directly or indirectly, of adversely affecting the federal income tax consequences of owning the Bonds, including causing interest on the Bonds to be included in gross income for purposes of federal income taxation,or imposing federal income taxation upon revenues or other income of the general character to be derived by the District under the Fiscal Agent Agreement or upon interest received on obligations of the general character of the Bonds, or the Bonds and also including adversely affecting the tax-exempt status of the City or the District under the Code,which,in the opinion of the Underwriter,materially adversely affects the market price of or market for the Bonds;or (c) legislation shall have been enacted, or actively considered for enactment with an effective date prior to the Closing, or a decision by a court of the United States shall have been rendered,the effect of which is that the Bonds,including any underlying obligations, or the Fiscal Agent Agreement, as the case may be, is not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect,or the Trust Indenture Act of 1939, as amended and as then in effect;or (d) a stop order,ruling,regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds, including any underlying obligations, or the execution and delivery of the Fiscal Agent Agreement as contemplated hereby or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect;or (e) any event shall have occurred or any information shall have become known to the Underwriter which causes the Underwriter to reasonably believe that the Final Official Statement as then amended or supplemented includes an untrue statement of a material fact, or omits to state any material fact necessary to make the statements therein,in light of the circumstances under which they were made, not misleading;or -6- (f) there shall have occurred any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or (g) there shall be in force a general suspension of trading on the New York Stock Exchange,the effect of which on the financial markets of the United States is such as,in the reasonable judgment of the Underwriter,would materially adversely affect the market for or market price of the Bonds; or (h) a general banking moratorium shall have been declared by federal,New York or State authorities;or (i) any proceeding shall be pending or threatened by the Securities and Exchange Commission against Improvement Area A. the City or any other governmental body for which the members of the City Council act as the governing board;or 0) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; or (k) the New York Stock Exchange or other national securities exchange, or any governmental authority,shall impose, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of,underwriters. 8. The obligations of the Underwriter to purchase the Bonds shall be subject (a) to the performance by the City and Improvement Area A of their obligations to be performed hereunder at and prior to the Closing, (b) to the accuracy as of the date hereof and as of the time of the Closing of the representations and warranties of the City and Improvement Area A herein, and (c) to the following conditions, including the delivery by Improvement Area A of such documents as are enumerated herein: (a) At the time of Closing, (i) the Official Statement, this Purchase Contract, the CFD Disclosure Certificate,the Continuing Disclosure Certificate-Landowner (the "Landowner Disclosure Agreement" and, collectively with the CFD Disclosure Certificate, the "Disclosure Certificate"), the Acquisition Agreement and the Fiscal Agent Agreement shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter,and (ii) the City Council shall have duly adopted and there shall be in full force and effect such resolutions as, in the opinion of Quint & Thimmig LLP, Bond Counsel ("Bond Counsel"), shall be necessary in connection with the transactions contemplated hereby. (b) Receipt of the Bonds at or prior to the Closing. The terms of the Bonds, as delivered,shall in all instances be as described in the Final Official Statement. (c) At or prior to the Closing, the Underwriter shall receive the following documents in such number of counterparts as shall be mutually agreeable to the Underwriter and the City: -7- (i) A final approving opinion of Bond Counsel dated the date of Closing, in substantially the form set forth in Appendix B to the Official Statement. (ii) A letter of Bond Counsel addressed to the Underwriter and dated the date of Closing, which opines as to the matters set forth in Exhibit A hereto, and which includes a statement to the effect that Bond Counsel's final approving opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to the Underwriter. (iii) An opinion of Disclosure Counsel in substantially the form set forth in Exhibit B hereto. (iv) The Final Official Statement executed on behalf of the District by a duly authorized officer of the City. (v) Certified copies of the Resolutions and the Ordinance, and executed copies of the Fiscal Agent Agreement, the Acquisition Agreement,the CFD Disclosure Certificate, the Landowner Disclosure Agreement and the Guaranty. (vi) Specimen Bonds. (vii) A letter from John S. Adams & Associates in which consent is given to the use of its Appraisal dated April 1, 2002 in the Preliminary Official Statement and the Official Statement and the references to the firm, and the Appraisal in the Preliminary Official Statement and the Official Statement. (viii) A certificate, in form and substance as set forth in Exhibit C hereto,of the City and Improvement Area A,dated as of the Closing Date. (ix) A certificate of Michael Swan Consulting, dated the Closing Date and addressed to the Underwriter and Improvement Area A. to the effect that (A) the descriptions in the Preliminary Official Statement and the Official Statement of the Rate and Method of Apportionment of Special Taxes for Improvement Area A (the "Rate and Method"), and as set forth in Appendix D to the Official Statement, are fair and accurate; and (B) the Special Tax, if collected in the maximum amounts permitted pursuant to the Rate and Method as in effect on the Closing Date,would generate at least 110%of the gross annual debt service payable on the Bonds. (x) A certificate or certificates addressed to the Underwriter and the City from the Developer to the effect that: (A) to the best of the Developer's knowledge, nothing has come to the Developer's attention which would contradict the information set forth in the Official Statement under the headings "Improvement Area A -Location" and "Improvement Area A-Public Facilities"; (B) any and all written information submitted by or on behalf of the Developer to the Underwriter or Disclosure Counsel in connection with the preparation- of the Preliminary Official Statement and the Official Statement or to the Appraiser in connection with the preparation -8- of its appraisal report was at the time submitted and, to the best knowledge of the officer of the Developer signing the certificate is, true and correct; (C) the statements relating to the Developer, McDonnell Douglas Corporation, The Boeing Company and the Development (as defined in the Official Statement) contained in the Preliminary Official Statement and the Official Statement do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they are made,not misleading; (D) no proceedings are pending or threatened in which the Developer,The Boeing Company or McDonnell Douglas Corporation may be adjudicated as bankrupt or discharged from all or substantially all of its respective debts or obligations or granted an extension of time to pay its respective debts or a reorganization or readjustment of its debts; (E) no action,suit proceedings,inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body,is pending or, to the best knowledge of the officer of the Developer signing the certificate threatened in any way,seeking to restrain or enjoin the development of the real property in Improvement Area A; (F) the Developer covenants that, while the Bonds are outstanding, it will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body which in any way seeks to challenge or overturn the District's formation or existence, the levy or collection of the Special Tax (provided that such levy and collection are in accordance with the terms of the Rate and Method) or the validity of the Bonds or the proceedings taken for their issuance; (G) all property tax installments due with respect to the property within Improvement Area A have been paid through the second ' installment due for 2001/2002; (H) the Developer is not in any material respect in violation of, breach of, or default under any applicable constitutional provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over the Developer of any of its activities, properties or assets, or any indenture, mortgage,deed of trust,resolution,note agreement or other agreement or instrument to which the Developer is a party which violation or breach of or default would have a material adverse effect upon the transactions on the part of the Developer contemplated by the Acquisition Agreement or otherwise described in the Official Statement,and no event has occurred and is continuing which with the passage of time or the giving of notice,or both would constitute such a default or event of default under any such instruments; and the execution and delivery by the Developer of the Acquisition Agreement, and compliance with the provisions on the Developer's part contained in the Acquisition Agreement,do not and will not in any material respect conflict with or constitute on the part of the -9- Developer a violation or breach of or default under any constitutional provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over the Developer or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement,or other agreement or instrument to which the Developer is a party or by which the Developer or any of its property or assets is bound which breach or default would have a material adverse affect upon the transactions on the part of the Developer contemplated by the Acquisition Agreement or otherwise described in the Official Statement; (I) The Boeing Company is not in any material respect in violation of, breach of, or default under any applicable constitutional provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over The Boeing Company of any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement or other agreement or instrument to which The Boeing Company is a party which violation or breach of or default would have a material adverse effect upon the transactions on the part of The Boeing Company contemplated by the Guaranty, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both would constitute such a default or event of default under any such instruments; and the execution and delivery by The Boeing Company of the Guaranty, and compliance with the provisions on The Boeing Company's part contained in the Guaranty, do not and will not in any material respect conflict with or constitute on the part of The Boeing Company a violation or breach of or default under any constitutional provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over The Boeing Company or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement, or other agreement or instrument to which The Boeing Company is a party or by which The Boeing Company or any of its property or assets is bound which breach or default would have a material adverse affect upon the transactions on the part of The Boeing Company contemplated by the Guaranty; (p the McDonnell Douglas Corporation is not in any material respect in violation of, breach of, or default under any applicable constitutional provision or law of any state or of the United States or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the McDonnell Douglas Corporation of any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution,note agreement or other agreement or instrument to which the McDonnell Douglas Corporation is a party which violation or breach of or default would have a material adverse effect upon the transactions on the part of the McDonnell Douglas Corporation contemplated by the Landowner Disclosure Agreement or otherwise described in the Official Statement, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both would constitute such a default or event of default under any such instruments;and the execution and delivery by the McDonnell Douglas Corporation of the Landowner -10- Disclosure Agreement, and compliance with the provisions on the McDonnell Douglas Corporation's part contained in the Landowner Disclosure Agreement,do not and will not in any material respect conflict with or constitute on the part of the McDonnell Douglas Corporation a violation or breach of or default under any constitutional provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over the McDonnell Douglas Corporation or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement, or other agreement or instrument to which the McDonnell Douglas Corporation is a party or by which the McDonnell Douglas Corporation or any of its property or assets is bound which breach or default would have a material adverse affect upon the transactions on the part of the McDonnell Douglas Corporation contemplated by the Landowner Disclosure Agreement or otherwise described in the Official Statement;and (K) there are no legal or governmental actions, proceedings, inquiries or investigations pending or, to the best knowledge of the officer of the Developer signing the certificate, threatened by governmental authorities or to which the Developer,The Boeing Company or McDonnell Douglas Corporation is a party or of which any property of the Developer,The Boeing Company or McDonnell Douglas Corporation is subject, which (1) seek to restrain or to enjoin the continuation and/or completion of the proposed development of the land in Improvement Area A as described in the Official Statement, or (2) if determined adversely to the Developer,The Boeing Company or McDonnell Douglas Corporation, would materially and adversely affect the transactions contemplated by the Official Statement to be engaged by the Developer, The Boeing Company or McDonnell Douglas Corporation or the ability of the Developer to perform its obligations under the Acquisition Agreement or the ability of The Boeing Company to perform its obligations under the Guaranty. (xi) An opinion addressed to the Underwriter and the District, of in- house counsel to the Developer,McDonnell Douglas Corporation and The Boeing Company, to the effect that: (A) the Developer is a corporation validly existing under the laws of the State of California, and the Developer is authorized to enter into and perform its obligations under the Acquisition Agreement; (B) McDonnell Douglas Corporation is a corporation validly existing under the laws of the State of Maryland, and is authorized to enter into and perform its obligations under the Landowner Disclosure Agreement; (C) The Boeing Company is a corporation validly existing under the laws of the State of Delaware, and is authorized to enter into and perform its obligations under the Guaranty; (D) the Acquisition Agreement, the Landowner Disclosure Agreement, and the Guaranty have been duly authorized, executed and -11- delivered by the Developer, McDonnell Douglas Corporation and The Boeing Company, respectively, and the Acquisition Agreement, the Landowner Disclosure Agreement and the Guaranty constitute the valid and binding legal obligations of such entities,respectively,enforceable in accordance with their respective terms, except as such enforceability may be limited by reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the enforcement of the rights of creditors generally as such laws may be applied in the event of a reorganization, insolvency, liquidation, readjustment or debt or other similar proceeding of or moratorium applicable to the Developer, McDonnell Douglas Corporation or The Boeing Company, respectively, and except that the availability of equitable remedies, including specific performance, to persons seeking to enforce such documents against the Developer, McDonnell Douglas Corporation or The Boeing Company, respectively,is subject to the discretion of the court;and (E) to the best knowledge of such counsel and without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, and based on the representations of the Developer, McDonnell Douglas Corporation and The Boeing Company, and in reliance thereon,and on certain documents reviewed by them as set forth in such opinion, no information came to their attention during the course of their representation of the Developer, McDonnell Douglas Corporation and The Boeing Company which caused them to believe that the statements contained in the Official Statement under the caption "THE DEVELOPER, THE LANDOWNER AND THE DEVELOPMENT," contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need to be expressed as to any financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion,or any information about valuation,appraisals or environmental matters contained therein). (xii) Evidence that Federal Form 8038 has been executed by the City for Improvement Area A and will be filed with the Internal Revenue Service. (xiii) Evidence that, except as disclosed in the Final Official Statement, all necessary approvals, whether legal or administrative, have been obtained from applicable federal,state and local entities and agencies for the construction of the public improvements to be built within the boundaries of Improvement Area A. (xiv) An opinion of the City Attorney addressed to the Underwriter, to the effect that: (A) the City is a municipal corporation and chartered city duly organized and validly existing as a public body corporate and politic under the Constitution and laws of the State of California and Improvement Area A is an improvement area of a community facilities district duly organized and validly existing under the Law, (B) the Resolutions and the Ordinance have been duly adopted at meetings of the City Council of the City which were called and held pursuant to law and with all public notices required by law at which a quorum was present and acting throughout, (C) no action, suit, proceeding, inquiry or -12- investigation, at law or in equity, before any court, regulatory agency, public board or body, to which the City or Improvement Area A is a party and has received notice of, is pending or, to her knowledge, threatened, in any way affecting the existence of the City or Improvement Area A or the titles of their officers to their respective offices,or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, the levy and collection or application of the Special Tax to pay the principal of, and interest on, the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds,the Community Facilities District Documents or any action of the City or Improvement Area A contemplated by any of said documents or in any way contesting the completeness or accuracy of the Official Statement or the powers of the City or Improvement Area A or their authority with respect to the Bonds, the Community Facilities District Documents or any action on the part of the City or Improvement Area A contemplated by any of said documents, or which challenges the exemption of interest paid on the Bonds from federal income taxation or State of California personal income taxation, (D) the City has duly authorized,executed and delivered the Community Facilities District Documents and the Official Statement, and (E) assuming due authorization, execution and delivery by the respective parties thereto where necessary, the Community Facilities District Documents constitute legal,valid and binding obligations of the City enforceable in accordance with their respective terms,subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles and the exercise of judicial discretion in appropriate cases. (xv) A certificate of the Fiscal Agent, dated the Closing Date, to the k effect that (A) the Fiscal Agent is duly organized and existing as a banking corporation under the laws of the State of California having the full power and authority to perform its duties under the Fiscal Agent Agreement, the CFD Disclosure Certificate and the Landowner Disclosure Agreement(collectively,the "Fiscal Agent Documents"); (B) the Fiscal Agent is duly authorized to accept the obligations created by the Fiscal Agent Documents and to authenticate the Bonds pursuant to the terms of the Fiscal Agent Agreement; (C) the Bonds have been duly authenticated and delivered by the Fiscal Agent in accordance with the Fiscal Agent Agreement,and the Fiscal Agent has duly authorized,executed and delivered the Fiscal Agent Documents, and by all proper corporate action has authorized the acceptance of the duties and obligations of the Fiscal Agent under the Fiscal Agent Documents; (D) assuming due authorization, execution and delivery by the other parties thereto, the Fiscal Agent Documents are valid,legal and binding of the Fiscal Agent,enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, agreements insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights in general and by general equitable principles (regardless of whether such enforcement is considered in a proceeding in equity or at law); no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Fiscal Agent that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Fiscal Agent of the other transactions contemplated to be performed by the Fiscal Agent in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Fiscal Agent Documents; (E) to the best knowledge of the officer of the Fiscal Agent -13- who signs the certificate, compliance with the terms of the Fiscal Agent Documents will not conflict with, or result in a violation or breach of, or constitute a default under,any loan agreement,indenture,bond,note,resolution or any other agreement or instrument to which the Fiscal Agent is a party or by which it is bound,or any law or any rule,regulation,order or decree of any court or governmental agency or body having jurisdiction over the Fiscal Agent or any of its activities or properties; and (F) to the best knowledge of the officer of the Fiscal Agent who signs the certificate,there is no litigation pending or threatened against or affecting the Fiscal Agent to restrain or enjoin the Fiscal Agent's participation in, or in any way contesting the powers of the Fiscal Agent with respect to the transactions contemplated by the Bonds and the Fiscal Agent Documents. (xvi) An opinion,dated the Closing Date and addressed to the District and the Underwriter, of counsel to the Fiscal Agent, to the effect that: (A) the Fiscal Agent has been duly organized and is validly existing and in good standing as a banking corporation under the laws of the State of California with full corporate power to undertake its obligations under the Fiscal Agent Documents and to authenticate and deliver the Bonds; (B) the Bonds have been duly authenticated and delivered by the Fiscal Agent in accordance with the Fiscal Agent Agreement,and the Fiscal Agent has duly authorized,executed and delivered the Fiscal Agent Documents, and by all proper corporate action has authorized the acceptance of the duties and obligations of the Fiscal Agent under the Fiscal Agent Documents; (C) assuming due authorization, execution and delivery.by the other parties thereto, the Fiscal Agent Documents are valid,legal and binding agreements of the Fiscal Agent,enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights in general and by general equitable principles (regardless of whether such enforcement is considered in a proceeding in equity or at law); and (D) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Fiscal Agent is or will be required for the execution and delivery by the Fiscal Agent of the Fiscal Agent Documents or the execution and delivery of the Bonds. (xvii) A nonarbitrage certificate of the City in form and substance acceptable to Bond Counsel and the Underwriter. (xviii) Such additional legal opinions, certificates, proceedings, instruments and other documents as Disclosure Counsel or the Underwriter may reasonably request to evidence compliance by Improvement Area A or the Developer with legal requirements, the truth and accuracy, as of the time of Closing, of the respective representations of the City and Improvement Area A herein,contained and of the Developer contained in the certificate executed by the Developer as specified in this Section and the due performance or satisfaction by each of them at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by each of them. If Improvement Area A shall be unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Contract, or if the obligations of the Underwriter to purchase and accept delivery of the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and none of the Underwriter, the City or Improvement Area A shall be under further obligation hereunder; except that the -14- respective obligations to pay expenses, as provided in Section 11 hereof shall continue in full force and effect. 9. The obligations of the City and Improvement Area A hereunder are subject to the performance by the Underwriter of its obligations hereunder. 10. All representations, warranties and agreements of the City and Improvement Area A hereunder shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the Closing. 11. The City shall pay or cause to be paid, solely from contributions by the Developer or the proceeds of the Bonds,all reasonable expenses incident to the performance of its obligations under this Purchase Contract,including, but not limited to, delivery of the Bonds, costs of printing and delivering the Bonds,the Preliminary Official Statement and Final Official Statement,any amendment or supplement to the Preliminary Official Statement or Final Official Statement and this Purchase Contract, fees and disbursements of the City's Special Tax Consultant,the appraiser, Bond Counsel, Disclosure Counsel, the City and other consultants, including the fees of the Fiscal Agent and any fees and disbursements in connection with the qualification of the Bonds for sale under the securities or "Blue Sky" laws of the various jurisdictions and the preparation of"Blue Sky" memoranda. The Underwriter shall pay all advertising expenses in connection with the public offering of the Bonds, the fees and expenses of any counsel retained by the Underwriter and all other expenses incurred by it in connection with their public offering and distribution of the Bonds. 12. Any notice or other communication to be given to the City or Improvement Area A under this Purchase Contract may be given by delivering the same in writing at its address set forth above, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Stone &Youngberg LLC, 15260 Ventura Boulevard, Suite 1520, Sherman Oaks, California 91403, Attention: Stephen E. Heaney. 13. This Purchase Contract is made solely for the benefit of the City, Improvement Area A and the Underwriter (including the successors or assigns of the Underwriter) and no other person,including any purchaser of the Bonds,shall acquire or have any right hereunder or by virtue hereof. 14. This Purchase Contract shall be governed by and construed in accordance with the laws of the State of California. -15- 15. This Purchase Contract shall become effective upon your acce ptance hereof. Very truly yours, STONE &YOUNGBERG LLC By: Its: Managing Director Accepted and agreed to as of the date first above written: CITY OF HUNTINGTON BEACH,for itself and on behalf of IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK) By: Lz�� Mayor Attest: By: City Clerk G Reviewed and Approved: By: A/1d e. '/ _ /���Ccfvr �j �ccry►�Nn c �Piv��o�?mPx f Reviewed and Approved as to Form: By: r City Attorney 08003.07:16164 -16- EXHIBIT A [Letterhead of Bond Counsel] July_, 2002 Stone&Youngberg LLC 15260 Ventura Boulevard,Suite 1520 Sherman Oaks, CA 91403 SUPPLEMENTAL OPINION: $4,900,000 Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the City of Huntington Beach (the "City") of its $4,900,000 aggregate principal amount of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), (the "Improvement Area") Special Tax Bonds, Series 2002-A (the "Bonds"),pursuant to the City of Huntington Beach Special Tax Financing Improvement Code (constituting Chapter 3.56 of the City's Municipal Code), and, where applicable, the Mello- Roos Community Facilities Act of 1982, as amended (Section 53311 et seq., of the California Government Code) (collectively, the "Law"), a Fiscal Agent Agreement, dated as of June 1, 2002 (the "Fiscal Agent Agreement"), by and between the City and BNY Western Trust Company, as Fiscal Agent, and Resolution No. 2002-63, adopted by the City Council of the City of Huntington Beach (the "City"),acting as the legislative body of the Improvement Area, on June 17, 2002. In that connection,we have examined the executed Fiscal Agent Agreement; the Bond Purchase Agreement, dated June 27, 2002 (the "Bond Purchase Agreement"), by and between you, as underwriter, and the City; the Official Statement, dated June_, 2002, relating to the Bonds (the "Official Statement"); the Acquisition Agreement, dated as of June 1, 2002 (the "Acquisition Agreement"), between the City and Boeing Realty Corporation, the Continuing Disclosure Certificate-Issuer (the "Disclosure Certificate") of the City; the law and such other certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Fiscal Agent Agreement and in the certified proceedings and other certifications of representatives of the City furnished to us,without undertaking to verify such facts by independent investigation. Based upon our examination,we are of the opinion, under existing law, as follows: 1. The Bond Purchase Agreement, the Acquisition Agreement and the Disclosure Certificate have been duly authorized, executed and delivered by, and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding agreements of the City, enforceable in accordance with their respective terms,subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of A-1 creditors' rights in general and to the application of equitable principles if equitable remedies are sought. 2. The Bonds are not subject to registration requirements of the Securities Act of 1933,as amended,and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended. 3. The information contained in the Official Statement under the captions "INTRODUCTION," "THE FINANCING PLAN," "THE SERIES 2002-A BONDS," "SECURITY FOR THE SERIES 2002-A BONDS," "CONCLUDING INFORMATION - Tax Matters," "APPENDIX A - Summary of the Fiscal Agent Agreement," and "APPENDIX B - Proposed Form of Opinion of Bond Counsel," is accurate insofar as it purports to summarize certain provisions of the Bonds, the Fiscal Agent Agreement, the Law, federal tax law,and our final legal opinion with respect to the Bonds delivered on the date of this opinion. Respectfully submitted, A-2 EXHIBIT B [Letterhead of Disclosure Counsel] July_, 2002 City of Huntington Beach 2900 Main Street Huntington Beach,California 92648 Stone&Youngberg LLC 15260 Ventura Boulevard,Suite 1520 Sherman Oaks, CA 91403 Re: $4,900,000 Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A Dear Ladies and Gentlemen: We have acted as Disclosure Counsel in connection with the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), (the "Improvement Area") Special Tax Bonds, Series 2002-A, in the aggregate principal amount of$4,900,000 (the "Bonds"), sold by the City pursuant to the Bond Purchase Contract dated June_, 2002 (the "Purchase Contract") between the City of Huntington Beach (the "City") and Stone & Youngberg LLC. The Bonds are issued pursuant to the Fiscal Agent Agreement, dated as June 1, 2002 (the "Fiscal Agent Agreement") between the City and BNY Western Trust Company,as fiscal agent (the "Fiscal Agent"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Contract. In that connection, we have reviewed certain portions of the Fiscal Agent Agreement,the Official Statement of the City, dated June_, 2002 with respect to the Bonds (the "Official Statement"),the Purchase Contract,certificates of the City,the Fiscal Agent,the Developer and others, the opinions referred to in Section 8 of the Purchase Contract and such other records, opinions and documents, and we have made such investigations of law, as we have deemed appropriate as a basis for the conclusions hereinafter expressed. In arriving at the conclusions hereinafter expressed,we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity, accuracy and sufficiency of the records, documents,certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein,including (without limitation) representations and legal conclusions regarding the due authorization, issuance,delivery,validity and enforceability of the Bonds and the exclusion of interest thereon from gross income for federal income tax purposes). We have assumed that all records, documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine. We are not passing upon and do not.:assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make B-1 no representation that we have independently verified the accuracy,completeness or fairness of any such statements. However, in our capacity as Disclosure Counsel, we met in conferences with representatives of the City, the City's special tax consultant, the Developer, the Underwriter and others, during which conferences the contents of the Official Statement and related matters were discussed. Based on our participation in the above-mentioned conferences, and in reliance thereon and on the records, documents, certificates and opinions herein mentioned (as set forth above),we advise you that,during the course of our assistance in the preparation of the Official Statement for this matter, no information came to the attention of the attorney in our firm rendering legal services in connection with.such representation which caused us to believe that the Official Statement as of its date and as of the date of this opinion (except for any financial,statistical or engineering data or forecasts,numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals or environmental matters, or the Appendices, or any information about book-entry or DTC included therein,as to which we express no opinion or view) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. We are furnishing this letter to you pursuant to Section 8(c)(iii) of the Purchase Contract solely for your benefit. Our engagement with respect to this matter has terminated as of the date hereof,and we disclaim any obligation to update this letter. This letter is not to be used, circulated,quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to,and may not,be relied upon by owners of Bonds. Very truly yours, B-2 EXHIBIT C CERTIFICATE OF CITY OF HUNTINGTON BEACH AND IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) I, Ray Silver, hereby certify that I am the City Administrator of the City of Huntington Beach (the "City") and that as such, I am authorized to execute this Certificate on behalf of the City and Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Improvement Area") in connection with the issuance of the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), Special Tax Bonds, Series 2002-A (the "Bonds"). I hereby further certify on behalf of the City and the Improvement Area that: (1) the representations, warranties and covenants of the City and the Improvement Area contained in Section 4 of that certain bond purchase contract by and between the City and Stone & Youngberg LLC, dated June 27, 2002 (the "Purchase Contract") are true and correct and in all material respects as of the date hereof as if made on the date hereof; (2) the Purchase Contract, the Fiscal Agent Agreement, the Acquisition Agreement and the CFD Disclosure Certificate (collectively, the "Community Facilities District Documents"), the Bonds and the Official Statement, dated June 27, 2002 relating to the Bonds (the "Official Statement") have been duly executed and delivered by the City, and when executed and delivered by the other respective parties thereto, will constitute valid and binding obligations of the City enforceable in accordance with their respective terms and such documents conform to the descriptions thereof in the Official Statement; (3) the representations and warranties of the City and the Improvement Area contained in the Community Facilities District Documents are true and correct in all material respects as of the date hereof as if made on the date hereof; (4) the City and the Improvement Area have complied with all agreements, covenants and conditions to be complied with by the City and the Improvement Area under the Community Facilities District Documents and the Disclosure Certificates on or prior to the date hereof;and (5) to the best knowledge of the undersigned, no event affecting the City or the Improvement Area has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date hereof the statements or information with respect to the City and the Improvement Area contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make such statements and information therein not misleading in any material respect. C-1 Capitalized terms not defined herein shall have the same meaning as is set forth in the Purchase Contract. IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date hereinbelow set forth. Dated:June 27, 2002 CITY OF HUNTINGTON BEACH By ja WV-e Zr—, i yAdministrator By: p UJY�C�. c� /GG�JNC�l'�t G Attest: By: G%Lcu/ City Clerk G/ L�z Reviewed and Approved as to Form: By: City Attorney U'u l v1 �0� z?_vy C-2 EXHIBIT D IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) SPECIAL TAX BONDS, SERIES 2002-A Maturity Principal Interest (September 1) , Amount Rate Yield Price 2005 $ 5,000.00 4.00% 4.00% 100.000 2006 10,000.00 4.25% 4.25% 100.000 2007 15,000.00 4.50% 4.50% 100.000 2008 25,000.00 4.70% 4.70% 100.000 2009 30,000.00 4.80% 4.80% 100.000 2010 40,000.00 4.90% 4.90% 100.000 2011 50,000.00 5.00% 5.00% 100.000 2012 55,000.00 5.15% 5.15% 100.000 2013 65,000.00 5.30% 5.30% 100.000 2014 80,000.00 5.40% 5.40% 100.000 2015 90,000.00 5.50% 5.50% 100.000 2016 100,000.00 5.60% 5.60% 100.000 2017 115,000.00 5.70% 5.70% 100.000 2018 130,000.00 5.80% 5.80% 100.000 2019 145,000.00 5.90% 5.90% 100.000 2020 160,000.00 6.00% 6.00% 100.000 2021 180,000.00 6.10% 6.10% 100.000 2022 200,000.00 6.15% 6.15% 100.000 t 2023 220,000.00 6.20% 6.20% 100.000 2027 1,115,000.00 6.25% 6.25% 100.000 2032 2,070,000.00 6.30% 6.30% 100.000 $ 4,900,000.00 D-1 DUPLICATE Ms. Stephanie Roslund Deputy Secretary of State State of California Executive Office 1500 11th Street Sacramento, California 95814 (916) 653-7244 Dear Ms. Roslund: In accordance with the Uniform Facsimile Signatures of Public Officials Act (Government Code§5500 et sea.)we hereby file with you the manual signature of Debbie Cook, certified by us under oath. Please acknowledge receipt of this filing on the enclosed copy and return it in the self- addressed envelope provided. MANUAL SIGNATURE: NAME: Debbie Cook, TITLE OF OFFICE: Mayor City of Huntington Beach ADDRESS: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk (714) 536-5404 Quint&Thimmig LLP Attorneys at Law i Paul J.Thimmig One Embarcadero Center Telephone:415/765-1550 Suite 2420 Telecopier.415/765-1555 San Francisco,CA 94111-3737 Email:pthimmig@gtllp.com Mt & Tmh;lllllilgup mmi Attorneys at Law {�li�r..aJ� ..�-�+.� ,Se.,v►�.�a.�.t a �ut.�. . �;� �AYch I rer pc bb� VUAr O-A �kL) t-, -4,.k Mc�bonrLU (ilAtAA— vvj- cLs�.S�Ow•c� r B tFc t 4r Please Sign And Return �l --O� 0��6v r-; I� • MY OF HUNIINGTON BEACH From The Desk Of Christy Teague Economic Development (714) 375-5088 teaguec@surfcity-hb.org Thursday,June 20,2002 FedEx I Ship Manager 1 Labe17927 3256 7487 Page:f From:BRIAN D QUINT(415)765-1550 REVENUE BARCODE QUINT&THIMMIG LLP ONE EMBARCADERO CENTER S U ITE 2420 ° SAN FRANCISCO,CA,94111 To: Connie Brockway (714)536-5236 City of Huntington Beach SHIP DATE: 20JUN02 2000 Main Street WEIGHT: 1 LBS Huntington Beach, CA, 92648 Ref:08003.07 DELIVERY ADDRESS RARCODE(FEDE%-EDR) FedEx PRIORITY OVERNIGHT FRI TRK #7927 3256 7487 6�% LG B az Z NUCA Deliver by: 92648-CA-US 21JUN02 Shipping Label Schedule Courser Ftnd'a Dropoff Location Shipping History ;;Shipment Complete: -Caned Sl ipmenf Edit Shipment Information 1. 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FedEx will not be responsible for any claim in excess of 5100 per package.whether the result of loss,damage,delay,nun-delivery,misdelivery,or misinformation,unless you declare a higher value,pay an additional charge.document your actual loss and file a timely claim.Limitations found in the current FedEx Service Guide apply.Your right to recover from FedEx for any loss,including intrinsic value of the package,loss of sales.income interest.profit,aemney's fees,costs.and other forms of damage whether direct,incidental,consequential,or special is limited to the greater of SI00 or the authorized declared value.Recovery cannot exceed actual documented loss.Maximum for items of extraordinary value is 5500,e.g.jewelry,precious metals-negotiable instruments and other items listed in our Service Guide.Written claims must be bled within strict time limits,see current FedEx service Guide. https://www.f edex.com/cgi•bin/unity?www55&gifs/87/74/7927_3256_7487SBbaazl.html i v1w v1w "I 0 .5 7 R Zc7 J al First Class Mail I!eLAJ sselo jsj1:j CITY CLERIC City of Huntington Beach 2000 Main Street P.O.Box 190 Huntington Beach, CA 92648 I I Council/Agency Meeting Held: 647--o22 Deferred/Continued to: Approved ❑ Conditio ally Approved Denied y Cler s Signature Councl Meeting Date: June 17, 2002 Department ID Number: ED 02-18 o C CITY OF HUNTINGTON BEACH N REQUEST FOR COUNCIL ACTION C= _ SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: RAY SILVER, City Administratora2&-, CT C y PREPARED BY: DAVID C. BIGGS, Economic Development Director SUBJECT: Authorize Issuance of Special Tax Bonds and Approve Legal Documents for City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement- of Issue: With the formation of a Community Facilities District (CFD) for the McDonnell Centre Business Park second phase, it is now requested that the City Council authorize the issuance of$4.9 million in bonds for the CFD. Funding Source: Costs associated with the issuance of the CFD bonds will be funded from the bond proceeds. Recommended City Council Action: To conclude the formation of the Community Facilities District and to authorize the issuance of bonds requires various sequential steps to be taken by the City Council set forth by state law. The recommended action is the following: 1. Adopt Resolution No. 2002- 6 3 of the City Council of the City of Huntington Beach Authorizing the Issuance of Special Tax Bonds of the City of Huntington Beach for Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), and Approving Other Related Documents and Actions. Alternative Action: The City Council has the option of not forming the Community Facilities District nor approving the issuance of bonds. This will negatively impact the ability of Boeing Realty Corporation to compete in the Orange County and Los Angeles industrial market. REQUEST FOR COUNCIL ACTION MEETING DATE: June 17, 2002 DEPARTMENT ID NUMBER: ED 02-18 Prior Actions: On April 1, 2002, the City Council approved the initial steps to approve the formation of the Community Facilities District in the process set forth by state law: 1. Approved the Rate and Method of Apportionment of Special Tax for Area A and Area B, identified as Exhibit C and- Exhibit D in proposed Resolution No. 2002-26 Resolution of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes. 2. Adopted Resolution No. 2002-26 Resolution of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes. 3. Adopted Resolution No. 2002-27 Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 2002-01 (McDonnell Centre Business Park) and schedule public hearing for May 6, 2002. 4. Approved Proposed Boundary Maps of Community Facilities District No. 2002-1 (McDonnell Centre Business Park), Attachment #4. 5. Set Public Hearing to Establish Community .Facilities District at the regular City Council meeting to be held on May 6, 2002 as set forth in Resolution No. 2002-26. On June 3, 2002, the City Council took the next sequential steps to approve the formation of the Community Facilities District in the process set forth by state law: 1. Conducted Public Hearing. 2. Adopted Resolution No. 2002-38 of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). 3. Adopted Resolution No. 2002-39 of the City Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area A, and Within Improvement Area B, of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). 4. Adopted Resolution No. 2002-40 of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and Within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). GAChristy\CFD\RCACFD061702.doc -2- 6/11/2002 3:21 PM REQUEST FOR COUNCIL ACTION MEETING DATE: June 17, 2002 DEPARTMENT ID NUMBER: ED 02-18 5. City Clerk conducted a special election on the formation of the Community Facilities District and announced results of election. 6. Adopted Resolution No. 2002-41 of the City Council of the City of Huntington Beach Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien. 7. Introduced Ordinance No. 3557 of the City of Huntington Beach Levying Special Taxes Within Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). Analysis: The formation of a Community Facilities District allows for the financing of approved public improvements and other costs required in early phases of development. A CFD will allow the price structure for development parcels in the McDonnell Centre Business Park to be similar to other industrial parcels available for sale and development in the region. The actions considered by the City Council in the formation of the Community Facilities District will assist Boeing as they begin their second phase of the very successful McDonnell Centre Business Park. 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. The bond issue under consideration is for Improvement Area A in the amount of $4.9 million, and is secured by property in the area. An appraisal was completed and is enclosed as Appendix C of the attached Official Statement. The amount of issue is consistent with the required 3:1 land value to lien ratio adopted for CFDs by the City Council on October 15, 2001. This will be a rated issue, scheduled for close and sale in July 2002. Bond proceeds will be used to acquire the completed public improvements in the area. The financing team working on this bond issue include the firm of Quint & Thimming, LLP as Bond Counsel and Stone & Youngberg, LLC as the Underwriter selected by the City and described further in the attached documents. Environmental Status: EIR No. 96-1 was approved with McDonnell Centre Business Park Specific Plan No. 11, adopted by City Council on October 6, 1997. G:\Christy\CFD\RCACFD061702.doc -3- 6/11/2002 3:21 PM REQUEST FOR COUNCIL ACTION MEETING DATE: June 17, 2002 DEPARTMENT ID NUMBER: ED 02-18 Attachments : City Clerk's . - Numbe r No. Description 1. City Resolution No. 2002 - 63 , Authorizing Issuance of Special Tax Bonds. 2. Fiscal Agent Agreement— For Public Review at the City Clerk's Office. 3. Purchase Contract— For Public Review at the City Clerk's Office. 4. Official Statement, including Continuing Disclosure Certificate — For Pub,Ij�J�eview at the City Clerk's Office. 5. Acquisition Agreement— For Public Review at the City Clerk's Office. RCA Author: Christy Teague,x 5088 G:\Christy\CFD\RCACFD061702.doc -4- 6/11/2002 3:22 PM RESOLUTION NO. 2002-63 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS OF THE CITY OF HUNTINGTON BEACH FOR IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK),AND APPROVING OTHER RELATED DOCUMENTS AND ACTIONS WHEREAS, this City Council has conducted proceedings under and pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (_the "Code') and, as applicable under the Code, the Mello-Roos Community Facilities Act of' 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), to form Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Improvement Area"), to authorize the levy of special taxes upon the land within the Improvement Area, and to issue bonds secured by the special taxes the proceeds of which are to be used to finance certain public improvements(the"Facilities");.and On June 3, 2002 an election was held within the Improvement Area and the sole qualified elector approved the propositions of the incurrence of the bonded debt by the City for the Improvement Area, the establishment of an appropriations limit for the Improvement Area and the levy of.special taxes in the Improvement Area by more than two-thirds of the votes cast at said special election;and There have been submitted to this City Council certain documents providing for the issuance of bonds of the City for the Improvement Area and the use of the proceeds of those bonds to finance the Facilities and this City Council, with the aid of City staff, has reviewed said documents and found them to be in proper order;and On October 15, 2001, this City Council adopted a resolution approving local goals and policies for community facilities districts (the"Goals and Policies");and The proposed bond financing program approved by this Resolution is consistent with the Goals and Policies;and Following the adoption of this Resolution, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of said bonds and the levy of said special taxes as contemplated by this Resolution and the documents referred to herein exist, will have happened and will have been performed in due time, form and manner as required by the laws of the State of California, including the Act,..and as required by the Code. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Res. No. 2002-63 Section 1. Pursuant to the Law, this Resolution and the Fiscal Agent Agreement (hereafter defined), special tax bonds of the City for the Improvement Area designated as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002- 1 (McDonnell Centre Business Park) Special Tax Bonds" in an aggregate principal amount not to exceed $13,000,000 (the "Bonds"), are hereby authorized to be issued, and the first series of such bonds designated "Series 2002-A" in an aggregate principal amount not to exceed $4,900,000 (the "Series 2002-A Bonds") are hereby authorized to be issued and sold as provided below. The Series 2002-A Bonds shall be executed in the form set forth in and otherwise as provided in the Fiscal Agent Agreement. Jurisdiction is hereby reserved to issue the remaining authorized,but unissued portion of the Bonds. In connection with the authorization, sale and issuance of the Series 2002-A Bonds, the City Council hereby makes the following determinations: (a) pursuant to the Goals and Policies, (i) the appraisal, dated April 1,2002, of John S. Adams &Associates, Inc. of the land in the Improvement Area has been prepared consistent with the Goals and Policies and satisfactory land value to lien ratios exist, (h) the rate and method of apportionment of special taxes for the Improvement Area is in compliance with the Goals and Policies, and (iii) the structure of the proposed financing is consistent with the applicable sections of the Goals and Policies; (b) the proposed financing satisfies the requirements of a minimum 3:1 value to lien ratio required by the Goals and Policies; and (c) the sale of the Series 2002-A Bonds at a negotiated sale as contemplated by the Purchase Contract(defined below) will result in a lower overall cost. Section 2. The fiscal agent agreement (the "Fiscal Agent Agreement") with respect to the Bonds, in the form on file with the City Clerk, is hereby approved. The Mayor is hereby authorized and. directed to execute and deliver, and the City Clerk is hereby authorized and directed to attest, the Fiscal Agent Agreement in substantially said form, with such additions thereto or changes therein as are approved by the Director of Administrative Services upon consultation with the City Attorney and Bond Counsel, including such additions or changes as are necessary or advisable in accordance with Section 8 hereof, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Fiscal Agent Agreement by the Mayor. The date,manner of payment,interest rate or rates,interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption and other terms of the Series 2002-A Bonds shall be as provided in the Fiscal Agent Agreement as finally executed. Section 3. The purchase contract for the Series 2002-A Bonds (the "Purchase Contract") between the City and Stone &Youngberg LLC (the "Underwriter"), in the form on file with the City Clerk, is hereby approved. The Director of Administrative Services is hereby authorized and directed to accept the offer of the Underwriter to purchase the Series 2002-A Bonds contained in the Purchase Contract (provided that the aggregate principal amount of the Series 2002-A Bonds sold thereby is not in excess of$4,900,000, the net interest cost of the Series 2002- A Bonds is not in excess of 7.00%,and the underwriters' discount is not in excess of 2.50%.of the .aggregate principal amount of the Series 2002-A Bonds) and to execute and deliver the Purchase Contract in said form, with such additions thereto or changes therein as are recommended or approved by such officer upon consultation with the City Attorney and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Purchase Contract by the Director of Administrative Services. -2- Res. No. 2002-63 Section 4. The official statement relating to the Series 2002-A Bonds (the "Official Statement"), in the form on file with the City Clerk, is hereby approved. The City Administrator is hereby authorized and directed,for and in the name and on behalf of the City, to execute the Official Statement in said form, with such additions thereto or changes therein as are recommended or approved by such officer upon consultation with the City Attorney and Bond Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of said Official Statement by the City Administrator. The Underwriter is hereby authorized to distribute copies of the Official Statement to persons who may be interested in the purchase of the Series 2002-A Bonds and is directed to deliver such copies to all actual purchasers of the Series 2002-A Bonds. Distribution of a preliminary official statement relating to the Series 2002-A Bonds is hereby approved and authorized. - The Director of Administrative Services is hereby authorized to execute a certificate or certificates to the effect that the Official Statement and such preliminary official statement were deemed "final" as of their respective dates for purposes of Rule 15c2-12 of the Securities Exchange Act of 1934,as amended,and is authorized to so deem such statements final. Section 5. The Series 2002-A Bonds, when executed, shall be delivered to the Fiscal Agent for authentication. The Fiscal Agent is hereby requested and directed to authenticate the Series 2002-A Bonds by executing the Fiscal Agent's certificate of authentication and registration appearing thereon, and to deliver the Series 2002-A Bonds, when duly executed and authenticated, to the Underwriter in accordance with written instructions executed on behalf of the City by the Director of Administrative Services, which instructions such officer is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Fiscal Agent. Such instructions shall provide for the delivery of the Series 2002-A Bonds to the Underwriter upon payment of the purchase price therefor. Section 6. The Continuing Disclosure Certificate - Issuer and the Acquisition Agreement, in the respective forms on file with the City Clerk, are hereby approved. The Mayor is hereby authorized and directed, for and in the name of and on behalf of the City, to execute and deliver the Continuing Disclosure Certificate - Issuer. and .the Acquisition Agreement in said forms, with such additions thereto or changes therein as are deemed necessary, desirable or appropriate by the Director of Administrative Services upon consultation with the City Attorney and Disclosure Counsel, the approval of such changes to be conclusively evidenced by the execution and delivery by the Mayor of the Continuing Disclosure Certificate-Issuer and the Acquisition Agreement. Section 7. The City hereby covenants, for the benefit of the Bondowners, to commence and diligently pursue to.completion any foreclosure action regarding delinquent installments of any amount levied as a special tax for the payment of interest or principal of the Bonds, said foreclosure action to be commenced and pursued as more completely set forth in the Fiscal Agent Agreement. Section 8. All actions.heretofore taken by the officers and agents of the City with respect to the establishment of the Improvement Area and the sale and issuance of the Series 2002-A Bonds are hereby approved, confirmed and ratified, and the proper officers of the City are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of -3- Res. No. 2002-63 the Series 2002-A Bonds in accordance with this Resolution, and any certificate, agreement, and other document described in the documents herein approved. Section 9. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Huntington Beach on this 17th day of June,2002. Mayor ATTEST: APPROVED AS TO FORM: City Clerk 66tiy-0S 6� City Attorney 014102- REVIEWED AND APPROVED: INITIATED AND APPROVED: 1 Administrator Director of Economic Development 08003.07:J6154 6/4/02 -4- Res. No. 2002-63 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 a regular meeting thereof held on the 17th day of June, 2002 by the following vote: AYES: Green, Boardman, Cook, Houchen, Winchell, Bauer NOES: None ABSENT: Dettloff ABSTAIN: None City Clerk and ex-officio derk of the City Council of the City of Huntington Beach, California Quint&Thimmig LLP 4/8/02 4/29/02 5/13/02 6/3/02 6/7/02 FISCAL AGENT AGREEMENT by and between the CITY OF HUNTINGTON BEACH and BNY WESTERN TRUST COMPANY, as Fiscal Agent Dated as of June 1, 2002 Relating to: $4,900,000 Improvement Area A of the-City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A 08003.07:J6159 TABLE OF CONTENTS ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section1.01. Authority for this Agreement.......................................................................................................3 Section 1.02. Agreement for Benefit of Owners of the Bonds.........................................................................3 Section1.03. Definitions.......................................................................................................................................3 ARTICLE H THE BONDS Section 2.01. Principal Amount;Designation..................................................................................................13 Section 2.02. Terms of the Series 2002-A Bonds..............................................................................................13 Section2.03. Redemption...................................................................................................................................14 Section2.04. Form of Bonds...............................................................................................................................17 Section2.05. Execution of Bonds.......................................................................................................................17 Section2.06. Transfer of Bonds................................................................................................:........................17 Section2.07. Exchange of Bonds.......................................................................................................................18 Section2.08. Bond Register................................................................................................................................18 Section2.09. Temporary Bonds.........................................................................................................................18 Section 2.10. Bonds Mutilated,Lost,Destroyed or Stolen.............................................................................18 Section2.11. Limited Obligation.......................................................................................................................19 Section2.12. No Acceleration............................................................................................................................19 Section 2.13. Issuance of Parity Bonds.............................................................................................................19 Section2.13. Book-Entry System.......................................................................................................................20 ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of Bonds.................................................................................................22 Section 3.02. Pledge of Special Tax Revenues..................................................................................................22 Section3.03. Validity of Bonds..........................................................................................................................22 ARTICLE IV FUNDS AND ACCOUNTS Section 4.01. Application of Proceeds of Sale of Bonds and Other Moneys...............................................23 Section4.02. Improvement Fund......................................................................................................................23 Section 4.03. Costs of Issuance Fund................................................................................................................24 Section4.04. Reserve Fund................................................................................................................................24 Section4.05. Bond Fund......................................................................................................................................26 Section4.06. Special Tax Fund..........................................................................................................................28 Section 4.07. Administrative Expense Fund....................................................................................................29 ARTICLE V OTHER COVENANTS OF THE CITY Section5.01. Punctual Payment........................................................................................................................30 Section5.02. Limited Obligation.......................................................................................................................30 Section 5.03. Extension of Time for Payment..................................................................................................30 Section 5.04. Against Encumbrances................................................................................................................30 -i- Section5.05. Books and Records.......................................................................................................................30 Section 5.06. Protection of Security and Rights of Owners...........................................................................30 Section5.07. Compliance with Law..................................................................................................................30 Section 5.08. Collection of Special Tax Revenues...........................................................................................31 Section5.09. Covenant to Foreclose..................................................................................................................31 Section5.10. Further Assurances......................................................................................................................32 Section 5.11. Private Activity Bond Limitations.............................................................................................32 Section 5.12. Federal Guarantee Prohibition...................................................................................................32 Section5.13. Rebate Requirement.....................................................................................................................33 Section5.14. No Arbitrage.................................................................................................................................33 Section5.15. Yield of the Bonds........................................................................................................................33 Section 5.16. Maintenance of Tax-Exemption.................................................................................................33 Section 5.17. Continuing Disclosure to Owners..............................................................................................33 Section5.18. Reduction of Special Taxes..........................................................................................................34 Section 5.19. Limits on Special Tax Waivers and Bond Tenders..................................................................34 Section 5.21. Limitation on Principal Amount of Parity Bonds....................................................................34 Section5.21. Annexation of Property......................:........................................................................................34 ARTICLE VI INVESTMENTS,DISPOSITION OF INVESTMENT PROCEEDS, LIABILITY OF THE AUTHORITY Section 6.01. Deposit and Investment of Moneys in Funds ..........................................................................36 Section6.02. Limited Obligation.......................................................................................................................37 Section6.03. Liability of City.............................................................................................................................37 Section 6.04. Employment of Agents by City..................................................................................................38 ARTICLE VII THE FISCAL AGENT Section7.01. Appointment of Fiscal Agent.......................................................................................................39 Section 7.02. Liability of Fiscal Agent.......................................:.......................................................................40 Section7.03. Information...................................................................................................................................41 Section7.04. Notice to Fiscal Agent..................................................................................................................41 Section 7.05. Compensation,Indemnification.................................................................................................41 Section7.06. Books and Accounts.....................................................................................................................42 ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section8.01. Amendments Permitted..............................................................................................................43 Section8.02. Owners' Meetings......................................................................................................................43 Section 8.03. Procedure for Amendment with Written Consent of Owners...............................................44 Section8.04. Disqualified Bonds.......................................................................................................................44 Section 8.05. Effect of Supplemental Agreement............................................................................................45 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments ....................................45 Section 8.07. Amendatory Endorsement of Bonds........................:................................................................45 ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties and School District...............................................46 Section 9.02. Successor is Deemed Included in All References to Predecessor..........................................46 -li- Section9.03. Discharge of Agreement..............................................................................................................46 Section 9.04. Execution of Documents and Proof of Ownership by Owners..............................................47 Section 9.05. Waiver of Personal Liability.......................................................................................................47 Section 9.06. Notices to and Demands on City and Fiscal Agent.................................................................47 Section 9.07. State Reporting Requirements....................................................................................................48 Section 9.08. Partial Invalidity...........................................................................................................................49 Section9.09. Unclaimed Moneys......................................................................................................................49 Section9.10. Applicable Law.............................................................................................................................49 Section9.11. Conflict with Law.........................................................................................................................49 Section 9.12. Conclusive Evidence of Regularity............................................................................................50 Section 9.13. Payment on Business Day...........................................................................................................50 Section9.14. Counterparts.................................................................................................................................50 EXHIBIT A—FORM OF SERIES 2002-A BOND -iii- FISCAL AGENT AGREEMENT THIS FISCAL AGENT AGREEMENT (the "A greement") is made and entered into as of June 1, 2002, by and between the City of Huntington Beach, a chartered city and municipal corporation organized and existing under the laws of the State of California (the "City") for and on behalf of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Improvement Area A"), and BNY Western Trust Company, a banking corporation duly organized and existing under the laws of the State of California,as fiscal agent(the "Fiscal A gent"). RECITALS: WHEREAS,the City Council of the City has formed the Improvement Area A under the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Municipal Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "A ct," and, together with the Code, the "Law ") and Resolution No. of the City Council of the City adopted on June 3, 2002 (the "Resolution of Formation"); WHEREAS, the City Council of the City, as the legislative body for Improvement Area A,is authorized under the Law to levy special taxes to pay for the costs of Improvement Area A and to authorize the issuance of bonds secured by said special taxes under the Law; WHEREAS, under the provisions of the Law, on June 17, 2002 the City Council of the City adopted its Resolution No. (the "Resolution"), which resolution authorized the issuance and sale of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds (the "Bonds"), in the aggregate principal amount of not to exceed $13,000,000, authorized the issuance and sale of a first series of the Bonds designated as "Series 2002-A" in the aggregate principal amount of not to exceed $4,900,000, and authorized the execution and delivery of this Agreement; WHEREAS,it is in the public interest and for the benefit of the City, Improvement Area A and the. owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds and the administration and payment of the Bonds;and WHEREAS, the City has determined that all things necessary to cause the Bonds,when executed by the City for Improvement Area A and issued as in the Law,the Resolution and this Agreement provided, to be be legal, valid and binding and special obligations of the City for Improvement Area A in accordance with their terms, and all things necessary to cause the creation, authorization, execution and delivery of this Agreement and the creation, authorization, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized. ' -1- AGREEMENT: NOW,THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows: -2- ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Law and the Resolution. Section 1.02. Agreement for Benefit of Owners of the Bonds. The provisions,covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners of the Bonds. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the Owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Fiscal Agent. Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement.as a whole and not to any particular Article,Section or subdivision hereof. "Acquisition Agreement" means the Acquisition Agreement, dated as of June 1, 2002, between the City and Boeing Realty Corporation. "A ct" means the Mello-Roos Community Facilities Law of 1982, as amended, being Sections 53311 et seq. of the California Government Code. "Administrative Expenses" means costs directly related to the administration of Improvement Area A consisting of the costs of computing the Special Taxes and preparing any Special Tax collection schedules (whether by the Director of Administrative Services or designee thereof or both) and the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Fiscal Agent; fees and costs of the Fiscal Agent (including its legal counsel) in the discharge of the duties required of it under this Agreement; the costs of the City or any designee of the City of complying with the disclosure provisions of the Act, the Continuing Disclosure Agreement and this Agreement, including those related to public inquiries regarding the Special Tax and disclosures to Bondowners and the Original Purchaser; the costs of the City or any designee of the City related to an appeal of the Special Tax; any amounts required to be rebated to the federal government in order for the City to comply with Section 5.13; the costs of performance by the City under the Acquisition Agreement; an allocable share of the salaries of the City staff directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto. Administrative Expenses shall also include amounts advanced by the City for any administrative purpose of Improvement Area A, including costs related to prepayments of Special Taxes, recordings related to such prepayments and satisfaction of Special Taxes, amounts advanced to ensure compliance with Section 5.13, costs related to annexations to -3- Improvement Area A, and the costs of commencing and pursuing foreclosure of delinquent Special Taxes. "Administrative Expense Fund" means the fund by that name established by Section 4.07(A)hereof. "A S eement" means this Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof. "A nnual Debt Service" means,for each Bond Year, the sum of(i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of the provisions of Section 2.03(A)(ii) providing for mandatory sinking payments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year pursuant to Section 2.03(A)(ii)). "A uditor"means the auditor/controller of the County. "Authorized Officer" means the Mayor, City Administrator, City Director of Administrative Services, City Treasurer, City Finance Officer, City Clerk or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer. "Bon d Counsel" means (i) Quint & Thimmig LLP, or (ii) any other attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bon d Fund"means the fund by that name established by Section 4.05(A)hereof. "Bon d Register" means the books for the registration and transfer of Bonds maintained by the Fiscal Agent under Section 2.08 hereof. "Bon d Year" means the one-year period beginning on September 2nd in each year and ending on September 1st in the following year,except that the first Bond Year shall begin on the Closing Date and end on September 1,2002. "Bon ds" means the Series 2002-A Bonds, and, if the context requires, any Parity. Bonds, at any time Outstanding under this Agreement or any Supplemental Agreement. "Business Day" means any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "CDIA C" means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto. -4- "Capitalized Interest Account" means the account by that name established by Section 4.05(A)hereof. "Ci "means the City of Huntington Beach,California. "Closing Date" means July 2002, being the date upon which there is a physical delivery of the Series 2002-A Bonds in exchange for the amount representing the purchase price of the Series 2002-A Bonds by the Original Purchaser. "Continuing Disclosure Agreement" shall mean that certain Continuing Disclosure Certificate — Issuer executed by the City on 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,closing costs, filing and recording fees,initial fees and charges of the Fiscal Agent including its first annual administration fee, expenses incurred by the City in connection with the issuance of the Bonds and the establishment of Improvement Area A, special tax consultant fees and expenses, preliminary engineering fees and expenses, Bond (underwriter's) discount, legal fees and charges, including bond and disclosure counsel, financial consultants' fees, charges for execution, transportation and safekeeping of the Bonds, landowner expenses related to Improvement Area A formation, and other costs, charges and fees in connection with the foregoing. "Costs of Issuance Fund" means the fund by that name established by Section 4.03(A) hereof. "Coup "means the County of Orange,California. "DTC " means the Depository Trust Company,New York,New York,and its successors and assigns. "Debt Service" means the scheduled amount of interest and amortization of principal payable by reason of Section 2.03(A)(ii) on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Depository" means (a)initially,DTC,and (b) any other Securities Depository acting as Depository pursuant to Section 2.14. "Director of Administrative Services" means the Director of Administrative Services of the City or such other officer or employee of the City performing the functions of the chief financial officer of the City. "District" means the City of Huntington Beach Community Facilities District No. 2002- 1 (McDonnell Centre Business Park), formed by the City under the Law and the Resolution of Formation. -5- "District Value" means the market value, as of the date of the appraisal described below, of all parcels of real property in Improvement Area A subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired with any amounts then on deposit in the Improvement Fund and with the proceeds of any proposed series of Parity Bonds, as determined by reference to (i) an appraisal performed within six (6) months of the date of issuance of any proposed Parity Bonds by an MAI appraiser (the "A ppraiser") selected by the City, or (ii), in the alternative, the assessed value of all such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the City. The City shall not be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provided for purposes of this definition or by reason of any exercise of discretion made by any Appraiser pursuant to this definition. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. "Federal Securities" means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent: direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America,including,without limitation,such of the foregoing which are commonly referred to as "stripped" obligation s and coupons. "Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place,as provided in Section 7.01. "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. -6- "Improvemen t Area A" means Improvement Area A of the District,as first identified in the Resolution of Intention, together with any property annexed thereto under the Act and the Municipal.Code. "Improvemen t Fund" means the fund by that name created by and held by the Fiscal Agent pursuant to Section 4.02(A)hereof. "In dependent Financial Consultant" means any consultant or firm of such consultants appointed by the City or the Director of Administrative Services,and who,or each of whom: (i) has experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact independent and not under the domination of the City; (iii) does not have any substantial interest, direct or indirect, with or in the City, or any owner of real property in Improvement Area A, or any real property in Improvement Area A; and (iv) is not connected with the City as an officer or employee of the City,but who may be regularly retained to make reports to the City. "In formation 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; Standard & Poor's Corporation "Called Bond Record", 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "In terest Payment Dates" means March 1 and September 1 of each year, commencing March 1,2003. "Law " means the Municipal Code and, as applicable under the Municipal Code, the Act. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. "Moody's "means Moody's In vestors Service,and any successor thereto. "Mun icipal 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. "Ordin ance"means any ordinance of the City levying the Special Taxes. "Original Purchaser" means Stone & Youngberg LLC, the first purchaser of the Bonds from the City. -7- "Outstan din&" when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.04) all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to this Agreement or any Supplemental Agreement. "Ow ner" or "Bon downer" means any person who shall be the registered owner.of any Outstanding Bond. "P arity Bonds" means any bonds issued by the City for Improvement Area A on a parity with any then Outstanding Bonds pursuant to Section 2.13 hereof. "P articipating;Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Agreement. "P ermitted Investments" means any of the following, but only to the extent that the same are acquired at Fair Market Value: (a) Federal Securities. (b) Time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank (including the Fiscal Agent and its affiliates) or trust company, or a state or federal savings and loan association; provided, that the certificates of deposit shall be one or more of the following: continuously and fully insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation,and/or continuously and fully secured by securities described in subdivision (a) of this definition of Permitted Investments which shall have a market value, as determined on a marked-to-market basis calculated at least weekly, and exclusive of accrued interest, of not less than 102 percent of the principal amount of the certificates on deposit. (c) Commercial paper of "prime' quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody's or S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an "A " or higher rating for the issuer's debentures, other than commercial paper, by either Moody's or S&P, provided that purchases of eligible commercial paper may not exceed 180 days' maturity nor represent more than 10 percent of the outstanding commercial paper of an issuing corporation. (d) A repurchase agreement with a state or-nationally charted bank or trust company or a national banking association or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, or any other financial institution 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 -8- ability or financial strength, is rated in at least the double A category by S&P and Moody's; provided that all of the following conditions are satisfied: (1) the agreement is secured by any one or more of the securities described in subdivision (a) of this definition of Permitted Investments, (2) the underlying securities are required by the repurchase agreement to be held by a bank, trust company, or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and which is independent of the issuer of the repurchase agreement, and (3) the underlying securities are maintained at a market value, as determined on a marked-to-market basis calculated at least weekly,of not less than 103 percent of the amount so invested. (e) An investment agreement or guaranteed investment contract with, or guaranteed by, a financial institution the long-term unsecured obligations of which are rated "A AY or better by Moody's and "A A-" or better by S&P at the time of initial investment. The investment agreement shall be subject to a downgrade provision with at least the following requirements: (1) the agreement shall provide that within five business days after the financial institution's long-term unsecured credit rating has been withdrawn,suspended,other than because of general withdrawal or suspension by Moody's or S&P from the practice of rating that debt,or reduced below "A A-" by S&P or below "A a3" by Moody's (these events are called "ratin g downgrades") the financial institution shall give notice to the Fiscal Agent and,within the five-day period, and for as long as the rating downgrade is in effect, shall deliver in the name of the Fiscal Agent to the Fiscal Agent federal securities allowed as investments under subdivision (a) of this definition of Permitted Investments with aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement invested with the financial institution at that time, and shall deliver additional allowed federal securities as needed to maintain an aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement within three days after each evaluation date, which shall be at least weekly, and (2) the agreement shall provide that, if the financial institution's long-term unsecured credit rating is reduced below "A 3" by Moody's or below "A-" by S&P, the Fiscal Agent may, upon not more than five business days' written notice to the financial institution, withdraw the investment agreement, with accrued but unpaid interest thereon to the date,and terminate the agreement. (f) The Local Agency Investment Fund of the State Treasurer of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code. (g) Investments in money market accounts (including any accounts of the Fiscal Agent and its affiliates for which they may receive compensation) 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 S&P of AAAm-G, AAAm, or.Aam, and if rated by Moody's,h aving a rating of Aaa,Aa1 or Aa2. (h) 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): -9- (i) U.S. Export-Import Bank Direct obligations or fully guaranteed certificates of beneficial ownership (ii) Farmers Home Administration Certificates of beneficial ownership (iii) Federal Financing Bank (iv) Federal Housing Administration Debentures (v) General Services Administration Participation certificates (vi) Government National Mortgage Association(GNMA) GNMA-guaranteed mortgage-backed bonds GNMA-guaranteed pass-through obligations (vii) U.S. Maritime Administration Guaranteed Title XI financing (viii) U.S. Department of Housing and Urban Development Project Notes Local Authority Bonds New Communities Debentures-United States government guaranteed debentures U.S. Public Housing Notes and Bonds-United States government guaranteed public housing notes and bonds; (i) 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 (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System Senior debt obligations (ii) Federal Home Loan Mortgage Corporation Participation Certificates Senior debt obligations (iii) Federal National Mortgage Association Mortgage-backed securities and senior debt obligations (iv) Student Loan Marketing Association Senior debt obligations -10- (v) Resolution Funding Corporation(REFCORP) obligations;and (vi) Farm Credit System Consolidated systemwide bonds and notes; (j) Forward Delivery Agreements or Forward Purchase and Sale Agreements,having as the underlying investment property those investments which are described in clause (a), (c) and/or(h) above. "P rincipal Office"means the principal corporate trust office of the Fiscal Agent set forth in Section 9.06,except for the purpose of maintenance of the registration books and presentation of Bonds for payment, transfer or exchange, such term shall mean the office at which the Fiscal Agent conducts its corporate agency business, or such other or additional offices as may be designated by the Fiscal Agent. "P roject" means the facilities more particularly described in the Resolution of Formation. "Qualified Reserve Fund Credit Instrument" means an irrevocable standby or direct- pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent pursuant to Section 4.04(H), provided that all of the following requirements are met: (a) the long-term credit rating or claims paying ability of such bank or insurance company is-in one of the two highest rating categories by S&P and Moody's; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least. equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to Section 4.04(H); and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder for the purpose of making payments required pursuant to Section 4.04. "Record Date" means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date,whether or not such day is a Business Day. "Reserve Fund" means the fund by that name established pursuant to Section 4.04(A) hereof. "Reserve Requirement" means, as of any date of calculation an amount equal to the least of(i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent(125%) of the then average Annual Debt Service, or (iii) ten percent (10%) of the then Outstanding principal amount of the Bonds. The Reserve Requirement as of the Closing Date is "Resolution" means Resolution No. adopted by the City Council of the City on June 17,2002. "Resolution of Formation" means Resolution No. , adopted by the City Council of the City on June 3,2002. -11- "Resolution of Intention" means Resolution No. , adopted by the City Council of the City on April 1,2002. "S&P" means Standard & Poor's Ratings Service, a division of McGraw-Hill, and any successor thereto. "Securities Depositories" means The Depository Trust Company, 55 Water Street, 50kh Floor,New York,New York 10041-0099,Attention: Call Notification Department,Fax (212) 855- 7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer's Certificate delivered to th a Fiscal Agent. "Series 2002-A Bonds" means the Bonds so designated and authorized to be issued under Section 2.01 hereof. "Special Tax Fun d"means the fund by that name established by Section 4.06(A)hereof. "Special Tax Prepayments" means the proceeds of any Special Tax prepayments received by the City, as calculated pursuant to the Rate and Method of Apportionment of the Special Taxes for Improvement Area A, less any administrative fees or penalties collected as part of any such prepayment. "Special Tax Prepayments Account" means the account by that name established by Section 4.05(A)hereof. "Special Tax Revenues" means.the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof,interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon. "Special Tax Reven ues" does not include any penalties collected in connection with delinquent Special Taxes. "Special Taxes" means the special taxes levied within Improvement Area A pursuant to the Law,the Ordinance and this Agreement. "SUplemen tal Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Law and which agreement is amendatory of or supplemental to this Agreement, but only if and to the extent that such agreement is specifically authorized hereunder. "Tax Code" means the Internal Revenue Tax Code of 1986 as in effect on the date of issuance of the Series 2002-A Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published,under the Tax Code. "Tax Consultant" means Michael Swan Consulting or another independent financial or tax consultant retained by the City for the purpose of computing the Special Taxes. -12- ARTICLE II THE BONDS Section 2.01.. Principal Amount; Designation. Bonds in the aggregate principal amount of Thirteen Million Dollars ($13,000,000) are hereby authorized to be issued by the City for Improvement Area A under and subject to the terms of the Resolution and this Agreement, the Law and other applicable laws of the State of California. The Series 2002-A Bonds shall be designated as the "Improvemen t Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A," and shall be in the initial principal amount of$4,900,000. Section 2.02. Terms of the Series 2002-A Bonds. (A) Form; Denominations. The Series 2002-A Bonds shall be issued as fully registered Bonds without coupons in the denomination of$5,000 or any integral multiple in excess thereof. (B) Date of Bonds. The Series 2002-A Bonds shall be dated the Closing Date. (C) CUSIP Identification Numbers. "CU SIP" identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the Bonds. In addition,failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute an event of default or any violation of the City's contract with such Owners and shall not impair the effectiveness of any such notice. (D) Maturities, Interest Rates. The Series 2002-A Bonds shall mature and become payable on September 1 in each of the years, and shall bear interest at the rates per annum as follows: Maturity Date (September 1) Principal Amount Interest Rate [to come] (E) Interest. The Series 2002-A Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) -it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. -13- (F) Method of Payment. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on the Interest Payment Dates by first class mail to the registered Owner thereof at such registered Owner's address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date,or by wire transfer(i) to the Depository (so long as the Bonds are in book-entry form pursuant to Section 2.14), or (ii) to an account within the United States made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds received before the applicable Record Date, which instructions shall continue in effect until revoked in writing, or until such Bonds are transferred to a new Owner. The principal of the Bonds and any premium on the Bonds are payable by check in lawful money of the United States of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent. All Bonds paid by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled Bonds and issue a certificate of destruction thereof to the City upon the City's req uest. Section 2.03. Redemption. (A) Redemption Dates. (i) Optional Redemption. The Series 2002-A Bonds are subject to optional redemption prior to their stated maturity on any Interest Payment Date, as a whole or in part, among maturities so as to maintain substantially the same debt service profile as in effect on the Closing Date and by lot within a maturity,at a redemption price (expressed as a percentage of the principal amount of the Series 2002-A Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption: Redemption Dates Redemption Prices Any Interest Payment Date from March 1,2003 103.0% to and including March 1,2010 September 1,2010 and March 1,2011 102.0 September 1,2011 and March 1,2012 101.0 September 1,2012 and any Interest Payment 100.0 Date thereafter (ii) Mandatory Sinking Payment Redemption. The Series 2002-A Bonds maturing on September 1, , are subject to mandatory sinking payment 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 fixed for redemption, without premium, from sinking payments as follows: -14- Redemption Date (September 1) Sinking Payments [to come] The Series 2002-A Bonds maturing on September 1, 2032, are subject to mandatory sinking payment 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 fixed for redemption,without premium,from sinking payments as follows: Redemption Date (September 1) Sinking Payments The amounts in the foregoing tables shall be reduced to the extent practicable so as to maintain the same debt service profile as in effect on the Closing Date on the Series 2002-A Bonds, as a result of any prior partial redemption of the Series 2002-A Bonds pursuant to Section 2.03(A)(i) above or Section 2.03(A)(iii)below, as specified in writing by an Authorized Officer to the Fiscal Agent. (iii) Redemption From Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to Section 4.05(B)(ii) and Section 4.04(F), respectively, shall be used to redeem Series 2002-A Bonds on the next Interest Payment Dates for which notice of redemption can timely be given under Section 2.03(D), among maturities so as to maintain substantially the same debt service profile as in effect on the Closing Date and by lot within a maturity, at a redemption price (expressed as a percentage at the principal amount of the Series 2002-A Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption: Redemption Dates Redemption Prices Any Interest Payment Date from March 1,2003 to 103.0% and including March 1,2010 September 1,2010 and March 1,2011 102.0 September 1,2011 and March 1,2012 101.0 September 1,2012 and any Interest Payment Date 100.0 thereafter (B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice of its intention to redeem Bonds pursuant to subsection (A)(i) or (A)(iii) not less than forty-five (45) days prior to the applicable redemption date, or such lesser number of days as shall be consented to by the Fiscal Agent. (C) Purchase of Bonds in Lieu of Redemption. In lieu of redemption under Section 2.03(A), moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for -15- purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer's Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof,plus interest accrued to the date of purchase and any premium which would otherwise be due if such Bonds were to be redeemed in accordance with this Agreement. (D) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Original Purchaser, to the Securities Depositories,to one or more Information Services,and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice,or any defect therein,shall not affect the validity of the proceedings for the redemption of such Bonds. Such notice shall state the redemption date and the redemption price and,if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUS1P numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUS1P number and Bond number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers,both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof .to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUS1P number identifying, by issue and maturity, of the Bonds being redeemed with the proceeds of such check or other transfer. Whenever provision is made in this Agreement for the redemption of less than all of the Bonds or any given portion thereof, the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof not previously called for redemption, among maturities as directed in writing by the Director of Administrative Services (who shall specify Bonds to be redeemed so as to maintain, as much as practicable, the same debt service profile for the Bonds as in effect prior to such redemption, unless otherwise specified herein), and by lot within a maturity in any manner which the Fiscal Agent deems appropriate. Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. (E) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund, such Bonds so called shall -16- cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice. All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled Bonds and issue a certificate of destruction thereof to the City. Section 2.04. Form of Bonds. The Series 2002-A Bonds, the form of Fiscal Agent's certificate of authentication and the form of assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions,as permitted or required by this Agreement,the Resolution and the Law. Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by the manual or facsimile signatures of its Mayor and City Clerk who are in office on the date of adoption of this Agreement or at any time thereafter, and the seal of the City shall be impressed, imprinted or reproduced by facsimile signature thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the owner. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City. Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered hereunder have been duly authenticated,registered and delivered hereunder and are entitled to the benefits of this Agreement. Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred,upon the books required to be kept pursuant to the provisions of Section 2.08 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 acceptable to the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount of authorized denomination(s). No transfers of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, (ii)with respect to a Bond -17- after such Bond has been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date. Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same series and maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, (ii) with respect to a Bond after such Bond has been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date. Section 2.08. Bond Register. The Fiscal Agent will keep or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds, which books shall show the series number,date,amount,rate of interest and last known Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred,on said books,the ownership of the Bonds as hereinbefore provided. The City and the Fiscal Agent will treat the Owner of any Bond whose name appears on the Bond register as the absolute Owner of such Bond for any and all purposes, and the City and the Fiscal Agent shall not be affected by any notice to the contrary. The City and the Fiscal Agent may rely on the address of the Bondowner as it appears in the Bond register for any and all purposes. Section 2.09. Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under to this Agreement as definitive Bonds authenticated and delivered hereunder. Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall -18- be canceled by it and destroyed by the Fiscal Agent who shall deliver a certificate of destruction thereof to the City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity for the City and the Fiscal Agent satisfactory to the Fiscal Agent shall be given, the City, at the expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond.delivered under this Section and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement. Section 2.11. Limited Obli ag tion. All obligations of the City under this Agreement and the Bonds shall be special obligations of the City,payable solely from the Special Tax Revenues and the funds pledged therefore hereunder. Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Section 2.12. No Acceleration. The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section shall in any way prohibit the redemption of Bonds under Section 2.03 hereof, or the .defeasance of the Bonds and discharge of this Agreement under Section 9.03 hereof. Section 2.13. Issuance of Parity Bonds. The City may from time to time issue bonds (the "P arity Bonds"), in addition to the Series 2002-A Bonds authorized under Section 2.01 hereof, by means of a Supplemental Agreement and without the consent of any Bondowners, upon compliance with the provisions of this Section 2.13. Any such Parity Bonds shall constitute Bonds hereunder and shall be secured by alien on the Special Tax Revenues and funds pledged for the payment of the Bonds hereunder on a parity with all other Bonds Outstanding hereunder. The City may issue the Parity Bonds subject to the following specific conditions precedent: (A) Current Compliance. The City shall be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in this Agreement and all Supplemental Agreements. (B) Payment Dates. The Supplemental Agreement providing for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and principal thereof shall be payable on September 1 in any year in which principal is payable (provided that there shall be no requirement that any Parity Bonds pay interest on a current basis). (C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement providing for the issuance of such Parity Bonds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund in an amount necessary -19- so that the amount on deposit therein, following the issuance of such Parity Bonds, is equal to the Reserve Requirement. (D) Value-to-Lien Ratio. The District Value shall be at least three times the sum of: (i) the aggregate principal amount of all Bonds then Outstanding,plus (ii) the aggregate principal amount of the series of Parity Bonds proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in Improvement Area A subject to the levy of Special Taxes, plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within Improvement Area A (the "Oth er District Bonds") equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction,the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within Improvement Area A, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other District Bonds occurs), based upon information from the most recent available Fiscal Year. (E) The Special Tax Coverage Test. The City shall obtain a certificate of a Tax Consultant to the effect that (i) the amount of the maximum Special Taxes that may be levied in each Fiscal Year, after deducting an amount determined by the City as appropriate to pay for annual Administrative Expenses, shall be at least one hundred ten percent (110%) of the total Annual Debt Service for each such Fiscal Year on the Bonds and the proposed Parity Bonds,and (ii) the aggregate Special Tax Prepayments that could occur after the issuance of the Parity Bonds is not less than the Outstanding principal amount of the Bonds and such Parity Bonds. (F) Officer's Certificate. The City shall deliver to the Fiscal Agent an Officer's Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in subsections (A), (B), (C), (D) and (E) of this Section 2.13 have been satisfied, and the limitation in Section 5.20 has not been exceeded. Section 2.14. Book-Entry System. DTC shall act as the initial Depository for the Bonds. One Bond for each maturity of the Series 2002-A Bonds shall be initially executed, authenticated, and delivered as set forth herein with a separate fully registered certificate (in ,print or typewritten form). Upon initial execution, authentication, and delivery, the ownership of the Bonds shall be registered in the Bond Register kept by the Fiscal Agent for the Bonds in the name of Cede&Co.,as nominee of DTC or such nominee as DTC shall appoint in writing. The representatives of the City and the Fiscal Agent are hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the Series 2002-A Bonds for the Depository's book-entry system, including the execution of the Depository's required representation letter. With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, neither the City nor the Fiscal Agent shall have any responsibility or obligation to any broker-dealer,bank, or other financial institution for which DTC holds Bonds as Depository from time to time (the "DTC Participants") or to any person for which a DTC -20- Participant acquires an interest in the Bonds (the "Beneficial Owners"). Without limiting the immediately preceding sentence, neither the City nor the Fiscal Agent shall have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the City elects to redeem the Bonds in part, (iv) the payment to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any amount with respect to the principal of or interest on the Bonds, or (v) any consent given or other action taken by the Depository as Owner of the Bonds. Except as set forth above,the Fiscal Agent may treat as and deem DTC to be the absolute Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the principal of and interest on such Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bonds,for the purpose of registering transfers with respect to such Bonds, and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and interest on the Bonds only to or upon the order of the Owners as shown on the Bond Register, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and interest on the Bonds to the extent of the sums or sums so paid. No person other than an Owner, as shown on the Bond Register,shall receive a physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions in Section 2.06 hereof, references to "Cede & Co." in this Section 2.14 shall refer to such new nominee of DTC. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Fiscal Agent during any time that the Bonds are Outstanding, and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the Bonds or that continuation of the system of book-entry transfers through DTC is not in the best interest of the Beneficial Owners, and the City shall mail notice of such termination to the Fiscal.Agent. Upon the termination of the services of DTC as provided in the previous paragraph,and if no substitute Depository willing to undertake the functions hereunder can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the Beneficial Owners of the Bonds that they be able to obtain certificated Bonds, the Bonds shall no longer be restricted to being registered in the Bond Register of the Fiscal Agent in the name of Cede & Co., as nominee of DTC,but may be registered in whatever name or name the Owners shall designate at that time, in accordance with Section 2.06. To the extent that the Beneficial Owners are designated as the transferee by the Owners, in accordance with Section 2.06, the Bonds will be delivered to such Beneficial Owners as soon as practicable. -21- ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of Bonds. At any time after the execution of this Agreement, the City may issue the Series 2002-A Bonds for Improvement Area A in the aggregate principal amount set forth in Section 2.01 and, subject to the provisions of Section 2.13, any Parity Bonds. The Authorized Officers of the City are hereby authorized and.directed to deliver any and all documents and instruments necessary to cause the issuance of the Bonds in accordance with the provisions of the Law, the Resolution and this Agreement, to authorize the payment of Costs of Issuance and costs of the Project by the Fiscal Agent from the proceeds of the Bonds and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser. Section 3.02. Pledge of Special Tax Revenues. The Bonds shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the Special Tax Revenues and all moneys deposited in the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein), the Reserve Fund and, until disbursed as provided herein, in the Special Tax Fund. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided herein) are hereby dedicated to the payment of the principal of; and interest and any premium on, the Bonds as provided herein and in the Law until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03. Amounts in the Administrative Expense Fund, the Improvement Fund and the Costs of Issuance Fund are not pledged to the repayment of the Bonds. The facilities financed with the proceeds of the Bonds are not in any way pledged to pay the Debt Service on the Bonds. Any proceeds of condemnation or destruction of any facilities financed with the proceeds of the Bonds are not pledged to pay the Debt Service on the Bonds and are free and clear of any lien or obligation imposed hereunder. Section 3.03. Validity of Bonds. The validity of'the authorization and issuance of the Bonds shall not be dependent upon the completion of the construction of the Project, or upon the performance by any person of such persons obligation(s)with respect to the Project. '-22- ARTICLE IV FUNDS AND ACCOUNTS Section 4.01. Application of Proceeds of Sale of Bonds and Other Moneys. The proceeds of the purchase of the Series 2002-A Bonds by the Original Purchaser (being$ ) shall be paid to the Fiscal Agent, who shall forthwith set aside, pay over and deposit such proceeds on the Closing Date as follows: (A) Deposit in the Costs of Issuance Fund an amount equal to$ (B) Deposit in the Reserve Fund an amount equal to$ (C)Deposit in the Improvement Fund an amount equal to$ (D) Deposit in the Capitalized Interest Account of the Bond Fund an amount equal to$ ;and (E) Deposit in the Administrative Expense Fund an amount equal to Section 4.02. Improvement Fund (A) Establishment of Improvement Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Improvement Fund (the "Improvemen t Fund"). Deposits shall be made to the Improvement Fund as required by Sections 4.01(C) and by any Supplemental Agreement. Moneys in the Improvement Fund shall be held in trust by the Fiscal Agent for the benefit of the City, and shall be disbursed for the payment or reimbursement of costs of the Project. (B) Procedure for Disbursement. Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer's Certificate which shall: (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made (which shall be for payment of a Project cost or to reimburse expenditures of the City or any other party for Project costs previously paid), that the disbursement is a proper expenditure from the Improvement Fund, 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 requesting a disbursement. Notwithstanding the foregoing, no Officer's Certificate shall request a disbursement from the Improvement Fund for the payment of the cost of right-of-way under the Acquisition Agreement until a guaranty of The Boeing Company substantially in the form of Exhibit D to the Acquisition Agreement has been delivered to the City,as described in Section 5.06F. of the Acquisition Agreement. Each such Officer's Certificate submitted to the Fiscal Agent as described in this Section 4.02(B) shall be sufficient evidence to the Fiscal Agent of the facts stated therein, and the Fiscal Agent shall have no duty to confirm the accuracy of such facts. -23- (C) Investment. Moneys in the accounts within the Improvement Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits from the investment and deposit of amounts in the Improvement Fund shall be retained in the Improvement Fund to be used for the purposes of the Improvement Fund. (D) Closing of Fund. Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid, or that any such costs are not required to be paid from the Improvement Fund,the Fiscal Agent shall transfer the amount, if any,remaining,in the Improvement Fund to the Bond Fund to be used to pay debt service on the Bonds on the next Interest Payment Date and the Improvement Fund shall be closed. Section 4.03. Costs of Issuance Fund. (A) Establishment of Costs of Issuance Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Costs of Issuance Fund (the "Costs of Issuance Fund"), to the credit of which a deposit shall be made as required by Section 4.01(A). Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance. (B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance,as set forth in a requisition containing respective amounts to be paid to the designated payees, signed.by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the Series 2002-A Bonds. The Fiscal Agent shall pay all Costs of Issuance after receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee pursuant to an Officer's Certificate requesting payment of Costs of Issuance. The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of 90 days from the date of delivery of the Series 2002-A Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon,to the Administrative Expense Fund. (C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund. Section 4.04. Reserve Fund. (A) Establishment of Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Reserve Fund (the "Reserve Fund"), to the credit of which a deposit shall be made as required by Section 4.01(B) equal to the Reserve Requirement as of the Closing Date for the Series 2002-A Bonds, and deposits shall be made as provided in Sections 4.06(B) and 2.14(C). 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 -24- payment of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B) Use of Reserve Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in.the event of any deficiency at any time in the . Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming Bonds from the Bond Fund. (C) Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent shall provide written notice thereof to the Director of Administrative Services,specifying the amount withdrawn. (D) Transfer of Excess of Reserve Requirement. Whenever,on the Business Day prior to any Interest Payment Date, or on any other date at the written request of the Director of Administrative Services, the amount in the Reserve Fund exceeds the Reserve Requirement,the Fiscal Agent shall provide written notice to the Director of Administrative Services of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with Section 4.05. (E) Transfer When Balance Exceeds OutstandingBonds.onds. Whenever the balance in the Reserve Fund equals or 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 the written direction of the Director of Administrative Services transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section 2.03 and 4.05, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred_ to the City to be used for any lawful purpose of the City. Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund pursuant to this Section 4.04(E) until after (i) the calculation of any amounts due to the federal government pursuant to Section 5.13 following payment of the Bonds and withdrawal of any such amount from the Reserve Fund for purposes of making such payment to the federal government,and (ii)payment of any fees and expenses due to the Fiscal Agent. (F) Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A)(iii), a proportionate amount in the Reserve Fund (determined on the basis of the principal of Bonds to be redeemed, and the original principal of the Bonds) 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 pursuant to Section 2.03(A)(iii). The Director of Administrative Services shall deliver to the Fiscal Agent an Officer's Certificate specifying any amount to be so transferred,and the Fiscal Agent may rely on any such Officer's Certificate. -25- (G) Transfer to Pay Rebate. Amounts in the Reserve Fund may at any time be used, at the written direction of an Authorized Officer,for purposes of paying any rebate liability under Section 5.13. (H) Substitution of Qualified Reserve Fund Credit Instrument. The City shall have the right at any time to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Fund Credit Instrument, and (h) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Fund Credit Instrument will cause interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, and upon delivery by the City to the Fiscal Agent of a written calculation of the amount permitted to be released from the Reserve Fund (upon which calculation the Fiscal Agent may conclusively rely), the Fiscal Agent shall transfer such funds from the Reserve Fund to the City free and clear of the lien of this Agreement, to be used by the City for any lawful purpose of Improvement Area A under the Law. The Fiscal Agent shall comply with all documentation relating to a Qualified Reserve Fund Credit Instrument as shall be required to maintain such Qualified Reserve Fund Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under Section 4.04. At least fifteen (15) days prior to the expiration of any Qualified Reserve Fund Credit Instrument, the City shall be obligated either (i),to replace such Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund Credit Instrument, or (ii) to deposit or cause to be deposited with the Fiscal Agent an amount of funds such that the amount on deposit in the Reserve Fund is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the City shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Fiscal Agent shall, prior to the expiration thereof, draw upon the Qualified Reserve Fund Credit Instrument in full and deposit the proceeds of such draw in the Reserve Fund. In the event that the Reserve Requirement shall at any time be maintained in the Reserve Fund in the form of a combination of cash and a Qualified Reserve Fund Credit Instrument,the Fiscal Agent shall apply the amount of such cash to make any payment required to be made from the Reserve Fund before the Fiscal Agent shall draw any moneys under such Qualified Reserve Fund Credit Instrument for such purpose. In the event that the Fiscal Agent shall at any time draw funds under a Qualified Reserve Fund Credit Instrument to make any payment then required to be made from the Reserve Fund, the Special Tax Revenues thereafter received by the Fiscal Agent, to the extent deposited to the Reserve Fund under Section 4.06(B)(ii), shall be used to reinstate the Qualified Reserve Fund Credit Instrument. Section 4.05. Bond Fund. (A) Establishment of Bond Fund,- Capitalized Interest Account and Special Tax Prepayments Account. There is hereby established as a separate fund to be held by the Fiscal Agent the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Bond Fund (the 'Bon d Fund"), to the credit of which deposits shall be made as required by Sections 4.02(D), 4.04(B), 4.04(D), 4.04(E), 4.04(F), -26- and 4.06(B), and any other amounts required to be deposited therein by this Agreement or the Law. There is also hereby created in the Bond Fund, a separate account held by the Fiscal Agent, the Capitalized Interest Account, to the credit of which deposits shall be made under Section 4.01(D). There is also hereby created in the Bond Fund a separate account to be held by the Fiscal Agent, consisting of the Special Tax Prepayments Account, to the credit of which deposits shall be made as provided in Section 4.06(A). Moneys in the Bond Fund and the accounts therein 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 alien in favor of the Owners of the Bonds. (B) Disbursements. (i) Bond Fund Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal,and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth in Section 2.03(A)(ii), or a redemption of the Bonds required by Section 2.03(A)(i) or (iii), such payments to be made in the priority listed in the second succeeding paragraph. Notwithstanding the foregoing, amounts in the Bond Fund as a result of a transfer pursuant to Section 4.02(D) shall be used to pay the interest on the Bonds prior to the use of any other amounts in the Bond Fund for such purpose. In the event that amounts in the Bond Fund are insufficient for the purposes set forth in the preceding paragraph, the Fiscal Agent shall withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Bond Fund insufficiency. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the first sentence of the first paragraph of this Section 4.02(B)(i), the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date. (ii) Special Tax Prepayments Account Disbursements. Moneys in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds can timely be given under Section 2.03(A)(iii), and notice to the Fiscal Agent can timely be given under Section 2.03(B), and shall be used (together with any amounts transferred pursuant to Section 4.04(F)) to redeem Bonds on the redemption date selected in accordance with Section 2.03. (iii) Capitalized Interest Account Disbursements. All moneys in the Capitalized Interest Account shall be transferred to the Bond Fund on the Business Day prior to each Interest Payment Date,in the amount equal to and to be used for the payment of interest on the Bonds due on the next succeeding Interest Payment Date;provided that no such transfer shall exceed the amount then on deposit in the Capitalized Interest Account. -27- When no amounts remain on deposit in such account, the Capitalized Interest Account shall be closed. (C) Investment. Moneys in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from the investment and deposit of amounts in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account shall be retained in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account,respectively,to be used for purposes of such fund and accounts. Section 4.06. Special Tax Fund. (A) Establishment of Special Tax Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Fund (the "Special Tax Fund"), to the credit of which the Fiscal Agent shall deposit amounts received from or on behalf of the City consisting of Special Tax Revenues, and any amounts required by Section 4.07(B) to be deposited therein. The City shall remit, not later than five (5) Business Days after receipt,all Special Taxes received by it to the Fiscal Agent for deposit by the Fiscal Agent to the Special Tax Fund. Notwithstanding the foregoing, any proceeds of Special Tax Prepayments shall be transferred by the City to the Fiscal Agent for deposit by the Fiscal Agent (as specified in writing by an Authorized Officer to the Fiscal Agent) in the Special Tax Prepayments Account established pursuant to Section 4.05(A). 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 alien in favor of the Owners of the Bonds and the City. (B) Disbursements. On 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, the Capitalized Interest Account and the Special Tax Prepayments Account to the Bond Fund pursuant to Sections 4.02(D),4.04(D), (E), and (F), and 4.05(B)(ii) and (iii), 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 such 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 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 the City agrees that 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. (C) Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof. -28- Section 4.07. Administrative Expense Fund. (A) Establishment of Administrative Expense Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Administrative Expense Fund (the "Administrative Expense Fund"), to the credit of which deposits shall be made as required by Sections 4.01(E), 4.03(B) and 4.06(B). 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 as provided below. (B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn 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 Costs of Issuance, and the nature of such Administrative Expense or Costs of Issuance. Amounts transferred from the Costs of Issuance Fund to the Administrative Expense Fund pursuant to Section 4.03(B) shall be separately identified at all times, and shall be expended for purposes of the Administrative Expense Fund prior to the use of amounts transferred to the Administrative Expense Fund from the Special Tax Fund pursuant to Section 4.06(B). Annually, on the last day of each Fiscal Year commencing with the last day of Fiscal Year following the Fiscal Year in which the improvements described in Exhibit B to the Acquisition Agreement have been completed, the Fiscal Agent shall withdraw any amounts then remaining in the Administrative Expense Fund in excess of$20,000 that have not otherwise been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered,and transfer such amounts to the Special Tax Fund. (C) Investment. Moneys in the Administrative Expense Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Administrative Expense Fund to be used for the purposes thereof. -29- ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds. . Section 5.02. Limited Obligation. The Bonds are limited obligations of the City on behalf of Improvement Area A and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein),the Reserve Fund and,until disbursed as provided herein, the Special Tax Fund. Section 5.03. 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 hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have so extended or funded. Section 5.04. Against Encumbrances. The City will 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 this Agreement. Section 5.05. Books and Records. The City will 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 Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. Section 5.06. 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. Section 5.07. Compliance with Law. The City will comply with all provisions of the Law and any other applicable law in administering Improvement Area A and completing the acquisition of the Project. -30- Section 5.08. Collection of Special Tax Revenues. The City shall comply with all requirements of the Law so as to assure the timely collection of Special Tax Revenues,including without limitation,the enforcement of delinquent Special Taxes. On or within five (5) Business Days of each July 1, the Fiscal Agent shall provide the Director of Administrative Services with a notice stating the amount then on deposit in the Bond Fund, the Capitalized Interest Account and the Reserve Fund,and informing the City that the Special Taxes may need to be levied pursuant to the Ordinance as necessary to provide for Annual Debt Service and Administrative Expenses and replenishment (if necessary) of the Reserve Fund so that the balance therein equals the Reserve Requirement. The receipt of or failure to receive such notice by the Director of Administrative Services shall in no way affect the obligations of the Director of Administrative Services under the following two paragraphs. Upon receipt of such notice, the Director of Administrative Services shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied,taking into account any parcel splits during the preceding and then current year. The City shall effect the levy of the Special Taxes in accordance with the Ordinance by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within Improvement Area A for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, 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 next real property tax roll. The City Treasurer or the Treasurer's designee shall fix and levy the amount of Special Taxes within Improvement Area A required for the payment of principal of and interest on any outstanding Bonds of Improvement Area A becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts necessary to discharge any obligation under Section 5.13) during such Bond Year, taking into account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable,and have the same priority,become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property;provided that,pursuant to and in accordance with the Ordinance, the Special Taxes may be collected by means of direct billing of the property owners within Improvement Area A, in which event the Special Taxes shall become delinquent if not paid when due pursuant to said billing. Section 5.09. Covenant to Foreclose. Pursuant to Section 53356.1 of the Act and the provisions of the Code, the City hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an -31- 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 Director of Administrative Services 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. On or about February 15 and June 15 of each Fiscal Year, the Director of Administrative Services shall compare the amount of Special Taxes theretofore levied in the Improvement Area A to the amount of Special Tax Revenues theretofore received by the City,and: (A) Individual Delinquencies. If the Director of Administrative Services determines that any single parcel subject to the Special Tax in the Improvement Area A is delinquent in the payment of Special Taxes in the aggregate amount of$5,000 or more, then the Director of Administrative Services shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the City within 90 days of such determination. (B) Aggregate Delinquencies. If the Director of Administrative Services determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District, (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the Director of Administrative Services shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and the City shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in Improvement Area A with a Special Tax delinquency. The Director of Administrative Services and the.City Attorney, as applicable, are hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for City staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder. Section 5.10. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement. Section 5.11. Private Activity Bond Limitations. The City shall assure that the proceeds of the Series 2002-A Bonds are not so used as to cause the Series 2002-A Bonds to satisfy the private business tests of section 141(b) of the Tax Code or the private loan financing test of section 141(c) of the Tax Code. Section 5.12. Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Series 2002-A Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Tax Code. -32- Section 5.13. Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Series 2002-A Bonds. If necessary, the City may use amounts in the Reserve Fund, amounts on deposit in the Administrative Expense Fund, and any other funds available to Improvement Area A, including amounts advanced by the City, in its respective sole discretion, to be repaid by Improvement Area A as soon as practicable from amounts described in the preceding clauses, to satisfy its obligations under this Section 5.13. The City Treasurer shall take note of any investment of monies hereunder in excess of the yield on the Series 2002-A Bonds, and shall take such actions as are necessary to ensure compliance with this Section 5.13, such as increasing the portion of the Special Tax levy for Administration Expenses as appropriate to have funds available in the Administrative Expense Fund to satisfy any rebate liability under this Section 5.13. Section 5.14. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the proceeds of the Series 2002-A Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series 2002-A Bonds would have caused the Series 2002-A Bonds to be"arbitrage bon ds"within the meaning of section 148 of the Tax Code. Section 5.15. Yield of the Bonds. In determining the yield of the Series 2002-A Bonds to comply with Section 5.13 and 5.14 hereof, the City will take into account redemption(including premium, if any) in advance of maturity based on the reasonable expectations of the City, as of the Closing Date, regarding prepayments of Special Taxes and use of prepayments for redemption of the Bonds,without regard to whether or not prepayments are received or Bonds redeemed. Section 5.16. Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the exclusion of interest on the Series 2002-A Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Series 2002-A Bonds. Section 5.17. Continuing Disclosure to Owners. In addition to its obligations under Section 9.07, the City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Agreement, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered a default hereunder; however, any Participating Underwriter or any holder or Beneficial Owner (as defined in Section 2.14) of the Series 2002-A Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations thereunder,including seeking mandate or specific performance by court order. An owner of the real property in Improvement Area A as of the Closing Date has also executed a continuing disclosure agreement for the benefit of the holders and beneficial owners of the Series 2002-A Bonds. Any Participating Underwriter or holder or beneficial owner may -33- take such actions as may be necessary and appropriate directly against such landowner to compel performance by it of its obligations thereunder, including seeking mandate or specific performance by court order; however the City shall have no obligation whatsoever to enforce any obligations under any such agreement. Section 5.18. Reduction of Special Taxes. The City covenants and agrees to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in Improvement Area A below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year,plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is hereby acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing covenant,and that said covenant is necessary to assure the full and timely payment of the Bonds. Section 5.19. Limits on Special Tax Waivers and Bond Tenders. The City covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds and further covenants not to permit the tender of Bonds in 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 Series 2002-A Bonds and any Parity Bonds remaining Outstanding following such tender. Section 5.20. Limitation on Principal Amount of Parity Bonds. The City will not issue more than $8,100,000 initial principal amount of Parity Bonds (exclusive of any refunding Bonds issued in a principal amount not in excess of the principal amount of the Bonds being refunded). Section 5.21. Annexation of Property. The City agrees not to annex any territory to Improvement Area A unless the "District Value" of such area (inserting for this purpose the description of such area for the words "Improvement Area A" in the definition of District Value in Section 1.03 hereof) is at least three times the sum of (i) the amount necessary to prepay the Special Tax Lien that would apply to such property upon its annexation to Improvement Area A (including amounts so required by reason of the issuance of any Parity Bonds to be issued in conjunction with the annexation,plus (ii) the aggregate principal amount of any fixed assessment liens on the parcels to be annexed, plus (iii) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on the parcels of land to be annexed (the "Oth er District Bonds") equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on the parcels to be annexed, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service-on the Other District Bonds occurs),based upon information from the most recent available Fiscal Year. The City agrees that, in addition to the foregoing, any annexation of land in Improvement Area B of the District to Improvement Area A will be contingent upon, and -34- effective from and after, the issuance of Parity Bonds in accordance with Sections 2.13 and 5.20 hereof. -35- ARTICLE VI INVESTMENTS,DISPOSITION OF INVESTMENT PROCEEDS,LIABILITY OF THE AUTHORITY Section 6.01. Deposit and Investment of Moneys in Funds. Moneys in any fund or account created or established by this 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, to the extent reasonably practicable, any such moneys in Permitted Investments described in clause (g) of the definition thereof in Section 1.03,which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. The City Treasurer shall make note of any investment of funds hereunder in excess of the yield on the Bonds, so that appropriate actions can be taken to assure compliance with Section 5.13. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in this Agreement any moneys are required to be transferred by the City to the Fiscal Agent,such transfer may be accomplished by transferring a like amount of Permitted Investments. The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. The Fiscal Agent shall not incur any liability for losses arising from any investments made pursuant to this Section. Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Agreement or the Tax Code) at Fair Market Value. The Fiscal Agent shall have no duty in connection with the determination of Fair Market Value other than to follow the investment direction of an Authorized Officer in any written direction of any Authorized Officer. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) investments in the subaccounts within the Reserve Fund shall be valued at their present value (within the meaning of section 148 of the Tax Code). Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent hereunder,provided that the Fiscal Agent shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement. -36- The Fiscal Agent shall sell at Fair Market Value, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet. any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the City nor the Fiscal Agent shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent hereunder. Section 6.02. Limited Obli ag tion. The City's obligations hereunder are limited obligations of the City on behalf of Improvement Area A and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Special Tax Fund, the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein) and the Reserve Fund created hereunder. Section 6.03. Liability of C4. The City shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Fiscal Agent herein or of any of the documents executed by the Fiscal Agent in connection with the Bonds,or as to the existence of a default or event of default thereunder. In the absence of bad faith, the City, including the City Treasurer and the Director of Administrative Services, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein,upon certificates or opinions furnished to the City and conforming to the requirements of this Agreement. The City, including the Director of Administrative Services,shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers,if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The City and the Director of Administrative Services may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report,warrant,bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be the City Attorney,with regard to legal questions, and the opinion of such counsel -37- shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The City shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established,if disputed. Whenever in the administration of its duties under this Agreement the City shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the City,be deemed to be conclusively proved and established by a certificate of the Fiscal Agent, an Appraiser (as such term is used in the definition"District Value" in Section 1.03 hereof), an Independent Financial Consultant or a Tax Consultant, and such certificate shall be full warrant to the City for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof,but in its discretion the City may,in lieu thereof,accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 6.04. Employment of Agents by City. In order to perform its duties and obligations hereunder, the City, the City Treasurer and/or the Director of Administrative Services may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so,upon the opinions,calculations,determinations and directions of such persons or entities. -38- ARTICLE VII THE FISCAL AGENT Section 7.01. Appointment of Fiscal Agent. BNY Western Trust Company is hereby appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent. Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger,conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. The City may at any time 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, corporation or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank,corporation or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon written acceptance of appointment by the successor Fiscal Agent. Upon such acceptance, the successor Fiscal Agent shall be vested with all rights and powers of its predecessor hereunder without any further act. If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within forty-five (45) days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Owner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice,if any,as such court may deem proper,appoint a successor Fiscal Agent. If, by reason of the judgment of any court, or reasonable agency, the Fiscal Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Treasurer of the City in trust for the benefit of the Owners. The City covenants for the direct benefit of the Owners that its Treasurer in such case shall be vested with all of the rights and powers of the Fiscal -39- Agent hereunder,and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the Owners of the Bonds. In such event, the Treasurer may designate a successor Fiscal Agent qualified to act as Fiscal Agent hereunder. Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Bonds,or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder,except for its own negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement;but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not the form of any such certificate or opinion conforms to the requirements of this Agreement (but without any need to independently confirm any of the factual representations or conclusions contained therein). Except as provided above in this paragraph,Fiscal Agent shall be protected and shall incur no liability in acting or proceeding,or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement,and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument. The Fiscal Agent shall not be liable for any error of judgment made in good faith unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder,or in the exercise of any of its rights or powers. The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent. -40- The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, and its liability shall be limited to the proper accounting for such funds as it shall actually receive. In order to perform its duties and obligations hereunder, the Fiscal Agent may employ such persons or entities as it deems necessary or advisable. The Fiscal Agent shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. Such persons and entities shall be entitled to the immunities and exceptions from liability granted to the Fiscal Agent hereunder. All provisions in related documents as to the conduct and liability of the Fiscal Agent are subject to this Section 7.02. The Fiscal Agent's rights to immunities-and protection from liability hereunder shall survive its resignation or removal and payment of the Bonds and discharge of this Agreement. Section 7.03. Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including but not limited to monthly statements reporting funds held and transactions by the Fiscal Agent. Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report,warrant,bond or other paper or document believed in good faith by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established,if disputed. Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by an Officer's Certificate, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof,but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. Section 7.05. Compensation, Indemnification. The City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, -41- including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent shall not have alien therefor on any funds at any time held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any costs, expenses, claims or liabilities whatsoever, including without limitation fees and expenses of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement,but any monetary obligation of the City arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Fund. Section 7.06. Books and Accounts. The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein), the Reserve Fund, the Special Tax Fund, the Administrative Expense Fund, the Improvement Fund and the Costs of Issuance Fund. Such books of record and accounts shall at all times during business hours be subject to the inspection by the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing upon reasonable prior notice. -42- ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section 8.01. Amendments Permitted. This Agreement and the rights and obligations of 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 Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding,exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon,or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on,any Bond,without the express consent of the Owner of such Bond,'or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Owners of the Bonds (except as otherwise permitted by the Law, the laws of the State of California or this Agreement), or (iii) reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent.- This Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement,without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes: (A) to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (B) to make modifications not adversely affecting any Outstanding series of Bonds of the City in any material respect; (C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the City or the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners of the Bonds; (D) to make such additions, deletions or modifications as may be necessary or desirable to* assure exemption from gross federal income taxation of interest on the Bonds;and (E) in connection with the issuance of Parity Bonds under and pursuant to Section 2.13. Section 8.02. Owners' Meetings. The City may at any time call a meeting of the Owners. In such event the City is authorized to fix the time and place of said meeting and to -43- provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting. Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the Fiscal Agent may at any time adopt a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01, to take effect when and as provided in this Section. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided. Such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement,stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon,consent to,or take any other action provided for in this Article VIII; provided, however, that the Fiscal Agent shall not be deemed to have knowledge that any Bond is owned or held by the City unless the City is the registered Owner or the Fiscal Agent has received written notice that any other registered Owner is an Owner for the account of the City. -44- Section 8.05. Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes. Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners' action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him,provided that due notation thereof is made on such Bonds. -45- ARTICLE IX MISCELLANEOUS Section 9.01. Benefits of Agreement Limited to Parties and School District. Nothing in this Agreement,expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent. Section 9.02. Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.03. Discharge of Agreement. The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the 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, such Outstanding Bonds, as and when the same become due and payable; (B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in Sections 4.04 and 4.05 is fully sufficient to pay such Outstanding Bonds,including all principal,interest and redemption premiums;or (C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the City shall determine as confirmed by Bond Counsel or an independent certified public accountant will, together with the interest to accrue thereon and moneys then on deposit in the fund and accounts provided for in Sections 4.04 and 4.05, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment,the pledge of the Special Taxes and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to such Outstanding Bonds shall cease and terminate. Notice of such election shall be filed with the Fiscal Agent. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered -46- and paid all sums due thereon, all amounts owing to the Fiscal Agent pursuant to Section 7.05, and otherwise to assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes,shall continue in any event. Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required.for the purposes of the preceding paragraph, shall be paid over to the City and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal Agent but shall be retained by the City to be used for any purpose permitted under the Law. Section 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith. Section 9.05. Waiver of Personal Liability. No Councilmember,officer, official, agent or employee of the City or Improvement Area A shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such Councilmember, officer, official, agent or employee from the performance of any official duty provided by law. Section 9.06. Notices to and Demands on City and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows: City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 Attn:Director of Administrative Services -47- Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Fiscal Agent with the City) as follows (provided that any such notice shall not be effective until actually received by the Fiscal Agent): BNY Western Trust Company 700 South Flower Street,Suite 500 Los Angeles,CA 90017-4104 Attn: Corporate Trust Section 9.07. State Reporting Requirements. The following requirements shall apply to the Bonds,in addition to those requirements under Section 5.17: (A) Annual Reporting. Not later than October 30 of each calendar year, beginning with the October 30 first succeeding the date of the Series 2002-A Bonds, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the Director of Administrative Services shall cause the following information to be supplied to CDIAC: (i) the principal amount of the Outstanding Bonds; (ii) the balance in the Reserve Fund; (iii) the balance,if any,in the Capitalized Interest Account; (iv) the number of parcels in the Improvement Area A which are delinquent in the payment of Special Taxes, the amount of each delinquency, the length of time delinquent and when foreclosure was commenced for each delinquent parcel; (v) the balance in the accounts within the Improvement Fund;and (vi) the assessed value of all parcels in the Improvement Area A subject to the levy of the Special Taxes as shown in most recent equalized roll. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC. (B) Other Reporting. If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve Fund to pay principal and interest on the Bonds, the Fiscal Agent shall notify the Director of Administrative Services of such failure or withdrawal in writing. The Director of Administrative Services shall notify CDIAC and the Original Purchaser of such failure or withdrawal within 10 days of such failure or withdrawal. (C) S12ecial Tax Reporting. The Director of Administrative Services shall file a report with the City no later than March 31, 2003, and at least once a year thereafter, which annual report shall contain: (i) the amount of Special Taxes collected and expended with respect to Improvement Area A, (ii) the amount of Bond proceeds collected and expended with respect to Improvement Area A, and (iii) the status of the Project. It is acknowledged that the Special Tax Fund and the Special Tax Prepayments Account are the accounts into which Special Taxes collected in Improvement Area A will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in Section 4.01 are the funds and accounts into which Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and the annual report described in the preceding sentence is -48- intended to satisfy the requirements of Sections 50075.1(d), 50075.3(d) and 53411 of the California Government Code. (D) Amendment. The reporting requirements of this Section 9.07 shall be amended from time to time, without action by the City or the Fiscal Agent (i) with respect to subparagraphs (A) and (B) above, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the Act, and (ii) with respect to subparagraph (C) above, to reflect any amendments to Section 50075.1, 50075.3, 53410 or 53411 of the California Government Code. Notwithstanding the foregoing, any such amendment shall not, in itself, affect the City's obligations under the Continuing Disclosure Agreement. The City shall notify the Fiscal Agent in writing of any such amendments which affect the reporting obligations of the Fiscal Agent under this Agreement. (E) No Liability. None of the City and its officers, agents and employees, the Director of. Administrative Services or the Fiscal Agent shall be liable for any inadvertent error in reporting the information required by this Section 9.07. The City shall provide copies of any of such reports to any Bondowner upon the written request of a Bondowner and payment by the person requesting the information of the cost of the City to produce such information and pay any postage or other delivery cost to provide the same,as determined by the Director of Administrative Services or the City Treasurer. The term "Bon downer for purposes of this Section 9.07 shall include any beneficial owner of the Bonds. Section 9.08. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal,invalid or unenforceable. Section 9.09. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2)years after the date when the payments of such principal,interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners shall look only to the City for the payment of the principal of,and interest and any premium on,such Bonds. Section 9.10. Apylicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Section 9.11. Conflict with Law. In the event of a conflict between any provision of this Agreement with any provision of the Law as in effect on the Closing Date, the provision of the Law shall prevail over the conflicting provision of this Agreement. -49- Section 9.12. Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Law relative to their issuance and the levy of the Special Taxes. Section 9.13. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date. Section 9.14. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. -50- IN WITNESS WHEREOF, the City caused this Fiscal Agent Agreement to be executed all as of June 1,2002. CITY OF HUNTINGTON BEACH,for and on behalf of IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) By: Mayor Attest: By: City Clerk Approved as to Form: By: City Attorney Reviewed and Approved: By: City Treasurer. BNY WESTERN TRUST COMPANY, as Fiscal Agent By: Authorized Officer 08003.07,J6159 -51- EXHIBIT A FORM OF SERIES 2002=A BOND UNITED.STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE No. $ IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) SPECIAL TAX BOND,SERIES 2002-A INTEREST RA7j MATURITY DATE BOND DATE CUSIP September 1, Jul _,2002 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Huntington Beach(the "City") for and on behalf of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Improvemen t Area A"), for value received, hereby promises to pay solely from the Special Tax (as hereinafter defined) to be collected in Improvement Area A or amounts in the funds and accounts held under the Agreement (as hereinafter defined), to the registered owner named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from the Bond Date set forth above, or from the most recent interest payment date to which interest has been paid or duly provided for,semiannually on March 1 and September 1, commencing March 1, 2003, at the interest rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office (as defined in the Agreement referred to below) of BNY Western Trust Company (the "Fiscal. Agent"). Interest on this Bond shall be paid by check of the Fiscal Agent mailed on each interest payment date to the registered owner hereof as of the close of business on the 15th day of the month preceding the month in which the interest payment date occurs (the "Record Date") at such registered owner's address as it appears on the registration books maintained by the Fiscal Agent, or (i) if the Bonds are in book-entry-only form, or (ii) otherwise upon written request filed with the Fiscal Agent prior to any Record Date by a registered owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to the depository for the Bonds or to an account in the United States designated by such registered owner in such written request,respectively. A-1 This Bond is one of the first series of a duly authorized issue of bonds in the aggregate principal amount of $13,000,000 approved by the qualified electors of Improvement Area A pursuant to the provisions of Chapter 3.56 of the Municipal Code of the City(the "Code") and, as applicable under the Code, the Mello-Roos Community Facilities Law of 1982, as amended, Sections 53311, et seq., of the California Government Code (collectively, the "Law ") for the purpose of financing certain public facilities within and in the vicinity of Improvement Area A (the "Project"), and is one of the series of Bonds designated "Improvemen t Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A" (the "Bonds") in the aggregate principal amount of $4,900,000. The creation of the Bonds and the terms and conditions thereof are provided for by resolution adopted by the City Council of the City on June 17,2002 (the "Resolution"), and the Fiscal Agent Agreement, dated as of June 1, 2002, between the City and the Fiscal Agent (the "Agreement") and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Resolution and in the Agreement, additional bonds may be issued by the City from time to time not to exceed the aggregate principal amount of $8,100,000 secured by alien on a parity with the lien securing the Bonds ("P arity Bonds"). The Resolution is adopted and the Agreement is entered into under and this Bond is issued under, and all are to be construed in accordance with,the laws of the State of California. Pursuant to the Law, the Agreement and the Resolution, the principal of and interest on this Bond are payable solely from the annual special tax authorized under the Law to be collected within Improvement Area A (the "Special Tax") and certain funds held under the Agreement. Interest on this Bond shall be payable from the interest payment date next preceding the date of authentication hereof,unless (i) it is authenticated on an interest payment date,in which event it shall bear interest from such date of authentication, or (ii) it is authenticated prior to an interest payment date and after the close of business on the Record Date preceding such interest payment date, in which event it shall bear interest from such interest payment date, or (iii) it is authenticated prior to the Record Date preceding the first interest payment date,in which event it shall bear interest from the Bond Date set forth above;provided, however, that if at the time of authentication of this Bond, interest is in default hereon, this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment hereon. Any tax for the payment hereof shall be limited to the Special Tax, except to the extent that provision for payment has been made by the City, as may be permitted by law. The Bonds do not constitute obligations of the City for which the City is.obligated to levy or pledge,or has levied or pledged,general or special taxation other than described hereinabove. The Bonds are subject to redemption prior to their stated maturity on any interest payment date, as a whole or in part among maturities as provided in the Agreement, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption: A-2 Redemption Dates Redemption Prices Any interest payment date from March 1,2003 103.0% to and including March 1,2010 September 1,2010 and March 1,2011 . 102.0 September 1,2011 and March 1,2012 101.0 September 1,2012 and any interest payment 100.0 date thereafter The Bonds maturing on September 1, are subject to mandatory sinking payment 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 fixed for redemption,without premium, from sinking payments as follows: Redemption Date (September 1) Sinking Payments [to come] The Bonds maturing on September 1, 2032, are subject to mandatory sinking payment 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 fixed for redemption, without premium, from sinking payments as follows: Redemption Date (September 1) Sinking Payments [to come] The Bonds are also subject to redemption on any interest payment date from the proceeds of Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to the Agreement among maturities so as to maintain substantially the same debt service profile as in effect on the Closing Date and by lot within a maturity, at a redemption price (expressed as a percentage at the principal amount of the Bonds to be redeemed), as set forth below,together with accrued interest to the date fixed for redemption: Redemption Dates Redemption Prices Any interest payment date from March 1,2003 103.0% to and including March 1,2010 September 1,2010 and March 1,2011 102.0 September 1,2011 and March 1,2012 101.0 September 1,2012 and any interest payment 100.0 date thereafter A-3 In the event of a redemption of less than all of the Bonds, the Bonds shall be redeemed by lot within a maturity,and among maturities in the manner specified in the Agreement. Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Agreement. This Bond shall be registered in the name of the owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon. No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated as herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such owner's order. The Fiscal Agent shall require the registered owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, (ii) with respect to a Bond after such Bond has been selected for redemption, or (iii) between a Record Date and the succeeding interest payment date. Exchanges may only be made for Bonds in authorized denominations, as provided in the Agreement. The Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein. The Bonds are not general obligations of the City, but are limited obligations payable solely from the revenues and funds pledged therefor under the Agreement. Neither the faith and credit of the City or the State of California or any political subdivision thereof is pledged to the payment of the Bonds. This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent. Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Fiscal Agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of A-4 this Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California. IN WITNESS WHEREOF, City of Huntington Beach has caused this Bond to be dated the Bond Date set forth above, to be signed by the facsimile signature of its Mayor and countersigned by the facsimile signature of its City Clerk. CITY OF HUNT NGTON BEACH [SEAL] Mayor ATTEST City Clerk A-5 FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the Resolution and in the Agreement which has been authenticated on BNY WESTERN TRUST COMPANY,as Fiscal Agent By: Authorized Signatory A-6 ASSIGNMENT For value received the undersigned hereby sells,assigns and transfers unto (Name,Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoints(s) attorney, to transfer the same on the registration books of the Fiscal Agent with full power of substitution in the premises. Dated: Signature Guaranteed: Signature: Note: Signature(s) must be guaranteed by an eligible Note: The signature(s) on this Assignment must guarantor. correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. A-7 • C�Py�� Quint&Thimmig LLP 4/08/02 5/13/02 6/4/02 6/7/02 U 4 (] UZ PURCHASE CONTRACT $4,900,000 Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds,Series 2002-A June 2002 City of Huntington Beach 2000 Main Street Huntington Beach,California 92648 Attention: City Administrator Ladies and Gentlemen: Stone &Youngberg LLC (the "U nderwriter") offers to enter into this Purchase Contract (this "Purchase Contract") with the City of Huntington Beach, California (the "City"), which, upon your acceptance of this offer, will be binding upon the City and the Underwriter. Terms not otherwise defined herein shall have the same meanings as set forth in the Fiscal Agent Agreement described below. This offer is made subject to the acceptance by the City of this Purchase Contract on or before 11:59 p.m. on June_,2002 or such later time as is acceptable to the Underwriter. 1. Upon the terms and conditions and in reliance upon the representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to sell to the Underwriter, all (but not less than all) of the $4,900,000 aggregate principal amount of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Improvement Area A") Special Tax Bonds, Series 2002-A (the "Bonds"), at an aggregate purchase price (the "Purchase Price") of $ (equal to the initial principal amount of the Bonds of $ less an Underwriter's discoun t of$ ). The Bonds will be issued pursuant to the City of Huntington Beach Special Tax Financing Improvement Code (constituting Chapter 3.56 of the City's Municipal Code), and, where applicable, the Mello-Ross Community Facilities Act of 1982, as amended (constituting Sections 53311 et seq. of the California Government Code) (collectively, the "Law ") and Resolution No. adopted on June 17, 2002 by the City Council (the "City Council") of the City acting as the legislative body of Improvement Area A (collectively, with Resolution Nos. 2002-27 and 2002-28 of the City Council adopted on April 1, 2002 and Resolution Nos. 2002-38, 2002-39, 2002-40 and 2002-41 of the City Council adopted on June 3, 2002, the "Resolution s"). The Special Tax to provide a source of payment for the Bonds will be levied pursuant to 08003.07:J6164 Ordinance No. 3557 adopted by the City Council on June 17, 2002 (the "Ordinance"). The Bonds will be issued pursuant to the terms of a Fiscal Agent Agreement (the "Fiscal Agent Agreement"), dated as of June 1,2002,between the City and BNY Western Trust Company,Los Angeles, California, as fiscal agent (the "Fiscal Agent"). The proceeds of the sale of the Bonds will be.used by the District for (a) the acquisition and construction of public improvements identified in the proceedings to form the District,pursuant to an Acquisition Agreement, dated as of June 1, 2002 (the "Acquisition Agreement") between the City and Boeing Realty Corporation (the "Developer"), (b) to fund a reserve fund, (c) to fund capitalized interest for the Bonds for a limited period of time, and (d) to pay the costs of issuance and administrative expenses related to the Bonds. The obligations of the Developer under the Acquisition Agreement will be.guaranteed under a Guaranty of The Boeing Company (the "Guaran ty") in the form attached to the Acquisition Agreement. 2. The Bonds will mature on the dates and in the principal amounts, and will bear interest at the rates, as set forth in Exhibit D hereto. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the offering prices set forth on the cover of the final Official Statement described below. 3. (a) The City agrees to deliver to the Underwriter as many copies of the Official Statement, dated the date hereof, relating to the Bonds-(as supplemented and amended from time to time, the "Fin al Official Statement") as the Underwriter shall reasonably request as necessary to comply with paragraph (b)(4) of Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934(the "Rule"). Th e City agrees to deliver such Final Official Statements within seven (7) business days after the execution hereof. The Underwriter agrees to deposit the Final Official Statement with a qualified national registered municipal securities information repository on or as soon as practicable after the Closing Date. The Underwriter agrees to deliver a copy of the Final Official Statement to each of its customers purchasing Bonds no later than the settlement date of the transaction. (b) The City has authorized and approved the Preliminary Official Statement dated June 2002 and hereby authorizes and approves the Final Official Statement (the Final Official Statement, the Preliminary Official Statement and any amendments or supplements that may be authorized for use with respect to the Bonds are herein referred to collectively as the "Official Statement"), consents to their distribution and use by the Underwriter and authorizes the execution and approval of the Final Official Statement by a duly authorized officer of the City. 4. The City and Improvement Area A represent and warrant to the Underwriter that: (a) The City is duly organized and validly existing as a charter city and municipal corporation under the Constitution and laws of the State of California (the "State"), Improvement Area A is duly organized and validly existing as an improvement area of a community facilities district under the laws of the State, including the Law, with the City Council acting as Improvement Area A's legislative body, and the City has the full legal right, power and authority (i) upon satisfaction of the conditions in this Purchase Contract and the Fiscal Agent Agreement, to issue the -2- Bonds, and (ii) to secure the Bonds in the manner contemplated in the Fiscal Agent Agreement. (b) The City Council, acting as the legislative body of Improvement Area A, has the full legal right,power and authority to adopt the Resolutions and the Ordinance, and the City has the full legal right, power and authority (i) to enter into this Purchase Contract, the Acquisition Agreement, the Fiscal Agent Agreement, and the Continuing Disclosure Certificate-Issuer relating to the Bonds (the "CFD Disclosure Certificate"), (ii) to issue,sell and deliver the Bonds to the Underwriter as provided herein, and (iii) to carry out and consummate all other transactions on its part and on the part of Improvement Area A contemplated by each of -the aforesaid documents (such documents together with the Final Official Statement and such other certificates or instruments required on the part of the City or Improvement Area A to carry out the transactions contemplated by such instruments are collectively referred to herein as the "Common ity Facilities District Documents"), and the City, Improvement Area A and the City Council have complied with all provisions of applicable law,including the Law, in all matters relating to such transactions. (c) The City and Improvement Area A have duly authorized (i) the execution and delivery by the City of the Bonds, (ii) the execution, delivery and due performance by the City and Improvement Area A of their obligations under the Fiscal Agent Agreement, the Acquisition Agreement and the CFD Disclosure Certificate, (iii) the distribution and use of the Preliminary Official Statement and execution, delivery and distribution of the Final Official Statement, and (iv) the taking of any and all such action as may be required on the part of the City or Improvement Area A to carry out, give effect to and consummate the transactions on the part of the City and Improvement Area A contemplated by such instruments. All consents or approvals necessary to be obtained by the City or Improvement Area A in connection with the foregoing have been received, and the consents or approvals so received are still in full force and effect. (d) The Resolutions and Ordinance have been duly adopted by the City Council and are in full force and effect; the Fiscal Agent Agreement, the Acquisition Agreement and the CFD Disclosure Certificate, when executed and delivered by the City and the other respective parties thereto, will constitute legal, valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' righ is generally. (e) When delivered to the Underwriter, the Bonds will have been duly authorized by the City Council (acting as the legislative body for Improvement Area A) and duly executed, issued and delivered by the City and will constitute legal,valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, and will be entitled to the benefit and security of the Fiscal Agent Agreement. (f) The information relating to the City and Improvement Area A contained in the Preliminary Official Statement is,and as of the date of closing such information in -3- the Final Official Statement will be true and correct in all material respects, and the Preliminary Official Statement does not as of its date and the Final Official Statement will not as of the Closing Date contain any untrue or misleading statement of a material fact relating to the City and Improvement Area A or omit to state any material fact relating to the City and Improvement Area A necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. (g) If, at any time prior to the earlier of (i) receipt of notice from the Underwriter that Final Official Statement is no longer required to be delivered under the Rule or (ii) 90 days after the Closing, any event known to the officers of the City participating in the issuance of the Bonds occurs with respect to the City or Improvement Area A as a result of which the Final Official Statement as then amended or supplemented might include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the City shall promptly notify the Underwriter in writing of such event. Any information supplied by the City for inclusion in any amendments or supplements to the Final Official Statement will not contain any untrue or misleading statement of a material fact relating to the City or Improvement Area A or omit to state any material fact relating to the City or Improvement Area A necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. (h) To the best knowledge of the official of the City executing this Purchase Contract, neither the adoption of the Resolutions or the Ordinance, the execution and delivery of the Community Facilities District Documents, nor the consummation of the transactions on the part of the City and Improvement Area A contemplated herein or therein or the compliance by the City and Improvement Area A with the provisions hereof or thereof will conflict with, or constitute on the part of Improvement Area A or the City a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which Improvement Area A or the City is a party or by which it is bound, (ii) any provision of the State Constitution, or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which Improvement Area A or the City is subject. (i) The City has never been in default at any time, as to principal of or interest on any obligation which it has issued,which default may have an adverse effect on the ability of the City or Improvement Area A to consummate the transactions on their part under the Community Facilities District Documents, and other than the Fiscal Agent Agreement, neither the City nor Improvement Area A has entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on the Special Taxes. (j) Except as is specifically disclosed in the Final Official Statement, to the best knowledge of the official of the City executing this Purchase Contract, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the City or Improvement Area A has been served with process or threatened, which in any way questions the powers of the City Council, the City or Improvement Area A referred to in paragraph -4- (b) above, or the validity of any proceeding taken by the City Council in connection with the issuance of the Bonds, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by this Purchase Contract, or of any other Community Facilities District Document, or which, in any way, could adversely affect the validity or enforceability of the Resolutions, the Ordinance, the Fiscal Agent Agreement, the Acquisition Agreement, the CFD Disclosure Certificate, the Bonds or this Purchase Contract or, to the knowledge of the official of the City executing this Purchase Contract, which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes or in any other way questions the status of the Bonds under federal or State tax laws or regulations. r (k) Any certificate signed by an official of the City authorized to execute such certificate and delivered to the Underwriter in connection with the transactions contemplated by the Community Facilities District Documents shall be deemed a representation and warranty by the City and Improvement Area A to the Underwriter as to the truth of the statements therein contained. (1) Neither the City nor Improvement Area A has been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. (m) The Bonds will be paid from the Special Tax (as defined in the Rate and Method of Apportionment of Special Taxes for Improvement Area A) received by the City and from amounts in certain funds established under the Fiscal Agent Agreement. (n) The Special Tax may lawfully be levied in accordance with the Rate and Method of Apportionment of Special Taxes for Improvement Area A, and, when levied, will be secured by a lien on the property on which it is levied. (o) The Fiscal Agent Agreement creates a valid pledge of, first lien upon and security interest in the Special Tax deposited thereunder, and the moneys in certain funds and accounts established pursuant to the Fiscal Agent Agreement including the investment earnings thereon, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein. (p) Neither the City nor Improvement Area A has failed to comply with any continuing disclosure obligations under Rule 15c2-12(b)(5) of the Securities and Exchange Commission. 5. The City covenants with the Underwriter that the City will cooperate with the Underwriter (at the cost of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may reasonably request; provided, however, that the City shall not be required to consent to suit or to service of process in any jurisdiction. The City consents to the use by the Underwriter of the Community Facilities District Documents in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds. -5- 6. At 8:00 a.m. on July _, 2002 or at such other time and/or date as shall have been mutually agreed upon by the City and the Underwriter, the City will deliver or cause to be delivered to the Underwriter the Bonds in definitive form duly executed and authenticated by the Fiscal Agent together with the other documents hereinafter mentioned;and the Underwriter will accept such delivery and pay the Purchase Price of the Bonds by delivering to the Fiscal Agent for the account of the City a check payable in federal funds or making a wire transfer in federal funds payable to the order of the Fiscal Agent. The activities relating to the final execution and delivery of the Bonds and the Fiscal Agent Agreement and the payment therefor and the delivery of the certificates, opinions and other instruments as described in Section 8 of this Purchase Contract shall occur at the offices of Quint & Thimmig LLP, One Embarcadero Center, Suite 2420, San Francisco, California. The payment for the Bonds and simultaneous delivery of the Bonds to the Underwriter is herein referred to as the "Closing." The Bonds will be delivered as definitive registered Bonds initially with one Bond for each maturity of the Bonds registered in the name of CEDE & CO., as nominee of The Depository Trust Company, and will be made available for checking and packaging by the Underwriter at such place as the Underwriter and the Fiscal Agent shall agree not less than 24 hours prior to the Closing. 7. The Underwriter shall have the right to cancel its obligations to purchase the Bonds if between the date hereof and the date of Closing: (a) the House of Representatives or the Senate of the Congress of the United States, or a committee of either, shall have pending before it, or shall have passed or recommended favorably, legislation introduced previous to the date hereof, which legislation, if enacted in its form as introduced or as amended, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the District, the City or by any similar body under the Fiscal Agent Agreement or upon interest received on obligations of the general character of the Bonds or the Bonds, or of causing interest on obligations of the general character of the Bonds, or the Bonds, to be includable in gross income for purposes of federal income taxation, and such legislation, in the Underwriter's opinion, materially adversely affects the market price of the Bonds;or (b) a tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation shall be favorably reported or rereported by such a committee or be introduced, by amendment or otherwise, in or be passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for passage by the President of the United States, or be enacted or a decision by a federal court of the United States or the United States Tax Court shall have been rendered, or a ruling,release, order,regulation or official statement by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency shall have been made or proposed to be made having the purpose or effect, or any other action or event shall have occurred which has the purpose or effect, directly or indirectly, of adversely affecting the federal income tax consequences of owning the Bonds, including causing interest on the Bonds to be included in gross income for -6- purposes of federal income taxation, or imposing federal income taxation upon revenues or other income of the general character to be derived by the District under the Fiscal Agent Agreement or upon interest received on obligations of the general character of the Bonds, or the Bonds and also including adversely affecting the tax-exempt status of the City or the District under the Code,which, in the opinion of the Underwriter, materially adversely affects the market price of or market for the Bonds;or (c) legislation shall have been enacted, or actively considered for enactment with an effective date prior to the Closing, or a decision by a court of the United States shall have been rendered, the effect of which is that the Bonds,including any underlying obligations, or the Fiscal Agent Agreement, as the case may be, is not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect,or the Trust Indenture Act of 1939,as amended and as then in effect;or (d) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds, including any underlying obligations, or the execution and delivery of the Fiscal Agent Agreement as contemplated hereby or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect,or the Trust Indenture Act of 1939,as amended and as then in effect;or (e) any event shall have occurred or any information shall have become known to the Underwriter which causes the Underwriter to reasonably believe that the Final Official Statement as then amended or supplemented includes an untrue statement of a material fact, or omits to state any material fact necessary to make the statements therein,in light of the circumstances under which they were made,not misleading;or (f) there shall have occurred any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds;or (g) there shall be in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter,would materially adversely affect the market for or market price of the Bonds;or I (h) a general banking moratorium shall have been declared by federal, New York or State authorities;or (i) any proceeding shall be pending or threatened by the Securities and Exchange Commission against Improvement Area A, the City or any other -7- governmental body for which the members of the City Council act as the governing board;or (j) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange;or (k) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of,underwriters. 8. The obligations of the Underwriter to purchase the Bonds shall be subject (a) to the performance by the City and Improvement Area A of their obligations to be performed hereunder at and prior to the Closing, (b) to the accuracy as of the date hereof and as of the time of the Closing of the representations and warranties of the City and Improvement Area A herein, and (c) to the following conditions, including the delivery by Improvement Area A of such documents as are enumerated herein: (a) At the time of Closing, (i) the Official Statement, this Purchase Contract, the CFD Disclosure Certificate, the Continuing Disclosure Certificate —Landowner (the "Landowner Disclosure Agreement" and, collectively with the CFD Disclosure Certificate, the "Disclosure Certificate"), the Acquisition Agreement and the Fiscal Agent Agreement shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and (ii) the City Council shall have duly adopted and there shall be in full force and effect such resolutions as, in the opinion of Quint & Thimmig LLP, Bond Counsel ("Bon d Counsel"), shall be necessary in connection with the transactions contemplated hereby. (b) Receipt of the Bonds at or prior to the Closing. The terms of the Bonds, as delivered,shall in all instances be as described in the Final Official Statement. (c) At or prior to the Closing, the Underwriter shall receive the following documents in such number of counterparts as shall be mutually agreeable to the Underwriter and the City: (i) A final approving opinion of Bond Counsel dated the date of Closing, in substantially the form set forth in Appendix B to the Official Statement. (ii) A letter of Bond Counsel addressed to the Underwriter and dated the date of Closing, which opines as to the matters set forth in Exhibit A hereto, and which includes a statement to the effect that Bond Counsel's final approving opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to the Underwriter. -8- (iii) An opinion of Disclosure Counsel in substantially the form set forth in Exhibit B hereto. (iv) The Final Official Statement executed on behalf of the District by a duly authorized officer of the City. (v) Certified copies of the Resolutions and the Ordinance, and executed copies of the Fiscal Agent Agreement, the Acquisition Agreement, the CFD Disclosure Certificate, the Landowner Disclosure Agreement and the Guaranty. (vi) Specimen Bonds. (vii) A letter from John S. Adams & Associates in which consent is given to the use of its Appraisal dated April 1, 2002 in the Preliminary Official Statement and the Official Statement and the references to the firm, and the Appraisal in the Preliminary Official Statement and the Official Statement. (viii) A certificate, in form and substance as set forth in Exhibit C hereto,of the City and Improvement Area A, dated as of the Closing Date. (ix) A certificate of Michael Swan Consulting, dated the Closing Date and addressed to the Underwriter and Improvement Area A; to the effect that (A) the descriptions in the Preliminary Official Statement and the Official Statement of the Rate and Method of Apportionment of Special Taxes for Improvement Area A (the "Rate and Method"), and as set forth in Appendix D to the Official Statement, are fair and accurate; and (B) the Special Tax, if collected in the maximum amounts permitted pursuant to the Rate and Method as in effect on the Closing Date,would generate at least 110%of the gross annual debt service payable on the Bonds. (x) A certificate or certificates addressed to the Underwriter and the City from the Developer to the effect that: (A) to the best of the Developer's knowledge, nothing has come to the Developer's attention which would contradict the information set forth in the Official Statement concerning the District; (B) any and all written information submitted by or on behalf of the Developer to the Underwriter or Disclosure Counsel in connection with the preparation of the Preliminary Official Statement and the Official Statement or to the Appraiser in connection with the preparation of its appraisal report was at the time submitted and, to the best knowledge of the officer of the Developer signing the certificate is, true and correct; (C) the statements relating to the Developer, McDonnell Douglas Corporation, The Boeing Company and the Development (as -9- defined in the Official Statement) contained in the Preliminary Official Statement and the Official Statement do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they are made,not misleading; (D) no proceedings are pending or threatened in which the Developer, The Boeing Company or McDonnell Douglas Corporation may be adjudicated as bankrupt or discharged from all or substantially all of its respective debts or obligations or granted an extension of time to pay its respective debts or a reorganization or readjustment of its debts; (E) no action, suit proceedings,inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body,is pending or, to the best knowledge of the officer of the Developer signing the certificate threatened in any way, seeking to restrain or enjoin the development of the real property in Improvement Area A; (F) the Developer covenants that, while the Bonds are outstanding, it will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body which in any way seeks to challenge or overturn the District's formation or existence, the levy or collection of the Special Tax (provided that such levy and collection are in accordance with the terms of the Rate and Method) or the validity of the Bonds or the proceedings taken for their issuance; (G) all property tax installments due with respect to the property within Improvement Area A have been paid through the second installment due for 2001/2002; (H) the Developer is not in any material respect in violation of, breach of, or default under any applicable constitutional provision or law of any state or of the United States or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Developer of any of its activities, properties or assets, or any indenture, mortgage,deed of trust, resolution,note agreement or other agreement or instrument to which the Developer is a party which violation or breach of or default would have a material adverse effect upon the transactions on the part of the Developer contemplated by the Acquisition Agreement or otherwise described in the Official Statement, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both would constitute such a default or event of default under any such instruments; and the execution and delivery by the Developer of the Acquisition Agreement, and compliance with the provisions on the Developer's part contained in the Acquisition Agreement, do not and will not in any material respect conflict with or constitute on the part of the Developer a violation or breach of or default under any constitutional -10- provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over the Developer or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement, or other agreement or instrument to which the Developer is a party or by which the Developer or any of its property or assets is bound which breach or default would have a material adverse affect upon the transactions on the part of the Developer contemplated by the Acquisition Agreement or otherwise described in the Official Statement; (I) The Boeing Company is not in any material respect in violation of, breach of, or default under'any applicable constitutional provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over The Boeing Company of any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement or other agreement or instrument to which The Boeing Company is a party which violation or breach of or default would have a material adverse effect upon the transactions on the part of The Boeing Company contemplated by the Guaranty, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both would constitute such a default or event of default under any such instruments; and the execution and delivery by The Boeing Company of the Guaranty, and compliance with the provisions on The Boeing Company's part contained in the Guaranty, do not and will not in any material respect conflict with or constitute on the part of The Boeing Company a violation or breach of or default.under any constitutional provision or law of any state or of the United States or any order,rule or regulation of any court or governmental agency or body having jurisdiction over The Boeing Company or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement, or other agreement or instrument to which The Boeing Company is a party or by which The Boeing Company or any of its property or assets is bound which breach or default would' have a material adverse affect upon the transactions on the part of The Boeing Company contemplated by the Guaranty; (J) the McDonnell Douglas Corporation is not in any material respect in violation of, breach of, or default under any applicable constitutional provision or law of any state or of the United States or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the McDonnell Douglas Corporation of any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution,note agreement or other agreement or instrument to which the McDonnell Douglas Corporation is a party which violation or breach of or default would have a material adverse effect upon the transactions on the part of the McDonnell Douglas Corporation contemplated by the Landowner Disclosure Agreement or otherwise described in the Official -11- Statement, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both would constitute such a default or event of default under any such instruments;and the execution and delivery by the McDonnell Douglas Corporation of the Landowner Disclosure Agreement, and compliance with the provisions on the McDonnell Douglas Corporation's part contained in the Landowner Disclosure Agreement, do not and will not in any material respect conflict with or constitute on the part of the McDonnell Douglas Corporation a violation or breach of or default under any constitutional provision or law of any state or of the United States or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the McDonnell Douglas Corporation or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement, or other agreement or instrument to which the McDonnell - Douglas Corporation is a party or by which the McDonnell Douglas Corporation or any of its property or assets is bound which breach or default would have a material adverse affect upon the transactions on the part of the McDonnell Douglas Corporation contemplated by the Landowner Disclosure Agreement or otherwise described in the Official Statement;and (K) there are no legal or governmental actions, proceedings, inquiries'or investigations pending or, to the best knowledge of the officer of the Developer signing the certificate, threatened by governmental authorities or to which the Developer, The Boeing Company or McDonnell Douglas Corporation is a party or of which any property of the Developer, The Boeing Company or McDonnell Douglas Corporation is subject, which (1) seek to restrain or to enjoin the continuation and/or completion of the proposed development of the land in Improvement Area A as described in the Official Statement, or (2) if determined adversely to the Developer, The Boeing Company or McDonnell Douglas Corporation, would materially and adversely affect the transactions contemplated by the Official Statement to be engaged by the Developer, The Boeing Company or McDonnell Douglas Corporation or the ability of the Developer to perform its obligations under the Acquisition Agreement or the ability of The Boeing Company to perform its obligations under the Guaranty. (xi) An opinion addressed to the Underwriter and the District, of Pillsbury Winthrop LLP,counsel to the Developer and an opinion of such firm or other counsel to McDonnell Douglas Corporation and The Boeing Company, with such opinions collectively to be to the effect that: (A) the Developer is a corporation validly existing under the laws of the State of California, and the Developer is authorized to enter into and perform its obligations under the Acquisition Agreement; (B) McDonnell Douglas Corporation is a corporation validly existing under the laws of the State of Maryland, and is authorized to -12- enter into and perform its obligations under the Landowner Disclosure Agreement; (C) The Boeing Company is a corporation validly existing under the laws of the State of Delaware, and is authorized to enter into and perform its obligations under the Guaranty; (D) the Acquisition Agreement, the Landowner Disclosure Agreement, and the Guaranty have been duly authorized, executed and delivered by the Developer, McDonnell Douglas Corporation and The Boeing Company, respectively, and the Acquisition Agreement, the Landowner Disclosure Agreement and the Guaranty constitute the valid and binding legal obligations of such entities, respectively, enforceable in accordance with their respective terms, except as such enforceability may be limited by reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the enforcement of the rights of creditors generally as such laws may be applied in the event of a reorganization, insolvency, liquidation, readjustment or debt or other similar. proceeding of or moratorium applicable to the Developer, McDonnell Douglas Corporation or The Boeing Company, respectively, and except that the availability of equitable remedies, including specific performance, to persons seeking to enforce such documents against the Developer, McDonnell Douglas Corporation or The Boeing Company, respectively,is subject to the discretion of the court;and (E) to the best knowledge of such counsel and without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, and based on the representations of the Developer, McDonnell Douglas Corporation and The Boeing Company, and in reliance thereon, and on certain documents reviewed by them as set forth in such opinion, no information came to their attention during the course of their representation of the Developer, McDonnell Douglas Corporation and The Boeing Company which caused them to believe that the statements contained in the Official Statement under the caption "TH E DEVELOPER, THE LANDOWNER AND THE DEVELOPMENT," contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need to be expressed as to any financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, or any information about valuation, appraisals or environmental matters contained therein). (xii) Evidence that Federal Form 8038 has been executed by the City for Improvement Area A and will be filed with the Internal Revenue Service. -13- (xiii) Evidence that, except as disclosed in the Final Official Statement, all necessary approvals, whether legal or administrative, have been obtained from applicable federal, state and local entities and agencies for the construction of the public improvements to be built within the boundaries of Improvement Area A. (xiv) An opinion of the City Attorney addressed to the Underwriter, to the effect that: (A) the City is a municipal corporation and chartered city duly organized and validly existing as a public body corporate and politic under the Constitution and laws of the State of California and Improvement Area A is an improvement area of a community facilities district duly organized and validly existing under the Law, (B) the Resolutions and the Ordinance have been duly adopted at meetings of the City Council of the City which were called and held pursuant to law and with all public notices required by law at which a quorum was present and acting throughout, (C) no action, suit, proceeding, inquiry or investigation, at law or in equity, before any court, regulatory agency, public board or body, to which the City or Improvement Area A is a party and has received notice of, is pending or, to her knowledge, threatened, in any way affecting the existence of the City or Improvement Area A or the titles of their officers to their respective offices, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, the levy and collection or application of the Special Tax to pay the principal of, and interest on, the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Community Facilities District Documents or any action of the City or Improvement Area A contemplated by any of said documents or in any way contesting the completeness or accuracy of the Official Statement or the powers of the City or Improvement Area A or their authority with respect to the Bonds, the Community Facilities District Documents or any action on the part of the City or Improvement Area A contemplated by any of said documents, or which challenges the exemption of interest paid on the Bonds from federal income taxation or State of California personal income taxation, (D) the City has duly authorized,executed and delivered the Community Facilities District Documents and the Official Statement, and (E) assuming due authorization, execution and delivery by the respective parties thereto where necessary, the Community Facilities District Documents constitute legal, valid and binding obligations of the City enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles and the exercise of judicial discretion in appropriate cases. (xv) A certificate of the Fiscal Agent, dated the Closing Date, to the effect that (A) the Fiscal Agent is duly organized and existing as a banking corporation under the laws of the State of California having the full power and authority to perform its duties under the Fiscal Agent Agreement, the CFD Disclosure Certificate and the Landowner Disclosure Agreement (collectively, the "Fiscal Agent Documents"); (B) the Fiscal Agent is duly authorized to accept -14- the obligations created by the Fiscal Agent Documents and to authenticate the Bonds pursuant to the terms of the Fiscal Agent Agreement; (C) the Bonds have been duly authenticated and delivered by the Fiscal Agent in accordance with the Fiscal Agent Agreement, and the Fiscal Agent has duly authorized, executed and delivered the Fiscal Agent Documents, and by all proper corporate action has authorized the acceptance of the duties and obligations of the Fiscal Agent under the Fiscal Agent Documents; (D) assuming due authorization, execution and delivery by the other parties thereto, the Fiscal Agent-Documents are valid, legal and binding of the Fiscal Agent, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, agreements insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights in general and by general equitable principles (regardless of whether such enforcement is considered in a proceeding in equity or at law); no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Fiscal Agent that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Fiscal Agent of the other transactions contemplated to be performed by the Fiscal Agent in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Fiscal Agent Documents; (E) to the best knowledge of the officer of the Fiscal Agent who signs the certificate, compliance with the terms of the Fiscal Agent Documents will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture,bond, note, resolution or any other agreement or instrument to which the Fiscal Agent is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Fiscal Agent or any of its activities or properties; and (F) to the best knowledge of the officer of the Fiscal Agent who signs the certificate, there is no litigation pending or threatened against or affecting the Fiscal Agent to restrain or enjoin the Fiscal Agent's participation in, or in any way contesting the powers of the Fiscal Agent with respect to the transactions contemplated by the Bonds and the Fiscal Agent Documents. (xvi) An opinion, dated the Closing Date and addressed to the District and the Underwriter, of counsel to the Fiscal Agent, to the effect that: (A) the Fiscal Agent has been duly organized and is validly existing and in good standing as a banking corporation under the laws of the State of California with full corporate power to undertake its obligations under the Fiscal Agent Documents and to authenticate and deliver the Bonds; (B) the Bonds have been duly authenticated and delivered by the Fiscal Agent in accordance with the Fiscal Agent Agreement, and the Fiscal Agent has duly authorized,executed and delivered the Fiscal Agent Documents, and by all proper corporate action has authorized the acceptance of the duties and obligations of the Fiscal Agent under the Fiscal Agent Documents; (C) assuming due authorization, execution and delivery by the other parties thereto, the Fiscal Agent Documents are valid, legal and binding agreements of the Fiscal Agent, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of -15- creditors' rights in general and by general equitable principles (regardless of whether such enforcement is considered in a proceeding in equity or at law);and (D) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Fiscal Agent is or will be required for the.execution and delivery by the Fiscal Agent of the Fiscal Agent Documents or the execution and delivery of the Bonds. (xvii) A nonarbitrage certificate of the City in form and substance acceptable to Bond Counsel and the Underwriter. (xviii) Such additional legal opinions, certificates, proceedings, instruments and other documents as Disclosure Counsel or the Underwriter may reasonably request to evidence compliance by Improvement Area A or the Developer with legal requirements, the truth and accuracy, as of the time of Closing, of the respective representations of the City and Improvement Area A herein contained and of the Developer contained in the certificate executed by the Developer as specified in this Section and the due performance or satisfaction by each of them at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by each of them. If Improvement Area A shall be unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Contract, or if the obligations of the Underwriter to purchase and accept delivery of the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and none of the Underwriter, the City or Improvement Area A shall be under further obligation hereunder; except that the respective obligations to pay expenses, as provided in Section 11 hereof shall continue in full force and effect. 9. The obligations of the City and Improvement Area A hereunder are subject to the performance by the Underwriter of its obligations hereunder. 10. All representations, warranties and agreements of the City and Improvement Area A hereunder shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter,and shall survive the Closing. 11. The City shall pay or cause to be paid, solely from contributions by the Developer or the proceeds of the Bonds, all reasonable expenses incident to the performance of its obligations under this Purchase Contract, including, but not limited to, delivery of the Bonds, costs of printing and delivering the Bonds, the Preliminary Official Statement and Final Official Statement, any amendment or supplement to the Preliminary Official Statement or Final Official Statement and this Purchase Contract, fees and disbursements of the City's Special Tax Consultant, the appraiser, Bond Counsel, Disclosure Counsel, the City and other consultants, including the fees of the Fiscal Agent and any fees and disbursements in connection with the qualification of the Bonds for sale under the securities or "Blue Sky' laws of the various jurisdictions and the preparation of"Blue Sky"memoran da. The Underwriter shall pay all advertising expenses in connection with the public offering of the Bonds, the fees and expenses of any counsel retained by the Underwriter and all -16- other expenses incurred by it in connection with their public offering and distribution of the Bonds. 12. Any notice or other communication to be given to the City or Improvement Area A under this Purchase Contract may be given by delivering the same in writing at its address set forth above, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Stone & Youngberg LLC, 15260 Ventura Boulevard, Suite 1520, Sherman Oaks, California 91403, Attention: Stephen E. Heaney. 13. This Purchase Contract is made solely for the benefit of the City, Improvement Area A and the Underwriter (including the successors or assigns of the Underwriter) and no other person, including any purchaser of the Bonds, shall acquire or have any right hereunder or by virtue hereof. 14. This Purchase Contract shall be governed by and construed in accordance with the laws of the State of California. -17- 15. This Purchase Contract shall become effective upon your acceptance hereof. Very truly yours, STONE &YOUNGBERG LLC By: Its: Accepted and agreed to as of the date first above written: CITY OF HUNTINGTON BEACH,for itself and on behalf of IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK) By: Mayor Attest: By: City Clerk Reviewed and Approved: By: City Administrator Reviewed and Approved as to Form: By: -1s- EXHIBIT A [Letterhead of Bond Counsel] July_,2002 Stone&Youngberg LLC 15260 Ventura Boulevard,Suite 1520 Sherman Oaks,CA 91403 SUPPLEMENTAL OPINION: $4,900,000 Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds,Series 2002-A Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the City of Huntington Beach (the"'City") of its $4,900,000 aggregate principal amount of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), (the "Improvement Area") Special Tax Bonds, Series 2002-A (the "Bon ds"), pursuant to the City of Huntington Beach Special Tax Financing Improvement Code (constituting Chapter 3.56 of the City's Municipal Code), and, where applicable, the Mello- Roos Community Facilities Act of 1982, as amended (Section 53311 et seq., of the California Government Code) (collectively, the "Law "), a Fiscal Agent Agreement, dated as of June 1, 2002 (the "Fiscal Agent Agreement"), by and between the City and BNY Western Trust Company, as Fiscal Agent, and Resolution No. adopted by the City Council of the City of Huntington Beach (the "City"), acting as the legislative body of the Improvement Area, on June 17,2002. In that connection, we have examined the executed Fiscal Agent Agreement; the Bond Purchase Agreement, dated June _, 2002 (the "Bon d Purchase Agreement"), by and between you, as underwriter, and the City; the Official Statement, dated June ___, 2002, relating to the Bonds (the "Official Statement"); the Acquisition Agreement; dated as of June 1, 2002 (the "Acquisition Agreement"), between the City and Boeing Realty Corporation, the Continuing Disclosure Certificate—Issuer (the "Disclosure Certificate") of the City; the law and such other certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Fiscal Agent Agreement and in the certified proceedings and other certifications of representatives of the City furnished to us, without undertaking to verify such facts by independent investigation. A-1 Based upon our examination,we are of the opinion,under existing law, as follows: 1. The Bond Purchase Agreement, the Acquisition Agreement and the Disclosure Certificate have been duly authorized, executed and delivered by, and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding agreements of the City,enforceable in accordance with their respective terms,subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought. 2. The Bonds are not subject to registration requirements of the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939,as amended. 3. The information contained in the Official Statement under the captions "INTRODUCTION," "THE FINANCING PLAN," "THE SERIES 2002-A BONDS," "SECURITY FOR THE SERIES 2002-A BONDS," "CONCLUDING INFORMATION - Tax Matters," "APPENDIX A -Summary of the Fiscal Agent Agreement," and "APPENDIX B - Proposed Form of Opinion of Bond Counsel," is accurate insofar as it purports to summarize certain provisions of the Bonds, the Fiscal Agent Agreement, the Law, federal tax law, and our final legal opinion with respect to the Bonds delivered on the date of this opinion. Respectfully submitted, A-2 EXHIBIT B [Letterhead of Disclosure Counsel] July 2002 City of Huntington Beach 2900 Main Street Huntington Beach,California 92648 Stone&Youngberg LLC 15260 Ventura Boulevard,Suite 1520 Sherman Oaks,CA 91403 Re: $4,900,000 Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds,Series 2002-A Dear Ladies and Gentlemen: We have acted as Disclosure Counsel in connection with the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), (the "Improvement Area") Special Tax Bonds, Series 2002-A, in the aggregate principal amount of $4,900,000 (the "Bonds"), sold by the City pursuant to the Bond Purchase Contract dated June _, 2002 (the "Purchase Contract") between the City of Huntington Beach (the "City") and Stone & Youngberg LLC. The Bonds are issued pursuant to the Fiscal Agent Agreement, dated as June 1, 2002 (the "Fiscal Agent Agreement") between the City and BNY Western Trust Company, as fiscal agent (the "Fiscal Agent"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Contract. In that connection, we have reviewed certain portions of the Fiscal Agent Agreement, the Official Statement of the City, dated June_, 2002 with respect to the Bonds (the "Official Statement"), the Purchase Contract, certificates of the City, the Fiscal Agent, the Developer and others, the opinions referred to in Section 8 of the Purchase Contract and such other records, opinions and documents, and we have made such investigations of law, as we have deemed appropriate as a basis for the conclusions hereinafter expressed. In arriving at the conclusions hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity, accuracy and sufficiency of the records, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein, including (without limitation) representations and legal conclusions regarding the due authorization, issuance, delivery,validity and enforceability of the Bonds and the exclusion of interest thereon from gross income for federal income tax purposes). We have assumed that all records, B-1 documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine. We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make no representation that we have independently verified the accuracy,completeness or fairness of any such statements. However, in our capacity as Disclosure Counsel, we met in conferences with representatives of the City, the City's special tax consultant, the Developer, the Underwriter and others, during which conferences the contents of the Official Statement and related matters were discussed. Based on our participation in the above-mentioned conferences, and in reliance thereon and on the records, documents, certificates and opinions herein mentioned (as set forth above),we advise you that, during the course of our assistance in the preparation of the Official Statement for this matter,no information came to the attention of the attorney in our firm rendering legal services in connection with such representation which caused us to believe that the Official Statement as of its date and as of the date of this opinion (except for any financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals or environmental matters, or the Appendices, or any information about book-entry or DTC included therein, as to which we express no opinion or view) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. We are furnishing this letter to you pursuant to Section 8(c)(iii) of the Purchase Contract solely for your benefit. Our engagement with respect to this matter has terminated as of the date hereof, and we disclaim any obligation to update this letter. This letter is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to,and may not,be relied upon by owners of Bonds. Very truly yours, B-2 EXHIBIT C CERTIFICATE OF CITY OF HUNTINGTON BEACH AND IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) I, Ray Silver, hereby certify that I am the City Administrator of the City of Huntington Beach (the "City") and that as such,I am authorized to execute this Certificate on behalf of the City and Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Improvement Area") in connection with the issuance of the Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), Special Tax Bonds, Series 2002-A (the 'Bon ds"). I hereby further certify on behalf of the City and the Improvement Area that: (1) the representations, warranties and covenants of the City and the Improvement Area contained in Section 4 of that certain bond purchase contract by and between the City and Stone & Youngberg LLC, dated June _, 2002 (the "Purchase Contract") are true and correct and in all material respects as of the date hereof as if made on the date hereof; (2) the Purchase Contract, the Fiscal Agent Agreement, the Acquisition Agreement and the CFD Disclosure Certificate (collectively, the "Community Facilities District Documents"), the Bonds and the Official Statement, dated June_,2002 relating to the Bonds (the "Official Statement") have been duly executed and delivered by the City, and when executed and delivered by the other respective parties thereto, will constitute valid and binding obligations of the City enforceable in accordance with their respective terms and such documents conform to the descriptions thereof in the Official Statement; (3) the representations and warranties of the City and the Improvement Area contained in the Community Facilities District Documents are true and correct in all material respects as of the date hereof as if made on the date hereof; (4) the City and the Improvement Area have complied with all agreements, covenants and conditions to be complied with by the City and the Improvement Area under the Community Facilities District Documents and the Disclosure Certificates on or prior to the date hereof;and (5) to the best knowledge of the undersigned, no event affecting the City or the Improvement Area has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date hereof the statements or information with respect to the City and the Improvement Area contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in C-1 order to make such statements and information therein not misleading in any material respect. C-2 Capitalized terms not defined herein shall have the same meaning as is set forth in the Purchase Contract. IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date hereinbelow set forth. Dated:June 2002 CITY OF HUNTINGTON BEACH By: City Administrator Attest: By: City Clerk Reviewed and Approved as to Form: By: City Attorney C-3 EXHIBIT D IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) SPECIAL TAX BONDS, SERIES 2002-A Maturity Principal Interest (September 1) Amount Rate Yield Price D-1 dd -L PRELIMINARY OFFICIAL STATEMENT DATED JUNE_,2002 d.. Eo NEW ISSUE NOT RATED yH BOOK-ENTRYONLY In the opinion of Quint&Thimmig LLP,San Francisco,California,Bond Counsel,subject,however,to certain qualifications described herein ,off under existing law, interest on the Series 2002-A Bonds is excluded from gross income for federal income tax purposes and is not an item of ta: o preference for purposes of the federal alternative minimum tax imposed on individuals and corporations,although for the purpose of computinl the alternative minimum tax on certain corporations,such interest is taken into account in determining certain income and earnings.In the furthe y� opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "CONCLUDING INFORMATION —Tax Matters' d_ herein. m :0 y $4,900,000- �� IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH o COMMUNITY FACILITIES DISTRICT NO. 2002-1 °= (MCDONNELL CENTRE BUSINESS PARK) SPECIAL TAX BONDS, SERIES 2002-A 0 Dated: Date of Issuance Due: September 1,as shown below H z o Type of Bonds Improvement Area A of the City of Huntington Beach Community Facilities District No.2002-1(McDonnell Centre Busines 0 3 Park)("Improvement Area A")Special Tax Bonds,Series 2002-A(the"Series 2002A Bonds")are being issued by the City o �= Huntington Beach (the "City") for Improvement Area A pursuant to Chapter 3.56 of the Municipal Code of the City o e o d Huntington Beach and,where applicable,the provisions of the Mello-Roos Community Facilities Act of 1982, as amende4 �o� (constituting Section 53311 et seq. of the California Government Code), and a Fiscal Agent Agreement,dated as of June 1 o� E y� 2002(the"Fiscal Agent Agreement"),between the City and BNY Western Trust Company,Los Angeles,California,as Fisca d° Agent. �s Use of Proceeds The proceeds of the Series 2002-A Bonds primarily will be used to pay costs of acquisition of right-of-way and of publi °u i infrastructure improvements related to the development by Boeing Realty Corporation(the"Developer")of the land withii h 0� and in the vicinity of Improvement Area A. See"IMPROVEMENT AREA A" herein. All of the land in Improvement Are d a A that is subject to the levy of special taxes to be used to repay the Series 2002-A Bonds is currently owned by McDonnel r,2 a Douglas Corporation (the "Landowner"). See "THE DEVELOPER, THE LANDOWNER AND THE DEVELOPMENT' P.3 a' herein. 2 Denominations Interest due on the Series 2002-A Bonds is payable on March I and September I of each year,commencing March 1,2002 E g`' Initial purchases of beneficial interests in the Series 2002-A Bonds will be made in book-entry form and the Series 2002-E Bonds will be registered in the name of Cede&Co.,as nominee for The Depository Trust Company("DTC").Series 2002-/ Bond denominations are $5,000 and any integral multiple in excess thereof. Purchasers of beneficial interests in the Serie cc d`0 2002-A Bonds will not receive certificates representing their interests in the Series 2002-A Bonds and will not be paid directl: 65 00 by the Fiscal Agent. See"APPENDIXG—The Book Entry System." Redemption The Series 2002-A Bonds are subject to optional and mandatory redemption prior to their stated maturity,as describe[ —y herein. See"THESERIES 2002-A BONDS—Redemption" herein. a, l:V Reserve Fund To provide funds for payment of the Series 2002-A Bonds which could result from a shortfall of revenues caused b- Eb a delinquent Special Tax payments,the City will establish a Reserve Fund initially funded from Series 2002-A Bond proceeds is-. If revenues from the Special Taxes are insufficient to pay the debt service on the Series 2002-A Bonds, the monies in th g 1=2 Reserve Fund are available to cover the deficiency. There is no assurance that funds will be available for this purpose and is E a during a period of delinquencies in the payment of Special Taxes,there are insufficient moneys in the Reserve Fund,ther 4J_ may be a delay in payment to the owners of the Series 2002-A Bonds. yp„ THE SERIES 2002-A BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX TO BE LEVIED ANNUALLY ON LAND WITHD IUM -aIMPROVEMENT AREA A AND AMOUNTS IN CERTAIN FUNDS ESTABLISHED UNDER THE FISCAL AGENT AGREEMENT. NEITHER THE FAITH ANI &.t 0 CREDIT NOR THE TAXING POWER OF THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN 01 N w IMPROVEMENT AREA A,TO THE LIMITED EXTENT SET FORTH IN THE FISCAL AGENT AGREEMENT)IS PLEDGED TO THE PAYMENT OF THE PRINCIPAI °Ta= OF,PREMIUM,IF ANY,OR INTEREST ON THE SERIES 2002-A BONDS. THE SERIES 2002-A BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGI H OF OR CHARGE,LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OR REVENUES OF THE CITY,AND THE PAYMENT OF THE PRINCIPAL OF OI r y o INTEREST OR REDEMPTION PREMIUM,IF ANY,ON THE SERIES 2002-A BONDS IS NOT IN ANY WAY A DEBT,LIABILITY OR OBLIGATION OF TH E CITY. d e d This cover page contains certain information for quick reference only. It is not a complete summary of the terms of this bond issue. Investor: .E-«m must read this entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Serie: e E 6 2002-A Bonds. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain risk factors that should bi g°,a considered,in addition to the other matters discussed herein,in considering the investment quality of the Series 2002-A Bonds. o� MATURITY SCHEDULE" $ Serial Bonds ,g H Maturity Date Principal Interest Maturity Date Principal Interest (September 1) Amount Rate Yield (September 1) Amount Rate Yield sEo C�H W C 1� E 3 $ _%Term Bonds due September 1,_ Price % d $ _%Term Bonds due September 1,2032 Price % o The Series 2002-A Bonds are being offered when, as and if issued by the City for Improvement Area A, subject to the approval as to thei a';,= legality by Quint&Thimmig LLP,San Francisco,California,Bond Counsel,and certain other conditions. Certain legal matters will be passed upoi 4J for the City by the City Attorney,and by Quint&Thimmig LLP;San Francisco,California,acting as Disclosure Counsel to the City. Certain lega c•' mmatters atter Bonds ille passed upon o for he New York,New York on or aboutbulPillsbu2r0y0 Winthrop LLP,Los Angeles,California. Delivery of the Serie: expectedy� a edW •E�9 Preliminary,subject to change. Vl � F20 Vl This Preliminary Official Statement and the information contained herein are subject to completion or amendment.These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form.Under no circumstances shall this Preliminary Official Statement constitute an otter to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer,solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. t7 m a c` 0 I� 6 N O O N r t� 0 C 0 arc ark GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Series 2002-A 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 Series 2002-A 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 Series 2002-A 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 Series 2002-A 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, Improvement Area A, the Developer, the Landowner 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 Series 2002-A 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 Series 2002-A 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 SERIES 2002-A 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 SERIES 2002-A BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. -i- CITY OF HUNTINGTON BEACH City Council Debbie Cook,Mayor Connie Boardman,Mayor Pro Tem Ralph Bauer,Councilmember Shirley Detloff,Councilmember Peter Green,Councilmember Pam Julien Houchen,Councilmember Grace Winchell,Councilmember City Staff Ray Silver,City Administrator Bill Workman,Assistant City Administrator David Biggs,Director of Economic Development Clay Martin,Director of Administrator Services Robert F. Beardsley,Director of Public Works Shari L. Freidenrich,City Treasurer Daniel T.Villella,Finance Officer Gail Hutton,City Attorney Connie Brockway,City Clerk PROFESSIONAL SERVICES Appraiser John S. Adams&Associates,Inc. Newport Beach,California City's Con sultant For Establishment of Special Tax Formula Michael Swan Consulting Irvine,California Bond Counsel and Disclosure Counsel Quint&Thimmig LLP San Francisco,California Fiscal Agent BNY Western Trust Company Los Angeles,California Underwriter Stone&Youngberg LLC Sherman Oaks,California -ii- TABLE OF CONTENTS INTRODUCTION...................................................1 Local,State and Federal Land Use General.................................................................1 Regulations.........................................................28 Issuing Authority................................................1 Direct and Overlapping Indebtedness...........29 Application of Proceeds.....................................2 Geologic,Topographic and Climatic The Development................................................2 Conditions..........................:...............................30 Sources of Payment for the Series 2002-A Hazardous Materials........................................31 Bonds....................................................................3 Property Controlled by Federal Deposit Land Value...........................................................3 Insurance Corporation......................................32 Limited Liability..................................................4 Disclosure to Future Property Owners or Description of the Series 2002-A Bonds...........4 Lenders...............................................................33 Tax Matters..........................................................5 Non-Cash Payments of Special Taxes............34 Continuing Disclosure........................................5 Payment of the Special Tax is not a Bond Owners' Risks..........................................6 Personal Obligation of the Owners.................34 Professionals Involved in the Offering.............6 Limitations on Remedies..................................34 Additional Information......................................6 Proceedings to Reduce or Terminate the THE FINANCING PLAN......................................6 Special Tax.........................................................35 Overview..............................................................6 Loss of Tax Exemption.....................................36 Uses of Bond Proceeds.......................................8 Secondary Markets and Prices........................36 Annual Debt Service of Series 2002-A No Acceleration Provision...............................36 Bonds....................................................................9 IMPROVEMENT AREA A..................................38 THE SERIES 2002-A BONDS..............................10 Location..............................................................38 Authority for Issuance......................................10 Authorization.....................................................38 Description of the Series 2002-A Bonds.........10 Rate and Method of Apportionment of Redemption........................................................11 Special Tax.........................................................39 Selection of Bonds for Redemption................13 Public Facilities..................................................40 Notice of Redemption.......................................13 THE CITY OF HUNTINGTON BEACH............43 Effect of Redemption........................................14 THE DEVELOPER,THE LANDOWNER Transfer or Exchange of Bonds.......................14 AND THE DEVELOPMENT...............................43 Parity Bonds.......................................................14 The Development..............................................43 SECURITY FOR THE SERIES 2002-A The Specific Plan...............................................44 BONDS...................................................................16 Utilities................................................................47 Special Tax.........................................................16 Development and Sales Schedule...................48 LandValue.........................................................18 The Developer...................................................48 Covenant for Superior Court Foreclosure......18 The Landowner.................................................49 ReserveFund.....................................................20 Financing Plan...................................................50 Limited Liability................................................22 CONCLUDING INFORMATION......................50 SPECIAL RISK FACTORS...................................22 Continuing Disclosure.......................................50 Concentration of Ownership...........................22 Absence of Litigation..................... LandValue.........................................................23 Tax Matters........................................................51 Risks of Real Estate Secured Investments Legal Matters Incident to the Issuance of Generally............................................................23 the Series 2002-A Bonds...................................52 Failure to Complete Public Facilities..............24 No Rating...........................................................52 Government Approvals...................................24 Underwriting.....................................................52 Insufficiency of Special Tax Revenues...........24 Miscellaneous....................................................52 Bankruptcy and Foreclosure Delays...............26 APPENDIX A SUMMARY OF THE FISCAL AGENT AGREEMENT APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL 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 CERTIFICATES -iv- OFFICIAL STATEMENT $4,900,000- IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) SPECIAL TAX BONDS, SERIES 2002-A 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 Series 2002-A Bonds (defined below). The sale and delivery of the Series 2002-A Bonds to potential investors is made only by means of this 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 $4,900,000* Improvement Area A of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park) ("Improvement Area A") Special Tax Bonds, Series 2002-A (the "Series 2002-A Bonds"). The Series 2002-A Bonds are being issued by the City for Improvement Area A under the provisions of Chapter 3.56 of the Municipal Code of the City and, where applicable, the provisions of the Mello-Roos 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 June 1, 2002 (the "Fiscal Agent Agreement"), between the City and BNY Western Trust Company, as Fiscal Agent (the "Fiscal Agent"). The Fiscal Agent Agreement permits the issuance of additional bonds ("Parity Bonds") secured on a parity with the Series-2002-A Bonds (see "TH E SERIES 2002-A BONDS— Parity Bonds"), and the Series 2002-A Bonds and any Parity Bonds are collectively referred to herein as the "Bonds." Other capitalized terms used in this Official Statement and not otherwise 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. The Law permits the City Council to designate separate improvement areas of a community facilities district, and, following such designation, all proceedings under the Law for purposes of the authorization of bonds and the levy of special taxes apply only to the improvement area. 'Preliminary,subject to change. -1- 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 an improvement area to repay the bonds and to pay for certain services permitted under the Law. Improvement Area A was established by the City Council pursuant to proceedings under the Law on June 3, 2002. Concurrently with the establishment of Improvement Area A, the City Council established Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (Improvement Area B). See "TH E FINANCING PLAN - Overview" herein. Improvement Area B is adjacent to Improvement Area A and encompasses land within a future phase of the Development described below;however,under the Law,the Bonds relate solely to,and are payable only from Special Taxes levied on, property in Improvement Area A. See "IMP ROVEMENT AREA A - Authorization" herein. The Series 2002-A Bonds were authorized to be issued by a resolution adopted by the City Council on June 17,2002 (the 'Resolution of Issuance"). The Series 2002-A Bonds are being issued pursuant to the Fiscal Agent Agreement. See APPENDIX A - SUMMARY OF THE FISCAL AGENT AGREEMENT. Application of Proceeds The net proceeds of the Series 2002-A Bonds will be used to pay costs of the acquisition of right-of-way and of public infrastructure improvements (the "P ublic Facilities") related to development occurring within and in the vicinity of Improvement Area A. See "IMP ROVEMENT AREA A" herein. Proceeds of the Series 2002-A Bonds will also be used to fund a reserve fund for the Series 2002-A Bonds, to pay interest on the Series 2002-A Bonds accruing through September 1, 2002, and to pay costs of issuance and certain administration expenses incurred in connection with the Series 2002-A Bonds. See "TH E FINANCING PLAN -Uses of Bond Proceeds"herein. The Development The land within Improvement Area A, to consist of eight County Assessor's parcels (following recordation of a final map as described herein), has a total of approximately 33 net acres, and is part of a larger area of approximately 307 gross acres constituting a business park known as the McDonnell Centre Business Park (the "Development"). Boeing Realty Corporation (the "Developer'), is the developer of the Development. All of the land in Improvement Area A that is subject to the levy of Special Taxes is currently owned by McDonnell Douglas Corporation (the "Landowner"). Both the Developer and the Landowner are wholly-owned subsidiaries of The Boeing Company. An existing aerospace facility of the Landowner, with approximately 2,800,000 square feet of office, research and industrial related facilities is located on approximately 185 acres of the Developement. As the Landowner determines that the land and/or existing buildings which are located in the Development are no longer necessary for its business operations, portions of the site are made available for development and disposition. The first phase of the Development (which is not within Improvement Area A) included 87 acres located in the easterly portion of the site. This area was sold to third parties and contains structures occupied by Sharp Electronics, Konica, Extended Stay America, Dynamic Cooking Systems, C&D -2- AeroSpace, Dix Metals, Airtec International, Cambo Manufacturing, Pacific Shoe and Morgan Metals. 'In total, these facilities represent approximately 1,800,000 square feet of commercial, office, hotel and industrial space. See "TH E DEVELOPER, THE LANDOWNER AND THE DEVELOPMENT"herein. Improvement Area A consists of the second phase of the Development, encompassing approximately 33 net acres, and is currently undeveloped. Only the land within Improvement Area A is subject to the levy of special taxes to pay the Series 2002-A Bonds. See "IMP ROVEMENT AREA A"herein. Sources of Payment for the Series 2002-A Bonds Under the Fiscal Agent Agreement, the Series 2002-A Bonds are payable from the Special Tax. As used in this Official Statement, the term "Special Tax" is that portion of the Special Tax which has been authorized pursuant to the Law to be levied on the real property located within Improvement Area A in accordance with the Rate and Method of Apportionment of Special Taxes for Improvement Area A approved by the City.Council as the legislative body for Improvement Area A (the "Special Tax Formula"). Proceeds of the levy of the Special Tax are to be used to pay debt service on the Series 2002-A Bonds, to replenish the Reserve Fund for the Series 2002-A Bonds established under the Fiscal Agent Agreement,and to pay administrative expenses of Improvement Area A. See "SECU RITY FOR THE SERIES 2002- A BONDS. — Special Tax" herein and APPENDIX D — RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES. Under the Fiscal Agent Agreement, the City has agreed to annually levy the Special Tax, and to repay the Series 2002-A Bonds from the Special Tax collected 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 Series 2002-A 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 parcels in Improvement Area A with delinquent Special Taxes. A portion of the proceeds of the Series 2002-A 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 Series 2002-A 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 Series 2002-A.Bonds in the event that moneys in the Bond Fund are insufficient therefore. See"SECU RITY FOR THE SERIES 2002-A BONDS—Reserve Fund." Land Value The City commissioned an appraisal report (the "Appraisal Report") from John S. Adams & Associates, Inc. (the "Appraiser"), dated April 1, 2002, to determine the value of the land in Improvement Area A that is subject to the levy of the Special Tax. The Appraisal Report summarizes the Appraiser's conclusion that, as of March 29, 2002, the bulk sale value of the land as improved with the improvements to be financed with the proceeds of the Series 2002-A Bonds was $14,750,000. The Appraisal Report also concluded that the total of the individual retail lot values within Improvement Area A was $19,349,000. See "TH E DEVELOPER, THE -3- LANDOWNER AND THE DEVELOPMENT —The Development" herein and APPENDIX C — APPRAISAL REPORT. The Appraisal Report is based upon various assumptions and subject to various limiting conditions, as set forth in detail in the Appraisal Report. See "SECURITY FOR THE SERIES 2002-A BONDS—Land Value," "SP ECIAL RISK FACTORS—Land Value," and APPENDIX C— APPRAISAL REPORT. The Appraisal Report does not take into account the cost of certain environmental remediation work being conducted within Improvement Area A. See "SPECIAL RISK FACTORS — Hazardous Materials" herein. Based upon the Appraisal, the bulk sale value of the land subject to the levy of the Special Taxes as of March 29, 2002 was approximately 3.0 times the principal amount of the Series 2002-A Bonds. Limited Liability Although the unpaid Special Taxes constitute alien on the real property within Improvement Area A, they do not constitute a personal indebtedness of the Landowner, or any future owners of the land in Improvement Area A. There is no assurance that the Landowner or any future landowners will be financially able to pay the Special Taxes or that it or they will pay the Special Taxes even though financially able to do so. THE SERIES 2002-A BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX TO BE LEVIED ANNUALLY ON THE LAND WITHIN IMPROVEMENT AREA A 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 IMPROVEMENT AREA A, TO THE LIMITED EXTENT SET FORTH IN THE FISCAL AGENT AGREEMENT) IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, AND INTEREST OR PREMIUM, IF ANY, ON THE SERIES 2002-A BONDS. THE SERIES 2002-A 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 PRINCIPAL OF, AND INTEREST AND PREMIUM, IF ANY, ON THE SERIES 2002-A BONDS IS NOT A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE CITY. Description of the Series 2002-A Bonds The Series 2002-A 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 Series 2002-A 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 Series 2002-A Bonds. In the event that the book-entry-only system described herein is no longer used with respect to the Series 2002-A Bonds, the Series 2002-A Bonds will be registered and transferred in accordance with the Fiscal Agent Agreement. See "TH E SERIES 2002-A BONDS —Description of the Series 2002-A Bonds" and APPENDIX G—THE BOOK ENTRY SYSTEM herein. -4- Principal of, premium, if any, and interest on the Series 2002-A 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 Series 2002-A Bonds, the Beneficial Owners will become the registered owners of the Series 2002-A Bonds and will be paid principal, premium, if any, and interest by the Fiscal Agent, all as described herein. See "TH E SERIES 2002-A BONDS —Description of the Series 2002-A Bonds" and APPENDIX G —THE BOOK ENTRY SYSTEM herein. So long as the Series 2002-A Bonds are in book-entry-only form, all references in the Official Statement to the owners or holders of the Series 2002-A Bonds shall mean DTC and not the Beneficial Owners of the Series 2002-A Bonds. The Series 2002-A Bonds are subject to optional redemption and mandatory redemption as described herein. For more complete descriptions of the Series 2002-A Bonds and the Fiscal Agent Agreement pursuant to which they are being issued and delivered, see "TH E SERIES 2002-A BONDS" and APPENDIX A — SUMMARY OF THE FISCAL AGENT AGREEMENT, herein. Tax Matters In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series 2002-A Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earrings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "CONCLUDING INFORMATION—Tax Matters" herein. A copy of the form of opinion of Bond Counsel is set forth in APPENDIX B hereto. Continuing Disclosure The City and the Landowner,. in separate Continuing Disclosure Certificates, 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), as applicable. The City and the Landowner have further agreed to provide notice,of the occurrence of certain material events. These covenants have been made in order to assist the Underwriter in complying with the Rule. The obligations of the Landowner under its Continuing Disclosure Certificate are expected to terminate prior to the maturity of the Series 2002-A Bonds. See "CONCLUDING INFORMATION — Continuing Disclosure" and APPENDIX F — FORMS OF CONTINUING DISCLOSURE CERTIFICATES 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. -5- Bond Owners'Risks Certain events could affect the timely repayment of the principal of and interest on the Series 2002-A 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 Series 2002-A Bonds. The Series 2002-A Bonds are not rated by any nationally recognized rating agency. The purchase of the Series 2002-A Bonds involves significant risks, and the Series 2002-A Bonds may not be an appropriate investment for some investors. See "SP ECIAL RISK FACTORS"herein. Professionals Involved in the Offering BNY Western Trust Company, Los Angeles, California, will act as Fiscal Agent under the Fiscal Agent Agreement. Stone & Youngberg LLC is the Underwriter of the Series 2002-A Bonds. The proceedings of the City Council in connection with the issuance, sale and delivery of the Series 2002-A Bonds are subject to the approval of Quint&Thimmig LLP, San Francisco, California, Bond Counsel. Michael Swan Consulting, Irvine, 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 Improvement Area A by the City Attorney and for the City by Quint & Thimmig LLP, San Francisco, California, acting in the capacity as Disclosure Counsel to the City. Certain legal matters will be passed on for the Developer [and the Landowner] by Pillsbury Winthrop LLP, Los Angeles, California. Other professional services related to the Series 2002-A Bonds have been performed by the Appraiser, John S. Adams&Associates,Inc.,Newport Beach,California. Additional Information Brief descriptions of the Series 2002-A Bonds, the Fiscal Agent Agreement, the security for the Series 2002-A Bonds, Improvement Area A, the Developer, the Landowner, the Development 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 duplication and mailing 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 net proceeds of the Series 2002-A Bonds will be used to finance the costs of the Public Facilities, consisting of the acquisition of right-of-way and the installation by the Developer of streets, traffic signals and street lighting, sewer and water lines, and storm drains and related improvements. See "IMP ROVEMENT AREA A-Public Facilities." It is expected -6- that the total costs of the Public Facilities eligible for financing under the Law will be in excess of the available proceeds of the Series 2002-A Bonds. The Developer is obligated to pay costs of the Public Facilities in excess of available Series 2002-A Bond proceeds, subject to later reimbursement from the net proceeds of any Parity Bonds issued by the City for Improvement Area A,or from the proceeds of bonds issued for Improvement Area B as discussed below. At the time the City established Improvement Area A, it also established Improvement Area B encompassing 43.785 net acres of land included within a future phase of the Development. The improvements authorized to be financed by Improvement Area B are the same.as those authorized to be financed by Improvement Area A,so that any costs of the Public Facilities in excess of available proceeds of the Series 2002-A Bonds could be financed with proceeds of bonds, if any, issued by the City for Improvement Area B. Alternatively, the Developer may, in the future, request that the City annex all or a portion of the land currently within Improvement Area B (or other land in later phases of the Development) to Improvement Area A, and that the City issue Parity Bonds for Improvement Area A by reason of the value of, and the additional Special Tax Revenues attributable to, the additional land in Improvement Area A arising from such an annexation. The City has no obligation to reimburse the Developer for costs of the Public Facilities that are in excess of proceeds of the proceeds of the Series 2002- A Bonds and the proceeds of any such additional bond when and if issued,that are deposited to the Improvement Fund under the Fiscal Agent Agreement. There is no definitive timetable for the development of the land currently in Improvement Area B or in the future phases of the Development, so the City is unable to predict when or if any such annexations will occur and, consequently, when or if any Parity Bonds will be issued. See "IMPROVEMENT AREA A" and "TH E DEVELOPER, THE LANDOWNER AND THE DEVELOPMENT" herein. Moreover, the Fiscal Agent Agreement contains covenants to the effect that any land annexed to Improvement Area A must have a minimum value specified in the Fiscal Agent Agreement, and any annexation of land in Improvement Area B to Improvement Area A must be contingent upon, and effective from and after, the issuance of Parity Bonds in accordance with the requirements of the Fiscal Agent Agreement. See APPENDIX A -SUMMARY OF FISCAL AGENT AGREEMENT -Covenants of the City,and "TH E SERIES 2002-A BONDS-Parity Bonds"herein. The Special Tax is to be imposed on the real property within Improvement Area A 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 Series 2002-A Bonds, as they become due and payable, and to pay the administrative expenses related to Improvement Area A and the Series 2002-A Bonds as they become due and payable, all in accordance with the provisions of the Fiscal Agent Agreement. See "SECU RITY FOR THE SERIES 2002-A BONDS-Special Tax" and "IMP ROVEMENT AREA A-Rate and Method of Apportionment of Special Tax"herein. -7- Uses of Bond Proceeds Under the provisions of the Fiscal Agent Agreement, the Fiscal Agent will receive the proceeds from the sale of the Series 2002-A Bonds and will apply them as follows: Source of Funds Principal Amount of Bonds $ Less:Underwriter's Discoun t Total $ Application of Funds Improvement Fund $ Costs of Issuance Fund(1) Reserve Fund(2) Capitalized Interest Account(3) Administrative Expense Fund(4) Total $ (1) To be used to pay costs of issuance of the Series 2002-A Bonds,including Bond and Disclosure Counsel fees,initial Fiscal Agent fees,appraisal and Special Tax Consultant fees,Official Statement printing and other costs of issuance. (2) An amount equal to the initial Reserve Requirement.See" SECURITY FOR THE SERIES 2002-A BONDS-Reserve Fund." (3) Estimated to be sufficient,together with investment earnings thereon at an assumed reinvestment rate of %,to pay the interest accruing on the Series 2002-A Bonds to September 1,2002. (4) To be used to pay administrative expenses of Improvement Area A prior to the receipt of the proceeds of the first levy of Special Taxes in Improvement Area A. -8- Annual Debt Service of Series 2002-A Bonds The table below sets forth the scheduled annual debt service payments on the Series 2002-A Bonds, assuming no optional redemption of the Series 2002-A Bonds or any redemption of the Series 2002-A Bonds from Special Tax prepayments. Year Ending September 1 Principal* Interest* Total* 2002 2003 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 Totals (1)Indicates a scheduled mandatory sinking account payment. 'Preliminary,subject to change. -9- THE SERIES 2002-A BONDS Authority for Issuance Improvement Area A was established and bonded indebtedness in an amount not to exceed $13,000,000 was authorized to be issued pursuant to actions of the City Council of the City, acting as the legislative body of Improvement Area A, under the 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 Improvement Area A were submitted to and approved by the Landowner, as the sole fee title owner of the property in Improvement Area A, at an election held on June 3, 2002 on such ballot measures. The Special Tax Formula and the amount of the Special Tax that can be collected from the land within Improvement Area A is more fully described in the sections herein entitled "SECU RITY FOR THE SERIES 2002-A BONDS — Special Tax" and "lIvIP ROVEMENT AREA A." The Resolution of Issuance, authorizing the issuance of the Series 2002-A Bonds and approving documents related thereto, was adopted by the City Council acting as the legislative body for Improvement Area A on June 17,2002. The Series 2002-A Bonds will be issued pursuant to the Law, the Fiscal Agent Agreement and the Resolution of Issuance. The Series 2002-A Bonds are secured under the Fiscal Agent Agreement. The Fiscal Agent Agreement allows for the issuance of additional bonded indebtedness secured on a parity with the Series 2002-A Bonds by the Special Taxes and funds pledged to the repayment of the Series 2002-A Bonds under the Fiscal Agent Agreement. See"TH E SERIES 2002-A BONDS—Parity Bonds"herein. Description of the Series 2002-A Bonds The Series 2002-A Bonds will be issued only as one fully registered bond for each maturity thereof, in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), as registered owner of all the Series 2002-A 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 Series 2002-A Bonds. So long as the Series 2002-A 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 Series 2002-A Bonds. See APPENDIX G—THE BOOK ENTRY SYSTEM. The Series 2002-A Bonds will be issued as fully registered bonds without coupons in denominations of $5,000 and any integral multiple thereof, and will be dated the date of delivery thereof. So long as the Series 2002-A Bonds are held in book-entry only form,principal of, premium, if any, and interest on the Series 2002-A Bonds will be paid directly to DTC for distribution to the beneficial owners of the Series 2002-A Bonds in accordance with the procedures adopted by DTC. See APPENDIX G — THE BOOK ENTRY SYSTEM. The Series 2002-A Bonds will mature on September 1 in the principal amounts and years, and will bear interest at the respective rates,as shown on the cover of this Official Statement. Interest on the Series 2002-A Bonds will be payable semiannually on March 1 and September 1 of each year, commencing March 1, 2003 (each, an "In terest Payment Date") and -10- 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 date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from its dated date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Payments of the principal of, premium, if any, and interest on the Series 2002-A 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 Series 2002-A 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 herein. See APPENDIX G—THE BOOK ENTRY SYSTEM. Redemption Optional Redemption. The Series 2002-A Bonds are subject to optional redemption prior to their stated maturity on any Interest Payment Date, as a whole, or in part among maturities so as to maintain substantially the same debt service profile as in effect on the Closing Date, and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the Series 2002-A Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption: Redemption Dates* Redemption Prices* Any Interest Payment Date from March 1,2003 to and 103% including March 1,2010 September 1,2010 and March 1,2011 102 September 1,2011 and March 1,2012 101 September 1,2012 and any Interest Payment Date 100 thereafter Mandatory Sinking Payment Redemption. The Series 2002-A Bonds maturing on September 1, , are subject to mandatory sinking payment 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 fixed for redemption,without premium,from sinking payments as follows: 'Preliminary,subject to change. -11- Redemption Date (September 1) Sinking Payments The Series 2002-A Bonds maturing on September 1, 2032, are subject to mandatory sinking payment 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 fixed for redemption,without premium,from sinking payments as follows: Redemption Date (September 1) Sinking Payments The amounts in the foregoing tables shall be reduced to the extent practicable so as to maintain the same debt service profile as in effect on the Closing Date on the Series 2002-A Bonds, as a result of any prior partial redemption of the Series 2002-A Bonds pursuant to the Fiscal Agent Agreement,as specified in writing by an Authorized Officer to the Fiscal Agent. Redemption from Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to the Fiscal Agent Agreement shall be used to redeem Series 2002-A Bonds on the next Interest Payment Date for which notice of redemption can timely be given under the Fiscal Agent Agreement, among maturities so as to maintain substantially the same debt service profile as in effect on the Closing Date and by lot within a maturity, at a redemption price (expressed as a percentage at the principal amount of the Series 2002-A Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption: Redemption Dates* Redemption Prices* Any Interest Payment Date from March 1,2003 to and 103% including March 1,2010 September 1,2010 and March 1,2011 102 September 1,2011 and March 1,2012 101 September 1,2012 and any Interest Payment Date 100 thereafter The Landowner or any future owner of land in Improvement Area A is permitted to prepay the Special Taxes authorized to be levied within Improvement Area A, which prepayment would result in a full or partial redemption of Series 2002-A Bonds on the terms described above. See "TH E COMMUNITY FACILITIES DISTRICT — Rate and Method of Apportionment of Special Tax'herein. Preliminary,subject to change. -12- Purchase of Bonds. In lieu of any redemption described above,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 may Bonds be purchased at a price in excess of the principal amount thereof,plus interest accrued to the date of purchase and any premium which would otherwise be due if such Bonds were to be redeemed in accordance with the Fiscal Agent Agreement. Selection of Bonds for Redemption Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the Series 2002-A Bonds or any given portion thereof, the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof not previously called for redemption, among maturities as directed in writing by the Director of Administrative Services of the City (who shall specify Bonds to be redeemed so as to maintain, as much as practicable, the same debt service profile for the Bonds as in effect prior to such redemption, unless otherwise specified in the Fiscal Agent Agreement), and by lot within a maturity in any manner which the Fiscal Agent deems appropriate. Upon surrender of Bonds redeemed in part only, the City will execute and the Fiscal Agent will authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. 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 Original Purchaser, to the Securities Depositories, to one or more Information Services, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; 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 shall state the redemption date and the redemption price and,if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers,both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. -13- Effect of Redemption From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund, such Bonds so called shall cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price and accrued interest to the date fixed for redemption, and no interest shall accrue thereon on or after the redemption date. All Bonds redeemed and purchased by the Fiscal Agent pursuant to the Fiscal Agent Agreement shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled Bonds and issue a certificate of destruction thereof to the City. Transfer or Exchange of Bonds So long as the Series 2002-A 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 G—THE BOOK ENTRY SYSTEM. If the book-entry only system for the Series 2002- A Bonds is ever discontinued, any Series 2002-A 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 Series 2002-A Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. Whenever any Series 2002-A Bond or Series 2002-A Bonds shall be surrendered for transfer or exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Series 2002-A Bond or Series 2002-A Bonds, for a like aggregate principal amount of Series 2002-A Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfers or exchanges of Series 2002-A Bonds shall be required to be made (i)within 15 days prior to the date established by the Fiscal Agent for selection of Series 2002-A Bonds for redemption, or (ii) with respect to a Series 2002-A Bond after such Series 2002-A Bond has been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date. Parity Bonds The City may from time to time issue bonds (the "Parity Bonds"), in addition to the Series 2002-A Bonds, by means of a Supplemental Agreement and without the consent of any Bondowners, upon compliance with the provisions of the Fiscal Agent Agreement. Any such Parity Bonds will constitute Bonds under and as such term is defined in the Fiscal Agent Agreement, and will be secured by alien on the Special Tax Revenues and funds pledged for the payment of the Bonds under the Fiscal Agent Agreement on a parity with all other Bonds Outstanding thereunder. The City may issue the Parity Bonds subject to the following specific conditions precedent: -14- The City shall be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in the Fiscal Agent Agreement and any Supplemental Agreements. The Supplemental Agreement providing for the issuance of the Parity Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and principal thereof shall be payable on September 1 in any year in which principal is payable (provided that there shall be no requirement that any Parity Bonds pay interest on a current basis). The Supplemental Agreement providing for the issuance of such Parity Bonds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund in an amount necessary so that the amount on deposit therein, following the issuance of such Parity Bonds, is equal to the Reserve Requirement. The District Value (as defined below) shall be at least three times the sum of: (i) the aggregate principal amount of all Bonds then Outstanding, plus (ii) the aggregate principal amount of the series of Parity Bonds proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in Improvement Area A subject to the levy of Special Taxes,plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within Improvement Area A (the "Oth er District Bonds") equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within Improvement Area A, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other District Bonds occurs),based upon information from the most recent available Fiscal Year. The City shall obtain_a certificate of a Tax Consultant to the effect that (i) the amount of the maximum Special Taxes that may be levied in each Fiscal Year, after deducting an amount determined by the City as appropriate to pay for annual Administrative Expenses, shall be at least one hundred ten percent (110%) of the total Annual Debt Service for each such Fiscal Year on the Bonds and the proposed Parity Bonds, and (ii) the aggregate Special Tax Prepayments that could occur after the issuance of the Parity Bonds is not less than the Outstanding principal amount of the Bonds and such Parity Bonds. The City shall deliver to the Fiscal Agent an Officer's Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in the five preceding subparagraphs have been satisfied. The term"District Value" is defined in the Fiscal Agent Agreement as the market value, as of the date of the appraisal described below, of all parcels of real property in Improvement -15- Area A subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired with any amounts then on deposit in the Improvement Fund established under the Fiscal Agent Agreement and with the proceeds of any proposed series of Parity Bonds, as determined by reference to (i) an appraisal performed within six (6) months of the date of issuance of any proposed Parity Bonds by an MAI appraiser selected by the City, or (ii) in the alternative, the assessed value of all such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the City. The Fiscal Agent Agreement provides that the City shall not be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provided for purposes of the foregoing definition or by reason of any exercise of discretion made by any appraiser pursuant to such definition. The City may issue Parity Bonds incident to any annexation of land currently in Improvement Area B or future phases of the Development to Improvement Area A in order to provide funds to pay the costs of the Public Facilities that are in excess of the proceeds of the Series 2002-A Bonds available for such purpose. See "TH E FINANCING PLAN—Overview" herein. SECURITY FOR THE SERIES 2002-A BONDS The Series 2002-A 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 Series 2002-A 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 Series 2002-A Bonds are not in any way pledged to pay the debt service on the Series 2002-A Bonds. Special Tax In accordance with provisions of the Law, Improvement Area A was established by the City Council, acting as the legislative body for Improvement Area A, on June 3, 2002. The Landowner, as the sole owner of the land within Improvement Area A, voted to authorize Improvement Area A to incur bonded indebtedness to finance costs related to specified public infrastructure improvements, with the indebtedness to be secured by a pledge of the proceeds of the levy of 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 Series 2002-A Bonds, to pay the administrative expenses of Improvement Area A, and to replenish the Reserve Fund to the amount of the Reserve Requirement, all consistent with the Special Tax Formula, the Law and the Fiscal Agent Agreement. See "IMP ROVEMENT AREA A —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 attached hereto 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 in accordance with the Ordinance levying the Special Tax by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the -16- parcels within Improvement Area A for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the City is obligated to prepare or cause to be prepared, and to transmit to the County Auditor, such data as the County Auditor requires to include the levy of the Special Taxes on the next real property tax roll. The City Treasurer or the Treasurer's designee is directed to fix and levy the amount of Special Taxes within Improvement Area A required for the payment of principal of and interest on any Outstanding Bonds of Improvement Area A becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts necessary to discharge any obligation under the Fiscal Agent Agreement to pay rebate to the Federal government) during such Bond Year, taking into account the balances in such funds and in the Special Tax Fund established under the Fiscal Agent Agreement. 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 may not exceed the authorized maximum amount in the Special Tax Formula. See "IMPROVEMENT AREA A — 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 and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property; provided that, pursuant to and in accordance with the Ordinance levying the Special Tax, the Special Taxes may be collected by means of direct billing of the property owners within Improvement Area A, in which event the Special Taxes shall become delinquent if.not paid when due pursuant to said billing. The Special Taxes 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 to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in Improvement Area A below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year.It is acknowledged by the City in the Fiscal Agent Agreement that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that the covenant is necessary to assure the full and timely payment of the Bonds. See "SP ECIAL RISK FACTORS—Proceeding to Reduce or Terminate Special Tax"herein. The City has also covenanted in the Fiscal Agent Agreement not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare a Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds. The City has further covenanted not to permit the tender of Bonds in 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 Series 2002-A Bonds and any Parity Bonds remaining Outstanding following such tender. See APPENDIX A — SUMMARY OF THE FISCAL AGENT AGREEMENT. -17- Although the Special Tax will constitute alien on the land within Improvement Area A which is subject to taxation, it does not constitute a personal indebtedness of the Landowner or any future owners of such land. There is no assurance that the Landowner or any future _owners of the land within Improvement Area A will be financially able to pay the annual Special Tax or that they will pay the Special Tax even if financially able to do so. The risk of the Landowner, or any subsequent owner of the land, not paying the annual Special Tax is more fully described under the heading "SPECIAL RISK FACTORS — Insufficiency of Special Tax Revenues" below. For further information regarding the Special Tax Formula, see "IMP ROVEMENT AREA A—Rate and Method of Apportionment of Special Taxes" herein and APPENDIX D—RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. Land Value The City commissioned an appraisal report (the "Appraisal Report") from John S. .Adams & Associates, Inc. (the "Appraiser"), dated April 1, 2002, to determine the value of the land in Improvement Area A that is subject to the levy of the Special Tax. The Appraisal Report summarizes the Appraiser's conclusion that, as of March 29, 2002, the bulk sale value of the land as improved with the improvements to be financed with the proceeds of the Series 2002-A Bonds was $14,750,000. The Appraisal Report also concluded that the total of the individual retail lot values within Improvement Area A was $19,349,000. See "TH E DEVELOPER, THE LANDOWNER AND THE DEVELOPMENT —The Development" herein and APPENDIX C — APPRAISAL REPORT. Based upon the Appraisal, the bulk sale value of the land subject to the levy of the Special Taxes as of March 29, 2002 was approximately 3.0 times the principal amount of the Series 2002-A 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. For example, the Appraisal Report does not take into account the cost of certain environmental remediation work being conducted within Improvement Area A. See "SPECIAL RISK FACTORS — Land Value" and "SPECIAL RISK FACTORS — Hazardous Materials" herein. If any of the assumptions made by the Appraiser prove not to be accurate, the market value of the property in Improvement Area A may not be as much as the value shown in the Appraisal. The City and Improvement Area A make no representation or warranty as to the accuracy or completeness of the Appraisal Report and purchasers of the Series 2002-A 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 established under the Law on the property on which the Special Tax was levied. In such an action, the real property subject to the unpaid Special Tax amount may be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory under the Law. -18- However, in the Fiscal Agent Agreement, the City has covenanted with and for the benefit of the owners of the Bonds that it will order, and cause to be commenced as described below, and thereafter diligently prosecute to judgment (unless such 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. The Director of Administrative Services is directed in the Fiscal Agent Agreement to notify the City Attorney of any such delinquency of which he is aware, and the City Attorney is directed in the Fiscal Agent Agreement to commence, or cause to be commenced,such proceedings. The Fiscal Agent Agreement provides that, on or about February 15 and June 15 of each Fiscal Year, the Director of Administrative Services of the City is to compare the amount of Special Taxes theretofore levied in Improvement Area A to the amount of Special Tax Revenues theretofore received by the City,and: Individual Delinquencies. If the Director of Administrative Services determines that any single parcel subject to the Special Tax in the Improvement Area A is delinquent in the payment of Special Taxes in the aggregate amount of $5,000 or more, then the Director of Administrative Services shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the City within 90 days of such determination. Aggregate.Delinquencies. If the Director of Administrative Services determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District (including the total of delinquencies under the preceding subparagraph), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the Director of Administrative Services shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and the City shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in Improvement Area A with a Special Tax delinquency. The Director of Administrative Services and the City Attorney, as applicable, are authorized under the Fiscal Agent Agreement to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel(including a charge for City staff time) in conducting foreclosure proceedings is an Administrative Expense under the Fiscal Agent Agreement. In the event that landowners in Improvement Area A do not pay Special Taxes levied in Improvement Area A when due, amounts on deposit in the Reserve Fund may be drawn upon to pay the debt service on the Bonds. In the event that superior court foreclosure or foreclosures are necessary to collect delinquent Special Taxes, after the Reserve Fund has been depleted, there could be a delay in principal or interest payments being made to the Bodowners pending prosecution of the foreclosure proceedings and receipt by Improvement Area A 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 land 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 -19- 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 "SP ECIAL 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 purchase or otherwise acquire any land sold at the execution sale if there is no other purchaser at such sale. The Law does authorize the City to bid at the foreclosure sale in an amount equal to the amount of the foreclosure judgement plus post judgement interest and costs, or a lesser amount with the consent of the owners of 75 percent by value of the Outstanding Bonds. Under the Law, the City may credit bid and if it becomes the purchaser of the property at foreclosure sale it has up to 24 months from the date of the foreclosure sale to pay the amount of its credit bid into the Bond Fund. The City has no obligation and has expressed no intention to be a bidder at any such foreclosure 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 Series 2002-A Bonds, the City will initially deposit Series 2002-A Bond proceeds in an amount equal to the initial Reserve Requirement into the Reserve Fund held by the Fiscal Agent. The term'Reserve Req uirement" is defined in the Fiscal Agent Agreement, as of any date of calculation, as the least of (a) ten percent (10%) of the outstanding principal amount of the Bonds, (b) the then Maximum Annual Debt Service, or (c) one hundred twenty-five percent (125%) of the then Average Annual Debt Service. The Reserve Requirement as of the date of issuance of the Series 2002-A Bonds is $ 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 that purpose, or, in the event the Special Tax on a parcel is prepaid, to pay a portion of the redemption price of the Bonds to be redeemed with such prepayment pursuant to the Fiscal Agent Agreement. In addition, the Fiscal Agent Agreement provides that whenever, on the Business Day prior to any Interest Payment Date, or on any other date at the written request of the Director of Administrative Services, the amount in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent is directed to provide written notice to the Director of Administrative Services of the amount of the excess and to transfer the excess to the Bond Fund to be used for the payment of the interest on and principal of the Bonds on the next succeeding Interest Payment Date. Amounts in the Reserve Fund may be used at any time, at the written direction of an Authorized Officer, for purposes of paying any rebate liability to the Federal government under the provisions of the Fiscal Agent Agreement. -20- The Fiscal Agent Agreement provides the City with the right at any time to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Fund Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Fund Credit Instrument.will cause interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, and upon delivery by the City to the Fiscal Agent of a written calculation of the amount permitted to be released from the Reserve Fund (upon which calculation the Fiscal Agent may conclusively rely), the Fiscal Agent will transfer such funds from the Reserve Fund to the City free and clear of the lien of the Fiscal Agent Agreement, to be used by the City for any lawful purpose of Improvement Area A under the Law. In such event, the Fiscal Agent is directed to comply with all documentation relating to a Qualified Reserve Fund Credit Instrument as shall be required to maintain the Qualified Reserve Fund Credit Instrument in full force and effect and as required to receive payments thereunder in the event and to the extent required to make any payment from the Reserve Fund when and as required under the Fiscal Agent Agreement. The Fiscal Agent Agreement defines Qualified Reserve Fund Credit Instrument as an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent, provided that all of the following requirements are met: (a) the long-term credit rating or claims paying ability of such bank or insurance company is in one of the two highest rating categories by Standard & Poor's Ratings Service and Moody's Investors Service; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to the Fiscal Agent Agreement; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder for the purpose of making payments from the Reserve Fund required pursuant to the Fiscal Agent Agreement. At least fifteen (15) days prior to the expiration of any Qualified Reserve Fund Credit Instrument, the City is obligated either (i) to replace the Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund Credit Instrument, or (ii) to deposit or cause to be deposited with the Fiscal Agent an amount of funds such that the amount on deposit in the Reserve Fund is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the City fails to take action as specified in clause (i) or (ii) of the preceding sentence, the Fiscal Agent will, prior to the expiration thereof, draw upon the Qualified Reserve Fund Credit Instrument in full and deposit the proceeds of such draw in the Reserve Fund. In the event that the Reserve Requirement is maintained in the Reserve Fund in the form of a combination of cash and a Qualified Reserve Fund Credit Instrument, the Fiscal Agent will apply the amount of such cash to make any payment required to be made from the Reserve Fund before the Fiscal Agent draws any moneys under the Qualified Reserve Fund Credit Instrument for such purpose. In the event that the Fiscal Agent draws funds under a Qualified Reserve Fund Credit Instrument to make any payment then required to be made from the Reserve Fund, the Special Tax Revenues thereafter received by the Fiscal Agent, to the extent deposited to the Reserve Fund under the Fiscal Agent Agreement, will be used to reinstate the Qualified Reserve Fund Credit Instrument. -21- Limited Liability THE SERIES 2002-A BONDS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX TO BE LEVIED ANNUALLY ON THE LAND WITHIN IMPROVEMENT AREA A 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 IMPROVEMENT AREA A, 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 SERIES 2002-A BONDS. THE SERIES 2002-A 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 PRINCIPAL OF, AND INTEREST OR REDEMPTION PREMIUM,IF ANY, ON THE SERIES 2002-A BONDS IS NOT A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE CITY. SPECIAL RISK FACTORS Investment in the Series 2002-A 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 Series 2002-A 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 land in Improvement Area A to pay the Special Taxes levied in Improvement Area A when due. Such failure to pay Special Taxes, if the Reserve Fund for the Bonds is depleted, could result in the inability of the City to make full and punctual payments of debt service on the Series 2002-A Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in Improvement Area A. Concentration of Ownership As of the date of issuance of the Series 2002-A Bonds, McDonnell Douglas Corporation owns all of the land in Improvement Area A that is subject to the levy of Special Taxes. While the Landowner has indicated its intent to sell all of the parcels in Improvement Area A to unrelated third parties, such sales will be dependent upon market conditions and there is no requirement that any such sales occur. In certain circumstances, the Developer could retain ownership of all or a portion of the land in Improvement Area A, construct buildings on the land,and lease the developed property to third parties. The initial lack of diversity in ownership. and thereby in the obligation to pay the Special Tax represents a significant risk to Bondowners in that the Landowner's ability to pay the Special Tax will be dependent in large measure on the success of its business as a whole. Failure of the Landowner (or any future of property within Improvement Area A) 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 parcel or parcels upon a foreclosure or otherwise. In that event, there could be a default in payments of the principal of, and interest -22- on, the Series 2002-A Bonds. See "SPECIAL RISK FACTORS - Insufficiency of Special Tax Revenues"below. Land Value The value of the land within Improvement Area A is a critical factor in determining the investment quality of the Series 2002-A Bonds. If a landowner defaults in the payment of a Special Tax, the City's on ly remedy is to commence foreclosure proceedings with respect to the parcel on which the Special Tax was levied in an attempt to obtain funds to pay the delinquent Special Tax. As stated under the heading "SECURITY FOR THE SERIES 2002-A BONDS - Land Value" above, the City commissioned the Appraisal Report for the land in Improvement Area A subject to the levy of the Special Tax in which the Appraiser concluded that, as of March 29, 2002, the bulk sale value of the land as improved with the improvements to be financed with the proceeds of the Series 2002-A Bonds was $14,750,000. The Appraisal Report also concluded that the total of individual retail lot values within Improvement Area A was $19,349,000. 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. The Appraisal Report specifically states that "Th e appraiser has not been provided any information regarding the presence of any material or substance on or in any portion of the subject property or improvements thereon, which material or substance possesses or may posses toxic, hazardous and/or other harmful and/or dangerous characteristics. However, the Developer has advised that the land within Improvement Area A is subject to certain environmental remediation work related to hazardous substances. See "SPECIAL RISK FACTORS - Hazardous Materials" herein. No representation is made as to the validity of the other assumptions in the Appraisal Report. Prospective purchasers of the Series 2002-A Bonds should not assume that any particular parcel of land within Improvement Area A could be sold for a proportionate amount of the appraised value described in the Appraisal Report at a foreclosure sale for delinquent Special Taxes. For example, it is possible that a proportionate amount of appraised value of the land in Improvement Area A will not be realized through a foreclosure sale with respect to any particular parcel or parcels because of general economic conditions at the time of sale and any inability of a purchaser to secure building permits, construction contracts, and necessary funding, to fully develop the parcel or parcels. Additionally,reductions in the value of the land in Improvement Area A could occur due to a severe downturn in the economy generally resulting in less demand for commercial/industrial property, physical events such as earthquakes or floods or other similar unforeseen events all of which could adversely impact the potential for sales and development of the parcels in Improvement Area A. Risks of Real Estate Secured Investments Generally The Bondowners will be subject to the risks generally incident to an investment secured by real estate,including,without limitation, adverse changes in local market conditions,such as -23- changes in the market value of real property in the vicinity of Improvement Area A, the supply of or demand for competitive properties in the general area, and the market value of industrial/commercial property and/or sites in the event of sale or foreclosure. Failure to Complete Public Facilities The Appraisal Report referenced' under the headings "1N'TRODU CTION - Land Value," "SECURITY FOR THE SERIES 2002-A BONDS - Land Value" and "SPECIAL RISK FACTORS - Land Value" above, contains an express assumption to the effect that the construction of the Public Facilities to be funded from Series 2002-A Bond proceeds is completed. The Developer currently estimates that the cost of the Public Facilities will be in excess of the Series 2002-A Bond proceeds available for payment of such costs; however the Developer has agreed in the Acquisition Agreement to pay any such excess costs. See "IMP ROVEMENT AREA A - Public Facilities" herein. Any such excess costs could be later reimbursed to the Developer if the City issues Parity Bonds (or bonds for Improvement Area B), the net proceeds of which could be available for such purpose. See "TH E FINANCING PLAN - Overview" herein. Moreover, a significant portion of the Public Facilities costs is the acquisition of right-of-way for which the Developer expects to receive reimbursement from Series 2002-A Bond proceeds on or shortly after the issuance of the Series 2002-A Bonds; however The Boeing Company has provided the City with a guaranty (the "Guaran ty") of the obligations of the Developer under the Acquisition Agreement to construct all of the initial Public Facilities despite any lack of available Series 2002-A Bond proceeds to finance all of such Public Facilities. See "IMP ROVEMENT AREA A-Public Facilities"herein. Notwithstanding the ability of the Developer (or The Boeing Company, pursuant to the Guaranty) to fund all such costs, any event that significantly impacts the ability to complete the Public Facilities on a timely basis (such as strikes or other work stoppages, adverse weather conditions, catastrophic events such as earthquakes or other natural events, or other similar events) could cause the value of the land within Improvement Area A to be less than that estimated by the Appraiser and could affect the willingness and ability of the Landowner or any future owners of land in Improvement Area A to pay the Special Taxes when due. See "IMP ROVEMENT AREA A-Public Facilities"herein. Government Approvals The Developer has secured all of the approvals, permits and government entitlements necessary to develop the property in Improvement Area A, other than specific building permits and other permits required only after the start of construction. Nevertheless, development within Improvement Area A is contingent upon the construction and acquisition by the City of a number of public improvements, including the Public Facilities. The installation of the necessary improvements and infrastructure for the Development is subject to inspection and final approvals from the City. The failure to obtain any such final approvals could adversely affect the completion of land development within Improvement Area A. Insufficiency of Special Tax Revenues In order to pay debt service on the Bonds, it is necessary that the Special Tax levied within Improvement Area A be paid in a timely manner. Should the Special Tax not be paid on -24- time,Improvement Area A has established a Reserve Fund in the initial amount specified under the heading "TH E FINANCING PLAN -Uses Of Bond Proceeds" to pay debt service on the 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-RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. As a result,if the Landowner or any future owner of all or a majority of the parcels of land in Improvement Area A is delinquent in the payment of the Special Tax, the City may not be able to replenish the Reserve Fund to the Reserve Requirement because the Landowner or any such future 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 in the payment of debt service on the Bonds would occur. The Law provides that, if any property within Improvement Area A 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 Bondowners 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 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 non-taxable entity such as the federal government, or another public agency, the Special Tax will be reallocated to the remaining portion, if any, of the non tax-exempt land within Improvement Area A, but in no case more than the maximum authorized maximum Special Tax for such remaining acreage, if any. If a substantial portion of land within Improvement Area A 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 Bonds when due or the owner or owners of the land in the remaining taxable acreage may not have successful business operations that provide revenues sufficient to pay the Special Taxes, and a default could occur with respect to the payment of such principal and interest on the Bonds. The City has covenanted to institute foreclosure proceedings to sell parcels of land with delinquent Special Taxes in order to obtain funds to pay debt service on the 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 of land could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest. See "SECURITY FOR THE SERIES 2002-A 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 with respect to a number of the parcels in Improvement Area A, there could be a delay in payments to Bondowners pending prosecution of the foreclosure sale, if the Reserve Fund were depleted. -25- No assurances can be given that any particular parcel of land 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 levied on the respective parcel. 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 of land 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. Improvement Area A 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, Improvement Area A is not included within the Teeter Plan. Bankruptcy and Foreclosure Delays The payment of Special Taxes and the ability of Improvement Area A to foreclose the lien of a delinquent unpaid Special Tax, as discussed in the section herein entitled "SECU RITY FOR THE SERIES 2002-A 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. In addition,potential investors should be aware that judicial foreclosure proceedings are not summary remedies and can be subject to delays beyond the control of the City. Potential investors should be aware that, under current conditions, it is estimated that a judicial foreclosure of the lien of Special Taxes could take up to two or three years from initiation to the lien foreclosure sale. At a Special Tax lien foreclosure sale, each parcel will be sold for not less than the "min imum bid amount" which is equal to the sum of all delinquent Special Tax installments, penalties and interest thereon, costs of collection (including reasonable attorneys fees), post-judgment interest and costs of sale. Each parcel is sold at foreclosure for the amounts secured by the Special Tax lien on such parcel and multiple parcels may not be aggregated in a single "bulk" foreclosure sale. If any parcel fails to obtain a "min imum bid" the City may, but is not obligated to, seek superior court approval to sell such parcel at an amount less than the minimum bid. Such Superior Court approval may require the consent of the owners of 75%of the aggregate principal amount of the Outstanding Bonds. The various legal opinions to be delivered concurrently with the delivery of the Series 2002-A 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. -26- Regardless of the priority of the Special Taxes securing the Series 2002-A Bonds over non-governmental liens on the land in Improvement Area A, 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 owner of, or anyone else who claims an interest in,the parcel or parcels with delinquent Special Taxes. 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 Series 2002-A Bonds. This is especially true when ownership of the taxable land is concentrated with one owner,as is the case initially in Improvement Area A. Further, should remedies be exercised under the bankruptcy law against the land in Improvement Area A with delinquent Special Taxes, 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 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 alien 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 "Ban kruptcy 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, "th e creation of a statutory lien for an ad valorem property tax imposed by . . . a -27- 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 "admin istrative expenses," rather than as tax liens secured by real property,at least during the pendency of bankruptcy proceedings. First, as noted above, special taxes have a different lien date than the lien date for general ad valorem taxes in the State of California noted above. 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 alien 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 Improvement Area A who 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 Series 2002-A Bonds. Because the land in Improvement Area A will initially be owned only by the Landowner, with no requirement for sales to unrelated third parties, 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 by the laws of the State relating to judicial foreclosure if the Landowner fails to pay the Special Tax levied in Improvement Area A. No assurances can be given that any financial difficulties experienced by the Landowner in the future, or any other landowner within Improvement Area A in the future, will not adversely affect the full and timely payment of Special Taxes levied in Improvement Area A. Local, State and Federal Land Use Regulations There can be no assurance that land development operations within Improvement Area A will not be adversely affected by future government policies, including, but not limited to, governmental policies which directly or indirectly restrict or control development. During the -28- past several years, citizens of a number of local communities in California have placed measures on the ballot designed to control the rate of future development. Although the City has adopted a Specific Plan with respect to the Development and the Developer has obtained all land use approvals necessary to commence grading of the land in Improvement Area A, it is possible that future initiatives applicable to the City or Improvement Area A could be enacted and could negatively impact the ability of the Landowner or any future landowners to further develop their land. During the past several years, state and federal regulatory agencies have significantly expanded their involvement in local land use matters through increased regulatory enforcement of various environmental laws, including the Endangered Species Act, the Clean Water Act and the Clear Air Act, among others. Such regulations can substantially impair the rate and amount of development without requiring just compensation unless the effect of the regulation is to deny all economic use of the affected property. Bodowners should assume that any event that significantly impacts the ability to develop land in Improvement Area A could cause the land values within Improvement Area A to decrease substantially and could affect the willingness and ability of the owners of land to pay the Special Taxes when due or to proceed with development of land in Improvement Area A. Direct and Overlapping Indebtedness The ability of the Landowner, or any subsequent owner of land within Improvement Area A, to pay the Special Tax could be affected by the existence of other taxes and assessments imposed upon the property in Improvement Area A. In addition, other public agencies whose boundaries overlap those of Improvement Area A could,without the consent of the City,and in certain cases without the consent of the owners of the land within Improvement Area A,impose additional taxes or assessment liens on the property within Improvement Area A in order to finance public improvements to be located inside of or outside of Improvement Area A. The lien created on the property within Improvement Area A through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Tax. r -29- Set forth below is a table which sets forth the direct and overlapping debt for Improvement Area A provided by California Municipal Statistics,Inc. on June 7,2002: CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 2001-02 Assessed Valuation: $441,975,656 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable Debt 7/1/02 Orange County Teeter Plan Obligations 0.197/0 $ 246,693 Metropolitan Water District 0.042 211,292 City of Huntington Beach Community Facilities District No.2002-1,Improvement Area A100.000 4,900,000 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $5,357,985 OVERLAPPING GENERAL FUND OBLIGATION DEBT: Orange County General Fund Obligations 0.197% $1,953,391 Orange County Pension Obligations 0.197 265,187 Orange County Transit District Authority 0.197 12,165 Coast Community College District Certificates of Participation 0.819 125,389 City of Huntington Beach General Fund Obligations 2.651 2,334,190 Municipal Water District of Orange County Water Facilities Corporation 0.297 142,218 Orange County Water District Certificates of Participation 0.344 736,848 Orange County Sanitation District No.11 Certificates of Participation 3.976 134,824 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT $5,704,212 Less: Orange County Transit District Authority(80%self-supporting) 9,732 MWDOC Water Facilities Corporation(100%self-supporting) 142,218 Orange County Water District Certificates of Participation(100%self-supporting) 736,848 TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT $4,815,414 GROSS COMBINED TOTAL DEBT $11,062,197 (2) NET COMBINED TOTAL DEBT $10,173,399 (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. Ratios to 2001-02 Assessed Valuation: Direct Debt S$4,900,000)...............................................................1.11% Total Direct and Overlapping Tax and Assessment Debt........1.21% Gross Combined Total Debt.........................................................2.50% Net Combined Total Debt.............................................................2.30% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/01: $0 Geologic,Topographic and Climatic Conditions The market value of the parcels of land 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 Improvement Area A 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 Improvement Area A 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 less -30- than one mile from the boundary of Improvement Area A. A significant earthquake along such fault is possible during the period the Series 2002-A 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 one mile_from the boundary of Improvement Area A. The Appraiser notes in the Appraisal Report that, according to FEMA Map Number 0650340027F, dated January 3, 1999, the property in Improvement Area A is within Flood Zone X500. This is an area inundated by 500 year flooding. 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 constructed in the future on parcels in Improvement Area A of varying seriousness, and any such damage may entail significant repair or replacement costs (or such repair or 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 parcels of land in Improvement Area A subject to the Special Tax levy or in any business enterprise that purchases land and constructs improvements on any of the parcels in Improvement Area A becoming unable to operate at a profit or such land otherwise becoming unmarketable upon a failure to pay Special Taxes and a subsequent foreclosure sale. 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 "Superfun d 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. It is an explicit assumption of the Appraisal Report that the parcels of land in Improvement Area A are not negatively impacted by toxic or hazardous materials. Moreover, the appraised value of the land in Improvement Area A 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. -31- The Developer has obtained various environmental assessment reports pertaining to portions of the Development, including a Phase I and Phase U Environmental Site Assessment, .dated March 26, 2001, prepared by ENSR Corporation for an area designated in the report as Area I of the Development site, and a Phase I Environmental Site Assessment, dated September 7, 2000, prepared by ENSR Corporation for an area designated in the report as Area II of the Development site (collectively, the "En vironmental Reports"). The Environmental Reports cover most of the area within Improvement Area A, as well as adjacent portions of the Development. The Environmental Reports identify various portions of the land in Improvement Area A that may be in need of hazardous material remediation due to prior diesel fuel storage facilities that were located on the site that have been removed. The Developer is in the process of conducting the remediation work, which it estimates will cost approximately $1,500,000 to complete. The Developer anticipates completing the remediation work in the next few months, and, upon completion, will apply for a no further action letter from the Orange County Water Control Board or other appropriate governmental agency. To ensure that the remediation work is completed as expected, The Boeing Company will include within the scope of the Guaranty delivered at the closing of the Series 2002-A Bonds (see "IMPROVEMENT AREA A - Public Facilities" herein), its guaranty of the obligation of the Developer to remediate the environmental hazards identified in the Environmental Reports. No assurance can be given that the remediation work will be completed for the cost and on the schedule identified above. In addition, additional remediation work may be necessary with respect to future phases of the Development not included in Improvement Area A. 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 any of the land within Improvement Area A, and all of such land is currently owned in fee by the Landowner. However, such an interest could arise, for example, if a loan secured by a deed of trust on a parcel of land in Improvement Area A 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 "P olicy 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 -32- 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 alien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's con sent. 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 immun ity. The United States Court of Appeals for the Ninth Circuit issued an opinion on August 28, 2001 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 of land in Improvement Area A 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 Series 2002-A 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 Series 2002-A 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 any of the land in Improvement Area A, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Series 2002-A Bonds are outstanding. Disclosure to Future Property Owners or Lenders The City recorded a notice of Special Tax Lien with respect to Improvement Area A in the Office of the County Recorder of the County of Orange on June J 2002. 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 a parcel of land in Improvement Area A, or the lending of money thereon. Under the Law, the Landowner has an obligation to -33- disclose the existence of the Special Tax to any future purchaser of a parcel of land in Improvement Area A. Failure to disclose the existence of the Special Tax may affect the willingness and ability of a future owner of land in Improvement Area A to pay the Special Tax when due. Non-Cash Payments of Special Taxes Under the Law, the City Council, acting as the legislative body of Improvement Area A, may reserve to itself the right and authority to allow the owner of any parcel of land subject to the levy of Special Taxes 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 a parcel in Improvement Area A 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 limited by the City, the Special Tax paid in cash could be insufficient to pay the debt service due with respect to Bonds. In order to provide some protection against the potential adverse impact on cash flows which might be caused by the tender of Bonds in payment of the Special Tax, the Fiscal Agent Agreement includes a covenant pursuant to which the City will not permit the tender of Bonds in hill or partial payment of any Special Taxes unless the City shall have received 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 remaining Outstanding following such tender. Payment of the Special Tax is not a Personal Obligation of the Owners The Landowner and any future owners of the land in Improvement Area A are not personally obligated to pay the Special Tax levied on the parcels in Improvement Area A. Rather, the Special Tax is an obligation which is secured only by alien against the parcels of land within Improvement Area A on which the Special Tax is levied. If the value of any particular parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the payment of the Special Tax levied and to be levied on such parcel, the City has no recourse against the owner of the parcel. Limitations on Remedies Remedies available to the owners of the Series 2002-A Bonds in the event of a default in payment or a breach by the City of covenants contained in the Fiscal Agent Agreement may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Series 2002-A Bonds or to preserve the tax-exempt status of the Series 2002-A Bonds. Bond Counsel has limited its'opinion as to the enforceability of the Series 2002- A 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 Series 2002-A Bonds. -34- Proceedings to Reduce or Terminate the Special Tax An initiative measure commonly referred to as the "Righ t 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 XIIID to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "th a 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 Series 2002-A 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 power to repeal or reduce the Special Tax if such reduction would interfere with the timely retirement of the Series 2002-A Bonds. It may be possible, however, for landowners or the City Council acting as the legislative body of Improvement Area A to reduce the Special Tax in a manner which does not interfere with the timely repayment of the Series 2002-A Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. 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 Series 2002-A Bonds. Therefore,no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, in the Fiscal Agent Agreement the City has covenanted to levy the Special Taxes in amounts sufficient for the payment of debt service on the Bonds and 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 not to consent to or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in Improvement Area A below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is acknowledged in the Fiscal Agent Agreement that Bondowners are purchasing the Bonds in reliance on the foregoing covenant,and that said covenant is necessary -35- to assure the full and timely payment of the Bonds. No assurance can be given as to the enforceability of the foregoing covenant. 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 "SP ECIAL RISK FACTORS—Limitatioxs on Remedies." Loss of Tax Exemption As discussed under the caption "CONCLUDING INFORMATION — Tax Matters" herein, interest on the Series 2002-A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2002-A 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 Series 2002-A 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. Secondary Markets and Prices The Underwriter will not be obligated to repurchase any of the Series 2002-A Bonds,and no representation is made concerning the existence of any secondary market for the Series 2002- A Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Series 2002-A Bonds, and no assurance can be given that the initial offering prices for the Series 2002-A Bonds will continue for any period of time. No Acceleration Provision The Fiscal Agent Agreement does not contain a provision allowing for the acceleration of the unpaid principal of the Series 2002-A Bonds in the event of a payment default or other default under the terms of the Series 2002-A Bonds or the Fiscal Agent Agreement. -36- a f a m Cal I I ( I � 041 Q pV I I I. I I F -----------------J avow a000 V9709 � -37- IMPROVEMENT AREA A Location Improvement Area A,which includes the land in Phase II of the Development,is located in the northwestern portion of the City of Huntington Beach. The immediate area is the primary industrial district for the City. North of Improvement Area A on the opposite side of Rancho Road and a U.S. Navy Railroad right-of-way is residential development within the cities of Huntington Beach and Westminster. South of Improvement Area A on the opposite side of Bolsa Avenue is industrial and office development within the Huntington Beach Industrial Park and residential development along portions of Bolsa Chica Road. Farther south beyond McFadden Avenue is additional industrial development, residential development and Marina High School. East of Improvement Area A beyond Springdale Street is residential development and some commercial uses extending east to Edwards Street. Beyond Edwards Street is the Westminster Mall with Sears,J.C. Penney,Robinsons/May as anchors. Farther east is the San Diego (405) Freeway. West of Improvement Area A on the opposite side of Bolsa Chica Road is the United States Naval Weapons Station within the City of Seal Beach. Primary access to the area is provided by Bolsa Avenue and Westminster Avenue which connect to the San Diego (405) Freeway about 1-1/2 miles east and Bolsa Chica Street and Springdale Street which connect to the San Diego (405) Freeway about 1-1/2 to 2 miles north. Improvement Area A is irregular in shape and contains 40.339 gross acres and 33.286 net acres. The 33.286 net acres will be subdivided into eight individual parcels with areas as follows, based on a final parcel map approved by the City Council on June 17, 2002 and thereafter submitted by the'Developer to the County Recorder of the County of Orange for recordation: Final Map Parcel Area Parcel Number Acres Square Feet 1 5.235 228,037 2 5.099 222,112 3 4.364 190,096 4 4.359 189,878 5 4.241 184,738 6 3.027 131,856 7 4.597 200,246 8 2.364 102,976 Totals 33.286 1,449,939 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." Chapter 3.56 was amended by an Ordinance adopted by the City Council of the City on March 4, 2002. The proceedings to form Improvement Area A have been conducted under Chapter 3.56 of the City's Municipal Code -38- 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, on April 1, 2002, the City Council adopted Resolution No. 2002-27 and Resolution No. 2002-28, stating its intention to establish Improvement Area A and for Improvement Area A to incur bonded indebtedness, respectively. Pursuant to Resolution Nos. 2002-38,2002-39 and 2002-40 adopted by the City Council on June 3,2002,Improvement Area A was formed, bonded indebtedness in an aggregate principal amount not to exceed $13,000,000 was determined necessary for Improvement Area A and an election was called pursuant to the Law. The Landowner,as the sole owner of the land within Improvement Area A,voted in favor of the incurrence of bonded indebtedness in a principal amount not to exceed $13,000,000 to finance the Public Facilities and the levy of a special tax consistent with the Special Tax Formula on land within Improvement Area A to pay the principal and interest on the Bonds, to pay administrative expenses of Improvement Area A, and to make any replenishments to the Reserve Fund (herein called the "Special Tax"). See "TH E COMMUNITY FACILITIES DISTRICT — Rate and Method of Apportionment of Special Tax." The Series 2002-A Bonds were authorized to be issued by the Resolution of Issuance adopted by the City Council on June 17,2002. Rate and Method of Apportionment of Special Tax The Special Tax will be levied on and collected from the owners of the land in Improvement Area A 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. The Special Tax Formula provides that,on or about each July 1st,the Director of Administrative Services of the City or such other person as is designated by the City Administrator to administer the Special Tax (the "Administrator") shall determine which Assessor's Parcels in Improvement Area A of CFD No._2002-1 are Taxable Property. Taxable Property is defined as all of the Assessor's Parcels within the boundaries of Improvement Area A of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. Exempt Land is defined as (i) any real property within the boundaries of Improvement Area A of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes, including,but not limited to, streets,water well production facilities,public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and (ii) any Assessor's Parcel for which the Special Tax has been paid in full. The Special Tax Formula provides that, commencing with Fiscal Year 2002-2003, and during each Fiscal Year thereafter, the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent (100%) of the Maximum Special Tax for that Fiscal Year, as needed to satisfy the Special Tax Requirement. The Special Tax Requirement is defined as the amount required in any Fiscal Year necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond 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 due and estimated by the Administrator to become due prior to the next levy of the Special Tax, and (iv) to cure any delinquencies in the payment of principal or interest on indebtedness of Improvement Area A. The Special Tax Requirement is subject to reduction in respect of (i) any credit from interest earnings on the Reserve Fund or other Bond -39- funds the earnings on which are available under the terms of the Fiscal Agent Agreement to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax levy, and (iii) any other funds legally available to apply against the Special Tax Requirement as determined by the Administrator. The Maximum Special Tax for each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003, increasing in every Fiscal Year thereafter by two percent (2%) of the Maximum Special Tax for the prior Fiscal Year. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2002-2003, and for each Fiscal Year thereafter 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 in accordance with the terms of the Fiscal Agent Agreement). The Special Tax Formula allows for partial and/or full prepayment of the Special Tax obligation with respect to any parcel. If a prepayment of the Special Tax is made with respect to any parcel in Improvement Area A, 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 APPENDIX B - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX for the detailed provisions of the Special Tax Formula pertaining to prepayments of Special Taxes, and "THE SERIES 2002-A BONDS - Redemption- Redemption from Special Tax Prepayments" herein. Any parcel in Improvement Area A for which the Special Tax has been prepaid in full will thereafter be classified as Exempt Land under the Special Tax Formula. Public Facilities Under the provisions of the Resolution of Formation for Improvement Area A, Improvement Area A is authorized to finance the following Public Facilities: 1. The construction of sewer lines in existing Skylab Road, new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. -40- 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road,new Delta Lane,and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. Under the Resolution of Formation, the Public Facilities to be financed include the costs of the acquisition of right-of-way that is being conveyed to the City in connection with the recording of a final map for the land within Improvement Area A, 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 Public Facilities. The proceeds of the Series 2002-A Bonds held in the Improvement Fund to be used to pay for the costs of the Public Facilities, and the Public Facilities when acquired by the City,are not pledged as security for the payment of the Series 2002-A Bonds. The Developer and the City have entered into an Acquisition Agreement, dated as of June 1, 2002 (the "Acquisition Agreement"), which contains provisions which set forth the process by which right-of-way and completed improvements or certain designated segments thereof will be paid for with Bond proceeds on deposit in the Improvement Fund established under the Fiscal Agent Agreement. The Acquisition Agreement may be amended at any time by the City and the Developer, without any requirement for any notice to or consent. of the Bondowners or the Fiscal Agent. The Acquisition Agreement pertains to the net proceeds of -41- any Bonds issued for Improvement Area A, as well as the net proceeds of any bonds that may be issued for Improvement Area B. See"THE FINANCING PLAN-Overview" herein. The Developer has provided the following budget for the Public Facilities to be funded under the Acquisition Agreement: Costs Item No. Description Initial(1) Future(2) Total 1 On-site Sewer Lines $ 363,589 $ 363,589 2,3,4,5 Streets,Curbs&Gutters for Skylab Road,Delta Lane, 991,652 $ 208,559 .1,200,211 Astronautics Lane and Skylab Lane 6 Rancho Road Waterline 366,154 366,154 7 Skylab Rd,Delta Lane and Astronautics Waterlines 646,301 646,301 8 Streetlight Trenching 183,164 183,164 8 Skylab Rd,Delta Lane and Astronautics Street Lights 204,410 204,410 9 Streets,Curbs&Gutters for Delta Lane 380,407 380,407 10 Delta Lane Waterline 169,881 169,881 11 Storm Drains in Skylab Road,Delta Lane,Astronautics 663,225 663,225 Lane and Skylab Lane 12 Bolsa/Delta Intersection&Signal Improvements 141,176 141,176 13 Rancho/Astronautics Intersection Imps.&New Signal 217,260 217,260 14 Roadway and Sidewalk for Rancho Road 47,837 47,837 Right-of-Way(3) 4,470,657 1,532,448 6,003,105 Total $8,154,249(4) $2,434472 $10,586,720 (1)The costs in this column indicate.the costs of the Public Facilities assumed to be completed in the Appraisal Report of the land in Improvement Area A(see"INTRODUCTION-Land Value,""SECURITY FOR THE SERIES 2002-A BONDS - Land Value," "RISK FACTORS - Land Value" and "RISK FACTORS - Failure to Complete Public Facilities" herein),and are the only Public Facilities that the Developer is obligated to construct under the provisions of the Acquisition Agreement as in effect on the date of issuance of the Series 2002-A Bonds. (2)The costs in this column pertain to Public Facilities authorized to be financed by Improvement Area A,but which pertain to the development of future phases of the Development. If funds become available to pay costs of the Public Facilities not fully funded from proceeds of the Series.2002-A Bonds by reason of the issuance of Parity Bond or bonds issued for Improvement Area B, the Developer may request that an amendment be made to the Acquisition Agreement to allow for their acquisition by the City (see "THE FINANCING PLAN - Overview" herein). (3) Consists of initial street right-of-way of 8.787 acres,as well as future street right-of-way of 3.012 acres. The right- of-way is to be acquired at$11.68 per square foot,as determined under an appraisal,dated April 22,2002 of John S.Adams&Associates,Inc.with regard to the value of such land. (4) See discussion below regarding the obligation of the Developer to pay costs of the Public Facilities in excess of available funds in the Improvement Fund. As of June 3, 2002, contracts have been executed by the Developer with unrelated construction companies with respect to the construction of the improvements listed as items 1, 2, 3, 4, 6, 7 and 11 above, and as of June _, 2002, the improvements listed as _ and _ are under construction. The right-of-way described in the foregoing table is expected to be conveyed to the City incident to the recordation of the final map for the land in Improvement Area A, which is expected to occur by July 31, 2002. The Developer has estimated that the initial Public Facilities will be completed by the end of calendar year 2002. In the event that amounts in the Improvement Fund are insufficient to pay for the costs of the Public Facilities due to the Developer under the Acquisition Agreement,the Developer is -42- obligated to use its own funds to pay the excess costs. Such excess costs may be reimbursed to the Developer at such time, if ever, that Parity Bonds are issued by the City for Improvement Area A or the City issues bonds for Improvement Area B. See "THE FINANCING PLAN - Overview" herein. The City is not obligated to issue any such Parity Bonds or bonds for Improvement Area B. In order to assure that the Public Facilities contemplated by the Appraisal are completed, The Boeing Company has provided the City with a guaranty of the obligations of the Developer under the Acquisition Agreement to complete those Public Facilities described in the Appraisal and in the column "Initial" in the table above. See, however,"RISK FACTORS-Failure to Complete Public Facilities" herein. If for any reason amounts in the Improvement Fund are in excess of the amounts to be reimbursed to the Developer under the terms of the Acquisition Agreement, the excess will be transferred from the Improvement Fund to the Bond Fund, and will be used to pay debt service on the Series 2002-A Bonds. See APPENDIX A - SUMMARY OF THE FISCAL AGENT AGREEMENT. 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 Improvement Area A or the Series 2002-A 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 SERIES 2002-A BONDS - Limited Liability" herein. See Appendix E hereto for general information regarding the City. THE DEVELOPER,THE LANDOWNER AND THE DEVELOPMENT Information set forth below regarding the Developer and the Development was provided by the Developer 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. The Development The land within Improvement Area A, consisting of approximately 33 net acres, is part of a larger area constituting a 307-acre master planned business park known as the McDonnell Centre Business Park (the "Development"). The Development is located within the northwest portion of the City on a site bounded on the north by Rancho Road and the U.S. Navy Railroad right-of-way and Astronautics Lane, on the east by Springdale Street, on the south by Bolsa Avenue, and on the west by Bolsa Chica Road. Low-density residential uses are located north of the railroad tracks and Rancho Road. Low-density residential and commercial uses are located east of Springdale Street, and office and manufacturing uses are located south of Bolsa Avenue. To the west is the Orange County Flood Control Channel which is owned by the Orange County Flood Control District. The property across from Bolsa Chica Road is owned by the U.S. Navy and is used as part of the Seal Beach Naval Weapons Station. -43- The Developer contemplates that the Development will be developed in several phases over an extended period of time and provide an opportunity for a variety of quality industrial, office and commercial uses, consistent with the City's General Plan and the Specific Plan described below. The Development site's natural features and proximity to regional transportation systems make the area amenable to a variety of compatible business land uses and activities. The Development concept is designed in concert with the area's history of industrial activities and the community's need for a strong self-sufficient economy. Boeing Realty Corporation (the "-Developer'), is the developer of the Development. All of the land in Improvement Area A that is subject to the levy of Special Taxes is currently owned by McDonnell Douglas Corporation (the "Landowner"). For a listing of the eight parcels in Improvement Area A see "IMPROVEMENT AREA A - Location' herein and APPENDIX C - APPRAISAL REPORT." Both the Developer and the Landowner are wholly- owned subsidiaries of The Boeing Company and are further described below. An existing aerospace facility of the Landowner, with approximately 2,800,000 square feet of office, research and industrial related facilities, is located on approximately 185 acres of -the Development. As the Landowner determines that the land and/or existing buildings which located in the Development area are no longer necessary for its business operations, portions of the site are made available for development and disposition. The first phase of the Development (which is not within Improvement Area A) included 87 acres located in the easterly portion of the site. This area was sold to third parties and contains structures occupied by Sharp .Electronics, Konica, Extended Stay America, Dynamic Cooking Systems, C&D AeroSpace, Dix Metals, Airtec International, Cambo Manufacturing, Pacific Shoe and Morgan Metals. In total these facilities represent approximately 1,800,000 square feet of commercial office,hotel and industrial space. The Specific Plan The area within the Development is subject to the McDonnell Centre Business Park Specific Plan (the "Specific Plan') approved by the City. The Specific Plan consists of 6 planning areas (1, 1A, 2, 3, 4, and 5) and provides for the eventual development of 8,361,995 square feet of industrial, office and commercial uses on the site. Improvement Area A is within planning area 4,which is more fully described below. The Specific Plan serves as zoning regulation for the Development. The objective of the Specific Plan is to implement the goals and policies of the City's General Plan by defining the physical development of the Development. Included in this approach is the establishment of land use, circulation, infrastructure, landscape and architectural design characteristics for the project area. To accomplish this, the Specific Plan consists of six major components which guide the development process: the Land Use Plan,Circulation Plan,Public Facilities Plan,Landscape Concept, Design Guidelines,and detailed Development Regulations. The Specific Plan development concept provides for a planned industrial/business park complex. The Specific Plan establishes the general type, location, parameters and character of all development within the site's boundaries, while allowing for creative design ideas on individual projects consistent with an overall concept. The Specific Plan is designed to allow for development in a manner that is compatible with the surrounding neighborhood and the -44- City as a whole. Design measures encompassing site planning, area landscaping, building architecture,streetscapes,pedestrian linkages, setbacks and signage have been established. The Specific Plan recognizes that development will occur over a long period of time and, therefore, must anticipate future concerns for the area. In order to address this concern, flexibility has been incorporated into the Specific Plans development regulations. This flexibility in development guidelines is intended to accommodate future market trends and tenant needs,without sacrificing the intended high-quality character of the Development area. The Land Use Plan portion of the Specific Plan addresses the need for flexibility byn allowing for a variety of activities within each Planing Area. This approach is intended to enable the existing McDonnell Douglas Aerospace Facility to expand into the undeveloped portions of adjacent Planning Areas or allow for compatible new private development. As stated above, the Specific Plan consists of 6 planning areas (1, 1A, 2, 3,4, and 5) each of which are described below. Planning Area 1 is the core of the Development and includes a portion of the existing McDonnell Douglas Aerospace Facility. The current facility is composed of 1,734,180 square feet of building area (consisting of a portion of the total of 2,800,000 square feet of building comprising the Landowners existing aerospace facility) on 54 net acres of land. It is anticipated that the aerospace facility will continue to modernize and expand in the coming years. Anticipated short-term improvements at the time of Specific Plan adoption in 1997 included outside storage facilities and additions to some of the existing buildings. Future projects may include aerospace related manufacturing activities, such as tank fabrication and assembly,heavy welding,insulation and thermal protections,though additional office uses can also be accommodated. Additional new industrial development and new activities or reuse plan or restructuring of the existing aerospace operations and facility can be accommodated by the regulations of the Specific Plan. This area can accommodate an additional 30,000 square feet of new development,for a total development of 1,764,180 square feet. Planning Area 1A is the entrance to the Aerospace Facility and provides the primary parking facilities along Bolsa Avenue. The area consist of 20 net acres and is anticipated to be developed as additional McDonnell Douglas research and development operations. Planning Area 1A may also provide new opportunities for private office development, research and development facilities and/or commercial retail activities. This area can accommodate a total development of 566,280 square feet. Planning Area 2 includes the area along Springdale Street and Bolsa Avenue, westerly to Able Lane and comprises 58 net acres of land. This Planning Area provides opportunities for industrial related development projects. Sharp Electronics has constructed a 540,000 square foot facility on a 23 acre site, and Cambro Manufacturing completed a 160,000 square foot building on a 12 acre site. The remaining acreage in the Planning Area has been developed with research and development facilities, light industrial, warehouse and distribution uses as well as -45- some office and commercial uses and the Springdale Water Reservoir. Later phases of development will add 570,117 square feet of development. This area accommodates a total development of approximately 1,642,212 square feet. Planning Area 3, west of Planning Area 2, includes the Bolsa Avenue frontage west of Able Lane to an extension of Graham Street. The area consists of 36 net acres. The area is intended to accommodate research and design facilities along with light industrial, manufacturing and distribution uses. Office use and limited commercial retail activities may occur along the Bolsa Avenue frontage. Anticipated development patterns in Planning Areas 2 and 3 are expected to be very similar and compatible. Currently Planning Area 3 contains the following facilities, totaling 638,772 square feet: DIX Metals, Airtec, Konica, and C&D Aerospace. At ultimate buildout this area can accommodate a total development of 1,019,304 square feet. Planning Area 4 is a section of land spanning from the northern perimeter of the Development to Planning Area 3 to the east and Planning Areal to the south and west. The area consists of 79.5 net acres of land, and includes a portion of the existing Aerospace Facility, the Edison Substation and a City waterwell. Planning Area 4 is intended to be developed with all or a portion of the Planning Area being separated from the aerospace facility and developed as new research and development facilities, office development, manufacturing, warehousing and/or distribution uses. This area can accommodate a total development of 2,250,963 square feet. Planning Area 5 is the western boundary of the Development, with a significant amount of frontage on the arterial highways. The area consists of 36.7 net acres and is partially developed with office,research and development facilities and surface parking lots. The first portion of a two sequence office development, has been completed and consists of an eight story, 235,831 square foot office building with adjacent parking (constructed in 1989). The second sequence of the office development involves the proposed construction of a twelve story, 345,551 square foot office building, with an adjacent 14,000 square foot restaurant and 9,600 square feet of support commercial services. Future activities for the area will depend on market conditions and may include: office, light industrial, research and development, and retail commercial uses including hotels and restaurants. These development activities may be either an expansion of the aerospace facility or independent new projects. This area can accommodate a total development of 1,119,056 square feet. -46- The table below summarizes the approved land uses by Planning Area: Land Use Summary Planning Industrial Use Office Use Commercial Use Total Area (sq.ft.) (ac*) (sq.ft.) (ac*) (sq.ft.) (ac*) (sq.ft.) (ac*) 1 1,764,180 54 0 0 0- 0 1,764,180 54 1A 0 0 566,280 20 0 0 566,280 20 2 1,525,894 50 116,318 8 0 0 1,642,212 58 3 926,446 28 92,858 8 0 0 1,019,304 36 4 1,688,223 62.2 562,740 17.3 0 0 2,250,963 79.5. 5 79,209 3 775,660 19 264,187 14.7 1,119,056 36.7 Total 5,983,952 198.2 2,113,856 71.3 264,187 14.7 8,361,995 284.2 Note: *Indicates net acres. There are 307 gross acres,including 22.8 acres of right-of-way. The City has formed Improvement Area A and Improvement Area B which encompass portions of Planning Areas 1,3 and 4,as indicated in the table below. Relationship of Improvement Areas to Planning Areas CFD Gross Land Net Land Conceptual Improvement Planning Area Area Building Area Areas Areas (Acres) (Acres) (Sq.Ft.) Area A Part of 4 40.3 33.3 563,000 Area B Part of 1,3 and 4 48.8 43.8 744,500 Total 89.1 77.1 1,307,500 The Specific Plan identifies and requires sufficient infrastructure and public facilities to adequately and efficiently support any and all anticipated land uses and activities. These improvements will be phased to coincide with or precede individual development projects. This upfront effort will allow future development projects to obtain City approval in an expedited manner, providing the individual projects are consistent with the Specific Plan and the Environmental Impact Report. Improvement Area A was established to fund the infrastructure and public facilities needed to develop the land in Improvement Area A. See "IMPROVEMENT AREA A-Public Facilities" herein. Utilities All usual and typical public utilities are available to the Development. The City supplies water to the Development site. The City and the Orange County Sanitation District supply sanitary sewer service to the Development. Southern California Edison supplies electricity, Southern California Gas supplies natural gas services, and Pacific Bell/Verizon supplies telephone services to the area. However, water and sewer connection permits will need to be obtained for each new building constructed within the Development. -47- Development and Sales Schedule As part of its plan to dispose of surplus real estate,the Developer expects to construct all land-based improvements within the portions of the Development not yet developed, and to sell, on behalf of the Landowner, the undeveloped land to third party developers and owner/users. These land-based improvements will include streets, curbs, gutters, sidewalks, street lighting, sewer lines, storm lines and water lines. Concurrent with installation of these improvements, the Developer expects to market the property for sale. It is expected that vertical building improvements and all other improvements will be undertaken by the purchasers of the property. The Developer has completed the demolition of existing buildings within Improvement Area A and expects to complete the grading of the land in Improvement Area A in the next few months. Construction of infrastructure improvements is expected to be completed by the end of 2002. The Developer expects to sell all of the parcels in Improvement Area A in calendar years 2002 and 2003,and has listed the parcels in Improvement Area A for sale with CB Richard Ellis at asking prices ranging from$18.50 to $19.00 per square foot. Marketing of the properties has recently commenced and,as of June 1,2002,no sales of property were pending. The Developer Boeing Realty Corporation (referred to in this Official Statement as the "Developer"), a California corporation, is a centralized real estate organization with offices in Seattle, Long Beach and St. Louis. The Developer is a wholly owned subsidiary of The Boeing Company and serves as the centralized corporate real estate organization for The Boeing Company. The Developer is responsible for all strategy, acquisitions, dispositions and lease administration for The Boeing Company worldwide. The Developer's real estate portfolio totals 120 million square feet,with$9 billion in assets. Philip W. Cybert,Stephen J. Barker and James W. Schulte are key principals of the Developer with respect to the Development. Set forth below is a brief resume of each of these men. Mr. Cyburt was instrumental in assisting in the establishment of the Developer and is viewed as one of the industry's top professionals. By integrating institutional investment practices with corporate real estate strategy, Mr. Cyburt has established a track record of adding value to The Boeing Company's real estate assets. Prior to joining the Developer, Mr. Cyburt was a director with a national development company, Tishman Realty & Construction, where he managed the leasing and in-house marketing for a 1 million square-foot project in Southern California. Previously, he worked with Lee & Associates as a commercial real estate broker. Mr. Cyburt earned a Bachelor of Science degree in finance and accounting from Chapman University. He undertook postgraduate studies at Pepperdine University and University of California at Irvine. Mr. Cyburt also earned a master of corporate real estate certificate from the NACORE International Institute for Corporate Real Estate. Mr. Cyburt is an active member of many community and commercial real estate professional organizations, including National Association of Corporate Real Estate Executives International (NACORE International), International Development Research Council (IDRC), -48- Pension Real Estate Association (PREA), National Association of Industrial/Office Properties (NAIOP) and Urban Land Institute (ULI). Mr. Cyburt was honored as the recipient of the 2000 Outstanding Real Estate Executive Award by NACORE International's Los Angeles chapter. Steve Barker is the Director of Business Operations for the Developer. Mr. Barker joined the company in 1993 and as a member of the senior management team of the Developer, he is involved in real estate strategy and company operations. Prior to joining the Developer, Mr. Barker was CFO of SDC Investments, Inc. ("SDC") with responsibility for a 400 million dollar portfolio of retail and industrial properties. Before SDC, Mr. Barker was a Senior Consultant with the real estate practice of Ernst & Young. He received his bachelors degree from California State University, Northridge and pursued postgraduate studies at California State University, Fullerton. Mr. Barker is a certified public accountant and member of the AICPA. He is a member of NACORE, the Urban Land Institute and is a frequent panelist and faculty member of the Institute for Corporate Real Estate. Jim Schulte is a Project Manager for the Developer. Mr. Schulte joined the Developer in 2000. As a member of the development team, he is involved in various aspects of development projects including capital structure, proforma financial projections, joint venture partnership structure as well as specialty land infrastructure including telecommunications and energy. . Mr. Schulte has primary responsibility for the activities of the Developer with respect to the Development. Prior to joining the Developer, Mr. Schulte was the acquisitions manager for Archstone Communities, with responsibility for investments in existing multifamily properties located in Southern California. Before Archstone, Mr. Schulte was a manager with the real estate consulting practice of Arthur Andersen. He received his bachelors degree in business administration from Southern Methodist University, and masters degree in business administration from The Anderson School at UCLA. Mr. Schulte is a member of the Urban Land Institute (ULI) and the National Association of Industrial and Office Properties (NAIOP). The Landowner McDonnell Douglas Corporation (referred to in this Official Statement as the "Landowner"), a Maryland corporation, was acquired by The Boeing Company in August of 1997, and is currently a wholly owned subsidiary of The Boeing Company. The Boeing Company ("Boeing"), a Delaware corporation, has represented to the City that it is the world's leading aerospace company, with its heritage mirroring the history of flight. Boeing has stated that it is the largest manufacturer of satellites, commercial jetliners, and military aircraft, and that it is a global market leader in missile defense, human space flight, and launch services. In terms of sales, Boeing has represented that it is the largest U.S. exporter. Total Boeing revenues for 2001 were reported to be $58 billion. Boeing is currently the largest employer, ranked by number of employees, within the City. See APPENDIX E - GENERAL INFORMATION REGARDING THE CITY OF HUNTINGTON BEACH. Boeing continues to expand its product line and develop new technologies to meet customer needs. From creating new versions of its family of commercial airplanes; to developing, producing, supporting and modifying aircraft for the U.S. military; to building -49- launch vehicles capable of lifting more than 14 tons into orbit; to improving communications for people around the world through an advanced network of satellites. The global reach of Boeing includes customers in 145 countries, employees in more than 60 countries and operations in 26 states. Worldwide, Boeing has represented that the company and its subsidiaries employ.close to 179,000 people with major operations in the Puget Sound area of Washington state;Southern California;Wichita,Kansas;and St. Louis,Missouri. Extensive information on Boeing can be found on the internet at its website location, www.boeing.com. The website includes a link to an Investor Relations page where information such as Boeing's annual report, SEC filings, and financial reports can be found. The website address is given for reference and convenience only, the information on the website may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference. Financing Plan The Developer has represented that it plans to use available corporate funds (including lines of credit with The Boeing Company) and proceeds of the Series 2002-A Bonds deposited to the Improvement Fund to complete the infrastructure improvements required to allow for development of the parcels in Improvement Area A. The Landowner intends to sell the parcels in Improvement Area A to -unrelated third parties. See "THE DEVELOPER, THE LANDOWNER AND THE DEVELOPMENT-The Development" above. CONCLUDING INFORMATION Continuing Disclosure The City and the Landowner each have covenanted in separate Continuing Disclosure Certificates for the benefit of the Owners of the Series 2002-A Bonds to provide certain financial and other information, and to provide notices of the occurrence of certain enumerated events,if material. The City is required to file reports on an annual basis and the Landowner is required to file reports on a semiannual basis. The City and the Landowner have each agreed in their respective Continuing Disclosure Certificates to file, or cause to be filed, with each Nationally Recognized Municipal Securities Information Repository and each State Repository their annual and semiannual reports, respectively, and notices of certain material events. See APPENDIX F - FORMS OF CONTINUING DISCLOSURE CERTIFICATES. 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 obligations of the Landowner under its Continuing Disclosure Certificate are subject to termination at such time as the Landowner and any of its affiliates own land in Improvement Area A responsible for payment of less than twenty percent (20%) of the annual Special Tax levy, or when the assessed value of the land in Improvement Area A owned by the Landowner and any of its affiliates increases to at least ten (10) times such land's allocable share of the principal amount of the outstanding Bonds. The Landowner plans to sell the land in Improvement Area A, so that it is expected that its continuing disclosure obligations will -50- terminate prior to the maturity of the Series 2002-A Bonds. However, in the event that the Landowner conveys land responsible for the payment of twenty percent (20%) or more of the Special Taxes levied in Improvement Area A to any one entity, the Landowner is obligated under its Continuing Disclosure Certificate to obtain an assumption agreement from such entity whereby it will assume the.disclosure obligations of the Landowner with respect to the land so conveyed. A default by the City or the Landowner under a Continuing Disclosure Certificate 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 Certificates. See APPENDIX F - FORMS OF CONTINUING DISCLOSURE CERTIFICATES. The City has never failed to comply with any undertaking by the City under the Rule, and the Landowner has advised the City that it has never failed to comply with any undertaking of the Landowner under the Rule. Absence of Litigation At the time of delivery of and payment for the Series 2002-A 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 Improvement Area A affecting the existence of the City or Improvement Area A or the title of their respective officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the Series 2002-A 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 Series 2002-A Bonds, or in any way contesting or affecting the validity or enforceability of the Series 2002-A Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, or any other applicable agreements or any action of the City or Improvement Area A contemplated by any of such documents. Tax Matters In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series 2002-A Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of.tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code'), that must be satisfied subsequent to the issuance of the Series 2002-A Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted in the Fiscal Agent Agreement to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2002-A Bonds. -51- In the further opinion of Bond Counsel, interest on the Series 2002-A Bonds is exempt from California personal income taxes. Series 2002-A Bondowners should be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Series 2002-A Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequence arising with respect to the Series 2002-A Bonds other than as expressly described above. The complete text of the final opinion of Bond Counsel is set forth in Appendix A. Legal Matters Incident to the Issuance of the Series 2002-A Bonds Certain legal matters incident to the authorization and issuance of the Series 2002-A Bonds are subject to the approving opinion of Quint&Thimmig LLP,San Francisco, California, acting in its capacity as Bond Counsel. Certain legal matters related to the Series 2002-A Bonds and Improvement Area A 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 in its capacity as Disclosure Counsel to the City, and certain legal matters will be passed upon for the Developer [and the Landowner] by Pillsbury Winthrop LLP, Los Angeles, California. Payment of the fees and expenses of Quint & Thimmig LLP is contingent upon the sale and issuance of the Series 2002-A Bonds. The various legal opinions to be delivered concurrently with the delivery of the Series 2002-A Bonds will be qualified as to enforceability of the various legal instruments by 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 Series 2002-A 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 for the Series 2002-A Bonds. Underwriting The Series 2002-A Bonds are being purchased by the Underwriter for a price. of $ , being equal to the initial principal amount of the Series 2002-A Bonds less an Underwriter's discount of $ . The Underwriter has committed to purchase all of the Series 2002-A Bonds if any of such Bonds are purchased. The Series 2002-A 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 Series 2002-A Bonds may be offered and sold to dealers, including the Underwriter and dealers acquiring Series 2002-A 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 -52- 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, Improvement Area A or the Underwriter and the purchasers or the owners of the Series 2002-A Bonds. The execution and delivery of this Official Statement has been duly authorized by the City Council,acting as the legislative body of Improvement Area A. CITY OF HUNTINGTON BEACH By: City Administrator -53- APPENDIX A SUMMARY OF THE FISCAL AGENT AGREEMENT The following is a brief summary of certain provisions of the Fiscal Agent Agreement not otherwise described in the text of this Official Statement. Such summary is not intended to be definitive, and reference is made to the text of the Fiscal Agent Agreement for the complete terms thereof. Definitions Except as otherwise defined in this summary, the terms previously defined in this Official Statement have the respective meanings previously given. In addition, the following terms have the following meanings when used in this summary: "Act" means the Mello-Roos Community Facilities Law of 1982, as amended, being Sections 53311 et seq. of the California Government Code. "Administrative Expenses" means costs directly related to the administration of Improvement Area A consisting of the costs of computing the Special Taxes and preparing any Special Tax collection schedules (whether by the Director of Administrative Services or designee thereof or both) and the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Fiscal Agent; fees and costs of the Fiscal Agent (including its legal counsel) in the discharge of the duties required of it under the Fiscal Agent Agreement; the costs of the City or any designee of the City of complying with the disclosure provisions of the Act, the Continuing Disclosure Agreement and the Fiscal Agent Agreement, including those related to public inquiries regarding the Special Tax and disclosures to Bondowners and the Original Purchaser; the costs of the City or any designee of the City related to an appeal of the Special Tax; any amounts required to be rebated to the federal government in order for the City to comply with the Fiscal Agent Agreement an n allocable share of the salaries of the City staff directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto. Administrative Expenses shall also include amounts advanced by the City for any administrative purpose of Improvement Area A, including costs related to prepayments of Special Taxes, recordings related to such prepayments and satisfaction of Special Taxes, amounts advanced to ensure compliance with the Fiscal Agent Agreement, costs related to annexations to Improvement Area A,and the costs of commencing and pursuing foreclosure of delinquent Special Taxes. "Administrative Expense Fund" means the fund by that name established by the Fiscal Agent Agreement. "Agreement" means the Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof. "Annual Debt Service" means,for each Bond Year, the sum of(i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of the provisions of the Fiscal Agent Agreement providing for A-1 mandatory sinking payments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year pursuant to the Fiscal Agent Agreement). "Auditor" means the auditor/controller of the County. "Authorized Officer" means the Mayor, City Administrator, City Director of Administrative Services, City Treasurer, City Finance Officer, City Clerk or any other officer or employee authorized by the City Council of the City 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 Counsel" means (i) Quint & Thimmig LLP, or (h) any other attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Fund" means the fund by that name established by the Fiscal Agent Agreement. "Bond Register" means the books for the registration and transfer of Bonds maintained by the Fiscal Agent under the Fiscal Agent Agreement. "Bond Year" means the one-year period beginning on September.2nd in each year and ending on September 1st in the following year,except that the first Bond Year shall begin on the Closing Date and end on September 1,2002. "Bonds" means the Series 2002-A Bonds, and, if the context requires, any Parity Bonds, at any time Outstanding under the Fiscal Agent Agreement or any Supplemental Agreement. "Business Day" means any day other than (i) a Saturday or a'Sunday, or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "CDIAC" means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto. "Capitalized Interest Account" means the account by that name established by the Fiscal Agent Agreement. "CC" means the City of Huntington Beach,California. "Closing Date" means June 2002, being the date upon which there is a physical delivery of the Series 2002-A Bonds in exchange for the amount representing the purchase price of the Series 2002-A Bonds by the Original Purchaser. "Continuing Disclosure Agreement" shall mean that certain Continuing Disclosure Certificate - Issuer executed by the City on the Closing Date, as originally executed and as it may be amended from time to time in accordance with the terms thereof. A-2 "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,closing costs,filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee, expenses incurred by the City in connection with the issuance of the Bonds and the establishment of Improvement Area A, special tax consultant fees and expenses, preliminary engineering fees and expenses, Bond (underwriter's) discount, legal fees and charges, including bond and disclosure counsel, financial consultants' fees, charges for execution, transportation and safekeeping of the Bonds, landowner expenses related to Improvement Area A formation, and other costs,charges and fees in connection with the foregoing. "Costs of Issuance Fund" means the fund by that name established by the Fiscal Agent Agreement. "Coun " means the County of Orange,California. "DTC" means the Depository Trust Company, New York, New York, and its successors and assigns. "Debt Service" means the scheduled amount of interest and amortization of principal payable by reason of the Fiscal Agent Agreement on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Depository' means (a) initially, DTC, and (b) any other Securities Depository acting as Depository pursuant to the Fiscal Agent Agreement. "Director of Administrative Services" means the Director of Administrative Services of the City or such other officer or employee of the City performing the functions of the chief financial officer of the City. "District" means the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park), formed by.the City under the Law and the Resolution of Formation. "District Value" means the market value, as of the date of the appraisal described below, of all parcels of real property in Improvement Area A subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired with any amounts then on deposit in the Improvement Fund and with the proceeds of any proposed series of Parity Bonds, as determined by reference to (i) an appraisal performed within six (6) months of the date of issuance of any proposed Parity Bonds by an MAI appraiser (the "Appraiser") selected by the City, or (ii), in the alternative, the assessed value of all such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the City. The City shall not be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provided for purposes of the Fiscal Agent Agreement or by A-3 reason of any exercise of discretion made by any Appraiser pursuant to the Fiscal Agent Agreement. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market(within the meaning of section 1273 of the Tax Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arms length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California but only if at all times during.which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. "Federal Securities" means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent: direct general obligations of the United- States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as"stripped" obligations and coupons. "Fiscal Agent" means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers provided in the Fiscal Agent Agreement, its successors and assigns, and any other corporation or association which may at any time be substituted in its place,as provided in the Fiscal Agent Agreement. "Fiscal Year" means the twelve-month period extending from October 1 in a calendar year to September 30 of the succeeding year,both dates inclusive. "Improvement Area A" means Improvement Area A of the District, as first identified in the Resolution of Intention, together with any property annexed thereto under the Act and the Municipal Code. "Improvement Fund" means the fund by that name created by and held by the Fiscal Agent pursuant to the Fiscal Agent Agreement. ".Independent Financial Consultant" means any consultant or firm of such consultants appointed by the City or the Director of Administrative Services, and who, or each of whom: (i) has experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact independent and not under the domination of the City; (iii) does not have any substantial interest, direct or indirect, with or in the City, or any owner of real property in Improvement Area A, or any real property in Improvement Area A; and (iv) is not connected A-4 with the City as an officer or employee of the City,but who may be regularly retained to make reports to the City. "Information Services" means Financial Information, Inc.'s"Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service", 65 Broadway, 16th Floor, New York, New York 10006; Standard & Poor's Corporation "Called Bond Record", 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Interest Payment Dates" means March 1 and September 1 of each year, commencing September 1,2002. "Law" means the Municipal Code and, as applicable under the Municipal Code, the Act. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. "Moody's" means Moody's Investors Service,and any successor thereto. "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 levying the Special Taxes. "Original Purchaser" means Stone & Youngberg LLC, the first purchaser of the Bonds from the City. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of the Fiscal Agent Agreement) all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the Fiscal Agent Agreement; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Fiscal Agent Agreement or any Supplemental Agreement. "Owner" or "Bondowner" means any person who shall be the registered owner of any Outstanding Bond. "Parity Bonds" means any bonds issued by the City for Improvement Area A on a parity with any then Outstanding Bonds pursuant to the Fiscal Agent Agreement. A-5 "Participating Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Agreement.. "Permitted Investments" means any of the following, but only to the extent that the same are acquired at Fair Market Value: (a) Federal Securities. (b) Time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank (including the Fiscal Agent and its affiliates) or trust company, or a state or federal savings and loan association; provided, that the certificates of deposit shall be one or more of the following: continuously and fully insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, and/or continuously and fully secured by securities described in subdivision (a) of this definition of Permitted Investments which shall have a market value, as determined on a marked-to-market basis calculated at least weekly, and exclusive of accrued interest, of not less than 102 percent of the principal amount of the certificates on deposit. (c) Commercial paper of"prime" quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody's or S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an "A" or higher rating for the issuer's debentures, other than commercial paper, by either Moody's or S&P, provided that purchases of eligible commercial paper may not exceed 180 days' maturity nor represent more than 10 percent of the outstanding commercial paper of an issuing corporation. (d) A repurchase agreement with a state or nationally charted bank or trust company or a national banking association or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, or any other financial institution 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; provided that all of the following conditions are satisfied: (1) the agreement is secured by any one or more of the securities described in subdivision (a) of this definition of Permitted Investments, (2) the underlying securities are required by the repurchase agreement to be held by a bank, trust company, or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and which is independent of the issuer of the repurchase agreement, and (3) the underlying securities are maintained at a market value, as determined on a marked-to-market basis calculated at least weekly, of not less than 103 percent of the amount so invested. (e) An investment agreement or guaranteed investment contract with, or guaranteed by, a financial institution the long-term unsecured obligations of which are rated "AA3" or better by Moody's and "AA-" or better by S&P at the time of initial investment. The investment agreement shall be subject to a downgrade provision with A-6 at least the following requirements: (1) the agreement shall provide that within five business days after the financial institutions long-term unsecured credit rating has been withdrawn, suspended, other than because of general withdrawal or suspension by Moody's or S&P from the practice of rating that debt, or reduced below "AA-" by S&P or below "Aa3" by Moody's (these events are called"rating downgrades") the financial institution shall give notice to the Fiscal Agent and, within the five-day period, and for as long as the rating downgrade is in effect, shall deliver in the name of the Fiscal Agent to the Fiscal Agent federal securities allowed as investments under subdivision (a) of this definition of Permitted Investments with aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement invested with the financial institution at that time, and shall deliver additional allowed federal securities as needed to maintain an aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement within three days after each evaluation date,which shall be at least weekly, and (2) the agreement shall provide that, if the financial institutions long-term unsecured credit rating is reduced below "AY by Moody's or below"A-" by S&P, the Fiscal Agent may,upon not more than five business days' written notice to the financial institution, withdraw the investment agreement, with accrued but unpaid interest thereon to the date,and terminate the agreement. (f) The Local Agency Investment Fund of the State Treasurer of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code. (g) Investments in money market accounts (including any accounts of the Fiscal Agent and its affiliates for which they may receive compensation) 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 S&P of AAAm-G, AAAm, or Aam, and if rated by Moody's,having a rating of Aaa,Aa1 or Aa2. (h) 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): (i) U.S. Export-Import Bank Direct obligations or fully guaranteed certificates of beneficial ownership (ii) Farmers Home Administration Certificates of beneficial ownership (iii) Federal Financing Bank (iv) Federal Housing Administration Debentures (v) General Services Administration Participation certificates A-7 (vi) Government National Mortgage Association(GNMA) GNMA-guaranteed mortgage-backed bonds GNMA-guaranteed pass-through obligations (vii) U.S. Maritime Administration . Guaranteed Title XI financing (viii) U.S. Department of Housing and Urban Development Project Notes Local Authority Bonds New Communities Debentures-United States government guaranteed debentures U.S. Public Housing Notes and Bonds-United States government guaranteed public housing notes and bonds; (i) 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 (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System Senior debt'obligations (ii) Federal Home Loan Mortgage Corporation Participation Certificates Senior debt obligations (iii) Federal National Mortgage Association Mortgage-backed securities and senior debt obligations (iv) Student Loan Marketing Association Senior debt obligations (v) Resolution Funding Corporation (REFCORP) obligations;and (vi) Farm Credit System Consolidated systemwide bonds and notes; (j) Forward Delivery Agreements or Forward Purchase and Sale Agreements, having as the underlying investment property those investments which are described in clause (a), (c) and/or (h) above. "Principal Office" means the principal corporate trust office of the Fiscal Agent set forth in the Fiscal Agent Agreement, except for the purpose of maintenance of the registration books and presentation of Bonds for payment, transfer or exchange, such term shall mean the office at which the Fiscal Agent conducts its corporate agency business, or such other or additional offices as may be designated by the Fiscal Agent. A-8 "Project„ means the facilities more particularly described in the Resolution of Formation. "Qualified Reserve Fund Credit Instrument" means an irrevocable standby or direct- pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent pursuant to the Fiscal Agent Agreement, provided that all of the following requirements are met: (a) the long-term credit rating or claims paying ability of such bank or insurance company is in one of the two highest rating categories by S&P and Moody's; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to the Fiscal Agent Agreement; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder for the purpose of making payments required pursuant to the Fiscal Agent Agreement. "Record Date" means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date,whether or not such day is a Business Day. Reserve Fund means the fund b that name established pursuant to the Fiscal Agent Y p g Agreement. "Reserve Requirement" means, as of any date of calculation an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of the then average Annual Debt Service, or (iii) ten percent (10%) of the then Outstanding principal amount of the Bonds. The Reserve Requirement as of the Closing Date is "Resolution" means Resolution No. adopted by the City Council of the City on June 3, 2002. "Resolution of Formation" means Resolution No. adopted by the City Council of the City on June 3,2002. "Resolution of Intention" means Resolution No. , adopted by the City Council of the City on April 1, 2002. "S&P" means Standard & Poor's Ratings Service, a division of McGraw-Hill, and any successor thereto. "Securities Depositories" means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York 10041-0099, Attention: Call Notification Department, Fax (212) 855- 7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer's Certificate delivered to the Fiscal Agent. "Series 2002-A Bonds" means the Bonds so designated and authorized to be issued under the Fiscal Agent Agreement. A-9 "Special Tax Fund" means the fund by that name established by the Fiscal Agent Agreement. "Special Tax Prepayments" means the proceeds of any Special Tax prepayments received by the City,.as calculated pursuant to the Rate and Method of Apportionment of the Special Taxes for Improvement Are_a A, less any administrative fees or penalties collected as part of any such prepayment. "Special Tax Prepayments Account" means the account by that name established by the Fiscal Agent Agreement. "Special Tax Revenues" means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon. "Special Tax Revenues" does not include any penalties collected in connection with delinquent Special Taxes. "Special Taxes" means the special taxes levied within Improvement Area A pursuant to the Law,the Ordinance and the Fiscal Agent Agreement. "Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Law and which agreement is amendatory of or supplemental to the Fiscal Agent Agreement, but only if and to the extent that such agreement is specifically authorized thereunder. "Tax Code" means the Internal Revenue Tax Code of 1986 as in effect on the date of issuance of the Series 2002-A Bonds or (except as otherwise referenced in the Fiscal Agent Agreement) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published,under the Tax Code. "Tax Consultant" means Michael Swan Consulting or another independent financial or tax consultant retained by the City for the purpose of computing the Special Taxes. Funds and Accounts The Fiscal Agent Agreement provides for the following funds, in addition to the Special Tax Fund,the Bond Fund and the Reserve Fund described in the text of this Official Statement: Improvement Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Improvement Fund. Deposits will be made to the Improvement Fund as required by the Fiscal Agent Agreement and by any Supplemental Agreement. Moneys in the Improvement Fund will be held in trust by the Fiscal Agent for the benefit of the City, and will be disbursed for the payment or reimbursement of costs of the Project. Disbursements from the Improvement Fund will be made by the Fiscal Agent upon receipt of an Officer's Certificate which shall: (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made (which will be for payment of a Project A-10 cost or to reimburse expenditures of the City or any other party for Project costs previously paid), that the disbursement is a proper expenditure from the Improvement Fund, 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 requesting a disbursement. Each such Officer's Certificate submitted to the Fiscal Agent as described above will be sufficient evidence to the Fiscal Agent of the facts stated therein, and the Fiscal Agent above will have no duty to confirm the accuracy of such facts. Notwithstanding the foregoing, no Officer's Certificate shall request a disbursement from the Improvement Fund for the payment of the cost of right-of-way under the Acquisition Agreement until a guaranty of The Boeing Company substantially in the form of Exhibit D to the Acquisition Agreement has been delivered to the City, as described in Section 5.06F. of the Acquisition Agreement. Moneys in the accounts within the Improvement Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits from the investment and deposit of amounts in the Improvement Fund will be retained in the Improvement Fund to be used for the purposes of the Improvement Fund. Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid, or that any such costs are not required to be paid from the Improvement Fund, the Fiscal Agent will transfer the amount, if any, remaining in the Improvement Fund to the Bond Fund to be used to pay debt service on the Bonds on the next Interest Payment Date and the Improvement Fund will be closed. Costs of Issuance Fund. There is established as a separate fund to be held by the Fiscal Agent, the Costs of Issuance Fund, to the credit of which a deposit will be made as required by the Fiscal Agent Agreement. Moneys in the Costs of Issuance Fund will be held in trust by the Fiscal Agent, will be disbursed as provided below for the payment or reimbursement of Costs of Issuance. Amounts in the Costs of Issuance Fund will be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the Series 2002-A Bonds. The Fiscal Agent will pay all Costs of Issuance after receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee pursuant to an Officer's Certificate requesting payment of Costs of Issuance. The Fiscal Agent will maintain the Costs of Issuance Fund for a period of 90 days from the date of delivery of the Series 2002-A Bonds and then will transfer any moneys remaining therein, including any investment earnings thereon,to the Administrative Expense Fund. Moneys in the Costs of Issuance Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment will be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund. . Reserve Fund. There is established as a separate fund to be held by the Fiscal Agent,the Reserve Fund, to the credit of which a deposit will be made as required by the Fiscal Agent Agreement equal to the Reserve Requirement as of the Closing Date for the Series 2002-A Bonds, and deposits will be made as provided in the Fiscal Agent Agreement. Moneys in the Reserve Fund will be held in trust by the Fiscal Agent for the benefit of the Owners of the A-11 Bonds as a reserve for the payment of principal of, and interest and any premium on,the Bonds and will be subject to alien in favor of the Owners of the Bonds. Except as otherwise provided in the Fiscal Agent Agreement, all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or,in accordance with the provisions of the Fiscal Agent Agreement,for the purpose of redeeming Bonds from the Bond Fund. Whenever transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent will provide written notice thereof to the Director of Administrative Services,specifying the amount withdrawn. Whenever, on the Business Day prior to any Interest Payment Date,or on any other date at the written request of the Director of Administrative Services, the amount in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent will provide written notice to the Director of Administrative Services of the amount of the excess and will transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with the Fiscal Agent Agreement. Whenever the balance in the Reserve Fund equals or 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 will upon the written direction of the Director of Administrative Services transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with applicable provisions of the Fiscal Agent Agreement, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred to the City to be used for any lawful purpose of the City. Notwithstanding the foregoing, no.amounts shall be transferred from the Reserve Fund until after (i) the calculation of any amounts due to the federal government pursuant to the rebate provisions of the Fiscal Agent Agreement following payment of the Bonds and withdrawal of any such amount from the Reserve Fund for purposes of making such payment to the federal government,and (ii) payment of any fees and expenses due to the Fiscal Agent. Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of such prepayment pursuant to the Fiscal Agent Agreement, a proportionate amount in the Reserve Fund (determined on the basis of the principal of Bonds to be redeemed, and the original principal of the Bonds) will 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 pursuant to the Fiscal Agent Agreement. The Director of Administrative Services will deliver to the Fiscal Agent an Officer's Certificate specifying any amount to be so transferred, and the Fiscal Agent may rely on any such Officer's Certificate. Amounts in the Reserve Fund may at any time be used, at the written direction of an Authorized Officer, for purposes of paying any rebate liability under the Fiscal Agent Agreement. A-12 The City will have the right at any time to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Fund Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Fund Credit Instrument will cause interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, and upon delivery by the City to the Fiscal Agent of a written calculation of the amount permitted to be released from the Reserve Fund (upon which calculation the Fiscal Agent may conclusively rely), the.Fiscal Agent will transfer such funds from the Reserve Fund to the City free and clear of the lien of the Fiscal Agent Agreement,to be used by the City for any lawful purpose of Improvement Area A under the Law. The Fiscal Agent will comply with all documentation relating to a Qualified Reserve Fund Credit Instrument as will be required to maintain such Qualified Reserve Fund Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Fiscal Agent Agreement. At least fifteen (15) days prior to the expiration of any Qualified Reserve Fund Credit Instrument, the City will be obligated either (i) to replace such Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund Credit Instrument, or (ii) to deposit or cause to be deposited with the Fiscal Agent an amount of funds such that the amount on deposit in the Reserve Fund is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the City shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Fiscal Agent will, prior to the expiration thereof, draw upon the Qualified Reserve Fund Credit Instrument in full and deposit the proceeds of such draw in the Reserve Fund. In the event that the Reserve Requirement shall at any time be maintained in the Reserve Fund in the form of a combination of cash and a Qualified Reserve Fund Credit Instrument, the Fiscal Agent will apply the amount of such cash to make any payment required to be made from the Reserve Fund before the Fiscal Agent shall draw any moneys under such Qualified Reserve Fund Credit Instrument for such purpose. In the event that the Fiscal Agent shall at any time draw funds under a Qualified Reserve Fund Credit Instrument to make any payment then required to be made from the Reserve Fund, the Special Tax Revenues thereafter received by the Fiscal Agent, to,the extent deposited to the Reserve Fund under the Fiscal Agent Agreement,will be used to reinstate the Qualified Reserve Fund Credit Instrument. Bond Fund, Capitalized Interest Account and Special Tax Prepayments Account. There is established as a separate fund to be held by the Fiscal Agent the Bond Fund, to the credit of which deposits shall be made as required by the Fiscal Agent Agreement, and any other amounts required.to be deposited therein by the Fiscal Agent Agreement or the Law. There is also created in the Bond Fund, a separate account held by the Fiscal Agent, the Capitalized Interest Account, to the credit of which deposits shall be made under the Fiscal Agent Agreement. There is also created in the Bond Fund a separate account to be held by the Fiscal Agent,consisting of the Special Tax Prepayments Account, to the credit of which deposits shall be made as provided in the Fiscal Agent Agreement. Moneys in the Bond Fund and the accounts therein will be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, will be disbursed for the payment of the A-13 principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement,will be subject to a lien in favor of the Owners of the Bonds. . Bond Fund Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments, or a redemption of the Bonds required by the Fiscal Agent Agreement,such payments to be made in the priority listed in the second succeeding paragraph. Notwithstanding the foregoing, amounts in the Bond Fund as a result of a transfer pursuant to the Fiscal Agent Agreement shall be used to pay the interest on the Bonds prior to the use of any other amounts in the Bond Fund for such purpose. In the event that amounts in the Bond Fund are insufficient for the purposes set forth in the preceding paragraph,the Fiscal Agent will withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Bond Fund insufficiency. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund. If, after the foregoing transfers, there.are insufficient funds in the Bond Fund to make the payments provided for as described above, the Fiscal Agent will apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date. Special Tax Prepayments Account Disbursements. Moneys in the Special Tax Prepayments Account will be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds can timely be given under the Fiscal Agent Agreement, and notice to the Fiscal Agent can timely be given thereunder, and will be used (together .with any amounts transferred pursuant to the applicable provisions of the Fiscal Agent Agreement) to redeem Bonds on the redemption date selected in accordance with the Fiscal Agent Agreement. Capitalized Interest Account Disbursements. All moneys in the Capitalized Interest Account will be transferred to the Bond Fund on the Business Day prior to each Interest Payment Date, in the amount equal to and to be used for the payment of interest on the Bonds due on the next succeeding Interest Payment Date;provided that no such transfer shall exceed the amount then on deposit in the Capitalized Interest Account. When no amounts remain on deposit in such account, the Capitalized Interest Account shall be closed. Moneys in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from the investment and deposit of amounts in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account shall be retained in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account,respectively,to be used for purposes of such fund and accounts. A-14 Special Tax Fund. There is established as a separate fund to be held by the Fiscal Agent, the Special Tax Fund, to the credit of which the Fiscal Agent will deposit amounts received from or on behalf of the City consisting of Special Tax Revenues, and any amounts required by the Fiscal Agent Agreement to be deposited therein. The City shall remit,not later than five (5) Business Days after receipt, all Special Taxes received by it to the Fiscal Agent for deposit by the Fiscal Agent to the Special Tax Fund. Notwithstanding the foregoing, any proceeds of Special Tax Prepayments will be transferred by the City to the Fiscal Agent for deposit by the Fiscal Agent (as specified in writing by an Authorized Officer to the Fiscal Agent) in the Special Tax Prepayments Account. Moneys in the Special Tax Fund will be held in trust by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, will be disbursed as provided in the Fiscal Agent Agreement and, pending disbursement, shall be subject to alien in favor of the Owners of the Bonds and the City. On each Interest Payment Date, the Fiscal Agent will 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, the Capitalized Interest Account and the Special Tax Prepayments Account to the Bond Fund pursuant to applicable provisions of the Fiscal Agent Agreement, 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 such 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 in the Special Tax Fund will also be transferred from time to time by the Fiscal Agent, at the written direction of the City, to the Administrative Expense Fund, but the City agrees in the Fiscal Agent Agreement that 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 accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof. Administrative Expense Fund. There is established as a separate fund to be held by the Fiscal Agent, the Administrative Expense Fund, to the credit of which deposits will be made as required by the Fiscal Agent Agreement. Moneys in the Administrative Expense Fund will be held in trust by the Fiscal Agent for the benefit of the City, and will be disbursed as provided below. Amounts in the Administrative Expense Fund will be withdrawn 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 Costs of Issuance, and the nature of such Administrative Expense or Costs of Issuance. Amounts transferred from the Costs of Issuance Fund to the Administrative Expense Fund pursuant to the Fiscal Agent Agreement will be separately identified at all times, and will be expended for purposes of the Administrative Expense Fund prior to the use of amounts A-15 transferred to the Administrative Expense Fund from the Special Tax Fund pursuant to the Fiscal Agent Agreement. Annually, on the last day of each Fiscal Year commencing with the last day of Fiscal Year 2002-2003, the Fiscal Agent will withdraw any amounts then remaining in the Administrative Expense Fund in excess of$20,000 that have not otherwise been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Special Tax Fund. Moneys in the Administrative Expense Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Administrative Expense Fund to be used for the purposes thereof. Covenants of the City The Authority will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreement and any Supplemental Agreement,and it will faithfully observe and perform all of the conditions, covenants and requirements of the Fiscal Agent Agreement and all Supplemental Agreements and of the Bonds. The Bonds are limited obligations of the City on behalf of the Improvement Area A and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein)„ the Reserve Fund and, until disbursed as provided in the Fiscal Agent Agreement, the Special Tax Fund. In order to prevent any accumulation of claims for interest after maturity, the City may 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 may 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. The City will 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 under the Fiscal Agent Agreement for the benefit of the Bonds, except as permitted by the Fiscal Agent Agreement. The City will 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 are made of all transactions relating to the Special Tax Revenues. Such books of record and accounts will at all times during business hours be subject to the inspection of the Fiscal Agent and the A-16 Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing: 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. The City will comply with all provisions of the Law and any other applicable law in administering Improvement Area A and completing the acquisition of the Project. On or within five (5) Business Days of each July 1, the Fiscal Agent is required provide the Director of Administrative Services with a notice stating the amount then on deposit in the Bond Fund,the Capitalized Interest Account 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 balances therein equal the Reserve Requirement. The receipt of or failure to receive such notice by the Director of Administrative Services shall in no way affect the obligations of the Director of Administrative Services under the following two paragraphs. Upon receipt of such notice, the Director of Administrative Services shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. The City shall effect the levy of the Special Taxes in accordance with the Ordinance by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within Improvement Area A for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the City is required to prepare or cause to be prepared, and will transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll. The City Treasurer or the Treasurer's designee shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of Improvement Area A becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts necessary to pay any rebate due to the federal government) during such Bond Year, taking into account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable,and have the same priority,become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property; provided that, pursu ant to and in accordance with the Ordinance, the Special Taxes may be collected by means of direct billing of the property owners within Improvement Area A, in which event the Special Taxes shall become delinquent if not paid when due pursuant to said billing. A-17 Pursuant to Section 53356.1 of the Act and the provisions of the Code, the City covenants with and for the benefit of the Owners of the Bonds that it will order,and cause to be commenced as provided in the Fiscal Agent Agreement, and thereafter diligently prosecute to judgment (unless such 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 Director of Administrative Services 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. On or about February 15 and June 15 of each Fiscal Year, the Director of Administrative Services will compare the amount of Special Taxes theretofore levied in the Improvement Area A to the amount of Special Tax Revenues theretofore received by the City,and: (A) Individual Delinquencies. If the Director of Administrative Services determines that any single parcel subject to the Special Tax in the Improvement Area A is delinquent in the payment of Special Taxes in the aggregate amount of $5,000 or more,then the Director of Administrative Services shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the City within 90 days of such determination. (B) Aggregate Delinquencies. If the Director of Administrative Services determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District, (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the Director of Administrative Services shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and the City shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in Improvement Area A with a Special Tax delinquency. The Director of Administrative Services and the City Attorney, as applicable, are authorized in the Fiscal Agent Agreement to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for City staff time) in conducting foreclosure proceedings shall be an Administrative Expense as defined in the Fiscal Agent Agreement. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Fiscal Agent Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in the Fiscal Agent Agreement. The City shall assure that the proceeds of the Series 2002-A Bonds are not soused as to cause the Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Series 2002-A Bonds to be"federally guaranteed" within the meaning of Section 149(b)of the Code. A-18 The City shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earrings, if any, to the federal government, to the extent that such section is applicable to the Series 2002-A Bonds. If necessary, the City may use earnings on amounts in the Reserve Fund, amounts on deposit in the Administrative Expense Fund, and any other funds available to Improvement Area A, including amounts advanced by the City, in its sole discretion, to be repaid by Improvement Area A as soon as practicable from amounts described in the preceding clauses, to satisfy its obligations described in this paragraph. The City Treasurer shall take note of any investment of monies under the Fiscal Agent Agreement in excess of the yield on the Series 2002-A Bonds, and shall take such actions as are necessary to ensure compliance with requirements in the Fiscal Agent Agreement regarding federal tax, such as increasing the portion of the Special Tax levy for Administration Expenses as appropriate to have funds available in the Administrative Expense Fund to satisfy any rebate liability under the Fiscal Agent Agreement. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the proceeds of the Series 2002-A Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series 2002-A Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code. In determining the yield of the Series 2002-A Bonds to comply with the requirements of the Fiscal Agent Agreement, the City will take into account redemption (including premium, if any) in advance of maturity based on the reasonable expectations of the City, as of the Closing Date, regarding prepayments of Special Taxes and use of prepayments for redemption of the Bonds,without regard to whether or not prepayments are received or Bonds redeemed. The City shall take all actions necessary to assure the exclusion of interest on the Series 2002-A Bonds from the gross income of the Owners of the Series 2002-A Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Series 2002-A Bonds. The City covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the Fiscal Agent Agreement, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered a default under the Fiscal Agent Agreement; however, any Participating Underwriter or any holder or beneficial owner of the Series 2002-A Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations thereunder,including seeking mandate or specific performance by court order. An owner of the real property in Improvement Area A as of the Closing Date has also executed a continuing disclosure agreement for the benefit of the holders and beneficial owners of the Series 2002-A Bonds. Any Participating Underwriter or holder or beneficial owner may take such actions as may be necessary and appropriate directly against such landowner to compel performance by it of its obligations thereunder, including seeking mandate or specific performance by court order; however the City shall have no obligation whatsoever to enforce any obligations under any such agreement. A-19 The City covenants and agrees to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in Improvement Area A below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is hereby acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that said covenant is necessary to assure the full and timely payment of the Bonds. The City covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds and further covenants not to permit the tender of Bonds in 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 Series 2002-A Bonds and any Parity Bonds remaining Outstanding following such tender. The City will not issue more than $8,100,000 initial principal amount of Parity Bonds (exclusive of any refunding Bonds issued in a principal amount not in excess of the principal amount of the Bonds being refunded). Investments Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent are required to 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 to the extent reasonably practicable any such moneys in the Permitted Investments described in clause (g) of the definition thereof in the Fiscal Agent Agreement which by their terms mature prior to the date on which such moneys are required to be paid out thereunder. The City Treasurer shall make note of any investment of funds under the Fiscal Agent Agreement in excess of the yield on the Bonds, so that appropriate actions can be taken to assure compliance with the Fiscal Agent Agreement. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of the Fiscal Agent Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in the Fiscal Agent Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments. The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. The Fiscal Agent shall not incur any liability for losses arising from any investments made pursuant to the Fiscal Agent Agreement. Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to the Fiscal Agent Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by the Fiscal Agent Agreement or the Tax Code) at Fair Market Value. The Fiscal Agent shall have no duty A-20 in connection with the determination of Fair Market Value other than to follow the investment direction of an Authorized Officer in any written direction of any Authorized Officer. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) investments in the subaccounts within the Reserve Fund shall be valued at their present value (within the meaning of section 148 of the Tax Code). Investments in any and all funds and accounts maybe commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent, 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 Fair Market Value, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the City nor the Fiscal Agent shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance with the Fiscal Agent Agreement. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent hereunder. Liability of City The City's obligations under the Fiscal Agent Agreement are limited obligations of the City on behalf of Improvement Area A and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Special Tax Fund, the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein) and the Reserve Fund created under the Fiscal Agent.Agreement. The City shall not incur any responsibility in respect of the Bonds or the Fiscal Agent Agreement other than in connection with the duties or obligations explicitly therein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent in the Fiscal Agent Agreement or of any of the documents executed by the Fiscal Agent in connection with the Bonds,or as to the existence of a default or event of default thereunder. In the absence of bad faith, the City, including the City Treasurer and the Director of Administrative Services, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of the Fiscal Agent Agreement. The City, including A-21 the Director of Administrative Services, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent i.n ascertaining the pertinent facts. No provision of the Fiscal Agent Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The City and the Director of Administrative Services may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report,warrant,bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be the City Attorney, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith. The City shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established;if disputed. Whenever in the administration of its duties under the Fiscal Agent•Agreement the City shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Fiscal Agent Agreement, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the City,be deemed to be conclusively proved and established by a certificate of the Fiscal Agent, an Appraiser, an Independent Financial Consultant or a Tax Consultant, and such certificate shall be full warrant to the City for any action taken or suffered under the provisions of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the City may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. In order to perform its duties and obligations under the Fiscal Agent Agreement, the City, the City Treasurer and/or the Director of Administrative Services may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith under the Fiscal Agent Agreement, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions,calculations, determinations and directions of such persons or entities. " The Fiscal Agent 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 A-22 substantially all of its corporate trust business, provided.such company shall be eligible under the following paragraph, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act. 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, corporation or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and be subject to supervision or examination by federal or state authority. If such bank, corporation or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining City above referred to,then the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon written acceptance of appointment by the successor Fiscal Agent. If no appointment of a successor Fiscal Agent shall be made 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 or any Owner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent. If, by reason of the judgment of any court, or reasonable agency, the Fiscal Agent is rendered unable to perform its duties under the Fiscal Agent Agreement, all such duties and all of the rights and powers of the Fiscal Agent thereunder shall be assumed by and vest in the Treasurer of the City in trust for the benefit of the Owners. The City covenants for the direct benefit of the Owners that its Treasurer in such case shall be vested with all of the rights and powers of the Fiscal Agent under the Fiscal Agent Agreement, and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent thereunder, in trust for the benefit of the Owners of the Bonds. In such event, the Treasurer may designate a successor Fiscal Agent qualified to act as Fiscal Agent thereunder. 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 Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of the Fiscal Agent Agreement or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations 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 default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. A-23 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; but in the case of any such certificates or opinions by which any provision of the Fiscal Agent Agreement are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of the Fiscal Agent Agreement. Except as provided above in this paragraph, Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of the Fiscal Agent Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of the Fiscal Agent Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument. The Fiscal Agent shall not be liable for any error of judgment made in good faith unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. No provision of the Fiscal Agent Agreement shall require.the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers. The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by the Fiscal Agent Agreement at the request or direction of any of the Owners pursuant to the Fiscal-Agent Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent. The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, and its liability shall be limited to the proper accounting for such funds as it shall actually receive. In order to perform its duties and obligations hereunder, the Fiscal Agent may employ such persons or entities as it deems necessary or advisable. The Fiscal Agent shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. Such persons and entities shall be entitled to the immunities and exceptions from liability granted to the Fiscal Agent hereunder. All provisions in related documents as to the conduct and liability of the Fiscal Agent are subject to the Fiscal Agent Agreement. The Fiscal Agent's rights to immunities and protection from liability under the Fiscal Agent Agreement shall survive its resignation or removal and payment of the Bonds and discharge of the Fiscal Agent Agreement. A-24 The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent under the Fiscal Agent Agreement as the City shall reasonably request, including but not limited to monthly statements reporting funds held and transactions by the Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report;warrant, bond or other ,paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel,who may be counsel to the City, with regard to legal_questions, and the opinion of such counsel shall be full and complete authorization and-protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith. The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established,if disputed. Whenever in the administration of its duties under the Fiscal Agent Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Fiscal Agent Agreement, such matter (unless other evidence in respect thereof be in the Fiscal Agent Agreement specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent,be deemed to be conclusively proved and established by an Officer's Certificate, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. The City is required to pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under the Fiscal Agent Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under the Fiscal Agent Agreement, but the Fiscal Agent shall not have alien therefor on any funds at any time held by it under the Fiscal Agent Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent,its officers, employees, directors and agents harmless against any costs, expenses,claims or liabilities whatsoever, including without limitation fees and expenses of its attorneys,which it may incur in the exercise and performance of its powers and duties under the Fiscal Agent Agreement which are not due to its negligence or willful misconduct. The obligation of the City under the Fiscal Agent Agreement shall survive resignation or removal of the Fiscal Agent thereunder and payment of the Bonds and discharge of the Fiscal Agent Agreement, but any monetary obligation of the City arising thereunder shall be limited solely to amounts_ on deposit in the Administrative Expense Fund. The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent,in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund (including the Special Tax Prepayments Account and the Capitalized Interest Account therein), the Reserve Fund, the Special Tax Fund, the Administrative Expense Fund, A-25 the Improvement Fund and the Costs of Issuance Fund. Such books of record and accounts shall at all times during business hours be subject to the inspection by the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing upon reasonable prior notice. The City agrees not to annex any territory to Improvement Area A unless the "District Value" of such area (inserting for this purpose the description of such area for the words "Improvement Area A" in the definition of District Value in the Fiscal Agent Agreement) is at least three times the sum of (i) the amount necessary to prepay the Special Tax Lien that would apply to such property upon its annexation to Improvement Area A (including amounts so required by reason of the issuance of any Parity Bonds to be.issued in conjunction with the annexation, plus (ii) the aggregate principal amount of any fixed assessment liens on the parcels to be annexed,plus (iii) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on the parcels of land to be annexed (the "Other District Bonds") equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on the parcels to be annexed, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other District Bonds occurs),based upon information from the most recent available Fiscal Year. The City agrees that, in addition to the foregoing, any annexation of land in Improvement Area B of the District to Improvement Area A will be contingent upon, and effective from and after, the issuance of Parity Bonds in accordance with Sections 2.13 and 5.20 hereof. Amendment of the Fiscal Agent Agreement The Fiscal Agent Agreement and the rights and obligations of 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 Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Fiscal Agent Agreement. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Fiscal Agent Agreement), or (iii) reduce the percentage of Bonds required for the amendment of the Fiscal Agent Agreement. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. The Fiscal Agent Agreement and the rights and obligations of the City and of .the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes: A-26 (A) 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; (B) to make modifications not adversely affecting any outstanding series of Bonds of the City in any material respect; (C) to make such provisions. for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Fiscal Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement, as the City or the Fiscal Agent may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreement, and which shall not adversely affect the rights of the Owners of the Bonds; (D) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from gross federal income taxation of interest on the Bonds;and (E) in connection with the issuance of Parity Bonds under and pursuant to the Fiscal Agent Agreement. Discharge of the Bonds and the Fiscal Agent Agreement The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways: (A) by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable; (B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in certain funds and accounts therein as provided in the Fiscal Agent Agreement is fully sufficient to pay such Bonds Outstanding,including all principal,interest and redemption premiums; or (C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the City shall determine as confirmed by Bond Counsel or an independent certified public accountant will; together with the interest to accrue thereon and moneys then on deposit in the Reserve Fund and in the Bond Fund and accounts therein as provided in the Fiscal Agent Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates. If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as provided in the Fiscal Agent Agreement or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice,then, at the election of the City, A-27 and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in the Fiscal Agent Agreement and all other obligations of the City under the Fiscal Agent Agreement with respect to such Bonds Outstanding shall cease and terminate. Notice of such election shall be filed with the Fiscal Agent. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to . the Owners of the Bonds not so surrendered and paid all sums due thereon, to pay all amounts owing to the Fiscal Agent pursuant to the Fiscal Agent Agreement, and otherwise to assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes, shall continue in any event. Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the City and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal Agent but shall be retained by the City to be used for any purpose permitted under the Law. A-28 APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL July ,2002 City of Huntington Beach 2900 Main Street Huntington Beach,CA 92648 Re: $ Improvement Area A of the City of Huntington Beach Community Facilities No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds,Series 2002-A Members of the City Council: We have acted as bond counsel in connection with the issuance by the City of Huntington Beach (the "City") of its $ Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds,Series 2002-A (the "Bonds") pursuant to Chapter 3.56 of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello- Roos Community Facilities Act of 1982, as amended (Section 53311 et seq., of the California Government Code) (collectively,the "Law"), a Fiscal Agent Agreement,dated as of June 1,2002 (the "Fiscal Agent Agreement"), by and between the City for and on behalf of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), and BNY Western Trust Company, as fiscal agent, and Resolution No. adopted by the City Council of the City on June 17, 2002 (the "Resolution'). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Resolution and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation. Based upon the foregoing,we are of the opinion,under existing law,as follows: 1. The City is a charter city and municipal corporation, duly organized and validly existing under the laws of the State of California,with the power to adopt the Resolution, enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein and issue the Bonds. B-1 City of Huntington Beach July J 2002 Page 2 2. The Fiscal Agent Agreement has been duly entered into by the City and constitutes a valid and binding obligation of the City enforceable upon the City. 3. Pursuant to the Law, the Fiscal Agent Agreement creates a valid lien on the funds pledged by the Fiscal Agent Agreement for the security of the Bonds. 4. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding limited obligations of the City, payable solely from the sources provided therefor in the Fiscal Agent Agreement. 5. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations;it should be noted,however,that,for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds, the Resolution and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, B-2 JOHN S. ADAMS & ASSOCIATES, INC. 5100 BIRCH STREET, NEWPORT BEACH, CALIFORNIA 92660 (949) 833-1972 FAX (949) B51-2055 April 1, 2002 Mr. David C. Biggs Economic Development Director City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Re: Community Facilities District No. 2002-1 Improvement Area A The McDonnell Centre Business Park Huntington Beach, California Dear Mr. Biggs: In accordance with your request and authorization, we have examined the above referenced real property for the purpose of estimating its market value as of March 29, 2002. As a result of this investigation and analysis of matters pertinent to the property's value, we have concluded that the market value, of the fee simple interest, subject to the limiting conditions and • assumptions set forth in the report, as of said date was as follows: Total of Individual Retail Lot Values $19,349,000 Bulk Sale Value $14,750,000 The above values assume the assumption of CFD No. 2002-1 Special Tax Bonds. On the following pages will be found our complete, self-contained appraisal report setting forth some of the matters and data upon which the opinions of market value have been predicated. .ry Respectfully submitted, b JOHN S. ADAMS & ASSOCIATES, INC. n S. Adams, MAI California Certification No. AGO01754 t ( i #: 0213 TABLE OF CONTENTS Page LETTEROF TRANSMITTAL ...................................................................................................... i TABLEOF CONTENTS ............................................................................................................... LIMITINGCONDITIONS............................................................................................................. 111 GENERAL INFORMATION PURPOSE OF APPRAISAL.............................................................................................. 1 SCOPEOF APPRAISAL................................................................................................... 1 INTENDED USE OF APPRAISAL................................................................................... 2 DATE OF VALUE...............................:..................... . DEFINITION OF MARKET VALUE................................................................................ 2 DEFINITION OF RETAIL VALUE .................................................................................. 3 DEFINITION OF BULK SALE VALUE........................................................................... 3 PROPERTY RIGHTS APPRAISED.................................................................................. 3 DEFINITION OF A FEE SIMPLE INTEREST ................................................................ 3 VALUATION ASSUMPTIONS AND CONDITIONS................................. LEGAL DESCRIPTION.................................................................................................... 4 t .• LOCATION....................................................................................................................... 4 AREA INFORMATION COUNTY OF ORANGE................................................................................:................... 6 c . CITY OF HUNTINGTON BEACH................................................................................... 8 INDUSTRIAL MARKET OVERVIEW............................................................................. 12 IMMEDIATE SURROUNDINGS...................................................................................... 15 SUBJECT PROPERTY DESCRIPTION PROJECT DESCRIPTION CFD NO. 2002-1 .........................:.......................................... 16 ' SITE DESCRIPTION AREA A............... .. 19 CFD 2002-1 PROPOSED IMPROVEMENTS................................................................... 25 SUBJECT PROPERTY HISTORY.................................................................................... 27 ASSESSED VALUATION AND REAL PROPERTY TAXES .......................................... 27 HIGHESTAND BEST USE.............................................................................................. 28 SALES COMPARISON APPROACH— SUM TOTAL OF INDIVIDUAL RETAILPARCEL VALUES..................................................................................................... 29 COMPARABLE LAND SALES ....................................................................................... 29 DISCOUNT FOR CFD NO. 2002-1 SPECIAL TAX BONDS ........................................:.. 35 DISCOUNTED VALUE IN BULK OF INDIVIDUAL RETAIL PARCELS................................... 36 CASH FLOW ASSUMPTIONS...................................................... .. 36 VALUATION................................................................................................................................. 40 EXPOSURE/MARKETING TIME................................................................................................. 41 CERTIFICATION.......................................................................................................................... 42 ADDENDA AERIAL PHOTOGRAPH CFD MAPS CASH FLOW ANALYSIS APPRAISERS' QUALIFICATIONS JOHN S. ADAMS&ASSOCIATES,INC. 0213 11 LIMITING CONDITIONS This appraisal report has been based upon the following premises and limiting conditions: 1. The date of value to which the conclusions and opinions expressed in this report apply, is set forth in the report. Further, the dollar amount of any value opinion rendered 1n this report is based upon the purchasing power of the American dollar existing on that date. 2. The appraiser assumes no responsibility for economic or physical factors which may affect the opinions in this report which occur after the date of value. 3. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. 4. The appraiser reserves the right to make such adjustments to the analyses, opinions and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. 5. No opinion as to title is rendered. Data related to ownership and legal description is considered reliable. Title is assumed to be marketable and free and clear of all liens, encumbrances, easements and restrictions except those specifically discussed in the report. The property is appraised assuming it to be under responsible ownership and competent management, and available for its highest and best use. 6. The appraiser assumes no responsibility for hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for arranging for engineering studies that may be required to discover them. 7. The property is appraised assuming it to be in full compliance with all applicable federal, a . state, and local environmental regulations and laws, unless otherwise stated. 8. The property is appraised assuming that all applicable zoning and use regulations and restrictions have been complied with, unless otherwise stated. 9. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national ` government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based, unless otherwise stated. 10. No engineering survey has been made by the appraiser. Except as specifically stated, data relative to size and area was taken from sources considered reliable and no encroachment of real property improvements is considered to exist. 11. No opinion is expressed as to the value of subsurface oil, gas or mineral rights or whether the property is subject to surface entry for the exploration or removal of such materials except as is expressly stated. 12. No soil reports concerning the subject property were available to this appraiser. The valuation assumes that soil conditions are adequate to support standard construction consistent with highest and best use. 13. Maps, .plats, and exhibits included in this report are for illustration only as an aid in visualizing matters discussed within the report. They should not be considered as surveys or relied upon for any other purpose. JOHN S.ADAMS&ASSOCIATES,INC. 0213 111 .14. No opinion is intended to be expressed for matters which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. 15. The appraiser, by reason of this appraisal, shall not be required to give testimony or to be in attendance',in,court or any governmental or other hearing with reference to the subject property, without prior arrangements having been made with the appraiser relative to such additional employment. 16. Neither all nor any part of the contents of this report shall be conveyed to any person or entity, other than the appraiser's or firm's client, through advertising, solicitation materials, public relations, news, sales, or other media without the written consent and approval of the authors, particularly as to valuation conclusions, the identity of the appraiser or firm with which the appraiser is connected, or any reference to the Appraisal Institute or the NW designation. Further, the appraiser or firm assumes no obligation, liability, or accountability to any third party. If this report is placed in the hands of anyone but the client, client shall make such party aware of all the assumptions and limiting conditions of the assignment. 17. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and improvements must not be used in'conjunction with any other appraisal and are invalid if so used. 18. The appraiser has not been provided any information regarding the presence of any material or substance on or in any portion of the subject property or improvements thereon, which material or substance possesses or may possess toxic, hazardous and/or other harmful and/or dangerous characteristics. These materials or substances include, but are not limited to, asbestos, polychlorinated biphenyl, petroleum leakage, ureaformaldehyde, foam insulation or agricultural chemicals. Unless otherwise stated in the report, the appraiser did . not become aware of the presence of any such material or substance during the appraiser's inspection of the subject property. However, the appraiser is not qualified to investigate or test for the presence of such materials or substances. The presence of such materials or substances may adversely affect the value of the subject property. The value estimated in this report is predicated on the assumption that no such material or substance is present on or in the subject property, or in such proximity thereto that it would cause a loss in value. The appraiser assumes no responsibility for the presence of any such substance or material on or in the subject property, nor for any expertise or engineering knowledge required to discover the presence of such substance or material. Unless otherwise stated, this report assumes the subject property is in compliance with all federal, state and local environmental laws, regulations and rules. 19. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey and analysis of this property to determine whether or not the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. JOHN S.ADAMS&ASSOCIATES,INC. 0213 1v PURPOSE OF APPRAISAL The purpose of this appraisal is to estimate market value with respect to those taxable properties located within the boundaries of Community Facilities District No. 2002-1 Improvement Area A. The analysis assumes the properties are encumbered by the proposed Special Tax Bonds. Our opinion of Market Value is reported under two scenarios. The first (retail value) considered the undiscounted sum total of individual parcel values for the developed properties and the second considered (bulk value) the value in bulk to a single purchaser. ' SCOPE OF APPRAISAL The scope of this appraisal encompasses the necessary research and analysis to prepare a written appraisal report in conformance with the Standards of Professional Practice of the Appraisal Institute, the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and Appraisal Standards for Land-Secured Financings by the California Debt Advisory Commission. The analysis of the subject property included the following steps. 1. A physical inspection of the property and review of relevant property information provided by the client, property manager or owner. 2. County, city and area data were obtained from the County of Orange, City of Huntington Beach, Chamber of Commerce and a physical inspection of the neighborhood. 3. Land sale data was obtained from various sources including: County assessor's records, Comps, Inc., First American Real Estate Solutions, Data Quick, our files and interviews with brokers, owners and active participants in the market. 4. After collection, verification and analysis of the most pertinent data obtained, a final estimate of market value was completed. JOHN S. ADAMS&ASSOCIATES,INC. 0213 1 INTENDED USE OF APPRAISAL This appraisal is prepared for the exclusive use of the City of Huntington Beach and Stone & Youngberg for the,issuance of Community Facilities District No. 2002-1 Improvement Area A Special Tax Bonds. Consent is given to the use of this Appraisal Report and/or summary in the Official Statement. DATE OF VALUE The value opinion expressed herein is stated as of March 29, 2002, the date of our last inspection of the subject property. The date of the report is April 1, 2002, the date of our completion of the analysis and report. y_ r DEFINITION OF MARKET VALUE The term "market value" as used in this report is defined as being: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: L Buyer and seller are typically motivated; 2. Both parties are well informed or well.advised, and each acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure in the open market. 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; 5. The price represents a normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. JOHN S. ADAMS&ASSOCIATES,INC. 0213 2 DEFINITION OF RETAIL VALUE Retail value is an estimate of what an end user would pay for a finished property under the conditions requisite to a fair sale. Aggregate retail value is the sum total of the retail values estimated for each parcel. DEFINITION OF BULK SALE VALUE The most probable price, in a sale of all parcels within a tract or development project, to a single purchaser or sales to multiple buyers, over a reasonable absorption period discounted to present value, as of a specified date, in cash, or in terms equivalent to cash, for which the property rights should sell after reasonable exposure, in a competitive market under all : conditions requisite to a fair sale, with buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue stress. Bulk sales value is derived by discounting retail values to present value by an appropriate discount rate, through a procedure called Discounted Cash Flow Analysis. PROPERTY RIGHTS APPRAISED ?` The property rights appraised are a fee simple interest subject to Special Tax Bonds. DEFINITION OF A FEE SIMPLE INTEREST A fee simple interest is defined as "absolute ownership unencumbered by any other interest or estate; subject only to the limitations of eminent domain, escheat, police power, and taxation." A fee simple interest in real property includes all interests, benefits and rights inherent in the ownership of physical real estate. JOHN S.ADAMS&ASSOCIATES,INC. 0213 3 VALUATION ASSUMPTIONS AND CONDITIONS The market value estimate contained herein is based upon the following assumptions and conditions: 1. Improvements funded by the first series of bonds under Community Facilities District No. 2002-1 Improvement Area are completed. 2. The parcels were valued assuming they are not negatively impacted by toxic or hazardous materials. 3. Market Value is reported under two scenarios. It was first reported as the sum total of individual retail parcel land values. This estimate is reflective of retail valuation since no discounts for absorption were applied. Secondly, we reported Market Value as the discounted value in bulk to a single purchaser which reflects estimated absorption. 4. The analysis was predicated upon the assumption that individual parcels are subject to the CFD 2002-1 Improvement Area A Special Tax Bonds which total $4,900,000, with maximum annual debt service of$11,200 per acre. -' LEGAL DESCRIPTION z A complete legal description has not been provided. Improvement Area A, which is the 1 ` subject of this appraisal, is currently described as Parcels 4 through 11 inclusive, of Tentative Parcel Map No. 2001-122. LOCATION The McDonnell Centre Business Park, of which the subject land will be a part, is located within the Northeast quadrant of the intersection of Bolsa Avenue and Bolsa Chica Street in the City of Huntington Beach. 4 ` JOHN S. ADAMS&ASSOCIATES,INC. 0213 4 _: '.JLMAR ANGELES SAN ~ ` ` SAN : na,,.R •Lokr tN , R rF NAND ` GABRIEL / FAntall N 2SM(. 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ALAMITOS umu $TANTON sANrwa St^' 'b r{ PALOS VERGE L ITA v ESTATES ROLLIN a „•„ As 3 I� SI6NAU rwr / :Nm�oN n.0 8 "Fi " J j_ HILL: HILL ; .L"Y GW ORANGE [L MODENA S25 ESTATES q IIAFBOR ITY�x WILMINGTON a5 C["*t" 4 nlu,pu Polo=v,d•s Pt_ w d„ AOAa llnrb,,, et.n fit• dOSSMODR 6 E exmmAN r M, Avt v Y h�` ~irvm�.n d l.ukr �t 3 H o r euOFN [s. o '•l ' HILLS t: ,� bBEIMOxi _ N7 ROIIiMG C]i AN• R SNORE I r._—1 1 GAOYtI 13 t T.US NAV TUSTIN HDcxR'. RANCHO ` "s ,� ALONG rn ALOS VERDES ,TA n. ooV �`RfI "'° Q = LB roRTUGUESF '„..rk LJ ��`� n,YCAroNS WEST INSTE 'r„ _ N Pt.Vk•me °h B["4 SAN Tn� r/ '\` C� BEACH �r / R;no ma`s" IOWAT RR El tm ' 4 `�- pi y ll•.M CITI At 9 3 Sa+[ Prdro lln,. SEAL I L a /SANTA h BEAC *ANA .Nt �. lip mn•ucx �• SUNSET BEACH'• HUNTIN T N �, 6" ,• >< O / ITAn I(ACx \ OUI E Q n P ail `.ma's FVALLEYN • �� {Z'r� .IRVINE HUNTINGTON BEACH r A `� o;; ro 'w. ERANNE ... ¢ n.lao p. Heron. ' COSTA t a �. I e/ xMNnxcTox o KE I el C RATi.u\^, l I�i�." m 4 FOREST �. C I / a S •[w LACUNA '1 WOODS _ e ! NEWPORT BEACH �•,r k`b "� a F`TDIr I / BALBOA�\``, CORONA DEL MAR QR" AUNA O I A c '7 CHYSI•AL�, HILLS Jy�/ co•OxA ou NA. / !�'•� >YI .r./ / RAn ANe CRY WCN\\\ VICINITY MAP j .T JOHN S. ADAMS&ASSOCIATES, INC. 0213 5 COUNTY OF ORANGE Orange County.''s early history as an agricultural county south of Los Angeles changed abruptly in the 1950%. Since the 1950's Orange County has experienced rapid population growth as it transformed from an agricultural county to a diverse, suburban metropolis. The following is a summary of Orange County's historical population statistics. Average Year Population Annual Change 1950 216,224 - 1960 603,925 10.8% 1970 1,420,3 86 8.9% 1980 1,932,921 3.1% 1990 2,410,668 2.2% 1995 2,597,151 . 1.5% 1996 2,632,297 1.4% 1997 2,677,530 1.7% 1998 2,734,533 2.1% 1999 2,788,767 2.0% 2000 2,867,741 2.9% r 2001 2,925,741 3.4% 3 . Orange County's housing has experienced stable growth over the past two decades. Housing statistics since 1980 for Orange County are as follows. . : Average Year Rousing Units Annual Change 1980 721,570 - . 1990 875,072 1.9% 1995 915,867 0.9% 1996 925,512 1.1% 1997 935,097 1.0% 1998 945,034 1.1% 1999 954,882 1.0% 2000 967,112 1.3% 2001 976,699 1.0% Based on historical growth patterns, Orange County should continue to experience gradual 1 � - population growth and slow stable housing growth in the future. E. r JOHN S. ADAMS&ASSOCIATES,INC. L; 0213 6 Data published by the State of California Employment Department contain the following employment statistics for Orange County. 1995 1996 1997 1998 1999 2000 2001 2/2002 Civilian Labor Force 1,331,000 1,340,200 1,385,000 1,435,100 1,471,700 1,511,000 1,537,100 1,563,800 Employment 1,263,300 1,285,200 1,339,900 1,393,700 1,432,700 1,472,700 1,490,800 1,506,800 Unemployment 67,700 55,000 . 45,200 41,400 39,000 38,300 46,300 573000 Unemployment Rate(%) 5.1% 4.1% 3.2% 2.9% " 2.6% 2.5% 3.0% 3.6% Orange County's February 2002 unemployment rate was 3.6%. For February 2002, California's unemployment rate was 6.4%. Employment throughout the County has increased every year since 1992. Orange County's economy 'is dynamic and resilient. It has demonstrated the capacity to recover from economic down-cycles. The diversified economic base and the desirable living en-6ronment continue to make Orange County an important population and employment center. Near term weaknesses lie in the recent closures of the El Toro and Tustin military bases. Long term weaknesses in the economy lie in the growing congestion, deteriorating -a a: transportation infrastructures, and the high cost of living. These factors, however, are being addressed with new transportation corridors and freeway widening projects. These issues are of paramount importance, but given the diversity of the economic base and a highly educated population, we believe the Orange County Metropolitan Area will continue to grow, albeit at a lower rate. The County of Orange filed Chapter 9 Bankruptcy on December 6, 1994 due to the failure of high-risk investments. The County emerged from bankruptcy in 1996. The impact on the County and real estate within the County was minimal. In conclusion, the County benefits from its location between Los At.geles and San Diego counties and its strong economic base. Potential future weaknesses are being addressed through new and improved transportation infrastructure and planned redevelopment of former military bases. JOHN S.ADAMS&ASSOCIATES,INC. 0213 7 L.. CITY OF IIUNTINGTON BEACH Location Huntington Beach is located in the southwestern coastal region of Orange County. The city is located approximately 35 miles southeast of Los Angeles and 95 miles northwest of San Diego. The city encompasses approximately 28 square miles. Huntington Beach is bounded by the Cities of Westminster and Fountain Valley on the north, the Pacific Ocean on the south and west, the Cities of Costa Mesa and Newport Beach on the east, and the City of Seal Beach on the west. Primary access to the city is provided by the San Diego Freeway (Interstate 405) which runs diagonally north-south across the northern portion of the city and the Pacific Coast Highway which runs along the city's coastline. The John Wayne/Orange County Airport is located approximately ten miles southeast of the city. Y• Population The following is a summary of population statistics for the City of Huntington Beach. Average Year Population Annual Increase 1960 11,492 - 1970 115,960 26.0% 1980 170,505 3.9% 1990 181,519 0.6% 1995 186,587 0.6% . 2000* 190,342 0.4% 2001 193,740 1.8% * Reflects 2000 census. Huntington Beach is the third largest city in Orange County. Population is expected to continue to grow at a slow rate in the near future. JOHN S.ADAMS&ASSOCIATES, INC. 0213 8 Housin The following is a summary of housing unit growth in the city. Average Year Housing Units Annual Increase 1970 35,971 - 1980 63,365 5.8% 1990 72,736 1.4% 1995 74,156 0.4% 2000 75,524 0.4% 2001 76,061 0.7% A continued slow increase in housing units is anticipated in the future with most of the new construction activity taking place in the Huntington Seacliff area and the potential Bolsa Chica `= development. Employment Approximately 50,485 people are employed in the city by approximately 2,628 businesses. ' Major private employers in the city are as follows: Approximate Name of Companv Employment Product The Boeing Company 7,000 Aerospace Quicksilver 900 Clothing Cambro Manufacturing 800 Plastics C&D Plastics 569 Airplane Interiors E-Trade Mortgage 431 Finance Dynamic Cooking Systems 400 Kitchen Appliances Huntington Beach Hospital and Medical Center 375 Health Care GTE California 352 Communications JOHN S.ADAMS&ASSOCIATES, INC. 0213 9 Deyeloment Land use within-the city is distributed as follows: ' Use Acres Residential 11,640 Commercial 1,286 Industrial 1,516 Open Space 1,746 Mixed Use 155 Other 1,385 Total 17,728 The major industrial areas of Huntington Beach are located in the northwest corner of the city and in the central portion of the city along Gothard Street. Approximately 5% of the industrial zoned land in the city is vacant. The major commercial and office district in the city is centered around the Huntington Beach Mall regional shopping center. located .at the intersection of the San Diego Freeway and Beach Boulevard with numerous other commercial centers located throughout the city. The Huntington Beach Mall is in the process of redevelopment. Tenants including Mervyn's, Burlington Coat Factory, Circuit City, Barnes & Nobel, Staples and a proposed Great Indoors store. Trend The trend within Huntington Beach is for continued economic expansion, but at a slower pace than experienced during the past. The city would be considered a desirable location for commercial and industrial development. JOHN S. ADAMS & ASSOCIATES,INC. 0213 10 's i, -gii r LLJ Id C; ■ 1 i. Z E'71 Z �z i7, J— so ad 5 plrz, J i4 fS _j is a Ei'� % r, iie A J I -iF �',FAM, it "M • I iitb� L it FF..... �7iioi 985 iiNiiiiii,; ;iFi it- i�"- - - N 1 v 5, t j�,', -rB T P4 F11 Ir- J �Mt JI .1 oo,� X".Tl. ...... 4 U." ^�' :�, ::»t•,oR ` „ ( - ' ?; 3rtis , •�' • iii"Ise t ri�+.. ° '/ 1n.% 44 i LS -71 Mj J. n, 1, 11,-nj q� J: 1A n l.— ;ij pz • .,F-11 Mills ;634 OF ii3 AI =1 -i� 7., NTTi-�T-3 ;c I r.,Wvj� vm�-f :71 y N 9 1 �1-1 z: wir;, F mi iii llwlj� Zio tii Al W6 vow 'W", Pi X, -opv �J� 5TR q- .11, !N:'Is it ti �Az Is ,.yeti_ 01 Ln In 44, --4 f A. I > 0 It, V LJ 'T F, L4 g'. . . .RL TNDUSTRTAL MARKET OVERVIEW The McDonnell Centre Business Park is located within the West County submarket of Orange County. The following is a summary of industrial vacancy information for Orange County, the West County submarket and Huntington Beach, according to a Fourth Quarter 2001 study prepared by CB Richard Ellis. The West County submarket includes the cities of Huntington Beach, Garden Grove, Cypress, La Palma, Los Alamitos, Seal Beach, Stanton and Westminster. The study includes buildings 10,000 square feet and larger. The following is a summary of current inventory, availability and vacancy. CURRENT INVENTORY AND VACANCY Area Total Sq. Ft. Availability Rate* Vacancv Rate* Orange County 242,359,560 7.5% 3.9% West County 37,133,804 6.5% 4.4% Huntington Beach 11,836,922 5.4% 3.5% *Vacancy rate includes only space that is physically vacant. The availability statistics represent available space that is either physically vacant or occupied. F'1 The following is a summary of historical availability rates for Orange County, the West County Area submarket and Huntington Beach. AVAILABILITY HISTORY Orange West Huntington Year-Quarter County County Beach 2001 -4th 7.5% 6.5% 5.4% 2001 -3rd 7.1% 6.3% 6.6% 2001 -2nd 6.1% 6.1% 6.4% 2001 - 1st 5.8% 5.9% 6.5% 2000 -4t11 4.8% 5.2% 1.4% 2000-3rd 5.6% 5.7% 5.5% 2000-2nd 6.0%, 7.2% 6.1% 2000 - I st 6.5% 7.8% 6.2% 1999 -4th 6.9% 7.6% 3.9% _ 1998 -4th 4.1%, 6.6% 5.1% 1997 -4th 7.41A 6.1% 4.3% 1996 -4th 7.1IX) 9.41;4, 9.6% 1995 4th 8.6';o 9.2% 12.2% 1994 -4th 9.3 9.5% 13.8% ' 1993 -4th 12.5%, 11.7% 16.8% 1992 -4th 13.3`/, 12.9% 15.3% JOHN S. ADAhIS& ASSOCIATES,INC. 0213 12 Availability rates in Orange County, the West County submarket and Huntington Beach declined in 2000 from the highs of the early 1990's. In 2001 vacancy levels have increased slightly due to increasing ecohomic concerns, the dot-com fallout and energy issues. The following is a summary of historical asking rates for industrial space in the West County submarket according to CB Richard Ellis. HISTORICAL ASKING RATES—WEST COUNTY Asking Rent Per Sq. Ft.* Year-Quarter Manufacturing R&D 2001-4°i $0.56 $0.72 2001-3`d $0.54 $0.70 2001-2"d $0.55 $0.77 2001-1" $0.56 $0.72 2000-4L' $0.55 $0.67 t ' 1999-4t' $0.51 $0.73 F: 1998-41, $0.55 $0.68 1997-4" $0.48 $0.62 1996-4' $0.41 $0.60 *Rents are on a net basis. As vacancy rates decreased throughout the 1990's, rental rates increased. During 1999 and 2000, as newer projects with higher asking rents were being absorbed, older product with lower rents were increasing in availability. This caused the appearance of declining rents during this time period. In reality, during 1999 and 2000 rates in the market were on the rise. In 2001, rental rates appear to have leveled off as concerns over the economy increase. Historical gross activity and net absorption for industrial space in Orange County based on 1 ' the CB Richard Ellis study are summarized in the following chart. Industrial space is divided into research and development space and manufacturing space. g 1 1 .- JOHN S. ADAMS&ASSOCIATES, ENC. ' 0213 13 HISTORICAL ABSORPTION—ORANGE COUNTY R&D R&D Manufacturing Manufacturing Total Total Gross Activity Net Absorption Gross Activity Net Absorption Gross Activity Net Absorption Year Square Feet Square Feet Square Feet Square Feet Square Feet Square Feet 1993 2,299,872 938,518 8,137,977 429,295 10,437,849 1,367,813 1994 3,889,482 1,586,235 14,254,800 5,751,377 18,144,282 7,337,612 1995 3,930,603 869,260 10,683,564 1,311,737 14,614,167 2,144,601 1996 4,672,947 519,038 13,564,250 4,469,482 18,237,197 4,988,520 1997 4,131,968 1,097,515 14,883,090 1,481,283 19,015,059 2,578,798 1998 3,333,228 244,442 13,654,501 1,750,844 17,006,726 2,012,206 1999 4,022,436 899,105 16,405.260 4,316,561 20,427,696 5,215,666 2000 4,122,845 970,170 15,000,774 3,989,994 19,123,619 4,960,164 2001 1,907,170 (1,107,237) 9,640,331 (3,874,909) 11,547,501 (4,982,146) The following is a summary of limited historical gross activity and net absorption statistics for all industrial space for the Huntington Beach submarket. ' HISTORICAL ABSORPTION—HUNTINGTON BEACH R&D R&D Manufacturing Manufacturing Total Total Gross Activity Net Absorption Gross Activity Net Absorption Gross Activity Net Absorption Year Square Feet Square Feet Square Feet Square Feet Square Feet Square Feet 1996 47,841 N/A 859,923 N/A 907,764 N/A 1997 98,049 (41,344) 1,450,761 583,781 1,549,810 542,437 1998 64,500 54,897 883,560 (12,522) 948,060 42,357 1999 N/A N/A N/A N/A 805,685 N/A 2000 75,325 N/A 685,276 N/A 760,601 N/A :i 2001 46,279 (92,564) 666,376 • (28,208) 712,655 (121,132) After near] five years of weak market conditions and an overbuilt industrial market with Y excess vacancies and inventory, the market returned to more stabilized conditions in 1996. This i } was the result of limited new construction, positive industrial absorption. and improving economic conditions. As a result of improved market conditions and increased demand, significant new 1 , industrial construction has come into the marketplace since 1996. Most of this new construction took place in the South Orange County submarket with some new development in the West County including development in Cypress, Garden Grove, and Huntington Beach. As the previous summaries indicate, gross activity in Orange County and the Huntington Beach submarket has decreased in 2001 from the relatively stable activity over the previous years. In Orange County, absorption has turned negative in 2001, after positive but inconsistent absorption over the previous several years. In the Huntington Beach area, absorption was also negative in 2001. 1 JOHN S.ADAM.S&ASSOCIATES,INC. 0213 14 IMMEDIATE SURROUNDINGS The McDonnell_Centre Business Park is located in the northwestern portion of Huntington Beach. The area surrounding the property is developed as follows: North of the subject on the opposite side of Rancho Road and a U.S. Navy Railroad right- of-way is residential development within the cities of Huntington Beach and Westminster. This residential development extends north to the San Diego (405)Freeway. South of the subject in the opposite side of Bolsa Avenue is industrial and office development within the Huntington Beach Industrial Park and residential development along portions of Bolsa Chica Street. Farther south beyond McFadden Avenue is additional industrial development, residential development and Marina High School. East of the subject beyond Springdale Street is residential development and some commercial uses extending east to Edwards Street. Beyond Edwards Street is the Westminster `. Mall with Sears, J.C. Penney, Robinsons/May as anchors. Farther east is the San Diego (405) Freeway. West of the subject on the opposite side of Bolsa Chica Street is the United States Naval Weapons Station within the City of Seal Beach. Primary access to the area is provided by Bolsa Avenue and Westminster Avenue which connect to the San Diego (405) Freeway about 1-1/2 miles east and Bolsa Chica Street and Springdale Street which connect to the San Diego (405) Freeway about 1-1/2 to 2 miles north. The immediate area benefits from good freeway proximity and its location near the Orange County, Los Angeles County border. The immediate area is the primary industrial district for T : Huntington Beach and would be considered a good industrial and corporate location. a'.. JOHN S. ADAMS&ASSOCIATES, INC. 0213 15 i:.i PROJECT DESCRIPTION CFD NO. 2002-i The subject property is a portion of the McDonnell Centre Business Park. The McDonnell Centre Business Park contains approximately 307 gross acres and is bounded as follows. NORTH: Rancho Road and the U.S. Navy railroad right of way. SOUTH: Bolsa Avenue EAST: Springdale Street WEST: Bolsa Chica Street The primary uses within the business park are the existing Boeing (McDonnell Douglas) aerospace facility which encompasses approximately 2,800,000 square feet of office, research, and .industrial .related facilities. The easterly portion of the property, which is known as Phase I and totals 87 acres, has been developed over the past seven years with new industrial and corporate facilities including the following. Building R , Tenant Square Feet Sharp Electronics 535,000 Dynamic Cooking Systems 320,000 Cambro Manufacturing 215,000 Konica 280,000 p, Dix Metals 101,000 C & D Aerospace 150,000 Air Tech 120,000 Pacific Shoe 54,000 Morgan Metals 46,000 Extended Stay America 104 room hotel These buildings and improvements are not a part of CFD No. 2002-1 Improvement Area A. 'rhe:CFD boundary.encompasses 188.4.82 gross acres which are allocated as follows. Area Gross Acres A 40.339 B 48.803 Exempt 99.340 Total 188.482 JOHN S. ADAMS&ASSOCIATES,INC. 0213 16 Included in the gross area listed on the previous page are street dedication areas as follows. Area Gross Acres Street Dedication-Phase I 8.787 Street Dedication-Future 3.012 Improvement Area A, which totals 40.339 gross acres and 33.286 net acres, is the subject of this appraisal. This property is to be subdivided into eight parcels and will be the taxable security for the proposed CFD 2002-1 Improvement Area A Special Tax Bonds. ,l. r ' S:. -f. T ' { L JOHN S. ADAMS& ASSOCIATES, INC. 0213 17 It.-a PROPOSED BOUNDARIES OF SHEET 2 OF 3 THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK) COUNTY OF ORANGE, STATE OF CALIFORNIA. LEGEND: ❑ CFD NO. 2002-1 BOUNDARY EXEMPT LAND IMPROVEMENT AREA "A" ❑ IMPROVEMENT AREA "8" . xo m im f ]of Aov GRARM,c Scut: 1•-XV . CURVE TABLE — CURVE DELTA I RADIUS LENGMT 1 a9•.2.2r 1 25.07 39.14 6 09'49.15- .7000 GM56 7 B9•.0'31• 27.00 42.26 8 I]'27'736' I 47MM 126.32 9 16.5r14• 831.49 244.83 10 901021581 2700 42.43 LII.E TABLE LIMO I LENGTH I BEARING LI 21SIM NOrlrWE L2 12-76 MB9.27'S1'V \.� L3 I3I.37 M00'32'09K LA 28129 M89.2736•V L] 127.a3 n39.29']vV / - L6 28L]] M50'30'06'E 47 Z0007 N89.27a9'V LB 13IL78 M79.297.•V 90 / L7 p p -x,r - y x}r O A_Av.o-tT U .. mY wAf}a'.J•�oN. �901--A0.0 _� u w Mefl •>!].G• Amy. _—_„,.N___ N I I a� TL i:na°• � t�]i a_•ovs ------------- VI M6fa.J• -� 5 o,Q 1-:: ]L .).• ]90..]'C tl0n \—CL BOLSA AVENUE I PRELIMINARY I CFD PROJECT AREA MAP JOHN S. ADANIS&ASSOCIATES,INC. 0213 18 SITE DESCRIPTION The subject of this appraisal is Improvement Area A of CFD No. 2002-1. The following description is for this portion of the property. Shame and Area The property is irregular in shape and contains 40.339 gross acres and 33.286 net acres according to Adams Steeter, the District Engineer. Parcel areas are calculated as follows: Area Acres -Square Feet Gross 40.339 1,757,167 Well Site .272 11,948 Streets 6.781 295,380 Net 33.286 1,449,939 The 33.286 net acres will be subdivided into eight individual parcels with areas as follows based on Tentative Parcel Map No. 2001-122 and proposed Final Parcel Map No. 2001-226. Tentative Map Final Map Parcel Area Parcel Number Parcel Number Acres Square Feet 4 1 5.235 228,037 5 2 5.099 222,112 6 3 4.364 190,096 7 4 4.359 189,878 8 5 4.241 184,738 9 6 3.027 131,856 10 7 4.597 200,246 11 8 2.364 102,976 Totals 33.286 1,449,939 JOHN S. ADAMS&ASSOCIATES, INC. 0213 19 Zonin The General Plan Designation for the subject is industrial with a floor ratio of 0.75. The subject property is within Planning Area 4 under Specific Plan Number 11 — McDonnell Centre Business Park. This planning area encompasses approximately 79.5 gross acres and is improved with 1,070,710 square feet of existing aerospace facilities. The following land use summary is designated for this planning area. Industrial :Use Office Use Commercial Use Total Building Land Building Land Building Land Building Land Sq. Ft. Acres Sq. Ft. Acres Sq. Ft. Acres Sq. Ft. Acres _ = 1,688,223 62.2 562,740 17.3 ---- --- 2,250,963 79.5 A total of 2,250,963'square feet of allowed development is a 0.65 floor area ratio. Planning Area 4 is divided into three subareas, Subareas G, H and I. Under these subareas the following uses are permitted. Industrial: Existing aerospace facilities, as well as manufacturing, warehousing, light industrial and research and development uses. Commercial: Communication facilities, eating and drinking establishments, maintenance and repair services and warehouse and sales outlets. Office: Business and professional, .research ..and. development services, and laboratories. - Public and Semi Public: Conference facilities, day care, general governmental facilities, heliports maintenance and service facilities and public utilities and:facilities. JOHN S.ADAMS&ASSOCIATES,INC. 0213 20 Development regulations within Planning Area 4 - Subareas G, H & I include the following. Planning Area 4 Subareas _G H I Maximum Intensity (F.A.R.) 0.65 0.65 0.65 Minimum Lot Size (AQ2 1.0 2.5 2.5 Minimum Lot Frontage 250' 250' 250' Maximum Bldg. Height 40' 40' 50' Maximum Lot Coverage 60% 60% 60% Minimum Setback Front 25' 25' 25' Interior Side 10, 15, 15' Exterior Side 15' 25' 25' Rear 10, 15' 15' Minimum Landscape 10% 10% 10% Minimum Perimeter Landscape Front 10, 15' 15' Interior Side 5' 5' S' Exterior Side 10, 10, 10, Interior Rear 5 S' S' Exterior Side 10, 10, 10, Adjacent to 24' NA NA Arterial Hwy Parking Standards The following parking standards are required within the McDonnell Center Business Park Specific Plan. Parking Standards Use Required Parkin Office, Administrative, 1 space/250 square feet Research and Development Industrial and Manufacturing 1 space/500 square feet Warehouse and Distribution 1 space/500 square feet (for the first 20,000 square feet) 1 space/5,000 square feet (for over 20,000 square feet) Hotel/Motel .75 space/room plus 2 space/Manager Restaurant 1 space/100 square feet Retail 1 space/200 square feet JOHN S. ADAMS&ASSOCIATES,INC. 0213 21 Topographyand nd Drainage Upon completion of construction, the subject parcels will be basically level and slightly above the grade of adjacent streets. Surface runoff is directed to adjacent streets and the existing storm drainage system. t Utilities All necessary public utilities will be available to the.subject .property upon completion of development. Utilities will be provided by the following: L Water: City of Huntington Beach Sewer: City of Huntington Beach and Orange County Sanitation District. Storm Drainage: City of Huntington Beach and Orange County Flood Control District Electricity: Southern California Edison Gas: Southern California Gas k, Telephone: Pacific Bell/Verizon Soils t No soils reports concerning the subject were available. The valuation herein assumes that soil conditions are adequate to support industrial, research and development, corporate and related uses without corrective work being required and that the site is free of hazardous or toxic materials. a: t �A JOHN S. ADMAS&ASSOCIATES,INC. 0213 22 Streets The following streets will be completed with development of Improvement Area A of the McDonnell Centre Business Park. These streets will provide access to the subject parcels. Street Name 'Ri2ht of Way Astronautics Lane 60-80 Feet Delta Lane 60 Feet Skylab Road 80 Feet Upon completion of development, these streets will be fully.dedicated.and improved. Street improvements will consist of asphalt paving concrete curbs, gutters and sidewalks and street lights. Access Primary access to the subject is provided by Bolsa Avenue, Balsa Chica Street, Springdale Street, and Rancho Road. Interior streets within the McDonnell Centre Business Park that will serve the subject parcels are Astronautics Lane, Delta Lane and Skylab Road. Flood/Earthquake Hazard According to FEMA Map Number 0650340027F, dated January 3, 1999, the subject property is withinFlood Zone X500. This is an area inundated by 500 year flooding. According to the City of Huntington Beach the subject is not in an identified earthquake hazard area, although earthquakes are common occurrence in the region. JOHN S.ADAMS&ASSOCIATES, LNC. 0213 23 ... . c TYPICAL W SECTION PAf2CEL `TTPraL m TO 76 SECTION' Jnu+oa noAD-EWr►n ""^"' (F•eso!G1., EAl30BlT NOTES LOT TABLLATgN .. --------- -•� .s._..�,... ...<.. ... PARCEL _ :i. ,,........_.-..®.- (0.302 AC) a3n� Tnrx W SEcnon _ V., Wm *d 4 -PAR L - - CE 1T7,PARCELm'.14 If 050 G04 /P9 RL n TTPCkL SECTION W S ..._ �., . PAj2CEL)15, .7� S.-'+.-_�� •. N. .': d-r_ - ref._ PARCEL PARCEL a 16 1 996 AC) SUB s tt •� • ~ ' BBA AVBAE - -Y --`- I-� - _P(R 30�C) \ ,j 'PARCEL 26 O Q �] +�— PARCEL * e. LAr Q M (O.7J5'Ac _ - RARCEL 79 L ¢ i 1 -1 .1 PARCEL.� 9 „r�.f• /' ,r l� s F. EU NOTED PARCEL 7 Vi• r •�(�1bB AS), ';� PARC � i --- -- S EC 311�JECT:.. jj4 1 �- I '(„• RARC�L-3 '.` . '\ �• r(5.832.)lC) i _- w`rrr—� \ ' — ;m, PARCELS. ✓!: L i �-•r s, r I .io_+-^�cC) f.°" y OLsoPsaeaewLrTrnar. _ a" P RC1EL 4��/ � SPAR Ste'!) n - r _.. E >.-� _ / o. ass AC) (5.953 AC) o S "«_ - (i' Xiar PnEFAREo UP ;' ` ` ``K I �` � SrUB� CT: SUBIE�CT I� k _ DATE{{�AF� r .•fl_ i _ _ '-`� -_ .I<.LG�..a -__ --- -— •_:. .._..... r''.l�/ ' ''tic. - Rm wR ARC L I Tentative Parcel 1 r a � i' ` PEL f•'1F.C=L �,.�_ =A,,. i , (ao26AC):C'; Ma No. 2001 - 122 2 i ._i.. yA9_.I'_:'!�•'1 _I 1 CFD 2002-1 PROPOSED IMPROVEMENTS Community Facilities District 2002-1 encompasses the subject property. The following is a general description of the improvements to be completed and an estimate of costs. 1. The construction of sewer lines in existing Skylab Road, new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane from Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of streets, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Street to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road, new Delta Lane, and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic. signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road including installation of new sidewalk. The Improvements to be financed shall include the costs of acquisition of the right-of-way that is intended to be dedicated by the recording of a final map, 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 appurtenan:,es related to any of the foregoing. .)OHN S. ADAMS,& ASSOCIATES,INC. v 0213 25 Some of the improvements listed above will also benefit Improvement Area B of Community Facilities District No. 2002-I which is not a part of this valuation. The following is the estimated cost of the proposed improvements. DETAILED COST BREAKDOWN COSTS ITEM NO. DESCRIPTION PHASE 1 FUTURE TOTAL 1 On-Site Sewer Lines $ 311,275 $ $ 311,275 2,3,4.5 Streets,Curbs,&Gutters for Skylab Road,Delta 848,972 177,276 1,026,248 Lane,Astronautics Lane and Skylab Lane 6 Rancho Road Waterline 313,471 - 313,471 7 Skylab Rd,Delta Lane and Astronautics Waterlines 553,310 - 553,310 8 Streetliglit Trenching 156,810 - 156,810 8 Skylab Rd,Delta Lane and Astronautics Street Lights 175,000 - 175,000 9 Streets,Curbs&Gutters for Delta Lane - 323,347 323,347 10 Delta Lane Waterline - 144,400 144,400 i Storm Drains in Skylab Road,Delta Lane,Astro- nautics Lane and Skylab Lane 567,800 - 567,800 12 Bolsa/Delta Intersection&Signal Improvements - 120,000 120,000 13 Rancho/Astronautics Intersection Imps&New Signal 186,000 - 186,000 14 Roadway and Sidewalk for Rancho Road 40.954 - 40,954 Subtotal Construction $3,153,592 S 765,023 $ 3,918,615 Street Right-of-Way 4,470,657 1,532,448 6,003,105 Subtotal Right-of--Way and Construction $7,624,249 $2,297,471 $ 9,921,720 Civil Engineering/Surveying 200,000 50,000 250,060 Geotech Inspection 30,000 10,000 40,000 - - City Plan Check Fees/Iispection 100,000 25,000 125,000 Construction Management 200,000 50,000 250,000 Grand Total Project Costs S8,154,249 S2,432,471 S10,586,720 Note: Item Nos. correspond to Exhibit A and B. Phase 1 Right-of-Way is the acreage to be dedicated as a part of the Recordation of Final Parcel Map No. 2001-226 (8.787 acres)and Future Right-of-Way is the remainder necessary to complete development of Improvement Area B(3.012 acres). Right-of-Way valued at$11.68 per Square Foot. Excluding right-of-way costs total development costs are equal to S3.16 per square foot of net land area in improvement Area A. JOILLN S. AllAMS&ASSOCIATES,INC. 0213 26 SUBJECT PROPERTY HISTORY The current owner of the property, McDonnell Douglas Corporation (Boeing), has owned the subject and adjacent land for more than 10 years. A portion of the property is improved with Boeing Company facilities. A portion of the existing improvements are being demolished for development of the subject land parcels. The parcels to be developed within Improvement Area A are currently listed for sale with CB Richard Ellis. The asking prices range from $19.50 to $19.00 per square foot. We are not aware of any other sales or listings for the subject property over the past three years. ASSESSED VALUATION AND REAL PROPERTY TAXES Assessor's Parcel Numbers: 195-111-24 and 31 and portions of 29 and 34 Assessed Valuation 2001-2002: The subject parcels are not individually assessed on the current tax roll. The current assessment covers portions of the subject property and adjacent property that is not a part of this appraisal. Tax Code Area: 04-019 Tax Rate,2001-2002: 1.00770% of assessed value Estimated Real Property Taxes: Not available Upon completion of infrastructure and when sold real estate taxes can be adjusted to approximately 1.01% of sale price or the assessor's estimate of market value; otherwise, tax escalations are limited to 2% per year. The parcels will also be subject to special assessments for vector control, MWD water standby charge and OCSD sewer user fee. In addition to basic real estate taxes, the taxable parcels within CFD No. 2002-1 Improvement Area A will be subject to Special Tax Bonds as foliows. The Maximum Special Tax for each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maxirrlu►n Special Tax .shall increase in every Fiscal Year thereafter by two percent (2%) of the Maximum Special Tax for the prior Fiscal Year. JOHN S. ADAMS&ASSOCLATES, INC. 0213 27 HIGHEST AND BEST USE According to the third edition of The Dictionary of Real Estate Appraisal (Appraisal Institute, 1993), highest and best use is defined as follows: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported,financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. HIGHEST AND BEST USE AS THOUGH VACANT The site is zoned for industrial, research and related uses. Industrial or research use is the maximally productive use of the subject site. There is demand for these uses in the subject's market. The highest and best use of the site as though vacant is development of industrial, research and related uses in accordance with Specific Plan 11 —McDonnell Centre Business Park. JOHN S. ADAMS&ASSOCIATES,INC. 0213 28 SALES COMPARISON APPROACH SUM TOTAL OF INDIVIDUAL RETAIL PARCEL LAND VALUES The Sales Comparison Approach is based upon the principle of substitution which assumes a prudent purchaser would pay no more for a particular property than the cost of acquiring an equally desirable substitute property. The reliability of this technique is dependent upon two factors: identifying a sufficient number of competitive properties, and verifying information pertaining to the sale price, financing terms and descriptive characteristics. A search was made within Huntington Beach and surrounding communities for the purpose of obtaining sale transaction data for vacant land purchased for corporate, industrial, research and related uses. The following is a summary of the most pertinent land sale transactions obtained. HUNTINGTON BEACH Data Number Sale Parcel Size Sale Price and Location Date Acres Sn• Ft. Total Per Sq. Ft. No. 1 Escrow 1.029 44,822 $825,000 $18.41 W. side Metzler Ln 3-02 S. of Slater Ave. Huntington Beach No.2 10-99 0.540 23,520 $423,500 $18.01 N. side Commercial Dr. E. of Chemical Ln. Huntington Beach No. 3 10-99 3.980 173,369 $2,463,500 $14.21 NEC Graham St. &McFadden Ave. Huntington Beach No.4 6-98 0.592 25,780 $438,500 $17.01 SWC Machine Dr. &Electric Ln. Huntington Beach No._5 6-98 0.541 23,564 $409,000 5117.36 E. side Connector Ln. N. of Machine Dr. Huntington Beach JOHN S. ADAMS&ASSOCIATES, INC. 0213 29 ADJACENT CON;NIUNITIES Data Number Sale Parcel Size Sale Price and Location Date Acres Sit. Ft. Total Per Sq. Ft. No.6 Escrow 5.270 229,561 $3,788,000 $16.50 SEC Knott St. 3-02 &Patterson Dr. Garden Grove No.7 5-01 3.700 161,172 $2,982,000 $18.50 N.side Katella Ave. W. of Walker St. Cypress No. 8 10-00 8.090 352.400 $6,167,000 $17.50 E.Side Walker St. N.of Katella Ave. Cypress No. 9 11-99 17.952 781,989 $12,908,000 $16.51 NWC Walker St. + 1,051,000 + 1.34 &Katella Ave. bonds bonds Cypress $13,959,000 $17.85 No. 10 1-00 7.588 330,533 $6,326,000 $19.14 SEC Harbor Blvd. &MacArthur Bl. Costa Mesa No. 11 6-00 0.975 42,474 $531,000 $12.50 S. side Blades Ave. W.of Monarch St. Garden Grove No. 12 6-00 11.859 516,578 $5,682,000 $11.00 E. side Hoover St. N. of Bolsa Ave. Westminster In addition to the above sales, the following is a historical summary of land sales within the McDonnell Centre Business Park. HISTORICAL SALES—MCDONNELL CENTRE BUSINESS PARK Data Number Sale Parcel Size Sale Price and Location Date Acres Sn. Ft• Total Per Sq. Ft. No. 13 12-93 11.884 517,667 $4,270,000 $8.25 NEC Skylab Rd. &Able Ln. Huntington Beach No. 14 12-95 23.439 1,021,003 $10,2102000 $10.00 NEC Bolsa Ave. &Springdale St. Huntington Beach �. JOHN S. ADAMS&ASSOCIATES,INC. 0213 30 HISTORICAL SALES—MCDONNELL CENTRE BUSINESS PARK Data Number Sale Parcel Size Sale Price and Location Date Acres Sq. Ft. Total Per Sq. Ft. No. 15 3-97 7.55 328,878 $3,385,000 $10.29 SEC Skylab Rd. &Able Ln. Huntington Beach No. 16 3-97 5.55 241,758 $2,525,000 $10.44 SWC Skylab Rd. &Able Ln. Huntington Beach No. 17 12-97 2.212 96,355 $1,490,000 $15.46 SEC Skylab Rd. &Bolsa Chica Rd. Huntington Beach No. 18 12-97 5.10 222,156 $2,521,500 $11.35 W.side Able Ln. N. of Balsa Ave. Huntington Beach No. 19 12-97 6AI 279,220 $3,937,000 $14.10 NWC Bolsa Ave. &Able Ln. Huntington Beach No.20 6-98 6.934 297,689 $3,990,000 $13.40 SWC Skylab Rd. &Springdale St. Huntington Beach No.21 6-98 13.069 569,286 $7,903,000 $13.88 NWC Skylab Rd. &Able Ln. Huntington Beach No.22 12-99 5.50 239,590 $3,234,000 $13.50 NWC Skylab Rd. &Springdale St. Huntington Beach Land Sale Data Analysis Data Numbers 1 through 5 represent sales within the Huntington Beach Industrial Park. These are the most recent land sale transactions in the area besides the sales within McDonnell Centre Business Park, which are included as Data Numbers 13 to 22. Data Number 1 is the pending sale of a smaller parcel in an inferior Huntington Beach location. The purchase includes plans for a 19,989 square foot industrial building. The plans add JOHN S. ADAMS&ASSOCIATES, INC. 0213 31 approximately $2.00 per square foot to the price. This results in a net price of$16.41 per square foot for the land only. Data Number2 is a smaller lot. Although this is an older sale, the smaller size results in a higher per square foot price. A lower price range is indicated for the subject parcels. Data Number 3 is the largest recent parcel sale in the Huntington Beach area. Due to the older date of this sale, a higher price would be indicated for the subject parcel. Data Numbers 4 and 5 are the older sales of smaller parcels. The smaller size influenced the price, although the sale date is old. A similar to slightly lower per square foot price is indicated for the subject parcels. Data Numbers 6 through 12 represent land sales from surrounding industrial districts. Data Number 6 is a pending sale of a parcel located in the Garden Grove Industrial Complex. The zoning allows a wider range of uses than the subject, however the location is inferior. A similar to slightly higher price is indicated for the subject. Data Number 7 is the sale of a parcel similar in size to the subject parcels. The location is in Cypress near the Los Alamitos Racetrack. The site was purchased for construction of a Marriott Residence Inn. Location along Katella Avenue is superior. A lower per square foot price is suggested for the subject. Data Number 8 is the sale of a larger site located in a good Cypress location. The site was purchased by a user for development of a corporate-industrial building. Location is considered slightly superior. A similar to slightly lower price is indicated for the subject. Data Number 9 is the sale of a larger parcel in Cypress. The site sold to a church who planned to build a church facility. The proposed church was not approved by the city. Location on the Katella-Walker corner is superior. This site was subject to assessment bonds. A similar to slightly lower price is indicated for the subject. JOHN S. ADAMS&ASSOCIATES,INC. 0213 32 Data Number 10 is a site located in Costa Mesa. Location at the corner of a n-.- or intersection is superior.- The site sold to a user for medical office use. A lower price is indicated for the subject. Data Number 11 is the sale of a smaller parcel in Garden Grove. The location is inferior. Even though smaller in size than the subject parcels a higher per square foot price is indicated for the subject. Data Number 12 is the sale of a larger sized parcel located in Westminster. The location is inferior based on its inferior location and larger size. A higher per square foot price is indicated for the subject. Data Numbers 13 to 22 represent the previous sales within the McDonnell Centre Business Park. The most recent sales indicate prices in the $13.40 to $13.88 per square foot range. These sales took place during 1998 and an upward adjustment is required for the older sale date. The sale data also show the significant upward trend in prices. Initial prices were $8.25 per square foot in 1993 escalating to the $10.00 to $11.00 per square foot range in 1997 and to $13.40 to $13.88 per square foot in 1998. Higher per square foot prices are indicated for the subject lots. Based on the sale data discussed, a price above the $13.40 to $13.88 per square foot range of older sales within the subject development and below the $17.50 to $18.50 per square foot range for the sales in a slightly superior Cypress location would be indicated for the subject. In our final conclusion of value, we have also considered the limited availability of vacant land in Huntington Beach and surrounding areas. Some future competition may come from the Boeing Seal Beach facility. This }project is in the governmental approval stage. The development will encompass about 42 acres f'or industrial-corporate development. These lots are not expected to be available for approximately two ;rears. There is some land available for build-to-suit only in Fountain Valley. The price for this land is in the y15.00 to $16.00 per square foot range. The most �r JOHN S. ADAMS&ASSOCIATES.INC. 0213 33 active land sale program is Irvine Spectrum south of the subject. Lsnd prices in Irvine Spectru►i are $20.00 to $25.00 per square foot. The subject will sell at lower prices. The following'is our estimate of the retail market value of the individual lots. Tentative Map Final Map Parcel Area Estimated Market Value Parcel Number Parcel Number Acres Square Feet Per Sq. Ft. Total 4 1 5.235 229,037 $16.50 $3,763,000 5 2 5.099 222,112 16.50 3,665,000 6 3 4.364 190,096 16.50 3,137,000 7 4 4.359 189,878 16.50 3,133,000 38 16.50 3,048,000 8 5 4.241 184,7 . 9 6 3.027 131,856 16.00 2,110,000 F S' 10 7 4.597 200,246 16.00 3,204,000 11 8 2.364 102,976 16.50 1,699,000 Totals 33.286 1,449,939 $16.38 $23,759,000 Avg MARKET VALUE CONCLUSION—SUM TOTAL OF INDIVIDUAL RETAIL LOT VALUES TWENTY THREE MILLION SEVEN HUNDRED FIFTY NINE THOUSAND DOLLARS $23,759,000 The above estimate represents the individual retail lot values prior to any adjustment for the proposed Community Facilities District Special Tax Bonds. The following analysis considers the impact of Special Tax Bonds. JOHN S. ADAMS Sc ASSOCIATES, INC. 0213 34 DISCOUNT FOR CFD NO. 2002-1 SPECIAL TAX BONDS The only other industrial land developed in the area that is selling lots subject to assessment of special tax liens is,Irvine Spectrum — Phase 5. This development is offering individual lots for sale subject to an assessment district lien equal to approximately $4.00 per square foot of land area. If the buyer of a lot elects to assume the assessment district lien the price is reduced by 100% of the principal balance of the lien. As the subject appraisal assumes the Community Facilities District No. 2002-1 lien will be assumed by buyers, our analysis will reflect a full discount from the retail price to reflect the bond assumption. This calculation is as follows. Total of Individual Retail Lot Values $23,759,000 Less CFD 2002-1 Special Tax Bonds ($4,900;000 less Reserve Fund of $490,000) $ 4,410,000 Indicated Market Value Subject to CFD 2002-1 Improvement Area A Lien $19,349,000 This is equal to $13.34 per square foot of net land area in Improvement Area A. x . JOHN S. ADAMS& ASSOCIATES, INC. 0213 35 VALUATION ANALYSIS DISCOUNTED VALUE IN BULK OF INDIVIDUAL ]RETAIL PARCELS Proper application of appraisal theory requires the sum total of individual retail parcel values be discounted to reflect their value to a single purchaser (i.e. bulk value). The Discounted Cash Flow methodology was used to accomplish this objective by forecasting the periodic revenue and expenses anticipated during the marketing term in addition to levels of profit commensurate with the undertaking. The periodic net revenue is then converted into an indication of net present value which is reflective of the property's current"as is" value to a single purchaser. The following are the assumptions utilized for the Discounted Cash Flow Analysis. Gross Sale Revenue The prior section of this report addressed the revenue potential of the subject land inventory assuming it was marketed on a retail basis. Referring to the preceding page, we estimated the retail potential of the eight parcels to be $23,759,000 or an average of$16.38 per square foot of net land area. Appreciation Rate The marketing of the inventory is likely to occur over an extended period of time and for this reason it is necessary to consider the potential for revenue growth due to appreciation. However, one must also consider the competing levels of inventory and recent trends in pricing. The subject project represents one of the few business parks in the area with a significant inventory of land available. Current competition is limited to scattered infill parcels.within the adjoining communities. The only other business park expected to offer direct competition in the future is Boeing Realty Corporation Pacific Gateway Business Center in Seal Beach. This development will total approximately 43 acres. This development may be two years away. JOHN S. ADAMS&ASSOCIATES, INC. 0213 3 6 Price appreciation within the subject development averaged 13.6% per year between the initial sale of$8.25 per square foot in December 1993 and the last sale at $13.88 per square toot in December 1998, a period of 5 years. Price appreciation averaged l 3% per year between December 1995 and December 1998. Price appreciation in Irvine Spectrum over the past year has been in the 3% to 5% range for land in the $20.00 to $25.00 per square foot range. As the level of per square foot price increases the extent of appreciation tends to decline. Based on the limited extent of vacant land available for development in the general market area and the lack of projected competition over the next two years, we have estimated land appreciation at 5% per year. Absorption Due to the built-up nature of the subject's immediate market area and relative lack of competing business parks from which absorption statistics could be acquired the estimate of absorption velocity for the lots is based on the McDonnell Centre Business Park's historical performance and limited market information from other areas. The subject's prior history of sales indicated the following historical absorption. Year Acres Sold 1993 11.88 1995 23.44 1997 26.82 1998 25.40 During the period of 1995 and 1997-98 when land was available the subject development absorbed on average about 25 acres per year. Land sales within Irvine Spectrum 5 totaled approximately 16 acres in 2000 and 29 acres in 2001, an average of 22.5 acres per year. JOHN S. ADAMS&ASSOCIATES,INC. 0213 37 Economic conditions have weakened over the past year and absorption of existing Industrial space has also declined.- Based on this information we have projected a 24 month period to sell the subject lots. This is equal to 16.64 acres per year. Land Development Costs The subject lots were valued as if in "finished" condition and do not require any additional construction or development expenditures to facilitate a transaction. The value assumes all infrastructure and improvements contemplated by CFD 2002-1 Improvement Area A have been installed and are completed. CFD No. 2002-1 Improvement Area A Costs It is anticipated that the CFD No. 2002-1 Special Tax Bonds will total $4,900,000. This is equal to $3.38 per square foot of net land area within Improvement Area A. As the value analysis is subject to assumption of bonds our cash flow analysis will consider a total bond amount of $4,410,000. This is $4,900,000 less debt service reserve of$490,000. Sale and Marketing Expenses This expense category includes sale commissions, advertising, escrow fees, legal fees, recording fees and other items related to the closing of land sale transactions. Our experience with business park communities has suggested most developers rely upon professional brokers. Sale commissions were estimated at 5% of gross sales with an additional 1% char?e for marketing and closing costs. �+ JOHN S. ADAMS&ASSOCIATES,INC. 0213 38 Carrying Costs Durin MarketingTerm During the marketing term, the property owner is expected to incur expenses associated with real estate taxes, general ad mini stration/overhead and incidental items. We have estimated these costs at 1.5% of gross sales. Entrepreneurial Profit And Discount Rate The Korpacz Real Estate Investment Survey for the Fourth Quarter 2001 indicated the following discount rates including developer profit were required by investors for land development projects. Fourth Ouarter 2001 Second Ouarter 2001 Discount Rate Free & Clear Range 11.0% to 35.0% 11.0% to 35.0% Average 19.96% 20.0% Subject to Financing Range 12.0% to 30.0% 12.0% to 35.0% Average 20.20% 22.14% Our discussions with developers indicates a 15% to 20% target internal rate of return including profit for land development projects. Based on the above information and considering the size, scope of development and duration of the development we have utilized a 15% to 17.5% discount range for our analysis. Value Indication Utilizing the cash flow assumptions discussed above, the bulk land value indication for the subject was S14,534,000 to $14,935,000. We have concluded at a value of$14,750,000. The conclusion equates to an average value of$10.17 per square root of net land area. A copy of the Discounted Cash Flow Analysis is included in the Addenda of this report. JOHN S. ADAMS&ASSOCIATES,INC. 0213 39 VALUATION Based upon the personal examination and analysis made, it is our judgment that as of March 29, 2002, the market'value of the fee simple interest in the subject property, subject to the CFD 2002-1 Improvement Area.A Special Tax Bonds, was as follows: TOTAL OF INDIVIDUAL RETAIL LOT VALUES NINETEEN MILLION THREE HUNDRED FORTY-NINE THOUSAND DOLLARS $19,349,000 BULK SALE VALUE FOURTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS $14,750,000 JOHN S.ADAMS&ASSOCIATES,INC. 0213 40 EXPOSUREIMARKETING TIMF. Exposure time is the estimated length of time the property interest would have been offered in the market prior to'the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based upon an analysis of past events assuming a competitive and open market. We have estimated that an exposure time of 6 months would have been required to sell the subject. property in bulk as of the date of value and an exposure time of 24 months would be required to sell the individual lots as of the date of value. Marketing time is an opinion of the amount of time it might take to sell a real property interest at the concluded market value level during the period immediately after the effective date of appraisal. Based upon present market conditions and discussions with commercial brokers we have estimated a marketing time of 24 months to sell the individual lots from the date of value and a marketing time of six months to sell the parcels in bulk as of the date of value. JOHN S.ADAMS&ASSom'ns,INC. 0213 41 CERTIFICATION The undersigned do hereby certify that, to the best of our knowledge and belief, • The statements of fact contained in this report are true and correct. • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. • We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest with respect to the parties involved. • We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • Our engagement in this assignment was not contingent upon developing or reporting predetermined results. • Our compensation is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. • Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • As of the date of this report, John S. Adams has completed the requirements under the continuing education program of the Appraisal Institute. • We have made a personal inspection of the property that is the subject of this report. • No one provided significant professional assistance to the persons signing this report. • We meet the requirements of the Competency Provision of the Uniform Standards of Professional Practice. Respectfully submitted, JOHN S. ADAMS & ASSOCIATES, INC. Jn) Adams, MAI California Certification No. AGO01754 JOHN S. ADAMS&ASSOCIATES, INC. 0213 42 • 1""mob 4M}ny,y,r-.n l � a ++»'....r- yA a . , A �••_;.f ' 'r, .� .•ram 9.�� ln. I f f1 '»NI•" •"P2'•+•{a*jycy�� »+•a '.."�. wHt @',",.72 - , '+t . .t I t .� •q� • } .,,.... 4fy,,.�•�"" v r } `�,�1�.,,;, p_..`T-.,. 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' ' rt, a ,,.'4;�`�' •i� d;/��$yf .`�a' II n �y eA .- . #tit •„eax 'rt�� ter 1:' ; . . t. +. s+' / ,r . CSC 827 Hunting on Beach Project: Boeing Facility Flown: 03-04-02 #02 Size: 8.5z11 le :Copyright 2002 Aerial Eye Inc aerial eye mcm aerial photographic services 18103-F Sky Park Circle Irvine, California 92614 (800) 462-2374 ©Aerial Eye Inc., ALL REPRODUCTION RIGHTS RESERVED • t, "era ' p�'rL$'s+ yt;c i b y .f3'uf+at i w..Y j r•+ M r ,h ., � � �i,�6.r*z. sy<l c5 `.z ° F � n'ftntii l„i li � • . • x1i.i '```v.,c.i`"Yi.H;L� 1t. t .i f,. '�. Y-f: / �„�. • {h. n1,M�r .rA� 3 e fz t v e 's4 �+° s �r r�y+t v%H'���'3^J�g�.-� �F tt]�is b��jfi� \ ' Lr t. •�h = � � +]+��5.. 1fE�''��E�.R,,� �. i4�• L.nf tr }+. \ \�Fl u}ht..r�'j,�' ;� :. � pr.-+ c F..f'�,��r �' .r,-ry�r f ��'�•..p r 4 n \ � v�,l„ .fit l.r� - s v�$"1Sj�y�' Si`;4�y t � ' ' _, +,'lF T c•� � 4b°"?''�S'1�H ,� •'�.iY, x >�=r 4Yn}r q r� r: •y'ds�,t 1�,.11 4 � \ � a' i.� r "78 - vlo To n A � A � � A CITY OF HUNTINGTON BEACH CFD No. 2002-1 McDONNELL CENTRE BUSINESS PARK AREA SUMMARY (ACRES) r PARCEL NUMBER ON PARCEL NUMBER ON TENTATIVE PARCEL MAP FINAL PARCEL MAP PARCEL SIZE 4 1 5.235 5 2 5.099 6 3 4.364 7 4 4.359 8 5 4.241 9 6 3.027 10 7 4.597 11 8 2.364 SUBTOTAL-NET ACRES 33.286 Final Map Street Riqht-of-WayDedication within Area A 6.781 City Well Site 0.272 - 40:339 TOTAL:-AREA A,:-GROSS_=ACRES :-==='.-= PARCEL NUMBER ON PARCEL NUMBER ON TENTATIVE PARCEL MAP FINAL PARCEL MAP PARCEL SIZE ` l 12 9 2.443 15 11 2.228 13 - 2.841 17 - 5.647 18 - 4.424 19 - 4.067 20 - 4.039 1 - 6.338 2 - 5.938 3 - 5.820 SUBTOTAL-NET ACRES 43.785 Street Right-of-Way 3.012 Final Map Street Riqht-of-Way Dedication within Area B 2.006 TOTAL-AREA: B.-GROSS_ACRES- UNION 111 '1 0 PARCEL NUMBER ON PARCE7PARCEL MBER ON TENTATIVE PARCEL MAP FINAL MAP PARCEL SIZE 14 1.050 16 12 2.031 OUTSIDE OUTSIDE 96.259 TOTAL:-EXEMPT=AREA-:GROSS ACRES:---' ---' 99.340 :.;: TOTAL- CFD-BOUNDARY GROSS:ACRES 188.482`;_ Parcei size acreages are from Final Map for parcels with a parcel number in that column. All others are from Tentative Map except the area'outside" both SHEET 1 OF 3 PROPOSED BOUNDARIES OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. RECORDING REQUESTED BY:CITY Of HUNTINGTON BEACH FILED MIS_DAY OF ,2002.AT THE HOUR 01_0'CLOCK_.11..IN 1 BOOK OF MAPS OF ASSESSMENT AND COINMUMTY iM?UTTES DISTRICTS AT PAGE IN THE OFFK;E OF THE COUNTY RECORDER IN THE COUNTY OF ORANGE. C STATE OF CALIFORNIA. y <CFD 140. 2002-1 BY: Y J RENEE RAMIRE2.ACTING COUNTY RECORDER OF COUNTY Of ORANGE I HEREBY CEROfY THAT THE WITHIN MAP SNOWING PROPOSED BOUNDARIES OF e K g J THE CRY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT N0.2002-1 (McDONNCLL F199 - C CENTRE BUSINESSvARK).COUNTY OF ORANGE.STATE Of CAU UL FORN WAS APPROVED - BY THE CITY COUNCIL OF THE CITY Of HUNTINGTON BEACH AT A REGULAR MEETING THEREOF HELD ON THE DAY Of ,7002.BY ITS RESOLUTION I�dw 'c ii 5 NO. FILED IN ME OFFICE OF THE CITY CLERK Of THE.COY OF HUNTINGTON BEACH. THIS DAY OF 2002. VICINITY MAP ,o fG.f ar: CONNIE BROCKWAY.ME CITY CLERK OF THE CITY OF HUNTINGTON BEACH f BASIS OF BfARI N04 THE BEARING SHOWN HEREON ARE BASED UPON l..2 THE CENTERuNE OF BOLSA AVENUE.BEARING JAH AOAMS R.C.E.21887 EKP 9-30-2005 N89'25'20^W.PER PARCEL MAP NO.97-T90 FILED IN BOOK 299.PAGES 3 AND a OF PARCEL MAPS.RECORDS OF ORANGE COUNTY.CAUFORNIA. NOTE: /\ FOR LEGAL DESCRIPTION OF CFO-2002-1 - •... BOUNDARY.SEE SHEET 3. Ks T07 ASSESSORS yARLEI.NUMBERS 195-;tI-03 - t95- tT-2a j � �?Q CRTT t95-tTt-29 R . I /• 2ai SE I � sKTiAe RDAD NAP. lNAP. iI f R aA NAP. ------------------ ---------------------- Y I 1 1 I I NAP. i9C 2 I'-.aI SHEET INDEX MAP RELIMiNARY — J.N.00-1340 SHEET 2 OF 3 PROPOSED BOUNDARIES OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK) COUNTY OF ORANGE, STATE OF CALIFORNIA. LEGEND: CFD NO. 2002-1 BOUNDARY ® EXEMPT LAND El IMPROVEMENT AREA "A' ❑ IMPROVEMENT AREA "B" ''200 3W 2eo,off d m ear GPAP/eC SCALE:I'-.Tod CURVE TABLE CURVE DELTA RADIUS LENGTT I 89•O-W 25m W14 6 09'49'15' 47G00 8056 7 89'.d31' 27SO A226 1. 'IS'23'36' 470= 126.32 31 9 16'S2'1.' 8 ..9 2...83 10 90'02'S8' 27.00 12.43 LINE TABLE LINE LENGTH BE _ LI 215.65 NOD'32V9'E ,r-Cl L2 12.76 N89-2731-V L3 151.53 NDO'32'09'E 2 LI 281.29 N89'23.561V L5 127.43 N39'2934'v /� • L6 28155 N50-W%'E '! L7 20aD7 M89.23'.9'V L9 37t.70 NB9'28'11'V i/ 7. 1' 16 '\ T-ect�l' 01 \gran L.112V anm 0 - - w2] T-26-0Y 'Y I 34170` -•- - Q NW27aTw `i tte4ra. ■, S1t�Nf am yjet.7v U n �• Nu' i 1�f � Ntr,T2YE J qS 1� # _ - T-".A.W;w i m t $in i.t 290.ea U I tma.tw h S .. IN ~ ���„ 1 i ` ` O N,LP, o ItlR2.•IrE.t.«• 11W rzrC alas• i MDT]2�YE a6.1O tma.•,rE 2aa«• 227. i' 3n i ab.60' �6 4-74• t - ]e0.N'C, 56'A ee41t!•- $ JCL BOLSA AVENUE PRELIMINARY 1K eD-I3W PROPOSED BOUNDARIES OF SHEET 3 OF 3 THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK) COUNTY OF ORANGE, STATE OF CALIFORNIA. LINE TABLE LINE LENGTH BEARING LEGAL DESRPTION OF C.F.D.NO.2002-1 BOUNDARY, LI 370.50 N00435005-E L2 13100 K'890241'550W PARCEL I _ L3 13100 N89.240554V L. 120.42 HOO.35.05-E PACCE:6.MD PARCEL 3 AS SHOWN ON THE MAP FILED IN BOOK 1, L5 141.75 N89'24'55'V PAGES 3 THROUGH 5 OF PARCEL MAPS.IN THE OFFICE OF THE L6 89 141.75 N '24'S5-V COUHIY RECORDER OF ORANGE COUNTY,iALPORNYL L7 120.42 N00'35'05'E OCEPIINC THEREFROM THE LAND INCLUOED WITHIN THE 06TINCTI4E LB 129.66 N00.35'05'E BORDER OF PARCEL IMP NO.87-424,AS SHOWN ON THE MAP FILED L9 __64A7 _M89-24.55-V IN BOOK 237.PACES a,5,AND 8 OF SAID PARCEL MAPS. LIO Is" .00.3S'05'E LII 23&0. N89.21•55•V ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE L12 A.75 N00'35'OS'E DISMNOWE BORDER OF PARCEL MAP NO.97-198.AS SHOWN ON THE MAP FILED IN BOOK 299.PAGES 8 ANO 9 OF SAID PARCEL 113 11.95 N89'24'S5'V MAPS- LI. 11.95 N8924•55'V L15 S58 x00.35'05'E ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITH ME L16 15,17 N89.24'55'V WTIMCTNE BORDER OF PARCEL MAP NO.97-189.AS SHOWN ON L17 2.58 NOO.35'05'E THE MAP FILED IN BOOK 299.PAGES I AND 2 OF SAID PARCEL MAPS LIS 9.83 N89.24'55'V L19 2.58 N00.35'05-E i ALSO EXCEPTING IHEREFRDM THE LAND INCLUDED WITHIN THE L20 240.16 N89-2A'S5'v DISTINCTIVE BORDER OF PARCEL MAP N0.97-190.AS SHOWN ON L21 2.58 N00.35'05•F MAP FILED IN BOOK 299,PACES 3 ARO. SAID PARCEL YAPS. L22 9.83 N89-24-55-V ALSO EXCEPTING THEREFROM PARCEL 4 OF PARCEL MAP NO.95-186 - L23 2.58 N00.350050E AS SHOWN ON ME MAP FILED IN BOOK 296.PACES 3 AND a OF L24 MIT N89.24'55•V SW PARCEL YAPS. L25 S58 NOO.35'05'E PARCEL 2: L26 11.95 N89.24'55•V L27 23158 NW35.05-E PARCEL'A'OF PARCEL MAP 97-190.IN THE CITY OF HUNTINCTON L29 55.51 N00.35'05'E BEACH,COUNTY OF ORANGE.STATE OF CALIFORNIA.AS SHOWN ON L29 0.38 N89.2V550V THE MAP FILED IN BOOK 299,PACES 3 MO•OF PARCELS MAPS,IN L. 9.83 N00.35'OS'E THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. L31 0.38 N89.2N'S5'v L32 156.33 N0035'05'E PARCEL}; L33 18.66 NOO'35'05'E W THAT PORTION OF SKYLAB RO ,IN TILE CITY OF HUNTINGTON BEACH, L34 213.04 N89.24055'V COUNTY OF ORANGE,STATE OF CALIFORMA,AS SHOWN ON PARCEL L35 2.59 N0095.05-E I MAP NO.95-168.FILED IN BOOK 296.PAGES J AND a FO PARCEL L36 9.03 N89.24-55-V YAPS.IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, L37 2.58 NOO 35'O5'E LYING WESTERLY OF THE FOLLOWING DESCRIBED UNE: L38 1117 .89.24-55'. BECININ AT THE WESTERLY TERMINUS OF THAT CERTAIN COURSE L39 S58 N00.35'05'E SHOWH AS'NORM 89'24'21'WEST 502.81 FEET ON THE NORM LINE LAOk9.8 N892N'S5•V OF PARCEL a OF SAID MAP;THENCE NORTHERLY IN A DIRECT LINE L41N89.2N155'V TO THE WESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS LN2NW35'O5'E 'NORM 89'2s'21'WWEST 592.38 FEED ON THE SOUTH LINE OF LA3 N89.24055'V PARCEL 1 OF PARCEL MAP NO,97-190,FILED IN BOOK 299,PAGES J AND♦OF PARCEL MAPS,IN SAID OFFICE OF THE COUNTY LNAN00.3S'OS'E -" I RECORDER LASN89.24.55•W LK6N00.35'05'E L47H892N'S5'V U9 LNBx00'35'OS'E N9M892N'S5'V Li7L43 AIL50 N00'35'05'E _ L51 4.22 N89.2N'S5'V T J J L32 993 N00.35.0YE L60 L53 A.22 N99.24.55-W L54 19.42 N00'35'05'E ® O L55 64.07 N89.24'S5'V L56 222.50 NOO.35.05-E L57 210-00 N00.35'05-E N.A.F. N.A.P. L59 33600 N003505•E Lk L60 10637 N8924'35'V L61 15J L3. L3 L61 156.40 MOO.35'05'E L55 \ L62 20163 N89.2N•55'V 1 L63 16000 N89.2 N'S5'V L64 N0500 N00.33'OS'E L65 160.00 N892A'35'V L66 N0100 N00'35'OS'E LI31 •h�_t l l\ L29 0 ul N.A.P. L5 L1. N.A.P. L2 JI �L1B L22 L20 I U - L63 PRELIMINARY a _�- _-__---------- --- J.H.00-1340 i i 4111102-3:35 PM Page 1 of t McDonnell Centre Business Park -Community Facilities District No. 2002-1 Land Development Analysis-8 Quarters Prepared By: John S.Adams&Associates all f Otr 2 Orr 3 Orr 4 Orr 5 Qlr 6 Ott 7 Ott 6 Lend price grows by 1.25%per quarter beginning quarter three Apr-02 Jul-02 Oc602 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-G3 Dec-03 Mar-04 Totals Check Gross Sales So.Ft. $PSF Amne�u Sales Group 1 181;242 $16.38 2,968,748 2,968,748 2,968,748 Sales Group 2 181.242 $16.38 2,968,748 - 2,963.748 - '2,968,748 Sales Group 3 181.242 $16.58 3,005,858 - 3.005.858 - 3,005,858 Sales Group 4 181,242 $16.79 3.043,431 - 3,043,431 - - 3,043,431 Sales Gloup5 181,242 $17.00 3,081,474 3,081,474 - 3,081,474 Sales Group 6 181,242 $17.21 3,119,992 - 3,119,992 - 3,119,992 Sales Group 7 181,242 $17.43 3,158,992 - - 3,158,992 - 3.158,992 Sales Group 8' 181,242 $17.65 3.198,480 - - - 3,198,480 3.198,480 Total Gross Sales 1,449,938 $16.93 24,545,723 2,968,748 2,968,748 3.005,858 3,043,431 3.081,474 3,119,992 3,158,992 3,198,480 24,545,723 Development Costs S Amount CFD No.2002-1 4,410,000 1,470,000 1,470,000 1.470,000 4,410,000 Total Development Costs 4,410,000 1,470,000 1,470,000 1.470.000 - 4,410,000 Sales Costs Units Factor Amount Sales(:s of gross sales) 5.00% ' 1,227,286 148,437 148.437 150,293 152,172 154,074 156.000 157,950 159,924 1,227,286 Marketing 8 Closing(%of gross sales) 1.00% 245.457 29,687 29,687 30,059 30,434 30,815 31,200 31,590 31,985 245,457 Taxes/Admin/OH(%of gross sales) 1.50% 368,186 44,531 44,531 45,088 45.651 46,222 46.800 47,385 47.977 368,186 CFD Special Tax(see notes below) 419,404 93,201 81.551 69,901 58,251 46,600 .34,950 23,300 11,650 419,404 Total Sales Costs 2,260,333 .315.857 304.207 295,340 286,508 277,711 268,950 260,225 251,536 2,260,333 Net Cash Flow S Amount Total Gross Sales 24.545,723 2,968,748 2,968,748 3,005,858 3,043.431 3,081,474 3,119.992 3,158.992 3,198,480 24,545,723 Total Development Costs (4,410,000) (1,470,000) (1,470,000) (1,470,000) - - - - - (4,410,000) Total Sales Costs (2,260,333) (315,857) (304,207) (295,340) (286,508) (277,711) (268.950) (260,225) (251,536) (2,260,333) Total Net Cash Flow 17,875,390 1,182,891 1,194,542 1,240,518 2,756.923 2,803,763 2,851,043 2,898.768 2,946.944 17,875.390 CFD Special Tax Tax Rate Per Acre Per Year $11.200 Acres in this CFD 33.286 Total Annual Special CFD Tax $372,803 Total Quarterly Special CFD Tax $93,201 Number of Quarters of this Analysis 8 Y a 4/11/02-3:35 PM McDonnell Centre Business Park - Community Facilities District No. 2002-1 Land Development Analysis- 8 Quarters Prepared By., John S.Adams&Associates i 3 Net Present Value of Development Cash Flow- Annual Quarterly Net Present Discount Rate Discount Rate value of CF S PSF 15.00% 3.56% 14,934,894 10.30 15.50% 3.67% 14,853,088 10.24 16.00%.. 3.78% 14,772,157 :10.19 16.50% 3.89% 14,692,089 10.13 17.00% 4.00% 14,612,869 10.08 17.50% 4.11% 14,534,486 10.02 18.00% 4.22% 14,456,927 9.97 18.50% 4.33% 14,380,179 9.92 19.00% 4.44% 14,304,230 9.87 19.50% 4.55% 14,229,068 9.81 20.00% 4.66% 14,154,682 9.76 20.50% 4.77% 14,081,060 9.71 21.00% 4.88% 14,008,191 9.66 21.50% 4.99% 13,936,064 9.61 22.00% 5.10% 13,864,668 9.56 22.50% 5.20% 13,793,993 9.51 23.00% 5.31% 13,724,028 9.47 23.50% 5.42% 13,654,763 9.42 24.00% 5.53% 13,586,187_ 9.37 24.50% 5.63% 13,518,293 9.32 25.00% 5.74% 13,451,068 9.28 QUALIFICATIONS - OF JOHN S.ADAMS,MAI,CRE PROFESSIONAL EXPERIENCE -Real Estate Appraiser and Consultant with offices located at: 5100 Birch Street, Second Floor Newport Beach, California 92660 Telephone(949) 833-1972 Facsimile(949) 851-2055 is Actively engaged in real estate since 1963. Principal, John S. Adams & Associates, Inc. since 1972; Formerly Assistant Vice President and Chief Appraiser ALCAL Financial Corporation; Assistant Vice President and Senior.Appraiser Financial Appraisals, Inc.; Staff Appraiser Equitable Savings and Loan Association and Coachella Valley Savings and Loan Association. r- PROFESSIONAL AFFILIATIONS Member, Appraisal Institute(MAI) Member, American Society of Real Estate Counselors(CRE) LICENSES State.of California- Certified General Real Estate Appraiser OREA Appraiser Identification Number AG001754 EDUCATION University of California,Los Angeles Certificate in Real Estate Appraisal Institute { Specialized Appraisal Courses and Seminars CLIENTS (Partial List) Corporations Aluminum Company of America Ford Motor Company General Dynamics Hyundai Motor America International Paper Company Kaiser Permanente Kawasaki Motors Corporation, Inc. Mazda North America Mercedes Benz Credit Corporation Pacific Bell Pfizer,Inc. Southern California Edison Company Toshiba America, Inc. Developers/Investors Aldrich,Eastman&Waltch,L.P. Arnel Development Company Birtcher Carson Estate Company Catellus Development Corporation C.J. Segerstrom& Sons Focus Real Estate Hunsaker Development Company The Irvine Company The Koll Company Layton-Belling Associates Mark IV Capital, Inc. Shaw Investment Company Trico Realty Inc. Turner Development Corporation Financial Institutions Allstate Life Insurance Company The Bank of Hemet Chinatrust Bank(U.S.A.) Cigna Investments, Inc. Citibank _ . First Bank&Trust GMAC Commercial Mortgage General American Life Insurance Company Independent Order of Foresters Manulife Financial Mellon First Business Bank Metropofitan Life Insurance Company Northwestern Mutual Life Insurance Company Omaha Woodman Life Insurance Society Pacific Mercantile Bank Pacific Mutual Life Insurance Prudential Mortgage Capital Safeco Insurance Companies State Farm Life Insurance Company Transamerica Life Insurance and Annuity Company Union Bank U.S. Bank National Association Wells Fargo Bank Western Financial Bank Weyerhaeuser Realty Investors JOHN S. ADAMS & ASSOCIATES, INC. 5100 BIRCH STREET, NEWPORT BEACH, CALIFORNIA 92660 (949) 833-1972 FAX (949) 851-2055 April 22, 2002 Mr. David C. Biggs Economic Development Director City of Huntington Beach 2000 Main Street Huntington Beach, California 92649 Re: Proposed Right-of-Way Acquisition The McDonnell Centre Business Park Huntington Beach, California . Dear Mr. Biggs: This letter supplements the appraisal report dated April 1, 2002 that covers the land within Area A of CFD 2002-1. Purpose of Report The purpose of this supplement is to reflect the value of the land being acquired for street purposes as a part of the development of Area A&B of the McDonnell Centre Business Park. This supplement is subject to all of the assumptions, limiting conditions and data contained in the April 1, 2002 report. The following is a summary of the data considered for this analysis. Intended Use of Appraisal '. This appraisal is prepared for the exclusive use of the City of Huntington Beach for land acquisition purposes. Date Of Value The value opinion expressed herein is stated as of March 29, 2002, the date of our last inspection of the subject property. The date of the report is April 22, 2002, the date of our completion of the analysis and report. Mr. David C. Biggs City of Huntington Beach April 22, 2002 Definition of Market Value The term "market value" as used in this report is defined as being: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised, and each acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure in the open market. r 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; S. The price represents a normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Pronerty Rights Appraised The property rights appraised are a fee simple interest. Definition of a Fee Simple Interest A fee simple interest is defined as "absolute ownership unencumbered by any other interest or estate; subject only to the limitations of eminent domain, escheat, police power, and taxation." A fee simple interest in real property includes all interests, benefits and rights inherent in the j ownership of physical real estate. ?: Le2al Description A complete legal description has not been provided. r. • i. JOHN S. ADAMS&c ASSOCIATES,INC. "� 0213-2 2 Mr. David C. Biggs City of Huntington Beach April 22, 2002 Location The McDonnell Centre Business Park, of which the subject land is a part, is located within the Northeast quadrant of the intersection of Bolsa Avenue and Bolsa Chica Street in the City of Huntington Beach. Site Description The larger parcel, from which the subject land is being acquired, is irregular in shape and totals 89.142 acres or 3,883,025 square feet. The property consists of the following. Parcel Area Property Acres Square Feet Area A—Net Acres 33.286 1,449,938 Area A— Streets 6.781 295,380 Area B —Net Acres 43.785 1,907,275 Area B — Streets 5.018 218,584 City Well Site 0.272 11,848 Total Gross Area 89.142 3,883,025 Right-of-Way Acquisition The areas to be acquired for street right-of-way are as follows. Parcel Area Area Acres Square Feet A 6.781 295,380 B 3,012 131,203 B 2.006 87,381 Total 11.799 513,964 This is the land area that is the subject of this appraisal. JOHN S. ADAMS&ASSOCIATES,INC. a� 0213-2 3 Mr. David C. Biggs City of Huntington Beach April 22, 2002 Tentative Parcel Man The larger parcel is proposed to be developed into smaller parcels in two phases. These phases are designated Improvement Area A and B. Area A and B will be subdivided into 18 individual parcels with areas as follows, based on Tentative Parcel Map No. 2001-122. Area A Tentative Map Parcel Area Parcel Number Acres Square Feet 4 5.235 228,037 5 5.099 222,112 6 4.364 190,096 7 4.359 189,878 8 4.241 184,738 9 3.027 131,856 10 4.597 200,246 11 2.364 102,976 Sub Totals 33.286 1,449,939 Area B Tentative Map Parcel Area Parcel Number Acres Square Feet 1 6.338 276,083 - 2 5.938 258,659 3 5.820 253,519 12 2.443 106,417 13 2.841 123,754 15 2.228 97,052 17 5.647 245,983 18 4.424 192,709 :. 3 JOHN S.ADAMS&ASSOCIATES,INC. i : 0213-2 4 Mr. David C. Biggs City of Huntington Beach April 22, 2002 Tentative Map Parcel Area Parcel Number Acres Square Feet 19 4.067 177,159 20 4.039 175,939 Sub Totals 43.785 1,907,274 Totals 77.071 3,357,213 The parcel areas shown are net after street dedication. Zoning The General Plan Designation for the subject is industrial with a floor ratio of 0.75. The subject property is within Planning Area 4 under Specific Plan Number 11 — McDonnell Centre Business Park. This planning area encompasses approximately 79.5 gross acres and is improved with 1,070,710 square feet of existing aerospace facilities. The following land use summary is designated for this planning area. Industrial Use Office Use Commercial Use Total Building Land Building Land Building Land Building Land Sq. Ft. Acres Sq. Ft. Acres Sq. Ft. Acres Sq. Ft. Acres 1,688,223 62.2 562,740 17.3 ---- --- 2,250,963 79.5 A total of 2,250,963 square feet of allowed development is a 0.65 floor area ratio. Planning Area 4 is divided into three subareas, Subareas G, H and I. Under these subareas the following uses are permitted. Industrial: Existing aerospace facilities, as well as manufacturing, warehousing, light industrial and research and development uses. Commercial: Communication facilities, eating and drinking establishments, maintenance and repair services and warehouse and sales outlets. Office: Business and professional, research and development services, and laboratories. JOHN S.ADAMS&ASSOCIATES,INC: 0213-2 5 Mr. David C. Biggs City of Huntington Beach April 22, 2002 Public and Semi Public: Conference facilities, day care, general governmental facilities, heliports maintenance and service facilities and public utilities and facilities. Street Improvement Costs The estimated cost for infrastructure improvements for the subject property totals $4,583,615 or $1.18 per square foot of gross land area. Sales Comparison Approach The following land sales were utilized to establish the retail land values for the subject parcels. HUNTINGTON BEACH Data Number Sale Parcel Size Sale Price and Location Date Acres Sq.Ft. Total Per Sq.Ft. No. l Escrow 1.029 44,822 $825,000 $18.41 W.side Metzler Ln 3-02 S.of Slater Ave. Huntington Beach No.2 10-99 0.540 23,520 $423,500 $18.01 N.side Commercial Dr. E.of Chemical Ln. Huntington Beach No. 3 10-99 3.980 173,369 $2,463,500 $14.21 NEC Graham St. &McFadden Ave. Huntington Beach No.4 6-98 0.592 25,780 $438,500 $17.01 SWC Machine Dr. &Electric Ln. Huntington Beach No. 5 6-98 0.541 23,564 $409,000 $17.36 E.side Connector Ln. N.of Machine Dr. Huntington Beach Y , JOHN S.ADAMS&ASSOCIATES,INC. 0213-2 6 Mr. David C. Biggs City of Huntington Beach April 22, 2002 ADJACENT COMMUNITIES Data Number Sale Parcel Size Sale Price . and Location Date Acres Sq. Ft. Total Per Sq.Ft. No.6 Escrow 5.270 229,561 $3,788,000 $16.50 SEC Knott St. 3-02 &Patterson Dr. Garden Grove No.7 5-01 3.700 161,172 $2,982,000 $18.50 N.side Katella Ave. W. of Walker St. Cypress No.8 10-00 8.090 352,400 $6,167,000 $17.50 E.Side Walker St. N.of Katella Ave. Cypress No. 9 11-99 17.952 781,989 $12,908,000 $16.51 NWC Walker St. + 1,051,000 + 1.34 &Katella Ave. Bonds Bonds Cypress $13,959,000 $17.85 No. 10 1-00 7.588 330,533 $6,326,000 $19.14 SEC Harbor Blvd. &MacArthur Bl. Costa Mesa No. 11 6-00 0.975 42,474 $531,000 $12.50 S. side Blades Ave. W.of Monarch St. Garden Grove No. 12 6-00 11.859 516,578 $5,682,000 $11.00 E. side Hoover St. N.of Bolsa Ave. Westminster In addition to the above sales, the following is a historical summary of land sales within the McDonnell Centre Business Park. HISTORICAL SALES—MCDONNELL CENTRE BUSINESS PARK Data Number Sale Parcel Size Sale Price and Location Date Acres Sq.Ft. Total Per Sq. Ft. No. 13 12-93 11.884 517,667 $4,270,000 $8.25 NEC Skylab Rd. &Able Ln. Huntington Beach JOHN S. ADAMS&ASSOCIATES,INC. 0213-2 7 Mr. David C. Biggs City of Huntington Beach April 22, 2002 HISTORICAL SALES—MCDONNELL CENTRE BUSINESS PARK Data Number Sale Parcel Size Sale Price and Location Date Acres Sq.Ft. Total Per Sq. Ft. No. 14 12-95 23.439 1,021,003 $10,210,000 $10.00 NEC Bolsa Ave. &Springdale St. Huntington Beach No. 15 3-97 7.55 329,879 $3,395,000 $10.29 SEC Skylab Rd. &Able Ln. Huntington Beach No. 16 3-97 5.55 241,758 $2,525,000 $10.44 SWC Skylab Rd. &Able Ln. Huntington Beach No. 17 12-97 2.212- 96,355 $1,490,000 $15.46 SEC Skylab Rd. &Bolsa Chica Rd. Huntington Beach No. 18 12-97 5.10 222,156 $2,521,500 $11.35 W.side Able Ln. N.of Bolsa Ave. Huntington Beach No. 19 12-97 6.41 279,220 $3,937,000 $14.10 NWC Bolsa Ave. &Able Ln.. Huntington Beach No.20 6-98 6.834 297,689 $3,990,000 $13.40 SWC Skylab Rd. &Springdale St. Huntington Beach No.21 6-98 13.069 569,286 $7,903,000 $13.88 NWC Skylab Rd. &Able Ln. Huntington Beach No.22 12-98 5.50 239,580 $3,234,000 $13.50 NWC Skylab Rd. &Springdale St. Huntington Beach Based on these land sale transactions we have concluded at the following land values for each parcel. JOHN S. ADAMS&ASSOCIATES,INC. 0213-2 8 Mr. David C. Biggs City of Huntington Beach April 22, 2002 Area A Tentative Map Parcel Area Estimated Market Value Parcel Number Acres Square Feet Per Sq. Ft. Total 4 5.235 228,037 $16.50 $3,763,000 5 5.099 222,112 16.50 3,665,000 6 4.364 190,096 16.50 3,137,000 7 4.359 189,878 16.50 3,133,000 8 4.241 184,738 16.50 3,048,000 9 3.027 131,856 16.00 2,110,000 10 4.597 200,246 16.00 3,204,000 11 2.364 102,976 16.50 1,699,000 Sub Totals 33.286 1,449,939 $16.38 $23,759,000 . Avg Area B ' Tentative Map Parcel Area Estimated Market Value Parcel Number Acres Square Feet Per So. Ft. Total 1 6.338 276,083 $16.50 $4,555,000 2 5.938 258,659 16.50 4,268,000 _ 3 5.820 253,519 16.50 4,183,000 12 2.443 106,417 16.00 1,703,000 13 2.841 123,754 16.00 1,980,000 15 2.228 97,052 16.50 1,601,000 17 5.647 245,983 16.00 3,936,000 18 4.424 192,709 16.50 3,180,000 19 4.067 177,159 16.50 2,923,000 20 4.039 175,939 16.50 2,903,000 i Sub Totals 43.785 1,907,274 $16.38 $31,232,000 AvQ Totals 77.071 3,357,213 $16.38 $54,991,000 - Avg JOHN S. ADAMS&ASSOCIATES, INC. 0213-2 9 Mr. David C. Biggs City of Huntington Beach April 22, 2002 Value of Larger Parcel Value Net Acres Improved: $ 54,991,000 Less Street Improvement Costs: - 4,583,615 Land Value Net Acres Unimproved: $ 50,407,385 Less Discount for Size, Carry and Marketing Costs at 10% - 5,040,739 INDICATED MARKET VALUE UNIMPROVED: $ 45,366,646 This is equal to $13.51 per square foot of net land area and $11.68 per square foot of gross land area. Value of Area to be Acquired Land Area to be Acquired is 11.799 Acres or 513,964 Square Feet. $11.68 per Sq. Ft. x 513,964 Sq. Ft. _ $ 6,003,100 Round To: $ 6,003,000 INDICATED MARKET VALUE OF PROPOSED RIGHT-OF-WAY ACQUISITION: $ 6,003,000 Limiting Conditions This appraisal report has been based upon the following premises and limiting conditions: 1. The date of value to which the conclusions and opinions expressed in this report apply, is set forth in the report. Further, the dollar amount of any value opinion rendered in this E report is based upon the purchasing power of the American dollar existing on that date. 2. The appraiser assumes no responsibility for economic or physical factors which may affect the opinions in this report which occur after the date of value. a : 5 - 3. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. i p.. F JOHN S. ADAMS&ASSOCIATES,INC. 0213-2 10 Mr. David C. Biggs City of Huntington Beach Ap1i122, 2002 4. The appraiser, reserves the right to make such adjustments to the analyses, opinions and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. 5. No opinion as to title is rendered. Data related to ownership and legal description is considered reliable. Title is assumed to be marketable and free and clear of all liens, encumbrances, easements and restrictions except those specifically discussed in the report. The property is appraised assuming it to be under responsible ownership-and competent management, and available for its highest and best use. 6. The appraiser assumes no responsibility for hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for arranging:for engineering studies that may be required to discover them. 7. The property is appraised assuming it to be in full compliance with all applicable federal, state, and local environmental regulations and laws, unless otherwise stated. s 8. The property is appraised assuming that all applicable zoning and use regulations and restrictions have been complied with, unless otherwise stated. k. 9. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based, unless otherwise stated. 10. No engineering survey has been made by the appraiser. Except as specifically stated, data relative to size and area was taken from sources considered reliable and no encroachment of real property improvements is considered to exist. „ . 11. No opinion is expressed as to the value of subsurface oil, gas or mineral rights or whether the property is subject to surface entry for the exploration or removal of such materials except as is expressly stated. -' 12. No soil reports concerning the subject property were available to this appraiser. The valuation assumes that soil conditions are adequate to support standard construction consistent with highest and best use. 13. Maps, plats, and exhibits included in this report are for illustration only as 'an aid in visualizing matters discussed within the report. They should not be considered as surveys.or relied upon for any other purpose. 14. No opinion is intended to be expressed for matters which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. - 15. The appraiser, by reason of this appraisal, shall not be required to give testimony or to be in attendance in court or any governmental or other hearing with reference to the subject property, without prior arrangements having been made with the appraiser relative to such additional employment. 16. Neither all nor any part of the contents of this report shall be conveyed to any person or g entity, other than the appraiser's or firm's client, through advertising, solicitation materials, JOHN S.ADAMS&ASSOCIATES,INC. 0213-2 11 Mr. David C. Biggs City of Huntington Beach April 22, 2002 public relations, news, sales, or other media without the written consent and approval of the authors, particularly as to valuation conclusions, the identity of the appraiser or firm with which the appraiser is connected, or any reference to the Appraisal Institute or the MAI designation. Further, the appraiser or firm assumes no obligation, liability, or accountability to any third party. If this report is placed in the hands of anyone but the client, client shall make such party aware of all the assumptions and limiting conditions of the assignment. 17. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 18. The appraiser has not been provided any information regarding the presence of any material s=_ or substance on or in any portion of the subject property or improvements thereon, which material or substance possesses or may possess toxic, hazardous and/or other harmful and/or dangerous characteristics. These materials or substances include, but are not limited to, asbestos, polychlorinated biphenyl, petroleum leakage, ureaformaldehyde, foam insulation or agricultural chemicals. Unless otherwise stated in the report, the appraiser did not become aware of the presence of any such material or substance during the appraiser's inspection of the subject property. However, the appraiser is not qualified to investigate or test for the presence of such materials or substances. The presence of such materials or substances may adversely affect the value of the subject property. The value estimated in this report is predicated on the assumption that no such material or substance is present on or in the subject property, or in such proximity thereto that it would cause a loss in value. The appraiser assumes no responsibility for the presence of any such substance or material on or in the subject property, nor for any expertise. or engineering knowledge required to discover the presence of such substance or material. Unless otherwise stated, this report assumes the subject property is in compliance with all federal, state and local environmental laws, regulations and rules. 19. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey and analysis of this property to determine whether or not the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. Certification The undersigned hereby certifies that, to the best of our knowledge and belief, • The statements of fact contained in this report are true and correct. k ; The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest with respect to the parties involved. 5 JOHN S.ADAMS&ASSOCIATES,INC. i 0213-2 12 Mr. David C. Biggs City of Huntington Beach April 22, 2002 • We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • Our engagement in this assignment was not contingent upon developing or reporting predetermined results. • Our compensation is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. • Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice. • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • As of the date of this report, John S. Adams has completed the requirements under the continuing education program of the Appraisal Institute. • We have made a personal inspection of the property that is the subject of this report. • No one provided significant professional assistance to the persons signing this report. • We meet the requirements of the Competency Provision of the Uniform Standards of - Professional Practice. Respectfully submitted, JOHN S. ADAMS & ASSOCIATES, INC. 0000, hn S. Adams, MAI California Certification No. AG001754 ii L F,.� JOHN S.ADAMS&ASSOCIATES,INC. r• U 0213-2 I3 v _. �`.. 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C) - • �•�it4i4 --"� :�� ---'� i ;I'' ARC 4.', , ' � �'�'.�'.m eS�a.,.`., DATE FFEPAMD W. - _:.:�' r : -.� e Tentative Parcel 1 F PARCEL 1 tt f r PAf2CE� '_ PM°97-189 PARCEL 4 .::.(Ir V Map No.. 2 0 01 - 12 2 1 PM 97-190 a: I j PlAB'299/1-2 ; ,ski ; PMB 299/3-a F ^� APPENDIX D IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) 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. 2002-1 (McDonnell Centre Business Park) (herein "CFD No. 2002-1") shall be levied and collected according to the special tax liability determined by the Administrator through the application of the procedures described below. The real property in Improvement Area A of CFD No. 2002-1,unless exempted by law or by the provisions hereof, shall be specially 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 of Special Tax: Acre or Acreage means the.land area of an Assessor's Parcel as shown on the applicable final map, parcel map, or 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 that 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 Improvement Area A of CFD No. 2002- 1: the fees and expenses of any Fiscal Agent (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;costs related to credit enhancement for the Bonds;the expenses of the Administrator and the City in carrying out their duties under any Indenture,including,but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, Bond redemption expenses, charges levied by the County or any division or office thereof in connection with the levy and collection of the Special Tax, audits, and amounts needed to pay arbitrage rebate to the federal government with respect to the 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 any delinquent Special Tax; and all other costs and expenses of City, the Administrator, the County, and any Fiscal Agent, escrow agent D-1 or trustee related to the administration of Improvement Area A of CFD No. 2002-1 or any Bonds. Administrator means the Director of Administrative Services of the City or such other person or entity designated by the City Administrator 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 that is located within Improvement Area A of CFD No. 2002-1. 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 Improvement Area A of CFD No. 2002-1 under the Act. Bond Fund means the fund or account created pursuant to the Indenture in which the collections of the Special Tax are deposited. ' Bond Year means the one year period from September 2 to the following September 1. 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. 2002-1. County means the County of Orange. Delinquencies mean the amount, if any, equal to delinquencies in payment of the Special Tax levied in Improvement Area A of CFD No. 2002-1 in the previous Fiscal Year. Exempt Land means (1) any real property within the boundaries of Improvement Area A of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes,including,but not limited to,streets,water well production facilities,public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent or trustee who is a party to the Indenture. 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. Improvement Area A means any real property within the boundaries of CFD No. 2002- 1 as depicted on the boundary map for said CFD entitled "Proposed Boundaries of The City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), County of Orange, State of California" and approved by the City Council. Said Improvement D-2 Area A is comprised generally of Parcels 4 through 11, the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Astronautics Road, Street 'B' and Street 'C'; as shown on Tentative Parcel Map No. 2001-122 on file with the City. Said Improvement Area A is also envisioned to include Parcels 1 through 8, the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Delta Lane and Astronautics Lane; as shown on proposed Final Parcel Map No. 2001-226 and encompassing approximately 40.339 gross acres and 33.286 net taxable acres. In no case shall the net taxable acres in Improvement Area A be less than 33.286. 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. Infrastructure means the public improvements authorized to be financed by Improvement Area A of CFD No. 2002-1 in accordance with the terms of the Act. Interest Payment Date means any date on which regularly scheduled principal and/or interest payments are due on the Bonds. Maximum Special Tax means, with respect to any Assessor's Parcel of Taxable Property,the maximum Special Tax determined in accordance with Section C that can be levied in any Fiscal Year on such Assessor's Parcel. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Property Owner means the owner of an Assessor's Parcel within the boundaries of Improvement Area A of CFD No. 2002-1 as determined from the latest equalized tax rolls of the County or as proved through some other acceptable manner to the Administrator. Reserve Fund means the fund of that name created under the Indenture. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax on Taxable Property within Improvement Area A of CFD No. 2002-1. Special Tax Requirement means the amount required in any Fiscal Year for Improvement Area A of CFD No. 2002-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond 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 due and estimated by the Administrator to become due prior to the next levy of the Special Tax, and (iv) to cure any Delinquencies in the payment of principal or interest on indebtedness of Improvement Area A of CFD No. 2002-1. The Special Tax Requirement shall be reduced by the following: (i) any credit from interest earnings on the Reserve Fund or other Bond funds the earnings on which are available under the terms of the Indenture to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax Levy, and (iii) any other funds D-3 legally available to apply against the Special Tax Requirement as determined by the Administrator. Taxable Property means all of the Assessor's Parcels within the boundaries of Improvement Area A of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. B. IDENTIFYING TAXABLE PROPERTY On or about each July 1st, the Administrator shall determine which Assessor's Parcels in Improvement Area A of CFD No. 2002-1 are Taxable Property. The Taxable Property shall be subject to the Special Tax 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 each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maximum Special Tax shall increase in every Fiscal Year thereafter by two percent(2%) of the Maximum Special Tax for the prior Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003, and during each Fiscal Year thereafter, the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent (100%) of the Maximum Special Tax for that Fiscal Year,as described in Section C,above,as needed to satisfy the Special Tax Requirement. E. LIMITATIONS No Special Tax shall be levied on an Assessor's Parcel after such Assessor's Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2002-2003, 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). Upon determination by the Administrator that this requirement has been met, the Special Tax lien shall be removed from all Assessor's Parcels in Improvement Area A of CFD No. 2002-1. F. MANNER OF COLLECTION The Special Tax shall be collected at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2002-1 may at any time directly bill the Special Tax, may D-4 collect the Special Tax at a different time or 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. G. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section G.: 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 which 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 in Improvement Area A 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 D-5 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 of Improvement Area A 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 iri 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 D-6 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 Improvement Area A of CFD No. 2002-1 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 G.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 G.1,minus the amounts determined in Paragraph No. 8 of Section G.1. F = the percent by which the owner of an Assessor's Parcels) is partially prepaying the Maximum Special Tax. G = the amounts determined in Paragraph No. 8 of Section G.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. 2002-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section G.1, and (ii) indicate in the records of Improvement Area A of CFD No. 2002-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the D-7 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. H. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Administrator not later than one calendar year after having paid the Special Tax that is disputed. The Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Administrator's decision requires that the Special Tax be modified or changed in favor of the property owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Administrator shall be referred to the City Council and the decision of the City Council shall be final. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. D-S APPENDIX E GENERAL INFORMATION REGARDING THE CITY OF HUNTINGTON BEACH The information in this Appendix is provided as general background data. The Series 2002-A Bonds are payable solely from the proceeds of the-levy of the Special Tax on land within Improvement Area A and certain funds held under the Fiscal Agent Agreement as described in this Official Statement. The City has no liability whatsoever with respect to the payment of the Series 2002-A Bonds. See the section in the Official Statement entitled "SECURITY FOR THE SERIES 2002-A 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 1,107 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 Debbie Cook,Mayor November 2004 Connie Boardman,Mayor Pro Tem November 2004 Ralph Bauer,Councilmember November 2002 Pam Julien Houchen, November 2004 Councilmember Shirley Detloff,Councilmember November 2002 Peter Green,Councilmember November 2002 Grace Winchell,Councilmember November 2002 E-1 KEY ADMINISTRATIVE PERSONNEL Ray Silver City Administrator David Biggs Director of Economic Development Clay Martin Director of Administrative Services Daniel Villella Finance Officer Shari L. Freidenrich City Treasurer Gail Hutton City Attorney Connie Brockway City Clerk Bill Workman Assistant City Administrator Governmental Services Public Safetij and Welfare Law enforcement and fire protection services are provided by the City. The Huntington Beach Police Department currently employs 254 sworn officers. The Huntington Beach Fire Department employs 141 sworn fire fighters operating out of seven 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 Additional services include parkway and median maintenance and improvements, refuse management, sewer and storm drain maintenance, zoning and development administration, environmental 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 Meri s and Women 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 1997 and_2001. CHANGE IN POPULATION CITY OF HUNTINGTON BEACH, SURROUNDING CITIES AND ORANGE COUNTY 1997-2001 HUNTINGTON BEACH SURROUNDING CITIES* ORANGE COUNTY Percentage Percentage Percentage Year Population Change Population Change Population Change 1997 189,800 229,000 2,677,500 1998 193,300 1.8% 233,600 2.0% 2,734,500 2.1% 1999 197,600 2.2% 237,100 1.5% 2,788,800 2.0% 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% *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." Personal Income Personal income information for Huntington Beach, Orange County, the State of California and the United States are summarized in the following charts. E-3 PERSONAL INCOME CITY OF HUNTINGTON BEACH,ORANGE COUNTY, STATE OF CALIFORNIA AND UNITED STATES 1996-2000 Year Huntington Beach Orange County State of California United States 1996 $46,622 $42,747 $35,216 $33,482 1997 48,659 42,715 36,483 34,618 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 Source: Sales and Marketing Management,"Survey of Buying Power." Employment and Industry The City is located in the Orange County labor market area. Four major job categories constitute 82% of the work force. They are services (31.7%), wholesale and retail trade (24.1%), manufacturing. (16.3%) and government (9.9%). The March, 2002 unemployment rate in the Orange County area was 3.7%. The State of California March, 2002 unemployment rate (unadjusted) was 6.8%. The distribution of employment in the County of Orange is presented in the following tables: ORANGE COUNTY MSA WAGE AND SALARY WORKERS BY INDUSTRY (1) (in Thousands) Industry 1997 1998 1999 2000 2001 Government 125.5 127.1 133.8 138.1 142.8 Services 377.4 399.6 420.6 439.8 455.7 Finance,Insurance&Real Estate 94.3 100.9 104.4 105.7 108.5 Wholesale&Retail Trade 309.8 323.6 331.6 340.2 346.1 Transportation&Public Utilities 44.4 46.4 48.6 51.9 53.1 Manufacturing: Nondurable goods 73.4 74.1 75.2 77.2 77.9 Durable goods 149.7 158.3 154.3 155.3 156.3 Construction and Mining 59.7 68.7 76.4 82.8 86.9 Total Nonagricultural 1,234.2 1,298.7 1,344.9 1,391.0 1,427.3 Agriculture,forestry&fisheries 6.9 7.1 6.9 7.6 8.2 Total(all industries) 1,241.1 1,305.8 1,351.8 1,398.6 1,435.5 E-4 %OF TOTAL WORKERS Industry 1997 1998 1999 2000 2001 Government 10.1% 9.7% 9.9% 9.9% 9.9% Services 30.4% 30.6% 31.1% 31.4% 31.7% Finance,Insurance&Real Estate 7.6% 7.7% 7.7% 7.6% 7.6% Wholesale&Retail Trade 25.0% 24.8% 24.5% 24.3% 24.1% Transportation&Public Utilities 3.6% 3.6% 3.6% 3.7% 3.7% Manufacturing: Nondurable goods 5.9% 5.7% 5.6% 5.5% 5.4% Durable goods 12.1% 12.1% 11.4% 11.1% 10.9% Construction and Mining 4.8% 5.3% 5.7% 5.9% 6.1% Total Nonagricultural 99.4% 99.5% 99.5% 99.5% 99.4% Agriculture,forestry&fisheries 0.6% 0.5% 0.5% 0.5% 0.6% Total(all industries) 100.0% 100.0% 100.0% 100.0% 100.0% (1)Annually,as of July. Source: State of California Employment Development Department,"Annual Planning Information' and "California Labor Market Bulletin". The major employers operating within -the City and their respective number of employees as of September 30,2001 are as follows: CITY OF HUNTINGTON BEACH LARGEST EMPLOYERS Number of Name of Company Employees Product/Service The Boeing Company 7,000 Aerospace Huntington Beach Union High School District 1,200 Education City of Huntington Beach 1,107 City Administration Oceanview School District 1,000 Education Quiksilver 900 Manufacturing Cambro Manufacturing .800 Manufacturing C&D Plastics 569 Manufacturing Huntington Beach City School District 500 Education E-Trade Mortgage 431 Electronic Mortgage Broker Dynamic Cooking Systems 400 Manufacturer Huntington Beach Hospital 375 Health Care GTE California 352 Communications Home Depot USA 266 Retail BSH Home Appliance 231 Retail Golden West College 212 Education Source: City of Huntington Beach. E-5 Commercial Activity The following charts summarize the volume of retail sales and taxable transactions for the City of Huntington Beach for 1996 through 2000. CITY OF HUNTINGTON BEACH TOTAL TAXABLE TRANSACTIONS (in Thousands) 1996-2000 Retail Retail Total Taxable Issued Sales Sales Transactions Sales Year ($000's) % Change Permits ($000's) % Change Permits 1996 1,214,347 1,865 1,582,927 6,910 1997 1,262,807 4.0% 1,851 1,675,185 5.8% 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 Source: State Board of Equalization, "Taxable Sales in California",published annually in November for prior year. 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 1996-2000 %Change from City 1996 1997 1998 1999 2000 1996-2000 HUNTINGTON BEACH $1,582,927 $1,675,185 $1,813,622 $2,043,221 $2,335,272 47.5% Fountain Valley 741,413 747,375 779,984 801,623 809,965 9.2% Costa Mesa 2,357,142 2,528,479 2,656,273 2,825,793 3,108,323 31.9% Newport Beach 1,187,127 1,372,867 1,490,995 1,641,782 1,763,466 48.5% 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 1996 through 2000 are summarized in the table below. E-6 CITY OF HUNTINGTON BEACH TAXABLE TRANSACTIONS BY TYPE OF BUSINESS 1996-2000 1996 1997 1998 1999 2000 Retail Stores Apparel Stores $ 69,614 $ 71,679 $ 72,084 $ 76,093 $ 80,763 General Merchandise Stores 113,840 140,723 144,168 152,810 159,064 Drug Stores 29,697 Food Stores 94,204 98,774 101,447 106,630 109,850 Packaged Liquor Stores 12,504 Eating/Drinking Places 156,626 167,671 178,565 189,740 199,428 Home Furnishings and Appliances 85,184 81,197 89,553 94,848 103,067 Building Materials and Farm Implements 96,661 122,239 121,506 165,281 187,158 Auto Dealers/Suppliers 263,422 258,289 303,496 349,601 408,833 Service Stations 112,867 113,232 103,220 121,357 138,004 Other Retail Stores 179,728 209,003 227,220 275,201 310,790 Total Retail Stores $1,214,347 $1,262,807 $1,341,259 $1,531,561 1,696,957 All Other Outlets . 368,580 412,378 472,363 511,660 638,315 Total All Outlets $1,582,927 $1,675,185 $1,813,622 $2,043,221 2,335,272 *As of 1997, "Drug Stores" has been merged with "General-Merchandise Stores" and "Packaged Liquor Stores"has been merged with"Other Retail Stores." Source: State Board of Equalization, "Taxable Sales in California",published annually in November for prior year. E-7 Building Activity The following charts summarize building activity valuations for the City of Huntington Beach for the five-year period from 1996 through 2000. CITY OF HUNTINGTON BEACH BUILDING ACTIVITY AND VALUATION (Valuation in Thousands of Dollars) 1996 1997 1998 1999 2000 Residential: New Single-Family $43,245 $186,843 $93,178 $110,093 $99,647 New Multi-Family 0 2,214 4,043 7,185 858 Total Residential $43,245 $189,057 $97,221 $117,278 $100,505 Commercial: New Commercial $ 4,133 $ 8,001 $17,233 $ 21,713 $18,538 New Industrial 13,800 8,057 13,464 11,340 6,526 Other 17,936 23,401 36,638 20,402 22,248 Additions,alterations 13,809 11,084 14,359 32,873 20,363 Total Nonresidential $49,678 $ 50,543 $ 81,694 $ 86,328 $ 67,855 Total Valuation $92,923 $239,600 $178,915 $203,606 $168,360 No. of New Dwelling Units: Single-Dwelling 195 800 421 425 427 Multi-Dwelling 0 20 32 44 6 Total New Units 195 820 453 469 433 Source: City of Huntington Beach. E-8 APPENDIX F FORMS OF CONTINUING DISCLOSURE CERTIFICATES CONTINUING DISCLOSURE CERTIFICATE - ISSUER This Continuing Disclosure Certificate-Issuer (the "Disclosure Certificate') is-executed and delivered by the City of Huntington Beach (the "City") in connection with the issuance of $4,900,000 Improvement Area A ("Improvement Area A") of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A (the "Bonds"). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of June 1,2002 (the "Fiscal Agent Agreement"),between the City and BNY Western Trust Company, as fiscal agent (the "Fiscal Agent"). The City, on behalf of Improvement Area A,covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by Improvement Area A for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section. 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by Improvement Area A pursuant to,and as described in,Sections 3 and 4 of this Disclosure Certificate. "Dissemination Agent" shall mean the Fiscal Agent, acting in the capacity as Dissemination Agent under this Disclosure Certificate, or any successor Dissemination Agent designated in writing by Improvement Area A and which has filed with Improvement Area A and the Fiscal Agent a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "National Repositonf shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Participating Underwriter" shall mean Stone &Youngberg LLC,the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repositonf' shall mean each National Repository and each State Repository. F-1 "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repositonf' shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. Section 3. Provision of Annual Reports. (a) The City shall, or upon written request shall cause the Dissemination Agent to, not later than March 31 of each year, commencing with March 31, 2003,provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate, with a copy to the Fiscal Agent and the Participating Underwriter. Not later than fifteen (15) Business Days prior to said date, the City shall provide the Annual Report to the Dissemination Agent. The City shall provide a written certification with each Annual Report furnished to-the Dissemination Agent, the Fiscal Agent and the Participating Underwriter to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder. The Dissemination Agent and the Fiscal Agent may conclusively rely upon such certification of the City, and shall have no duty or obligation to review such Annual Report. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and not later than the date required above for the filing of the Annual Report if not available by that date. If the City's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) If the City is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the City shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository,if any;and (ii) to the extent the Annual Report has been provided to the Dissemination Agent, file a report with the City and the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. Section 4. Content of Annual Reports. The City's Annual Report shall contain or incorporate by reference the following: (a) The City's audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to F-2 time by the Governmental Accounting Standards Board, and as further modified according to applicable State law. If the City's audited financial statements are not available by the time the Annual Report is required to.be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the usual format utilized by the City, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following additional items: 1. Principal amount of Bonds outstanding. 2. Balance,if any,in the improvement fund for the Bonds. 3. Balance in the reserve fund for the Bonds. 4. The assessed value of all parcels in the District subject to the Special Taxes for the most recent year. 5. Special Tax and property tax delinquency rate for parcels in the District for the most recent year. 6. Concerning delinquent parcels: • number of parcels delinquent in payment of Special Tax, • amount of total delinquency and as a percentage of total Special Tax levy,and • status of Improvement Area A's actions on covenants to pursue foreclosure proceedings upon delinquent properties. 7. Identity of any delinquent tax payer obligated for more than 10% of the annual Special Tax levy and: • assessed value of applicable properties,and • summary of results of foreclosure sales,if available. 8. Significant amendments to land use entitlements for property in Improvement Area A known to the City's Director of Administrative Services. 9. Status of any significant legislative, administrative, and judicial challenges to the construction of the development in Improvement Area A known to the City's Director of Administrative Services, without independent inquiry, for any year in which construction activity has occurred in Improvement Area A. 10. To the extent not otherwise provided pursuant to the preceding items 1-9, annual information required to be filed by Improvement Area A with the California Debt and Investment Advisory Commission pursuant to Sections 50075.1, 50075.3, 53359.5(b),53410(d) or 53411 of the California Government Code. F-3 Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds,if material: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers,or their failure to perform. (6) Adverse tax opinions or events affecting the tax-exempt status of the security. (7) Modifications to rights of security holders. (8) Bond calls. (9) Defeasances. (10) Release,substitution,or sale of property securing repayment of the securities. (11) Rating changes. (b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall as soon as possible, but in no event later than ten (10) business days after the occurrence thereof,determine if such event would be material under applicable Federal Securities law. (c) If the City determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the City shall promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository, with a copy to the Fiscal Agent and the Participating Underwriter. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected Bonds pursuant to the Fiscal Agent Agreement. Section 6. Termination of Reporting Obligation. The City's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to act as such under this Disclosure Certificate, and may discharge any F-4 such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Fiscal Agent. The Dissemination Agent may at any time resign by providing thirty days written notice to the City (if the then Dissemination Agent is other than the City) and the Fiscal Agent, such resignation to become effective .upon acceptance of appointment by a successor Dissemination Agent. Upon receiving notice of such resignation, the City shall promptly. appoint a successor -Dissemination Agent by an instrument in writing, delivered to the Fiscal Agent. If no appointment of a successor Dissemination Agent shall be made pursuant to the forgoing provisions of this Section within forty-five (45) days after the Dissemination Agent shall have given to the City and the Fiscal Agent written notice of its resignation, the Dissemination Agent may apply to any court of competent jurisdiction to appoint a successor Dissemination Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Dissemination Agent. The City shall provide.the Fiscal Agent with written notice of the identity of any successor Dissemination Agent appointed or engaged by the City. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived,provided that the following conditions are satisfied: (a) the amendment or waiver, if it relates to annual or event information to be provided, is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identify, nature, or status of Improvement Area A,or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel have complied with the requirements of the Rule at the time of the primary offering of the Bonds,after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (c) the proposed amendment or waiver (i) is approved by owners of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the owners or beneficial owners of the Bonds;and (d) no amendment increasing or affecting the obligations or duties of Improvement Area A, the City, the Dissemination Agent or the Fiscal Agent shall be made without the consent of such party. If any annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. F-5 If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of Improvement Area A to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5(c). Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed a default under the Fiscal Agent Agreement,and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and, if the Dissemination Agent is other than the City, Improvement Area A agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall be paid compensation by Improvement Area A for its services provided hereunder and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent, if the Dissemination Agent is other than the City, shall have no duty or obligation to review any information provided to it by the City and shall not be deemed to be acting in any fiduciary capacity for the City, the Bondholders or any other party. The obligations of Improvement Area A under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. F-6 Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City,Improvement Area A, the Dissemination Agent,the Participating Underwriter and the owners and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Dated as of June 1,2002 CITY OF HUNTINGTON BEACH,for itself and on behalf of IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) By: Mayor Attest: By: City Clerk Reviewed and Approved: By: City Administrator Reviewed and Approved as to Form: By: City Attorney BNY Western Trust Company agrees to act as Dissemination Agent pursuant to the foregoing Continuing Disclosure Certificate-Issuer By: Its: F-7 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Huntington Beach Name of Bond Issue: Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds,Series 2002-A Date of Issuance: June_,2002 NOTICE IS HEREBY GIVEN that the City of Huntington Beach (the "City") has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate-Issuer dated as of June 1, 2002 executed by the City for the benefit of the owners and beneficial owners of the above-referenced bonds. The City anticipates that the Annual Report will be filed by Dated: CITY OF HUNTINGTON BEACH By: Its: cc: BNY Western Trust Company 700 South Flower Street,Suite 500 Los Angeles,CA 90017-4104 Attn: Corporate Trust F-9 CONTINUING DISCLOSURE CERTIFICATE -LANDOWNER This Continuing Disclosure Certificate-Landowner (the "Disclosure Certificate') is executed and delivered by McDonnell Douglas Corporation (the "Landowner") in connection with the issuance of $4,900,000 Improvement Area A ("Improvement Area A") of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A (the "Bonds"). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of June 1, 2002 (the "Fiscal Agent Agreement"), between the City of Huntington Beach (the "City") and BNY Western Trust Company, as fiscal agent (the "Fiscal Agent"). The Landowner covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Landowner for the benefit of the owners and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Affiliate" of another Person means (a) a Person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of such other Person, (b) any Person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other Person, (c) any Person directly or indirectly controlling such other Person, and (d) with respect to any general partner of a partnership or member of a limited liability company for purposes hereof, control means the power to exercise a controlling influence over the management or policies of a Person,unless such power is solely the result of an official position with such Person. "Allocable Share of the Principal of the Bonds" means, with respect to any County Assessor's Parcel of land within Improvement Area A, an amount equal to the then Outstanding principal of the Bonds and any Parity Bonds, multiplied by a fraction the numerator of which is the Special Tax levied on such parcel in the preceding Bond Year and the denominator of which is the aggregate Special Tax levied in Improvement Area A; provided 'that for any period prior to which Special Taxes have been levied in the preceding Bond Year the numerator of such fraction shall be the acreage of such parcel and the denominator shall be the total acreage of all parcels in Improvement Area A subject to the levy of Special Taxes. "Assumption Agreement" means an agreement between an owner of the land located in Improvement Area A, or an Affiliate thereof, and the Dissemination Agent containing terms substantially similar to this Disclosure Certificate, whereby such entity or Affiliate agrees to provide annual reports and notices of significant events to the Dissemination Agent of the character described in Sections 3 and 4 hereof, with respect to the portion of the Property owned by such entity and its Affiliates and which contains an assumption provision of the character set forth in Section 6 hereof. F-10 "City"means the City of Huntington Beach. "Disclosure Representative" means the Director of Business Operations of Boeing Realty Corporation, or his designee, or such other officer,employee or agent as the Landowner or such Disclosure Representative shall designate in writing to the. Dissemination Agent and the City from time to time. "Dissemination Agent" shall mean the Fiscal Agent, acting in the capacity as Dissemination Agent under this Disclosure Certificate, or any successor Dissemination Agent designated in writing by the City and which has filed with the Landowner, the City and the Fiscal Agent a written acceptance of such designation. "Event of Bankruptcy" means,with respect to a Person,that such Person files a petition or institutes a proceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby such Person asks or seeks or prays to be adjudicated a bankrupt,or is to be discharged from any or all of such Person's debts or obligations, or offers to such Persons creditors to effect a composition or extension of time to pay such Persons debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of such Person's debts,or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character is filed or instituted or taken against such Person, or if a receiver of the business or of the property or assets of such Person is appointed by any court, or if such Person makes a general assignment for the benefit of such Person's creditors. "Fiscal Year" shall mean the Landowner's fiscal year for its financial accounting . purposes. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Participating Underwriter'' shall mean Stone &Youngberg LLC,the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. "Property" means the fee interest in the real property within the boundaries of Improvement Area A on which Special Taxes are authorized to be levied by Improvement Area A. "Repository" shall mean each National Repository and each State Repository. F-11 "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Semiannual Report" shall mean any Semiannual Report provided by the Landowner pursuant to,and as described in,Sections 3 and 4 of this Disclosure Certificate. "State Repositonf'-shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. Section 3. Provision of Semiannual Reports. (a) Until this Disclosure Certificate terminates in accordance with Section 7 below, the Landowner shall, or shall cause the Dissemination Agent to, not later than three months after each June 30 and December 31, commencing with the report for December 31, 2002, provide to each Repository a Semiannual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate,with a copy to the City, the Participating Underwriter and the Fiscal Agent. Not later than fifteen (15) Business Days prior to said date, the Landowner shall provide the Semiannual Report to the Dissemination Agent. The Landowner shall provide a written certification with each Semiannual Report furnished to the Dissemination Agent, the City, the Participating Underwriter and the Fiscal Agent to the effect that such Semiannual Report constitutes the Semiannual Report required to be furnished by the Landowner hereunder. The Dissemination Agent, Improvement Area A, the City and the Fiscal Agent may conclusively rely upon such certification of the Landowner, and shall have no duty or obligation to review such Semiannual Report. The Semiannual Report may .be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4(a) of this Disclosure Certificate. (b) If the Landowner is unable to provide to the Repositories a Semiannual Report by a date required in the first sentence of subsection (a), the Landowner shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Semiannual Report the name and address of each National Repository and each State Repository,if any; and (ii) to the extent the Semiannual Report has been provided to the Dissemination Agent, file a report with the Landowner, the City and the Fiscal Agent (if the Dissemination Agent is other than the Fiscal Agent) certifying that the Semiannual Report has been provided pursuant to this Disclosure Certificate, F-12 stating the date it was provided and listing all the Repositories to which it was provided. Section 4. Content of Semiannual Reports. The Landowner's Semiannual Report shall contain or incorporate by reference the following: (a) Until the completion of the public and private improvements being constructed by the Landowner or any Affiliate thereof located within Improvement Area A (the "Improvements') as described in the Official Statement for the Bonds, a description of any material changes to the plan of development for the Improvements from that described in the Official Statement. (b) A description of the status of completion of the Improvements. (c) Any delinquency in the payment of Special Taxes by the Landowner or any Affiliate thereof. (d) Any pending litigation which would adversely affect the ability of the Landowner to complete the Improvements or to pay Special Taxes levied on the Property. (e) Any sale by The Boeing Company of a material interest in the Landowner, and, if all or a substantial portion of the ownership interest of The Boeing Company in the Landowner is sold, any subsequent material change in the ownership of the Landowner. (f) A description of any sales or long-term leases by the Landowner of all or any part of the property in Improvement Area A since the last report by the Landowner hereunder, including the identification of the purchaser or lessee, and the number of acres sold or leased. (g) The assumption of any obligations of the Landowner pursuant to Section 6. In addition to any of the information expressly required to be provided as described above, the Landowner shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made,not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Landowner or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Landowner shall clearly identify each such other document so included by reference. F-13 Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Landowner shall give, or cause to be given,notice of the occurrence of any of the following events,if material: (i) failure by the Landowner or any Affiliate thereof to pay any real property taxes (including any Special Taxes) levied within Improvement Area A, (ii) material damage to or destruction of any of the Improvements, (iii) default by the Landowner or any Affiliate thereof on any loan with respect to the construction or permanent financing of the Improvements,and (iv) The occurrence of an Event of Bankruptcy with respect to the Landowner. (b) Whenever the Landowner obtains knowledge of the occurrence of a Listed Event, the Landowner shall as soon as possible determine if such event would be material under applicable Federal securities law. (c) If the Landowner determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Landowner shall promptly file, or cause the Dissemination Agent to file, a notice of such occurrence with the Municipal Securities Rulemaking Board and each Repository, with a copy to the City,the Participating Underwriter and the Fiscal Agent. Section 6. Assumption of Obligations. If the Property owned by the Landowner,or any Affiliate of the Landowner, other than Property with respect to which the assessed value of the applicable County Assessor's Parcel is at least ten times the parcel's Allocable Share of the Principal of the Bonds,which is responsible for the payment of twenty percent(20%) or more of the Special Taxes levied in Improvement Area A, is to be conveyed to a Person, or following any conveyance by. the Landowner the Person will so own Property responsible for the payment of twenty percent (20%) or more of the Special Taxes in Improvement Area A, the Landowner shall include a provision in the conveyance agreement for such Person to agree to execute an Assumption Agreement following the closing of escrow for the conveyance. The Landowner shall enter into an Assumption Agreement with any Person described in the preceding paragraph, which Assumption Agreement shall be in form and substance satisfactory to the City, or the acquiring entity shall otherwise enter into an agreement with the Dissemination Agent in form substantially identical to this Disclosure Certificate (except for the identity of the "Landowner" therein). From and after the date on which an Assumption Agreement (or replacement agreement in form substantially equivalent to this Disclosure Certificate) is executed with respect to any Property,the Landowner shall no longer be required to comply with the requirements of this Disclosure Certificate with respect to such Property; provided however that if,following a conveyance by the Landowner of the character described in the first sentence of this Section 6, an Assumption Agreement (or replacement agreement in form substantially equivalent to this Disclosure Certificate) is not executed (other than by reason of the willful misconduct of the Dissemination Agent), the Landowner shall continue to comply with the requirements of this Disclosure Certificate and, for purposes of Section 3, the F-14 term "Landowner" shall include, in addition to Landowner, the Person to whom the Property has been conveyed. Section 7. Termination of Reporting Obligation. The Landowner's obligations under this Disclosure Certificate shall terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the Bonds, (b) the date on which the Landowner and all Affiliates of the Landowner own Property in Improvement Area A,other than Property with respect to which the assessed value of the applicable County Assessor's Parcel is at least ten times the parcel's Allocable Share of the Principal of the Bonds, which in the aggregate is responsible for the payment of less than twenty percent (20%) of the Special Taxes levied in Improvement Area A (subject, however, to the last paragraph of Section 6 above), (c) the date on which the assessed value of each County Assessor's Parcel owned by the Landowner in Improvement Area A that is subject to the levy of Special Taxes to pay debt service on the Bonds is at least ten times each respective parcel's Allocable Share of the Principal of the Bonds, and (d) the date on which the Landowner delivers to the City and the Dissemination Agent an opinion of bond counsel acceptable to the City to the effect that the continuing disclosure provided for in this continuing Disclosure Certificate is no longer required under the Rule to allow the Participating Underwriter to deal in the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Landowner shall give, or cause to be given, notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to act as such under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Fiscal Agent. The Dissemination Agent may at any time resign by providing thirty days written notice to the City, the Landowner and the Fiscal Agent, such resignation to become effective upon acceptance of appointment by a successor Dissemination Agent. Upon receiving notice of such resignation, the City shall promptly appoint a successor Dissemination Agent by an instrument in writing, delivered to the Fiscal Agent and the Landowner. If no appointment of a successor Dissemination Agent shall be made pursuant to the foregoing provisions of this Section within forty-five (45) days after the Dissemination Agent shall have given to the City, the Landowner and the Fiscal Agent written notice of its resignation, the Dissemination Agent may apply to any court of competent jurisdiction to appoint a successor Dissemination Agent. Said court may thereupon after such notice, if any, as such court may deem proper, appoint a successor Dissemination Agent. The City shall provide the Landowner and the Fiscal Agent with written notice of the identity of any successor Dissemination Agent appointed or engaged by the City. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Landowner may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3,4 or 5(a),it may only be made in connection with a change in circumstances that arises from a F-15 change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds,or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or.interpretations of the Rule, as well-as any change in circumstances; (c) the proposed amendment or waiver either (i) is approved by owners of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the owners or beneficial owners of the Bonds;and (d) no amendment increasing or affecting the obligations or duties of the City, the Dissemination Agent or the Fiscal Agent shall be made without the consent of such party. If any annual financial information or operating data provided in any Semi-annual Report (it being acknowledged that Section 4 hereof does not require any financial or.operating data to be included in any Semi-annual Report) is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Landowner from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Landowner chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Landowner shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the Landowner to comply with any provision of this Disclosure Certificate any Participating Underwriter or any owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Landowner to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed a default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the Landowner to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure F-16 Certificate, and the Landowner agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including reasonable attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall be paid compensation by Improvement Area A for its services provided hereunder and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder, promptly following receipt by the City of a written invoice therefor. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Landowner and shall not be deemed-to be acting in any fiduciary capacity for the Landowner, the Bondholders, or any other party. The obligations of Improvement Area A and the Landowner under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. F-17 Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, Improvement Area A, the Landowner (its successors and assigns), the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and the owners and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Dated as of June 1,2002 McDONNELL DOUGLAS CORPORATION By: Its: BNY Western Trust Company agrees to act as Dissemination Agent pursuant to the foregoing Continuing Disclosure Certificate-Landowner By: Its: F-18 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Huntington Beach Name of Bond Issue: Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds,Series 2002-A Date of Issuance:. June 2002 NOTICE IS HEREBY GIVEN that McDonnell Douglas Corporation (the "Landowner") has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate-Landowner dated as of June 1, 2002 executed by the Landowner for the benefit of the owners and beneficial owners of the above-referenced bonds. The Landowner anticipates that the Annual Report will be filed by Dated: ,2002 McDONNELL DOUGLAS CORPORATION By: Its: cc: City of Huntington Beach 2900 Main Street Huntington Beach,California 92648 Attention:Director of Administrative Services . BNY Western Trust Company. 700 South Flower Street,Suite 500 Los Angeles,CA 900174041 Attn: Corporate Trust F-19 APPENDIX G 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 Series 2002-A Bonds, payment of principal, interest and other payments on the Series 2002-A 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 Series 2002-A 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 Series 2002-A Bonds while the Series 2002-A Bonds are in book-entry-only form. As long as a book-entry system is used,the Beneficial Owners of the Series 2002-A Bonds or of interests in the Series 2002-A Bonds will not receive or have the right to receive physical delivery of the Series 2002-A Bonds, and will not be or be considered to be registered owners under the Fiscal Agent Agreement. The beneficial ownership of the Series 2002-A 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 Series 2002-A 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 Series 2002-A Bonds and setting forth certain terms of the Series 2002-A Bonds. G-1 The Fiscal Agent, as long as a book-entry method is used for the Series 2002-A Bonds and the Series 2002-A 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 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, Improvement Area A 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 Series 2002-A Bonds. Payments of principal of or interest on the Series 2002-A Bonds will be made only to DTC or its nominee, Cede & Co., as the registered owner of the Series 2002-A 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 Improvement Area A, subject to any statutory and regulatory requirements as may be in effect from time to time. The City and Improvement Area A 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 Series 2002- A 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 Series 2002-A 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 Series 2002-A 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. G-2 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. G-3 PLANNING CONTEXT 2.2 ZONING REGULATIONS Upon approval and adoption by the City Council, the Edinger Corridor Specific Plan's regulations and development standards shall supersede the relevant provisions of the Huntington Beach Zoning and Subdivision Ordinance as they currently exist or may be amended in the future. If a conflict should arise between the 2.2.1 THE NORTH HUNTINGTON CENTER SPECIFIC PLAN-SP 1 provisions of the Edinger Corridor Specific Plan and the Huntington Beach Zoning and Subdivision Ordinance, the Edinger The North Huntington Center Specific Plan was originally adopted Corridor Specific Plan's regulations and development standards in December 1975 and last amended in July 1991. This Specific shall take precedence. In instances where the Edinger Corridor Plan covers the existing Seawind Village apartments, Old World Specific Plan does not address a specific issue or other relevant Village and One Pacific Plaza to the north of the Huntington considerations, the regulations and standards contained in the Center Specific Plan. To date, the North Huntington Center City's Zoning and Subdivision Ordinance shall apply. Specific Plan site is entirely built out with a mixture of commercial, office, hotel and residential uses. In preparation of the The Edinger Corridor Specific Plan area currently falls into the Edinger Corridor Specific Plan, care has been taken to ensure that following City of Huntington Beach zoning districts, as shown on planning consistency is maintained between the two specific plans Exhibit 2.3,Existing Zoning Designations: and that plan elements of the two projects, such as infrastructure facilities, are complementary. • General Commercial (CG) 0 General Commercial—Floodplain Overlay(CG-FP2) 2.2.2 HUNTINGTON CENTER SPECIFIC PLAN SP 13 0 General Commercial—High Rise Overlay(CG-H) • General Industrial (IG) In August 2000, the City Council adopted the Huntington Center • Low Density Residential (RL) Specific Plan (SP 13) to provide a planning and design framework • Medium-High Density Residential (RMH) for redevelopment of the former Huntington Beach Mall site. The • Public-Semipublic (PS) Specific Plan contains a set of development regulations, standards, and policies to guide future commercial projects on the 63t acre Adoption of the Edinger Corridor Specific Plan will effectively site. These regulations, standards, and guidelines pertain only to change the above zoning designations to "Specific Plan" (SP 14) development on the SP 13 site and do not apply to areas outside for the entire project area, as shown on Exhibit 2.4, Proposed of the SP 13 project boundaries. In preparation of the Edinger Zoning Designation. The Huntington Center Specific Plan (SP 13) Corridor Specific Plan, care has been taken to ensure that planning and the North Huntington Specific Plan (SP 1) will not be consistency is maintained between the two specific plans and that amended by the Edinger Corridor Specific Plan and will be plan elements of the two projects, such as infrastructure facilities, supplemental. are complementary. Edinger Corridor Specific Plan 2-2 April 2002 PLANNING CONTEXT 2.2 ZONING REGULATIONS Upon approval and adoption by the City Council, the Edinger Corridor Specific Plan's regulations and development standards shall supersede the relevant provisions of the Huntington Beach Zoning and Subdivision Ordinance as they currently exist or may be amended in the future. If a conflict should arise between the 2.2.1 THE NORTH HUNTINGTON CENTER SPECIFIC PLAN-SP I provisions of the Edinger Corridor Specific Plan and the Huntington Beach Zoning and Subdivision Ordinance, the Edinger The North Huntington Center Specific Plan was originally adopted Corridor Specific Plan's regulations and development standards in December 1975 and last amended in July 1991. This Specific shall take precedence. In instances where the Edinger Corridor Plan covers the existing Seawind Village apartments, Old World Specific Plan does not address a specific issue or other relevant Village and One Pacific Plaza to the north of the Huntington considerations, the regulations and standards contained in the Center Specific Plan. To date, the North Huntington Center City's Zoning and Subdivision Ordinance shall apply. Specific Plan site is entirely built out with a mixture of commercial, office, hotel and residential uses. In preparation of the The Edinger Corridor Specific Plan area currently falls into the Edinger Corridor Specific Plan, care has been taken to ensure that following City of Huntington Beach zoning districts, as shown on planning consistency is maintained between the two specific plans Exhibit 2.3, Existing Zoning Designations: and that plan elements of the two projects, such as infrastructure facilities, are complementary. • General Commercial (CG) • General Commercial—Floodplain Overlay(CG-FP2) 2.2.2 HUNTINGTON CENTER SPECIFIC PLAN SP 13 • General Commercial—High Rise Overlay(CG-H) • General Industrial.(IG) In August 2000, the City Council adopted the Huntington Center • Low Density Residential (RL) Specific Plan (SP 13) to provide a planning and design framework • Medium-High Density Residential (RMH) for redevelopment of the former Huntington Beach Mall site. The • Public-Semipublic (PS) Specific Plan contains a set of development regulations, standards, and policies to guide future commercial projects on the 63± acre Adoption of the Edinger Corridor Specific Plan will effectively site. These regulations, standards, and guidelines pertain only to change the above zoning designations to "Specific Plan" (SP 14) development on the SP 13 site and do not apply to areas outside for the entire project area, as shown on Exhibit 2.4, Proposed of the SP 13 project boundaries. In preparation of the Edinger Zoning Designation. The Huntington Center Specific Plan (SP 13) Corridor Specific Plan, care has been taken to ensure that planning and the North Huntington Specific Plan (SP 1) will not be consistency is maintained between the two specific plans and that amended by the Edinger Corridor Specific Plan and will be plan elements of the two projects, such as infrastructure facilities, supplemental. are complementary. Edinger Corridor Specific Plan 2-2 April 2002 PLANNING CONTEXT 2.2 ZONING REGULATIONS Upon approval and adoption by the City Council, the Edinger Corridor Specific Plan's regulations and development standards shall supersede the relevant provisions of the Huntington Beach Zoning and Subdivision Ordinance as they currently exist or may be amended in the future. If a conflict should arise between the 2.2.1 THE NORTH HUNTINGTON CENTER SPECIFIC PLAN-SP 1 provisions of the Edinger Corridor Specific Plan and the Huntington Beach Zoning and Subdivision Ordinance, the Edinger The North Huntington Center Specific Plan was originally adopted Corridor Specific Plan's regulations and development standards in December 1975 and last amended in July 1991. This Specific shall take precedence. In instances where the Edinger Corridor Plan covers the existing Seawind Village apartments, Old World Specific Plan does not address a specific issue or other relevant Village and One Pacific Plaza to the north of.the Huntington considerations, the regulations and standards contained in the Center Specific Plan. To date, the North Huntington Center City's Zoning and Subdivision Ordinance shall apply. Specific Plan site is entirely built out with a mixture of commercial, office, hotel and residential uses. In preparation of the The Edinger Corridor Specific Plan area currently falls into the Edinger Corridor Specific Plan, care has been taken to ensure that following City of Huntington Beach zoning districts, as shown on planning consistency is maintained between the two specific plans Exhibit 2.3,Existing Zoning Designations: and that plan elements of the two projects, such as infrastructure facilities, are complementary. • General Commercial (CG) • General Commercial—Floodplain Overlay(CG-FP2) 2.2.2 HUNTINGTON CENTER SPECIFIC PLAN SP 13 • General Commercial—High Rise Overlay(CG-H) • General Industrial (IG) In August 2000, the City Council adopted the Huntington Center • Low Density Residential (RL) Specific Plan (SP 13) to provide a planning and design framework • Medium-High Density Residential (RMH) for redevelopment of the former Huntington Beach Mall site. The • Public-Semipublic (PS) Specific Plan contains a set of development regulations, standards, and policies to guide future commercial projects on the 63f acre Adoption of the Edinger Corridor Specific Plan will effectively site. These regulations, standards, and guidelines pertain only to change the above zoning designations to "Specific Plan" (SP 14) development on the SP 13 site and do not apply to areas outside for the entire project area, as shown on Exhibit 2.4, Proposed of the SP 13 project boundaries. In preparation of the Edinger Zoning Designation. The Huntington Center Specific Plan (SP 13) Corridor Specific Plan, care has been taken to ensure that planning and the North Huntington Specific Plan (SP 1) will not be consistency is maintained between the two specific plans and that amended by the Edinger Corridor Specific Plan and will be plan elements of the two projects, such as infrastructure facilities, supplemental. are complementary. Edinger Corridor Specific Plan 2-2 April 2002 PLANNING CONTEXT 2.2 ZONING REGULATIONS Upon approval and adoption by the City Council, the Edinger Corridor Specific Plan's regulations and development standards shall supersede the relevant provisions of the Huntington Beach Zoning and Subdivision Ordinance as they currently exist or may be amended in the future. If a conflict should arise between the 2.2.1 THE NORTH HUNTINGTON CENTER SPECIFIC PLAN-SP 1 provisions of the Edinger Corridor Specific Plan and the Huntington Beach Zoning and Subdivision Ordinance, the Edinger The North Huntington Center Specific Plan was originally adopted Corridor Specific Plan's regulations and development standards in December 1975 and last amended in July 1991. This Specific shall take precedence. In instances where the Edinger Corridor Plan covers the existing Seawind Village apartments, Old World Specific Plan does not address a specific issue or other relevant Village and One Pacific Plaza to the north of the Huntington considerations, the regulations and standards contained in the Center Specific Plan. To date, the North Huntington Center City's Zoning and Subdivision Ordinance shall apply. Specific Plan site is entirely built out with a mixture of commercial, office, hotel and residential uses. In preparation of the The Edinger Corridor Specific Plan area currently falls into the Edinger Corridor Specific Plan, care has been taken to ensure that following City of Huntington Beach zoning districts, as shown on planning consistency is maintained between the two specific plans Exhibit 2.3,Existing Zoning Designations: and that plan elements of the two projects, such as infrastructure facilities, are complementary. • General Commercial (CG) • General Commercial—Floodplain Overlay(CG-FP2) 2.2.2 HUNTINGTON CENTER SPECIFIC PLAN SP 13 • General Commercial—High Rise Overlay(CG-H) • General Industrial (IG) In August 2000, the City Council adopted the Huntington Center • Low Density Residential (RL) Specific Plan (SP 13) to provide a planning and design framework • Medium-High Density Residential (RMH) for redevelopment of the former Huntington Beach Mall site. The • Public-Semipublic (PS) Specific Plan contains a set of development regulations, standards, and policies to guide future commercial projects on the 63f acre Adoption of the Edinger Corridor Specific Plan will effectively site. These regulations, standards, and guidelines pertain only to change the above zoning designations to "Specific Plan" (SP 14) development on the SP 13 site and do not apply to areas outside for the entire project area, as shown on Exhibit 2.4, Proposed of the SP 13 project boundaries. In preparation of the Edinger Zoning Designation. The Huntington Center Specific Plan(SP 13) Corridor Specific Plan, care has been taken to ensure that planning and the North Huntington Specific Plan (SP 1) will not be consistency is maintained between the two specific plans and that amended by the Edinger Corridor Specific Plan and will be plan elements of the two projects, such as infrastructure facilities, supplemental. are complementary. Edinger Corridor Specific Plan 2-2 April 2002 PLANNING CONTEXT 2.2 ZONING REGULATIONS Upon approval and adoption by the City Council, the Edinger Corridor Specific Plan's regulations and development standards shall supersede the relevant provisions of the Huntington Beach Zoning and Subdivision Ordinance as they currently exist or may be amended in the future. If a conflict should arise between the 2.2.1 THE NORTH HUNTINGTON CENTER SPECIFIC PLAN-SP 1 provisions of the Edinger Corridor Specific Plan and the Huntington Beach Zoning and Subdivision Ordinance, the Edinger The North Huntington Center Specific Plan was originally adopted Corridor Specific Plan's regulations and development standards in December 1975 and last amended in July 1991. This Specific shall take precedence. In instances where the Edinger Corridor Plan covers the existing Seawind Village apartments, Old World Specific Plan does not address a specific issue or other relevant Village and One Pacific Plaza to the north of the Huntington considerations, the regulations and standards contained in the Center Specific Plan. To date, the North Huntington Center City's Zoning and Subdivision Ordinance shall apply. Specific Plan site is entirely built out with a mixture of commercial, office, hotel and residential uses. In preparation of the The Edinger Corridor Specific Plan area currently falls into the Edinger Corridor Specific Plan, care has been taken to ensure that following City of Huntington Beach zoning districts, as shown on planning consistency is maintained between the two specific plans Exhibit 2.3,Existing Zoning Designations: and that plan elements of the two projects, such as infrastructure facilities, are complementary. • General Commercial (CG) • General Commercial—Floodplain Overlay(CG-FP2) 2.2.2 HUNTINGTON CENTER SPECIFIC PLAN SP 13 • General Commercial—High Rise Overlay(CG-H) • General Industrial (IG) In August 2000, the City Council adopted the Huntington Center • Low Density Residential (RL) Specific Plan (SP 13) to provide a planning and design framework • Medium-High Density Residential (RMH) for redevelopment of the former Huntington Beach Mall site. The • Public-Semipublic (PS) Specific Plan contains a set of development regulations, standards, and policies to guide future commercial projects on the 63± acre Adoption of the Edinger Corridor Specific Plan will effectively site. These regulations, standards, and guidelines pertain only to change the above zoning designations to "Specific Plan" (SP 14) development on the SP 13 site and do not apply to areas outside for the entire project area, as shown on Exhibit 2.4, Proposed of the SP 13 project boundaries. In preparation of the Edinger Zoning Designation. The Huntington Center Specific Plan (SP 13) Corridor Specific Plan, care has been taken to ensure that planning and the North Huntington Specific. Plan (SP 1) will not be consistency is maintained between the two specific plans and that amended by the Edinger Corridor Specific Plan and will be plan elements of the two projects, such as infrastructure facilities, supplemental. are complementary. Edinger Corridor Specific Plan 2-2 April 2002 t Quint&Thimmig LLP FINAL ACQUISITION AGREEMENT by and between the CITY OF HUNTINGTON BEACH and BOEING REALTY CORPORATION Dated as of June 1, 2002 Relating to: Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) 08003.07 j6176 s TABLE OF CONTENTS ARTICLE I DEFINITIONS Section1.01. Definitions.................................................................................................................I ARTICLE II RECITALS Section2.01. The CFD....................................................................................................................4 Section 2.02. The Development...............................................................:.......................................4 Section 2.03. The Facilities..............................................................................:...............................4 Section2.04. The Financing............................................................................................................4 Section2.05. The Bonds..................................................................................................................4 Section 2.06. No Advantage to City Construction.............................................................................4 Section2.07. Agreements...............................................................................................................4 ARTICLE III FUNDING Section3.01. CFD Proceedings........................................................................................................6 Section3.02. Bonds.........................................................................................................................6 Section3.03. Bond Proceeds............................................................................................................6 ARTICLE IV CONSTRUCTION OF FACILITIES Section4.01. Plans..................................................................... ......................................................8 Section 4.02. Duty of Developer to Construct..................................................:................................8 Section 4.03. Relationship to Public Works;Bidding Requirements..................................................8 Section 4.04. Independent Contractor............................................................................................10 Section 4.05. Performance and Payment Bonds..............................................................................10 Section 4.06. Contracts and Change Orders...................................................................................10 Section 4.07. Time for Completion.................................................................................................I I ARTICLE V ACQUISITION AND PAYMENT Section5.01. Inspection.................................................................................................................12 Section 5.02. Agreement to Sell and Purchase Facilities..................................................................12 Section 5.03. Payment Requests....................................................................................................12 Section 5.04. Processing Payment Requests...................................................................................12 Section5.05. Payment...................................................................................................................13 Section 5.06. Restrictions on Payments..........................................................................................13 Section 5.07. Acquisition of Additional Facilities............................................................................16 Section 5.08. Defective or Nonconforming Work............................................................................16 Section 5.09. Modification of Discrete Components.........................................................................16 ' ARTICLE VI OWNERSHIP AND TRANSFER.OF FACILITIES Section 6.01. Facilities to be Owned by the City-Conveyance of Land and Easements to City........17 Section 6.02. Facilities to be Owned by the City-Title Evidence...................................................17 Section 6.03. Facilities Constructed on Private Lands......................................................................17 Section 6.04. Facilities Constructed on City Land...........................................................................17 Section 6.05. Maintenance and Warranties.....................................................................................17 -i- ARTICLE VII INSURANCE;RESPONSIBILITY FOR DAMAGE Section 7.01. Liability Insurance Requirements..............................................................................19 Section 7.02. Responsibility for Damage........................................................................................21 ARTICLE VIII REPRESENTATIONS,WARRANTIES AND COVENANTS Section 8.01. Representations, Covenants and Warranties of the Developer....................................23 ARTICLE IX TERMINATION Section9.01. No Bonds.................................................................................................................25 Section9.02. Mutual Consent........................................................................................................25 Section 9.03. City Election for Cause..............................................................................................25 Section 9.04. Force Majeure...........................................................................................................26 ARTICLE X MISCELLANEOUS Section 10.01. Limited Liability of City...........................................................................................27 Section10.02. Excess Costs..............................................................................................................27 Section10.03. Audit.......................................................................................................................27 Section 10.04. Attorney's Fees........................................................................................................27 Section10.05. Notices.....................................................................................................................27 Section10.06. Severability..............................................................................................................27 Section 10.07. Successors and Assigns.............................................:................................................28 Section 10.08. Other Agreements:......::...:.....:.................:.................:.............:........................:.:....28 Section10.10. Waiver.....................................................................:...............................................28 Section10.11. Merger.....................................................................................................................28 Section 10.12. Parties in Interest......................................................................................................28 Section10.13. Amendment.............................................................................................................28 Section10.14. Counterparts............................................................................................................28 EXHIBIT A DESCRIPTION OF AUTHORIZED FACILITIES ELIGIBLE FOR ACQUISITION FROM THE DEVELOPER EXHIBIT B DESCRIPTION OF FACILITIES,DISCRETE COMPONENTS AND BUDGETED COSTS EXHIBIT C FORM OF PAYMENT REQUEST EXHIBIT D FORM OF GUARANTY EXHIBIT E LIST OF PREFORMATION CONTRACTS -ii- THIS ACQUISITION AGREEMENT (the "Acquisition Agreement"), dated as of June 1, 2002, is by and between the City of Huntington Beach, a chartered city and municipal corporation organized and existing under the laws of the State of California (the "City"), for Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Improvement Area A"), and for Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Improvement Area B") and Boeing Realty Corporation (the "Developer"). ARTICLE I DEFINITIONS Section 1.01. Definitions. The following terms shall have the meanings ascribed to them in this Section 1.01 for purposes of this Acquisition Agreement. Unless otherwise indicated, any other terms,capitalized or not,when used herein shall have the meanings ascribed to them in the Fiscal Agent Agreement (as hereinafter defined). "Acceptable Title" means title to land or interest therein, in form acceptable to the Director of Public Works, free and clear of all liens, taxes, assessments, leases, easements and encumbrances, whether or not recorded, but subject to any exceptions determined-by the Director of Public Works as not interfering with the actual or intended use of the land or interest therein. Notwithstanding the foregoing, an irrevocable offer of dedication may constitute land with an "Acceptable Title" if: (i) such offer is necessary to satisfy a condition to a tentative or final parcel map, (ii) such offer is in a form acceptable to the Director of Public Works, (iii) the Director of Public Works has no reason to believe that such offer of dedication will not be accepted by the applicable public agency, and (iv) the Developer commits in writing not to. allow any liens to be imposed on such property prior to its acceptance. "Acceptance" means (i) as to any Facility, the final action taken by the City Council of the City (or other public entity that is to own a Facility) to accept dedication of or transfer of title to a Facility; and (ii) as to any land, the recordation of a subdivision map which irrevocably conveys such land to the City, or, if the conveyance is by deed, the action by the City Council to accept the conveyance and recordation of the deed. "Acquisition Agreement" means this Acquisition Agreement, together with any Supplement hereto. "Act" means the Mello-Roos Community Facilities Act of 1982, Sections 53311 et seq. of the California Government Code,as amended. "Actual Cost" means the substantiated cost of a Facility or a Discrete Component, which costs may include: (i) the costs (evidenced by payments to parties unrelated to the Developer) incurred by the Developer for the construction of such Facility or Discrete Component, (ii) the documented costs incurred by the Developer in preparing the Plans for such Facility or Discrete Component and the related costs of design,engineering and environmental evaluations of the Facility or Discrete Component, (iii) the fees paid to governmental agencies for obtaining permits, licenses or other governmental approvals.for such Facility or Discrete Component, (iv) documented professional costs incurred by the Developer associated with such Facility or Discrete Component,such as engineering, legal, accounting, inspection, construction staking, materials testing and similar professional services; and (v) costs directly related to the construction and/or acquisition of a Facility or Discrete Component, such as costs of payment, performance and/or maintenance bonds, and insurance costs (including costs of any title -1- 4 insurance required hereunder). Actual Cost may include an amount not in excess of 7.0%of the cost described in clause (i) of the preceding paragraph in respect of any construction, project management or other similar fee payable to the Developer or any party related thereto. Actual Cost shall not include any financing fees, costs or charges, or any interest, cost of carry or other similar charges. "Affiliate" means any entity with respect to which fifty percent (50%) or more of the ownership or voting power is held individually or collectively by any of the Developer and any other entity owned, controlled or under common ownership or control by or with,as applicable, the Developer, and includes all general partners of any entity which is a partnership. Control shall mean ownership of fifty percent (50%) or more of the voting power of or ownership interest in the respective entity. "Bonds" means, collectively, (i) the bonds designated "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A",to be issued by the City for Improvement Area A, (ii) any Parity Bonds issued under and as such term is defined in the Fiscal Agent Agreement, and (iii) any bonds issued by the City for Improvement Area B under the Law. "Budgeted Cost" means the estimated cost of a Facility or Discrete Component as shown on Exhibit B hereto. "CFD" means,collectively,Improvement Area A and Improvement Area B. "City" means the City of Huntington Beach, California. "County" means the County of Orange,California. "Developer" means Boeing Realty Corporation, and its successors and assigns to the extent permitted under Section 10.07 hereof. "Director of Public Works" means the Director of Public Works of the City, or his written designee acting as such under this Acquisition Agreement. "Discrete Component" means a functional segment or component of a Facility that the Director of Public Works has agreed can be separately identified,inspected and completed,and be the subject of a Payment Request hereunder. The Discrete Components are shown on Exhibit B hereto. "Facilities" means the public facilities described in Exhibit A hereto which are eligible to be financed by the CFD. "Fiscal Agent" means BNY Western Trust Company, in its capacity as fiscal agent I the Fiscal Agent Agreement, or any successor thereto acting as fiscal agent under the Fiscal Agent Agreement. "Fiscal Agent Agreement" means, collectively, (i) the agreement by that name between the City and the Fiscal Agent, providing for, among other matters, the issuance of the Bonds described in clause (i). of the definition of Bonds herein and the establishment of the Improvement Fund, as it may be amended from time to time; and(ii) any similar agreement providing for the issuance of bonds of the City for Improvement Area B. "Guaranty" means the Guaranty of The Boeing Company in favor of the City, in the form of Exhibit D hereto. -2- 4 "Improvement Area A" means Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), created by the City Council of the City under the Law. "Improvement Area B" means Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), created by the City Council of the City under the Law. "Improvement Fund" means,collectively,each and every Improvement Fund established by any Fiscal Agent Agreement. "Law" means the Municipal Code and, as applicable under the Municipal Code, the Act. "Municipal Code" means Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City. "Payment Request" means a document, substantially in the form of Exhibit C hereto, to be used by the Developer in requesting payment of a Purchase Price. "Plans" means the plans, specifications, schedules and related construction contracts for the Facilities described in Exhibit B and/or any Discrete Components thereof approved pursuant to the applicable standards of the City or other entity that will own, operate or maintain the Facilities when completed and acquired. As of the date of this Acquisition Agreement, the City standards for construction incorporate those set forth in the Green Book, Standard Specifications for Public Works Construction (SSPWC), of the Southern California Chapter of the American Public.Works Association,as modified by applicable City regulations. "Purchase Price" means the amount paid by the City for a Facility and/or any Discrete Components thereof determined in accordance with Article V hereof,being an amount equal to the Actual Cost of such Facility or Discrete Component, but subject to the limitations and reductions provided for in Article V. "Risk Manager" shall mean the person acting in the capacity of Risk Manager for the City. "State" means the State of California. "Supplement" means a written document amending, supplementing or otherwise modifying this Acquisition Agreement and any exhibit hereto, including any amendments to the list of Discrete Components in Exhibit B, and/or the addition to Exhibit B of additional Facilities (and Discrete Components) to be financed with the proceeds of the Bonds deposited in the Improvement Fund. -3- 4 ARTICLE II RECITALS Section 2.01. The CFD. The City Council of the City has established Improvement Area A and Improvement Area B under the Act for the financing of, among other things, the acquisition, construction and installation of public facilities listed in Exhibit A hereto. Section 2.02. The Development. The Developer is developing land located within the CFD. Section 2.03. The Facilities. The Facilities are within or in the vicinity of the CFD, and the City and the Developer will benefit from a.coordinated plan of design, engineering and construction of the Facilities and the development of the land owned by an affiliate of the Developer that is located within the CFD. The Developer acknowledges that the inclusion of Facilities in Exhibit A hereto in no way,in itself,obligates the City to issue any Bonds to acquire the Facilities from the Developer or implies that the City has in any way engaged the Developer to construct the Facilities, except as specifically provided in this Acquisition Agreement. Moreover, except for those Facilities listed in Exhibit B, this Acquisition Agreement shall in no way, by itself, obligate the Developer to construct the Facilities. The Facilities which are the subject of acquisition by the City from the Developer under this Acquisition Agreement are only the Facilities listed in Exhibit B hereto, as such Exhibit may be amended and/or supplemented by any Supplement. Section 2.04. The Financing. The Developer and the City wish to finance the acquisition of the Facilities and the payment therefor by entering into this Acquisition Agreement for the acquisition of the Facilities and payment for Discrete Components thereof as shown.in Exhibit B.hereto (as it maybe amended and supplemented) with a portion of the proceeds of the Bonds on deposit in the Improvement Fund. Section 2.05. The Bonds. The City is proceeding with the authorization and issuance of the Bonds under the Law and the Fiscal Agent Agreement,the proceeds of which Bonds shall be used, in part, to finance the acquisition of all or a portion of the Facilities. The execution by the City of this Acquisition Agreement in no way obligates the City to issue any Bonds, or to acquire any Facilities with proceeds of any Bonds issued,except the Facilities listed in Exhibit B hereto (as such exhibit may be amended from time to time) which are to be acquired subject to the terms and conditions set forth in this Agreement. Section 2.06. No Advantage to City Construction. The City, by its approval of this Acquisition Agreement, has determined that it will obtain no advantage from undertaking the construction by the City directly of the Facilities listed in Exhibit B (as such exhibit may be amended from time to time), and that the provisions of this Acquisition Agreement require that the Facilities be constructed by the Developer as if they had been constructed under the direction and supervision of the City. The Developer hereby represents that it has experience in the supervision of the construction of public facilities of the character of the Facilities. Section 2.07. Agreements. In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration the receipt and sufficiency of which are hereby . acknowledged, the City.and the Developer agree that the foregoing recitals, as applicable to each, are true and correct and further make the agreements set forth herein. -4- 4 ARTICLE III FUNDING Section 3.01. CFD Proceedings. The City shall conduct all necessary proceedings under the Law for the issuance, sale and delivery of the Bonds described in clause (i) of the definition of "Bonds" in Section 1.01; provided, however, that nothing herein shall be construed as requiring the City to issue such Bonds or any portion thereof. Upon the written request of the Developer, the Developer and the City staff shall meet regarding the amount, timing and other material aspects of the Bonds, but the legal proceedings and the principal amount, interest rates, terms and conditions and timing of the sale of the Bonds shall be.in all respects subject to the approval of the City Council of the City. The authorized aggregate principal amount of the Bonds of each of Improvement Area A and Improvement Area B is $13,000,000; however (i) it is expected that in no event will more than $13,000,000 of Bonds (exclusive of any refunding bonds) be issued for the CFD, and (ii) the City expects that the first series of the Bonds described in clause (i) of the definition of"Bonds" in Section 1.01 will be in a principal amount equal to $4,900,000 and the amount that the City anticipates depositing to the Improvement Fund from the proceeds of such initial series of the Bonds is $4,070,000. A portion of the net proceeds from any subsequent sale of Bonds (other than Bonds issued to refund previously issued Bonds) will be deposited in the Improvement Fund. Section 3.02. Bonds. The City, in connection with this Acquisition Agreement, is proceeding with the issuance and delivery of the initial series of the Bonds for Improvement Area A. The City agrees to consider the issuance of additional series of the Bonds upon the written request of the Developer subject to the following: (a) the Developer shall provide the City with a deposit in an amount sufficient to pay all non contingent costs of the City necessary to consider the issuance of such additional Bonds (including but not limited to appraisal costs and City staff costs),subject to reimbursement of such amount so advanced by the Developer from the proceeds of the additional Bonds, when and if issued and as permitted under the Law; (b) the additional Bonds shall satisfy all of the requirements for "Parity Bonds" under and as such term is defined in the Fiscal Agent Agreement for Improvement Area A or otherwise satisfy similar criteria if issued with respect to Improvement Area B; (c) the landowners in the CFD shall assist the City in preparation of any disclosure agreement as deemed appropriate by the City in connection with the offer and sale of such additional Bonds and the execution of any related disclosure certificate; and (d) the timing of sale and principal amount of such additional Bonds shall be determined by the City upon consultation with the Developer. The City shall not be obligated to pay the Purchase Price of the Facilities listed in Exhibit B or any Discrete Components thereof except from amounts on deposit in the Improvement Fund on or after the closing date of the Bonds. The City makes no warranty, express or implied, that the proceeds of the Bonds deposited and held in the Improvement Fund, and any investment earnings thereon deposited to the Improvement Fund, will be sufficient for payment of the Purchase Price of all of the Facilities. Section 3.03. Bond Proceeds. The proceeds of the Bonds shall be deposited, held, invested, reinvested and disbursed as.provided in the applicable Fiscal Agent Agreement. A portion of.the proceeds of the Bonds (other than proceeds of refunding bonds) will be set aside under each Fiscal Agent Agreement in the Improvement Fund. Moneys in the Improvement Fund shall be withdrawn therefrom in accordance with the provisions of the applicable Fiscal Agent Agreement and the applicable provisions hereof for payment of all or a portion of the costs of -5- 4 construction and/or acquisition of the Facilities listed in Exhibit B (including payment of the Purchase Price of Discrete Components thereoO,all as herein provided. The Developer agrees that the City alone shall direct the investment of the funds on deposit in the funds and accounts established by or pursuant to a Fiscal Agent Agreement, including the Improvement Fund, and that the Developer has no right whatsoever to direct investments under a Fiscal Agent Agreement. The City shall have no responsibility whatsoever to the Developer with respect to any investment of funds made by a Fiscal Agent under a Fiscal Agent Agreement, including any loss of all or a portion of the principal invested or any penalty for liquidation of an investment. Any such loss may diminish the amounts available in the Improvement Fund to pay the Purchase Price of Facilities and Discrete Components hereunder. The Developer further acknowledges that the obligation of any owner of real property in the CFD, including McDonnell Douglas Corporation to the extent it owns any real property in.the CFD, to pay special taxes levied in the CFD is not in any way dependent on: (i) the availability of amounts in the Improvement Fund to pay for all or any portion of the Facilities or Discrete Components thereof hereunder, or (ii) the alleged or actual misconduct of the City in the performance of its obligations under this Acquisition Agreement, a Fiscal Agent Agreement, any subdivision agreement or amendment thereto or any other agreement to which the Developer (and/or McDonnell Douglas Corporation) and the City are signatories. The Developer acknowledges that any lack of availability of amounts in the Improvement Fund to pay the Purchase Price of Facilities or any Discrete Components thereof shall in no way diminish any obligation of the Developer with respect to the construction of or contributions for public facilities required by any subdivision or other agreement to.which the Developer is a party, or any governmental approval'to which the Developer or any land within the CFD is subject: -6- 4 ARTICLE IV CONSTRUCTION OF FACILITIES Section 4.01. Plans. To the extent that it has not already done so, the Developer shall cause Plans to be prepared for the Facilities listed in Exhibit B. The Developer shall obtain the written approval of the Plans in accordance with applicable ordinances and regulations of the City. Copies of all Plans shall be provided by the Developer to the Director of Public Works upon request therefor, and, in any event, as built drawings and a written assignment of the Plans for any Facility listed in Exhibit B shall be provided to the City prior to its acceptance of the Facility. Section 4.02. Duty of Developer to Construct. All Facilities to be acquired hereunder specified in Exhibit B hereto, as amended from time to time, shall be constructed by or at the direction of the Developer in accordance with the approved Plans. The Developer shall perform all of its obligations hereunder and shall conduct all operations with respect to the construction of such Facilities in a good, workmanlike and commercially reasonable manner, with the standard of diligence and care normally employed by duly qualified persons utilizing their best efforts in the performance of comparable work and in accordance with generally accepted practices appropriate to the activities undertaken. The Developer shall employ at all times adequate staff or consultants with the requisite experience necessary to administer and coordinate all work related to the design, engineering, acquisition,construction and installation of such Facilities to be acquired by the City from the Developer hereunder. The Developer shall be obligated: (i) to construct and cause conveyance to the.City all Facilities and Discrete Components thereof listed in Exhibit B hereto, and (ii) to use its own funds to pay all costs thereof in excess of the Purchase Prices thereof to be paid therefor hereunder. The Developer shall not be relieved of its obligation to construct each Facility and Discrete Component thereof listed in Exhibit B hereto and convey each such Facility to the City in accordance with the terms hereof, even if, (i) because of the limitations imposed by Section 5.06 hereof, the Purchase Price for such Discrete Component or Facility is less than the Actual Cost, or cost to the Developer, of such Discrete Component or Facility, or (ii) there are insufficient funds in the Improvement Fund to pay the Purchase Prices thereof, and, in any event, this Acquisition Agreement shall not affect any obligation of any owner of land in the CFD under any other agreement or any governmental approval to which any land within the CFD is subject, with respect to the public improvements required in connection with the development of the land within the CFD. Such obligation of the Developer to construct and convey such Facilities, and pay the costs thereof in excess of available monies in the Improvement Fund, shall be an obligation of the Developer as a party to this Acquisition Agreement without regard to any governmental conditions to development of the land in the CFD that may otherwise apply to the land owners in the CFD. Section 4.03. Relationship to Public Works;Bidding Requirements. The following shall - apply to all contracts applicable to the Facilities listed in Exhibit B and any Discrete Components thereof: A. General. This Acquisition Agreement is for the acquisition by the City of the Facilities listed in Exhibit B hereto and payment for Discrete Components thereof from moneys in the Improvement Fund and is not intended to be a public works contract. The City and the Developer agree that the Facilities listed in Exhibit B are of -7- 4 local, and not state-wide concern, and that the provisions of the California Public Contract Code shall not apply to the construction of such Facilities. The City and the Developer agree that the Developer shall award all contracts for the construction of the Facilities listed in Exhibit B hereto and the Discrete Components thereof and that this Acquisition Agreement is necessary to assure the timely and satisfactory completion of such Facilities and that compliance with the Public Contract Code with respect to such Facilities would work an incongruity and would not produce an advantage to the City or the CFD. B. Bidding Procedures. Notwithstanding the foregoing, the Developer shall award all contracts for construction of the Facilities listed in Exhibit B and any Discrete Components thereof, and materials related thereto,by means of a bid process consistent with this Section 4.03 B. or otherwise acceptable to the Director of Public Works, and in each case consistent with the City Charter and applicable City ordinances and regulations. The Developer shall prepare bid packages, including engineering reports and an estimated schedule of values and unit costs for each of the Facilities (or any specific Discrete Components thereof to be separately bid), and shall submit such packages to the Director of Public Works, reasonably in advance of the anticipated bid, for review. Upon agreement by the Director of Public Works and the Developer on the content of such bid packages and a schedule of bid prices, plus an acceptable margin of variance, the Developer may proceed to take bids on the applicable Facilities (or Discrete Components) after notice by publication in accordance with City Charter Section 503 by two or more insertions, the first of which shall be at least ten days before the time for opening bids. The Developer shall establish a list of written criteria acceptable to the Director of Public Works (including experience, ability to perform on schedule and financial ability to complete the work) to . determine requisite qualification for contractors for any contract. Such general contractors shall comply with any applicable City regulations. The Director of Public Works shall meet with the qualified general contractors to discuss the requirements of the particular contract to be bid at the written request of the Developer; provided that any such written request is delivered to the Director of Public Works at least five (5) business days prior to the date of the meeting. Bids for each Facility or Discrete Component shall be submitted to the Director of Public Works prior to the time and date prescribed for bid opening and shall include a complete schedule of values and unit costs of each of the Facilities (or any specific Discrete Components thereof to be separately bid). If a bid is within the constraints of the approved bid package, the Developer shall, subject to the provisions of Section 4.03 C. below, award the applicable contract to the lowest responsible bidder. If all bids are in excess of the bid parameters, the Developer shall obtain the consent of the Director of Public Works prior to awarding the contract. Upon written request of the Director, the Developer shall provide an analysis of bids for construction and materials for the Facilities or applicable Discrete Components,indicating how the winning bid was determined and how it was consistent with the applicable bid package.The Developer shall promptly publish notice of the award of any contract in such paper as the Director of Public Works shall specify. C. Pre-approved Contracts. Notwithstanding the provisions of Section 4.03 B. above, the City hereby approves the contracts for work related to the Facilities that were executed by the Developer prior to the formation of the CFD that are listed in Exhibit E hereto. -8- 4 D. Scheduling. The Developer shall develop or cause to be developed and shall maintain or cause to be maintained a project schedule for all major project elements included in the construction of the Facilities to be acquired hereunder, so that the whole project is scheduled in an efficient manner. The Developer shall provide the Director of Public Works with complete copies of the schedule and each update to the schedule for the Director's review and approval. E. Periodic Meetings. From time to time (expected to be at least every two (2) weeks) at the request of the Director of Public Works, representatives of the Developer shall meet and confer with City staff, consultants and contractors regarding matters arising hereunder with respect to the Facilities,Discrete Components and the progress in constructing and acquiring the same, and as to any other matter related to the Facilities or this Acquisition Agreement. The Developer shall advise the Director of Public Works in advance of any coordination and scheduling meetings to be held with contractors relating to the Facilities, in the ordinary course of performance of an individual contract. The Director of Public Works or the Director of Public Work's designated representative shall have the right to be present at such meetings, and to meet and confer with individual contractors if deemed advisable by the Director of Public Works to resolve disputes and/or ensure the proper completion of the Facilities. Section 4.04. Independent Contractor. In performing this Acquisition Agreement, the Developer is an independent contractor and not the agent or employee of the City or the CFD. Neither the City nor the CFD shall be responsible for making any payments to any of the entities that are parties to any of the contracts listed in Section 4.03(C), or to any other contractor, subcontractor, agent,consultant, employee or supplier of the Developer. Section 4.05. Performance and Payment Bonds. The Developer agrees to comply with all applicable performance and payment bonding requirements of the City as required by the Director of Public Works with respect to the construction of the Facilities listed in Exhibit B. All contractors and/or subcontractors employed by the Developer in connection with the construction of Facilities listed in Exhibit B shall provide a labor and materials and performance bonds which name the City as an additional insured. Section 4.06. Contracts and Change Orders. The Developer shall be responsible for entering into all contracts and any supplemental agreements (commonly referred to as "change orders") required for the construction of the Facilities listed in Exhibit B hereto, as amended from time to time, and all such contracts and supplemental agreements shall be submitted to the Director of Public Works for review. Prior written approval of supplemental agreements by the Director of Public Works shall be required for such change orders which in any way materially alter the quality or character of the subject Facilities, or which involve an amount equal to five percent (5%) or more of either the amount of the bid for the Discrete Component involved or any change to the schedule of values or unit cost for each of the Facilities or Discrete Components thereof. The City expects that such contracts and supplemental agreements needing prior approval by the Director of Public Works will be approved or denied (any such denial to be in writing,stating the reasons for denial and the actions, if any,that can be taken to obtain later approval) within ten (10) business days of receipt by the Director of Public Works thereof. Any approval by the Director of Public Works of a supplemental agreement shall in no way affect the Budgeted Costs listed in Exhibit B for any related Facility or Discrete Component, but to the extent that it increases the Actual Cost of a Facility or Discrete Component, such increased cost.may be payable as part of the Purchase Price of the related Facility or Discrete Component as provided in Section 5.06A.hereof. Section 4.07. Time for Completion. The Developer agrees that this Acquisition Agreement is for the benefit of the City and the Developer and, therefore, the Developer represents that it expects to complete the Facilities listed in Exhibit B and to have requested payment for such Facilities under this Acquisition Agreement within ten (10) calendar months from the date of the closing of the first series of the Bonds.The Developer agrees to use its good faith efforts to complete all Facilities initially listed in Exhibit B within ten (10) calendar months from the date of closing of the first series of the Bonds. Any failure to complete any Facilities within said time period shall not,however, in itself, constitute a breach by the Developer of the terms of this Acquisition Agreement. -10- ARTICLE V ACQUISITION AND PAYMENT Section 5.01. Inspection. No payment hereunder shall be made by the City to the Developer for a Facility or Discrete Component thereof until the Facility or Discrete Component thereof has been inspected and found to be completed in accordance with the approved Plans by the City as evidenced by formal acceptance of the improvements. The City shall make periodic site inspections of the Facilities to be acquired hereunder; provided that in no event shall the City incur any liability for any delay in the inspection of any Facilities or Discrete Components. The Developer agrees to pay all inspection, permit and other similar fees of the City applicable to construction of the Facilities. Section 5.02. Agreement to Sell and Purchase Facilities. The Developer hereby agrees to sell the Facilities listed in Exhibit B hereto to the City, and the City hereby agrees to use amounts in the Improvement Fund to pay the Purchase Prices thereof to the Developer, subject to the terms and conditions hereof. The City shall not be obligated to use amounts in the Improvement Fund to pay the Purchase Price of any Facility or Discrete Component until the Facility or Discrete Component is completed and the processing requirements of Section 5.05 hereof for such Facility or Discrete Component have occurred; provided, however, that, payment shall be made for the right-of-way described in Exhibit B upon confirmation of the recordation of a map dedicating the right-of-way to the City, without the requirement for a separate approval of the City Council described in Section 5.05 accepting such right-of-way. In any event, the City shall not be obligated to pay the Purchase Price for any Facility or Discrete Component except from the moneys in the Improvement Fund. Section 5.03. Payment Requests. In order to receive the Purchase Price for a completed Facility or Discrete Component,.inspection and acceptance thereof under-Section 5.01 shall have been made and the Developer shall deliver to the Director of Public Works: (i) a Payment Request in the form of Exhibit C hereto for such Facility or Discrete Component, together with all attachments and exhibits required by Exhibit C and this Section 5.03 to be included therewith (including, but not limited to Attachments 1 and 2 to Exhibit C), and (ii) if payment is requested for a completed Facility, (a) if the property on which the Facility is located is not owned by the City at the time of the request,a copy of the recorded documents conveying to the City Acceptable Title to the real property on, in or over which such Facility is located, as described in Section 6.01 hereof, (b) a copy of the recorded notice of completion of such Facility (if applicable), (c) to the extent paid for with the proceeds of the Bonds, an assignment to the CFD of any reimbursements that may be payable with respect to the Facility, such as public or private utility reimbursements,and (d)an assignment of the warranties and guaranties for such Facility, as described in Section 6.05 hereof, in a form acceptable to the Director. Section 5.04. Processing Payment Requests. Upon receipt of a Payment Request (and all accompanying documentation), the Director of Public Works shall conduct a review in order to confirm that such request is complete, that such Discrete Component or Facility identified therein was constructed in accordance with the Plans therefor, and to verify and approve the Actual Cost of such Discrete Component or Facility specified in such Payment Request. The Director of Public Works shall also conduct such review as is required in his discretion to confirm the matters certified in the Payment.Request. The Developer agrees to cooperate with. the Director of Public Works in conducting each such review and to provide the Director of Public Works with such additional.information and documentation as is reasonably necessary for the Director of Public Works to conclude each such review. Within ten (10) business days of receipt of any Payment Request, the Director of Public Works shall review the request for completeness and notify the Developer whether such Payment Request is complete, and, if not, 4 what additional documentation must be provided. If such Payment Request is complete, the Director of Public Works shall provide a written approval or denial (specifying the reason for any denial) of the request within twenty (20) days of its submittal. If a Payment Request seeking reimbursement for more than one Facility or Discrete Component is denied, the Director of Public Works shall state whether the Payment Request is nevertheless approved and complete for any one or more Facilities or Discrete Components and any such Facilities or Discrete Components shall be processed for payment under Section 5.05 notwithstanding such partial denial. Section 5.05. Payment. Upon approval of the Payment Request by the Director of Public Works,the Director of Public Works shall submit a request to the City Council for formal acceptance of the dedication or transfer of and/or facilities of title to the Facility or Discrete Component identified in the Payment Request.-Upon final action by the City Council to accept dedication of or transfer of title to a Facility or Discrete Component thereof, the Director of Public Works shall, within twenty (20) days of the City's Council's action, sign the Payment Request and forward the same to the City Treasurer,with a copy to the City's Finance Officer. Upon receipt of the reviewed and fully signed Payment Request, the City Treasurer or the City's Finance Officer shall,within the then current City financial accounting payment cycle but in any event within thirty (30) days of receipt of the approved Payment Request, cause the same to be paid by the Fiscal Agent under the applicable provisions of the Fiscal Agent Agreement, to the extent of funds then on deposit in the Improvement Fund. Any approved Payment Request not paid due to an insufficiency of funds in the Improvement Fund, shall be paid promptly following the deposit into the Improvement Fund of proceeds of any additional Bonds, any investment earnings or other amounts transferred to the Improvement Fund under the terms of the Fiscal Agent Agreement. The parties hereto acknowledge that (i) the Developer will be constructing Facilities and Discrete Components prior to the issuance of additional Bonds the proceeds of which will be used to reimburse the. Developer for those Facilities and Discrete Components, (ii) the Developer will be submitting Payment Requests to the City in advance of such an issuance of additional Bonds, with knowledge that there may be insufficient funds available in the Improvement Fund for reimbursement, (iii) the Facilities and Discrete Components that are the subject of the Payment Requests submitted when there are insufficient proceeds will be inspected and reviewed by the Director of Public Works as set forth in this Article V and that such Payment Requests will be reviewed by the Director of Public Works and, if appropriate, submitted to the City Council in the manner set forth in Sections 5.03, 5.04 and 5.05, and (iv) the payment for any Payment Requests approved in the preceding manner will be deferred until the date, if any, on which there are sufficient amounts in the Improvement Fund to make such payment, at which time the Director of Public Works will forward the approved Payment Requests to the City Treasurer,with a copy to the City's Finance Officer,who will then arrange for payment from the Fiscal Agent in the manner set forth above. The Purchase Price paid hereunder for any Facility or Discrete Component shall constitute payment in full for such Facility or Discrete Component, including, without limitation, payment for all labor, materials, equipment, tools and services used or incorporated in the work, supervision, administration, overhead, expenses and any and all other things required, furnished or incurred for completion of such Facility or Discrete Component, as specified in the Plans or associated construction documents. . -12- Section 5.06. Restrictions on Payments. Notwithstanding any other provisions of this Acquisition Agreement, the following restrictions shall apply to any payments made to the Developer under Sections 5.02 and 5.05 hereof- A. Amounts of Payments. Subject to the following paragraphs of this Section 5.06,payments for each Discrete Component or Facility will be made only in the amount of the Purchase Price for the respective Discrete Component or Facility; however, if the Actual Cost exceeds the Budgeted Cost for a Discrete Component or a Facility, the excess shall be borne by the Developer until such time as (i) proceeds of additional Bonds are deposited to the Improvement Fund, or (ii) a Budgeted Cost for another Discrete Component or Facility is greater than the Actual Cost therefore,in which event the savings shall be applied to reduce any excess of Actual Cost over Budgeted Cost previously paid for any Facility or Discrete Component by the Developer, unless the Developer consents in writing to another application of such savings. Any savings attributable to the Actual Cost being less than Budgeted Cost which are not disbursed under the previous sentence to cover unreimbursed Actual Costs or as otherwise consented to by the Developer shall be carried forward to be credited against future cost overruns,or costs related to supplemental agreements (change orders). Nothing herein shall require the City in any event (i) to pay more than the Actual Cost of a Facility or Discrete Component, or (ii) to pay an amount which would cause the sum of all Purchase Prices paid for all acquired Facilities and Discrete Components to exceed the sum of all Budgeted Costs for such acquired items, or (iii) to make any payment beyond the available funds in the Improvement Fund. The parties hereto acknowledge and agree that all payments to the Developer for the Purchase Prices of Facilities or Discrete Components are intended to be reimbursements to the Developer for monies already expended or for immediate payment by the Developer (or directly by the City) to third parties in respect of such Facilities and/or Discrete Components. B. Toint or Third Party Payments. The City may make any payment jointly to the Developer and any mortgagee or trust deed beneficiary, contractor or supplier of materials, as their interests may appear, or solely to any such third party, if the Developer so requests the same in writing or as the City otherwise determines such joint or third party payment is necessary to obtain lien releases. C. Withholding Payments. The City shall be entitled, but shall not be required, to withhold any payment hereunder for a Discrete Component or a Facility if the Developer or any Affiliate, or McDonnell Douglas Corporation, is delinquent in the payment of ad valorem real property taxes, special assessments or taxes levied in the CFD, or Special Taxes levied in the CFD. In the event of any such delinquency, the City shall only make payments hereunder, should any be made at the City's sole discretion, directly to contractors or other third parties employed in connection with the construction of the Facilities or to any assignee of the Developer's interests in this Acquisition Agreement (and not to the Developer or any Affiliate),until such time as the Developer provides the Director of Public Works with evidence that all such delinquent taxes and assessments have been paid. The City shall withhold payment for any Discrete Component or Facility constructed on land, until Acceptable Title to such land is conveyed-to the City, as described in Article VI hereof. The City shall be entitled to withhold any payment hereunder for a Discrete Component that is the subject of a Payment Request until it is satisfied that any and all claims for labor and materials have been paid by the Developer for the Discrete -13- Component that is the subject of a Payment Request, or conditional lien releases have been provided by the Developer for such Discrete Component. The City, in its discretion, may waive this limitation upon the provision by the Developer of sureties, undertakings, securities and/or bonds of the Developer or appropriate contractors or subcontractors and deemed satisfactory by the Director of Public Works to assure payment of such claims. The City shall be entitled to withhold payment for any Facility hereunder to be owned by the City (or the final Discrete Component of any such Facility) until: (i) the Director of Public Works determines that the Facility is ready for its intended use, (ii) the Acceptance Date for the Facility has occurred and the requirements of Section 6.01, if applicable to such Facility, have been satisfied, and (iii) a Notice of Completion executed by the Developer, in a form acceptable to the Director of Public Works, has been recorded for the Facility and general lien releases conditioned solely upon payment from the proceeds of the Bonds to be used to acquire such Facility (or final Discrete Component) have been submitted to the Director of Public Works for the Facility. The City hereby agrees that the Developer shall have the right to post or cause the appropriate contractor or subcontractor to post a bond with the City to indemnify it for any losses sustained by the City because of any liens that may exist at the time of acceptance of such a Facility, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the Director of Public Works. If the Director of Public Works determines that a Facility is not ready for intended use under (i) above, the Director of Public Works shall so notify the Developer as soon as reasonably practicable in writing specifying the reason(s) therefor. Nothing in this Acquisition Agreement shall be deemed to prohibit the Developer from contesting in good faith the validity or amount of any mechanics or materialmans lien nor limit the remedies available to the Developer with respect thereto so long as such delay in performance shall not subject the Facilities or any Discrete Component thereof to foreclosure, forfeiture or sale. In the event that any such lien is contested, the Developer shall only be required to post or cause the delivery of a bond in an amount equal to twice the amount in dispute with respect to any such contested lien, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the Director of Public Works. D. Retention. The City shall withhold in the Improvement Fund an amount equal to ten percent (10%) of the Purchase Price of each Facility or Discrete Component to be paid hereunder. Any such retention will be released to the Developer upon final completion and acceptance of the related Facility and the expiration of a maintenance period consistent with applicable City policy thereafter (currently a one year warranty period for any landscaping, and upon receipt of a faithful performance bond acceptable to the Director of Public Works to remain in effect for one year as to other Facilities). Notwithstanding the foregoing, the Developer shall be entitled to payment of any such retention upon the completion and acceptance of a Facility or Discrete Component, if a maintenance or warranty bond is posted in lieu thereof in accordance with Section 6.05 hereof. Payment of any retention shall also be contingent upon the availability of monies in the Improvement Fund therefore. No retention shall apply if the Developer proves to the Director of Public Work's satisfaction that the Developer's contracts for the Facilities (or Discrete Components) provide for the same retention as herein provided,so that the Purchase Price paid for the Facility or Discrete Component is at all times net of the required retention. -14- 3 E. Frequency. Unless otherwise agreed to by the Director of Public Works, no more than one Payment Request shall be submitted by the Developer in any calendar month. F. Restriction on Payments for Right-of-Way. The Developer may be reimbursed for the acquisition of right-of-way prior to the completion of any improvements to the right-of-way. The amount to reimburse the Developer for right-of-way shall be determined by an appraisal. Notwithstanding the foregoing,no payment shall be made to the Developer from the Improvement Fund in respect of the acquisition of right-of- way (listed immediately after item number 14 in Exhibit B hereto) until the Guaranty, substantially in the form of Exhibit D hereto,has been executed by The Boeing Company and delivered to the City. Section 5.07. Acquisition of Additional Facilities. If the construction and acquisition of all the Facilities theretofore listed in Exhibit B have been completed and the Purchase Prices (including any retentions described in 5.06D. above) with respect thereto have been paid, and funds remain on deposit in the Improvement Fund or become available through the issuance of additional Bonds, the City and the Developer may designate in a Supplement hereto, Facilities (and/or Discrete Components thereof) to be constructed and acquired with such remaining or additional funds to be selected from the list of Facilities in Exhibit A. Section 5.08. Defective or Nonconforming Work. If any of the work done or materials furnished for a Facility listed in Exhibit B or Discrete Component are found by the Director of Public Works to be defective or not in accordance with the applicable Plans: (i) and such finding is made prior to payment for the Purchase Price of such Facility or Discrete Component hereunder, the City may withhold payment therefor until such defect or nonconformance is corrected to the satisfaction of the Director of Public Works, or (ii) and such finding is made after payment of the Purchase Price of such Facility or Discrete Component, the.City and the. .Developer shall act in accordance with the City's standard specification for public works construction (which are set forth in the Green Book, Standard Specifications for Public Works Construction (SSPWC), of the Southern California Chapter of the American Public Works Association, as modified by applicable City regulations). Section 5.09. Modification of Discrete Components. Upon written request of the Developer, the Director of Public Works shall consider modification of the description of any Discrete Component. Any such modification shall be subject to the written approval of the Director of Public Works, and shall not diminish the overall Facilities listed in Exhibit B to be provided by the Developer hereunder (in a material way such that the change invalidates any of the assumptions used in the appraisal conducted to sell the Bonds) or in any way increase the total Budgeted Costs identified in Exhibit B. It is expected that any such modification will be solely for purposes of dividing up the work included in any Discrete Component for purposes of acceptance and payment, for example: (i) separation of irrigation and landscaping from other components of a Discrete Component, (ii) modifications to allow for payment for roadway improvements prior to completion of the top course of paving, or (III) division of utility construction by utility work orders. In most instances, the Director of Public Works will only approve modifications for payment purposes when there will be an unusual period of time _between the completion and acceptance of such divided work or to better implement the phasing of the overall construction of the Facilities; but no such circumstances shall this Section In any way obligate the Director of Public Works to approve such modification. -15- ARTICLE VI OWNERSHIP AND TRANSFER OF FACILITIES Section 6.01. Facilities to be Owned by the City—Conveyance of Land and Easements to City. Acceptable Title to all property on, in or over which each Facility to be acquired by the City will be located, shall be deeded over to the City by way of grant deed, quitclaim, or dedication of such property, or easement thereon, if such conveyance of interest is approved by the City as being a sufficient interest therein to permit the City to properly own, operate and maintain such Facility located therein, thereon or thereover, and to permit the Developer to perform its obligations as set forth in this Acquisition Agreement. The Developer agrees to assist the City in obtaining such documents as are required to obtain Acceptable Title. Completion of the transfer of title to land shall be accomplished prior to the payment of the Purchase Price for a Facility (or the last Discrete Component thereof) and shall be evidenced by prompt recordation of the acceptance thereof by the City Council or the designee thereof. Section 6.02. Facilities to be Owned by the City—Title Evidence. Upon the request of the City, the Developer shall furnish to the City a preliminary title report for land with respect to Facilities to be acquired by the City and not previously dedicated or otherwise conveyed to the City, for review and approval at least fifteen (15) calendar days prior to the transfer of Acceptable Title to a Facility to the City. The Director of Public Works shall approve the preliminary title report unless it reveals a matter which, in the judgment of the City, could materially affect the City's use and enjoyment of any part of the property or easement covered by the preliminary title report. In the event the City does not approve the preliminary title report, the City shall not be obligated to accept title to such Facility and the City shall not be obligated to pay the Purchase Price for such Facility (or the last Discrete Component thereof) until the Developer has cured such objections to title to the satisfaction of the City. Section 6.03. Facilities Constructed on Private Lands. If any Facilities to be acquired are located on privately-owned land, the owner thereof shall retain title to the land and the completed Facilities until acquisition of and payment for the Facilities under Article V hereof. Pending the completion of such transfer, the Developer shall not be entitled to receive any payment for any such Facility or the last Discrete Component thereof. The Developer shall, however, be entitled to receive payment for Discrete Components (other than the last Discrete Component) upon making an irrevocable offer of dedication of such land in form and substance acceptable to the Director of Public Works. Notwithstanding the foregoing, upon written request of the Director of Public Works before payment for any Discrete Component of such a Facility, the Developer shall convey or cause to be conveyed Acceptable Title thereto in the manner described in Sections 6.01 and 6.02 hereof. Section 6.04. Facilities Constructed on City Land. If the Facilities to be acquired are on land owned by the City, the City shall grant to the Developer a license to enter upon such land for purposes related to the construction (and maintenance pending acquisition) of the Facilities. The provisions for inspection and acceptance of such Facilities otherwise provided herein shall apply. Section 6.05. Maintenance and Warranties. The Developer shall maintain each Discrete Component in good and safe condition until the Acceptance Date of.the Facility of which such Discrete Component is apart. Prior to the Acceptance Date, the Developer shall be responsible for performing any required maintenance on any completed Discrete Component or Facility. On or before the Acceptance Date of the Facility, the Developer shall assign to the City all of the Developer's rights in any warranties, guarantees, maintenance obligations or other evidence of contingent obligations of third persons with respect to such Facility. The Developer shall -16- maintain or cause to be maintained each Facility to be owned by the City (including the repair or replacement thereof) for a period of one year from the Acceptance Date thereof, or, alternatively,shall provide a bond reasonably acceptable in form and substance to the Director of Public Works for such period and for such purpose (specifically, a one-year maintenance period for landscaping improvements, and for the posting of a warranty bond to remain in effect for one year as to other Facilities),to insure that defects,which appear within said period will be repaired, replaced, or corrected by the Developer, at its own cost and expense, to the satisfaction of the Director of Public Works. During any such one-year period, the Developer shall commence to repair, replace or correct any such defects within thirty (30) days after written notice thereof by the City to the Developer, and shall complete such repairs, replacement or correction as soon as practicable. After such one-year period,the City shall be responsible for maintaining such Facility. Any warranties, guarantees or other evidences of contingent obligations of third persons with respect to the Facilities to be acquired by the City shall be delivered to the Director of Public Works as part of the transfer of title. . -17- ARTICLE VII INSURANCE;RESPONSIBILITY FOR DAMAGE Section 7.01. Liability Insurance Requirements. The Developer shall provide to the Risk Manager evidence of insurance and endorsements thereto on forms acceptable to the Risk Manager within 10 working days of execution by it of this Acquisition Agreement and prior to any physical work on the Facilities being performed. The Developer shall procure and maintain for the duration of this Acquisition Agreement the following minimum insurance coverage and limits against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work covered by this Acquisition Agreement by the Developer, its agents, representatives, employees or subcontractors: (a) Premises, operation and mobile equipment. (b) Products and completed operations. (c) Explosion, collapse and underground hazards. (d) Personal injury. (e) Contractual liability. (f) Errors and omissions for work performed by design professionals. COVERAGE PER OCCURRENCE ISO FORM Commercial General CG 00 011185 or 88 Rev. Liability (Primary) $1,000,000 Umbrella Liability GL 00 011185 or 88 Rev. (Over Primary,if required) $1,000,000 Business Auto CA 00 01 06 92 $1,000,000 Workers' Compensation/ Statutory Employers' Liability $1,000,000 Errors and Omissions $1,000,000 Combined single limit per occurrence shall include coverage for bodily injury, personal injury, and property damage for each accident and a five million dollar ($5,000,000) general aggregate. Insurance shall be placed with insurers with a Best's Rating of no less than ANII. The Developer shall furnish to the Risk Manager certificates of insurance and endorsements on forms specified by the Risk Manager, duly authenticated, giving evidence of the insurance coverage required in this contract and other evidence of coverage or copies of policies as may be reasonably required by the Risk Manager from time to time. Each required insurance policy coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after fifteen (15) days written notice by certified mail, return receipt requested,has been given to the Risk Manager. Liability coverage shall not be limited to the vicarious liability or supervising role of any additional insured nor shall there be any limitation with the severability clause. Coverage shall contain no limitation endorsements and there shall be no endorsement or modification limiting the scope of coverage for liability arising from pollution, explosion, collapse, underground property damage or employment related practices. Any umbrella liability coverage shall apply to bodily injury/property damage, personal injury/advertising injury, at a minimum, and shall include a "drop down" provision providing primary coverage above a maximum $25,000.00 self-insured retention for liability not covered -18- a by primary polices not covered by the umbrella policy. Coverage shall be following form to any other underlying coverage. Coverage shall be on a "pay on behalf" basis, with defense costs payable in addition to policy limits. There shall be no cross policy exclusion and no limitation endorsement. The policy shall have starting and ending dates concurrent with the underlying coverage. All liability insurance shall be on an occurrence basis. Insurance on a claims made basis will be rejected. Any deductibles or self-insured retentions shall be declared to and approved by the Risk Manager. The insurer shall provide an endorsement to the City eliminating such deductibles or self-insured retentions as respects the City, and its consultants, and each of its Councilmembers, officials,employees and volunteers. All subcontractors employed on the work referred to in this Acquisition Agreement shall meet the insurance requirements set forth in this Section 7.01 for the Developer. The Developer shall furnish certificates of insurance and endorsements for each subcontractor at least five days prior to the subcontractor entering the job site, or the Developer shall furnish the Risk Manager an endorsement including all subcontractors as insureds under its policies. The City shall not be liable for any accident, loss, or damage to the work prior to its completion and acceptance, and the Developer shall save, keep and hold harmless the City and its consultants, and its Councilmembers, officers, officials, employees, agents and volunteers from all damages, costs or expenses in law or equity that may at any time arise or be claimed because of damages to property, or personal injury received by reason of or in the course of performing work, which may be caused by any act or omission by the Developer or any of the Developer's employees,or any subcontractor. The cost of insurance required by this subsection shall be born by the Developer and its subcontractors and no compensation for purchasing insurance or additional coverage needed to meet these requirements will be paid for by the City. In the event that any required insurance is reduced in coverage, canceled for any reason, voided or suspended, the Developer agrees that the City may arrange for insurance coverage as specified, and the Developer further agrees that administrative and premium costs may be deducted from any deposits or bonds the City may have, or from the Improvement Fund. A reduction or cancellation of any required insurance will be grounds for termination of this Acquisition Agreement (subject to any applicable cure period in Section 9.03) and will cause a halt to payment for any work on the Facilities until the insurance is reestablished. Liability policies shall contain, or be endorsed to contain the following provisions: (a) General Liability and Automobile Liability: The City and its consultants, and its Councilmembers, officers, officials, employees and volunteers shall be covered as additional insureds using ISO form CG 20 10 1185 as it respects: liability arising out of activities _ performed by or on behalf of the Developer; products and completed operations of the Developer' premises owned, occupied or used by the Developer; or automobiles owned, leased, hired or borrowed by the Developer. The coverage shall contain no special limitations on the scope or protection afforded to the City and its consultants,and its Councilmembers,officers,officials, employees,or volunteers. The Developer's insurance coverage shall be primary insurance with respect to the City and its consultants, and its Councilmembers, officers, officials, employees and volunteers. Any insurance or self-insurance maintained by the City and its consultants, and its Councilmembers,officers,officials, employees and volunteers shall be excess of the Developer's insurance and shall not contribute with it. -19- a Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, and its consultants, and its Councilmembers, officers, officials,employees, and volunteers. The Developer's insurance shall apply separately to each insured against whom claim is made or suit is brought,except with respect to the limits of the insurer's liability. (b) Workers' Compensation and Employer's Liability: The Developer and all subcontractors shall have workers' compensation for all employees in conformance with the requirements in Section 3700 of the Labor Code. (c) Error and Omissions Liability: The Developer and all subcontractors who are design professionals shall have and maintain errors and omissions insurance. Section 7.02. Responsibility for Damage. The Developer shall take and assume all responsibility for the work performed as part of the Facilities constructed pursuant to this Acquisition Agreement.The Developer shall bear all losses and damages directly or indirectly resulting to it, to the City, and its consultants, and its Councilmembers, officers, employees and agents, or to others on account of the performance or character of the work, unforeseen difficulties, accidents of any other causes whatsoever. The Developer shall assume the defense of and indemnify and save harmless the City, and its consultants, and Councilmembers, officers, employees, and agents, from and against any and all claims, losses, damage, expenses and liability of every kind, nature, and description, directly or indirectly arising from the performance of the work, regardless of responsibility for negligence, and from any and all claims, losses, damage, expenses, and liability, howsoever the same may be caused, resulting directly, or indirectly from the nature of the work covered by this Acquisition Agreement, regardless of responsibility for negligence, to the fullest extent permitted by law. In accordance with Civil Code section 2782,nothing in this Section 7.02 shall require defense or indemnification for death, bodily injury, injury to property, or any other loss, damage or expense arising from the active or sole negligence or Nvillful misconduct of the City, and its consultants, and its Councilmembers, agents, servants or independent contractors who are directly responsible to the City, or for defects in design furnished by such persons. Moreover, nothing in this Section 7.02 shall apply to impose on the Developer, or to relieve the City from, liability for active negligence of the City, or its consultants as delineated in Civil Code Section 2782. Any relief for determining the City's sole or active negligence shall be determined by a court of law. The City does not, and shall not, waive any rights against the Developer which it may have by reason of the aforesaid hold harmless agreements because of the acceptance by the City, or deposit with the City by the Developer of any insurance policies described in Section 7.01. The aforesaid hold harmless agreement by the Developer shall apply to all damages and claims for damages of every kind suffered, or alleged to have been suffered by reasons of any of the aforesaid operations of the Developer, or any subcontractor, regardless of whether or not such insurance policies are determined to be applicable to any of such damages or claims for damages. No act by the City, or its representatives in processing or. accepting any plans, in releasing any bond, in inspecting or accepting any work, or of any other nature, shall in any respect relieve the Developer or anyone else from any legal responsibility,obligation or liability it might otherwise have. -20- A ARTICLE VIII REPRESENTATIONS,WARRANTIES AND COVENANTS Section 8.01. Representations, Covenants and Warranties of the Developer. The Developer represents and warrants for the benefit of the City and the CFD as follows: A. Organization. The Developer is a corporation duly organized and validly existing under the laws of the State of California, is in compliance with all applicable laws of the State, and has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated. B. Authority. The Developer has the power and authority to enter into this Acquisition Agreement;and has taken all action necessary to cause this Acquisition Agreement to be executed and delivered, and this Acquisition Agreement has been duly and validly executed and delivered by the Developer. C. Binding Obligation. This Acquisition Agreement is a legal, valid and binding obligation of the Developer, enforceable against the Developer in accordance with its terms,subject to bankruptcy and other equitable principles. D. Compliance with Laws. The Developer shall not with knowledge commit, suffer or permit any act to be done in, upon or to the lands in the CFD or the Facilities in violation of any law, ordinance, rule, regulation or order of any governmental authority or any covenant, condition or restriction now or hereafter affecting the lands in the CFD or the Facilities. E. Requests for Payment. The Developer represents and warrants that (i) it will not request payment from the City for the acquisition of any improvements that are not part of the Facilities, and (ii) it will diligently follow all procedures set forth in this Acquisition Agreement with respect to the Payment Requests. F. Financial Records. Until the final acceptance of the Facilities, the Developer covenants to maintain proper books of record and account for the construction of the Facilities and all costs related thereto. Such accounting books shall be maintained in accordance with generally accepted accounting principles, and shall be available for inspection by the City or its agent at any reasonable time during regular business hours on reasonable notice. G. Prevailing Wages. The Developer covenants that, with respect to any contracts or subcontracts for the construction of the Facilities listed in Exhibit B to be acquired from the Developer hereunder, it will assure complete compliance with any applicable law or regulation for the payment of prevailing wages. The Developer agrees to pay and require all subcontractors to pay all employees a salary or wage at least equal to the general prevailing rate of per diem wages and the general prevailing rate for legal holiday and overtime work in the locality in which the Facilities listed in Exhibit B are to be constructed as ascertained by the City from the Director of Industrial Relations of the State of California and set forth by resolution on file in the office of the City Clerk of the City. The Developer shall pay not less than said prevailing wage rates to all . workers employed to construct the Facilities listed in Exhibit B (or any Discrete Component thereof). In accordance with the provisions of Section 3700 of the California Labor Code,the Developer agrees to secure payment of compensation to every employee -21- pursuant to this Agreement and,with respect to the construction of the Facilities listed in Exhibit B, in accordance with Section 1774 and 1775 of the California Labor Code, the Developer shall, as penalty to City, forfeit twenty-five dollars ($25) for each calendar day or portion thereof for each worker paid (either by the Developer or any of its subcontractors) less than the prevailing wage rate established for that particular craft or type of work. H. Plans. The Developer represents that it has obtained or will obtain approval of the Plans for the Facilities listed in Exhibit B to be acquired from the Developer hereunder from all appropriate departments of the City. The Developer further agrees that the Facilities listed in Exhibit B to be acquired from the Developer hereunder have been or will be constructed in full compliance with such approved plans and specifications and any supplemental agreements (change orders) thereto, as approved in the same manner. I. Land Owners. The Developer agrees that in the event that McDonnell Douglas Corporation sells any land owned by such corporation within the boundaries of the CFD, the Developer will (i) notify the purchaser in writing prior to the closing of any such sale of the existence of this Acquisition Agreement and, in general, the Developer's rights and obligations hereunder with respect to the construction of and payment for the Facilities, and (ii) notify the purchaser in writing of the existence of the CFD and the special tax lien in connection therewith, and otherwise comply with any applicable provision of Section 53341.5 of the Act. J. Additional Information. The Developer agrees to cooperate with all reasonable written requests for nonproprietary information by the original purchasers of the Bonds or the City related to the status of construction of improvements within the CFD, the anticipated.completion dates for future improvements, and any other matter material to the investment quality of the Bonds. K. Continuing Disclosure. The Developer agrees to comply with all of its obligations under any continuing disclosure agreement or certificate executed by it in connection with the offering and sale of any of the Bonds. -22- ARTICLE IX TERMINATION Section 9.01. No Bonds. If, for any reason, the City does not issue the first series of the Bonds for the CFD by October 30, 2002, this Acquisition Agreement shall terminate and be null and void and of no further effect. Section 9.02. Mutual Consent. This Acquisition Agreement may be terminated by the mutual,written consent of the City and the Developer, in which event the City may let contracts for any remaining work related to the Facilities listed in Exhibit B not theretofore acquired from the Developer hereunder,and use all or any portion of the monies in the Improvement Fund to pay for same, and the Developer shall have no claim or right to any further payments for the Purchase Price of Facilities or Discrete Components hereunder, except as otherwise may be provided in such written consent. Section 9.03. City Election for Cause. The following events shall constitute grounds for the City, at its option, to terminate this Acquisition Agreement, without the consent of the Developer: (a) The Developer shall voluntarily file for reorganization or other relief under any Federal or State bankruptcy or insolvency law. (b) The Developer shall have any involuntary bankruptcy or insolvency action filed against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of the assets of Developer, or shall suffer an attachment or levy of execution to be made against the property it owns within the CFD unless, in any of such cases, such circumstance shall have been terminated or released _within thirty (30) days thereafter. (c) The Developer shall abandon construction of the Facilities listed in Exhibit B. Failure for a period of ninety (90) consecutive days to undertake substantial work related to the construction of the Facilities listed in Exhibit B, other than for a reason specified in Section 9.04 hereof, shall constitute a noninclusive example of such abandonment. (d) The Developer shall breach any material covenant or default in the performance of any material obligation hereunder. (e) The Developer shall transfer any of its rights or obligations under this Acquisition Agreement without the prior written consent of the City. (0 The Developer shall have made any material misrepresentation or omission in any written materials furnished in connection with any preliminary official statement, official statement or bond purchase contract used in connection with the sale of the Bonds. (g) The Developer or any of its Affiliates shall at any time challenge the validity . of the CFD or any of the Bonds, or the levy of Special Taxes within the CFD, other than on the grounds that such levy was not made in accordance with the terms of the Rate and Method of Apportionment of the Special Taxes for the CFD. -23- a If any such event occurs,the City shall give written notice of its knowledge thereof to the Developer, and the Developer agrees to meet and confer with the Director of Public Works and other appropriate City staff and consultants within ten (10) days of receipt of such notice as to options available to assure timely completion of the Facilities listed in Exhibit B. Such options may include,but not be limited to the termination of this Acquisition Agreement by the City. If the City elects to terminate this Acquisition Agreement, the City shall first notify the Developer (and any mortgagee or trust deed beneficiary specified in writing by the Developer to the City to receive such notice) of the grounds for such termination and allow the Developer a minimum of thirty (30) days to eliminate or mitigate to the satisfaction of the Director of Public Works the grounds for such termination. Such period may be extended, at the sole discretion of the City, if the Developer, to the satisfaction of the City, is proceeding with diligence to eliminate or mitigate such grounds for termination. If at the end of such period (and any extension thereof), as determined solely by the City, the Developer has not eliminated or completely mitigated such grounds,to the satisfaction of the City,the City may then terminate this Acquisition Agreement. Notwithstanding the foregoing, so long as any event listed in any of clauses (a) through and including (g) above has occurred, notice of which has been given by the City to the Developer, and such event has not been cured or otherwise eliminated by the Developer, the City may in its discretion cease making payments for the Purchase Price of Facilities or Discrete Components under Article V hereof until such time as such event has been cured or otherwise eliminated to the satisfaction of the City. Section 9.04. Force Majeure. Whenever performance is required of a party hereunder, that party shall use all due diligence and take all necessary measures in good faith to perform, but if completion of performance is delayed by reasons of floods, earthquakes or other acts of God, war, terrorist attacks, civil commotion, riots, strikes, picketing, or other labor disputes, damage to work in progress by casualty, or by other cause beyond the reasonable control of the party (financial inability excepted), then the specified time for performance shall be extended by the amount of the delay actually so caused. -24- ARTICLE X MISCELLANEOUS Section 10.01. Limited Liability of City. The Developer agrees that any and all obligations of the City arising out of or related to this Acquisition Agreement are special and limited obligations of the City and the City's obligations to make any payments hereunder are restricted entirely to the moneys, if any, in the Improvement Fund and from no other source. No Councilmember, or City staff member, employee or agent shall incur any liability hereunder to the Developer or any other party in their individual capacities by reason of their actions hereunder or execution hereof. Section 10.02. Excess Costs. The Developer agrees to pay all costs of the Facilities that it is obligated to construct pursuant to Section 4.02 in excess of the moneys available therefor in the Improvement Fund. Section 10.03. Audit. The Director of Public Works and/or the City's Director of Administrative Services shall have the right, during normal business hours and upon the giving of two (2) business days prior written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in to any of the Facilities, and any bids taken or received for the construction thereof or materials therefor. Section 10.04. Attorney's Fees. In the event that any action or suit is instituted by either party against the other arising out of this Acquisition Agreement, each party shall bear its own attorney's fees and the prevailing party shall not be entitled to recover its attorney's fees from the other party. Section 10.05. Notices. Any notice, payment or instrument required or permitted by this Acquisition Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered, or transmitted by telecopy or facsimile transmission (which shall be immediately confirmed by telephone and shall be followed by mailing an original of the same within twenty-four hours after such transmission), or seventy-two hours following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows: City, Improvement Area A, City of Huntington Beach Improvement Area B or CFD: 2000 Main Street Huntington Beach, California 92648 Attention: Director of Public Works Developer: Boeing Realty Corporation 3760 Kilroy Airport Way, Suite 500 Long Beach, California 90806 Attention:Jim Schulte Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party. Section 10.06. Severability. If any part of this Acquisition Agreement is held.to be . illegal or unenforceable by a court of competent jurisdiction, the remainder of this Acquisition Agreement shall be given effect to the fullest extent possible. -25- a Section 10.07. Successors and Assigns. This Acquisition Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Acquisition Agreement shall not be assigned by the Developer, except in whole to an Affiliate, without the prior written consent of the City,which consent shall not be unreasonably withheld or delayed. In connection with any such consent of the City,the City may condition its consent upon the acceptability of the relevant experience and financial condition of the proposed assignee, the assignee's express assumption of all obligations of the Developer hereunder, and/or upon any other factor which the City deems relevant in the circumstances. In any event, any such assignment shall be in writing, shall clearly identify the scope of the rights and/or obligations assigned, and shall not be effective until approved in writing by the City. Section 10.08. Other Agreements. The obligations of the Developer hereunder shall be those of a party hereto and not as an owner of property in the CFD. Nothing herein shall be construed as affecting the City's or the Developer's rights, or duties to perform their respective obligations, under other agreements, use regulations or subdivision requirements relating to the development of the lands in the CFD. This Acquisition Agreement shall not confer any additional rights, or waive any rights given, by either party hereto under any development or other agreement to which they are a party. Section 10.10. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Acquisition Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Acquisition Agreement thereafter. Section 10.11. Merger. No other agreement,statement or promise made by any party or any employee, officer or agent of any party with respect to any matters covered hereby that is not in writing and signed by all the parties to this Acquisition Agreement shall be binding. Section 10.12. Parties in Interest. Nothing in this Acquisition Agreement,expressed or implied, is intended to or shall be construed to confer upon or to give to any person or entity other than the City and the Developer any rights, remedies or claims under or by reason of this Acquisition Agreement or any covenants, conditions or stipulations hereof, and all covenants, conditions, promises, and agreements in this Acquisition Agreement contained by or on behalf of the City or the Developer shall be for the sole and exclusive benefit of the City, and the Developer. Section 10.13. Amendment. This Acquisition Agreement may be amended,from time to time; by written Supplement hereto and executed by both the City and the Developer. Section 10.14. Counterparts. This Acquisition Agreement may be executed in counterparts,each of which shall be deemed an original. -26- a IN WITNESS WHEREOF, the parties have executed this Acquisition Agreement as of the day and year first-above written. BOEING REALTY CORPORATION By, x4 Its: 11EPHEN J.BARKER CITY OF HUNTINGTON BEACH, for and on behalf of IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT 2002-1 (MCDONNELL CENTRE BUSINESS PARK) and IMPROVEMENT AREA B OF THE CITY OF-HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT 2002-1 Attest: (MCDONNELL CENTRE BUSINESS PARK) By: By: City Clerk Mayor Reviewed and Approved: Approved as to Form: By. By. City Treasurer City Attorney VhIOti 6-�-oz— As owner of all of the real property in the CFD, - the undersigned consents to the foregoing Acquisition Agreement MCDONNELL DOUGLAS CORPORATION By: Its: Won L Badw AuWXiW SiQ W" 20009.03 J6176 -27- ACQUISITION AGREEMENT EXHIBIT A DESCRIPTION OF AUTHORIZED FACILITIES ELIGIBLE FOR ACQUISITION FROM THE DEVELOPER FACILITIES It is intended that the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road, new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street,curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road, new Delta Lane, and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. Exhibit A Page 1 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way that is intended to be dedicated by the recording of a final map, 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. Exhibit A Page 2 ACQUISITION AGREEMENT EXHIBIT B DISCRETE COMPONENTS OF FACILITIES Item No. Description Cost 1 On-site Sewer Lines $ 363,589 2,3,4,5 Streets, Curbs & Gutters for Skylab Road, Delta Lane, Astronautics 991,652 Lane and Skylab Lane 6 Rancho Road Waterline 366,154. 7 Skylab Rd,Delta Lane and Astronautics Waterlines 646,301 8 Streetlight Trenching 183,164 8 Skylab Rd,Delta Lane and Astronautics Street Lights 204,410 9 Streets, Curbs & Gutters for Delta Lane 10 Delta Lane Waterline 11 Storm Drains in Skylab Road, Delta Lane, Astronautics Lane and 663,225 Skylab Lane 12 Bolsa/Delta Intersection&Signal Improvements 13 Rancho/Astronautics Intersection Imps. &New Signal 217,260 14 Roadway and Sidewalk for Rancho Road 47,837 Right-of-Way(1) 4,470,657 Total $8,154,249 (1) Consists of initial street right-of-way of 8.787 acres. The right-of-way is to be acquired at$11.68 per square foot,as determined under the Appraisal,dated April 22,2002 of John S.Adams &Associates, Inc.with regard to the value of such land. Exhibit B Page 1 -t ACQUISITION AGREEMENT EXHIBIT C FORM OF PAYMENT REQUEST PAYMENT REQUEST NO. The undersigned (the "Developer"), hereby requests payment in the total amount of $ for the Facilities (as defined in the Acquisition Agreement, dated as of June 1, 2002, between the City of Huntington Beach (the "City"), for and on behalf of Improvement Area A of the City of Huntington Beach Community Facilities District 2002-1 (McDonnell Centre Business Park), and Improvement Area B of the City of Huntington Beach Community Facilities District 2002-1 (McDonnell Centre Business Park), and the Developer), or Discrete Components thereof(as described in Exhibit B to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby represents and warrants to the Authority as follows: 1. He(she) is a duly authorized officer of the Developer, qualified to execute this Payment Request for payment on behalf of the Developer and is knowledgeable as to the matters set forth herein. 2. To the extent that this payment request is with respect to a completed Facility, the Developer has submitted or submits herewith to.the City of Huntington Beach (the "City") as-built drawings or similar plans and specifications for the items to be paid for as listed in Attachment.l hereto with respect to any such completed Facility, and such drawings or plans and specifications, as applicable, are true, correct and complete. To the extent that this Payment request is for a Discrete Component, the Developer has in his construction office a marked set of drawings or similar plans and specifications for the Discrete Components to be acquired as listed in Attachment 1 hereto, which drawings or plans and specifications, as applicable, are current and show all changes or modifications which have been made to date. 3. All costs of the Facilities or Discrete Components thereof for which payment is requested hereby are Actual Costs (as defined in the Agreement referenced above) and have not been inflated in any respect. The items for which payment is requested have not been the subject of any prior payment request submitted to the City. 4. Supporting documentation (such as third party invoices) is attached with respect to each cost for which payment is requested. 5. There has been compliance with applicable laws relating to prevailing wages for the work to construct the Facilities or Discrete Components thereof for which payment is requested. 6. The Facilities or Discrete Components thereof for which payment is requested were constructed in accordance with all applicable City or other governmental standards, and in accordance with the as-built drawings or plans and specifications, as applicable, referenced_ in paragraph.2 above: 7. The Developer is in compliance with the terms and provisions of the Acquisition Agreement and no portion of the amount being requested to be paid was previously paid. Exhibit C Page 1 t 8. The Purchase Price for each Facility or Discrete Component (a detailed calculation of which is shown in an Attachment 2 hereto for each such Facility or Discrete Component), has been calculated in conformance with the terms of Section 5.06 of the Acquisition Agreement. 9. Neither the Developer nor any Affiliate (as defined in the Acquisition Agreement), nor McDonnell Douglas Corporation, is in default in the payment of ad valorem real property taxes or special taxes or special assessments levied in the CFD (as defined in the Acquisition Agreement), except as follows: I hereby declare under penalty of perjury that the above representations and warranties are true and correct. DEVELOPER: CITY: BOEING REALTY CORPORATION Payment Request Approved for Submission to the City Treasurer (with a copy to the Finance Officer of the City) By: Authorized Representative of the Developer By: Director of Public Works Date: Date: Exhibit C Page 2 ATTACHMENT 1 EXI-IIBIT C [list here all Facilities or Discrete Components thereof for which payment is requested, and attach support documentation] Exhibit C-1 Page 3 ATTACHMENT 2 EXHIBIT C CALCULATION OF PURCHASE PRICE [Use a separate sheet for each Facility or Discrete Component for which payment is being requested] 1. Description (by reference to Exhibit B to the Acquisition Agreement) of the Facility or Discrete Component 2. Actual Cost (list here total of supporting invoices and/or other documentation supporting determination of Actual Cost): $ 3. Budgeted Cost: $ 4. Permitted Additions to Budgeted Cost (to the extent, and only to the extent,that Actual Cost exceeds Budgeted Cost): A. Unused Facility Contingency for this Facility (see clause (i) of second paragraph of Section 5.06A of the Acquisition Agreement) $ B. Unused Facility Contingency from prior Facilities already acquired by the Authority (see clause (i) of second paragraph of Section 5.06A of the Acquisition Agreement) $ C. Savings (Actual Costs less than Budgeted Cost) carried forward from prior acquired Facilities/Discrete Components (see first paragraph of Section 5.06A) and not previously applied to cover cost overruns (Actual Costs greater than Budgeted Cost) on previously acquired Facilities $ D. Unused Overall Contingency (see clause (ii) of second paragraph of Section 5.06(A) of the Acquisition Agreement) $ E. Additional Bond proceeds available $ 5. Subtractions from Purchase Price: A. Holdback for Lien releases (see Section 5.06(C) of the Acquisition Agreement) $ B. Retention (see Section 5.06(D) of the Acquisition Agreement) $ 6. Total disbursement requested (Amount listed in 3, plus amounts, if any, listed in 4 (total of amounts in 3 and 4 not to exceed amount listed in 2), less amounts,if any,listed in 5) $ Exhibit C-2 Page 4 ACQUISITION AGREEMENT EXHIBIT D FORM OF GUARANTY GUARANTY, dated as of , 20_, of THE BOEING COMPANY, a Delaware corporation ("Guarantor"), in favor of the City of Huntington Beach, California, a municipal corporation ("Creditor"). . WITNESSETH: 1. RECITALS. 1.1 Boeing Realty Corporation, a California corporation ("Boeing Affiliate") is a subsidiary of Guarantor and has entered into the Acquisition Agreement, dated as of June 1, 2002,with Creditor (the "Agreement"). Boeing Affiliate intends to complete the Improvements (as defined below) pursuant to the Agreement and in connection with the formation of City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "CFD"). 1.2 In connection with the transactions contemplated by the Agreement, Creditor has required that Guarantor execute and deliver this Guaranty. 2. DEFINITIONS. In addition to the terms defined above, the following terms shall have the following respective meanings: "Improvements" shall mean the improvements described in Exhibit B to the Agreement as of the date of execution of the Agreement (and shall not include any facilities added to Exhibit- B through an amendment to the Agreement). "Obligations" shall mean (i) all obligations and liabilities of Boeing Affiliate to Creditor under the Agreement for the financing, construction and maintenance of the Improvements in the manner set forth in the Agreement, and (ii) all obligations and liabilities of Boeing Affiliate to remediate the environmental hazards revealed by the Phase I and Phase II Environmental Site Assessment Report of ENSR Corporation, dated March 26, 2001, on the property within and adjacent to the boundaries of the CFD. "Obligations" shall not include, and the Guarantor is in no way guaranteeing, the value of the right-of-way indicated on Exhibit B. "Person" shall mean any individual, partnership, limited liability company, joint venture, trust, unincorporated organization, corporation, institution, public benefit corporation,entity or government (whether Federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division agency, body or department thereon. References to this "Guaranty" shall mean this Guaranty, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Guaranty as the same may be in effect at the time such reference becomes operative. 3. THE GUARANTY. The guaranty of Guarantor hereunder is as follows: 3.1 Guaranty of Obligations of Boeing Affiliate. Guarantor hereby unconditionally guarantees to Creditor the performance of the Obligations. Guarantor agrees that its obligations under this Guaranty shall be primary, irrespective of,and unaffected by: (a) the absence of any action to enforce this Guaranty or the Agreement;or (b) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor,other than as set forth herein,it Exhibit D Page 1 being agreed by Guarantor that its obligations under this Guaranty shall not be discharged until the performance, in full, of the Obligations or the termination of the Agreement. Guarantor shall be regarded, and shall be in the same position, as principal obligor with respect to the Obligations. Guarantor expressly waives all rights it may have, now or in the future, under any statute, or at common law, or at law or in equity, or otherwise, to compel Creditor to proceed in respect of the Obligations against the Boeing Affiliate or any other party or against any security for the performance of the Obligations before proceeding against, or as a condition to proceeding against, Guarantor. 3.2 Enforcement of Guaranty. In no event shall Creditor have any obligation (although it is entitled, at its option) to proceed against Boeing Affiliate or any other Person before seeking satisfaction from Guarantor. Any demand by Creditor for performance by Guarantor under this Guaranty shall be in writing, shall make reference to this Guaranty and the Agreement, shall indicate that the Obligations (or the applicable portion thereof) have not been performed by Boeing Affiliate when due and shall specify the Obligations which are the subject of such demand. 3.3 Bankruptcy. This Guaranty shall remain in full force and effect and continue to be effective in the event any petition be filed by or against Boeing Affiliate or Guarantor for liquidation or reorganization, in the event Boeing Affiliate or Guarantor becomes insolvent or makes an assignment for the benefit of creditors or in the event a receiver or trustee be appointed for all or any significant part of Boeing Affiliate's or Guarantor's assets. 3.4 Continuing Guaranty. Except as provided in Section 5.6, Guarantor agrees that this Guaranty is a continuing guaranty and shall remain in full force and effect until the performance in full of the Obligations. 4. REPRESENTATIONS AND WARRANTIES. To induce Creditor to enter into the Agreement, Guarantor makes the following representations and warranties to Creditor, each and all of which shall survive the execution and delivery of this Guaranty: 4.1 Corporate Existence. Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation. 4.2 Corporate Power; Authorization; Enforceable Obligations. The execution, delivery and performance of this Guaranty are within Guarantor's corporate powers, have been duly authorized by all necessary or proper corporate action, are not in contravention of any provision of such Guarantor's Certificate or Articles of Incorporation or ByLaws. This Guaranty has been duly executed and delivered on behalf of Guarantor, and constitutes a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms. 5. MISCELLANEOUS. 5.1 Entire Agreement; Amendments. This Guaranty, together with the Agreement, . .:._ .constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to a guaranty of the Obligations and may not be amended or supplemented except by a writing signed by Guarantor and Creditor. 5.2 Headings. The headings in this Guaranty are for convenience of reference only and are not part of the substance of this Guaranty. Exhibit D Page 2 5.3 Severability. In the event that any one or more of the provisions contained in this Guaranty shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and the remaining provisions of this Guaranty shall not be in any way impaired. 5.4 Notices. Whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any such communication with respect to this Guaranty, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person (by personal delivery, delivery service or overnight courier service) with receipt acknowledged, or telecopied and confirmed immediately in writing by a copy mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as hereafter set forth, or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: (a) If to Creditor, at: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention:Director of Public Works Telecopier No.: (714) 374-1573 (b) If to Guarantor, at: The Boeing Company 100 North Riverside, MC 5003-3020 Chicago, Illinois 60606-1596 Attention:Treasury Operations Telecopier No.: (312) 544 -2399 or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, in person, by delivery service or by overnight courier service, with receipt acknowledged, the date of telecopy transmission or three (3) business days after the same shall have been deposited with the United States mail, postage prepaid. 5.5 Binding Effect. This Guaranty shall bind Guarantor and shall inure to the benefit of Creditor and its successors and assigns. Guarantor may not assign this Guaranty. 5.6 Termination. This Guaranty shall terminate and be of no further force or effect at the earlier of(i) such time as the Obligations shall be performed in full, or (ii) the Agreement is terminated pursuant to Section 9.01, 9.02 or 9.03 of the Agreement. Upon such performance in full of the Obligations,or termination of the Agreement, Creditor shall deliver to Guarantor such documents as Guarantor may reasonably request to evidence such termination. 5.7 Governing Law. THE TERMS OF THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCLUSIVE OF ANY RULES AS TO CONFLICT OF LAWS) AND THE LAWS OF THE UNITED STATES APPLICABLE THEREIN. GUARANTOR WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES HEREUNDER, UNDER THE AGREEMENT OR RELATING TO THE FOREGOING. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED Exhibit D Page 3 WITHIN THE CITY OF NEW YORK AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON GUARANTOR, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO GUARANTOR AT THE ADDRESSES PROVIDED IN SECTION 5.4 ABOVE AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE UNITED STATES MAIL, POSTAGE PREPAID. GUARANTOR WANES ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. 5.8 Counterparts. This Guaranty may be executed in any number of counterparts which shall individually and collectively constitute one agreement. Exhibit D Page 4 .ti V IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the date first above written. THE BOEING COMPANY By: Name: Title: Accepted and acknowledged by CITY OF HUNTINGTON BEACH, for and on behalf of IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT 2002-1 (MCDONNELL CENTRE BUSINESS PARK) and IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT 2002-1 Attest: (MCDONNELL CENTRE BUSINESS PARK) By: By: City Clerk Mayor Reviewed and Approved: Approved as to Form: By: By: City Treasurer City Attorney Exhibit D Page 5 ACQUISITION AGREEMENT EXHIBIT E LIST OF PREFORMATION CONTRACTS The following scopes of work were awarded prior to the formation of the District, pursuant to paragraph 4.03C. of the Acquisition Agreement. 1. Sanitary sewer lines located in Skylab Road West, Delta Lane, and Astronautics Lane has been awarded for $257,854.00 pursuant to a contract, dated May 29, 2002, between Boeing Realty Corporation and Rossi Construction Company. 2. Site Concrete i.e. curbs and gutters, and sidewalks along Skylab Road between Astronautics and Delta has been awarded for $27,500.00, pursuant to a contract, dated May 29, 2002, between Boeing Realty Corporation and CL Concrete. (b) Asphalt Paving along Skylab Road between Astronautics and Delta has been awarded for $69,575.00, pursuant to a contract, dated May 29, 2002, between Boeing Realty Corporation and Western Paving. 3. Site Concrete i.e. curbs and gutters, and sidewalks for Delta Lane from Skylab Road north to Astronautics has been awarded for $48,150.00, pursuant to a contract, dated May 29, 2002,between Boeing Realty Corporation and CL Concrete. (b) Asphalt Paving for Delta Lane from Skylab Road north to Astronautics has been awarded for $53,820.00, pursuant to a contract, dated May 29, 2002, between Boeing Realty Corporation and Western Paving. 4. Construction of Site Concrete i.e. curbs and gutters, and sidewalks along "new" Astronautics Lane to Rancho Road has been awarded for $118,944.00, pursuant to a contract, dated May 29, 2002, between Boeing Realty Corporation and CL Concrete. (b) Asphalt Paving for "new" Astronautics Road to existing Rancho Road has been awarded for $126,600.00, pursuant to a contract, dated May 29, 2002, between Boeing Realty Corporation and Western Paving. 6. Rancho Road domestic water line located in Rancho Road from Bolsa Chica to Astronautics Lane has been awarded for $353,535.00 pursuant to a contract, dated May 29, 2002,between Boeing Realty Corporation and Doty Brothers Equipment Company. 7. Domestic water line located in Skylab Road West,Delta Lane, and Astronautics Lane has been awarded for $589,177.00 pursuant to a contract, dated May 29, 2002, between Boeing Realty Corporation and Rossi Construction Company. 11. Construct storm drain line located in Skylab Road West, Delta Lane, and Astronautics Lane has been awarded for $521,880.00 pursuant to a contract, dated May 29, 2002,between Boeing Realty Corporation and Rossi Construction Company. Exhibit E Page 1 RCA. ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Adopt Ordinance, Authorize Issuance of Special Tax Bonds and Approve Legal Documents for City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park COUNCIL MEETING DATE: June 17, 2002 RCA TACHM AT ENTS 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 Attome 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:_., Only)(Below Space For City Clerk's Use RCA Author: FJH CITY OF HUNTINGTON BEACH O INTER-DEPARTMENT COMMUNICATION ION BEACH Connie Brockway, City Clerk Office of the City Clerk Liz Ehring, Deputy City Clerk II To: Date: � Meeting Date: / 7 C,. Agenda Item: aCJ07� roposed City Council Agenda Items: The City Clerk's Office/City Administrator's Office must return your agenda item due to the following requirements that have not been met. When your Agenda Item is ready to resubmit,please return to: Elaine Kuhnke, Management Assistant, Administration 1. Signature(s)Needed ,001" A On RCA B On Agreement C Other 2. Attachments A Missing B Not identified C Other 3. Exhibits A Missing B Not identified C Other 4. Insurance Certificate(Proof Of Insurance) A Not attached B Not approved by City Attorney's Office C Signed form notifying City Clerk that depa ment will be responsible for obtaining insurance certificate on this item.(See form attached) 5. Wording On Request For Council Action(RCA)Unclear A Recommended Action on RC not complete B Clarification needed on RCjA C Other 6. City Attorney Aplfroval Required 7. Agreement Xeeds To Be Changed A Page No. 8. Ot r n c/ G:agenda/misdrcafomt r ., HAA Jae Tb J, Quint&Thimmig LLP 7/11/02V 0T VOT- $4,900,000 IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) SPECIAL TAX BONDS,SERIES 2002-A SCHEDULE OF TRANSCRIPT DOCUMENTS A. CFD FORMATION AND ISSUANCE DOCUMENTS 1. Petition (Including Waiver) of McDonnell Douglas Corporation (the "Landowner"). (Leonie Mulvihill may have this in her files for this financing. I have left a message for her to confirm that she has it in her files, if you have it in your file, please include it in the package) 2. Deposit/Reimbursement Agreement, between the City of Huntington Beach (the "City") and the Landowner. (Leonie Mulvihill may have this in her files for this financing. I have left a message for her to confirm that she has it in her files, if you have it in your file, please include it in the package) XOrdinance No. 3546 entitled "An Ordinance of the City of Huntington Beach Amending the City of Huntington Beach Special Tax Financing Improvement Code," adopted March 18, 2002. City Resolution No. 2002-26, 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," adopted April 1, 2002. City Resolution No. 2002-27, entitled "A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention to Incur Bonded Indebtedness of the Proposed City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)," adopted April 1, 2002. Community Facilities District Report, dated June 3, 2002. City Resolution No. 2002-38, entitled "A Resolution of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)," adopted June 3, 2002 (the "Resolution of Formation"). City Resolution No. 2002-39, entitled "A Resolution of the City Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area A, and Within Improvement Area B, of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)," adopted June 3, 2002. �( City Resolution No. 2002-40, entitled "A Resolution of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and Within Improvement Area B of the City of Huntington Beach Community 08003.07 Facilities District No. 2002-1 (McDonnell Centre Business Park)," adopted June 3, 2002. Official Ballot/Special Tax Election on June 3, 2002, including copy of the Official Ballot and return envelope. City Resolution No. 2002-41, entitled "A Resolution of the City Council of the City of Huntington Beach Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien," adopted June 3, 2002. Canvass and Statement of Result of Election held on June 3, 2002, as certified by the City Clerk. (sv-L� 1l.4% dF fags. W- 2w2-41) City Ordinance No. 3557, entitled "An Ordinance of the City of Huntington Beach Levying Special Taxes Within Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)," adopted on June 17, 2002. City Resolution No. 2002-63, entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing the Issuance of Special Tax Bonds of the City of Huntington Beach for Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), and Approving Other Related Documents and Actions," adopted June 17, 2002 (the "Authorizing Resolution"). -2- .1Improvement Area A CFD No. 2002-1 McDonnell Centre Business Park Page 1 of 1 Hughes, Jeff'r From: Blythe Fleet [bfleet@qtl p.com] Sent: , To: jhughes@surfcity-hb.org Subject: Improvement Area A CFD No. 2002-1 McDonnell Centre Business Park Dear Jeffrey, Attached is the list of resolutions etc.,that we will need for the transcript for this financing. Please prepare one certified copy of each resolution or ordinance.Any other documents that are on the list and that are in your files,please include a copy of the signed document(if you have it). Christy Teague will be sending a Federal Express package to our office on Monday,July 15th.Please give these documents to her,as soon as possible, so that she may include them in her package. You have been so helpful!!!!!! Thank you so much for all of your assistance with this financing!!!! Blythe Blythe-Fleet Quint&Thimmig LLP One Embarcadero Center,Suite 2420 San Francisco,CA 94111 p: (415)765-1550 f: (415)765-1555 bfleet@qtllp.com 7/11/2002 Quint&Thimmig LLP - __-- FINAL-- Recorded in Official Records, County of Orange RECORDING REQUESTED BY AND Darlene Bloom, Interim Clerk-Recorder AFFER RECORDATION RETURN TO: I III!II IIIII IIIII IIIII IIIII IIIII III!I lilll!I!II I!III IIIII NO FEE City Clerk 200205096401105pm 06118/02 .4 City of Huntington Beach 116 32 NO3 17 2000 Main Street 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Huntington Beach,California 92648 -Mis document Is solely for tf official business of the City of Huntington Beach, as conteal. NOTICE OF SPECIAL TAX LIEN pleated under Government Code I Sec. 6103 -and should be recorded /I / frae of:charga. Improvement Area A of the City of Huntington Beach Community Facilities District No.2002-1 ��- (McDonnell Centre Business Park) Pursuant to the requirements of Section 3114.5 of the California Streets and Highways Code, and the provisions of Chapter 3.56 of the Municipal Code of the City of Huntington Beach (the "Code") and,_as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), the undersigned City Clerk of the City of Huntington Beach (the "City"), County of Orange, State of California, hereby gives notice that a lien to secure payment of a special tax which the City Council of the City authorized, is hereby imposed. The special tax secured by this lien is authorized to be levied for the purpose of paying principal and interest on bonds, the proceeds of which are being used to finance the certain public improvements described on Exhibit A attached hereto and hereby made a part. hereof. The special tax is authorized to be levied within Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Improvement Area")which has now been officially formed and the lien of the special tax is a continuing lien which shall secure each annual levy of the special tax and which shall continue in force and effect until the special tax obligation is prepaid, permanently satisfied, and cancelled in accordance with law or until the special tax ceases to be levied and a notice.of cessation of special tax is recorded in accordance with Section 53330.5 of the Act. The rate, method of apportionment, and manner of collection of the authorized special tax is as set forth in Exhibit B attached hereto and hereby made a part hereof. Conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied and the lien of the special tax cancelled are as provided in Exhibit B 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 Improvement Area in accordance with Section 3115.5_ of the California Streets and Highways Code. The assessor's tax parcel(s) numbers of all parcels or any portion thereof which are included within improvement Area, and the name(s) of the owner(s) of the real property included within the Improvement Area as they appear on the latest secured assessment roll as of the date of recording of this or as otherwise known to the City, are as set forth in Exhibit C attached hereto and hereby made a part hereof. 08003.07:J6152A Reference is made to the boundary map of the Improvement Area recorded at Book 85 of Maps of Assessment and Community Facilities Districts at Pages 3-6 (Instrument No. 20020279386), 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 Improvement Area. 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 Director of Administrative Services of the City of Huntington Beach, City of Huntington Beach, 2000 Main Street, Huntington Beach, CA 92648, telephone number (714) 536-5236. C."/ By: �7 ODD City City of Huntingto ton Beach -2- CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT i State of California ) ss. County of 'L� ) On f,t-17 �� before me, 1AZL,-& A ffate Name and Title of Officer(e.g., Jane Doe,Notary u is") personally appeared [. Name(s)of S' er(s) ,] ,)personally known to me proved to me on the basis of satisfactory evidence ) to be the personN whose names)(3)am ) subscribed to the within instrument and LAURA A.NELSON acknowledged to me that-i-vede l"executed ) Commission# 1226066 the same in h+s�Dtheir aut orized NotaryPublic-California capacity(ifls), and that by ' / er r ) My CoOrangeiCounty�,2oai r signature(s) on the instrument the person(s), or ) the entity upon behalf of which the person(* ) acted, executed the instrument. ) ( WITNESS hand and official seal. i- Place Notary Seal Above Signature of Notary Public L/ OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Docu e t - Title or Type of Document: Document Date: Number of Pages: ( Signer(s) Other Than Named Above: /`ZILIPI� ) :I Capacity(ies) Claii ed�neV7G�Signer's Name: L(l�clMeW ❑ Individual L/� _ '�+ Corporate Officer—Title(s): �(/li(�1 (�(,� Top of thumb here ❑ Partner—❑ Limited ❑General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ) ❑ Other: ) Signer Is Representing: ) 0 1999 National Notary Association•9350 De Soto Ave.,P.O.Box 2402•Chatsworth,CA 91313-2402•www.nationalnotary.org Prod.No.5907 Reorder Call Toll-Free 1-800-876-6827 . y EXHIBIT A IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA A OF THE DISTRICT FACILITIES It is intended that Improvement Area A of the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road,new Delta Lane and new Astronautics Lane. 2. The construction of streets,curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets,curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road,new Delta Lane, and new Astronautics Lane. 9. The construction of street,curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. A-1 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way that is intended to be dedicated by the recording of a final map, 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. - OTHER Improvement Area A of 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 IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) 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. 2002-1 (McDonnell Centre Business Park) (herein "CFD No. 2002-1") shall be levied and collected according to the special tax liability determined by the Administrator through the application of the procedures described below. The real property in Improvement Area A of CFD No. 2002-1, unless exempted by law or by the provisions hereof, shall be specially taxed for the purposes, to the extent, and in the manner herein provided. A. DEFEIQMONS The capitalized terms hereinafter set forth have the following meanings when used in this Rate and Method of Apportionment of Special Tax: Acre or Acreage means the land area of an Assessor's Parcel as shown on the applicable final map,parcel map, or 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 that 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 Improvement Area A of CFD No. 2002-1: the fees and expenses of any Fiscal Agent (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; costs related to credit enhancement for the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, Bond redemption expenses,charges levied by the County or any division or office thereof in connection with the levy and collection of the Special Tax, audits, and amounts needed to pay arbitrage rebate to the federal government with respect to the 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 any delinquent Special Tax; 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 Improvement Area A of CFD No. 2002-1 or any Bonds. Administrator means the Director of Administrative Services of the City or such other person or entity designated by the City Administrator or the City Council to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. B-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 that is located within Improvement Area A of CFD No. 2002-1. 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 Improvement Area A of CFD No. 2002-1 under the Act. Bond Fund means the fund or account created pursuant to the Indenture in which the collections of the Special Tax are deposited. Bond Year means the one year period from September 2 to the following September 1. 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. 2002-1. County means the County of Orange. Delinquencies mean the amount, if any, equal to delinquencies in payment of the Special Tax levied in Improvement Area A of CFD No. 2002-1 in the previous Fiscal Year. Exempt Land means (1) any real property within the boundaries of Improvement Area A of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes, including,but not limited to,streets,water well production facilities, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent or trustee who is a party to the Indenture. 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. Improvement Area A means any real property within the boundaries of CFD No. 2002-1 as depicted on the boundary map for said CFD entitled "Proposed Boundaries of The City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), County of Orange, State of California" and approved by the City Council. Said Improvement Area A is comprised generally of Parcels 4 through 11, the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Astronautics Road, Street 'B' and Street 'C'; as shown on Tentative Parcel Map No. 2001-122 on file with the City. Said Improvement Area A is also envisioned to include Parcels 1 through 8,the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Delta Lane and Astronautics Lane; as shown on proposed, Final: Parcel Map No. 2001-226 and encompassing approximately 40.339 gross acres and 33.286 net taxable acres. In no case shall the net taxable acres in Improvement Area A be less than 33.286. 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, B-2 amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. Infrastructure means the public improvements authorized to be financed by Improvement Area A of CFD No. 2002-1 in accordance with the terms of the Act. Interest Payment Date means any date on which regularly scheduled principal and/or interest payments are due on the Bonds. Maximum Special Tax means, with respect to any Assessor's Parcel of Taxable Property, the maximum Special Tax determined in accordance with Section C that can be levied in any Fiscal Year on such Assessor's Parcel. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Property Owner means the owner of an Assessor's Parcel within the boundaries of Improvement Area A of CFD No. 2002-1 as determined from the latest equalized tax rolls of the County or as proved through some other acceptable manner to the Administrator. Reserve Fund means the fund of that name created under the Indenture. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax on Taxable Property within Improvement Area A of CFD No. 2002-1. Special Tax Requirement means the amount required in any Fiscal Year for Improvement Area A of CFD No. 2002-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond 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 due and estimated by the Administrator to become due prior to the next levy of the Special Tax, and (iv) to cure any Delinquencies in the payment of principal or interest on indebtedness of Improvement Area A of CFD No. 2002-1. The Special Tax Requirement shall be reduced.by the following: (i) any credit from interest earnings on the Reserve Fund or other Bond funds the earnings on which are available under the terms of the Indenture to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax Levy, and (iii) any other funds legally available to apply against the Special Tax Requirement as determined by the Administrator. Taxable Property means all of the Assessor's Parcels within the boundaries of Improvement Area A of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. B. IDENTIFYING TAXABLE PROPERTY On or about each July 1", the Administrator shall determine which Assessor's Parcels in Improvement Area A of CFD No. 2002-1 are Taxable Property. The Taxable Property shall be subject to the Special Tax in accordance with the rate and method of apportionment described in Sections C and D below. B-3 C. MAXIMUM SPECIAL TAX The Maximum Special Tax for each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maximum Special Tax shall increase in every Fiscal Year thereafter by two percent (2%) of the Maximum Special Tax for the prior Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003, and during each Fiscal Year thereafter, the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent (100%) of the Maximum Special Tax for that Fiscal Year, as described in Section C, above, as needed to satisfy the Special Tax Requirement. E. LIMITATIONS No Special Tax shall be levied on an Assessor's Parcel after such Assessor's Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2002-2003, 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). Upon determination by the Administrator that this requirement has been met, the Special Tax lien shall be removed from all Assessor's Parcels in Improvement Area A of CFD No. 2002-1. F. MANNER OF COLLECTION The Special Tax shall be collected at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2002-1 may at any time directly bill the Special Tax, may . collect the Special Tax at a different time or 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. G. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section G.: 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 which 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. B-4 1. Prepayment in Full The Special Tax obligation applicable to such Assessor's Parcel in Improvement Area A 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. 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). B-5 1 8. Determine the administrative fees and expenses of Improvement Area A 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 Improvement Area A of CFD No. 2002-1 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 G.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 G.1, minus the amounts determined in Paragraph No. 8 of Section G.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 G.1. B-6 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. 2002-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section G.1, and (ii) indicate in the records of Improvement Area A of CFD No. 2002-1 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. H. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Administrator not later than one calendar year after having paid the Special Tax that is disputed. The Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Administrator's decision requires that the Special Tax be modified or changed in favor of the property owner,a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Administrator shall be referred to the City Council and the decision of the City Council shall be final. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. B-7 EXHIBIT C IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) ASSESSOR'S PARCEL NUMBERS AND OWNERS OF LAND WITHIN Orange County Assessor's Parcel Numbers Owner of Record of Parcel 195-111-34 (portion), McDonnell Douglas Corporation 195-111-24, c/o Boeing Realty Corporation and 195-111-31 3760 Kilroy Airport Way #500 Long Beach, CA 90806 C-1 CN FO AM ED CO PY / M..t GOtepved NRe odg., 5 PROPOSED BOUNDARIES OF SHEET 1 OF 4 IMPROVEMENT AREAS A AND 8 OF ao THE CITY OF HUNTINGTON BEACH SCALE COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. 1W.4mw BA9I9 OF BE/IPoDlE14 FILED IN THE OFFICE OF CITY dFR1C OF THE CRY OF HUNM CTON BEACH. M FAO•'�-1 B0U DAW THE BEARINGS SHONN HEREON ARE BASED UPON NUMB OAY OF 2002. THE CENTERUNE OF BOLSA AVENUE.BEARING Q NSv25.20'W.PER PARCEL MAP NO.97-190 BY: V��1-eaf/ ® Mawr LAID FLED IN BODK 299,PACES 3 AND 4 OF PARCEL CONNIE Y.THEI=CLERK OF THE COY OF HUN INGADN BEACH NEAPS RECORDS OF OR"E COUNTY,CALOORNIA. I HEREBY CERTIFY THAT THE NTTHBN MAP SHCAMNG PROPOSED BOUNDARIES OF 04PR0VDAE W . LIPROVBAE Nr AREA A AREAS A AND B OF THE CITY OF HUNTNGTOH BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MeDONNELL CENTRE BUSINESS PARK).COUKfY OF ORANGE.STATE OF CALB'ORNU. WAS APPROVED BY THE CITY COUNCIL OF THE�CIITTY,��OF HUNTINGTON BEACH AT A REGULAR MEETING ® AREA B TH OF HELD ON THE 11 DAY OF AML 2002. BY ITS REsownON NO. SEE SHEET 4 FDA 1U.P.' CONME-BROCKWAY.THE 4M CLERK OF THE COY OF HUNTINGTON BENCH DUALS AND OIMENSWNS. aEW4XNc aEoutsreo BY.CITY OF HUNTNcroH BFADN FILED Y OF T CURVE TABLE B OFLMAPS OF ASSESSMENT AND COMMUNITY FACILITIES O MIS AT IN VE DELTA RADIUS LENGTT PACE '6"m tm THE OFFICE OF THE COUN11'RET.WAROER IN THE COl1NIY OF ORANGE. cl 89'42'22' 2500 3914 STATE OF CAIIF'ORNk 06 09'37'32' 470M 7940 6 CA F 89'40.31' 27A0 IP26 H0 Q00zQ'j•�9+J8( . CIO 89.39'47' 2740 42.41 1 C11 13.40'24' 53000 IM.9B BY: UNE TABLE mwt J. M.INTERIM COMM RECORDER OF COUNTY OF OHANOE LINE LENGTH I BEARING Ll 153.83 I N00.32'09'E / 1Z76 I N89'2751'V � L L3 1=3 1 N00.38'09'E C�- >-d 3•te.ot L4 281.29 NB9'23'56•V f� JAN ADAMS R-E.21887 EKP 9-30-2005 0127.47 1 N39.29 34'V / L6 261.33 R50'30'06'E L 200D7 NB9.2W49'V • . L. M76 H39.29'S4'V / v' L 173.73 R89'26.4 UO 294M N89'26'40'V 'I'••'•••' •�. Ltl 307b0 N00'32'03'E . . Why h big L12 223.% NOD'33'00'E /' \ * py.9-" U 56.88 N89.26.40'V i CIVIL U4 243.83 N00.34'41'E /' 9 a ,a lip 40 c te.1947.7W Lrnld7s• T-327.7,• "2E,r/ i . T to or .a t = R- 1.-4L26' T-2e 2"r 6�' I 6'Bv4r23- 34ZW IEr24.4WW .•NH4.7,V 65[WfA5AD IGr W.4 Nt�Z171M1Ti MAP. NAP nor Lr423r T-27AW � S b4otrfs• $i- taas�'m•E $- I ---------- V v I 1'� IqW' R�eOQI �\NAP. Itg I tnr , t i 74.2 m m' 1 , eY I Y W7A7f' t.ee' ---------- FLAFeFFTrs'AFmeA $� CiBALSAA EWW -- - ADAF6 9TFEEl61 CTYL.ENOMM NC: CAI ■o-o-rtM.4+-a4ao4 II.YOF®bM01®TI 'm OO mo CONFORMED COPY • Nut Compfma.lh Onpw1 d SHEET 2 OF 4 PROPOSED BOUNDARIES OF IMPROVEMENT AREAS A AND B OF THE CITY OF HUNIINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. JI .mama aro. 1 L. 9 CFD NO.2002-1 VICRM MAP =A ac" FOR LEML OEkWPRON OF M la 2002-1 WWMARY.SEE SHEEP 3, 193-111 195-111- 195-111= q 195-111-( �f- 195-itt-® . A522ROAD W O UVI=JIrA O W SCALE r-4W NAr. BCUA AWME ASSESSOR'S PARCEL MAP RAW FWAMi ADAMS•etra I CNL e40NEEF ,W- •4ms.rM�MGad II.Y WCCRaMN® JH 00040 CONFORMED CO Not ComDano MN Or4bW PROPOSED BOUNDARIES OF SHEET 3 OF 4 IMPROVEMENT AREAS A AND B OF THE CITY OF HUN71NGTON BEACH COMMUNITY FACILMES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. LEGAL MCHE"OF OFD.NO.2002-1 BOU�DAAri PARCEL PARCEL 6 AND PARCEL 3 AS SHOWN ON THE YAP FILED N BOOK 1.PAGES 3 11-MUCH S OF PARCEL YAPS,N THE MICE OF THE COUNTY RECORDER OF ORANGE COUNTY.CAMRNN. EXCEPTING THEREFROM THE LINO 04CWDM WITHIN THE DISTINCTIVE BORDER OF PARCEL NAP NO.87-424.AS SHOWN ON THE YAP FILED IN ROOK 237. PAGES 4.5.AND 6 OF SUD PARCEL YAPS. ALSO EXCEPTING 1 00ROY THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER OF PARCEL.YAP NO.97-198.AS SHOWN ON THE YAP FILED N BOOK 299,PAGES 8 AND 9 OF SAID PARCEL YAPS. ALSO EXCEPTING THEIRIEF"THE LAND INCLUDED WITH THE DISTINCTIVE BORDER OF PARCEL YAP NO.97-189.AS SHOWN ON THE YAP FILED IN BDOK 299.PAGES I AND 2 OF SAID PARCEL MAPS. , ALSO E%CEPIINO THEREFROM THE NAND INCLUDED WITHIN THE DISTINCTNE _ BORDER OF PARCEL YAP NO.97-10%AS SHOWN ON YAP FILED N BOON 2". PAGES 3 AND 4 OF SAID PARCEL YAPS. ALSO EXCEPTING THEREFROM PARCEL 4 OF PARCEL YAP NO.95-196 AS SHOWN ON THE MAP FRO IN BOOK 296,PAGES 3 AND 4 OF SAID PARCEL YAPS PARCEL 8 PARCEL'A'OF PARCEL YAP 97-IM N THE CITY OF HUNTINGTON BEACH• COUNTY OF ORANGE,STATE OF CALIFORNIA AS SHOWN ON THE YAP FILED 9N BOOK 299'PACES 3 AND 4 OF PARCELS YAPS.ON THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL O THAT PORRON OF SMA ROAD.IN THE CITY OF FNNTWGTON BUDN.COUNTY OF ORANGE,STATE OF CNNOR NK AS SHOWN ON PARCEL YAP NO.95-186. FILED IN BOOK 296,PAGES 3 AND 4 OF PARCEL MAPS.N THE OFFICE OF THE COUNTY RECORDER OF 30 COUNTY.LYING WESTERLY OF THE FOLLOWING DESCRIBED LIKE- BEGINNING AT THE WESTIM TERL6 M OF THAT CERTAIN COURSE SHOWN AS "NORTH 89'2421'WEST 502.91 FEET ON THE NORM LINE OF PARCH.4 OF SAID YAP;THENCE NORTHERLY ON A ONE,LINE 70 THE WESTERLY TERMRNS OF THAT CERTAIN COURSE SHOWN AS"NORTH 69'24.21'WEST 592-M FEET'ON THE SOUTH LANE OF PARCEL 1 OF PARCEL YAP NO.97-190.FEED IN BOOK 299. PACES 3 AND 4 OF PARCEL YAPS.N SAID OFFICE OF THE COUNTY RECORDER NORM SCALE f-407 ! : ROAD . ! Q 6Fir MET Poll NAP.CETAIA r � ILAP. � ------------ ------- JIM AF�ENE�yN./CA FLAFE FIBAM SA SHEET LIW MAP ADAMS 4 STFEM SCALE f-400' CNL ENOWEEf$LNG ea.r+.r.a�wnaap NwNawcmr.raar .LN 000N0 S� 6 o v w co � F •- d N Z o cr W 11,111 W 7 7 W 7 1 W 1 '� o In'11'mJ N '1 SV N N=Y � ~ rl'IN1N1'1 f +' N ' NCppl N a. O W Z RIM mnIM:!CI CIm^ NA Nn f!) 83 U m F— w RIN� .��M�n R� :0°4� n��F,���� zY asi � 9 cz, ssi wZ Z O J rC1 tlf�00 mm VV I�yy�I�CII 1 y,I��q YY.pp�I1�m„Im J O ya m J J J MJ"J J J J J J J J J J J J J J J J J J J J J J J J�J g J - O` 09 Z Z � wF— °a j w■ � � � � i^ , z' a w ° W s or, W wUU oz co w O U PwP??PW[?O�nl�gWn?BWR?W�R?Wu?PWQPup. ?W p. A?l�„W pOQ JJ ' yy ^N NW NLL yNI QCN N ¢? ►� J az, O� zci J aa. V yf Z il & N I CL 7JJJpp��.onmwa.. n�n,On m�ry�JJJJJJJJJJ Lz'1 Tin U s s 9! s 1, 691 a Quint&Thimmig LLP FINAL RECORDING REQUESTED BY AND Recorded in Official Records, County of Orange AFTER RECORDATION RETURN TO: Darlene Bloom, Interim Clerk-Recorder IIIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIIINO City Clerk FEE City of Huntington Beach 116 32 Nos 2002050964112.-05pm 06/18/02 i 2000 Main Street 17 Huntington Beach,California 92648 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 T'N,!s -incurnent is solely for the c`:k-ai business of the City of Huntington Beach, as contem- NOTICE OF SPECIAL TAX LIEN plated under Government Code Sec. 6103 and should be recce Improvement Area B of the -free of charge.. P City of Huntington Beach Community Facilities District No.2002-1 0,C (McDonnell Centre Business Park) `6 W Pursuant to the requirements of Section 3114.5 of the California Streets and Highways Code, and the provisions of Chapter 3.56 of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), the undersigned City Clerk of the City of Huntington Beach (the "City"), County of Orange, State of California, hereby gives notice that a lien to secure payment of a special tax which the City Council of the City authorized, is hereby imposed. The special tax secured by this lien is authorized to be levied for the purpose of paying principal and interest on bonds, the proceeds of which are being used to finance the certain public improvements described on Exhibit A attached hereto and hereby made a part hereof. The special tax is authorized to be levied within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Improvement Area")which has now been officially formed and the lien of the special tax is a continuing lien which shall secure each annual levy of the special tax and which shall continue in force and effect until the special tax obligation is prepaid, permanently satisfied, and cancelled in accordance with law or until the special tax ceases to be levied and a notice of cessation of special tax is recorded in accordance with Section 53330.5 of the Act. The rate, method of apportionment, and manner of collection of the authorized special tax is as set forth in Exhibit B attached hereto and hereby made a part hereof. Conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied and the lien of the special tax cancelled are as provided in Exhibit B 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 Improvement Area in accordance with Section 3115.5 of the California Streets and Highways Code. The assessor's tax parcel(s) numbers of all parcels or any portion thereof which are included within improvement Area, and the name(s) of the owner(s) of the real property included within the Improvement Area as they appear on the latest secured assessment roll as of the date of recording of this or as otherwise known to the City, are as set forth in Exhibit C attached hereto and hereby made a part hereof. 08003.07:J6152B J Reference is made to the boundary map of the Improvement Area recorded at Book 85 of Maps of Assessment and Community Facilities Districts at Pages 3-6 (Instrument No. 20020279386), 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 Improvement Area. 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 Director of Administrative Services of the City of Huntington Beach, City of Huntington Beach, 2000 Main Street, Huntington Beach, CA 92648, telephone number (714) 536-5236. By: G � City Clerk, av�aCity of Huntington--Beach -2- f CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT [ 1 1 State of California ( ss. ) County of �I ) On 1 / Z , before me, C� �• ���/1'l i- U ) ( Date / N and Title of Officer(e.g.."J a Doe.Notary b ") ) personally appeared U Name(s)of gner(s) ) i impersonally known to me ❑ proved to me on the basis of satisfactory ) evidence ;) to be the person 4) whose name(s)Qare ) subscribed to the within instrument and ) (AURA A NELSON acknowledged to me that ggpt4ey executed (' Commission# 1226066 the same in Ws&theair authorized i (' NotaryPublic-California capacity(tes), and that by 44Z9 r Herr Orange County signature(s)on the instrument the person(..), or46 ) ( MyComm.B oiresJul23,2M3 the entity upon behalf of which the person(-.) acted, executed the instrument. ) WITNESS my d and official seal. ) Place Notary Seal Above Signature of Notary Public ) OPTIONAL , (, Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Docu ent Title or Type of Document: (1 Document Date: jstrx�(_, Number of Pages: a'� ) Signer(s) Other Than Named Above: A,6Xti Capacity(ies) Claimed by Signef� Signer's Name: C�7L�'Iti� l Jit�oGt;GtlZG�.L _ ❑ Individual - ) Top of thumb here I •» Corporate Officer—Title(s): ❑ Partner—❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ) ❑ Guardian or Conservator ❑ Other: Signer Is Representing: 1 01999 National Notary Association•9350 De Soto Ave.,P.O.Box 2402•Chatsworth,CA 91313-2402•www.nationalnotary.org Prod.No.5907 Reorder.Call Toll-Free 1-800-876.6827 E?(HIBIT A IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA B OF THE DISTRICT FACILITIES It is intended that Improvement Area B of the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road,new Delta Lane and new Astronautics Lane. 2. The construction of streets,curbs,and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets,curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road, new Delta Lane, and new Astronautics Lane. 9. The construction of street,curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. A-1 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way that is intended to be dedicated by the recording of a final map, 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. OTHER Improvement Area B of 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 IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) 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. 2002-1 (McDonnell Centre Business Park) (herein "CFD No. 2002-1") shall be levied and collected according to the special tax liability determined by the Administrator through the application of the procedures described below. The real property in Improvement Area B of CFD No. 2002-1,unless exempted by law or by the provisions hereof, shall be specially 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 of Special Tax: Acre or Acreage means the land area of an Assessor's Parcel as shown on the applicable final map,parcel map, or 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 that 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 1952, 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 Improvement Area B of CFD No. 2002-1: the fees and expenses of any Fiscal Agent (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; costs related to credit enhancement for the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, Bond redemption expenses,charges levied by the County or any division or office thereof in connection with the levy and collection of the Special Tax, audits, and amounts needed to pay arbitrage rebate to the federal government with respect to the 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 any delinquent Special Tax; 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 Improvement Area B of CFD No. 2002-1 or any Bonds. Administrator means the Director of Administrative Services of the City or such other person or entity designated by the City Administrator or the City Council to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. B-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 that is located within Improvement Area B of CFD No. 2002-1. 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 Improvement Area B of CFD No. 2002-1 under the Act. Bond Fund means the fund or account created pursuant to the Indenture in which the collections of the Special Tax are deposited. Bond Year means the one year period from September 2 to the following September 1. 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. 2002-1. County means the County of Orange. Delinquencies mean the amount, if any, equal to delinquencies in payment of the Special Tax levied in Improvement Area B of CFD No.2002-1 in the previous Fiscal Year. Exempt Land means (1) any real property within the boundaries of Improvement Area B of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes, including,but not limited to,streets,water well production facilities, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the.fiscal agent or trustee who is a party to the Indenture. 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. Improvement Area B means any real property within the boundaries of CFD No. 2002-1 as depicted on the boundary map for said CFD entitled "Proposed Boundaries of The City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), County of Orange, State of California" and approved by the City Council. Said Improvement Area B is comprised generally of Parcels 1, 2, 3, 12, 13, 15, 17 through 20 and adjacent portions of the following roadway right-of-way; Skylab Road, Street 'A', Street 'C' and Street 'D'; as shown on Tentative Parcel Map No. 2001-122 on file with the City and encompassing -approximately 48.803 gross acres and 43.785 net taxable acres. In no case shall the net taxable acres in Improvement Area B be less than 43.785. 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. B-2 Infrastructure means the public improvements authorized to be financed by Improvement Area B of CFD No. 2002-1 in accordance with the terms of the Act. Interest Payment Date means any date on which regularly scheduled principal and/or interest payments are due on the Bonds. Maximum Special Tax means, with respect to any Assessor's Parcel of Taxable Property, the maximum Special Tax determined in accordance with Section C that can be levied in any Fiscal Year on such Assessor's Parcel. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Property Owner means the owner of an Assessor's Parcel within the boundaries of Improvement Area B of CFD No. 2002-1 as determined from the latest equalized tax rolls of the County or as proved through some other acceptable manner to the Administrator. Reserve Fund means the fund of that name created under the Indenture. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax on Taxable Property within Improvement Area B of CFD No. 2002-1. Special Tax Requirement means the amount required in any Fiscal Year for Improvement Area B of CFD No. 2002-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond 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 due and estimated by the Administrator to become due prior to the next levy of the Special Tax, and (iv) to cure any Delinquencies in the payment of principal or interest on indebtedness of Improvement Area B.of CFD No. 2002-1. The Special Tax Requirement shall be reduced by the following: (i) any credit from interest earnings on the Reserve Fund or other Bond funds the earnings on which are available under the terms of the Indenture to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax. Levy, and (iii) any other funds legally available to apply against the Special Tax Requirement as determined by the Administrator. Taxable Property means all of the Assessor's Parcels within the boundaries of Improvement Area B of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. B. IDENTIFYING TAXABLE PROPERTY On or about each July 1", the Administrator shall. determine which. Assessor's Parcels in Improvement Area B of CFD No. 2002-1 are Taxable Property. The Taxable Property shall be subject to the Special Tax 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 each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maximum Special Tax shall increase in every Fiscal Year thereafter by two percent(2%) of the Maximum Special Tax for the prior Fiscal Year. B-3 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003, and during each Fiscal Year thereafter, the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent (100%) of the Maximum Special Tax for that Fiscal Year, as described in Section C, above, as needed to satisfy the Special Tax Requirement. E. LEWTATIONS No Special Tax shall be levied on an Assessor's Parcel after such Assessor's Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2002-2003, 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). Upon determination by the Administrator that this requirement has been met, the Special Tax lien shall be removed from all Assessor's Parcels in Improvement Area B of CFD No. 2002-1. F. MANNER OF COLLECTION The Special Tax shall be collected at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2002-1 may at any time directly bill the Special Tax, may collect the Special Tax at a different time or 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. G. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section G.: 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 which 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 in Improvement Area B 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 B-4 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. 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 of Improvement Area B 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), B-5 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 Improvement Area B of CFD No. 2002-1 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 G:1; except that a partial prepayment shall be calculated according to the following formula: PP = (P,, xF) + G Where these terms are defined as follows: PP = the partial prepayment PH = the Prepayment Amount calculated according to Section G.1, minus the amounts determined in Paragraph No. 8 of Section G.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 G.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. B-6 With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2002-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section G.1, and (ii) indicate in the records of Improvement Area B of CFD No. 2002-1 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. H. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Administrator not later than one calendar year after having paid the Special Tax that is disputed. The Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Administrator's decision requires that the Special Tax be modified or changed in favor of the property owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Administrator shall be referred to the City Council and the decision of the City Council shall be final. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. B-7 EXHIBIT C IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) ASSESSOR'S PARCEL NUMBERS AND OWNERS OF LAND WITHIN Orange County Assessor's Parcel Numbers Owner of Record of Parcel 195-111-29 (portion), McDonnell Douglas Corporation 195-111-34 (portion), c/o Boeing Realty Corporation and 195-111-03 3760 Kilroy Airport Way #500 Long Beach, CA 90806 C-1 ONFORMED COPY / Rol Compnroa NW OH911Mi S 3 PROPOSED BOUNDARIES OF SHEET 1 OF 4 IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH GWR1u SCAM COMMUNITY FACILITIES DISTRICT NO. 2002-1 - (McDONNELL CENTRE BUSINESS PARK), I COUNTY OF ORANGE, STATE OF CALIFORNIA. �}}-�rt••yyy IM QF BEpPoN(14 FLIED 1N THE OFFlCE OF CLERK OF THE CITY OF HUNTINGTON BEACH. QFD NO.2002-1 BOUNDARY THE BEARINGS SHOWN HEREON ARE BASED UPON ; -'a�DAY OF 2001 THEN89 CENTERL5*20NXINE OF RCEL AVENUE 7-1 BY: �G ® MED IY0�11,PER PARCEL MAP N0.97-190 f�wir DST 1.A�D FlIFD N BOOK 299,PACES 3 AND 4 OF PARCEL CONNIE Y.THE CLERK OF THE CITY OF HUNTINGTON BEACH MAPS.RECORDS OF ORANGE COUNTY.CALIFORNIA. I HEREBY CERTIFY THAT THE WITHIN MAP SNOWING PROPOSED BOUNDARIES OF IMPROVEMENT &PROVEi.01T AREA A AREAS A AND 8 OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (Mc00NNELL CENTRE BUSOIE59 PARK),COUNTY OF ORANGE STATE OF C.4SORHI& ® WAS APPROVED BY THE CITY COUNCLL OF 1NE CITY OF HUNTINGTON BEACH AT A REGULAR MEETINGOF WELD HEPA DAY OF kf"OVE ENR AREA B ON T AML -• 2002,BY ITS RESOLUTION By: �ix,7.a Q..rG4Y.f� SEE SHEET 4 FOR"NAP. CONNIE-BROCMYAY.THE&rY CLERK OF THE CIY OF HUNTINCTON BEACH DETAILS AND OOIENSIOM RED+�RE�O,,UESTm BY:CITY OF"MGM BTHE MR EACH CURVE TABLE K.� YMAPS OFaIASSESSMENT ANDTCMNUNITY FAdUT1ES 06�RICTS ATM.,DI CURVE DELTA I RADIUS I LEMONT PACE -9 M IN THE OFFICE OF THE COCIM RECORDER IN THE COUNTY OF ORANGE. Cl 89.42'22• 25SO 1 3914 STATE OF CALIFORNIA. C6 09.3752• 47000 7940 FCE, Lvcmpr_ C7 89.40.31• 1 27A0 1 4226 MENT NO. 20 —T—' . C10 6959'47' 1 E720 1 4Z41 CN 13.40124' 1 53000 1 144.98 . Hf: LINE TABLE J.ByOm.INTERIM COIRAY RECORDER OF COUNTY OF ORANGE LDff I LENGTH I BEARING Ll 1 155,83 1 HOO.32'091E 12 7-76 1 N89.2751'V L3 151=1 I NDO92'09•E •••YYHIVI/i/LL b•!.os L4 21129 NB9.23.56•V JAN ADAMS RC.E 21887 EXP 9-30-2005 L3 127.43 N39.2954'V /� ✓� L6 281.33 i N5O'30'06'E L7 E00A7 NB9.23.49'V G Vi. p L9 130.78 N39.29'SYV L9 173.73 N89.26.40' / •P N•i A41 UO E94Jq N89'260''1V ' -% Y v' L.11 307.60 NOO.32'03'E . ; 6 216ID LI2 223.96 1 N00'35'00'E L13 36.88 N89'26'40N lp 6 �,A CIYM1 L14 E43J33 NOO.34Y1'E � �i6/' 7 _ � JFQ'�1� . eP ,D �V \Y so Lr„Ow7W TES,' � ........... . . . .i L�26.IY T.1195' o �. �Ik •...•. •. ...•. . : L 4Y T-20" t . . Tye.ey C.er4D7s• • • 34L f° IM4' lW24'4XW . I4.7 81CYLABROAD NAP NAIL 27AW a Ir4. 1 T_Z7.IY ♦j �1 1 S C►0019'19' `7 1 wl Iw s ^x I $, n e3A` z 1 1 t9600' R \ p �.• NAP. 1 1 7 1 1 eY Y w7.oF IRS _—_—_—_—_ _ _ 9erxs'w neo.u' r1eFss xo�► ss ---------- . RAIlFl�Am BP $� —L QlL BOLSA A ENUE -- ADA16•H1i fflBi - 1!;. ®bMMM .ILL O0040 . CONFORMED COPY Nol Compared xpa OdpaNt SHEET 2 OF 4 PROPOSED BOUNDARIES OF IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. JI CFD NO. 2002-1 6 .� F 1 I VM[Y MAP � 4 FOR LEGIT.DESCWP00N OF CFO NO.2002-1 BOUNDARY.SEE SHEET 3. - L 193-111- O 8K12 AB NAJ! Q SCALE rw4W NAr. eaBa aVaW ASSESSOR'S PARCEL MAP ADANB•GnWETM a+ti exidi e,tl� n.rora+RPsrom - . JN.OOOAO CONFORMED COPY Not Comparo4 W6A OmnM PROPOSED BOUNDARIES OF SHEET 3 OF.4 IMPROVEMENT AREAS A AND B OF THE CITY OF HUNIINGTON BEACH COMMUNITY FAGLITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE,-STATE OF CALIFORNIA. LMALDEBCfiP M OF CPD.M 2002-1 BOIRdARY rARee.4 PARCEL 6 AND.PARCEL 3 AS SHOWN ON THE MAP FILED IN BOOK 1.PAGES 3 ' THROUGH 5 OF PARCEL MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY.CALIFORNIL INCEPTING'THEREFROM I DED LAND INCLU W11HIN 71¢DISTINCTIVE BORDER OF PARCEL MAP NO.87-424.AS MOWN ON THE MAP FILED IN BOOK 237. _ PAGES 4.S.AND 5 OF SAID PARCEL IMPS. ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER OF PARCEL MAP NO.97-195,AS% WH ON THE IMP FILED IN BOOK 229.PAGES 8 AND 9 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITH THE DISTINCTIVE BORDER OF PARCEL MAP NO.97-189.AS SHOWN ON THE MAP FILED IN BOOK 299.PAGES 1 AND 2 OF SAID PARCEL MAPS ALSO EXCEPONG THEREFROM THE LAND 94CWDED WITHIN THE DISTINCTIVE ? BORDER OF PARCEL MAP NO.97-190.AS SHOWN ON MAP FILED IN BOOK 299. PAGES 3 AND 4 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM PARCEL 4 OF PARCEL MAP NO.95-188 AS SHOWN ON THE MAP FLED IN BOOK 298.PACER 3 AND 4 OF SAID PARCEL MAPS PARCEL* PARCEL'A'OF PARCEL MAP 97-190.IN THE CITY OF HUNTIN TON BEACK - CDUNTY OF ORANGE.STATE OF CALIFORNK AS SHOWN ON THE MAP FILED IN BOOK 299.PACES 3 AND 4 OF PARCELS MAPS.IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL* THAT PORTION OF SKYLAS ROAD,IN TILE CITY OF HIMDNGTON BENCH.COUNTY OF ORANGE STATE OF CAUFORNK AS SHOWN ON PARCEL MAP NO.95-186, FR D IN BOOK 296.PAGES 3 AND 4 OF PARCEL MAPS.IN THE OFFICE OF THE - COUMY RECORDER OF SO COUNTY,LYING WES'FRLY OF THE FOLLOWING DESCRIBED LINE BEf9NNING AT THE WESTERLY TERMINUS OF T14AT CERTAIN COURSE SHOWN AS 'NORTH BP24'21'WEST 502AI FEET'ON THE NORM LINE OF PARCEL 4 OF SAID MAP;THENCE NORTHERLY IN A DIRECT LINE TO THE WESTERLY 7OWINUS OF THAT CERTAIN COURSE SHOWN AS'NORTH 6724*21'WEST 592.E FEET'ON THE ' SOUTH LINE OF PARCEL 1 OF PARCEL MAP NO.97-190.FILED IN BOOK 299, PAGES 3 AND 4 OF PARCEL MAPS,IN SAID OFFICE OF THE COUNT! RECORDER. 9CALE T•40O 16OLM"(Mb . ' C::R Q NFE!T 4 FOR NAP.OETALB L_J � I f i M" AMM! - FUELN711111-Am" SHOT NM MAP AOAMS BIIEE1ER 9CALE r-400' CIVL EMONEEFA M IFMOfrtC01'�W OiOY 1� JN OODN6 �/T M L1 G L =Q �O V 0 V PU.�N�YO�Om VPUi WI•11�ON0 V PY�W NL� ` � V lB L57 L V K #11p ljgj#.g.g 9 11 9 � gallgil mill� 1,891,111 �Ij,I � m � � � � �a. �.a. .a.a. :�..a: .a..a $aaaaaaa$aaa�a$ai �aaaa O co V0 L Ls rS: �rt�rSr.2r12rtZrtl�1<�2�u2 L28 l54 0 ZZr 2� m O go �1a L4 L1 12 l4 w�, mm: m = �u a i o m O i „� � �nco i A O Z Z on so rarr Ur11GruG1lr� Grrr+rrrrrrrrfryryfr.�frJryr(r,1 a U � � � Dil 10 N O N b b m V P Y i 41 N o b m V P G W N rn �GG r Z O r ffl .3u7 a us 5 66 s'� � Me n (�j —1 a) 0 co z �nm0 +'�•a.61M. i +. .aiaiwu O � a$aa $ aa$a$a$aaalaaaNda$aaa $ -n �r111n�rin rl�rl�ril��rltni�ri1�r11rS1ritriri fA S m A O A Ol 9 �S. • 5 CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK [ ,ND CONNIE BROCKWAY e16711-11- CITY CLERK June 18, 2002 Darlene J. Bloom County Clerk-Recorder P. O. Box 238 Santa Ana, CA 92702 Attached please find two Notices of Special Tax Lien to be recorded and returned to the City of Huntington Beach, Office of the City Clerk, 2000 Main Street, Huntington Beach, CA 92648. Please return conformed copies of the Notices when recorded to this office in the enclosed self- addressed stamped envelope. Connie Brockway, CIVIC City Clerk Attachments g:/followup/misc...doc Notice of Special Tax Lien—Improvement Area A—CFD No.2002-1 Notice of Special Tax Lien—Improvement Area B—CFD No.2002-1 (Telephone:714-5 36-5 227) 2420 UIUt ThimmigLLr One Embarcadero Center, Suite San Francisco,CA 94111-3737 3737 Attorneys at Law Telephone:415/765-1550 Telecopier:415/765-1555 bquint@gtllp.com pthimmig@gtllp.com June 13, 2002 VIA FEDERAL EXPRESS Christy Teague Assistant Project Manager City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Re: Notices of Special Tax Lien — Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A Dear Christy: Accompanying this letter are final drafts of the Notice of Special Tax Lien for Improvement Area A and the Notice of Special Tax Lien for Improvement Area B. Please have the City Clerk sign each of the two Notices on the second page of the Notices, have her signature notarized, and have the two Notices recorded with the County Recorder. Please let me know the date on which they are recorded. Thank you for your assistance. Very truly yours, yICU, Paul J.Thimmig PJT:cra Enclosures Res0WW Nm 20 4 ARESOI.moFTHEC(rY000a0FTHF= 1tGl%EACHCAIIPIGSPEgALELECIION YNIF9'l11MVERENTAREAp AHOWR M MPROVEIIWAREAB,OFTHEMYOFHLWWrONBEACH OONMUNIMACQl11ESOIS WNO 2002.I NMOPpJFJ.LM.M BUMMPARK) WHEREAS,m tlds date,tlus pN Carol adoped a n �tled•ARrr d the C11y 0anda the City d HunNhglan Beach of Famation of Mpnomem Area A and Improvemen(Area B d the d FknVN ai Beach Wwwiily Facilities District No.2002.1(McDonMi C a#er Btaiess Parkr(te TieSdOn d(�ademg the famation d Area A d the d.Husrglon B Camnudy Facrroes Dstrid 2002.1 Centre Busi ass Park CArea A1,and Improvement Ala 6 d the City d Hun"w Beach Conmuntiy Facilities Distrid No. . 20 l 0kDorwcel Cerft Bmvhess Pads)CArea Er),au0grm�q the levy d a special tax on properly wdlm Area A'and wlhihAreaBard eshahisftrganapproprelionsKaAr�AandfaAreaBand On tits cafe,ths�nd aso adopted a resolution erdded'A Resdution d the City Card d the City d PROOF OF PUBLICATION ImprdvarnetArea mbNW Beach of williA thengtcedN CoroCon Dom t 0Cft Business Parkr(the'Resd on to khao Irhdebtedhessi,detenntrhng the necessity to craw bonded webtac pass in to rrw�ramh prrh�I ari u t of$13,t10D,000 for each dAra Aand of Area B(but more Im$13,000,000 h btu kxbdhaM7=lte eeui offtspedaltaxtobeleiWwttnkeaAevayWAreaBB,msaplecfiv*,,aW appropria6ahs the estatAftnerit of the 6nrta mmVof the bonded i (aeadrof AdarddA[eaBsbbesuhndtedtothe STATE OF CALIFORNIA) � d�A �d' � ;(, erheWandas �gwith ftmdo4c camnuulyur FaDAddl982oord'U'hgthecity �on53311dsndthe CadCeo(tdhee SS. 'Acrard �rwthBCodete �.� NOW� rrR by the City Cowdd the City ofRrilirqon Beach asdow c SdmL Pursuant to the Code and Sectiom 53325.7,53326 and 53351 dtlhe Ad,Coe ssues of the levy of sad County of Orange ) j spacial W,the h+Aanig d bonded ihdebGedrss ard the eatalftnent of said find tor Area A shall be sibnhited to the q�.a dect rs d Ara A at an eMm ailed them m of theIefeovrr �Pursuarht to the Code and Sediom Walotaffiess and the edabisfunerit a Ad the tend' or k"6 be said special ro tie d I am a Citizen of the United States and a t0N� Sffi�1,?. •As authorized by Section 53353.5 of the Ad,the three proposaU�ors desxeed in paragraph 1 above for t each dkeeAaW Arm Bshelbemrnhohedidoa ' balotmeamue AardlorArea8,mgxc *,,thetas resident of the County aforesaid; I am ; dwhddmeashaesbeiNassetfti,tetim,d a�dheretoas��itAandbtnisreftm d hereih.The famdtebalotinEMAs (On W for R&Review nthe Cle�KsMal over the age of eighteen years and not a ����� ' °�12persashavebeenr�redto,�e„�theter" s dAra A each d the wooly(90)days txeadrg the dote oI the fharehgs hereelore oandrded and aadhded hytdsCdyCo xilVthepurposesdthesepn>ceedPd� andpursuanitotheCodeandSection53326(b)d party to or interested - in the below ; ticeAdtesCdyCaundhndstatfaphhrposesdtcesaprooees' quadcedeledorataareanaretceawncersdppce lard wftAreaAtrat maybesbjecito the levy dspaaal taxesand that the vote with respect loAreaAshal be bysaid entitled matter. l am a principal clerk of lardc0erSorIVautlaladrepresent0ves,�havwgorevotefaeachWeaportiontereofsuchtardowrhe P P amin Area Aasof the close dtcepulkhaari% the HUNTINGTON BEACH INDEPENDENT,.a �,a� ' ��apersorsfhawebeedregsteredbwtewlhihlh8* taydAr8aBfa randy days the phblc harings heretdae arhdhrded and whdhded by the City Coudlortce tesepoceerfrtgs andq>rshen11o11�CalearxlSection53326t dthe trs er of general circulation, C,C=db newspaper on, p pr athesep a�lad lorAreaBareftom thelandwithih Area B that maybe subject lo.theLvyofO' daltaxesarddthatthevotewithrespedb hdowners AreaBshalbebysaillar and published in the City of Huntington ; ortceiautuad each hrvinga votebrachacreorportiontereofadarhdawheraxsnAreaBas dtiedasedlhe �ticf Beach County of Orange State of ; �I c*aba leWwto d�abecl 2above, i 7 which eledon snap be in adopdon oft the Resdubrh in the Chambers d the ' Courted d the California, and that attached Notice is a d"'�'�'`��'`� r�yd at��the mW"°°°'����esdkeaQf� City �ResdAndF«mhatorh,amapd the proposed bouhdadesdAraAarxl dAraB,and asullderdtdescrptiontoalowtheGry C�klodetaftelthehohrhdarssdAreaAanddAwB. true and complete copy as was printed ThewedbalolsWberehmedbt40ty'kr noeterthanrtrn yrda+agtdeadoplonof this Reckdord and wherh al d the quafrfied voters have voted,tie election shall be dosed and published in the Huntington Beach b and Section 53377dtheAd the etionshallbearCledbymalarhand de6ver�edbaldpursuanttofheCaUomrial3ectiasCode.Ths CandherebyfQhdstatparagapldslal,@),@)l0� and Fountain Valley issues of said ; '"3}ci Section 4°°°d the` a`>g°e�°��edaarealabtspeaa'ati°` a j§ Ths pie a xA d Area 8,a that the Berk has forth in b be A hereto. er ed to the ab iir the newspaper to wit the issue(s) of: urtu ndb�equalted thordaaas'abalbtodtheloinsettoasoei.' bitAhereto.Thebalduhda�estole mrr�herdwtesbbevotedbyticelandowrcerwthnspedbe�thl>aldm�hnre. Tice bald aaanpaded by al sd�pfas and won Baba aorhs necessary for the use and refum d the bald.The (ben�vewllorqd�to be used b retum the bald was enclosed with the bald,had the reha podage prepaid,and ooritairW the awrcerd(a statav to the voter is the reoordorautarizedcepresentat6'vte um ard address of the eof the larddamw �ar�ids the p�ersonW rem appears on h the w4ope,(c)the prided mrne,sig&re and address ofthe voter,(a)the dated s"'rig and plxa d execaLon d the dedaraton g CM to clause @)above,and(e)a ndoe that-the envelope c tans an otr l bald and is b be opened alylytlhe June 13, 2002 itaraawabero rbs thaec 1perhre b" °tarrhtbceasWmazUwtmeJWau pemelbdtrytheCadeerasection53327@)dlheAd , $ y The City perk anal aocept the Ihatd d tole qual fled elector arM prior b the adoption d tits Resobntoh whdhe the babt cues pesarcetly de`nered a recdved by mceL�Clwk anal have avaiabe a bald i wfidhmayberredmdntheCdyCodndld�rbersontcee UondaybyIthe eleda. ➢@ Ths Gry Canal he Nrlher hrMs That the provsiah the Ad requimg a ranrrxhm d 90 days the adap6on d B e RasoYutah d Famgtiah b apse betae said special e�bon s to the prota h d the esdasdAreaAandAraB.ThepdtiahpreviaslZ bythesoleow wdlaWnAreaAandin Area B declare, under penalty of perjury, that ; ,b ,mod , ��d de rdceddeaadAreaAandAreaBcordairh! anedgrcerhtdawawerdarryCrrcelmdpertaruxJtoof eleAorharhddawaiuedarryrequierrhodthe foregoing is true and correct. andarguroens in comha�n wino the deaon. ,,tt QyCad kids and detemnes 00 the �declor has been hily appprsed of and has geed to the shorterhed lane for the election and waiver of are*and �aril has thereby been hk protected it these pmoeedr%This C"d also fads and determirces that the nasmhanredi,thesfhortehed5netatedactah. B� Pursuant to the local Special Tax and BorM Accourdad�y Ad,Saob=50075.1 et seq.and Sec4ors 53g10.e1 seq.d the CaUartda�mr at Cade,(a)the ballot measures refenred to in Section 4 above each Executed on June 13 2002 cubi h a staerned mdi np the spedk purposes of the special tax referehad in the rasp bald measure,the created by CityTreasuerra�cu of the spe MYJ tax be so Widib eedsdsthe special tax levies dkea a Aaandt olAreamannBmerestealbe at Costa Mesa, California. w3bedeposied and tceOuelorofAdmi veSenicesshereby&actedb anan�r�bt» Camel as tegdred try Section 50075.3 d the Carrfarda Govenmenl Code;ardd @}the ballot measures cadam a staterthem'ehda�rq the pdnpose d the bads refererad n the.respeclve bald m�scre,tce prpceeds d the balls wl be appled any bEre puapose speed in the��p�Ie bald mceazure,tlhere steal be acted by the L1ry Tr�dao aomuds ido xfidn� bonds Ixr be deptsrted(wfitidd raced root he sedate bmdk acwunts,bN wthich Adhiosaa6ue Sevices s trueby deeded ro amxalrepod ro trs�Coudd as regimed by Sectim�5,34�1t d the Caflmhia Goverrrrhenl Cade. Sectim10,, The City perk is hereby dreded to,muse b be pcbfstced in a MV r d�ecera�emanation we lalq within Area A and Area B a oop�d tis resobmm and a copy d the Resohnton tD=baddfedhess,as son asp ace*otter the date dadoptiondt'Resolton. This Resobrtmshaltak effect is ��ddd��dANDADOPTEDbytheDiyCaedo3d CityolF4aitrdgtarBahalacagierrrheding@heedholdcnthe Signature Co*Map ATM lslCame&odcw^Cily Clerk Published on Beach l June13,2002 062-129 Resolution No. 200gq2pp�3``9,, A RFSOLLMON OF 7F� NGIC.OF'&6'NGTON BEACH I DETERMINING THE NECESSITY TO INCUR BONDED INDEBTEDNESS WITM IMPROVEMENT AREAA,AND WITHIN IMPROVEMENTAREA B OFTHECITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) i to vli" .rit t es• WHEREAS,on April 1,2002,this City,Couna!'adop l'a resolution entitled"A Resolution of the City Council of the City of Huntington Beach�Declarirg Its Intention to Establish a Community Facilities.District and to Authorize the Levy of Special Taxes There (the"Resolution of Inter�t�staling its intention to form the City of H Bach Community FacBities District' N.o.2002-1(McDonnell Centre&�siness Park PROOF OF P U B LI CAT i O N I "4D- rict?,pursuant to the provisions of Chapter 3.56(commeng with 010)oftheMuncipal dfcable under the Code,the McUo-Roos Corrunurrity F�ifities A[t of 1982 oalstlWhrtg with the Code the 'La j"t fufurM�certmaln bec i provCaomdee (� together iiPsa bed tlmere�; Adt� tr STATE OF CALIFORNIA) 1 of the City.of HuntiP.ngton Beach Community Fadlrhes.Dnstrirt No.�McDonnell .S.S. Centre Btrsfr>ess Park)"("Area B J as autlmorized by Section 53350 of 1heAd Area A arxd Area B are sometimes refened to belay as an'Smprarerrnent area"and as County of Orange ) ��' On April 1,2002,this City Council also adopted a resolution entitled"A Resolution of the Cily r;ouncil of the City of Huntington Beach Declaring Its Intention to Incur Bonded Indebtedness of the Proposed Cily of Huntington Beach Community Facilities District No.2002-1(McDonnell Centre Business Patic)"(the"Resolution of Intention to Incur I am a Citizen of the United States and a AreaAaridns?n mi a r boundaries of resident of the County aforesaid; i am I lim.Onthiseof ,thiscugtheoncilhosts ldanohe tices;and On this date,this City Council held a noticed public fteari as required by the Law relover the age of eighteen years, and not a ' thetivetothedetevisiono,to for the each ofthelorprove entare�n areas of the Dstrci,the provision of this,Facilities for each of the improvernerrt areas as specified in the Resolution of Intention and the rate and method of�M of the special tax_ to be levied within each of the improvement areas of the to pay fhepdndpal and par to or interested - in . the below interest r<,deb and the admn#.s:r e�ofu1RCitYrelativeto entitled matter. I am a principal clerk of tl>a.° a�"° At the hearing all persons desiring to be heard on all matters pertaining to the. the H U NTl N GTO N BEACH INDEPENDENT a formation of each of the improvement areas of the Dist,the prom of the Facilities and the levy of the special tax on property within each of the improvement areas of the Districi were heard and a full and fair hearing was held;and newspaper of general circulation printed Subsequent to the hearing,this C Council adopted a resolution entitled"A b , p Resolution of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Impprovement Area B of the Ctty of Huntington Beach and p u I i s h e d in the City of Huntington Community Facilities District No.2002-1 (McDonnell Centre Business Park)"(the Beach, County of Orange, State of °Resolution of Formation},which iraorporatea by reference the description of fhe Facil ties to be provided by each improverrnent area of the District as set forth in the exhibits to Resolir�n of Intention,and moorporated by referenda tf>e rate and method of California, and that attached Notice is a ineappo��' in extubits to the Resolution of Fommatan;and - r true and complete copy as was printed relatiivvetothheematte m teririalm'�q set forth n' fInt�onto and published in the Huntington Beach lrncNo written eble ness;and N protests witll respect to the matters material 10 the questions set forth in the Resolution of Intention to Inver Indebtedness have been fged wgh the City Clerk and Fountain Va 1 I e y issues of said NOW,THEREFORE,BE IT RESOLVED by the City Gourd of the City of Huntin ton Beach as follows: newspaper to wit the issue(s) of: Section1. The foregoing mortals are true and coned Section 2. This City Council deems it necessary to incur bonded indebtedness in the maximum a to nck)d amount d$13,000:000 mOin the boundaries of Ara A of the District,�indebtedness in the maximum aggregate amanxd of$13,000,000 within the boundaries of Area B of the Dlslric# that n no eveM shall the total bonded i�of the District exoeed$13, ODO Semen 3. The indebtedness to be incurred in each Improvement area of the District is for the purpose of financing the oosts of the Facilities,as provided in ft-. June 13 2 0 0 2 Resolution of Formation including,but rat-limited to,the costs of issuing and selling r bonds to finance the Facilities and the costs of the City in administering the respective j improvement area of the District i4.to A Awhole of Area respect A of the Distiiol shall pa fo the bonded ir>debtedr>ess' rough the levy of the special tax The steal tax forArea A is to be apportioned in acoordanoe with the formula set forth in A to the Resolution of Formation.The whole of Area B of the District shall pay for the bonded indebtedness with respect to Area B through the levy of the special tax The special tax for Area B is to be roomed in acoordance with the formula set forth in Exhibit B to the Resolution of declare, under penalty of perjury, that ffro tion.(OnfileforPublicReviewintheCityCle&sOlfice.) the foregoing is true and correct. The maximum amount of bonded indebtedness to be incurred for Area A of the District s$13,000,000 and the maximum m term of the bonds to be issued shall in no event exceed forty(40))years.The maximum amount of bonded indebtedness to be incurred for Area B of the b is$13,000,000 and the rnax immun term of the bads to be issued shall in no evert exceed forty(40)years.No-thstandumg the forego, 'vn no event shall the total bonded indebtedness of the District,including both Grprovement Executed on areas,exceed$13,000,000. June 13 2 0 0 2 Section 6. The bads for each improvement area shall bear interest at a rate or rates not to exceed the maximum interest rate permitted by applicable law at the time of at Costa Mesa, California. �� 'de semiannuallye ' ' manner� Council°f;�shall acua�an �Mof interest to be determined by this City Council or its designee at the lime or tunes of sale of the bonds. Section 7. The proposition of honing the bonded indebtedness herein authorized for each improvement area of the District shall be submitted to thz qualified electors of the respective improvement area of the District and shall be consolidated with elections on the proposition of.levvyyiringg taxes within such improvement area of the District pursuant to Section 53353.5(a of the Act The time,place and conditions of said election shag be as specified by separate resolution of this City Cord. Section 8, This Resolution shag take effect upon its adoption. PASSED AND ADOPTED by the City.Coundl of the City of Huntington Beach.at a regular meeting thereof held on the 3rd day of June 21102. Signature /st DebblieCook A ST." (/e//yConnie Brockway Cierk Published Huntington Beach Independent June 13,2002 062-130 j 4 9 Council/Agency Meeting Held: 05-0b-a2 Deferred/ ontinued t : Q NT�NV0 Q ft-N T. Ob-4?-o`L ❑ Ap roved Conditionally A proved ❑ Denied �%f &t Clerk' Signature ' �r offKim ) Col cil Meeting Date: May 6, 2002 Department ID Number: ED 02-12 �6- 1�_Q2• °8-TY OFHUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS =- SUBMITTED BY: RAY SILVER, City Administrator PREPARED BY: DAVID C. BIGGS, Economic Development Director SUBJECT: Formation of and Special Election for City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Resolution Nos. 2002-38, 39, 40, and 41, Ordinance No. 3557 Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: Boeing has requested City assistance in formation of a Community Facilities District (CFD) for the McDonnell Centre Business Park second phase to allow Boeing land to be marketed competitively with other industrial properties with CFDs already in place throughout the region. The area is divided into two parts, Area A and Area B, and Boeing has requested funding authority for both areas in an, amount of not to exceed $13,000,000. Boeing is the sole owner of the affected properties. Funding Source: Funding for this CFD will come from bonds issued later this year after appropriate actions are considered by the City Council. Boeing' has provided funds to reimburse the City for expenses already incurred in the event'that the Community Facilities District is not approved b City Council or is not formed for some unforeseen reason. pp Y Y Recommended City Council Action: The formation of the Community Facilities District requires various sequential steps to be taken by the City Council set forth by state law. The recommended actions are the following: 1. Conduct Public Hearing 2. Adopt Resolution No. 2002-38 of the City Council of the City of Huntington Beach of Formation of improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) f REQUEST FOR COUNCIL ACTION MEETING DATE: May 6, 2002 DEPARTMENT ID NUMBER: ED 02-12 3. Adopt Resolution No. 2002-39 of the City Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area A, and Within Improvement Area B, of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) 4. Adopt Resolution No. 2002-40 of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and Within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) 5. Request the City Clerk to conduct a special election on the formation of the Community Facilities District and announce results of election. 6. Adopt Resolution No. 2002-41 of the City Council of the City of Huntington Beach Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien 7. Introduce Ordinance No. 3557 of the City of Huntington Beach Levying Special Taxes Within Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Alternative Action: The City Council has the option of not forming the Community Facilities District. This will negatively impact the ability of Boeing Realty Corporation to compete in the Orange County and Los Angeles industrial market. Prior Actions: On March 4, 2002, the City Council considered changes to Municipal Code 3.56 to allow maintenance costs to be included in City Community Facilities District bond amounts. This action was prompted by the anticipation of the formation of this Community Facilities District, but will also allow maintenance costs to be included in future City CFDs. On April 1, 2002, the City Council approved the initial steps to approve the formation of Community Facilities District No. 2002-1 (McDonnell Centre Business Park) in the process set forth by state law: 1. Approved the Rate and Method of Apportionment of Special Tax for Area A and Area B, identified as Exhibit C and Exhibit D in proposed Resolution No. 2002-26 Resolution of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes. 2. Adopted Resolution No. 2002-26 Resolution of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes. G:\Christy\CFD\RCACFD50602.doc -2- 4/30/2002 3:10 PM REQUEST FOR COUNCIL ACTION MEETING DATE: May 6, 2002 DEPARTMENT ID NUMBER: ED 02-12 9 3. Adopted Resolution No. 2002-27 Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 2002-01 (McDonnell Centre Business Park) and schedule public hearing for May 6, 2002. 4. Approved Proposed Boundary Maps of Community Facilities District No. 2002-1 (McDonnell Centre Business Park), Attachment #4. 5. Set Public Hearing to Establish Community Facilities District at the regular City Council meeting to be held on May 6, 2002 as set forth in Resolution No. 2002-26. Analvsis: The formation of a Community Facilities District is a method to finance approved public improvement and other costs required in early phases of development. A CFD will allow the price structure for development parcels in the McDonnell Centre Business Park to be similar to other industrial parcels available for sale and development in the region. The actions considered by the City Council in the formation of the Community Facilities District will assist Boeing as they begin their second phase of the very successful McDonnell Centre Business Park. 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. Environmental Status: EIR No. 96-1 was approved with McDonnell Centre Business Park Specific Plan No. 11, adopted by City Council on October 6, 1997. G:\Christy\CFD\RCACFD50602.doc -3. 4/30/2002 3:10 PM REQUEST FOR COUNCIL ACTION MEETING DATE: May 6, 2002 DEPARTMENT ID NUMBER: ED 02-12 Attachment(s): City Clerk's Page Number No. Description . ..........__.._....... .._..._._.... 1 Resolution No. 2002-38 of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). 2• Resolution No. 2002-39 of the City Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area A, and Within Improvement Area B, of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). 3. Community Facilities District Report. 4. Resolution No. 2002-40 of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and Within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). 5. Resolution No. 2002-41 of the City Council of the City of Huntington Beach Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien. 6• Ordinance No. 3557 of the City of Huntington Beach Levying Special Taxes Within Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). RCA Author: Christy Teague x5088 G:\Christy\CFD\RCACFD50602.doc -4- 4/30/2002 3:10 PM RESOLUTION NO. 2002-38 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH OF FORMATION OF IMPROVEMENT AREA A AND IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK WHEREAS, on April 1, 2002, this City Council adopted a resolution 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") stating its intention to form the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "District") pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello- Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the"Law"); and The Resolution of Intention designated a portion of the District as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and a portion of the District as "Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area 13"), as authorized by Section 53350 of the Act (Area A and Area B are sometimes referred to below individually as an "improvement area" and, collectively, as the "improvement areas"); and The Resolution of Intention, incorporating by reference a map of the proposed boundaries of Area A and of Area B and stating the improvements to be provided by Area A and Area B (collectively,-the "Facilities"), the cost of providing the Facilities, and the rate and method of apportionment of the special tax to be levied within Area A and Area B to pay the costs of the Facilities and the principal and interest on bonds proposed to be issued with respect to Area A and Area B, is on file with the City Clerk and the provisions thereof are incorporated herein by this reference as if fully set forth herein; and On this date, this City Council held a noticed public hearing as required by the Law and the Resolution of Intention relative to the proposed formation of Area A and of Area B; and At the hearing all interested persons desiring to be heard on all matters pertaining to the formation of Area A.and of.Area B, the Facilities to be provided by each such improvement area of the District and the levy of the special tax in each such improvement area.were heard.and a full and fair hearing was held; and Res.No.2002-38 At the hearing certain changes were presented to the rate and method of apportionment of special taxes for the improvement areas, and the revised rate and method of apportionment of special taxes for Area A is attached to this Resolution as Exhibit A and the revised rate and method of apportionment of special taxes for Area B is attached hereto as Exhibit B; and At the hearing evidence was presented to this City Council on the matters before it, including a report by the Director of Public Works of the City (the "Report") as to the Facilities to be provided by each improvement area of the District and the costs thereof, a copy of which is on file with the City Clerk, and this City Council at the conclusion of the hearing was fully advised regarding each improvement area of the District; and The sole owner of the land in the improvement areas that will be subject to the levy of the special taxes has been furnished with copies of this Resolution, including Exhibits A and B hereto; and Written protests with respect to the formation of the improvement areas of the District and/or the furnishing of specified types of Facilities by such improvement areas as described in the Report have not been filed with the City Clerk by fifty percent (50%) or more of the registered voters residing within the territory of either of the improvement areas of the District or property owners of one-half(1/2) or more of the area of land within either of the improvement areas of the District and not exempt from the special tax; and The special tax proposed to be levied in Area A to pay for the Facilities to be provided thereby, as set forth in Exhibit A to this Resolution, has not been eliminated by protest by fifty percent (50%) or more of the registered voters residing within the territory of Area A or the owners of one-half (1/2) or more of the area of land within Area A and not exempt from the special tax; and The special tax proposed to be levied in Area B to pay for the Facilities to be provided thereby, as set forth in Exhibit B to this Resolution, has not been eliminated by protest by fifty percent (50%) or more of the registered voters residing within the territory of Area B or the owners of one-half (1/2) or more of the area of land within Area B and not exempt from the special tax; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. The foregoing recitals are true and correct. Section 2.. The proposed special tax to be levied within the Area A of the District has not been precluded by majority protest pursuant to Section 53324 of the California Government Code. The proposed special tax to be levied within the Area B of the District has not been precluded by majority protest pursuant to Section 53324 of the California Government Code. -2- G:Mulvihill:McDonnell DouglasCFD:ResoFormationJ6158 Res.No.2002-38 Section 3. All prior proceedings taken by this City Council in connection with the establishment of Area A of the District and the establishment of Area B of the District and the levy of the special tax in each such improvement area have been duly considered and are hereby found and determined to be valid and in conformity with the Law. Section 4. The community facilities district improvement areas designated"Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" and designated "Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" are hereby established pursuant to the Law. Section 5. The boundaries of Area A and of Area B of the District, as described in the Resolution of Intention and set forth in the boundary map of the District recorded in the Orange County Recorder's Office at Book 85 of Maps of Assessment and Community Facilities Districts at Pages 3-6 (Instrument Number 20020279386), are hereby approved, are incorporated herein by this reference and shall be the boundaries of Area A and of Area B,respectively, of the District. Section 6. The type of public facilities proposed to be financed by Area A of the District pursuant to the Law shall consist of those items listed as Facilities on Exhibit A to the Resolution of Intention which Exhibit is by this reference incorporated herein. The type of public facilities proposed to be financed by Area B of the District pursuant to the Law shall consist of those items listed as Facilities on Exhibit'B to the Resolution of Intention which Exhibit is by this reference incorporated herein. This City Council hereby finds that the Facilities are necessary to meet increased demands placed upon local agencies as the result of development occurring in. the applicable improvement area of the District. Section 7. Except to the extent that funds are otherwise available to Area A of the District to pay for the Facilities and/or the principal and interest as it becomes due on bonds of Area A of the District issued to finance the Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in Area A of the District, will be levied annually within Area A of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area A of the District, in sufficient detail to allow each landowner within the proposed District to estimate the maximum amount such owner will have to pay, are described in Exhibit A to this Resolution which Exhibit is by this reference incorporated herein. Except to the extent that funds are otherwise available to Area B of the District to pay for the Facilities and/or the principal and interest as it becomes due on bonds of Area B of the District issued to finance the Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non.exempt real property in Area B of the District, will be levied annually within Area B of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area B of the District, -3- G:MulvihiILNIc Don nelIDouglasCFD:ResoFormationJ6158 Res.No.2002-38 in sufficient detail to allow each landowner within the proposed District to estimate the maximum amount such owner will have to pay, are described in Exhibit B to this Resolution which Exhibit is by this reference incorporated herein. Section 8. The Director of Administrative Services of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California, 92648, telephone number (714) 536-5236, is the officer of the City that will be responsible for preparing annually a current roll of special tax levy obligations by assessor's parcel number and which will be responsible for estimating future special tax levies pursuant to Section 53340.2 of the California Government Code. Section 9. Upon recordation of a notice of special tax lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property in each of Area A and Area B of the District, respectively, and this lien shall continue in force and effect until the special tax obligation imposed in the respective improvement area is fully paid or prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the tax in the applicable improvement area by the City ceases. Section 10. In accordance with Section 53325.7 of the California Government Code, the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, of Area A of the District is hereby preliminarily established at $13,000,060 and said appropriations limit shall be submitted to the voters of the District as provided below.- In accordance with Section 53325.7 of the California Government Code, the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, of Area B of the District is hereby preliminarily established at $13,000,000 and said appropriations limit shall be submitted to the voters of the District as provided below. The proposition establishing an appropriations limit shall become effective if approved by the qualified electors voting thereon and shall be adjusted in accordance with the applicable provisions of Section 53325.7 of the California Government Code. Section 11. Pursuant to the provisions of the'Law, the proposition of the levy of the special tax and the proposition of the establishment of the appropriations limit specified above for Area A shall be submitted to the qualified electors of Area A of the District at an election, the time, place and conditions of which election shall be as specified by a separate resolution of this City Council. Pursuant to the provisions of the Law, the proposition of the levy of the special tax and the proposition of the establishment of the appropriations limit specified above for Area B shall be submitted to the qualified electors of Area B of the District at an election, the time, place and conditions of which election shall be as specified by a separate resolution of this City Council. Section 12. This Resolution shall take effect upon its adoption. -4- G:Muh•ihill:Mc Donnell DouglasCFD:ResoFormationJ61-58 Res.No.2002-38 PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of June , 2002. Mayor ATTEST: APPROVED AS TO FORM: City Clerk al 6-ds City Attorney O 2- REVIEWED AND APPROVED: INITIATED AND APPROVED: ity Administrator Director of Economic Development s -5- G:Mulvihill:Mc Donne]IDouglasCFD:ResoFormationJ6158 Res.No.2002.38 Ex.A EXHIBIT A IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX Res.No.2002-38 Ex.A EXHIBIT A IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) 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. 2002-1 (McDonnell Centre Business Park) (herein "CFD No. 2002-1") shall be levied and collected according to the special tax liability determined by the Administrator through the application of the procedures described below. The real property in Improvement Area A of CID No. 2002-1, unless exempted by law or by the provisions hereof, shall be specially 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 iri this Rate and Method of Apportionment of Special Tax: Acre or Acreage means the land area of an Assessor's Parcel as shown on the applicable final map, parcel map, or 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 that 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 Improvement Area A of CFD No. 2002-1: the fees and expenses of any Fiscal Agent (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; costs related to credit enhancement for the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel,Bond redemption expenses,charges levied by the County or any division or office thereof in connection with the levy and collection of the Special Tax, audits, and amounts needed to pay arbitrage rebate to the federal government with respect to the Bonds;costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding A-1 Res.No.2002-38 Ex.A Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for any delinquent Special Tax; 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 Improvement Area A of CFD No. 2002-1 or any Bonds. Administrator means the Director of Administrative Services of the City or such other person or entity designated by the City Administrator 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 that is located within Improvement Area A of CFD No.2002-1. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's P arcel 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 Improvement Area A of CFD No. 2002-1 under the Act. Bond Fund means the fund or account created pursuant to the Indenture in which the collections of the Special Tax are deposited. Bond Year means the one year period from September 2 to the following September 1. 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. 2002-1. County means the County of Orange. Delinquencies mean the amount, if any, equal to delinquencies in payment of the Special Tax levied in Improvement Area A of CFD No. 2002-1 in the previous Fiscal Year. Exempt Land means (1) any real property within the boundaries of Improvement Area A of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes, including, but not limited to, streets, water well production facilities, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent or trustee who is a party to the Indenture. 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. A-2 Res.No.2002-38 Ex.A Improvement Area A means any real property within the boundaries of CFD No. 2002-1 as depicted on the boundary map for said CFD entitled "Proposed Boundaries of The City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), County of Orange, State of California" and approved by the City Council. Said Improvement Area A is comprised generally of Parcels 4 through 11, the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Astronautics Road, Street 'B' and Street 'C'; as shown on Tentative Parcel Map No. 2001-122 on file with the City. Said Improvement Area A is also envisioned to include Parcels 1 through 8, the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Delta Lane and Astronautics Lane; as shown on proposed Final Parcel Map No. 2001-226 and encompassing approximately 40.339 gross acres and 33.286 net taxable acres. In no case shall the net taxable acres in Improvement Area A be less than 33.286. 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. Infrastructure means the public improvements authorized to be financed by Improvement Area A of CFD No. 2002-1 in accordance with the terms of the Act. Interest Payment Date means any date on which regularly scheduled principal and/or interest payments are due on the Bonds. Maximum Special Tax means, with respect to any Assessor's Parcel of Taxable Property, the maximum Special Tax determined in accordance with Section C that can be levied in any Fiscal Year on such Assessor's Parcel. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Property Owner means the owner of an Assessor's Parcel within the boundaries of Improvement Area A of CFD No. 2002-1 as determined from the latest equalized tax rolls of the County or as proved through some other acceptable manner to the Administrator. Reserve Fund means the fund of that name created under the Indenture. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax on Taxable Property within Improvement Area A of CFD No.2002-1. Special Tax Requirement means the amount required in any Fiscal Year for Improvement Area A of CFD No. 2002-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond Year which commences in such Fiscal Year, (ii) to pay any amounts required to establish or A-3 Res.No.2002-38 Ex.A replenish the Reserve Fund for all Outstanding Bonds, (iii) to pay Administrative Expenses due and estimated by the Administrator to become due prior to the next levy of the Special Tax, and (iv) to cure any.Delinquencies in the payment of principal or interest on indebtedness of Improvement Area A of CFD No. 2002-1. The Special Tax Requirement shall be reduced by the following: (i) any credit from interest earnings on . the Reserve Fund or other.Bond funds the earnings on which are available under the terms of the Indenture to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax Levy, and (iii) any other funds legally available to apply against the Special Tax Requirement as determined by the Administrator. Taxable Property means all of the Assessor's Parcels within the boundaries of Improvement Area A of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. B. IDENTIFYING TAXABLE PROPERTY On or about each July 1st, the Administrator shall determine which Assessor's Parcels in Improvement Area A of CFD No. 2002-1 are Taxable Property. The Taxable Property shall be subject to the Special Tax 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 each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maximum Special Tax shall increase in every Fiscal Year thereafter by two percent (2%) of the Maximum Special Tax for the prior Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003,and during each Fiscal Year thereafter,the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent (100%) of the Maximum Special Tax for that Fiscal Year, as described in Section C, above,as needed to satisfy the Special Tax Requirement. E. LIMITATIONS No Special Tax shall be levied on an Assessor's Parcel after such Assessor's Parcel becomes Exempt Land. The Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2002-2003, and for each Fiscal Year thereafter, and until the date on which A-4 Res.No.2002-38 Ex.A principal and interest on all Outstanding Bonds have been paid in full (or provision for their payment has been made). Upon determination by the Administrator that this requirement has been met, the Special Tax lien shall be removed from all Assessor's Parcels in Improvement Area A of CFD No.2002-1. F. MANNER OF COLLECTION The Special Tax shall be collected at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2002-1 may at any time directly bill the Special Tax, may collect the Special Tax at a different time or manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's P arcels as permitted by the Act. G. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section G.: 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 which 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 in Improvement Area A may be fully prepaid and the obligation of such Assessor's P arcel 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. A-5 Res.No.2002-38 Ex.A 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: Paragjaph No. 1. For Assessor's Parcels of Taxable Property intended to be prepaid, compute the Maximum Special Tax for such Assessor's P arcels 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 of Improvement Area A 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). A-6 Res.No.2002-38 Ex.A 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 P arcel 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 Improvement Area A of CFD No. 2002-1 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 G.1, except that a partial prepayment shall be calculated according to the following formula: PP= (PH xF) +G A-7 Res.No.2002-38 Ex.A Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section G.1,minus the amounts determined in Paragraph No. 8 of Section G.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 G.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 P arcel following receipt of the request. With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2002-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section G.1, and (ii) indicate in the records of Improvement Area A of CFD No. 2002-1 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. H. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Administrator not later than one calendar year after having paid the Special Tax that is disputed. The Administrator shall promptly review the appeal,and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Administrator's decision requires that the Special Tax be modified or changed in favor of the property owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Administrator shall be referred to the City Council and the decision of the City Council shall be final. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. A-8 Res.No.2002-38 Ex.B EXHIBIT B IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1. (MCDONNELL CENTRE BUSINESS PARK) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX Res.No.2002-38 Ex.B EXHIBIT B IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) 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. 2002-1 (McDonnell Centre Business Park) (herein "CFD No. 2002-1") shall be levied and collected according to the special tax liability determined by the Administrator through the application of the procedures described below. The real property in Improvement Area B of CFD No. 2002-1, unless exempted by law or by the provisions hereof, shall be specially 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 of Special Tax: Acre or Acreage means the land area of an Assessor's Parcel as shown on the applicable final map, parcel map, or 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 that 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 Improvement Area B of CFO No. 2002-1: the fees and expenses of any Fiscal Agent (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; costs related to credit enhancement for the Bonds;the expenses of the Administrator and the City in carrying out their duties under any Indenture, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel,Bond redemption expenses,charges levied by the County or any division or office thereof in connection with the levy and collection of the Special Tax, audits, and amounts needed to pay arbitrage rebate to the federal government with respect to the Bonds; costs associated with complying with continuing disclosure requirements; costs associated with responding to public inquiries regarding B-1 Res.No.2002-38 Ex.B Special Tax levies and appeals; attorneys' fees and other costs associated with commencement or pursuit of foreclosure for any delinquent Special Tax; 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 Improvement Area B of CFD No. 2002-1 or any Bonds. Administrator means the Director of Administrative Services of the City or such other person or entity designated by the City Administrator 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 that is located within Improvement Area B of CFD No.2002-1. Assessor's Parcel Map means an official map of the Assessor of the County designating Parcels by Assessor's P arcel 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 Improvement Area B of CFD No. 2002-1 under the Act. Bond Fund means the fund or account created pursuant to the Indenture in which the collections of,the Special Tax are deposited. Bond Year means the one year period from September 2 to the following September 1. 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. 2002-1. County means the County of Orange. Delinquencies mean the amount, if any, equal to delinquencies in payment of the Special Tax levied in Improvement Area B of CFD No. 2002-1 in the previous Fiscal Year. Exempt Land means (1)any real property within the boundaries of Improvement Area B of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes, including, but not limited to, streets, water well production facilities, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent or trustee who is a party to the Indenture. 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. B-2 Res.No.2002-38 Ex.B Improvement Area B means any real property within the boundaries of CFD No. 2002-1 as depicted on the boundary map for said CFD entitled "Proposed Boundaries of The City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), County of Orange, .State of .California" and approved by the City. Council. Said Improvement Area B is comprised generally of Parcels 1, 2, 3, 12, 131 15,_ 17 through 20 and adjacent portions of the following roadway right-of-way; Skylab Road, Street 'A', Street 'C' and Street 'D'; as shown on Tentative Parcel Map No. 2001-122 on file with the City and encompassing approximately 48.803 gross acres and 43.785 net taxable acres. In no case shall the net taxable acres in Improvement Area B be less than 43.785. 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. Infrastructure means the public improvements authorized to be financed by Improvement Area B of CID No.2002-1 in accordance with the terms of the Act. Interest Payment Date means any date on which regularly scheduled principal and/or interest payments are due on the Bonds. Maximum Special. Tax means,.with respect to any Assessor's Parcel of Taxable Property, the maximum Special Tax determined in accordance with Section C that can be levied in any Fiscal Year on such Assessor's Parcel. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Property Owner means the owner of an Assessor's Parcel within the boundaries of Improvement Area B of CID No. 2002-1 as determined from the latest equalized tax rolls of the County or as proved through some other acceptable manner to the Administrator. Reserve Fund means the fund of that name created under the Indenture. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax on Taxable Property within Improvement Area B of CFD No. 2002-1. Special Tax Requirement means the amount required in any Fiscal Year for Improvement Area B of CFD No. 2002-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond 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 due and estimated by the Administrator to become due prior to the next levy of the Special Tax, and (iv) to cure any Delinquencies in the payment of principal or B-3 Res.No.2002-38 Ex.B interest on indebtedness of Improvement Area B of CFD No. 2002-1. The Special Tax Requirement shall be reduced by the following: (i) any credit from interest earnings on the Reserve Fund or other Bond funds the earnings on which are available under the terms of the Indenture to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax Levy, and (iii) any other funds legally available to apply against the Special Tax Requirement as determined by the Administrator.. Taxable Property means all of the Assessor's Parcels within the boundaries of Improvement Area B of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. B. IDENTIFYING TAXABLE PROPERTY On or about each July 1st, the Administrator shall determine which Assessor's Parcels in Improvement Area B of CFD No. 2002-1 are Taxable Property. The Taxable Property shall be subject to the Special Tax 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 each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maximum Special Tax shall increase in every Fiscal Year thereafter by two percent (2%) of the Maximum Special Tax for the prior Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003,and during each Fiscal Year thereafter,the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent(100%) of the Maximum Special Tax for that Fiscal Year, as described in Section C, above,as needed to satisfy the Special Tax Requirement. E. LIMITATIONS No Special Tax shall be levied on an Assessor's Parcel after such Assessor's Parcel becomes Exempt Land. The-Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2002-2003, 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). Upon determination by the Administrator that this B-4 Res.No.2002-38 Ex.B requirement has been met, the Special Tax lien shall be removed from all Assessor's Parcels in Improvement Area B of CFD No.2002-1. F. MANNER OF COLLECTION The Special Tax shall be collected at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2002-1 may at any time directly bill the Special Tax, may collect the Special Tax at a different time or manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's P arcels as permitted by the Act. G. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section G.: 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 which 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 in Improvement Area B may be fully prepaid and the obligation of such Assessor's P arcel 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. B-5 Res.No.2002-38 Ex.B 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 P arcels 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 of Improvement Area B 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). B-6 Res.No.2002-38 Ex.B 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 P arcel 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 Improvement Area B of CFD No. 2002-1 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 G.1, except that a partial prepayment shall be calculated according to the following formula: PP= (PH xF) +G B-7 Res.No.2002-38 Ex.B Where these terms are defined as follows: PP = the partial prepayment PH = the Prepayment Amount calculated according to Section G.1,minus the amounts determined in Paragraph No..8 of Section G.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 G.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 P arcel following receipt of the request. With respect to any Assessor's Parcel that is partially prepaid, CFD No. 2002-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section G.1, and (ii) indicate in the records of Improvement Area B of CFD No. 2002-1 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. H. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Administrator not later than one calendar year after having paid the Special Tax that is disputed. The Administrator shall promptly review the appeal,and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Administrator's decision requires that the Special Tax be modified or changed in favor of the property owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over.the decision of the Administrator shall be referred to the City Council and the decision of the City Council shall be final. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. B-8 Res. No. 2002-38 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 a regular meeting thereof held on the 3rd day of June, 2002 by the following vote: AYES: Green, Dettloff, Boardman,Cook, Winchell, Bauer NOES: None ABSENT: Houchen (out of room) ABSTAIN: None City Clerk and ex-officio C erk of the City Council of the City of Huntington Beach, California RESOLUTION NO.2002-39 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DETERMINING THE NECESSITY TO INCUR BONDED INDEBTEDNESS WITHIN IMPROVEMENT AREA A,AND WITHIN IMPROVEMENT AREA B,OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1. (MCDONNELL CENTRE BUSINESS PARK) WHEREAS, on April 1, 2002, this City Council adopted a resolution 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') stating its intention to form the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "District"), pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), to fund certain public improvements (the"Facilities"),as described therein; and The Resolution of Intention designated a portion of the District as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)." ("Area A"), and a portion of the District as "Improvement Area B of the City of . Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area B"), as authorized by Section 53350 of the Act (Area A and Area B are sometimes referred to below as an"improvement area" and,collectively,as "improvement areas");and On April 1, 2002, this City Council also adopted a resolution entitled "A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention to Incur Bonded Indebtedness of the Proposed City of Huntington Beach Community Facilities District No. 2002-1 ' (McDonnell Centre Business Park)" (the "Resolution of Intention to Incur Indebtedness") stating its intention to incur bonded indebtedness within the boundaries of Area A and its intention to incur bonded indebtedness within the boundaries of Area B for the purpose of financing the costs of the Facilities;and On this date, this City Council held a noticed public hearing as required by the Law relative to the determination to proceed with the formation of the improvement areas of the District, the provision of the Facilities for each of the improvement areas as specified in the Resolution of Intention and the rate and method of apportionment of the special tax to be levied within each of the improvement areas of the District to pay the principal and interest on the proposed indebtedness and the administrative costs of the City relative to the.District; and At the hearing all persons desiring to be heard on all matters pertaining to the'formation of each of the improvement areas of the District, the provision of the Facilities and the levy of the special tax on property within each of the improvement areas of the District were heard and a full and fair hearing was held;and Res. No. 2002-39 Subsequent to the hearing, this City Council adopted a resolution entitled "A Resolution of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution of Formation'), which incorporated by reference the description of the Facilities to be provided by each improvement area of the District as set forth in the exhibits to the Resolution of Intention, and incorporated by reference the rate and method of apportionment of the special tax for each improvement area of the District as set forth in exhibits to the Resolution of Formation;and On this-date, this City Council held a noticed public hearing as required by the Law relative to the matters material to the questions set forth in the Resolution of Intention to Incur Indebtedness;and No written protests with respect to the matters material to the questions set forth in the Resolution of Intention to Incur Indebtedness have been filed with the City Clerk. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. The foregoing recitals are true and correct. Section 2. This City Council deems it necessary to incur bonded indebtedness in the maximum aggregate principal amount of $13,000,000 within the boundaries of Area A of the District,and bonded indebtedness in the maximum aggregate principal amount of$13,000,000 within the boundaries of Area B of the District; provided that in no event shall the total bonded indebtedness of the District exceed$13,000,000. Section 3. The indebtedness to be incurred in each improvement area of the District is for the purpose of financing the costs of the Facilities, as provided in the Resolution of Formation including, but not limited to, the costs of issuing and selling bonds to finance the Facilities and the costs of the City in administering the respective improvement area of the District. Section 4. The whole of Area A of the District shall pay for the bonded indebtedness with respect to Area A through the levy of the special tax. The special tax for Area A is to be apportioned in accordance with the formula set forth in Exhibit A to the Resolution of Formation. The whole of Area B of the District shall pay for the bonded indebtedness with respect to Area B through the levy of the special tax. The special tax for Area B is to be apportioned in accordance with the formula set forth in Exhibit B to the Resolution of Formation. Section 5. The maximum amount of bonded indebtedness to be incurred for Area A of the District is $13,000,000 and the maximum term of the bonds to.be issued shall in no event exceed forty (40) years. The maximum amount of bonded indebtedness to be incurred for Area B of the District is $13,000,000 and the maximum term of the bonds to be issued shall in no event exceed forty (40) years. Notwithstanding the foregoing, in no event shall the total bonded indebtedness of the District,including both improvement areas,exceed$13,000,000. -2- Res. No. 2002-39 Section 6. The bonds for each improvement area shall bear interest at a rate or rates not to exceed the maximum interest rate permitted by applicable law at the time of sale of the bonds, payable semiannually or in such other manner as this City Council or its designee shall determine, the actual rate or rates and times of payment of such interest to be determined by this City Council or its designee at the time or times of sale of the bonds. Section 7. The proposition of incurring the bonded indebtedness herein authorized for each improvement area of the District shall be submitted to the qualified electors of the respective improvement area of the District and shall be consolidated with elections on the proposition of levying special taxes within such improvement area of the District and the establishment of an appropriations limit for such improvement area of the District pursuant to Section 53353.5(a) of the Act. The time, place and conditions of said election shall be as specified by separate resolution of this City Council. Section 8. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of June 2002. Mayor ATTEST: APPROVED AS TO FORM: City Clerk e .ab' Z City Attorney 7-b 1�'d REVIEWED AND APPROVED: INITIATED AND APPROVED: 42" �� lba 0 � CitrAdministrator Director of Economic Development 08003.07:J6157 4/19/02 . -3- Res. No. 2002-39 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 a regular meeting thereof held on the 3rd day of June, 2002 by the following vote: AYES: Green, Dettloff, Boardman, Cook, Winchell, Bauer NOES: None ABSENT: Houchen (out of room) ABSTAIN: None City Clerk and ex-officio derk of the City Council of the City of Huntington Beach, California Michael Swan Consulting April 26,2002 IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK COMMUNITY FACILITIES DISTRICT REPORT IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) 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 April 1, 2002, adopt Resolution No. 2002-26 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. 2002-1 (McDonnell Centre Business Park) comprised of two separate improvement areas (the "District"). Pursuant to Section 53350 of the Act, the City Council designated a portion of the District as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and a portion of the District as "Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area B" 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, 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 Director of Public Works 1 PART I Description of District,Area A and Area B The proposed boundaries of Area A and Area B 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 east of the intersection of Bolsa Avenue and Bolsa Chica Road in the City of Huntington Beach, County of Orange, State of California and includes the currently designated County Assessor's Parcel Numbers 195-111- 03, 195-111-24, 195-111-29, 195-111-31 and 195-111-34. The District is comprised of two separate improvement areas designated Improvement Area A and Improvement Area B, whose boundaries are described as follows: Improvement Area A is comprised generally of Parcels 4 through 11, the proposed public well site and adjacent portions of the following roadway rights-of-way: Skylab Road, Astronautics Road, Street `B' and Street `C', as shown on Tentative Parcel Map No. 2001-122 on file with the City. Once the proposed Final Parcel Map No. 2001-226 is recorded, said Improvement Area A is envisioned to include Parcels 1 through 8, the proposed public well site and adjacent portions of the following roadway rights-of-way: Skylab Road, Delta Lane and Astronautics Lane, as shown on said proposed Final Parcel Map, encompassing approximately 40.339 gross acres and 33.286 net taxable acres. Improvement Area B is comprised generally of Parcels 1, 2, 3, 12, 13, 15, 17 through 20 and adjacent portions of the following roadway rights-of-way: Skylab Road, Street `A', Street `C' and Street `D', as shown on Tentative Parcel Map No. 2001-122 on file with the City and encompassing approximately 48.803 gross acres and 43.785 net taxable acres. For more particulars, reference is made to the boundary map entitled "Proposed Boundaries of Improvement Areas A and B 'of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park),. County of Orange, State of California" approved by the City Council on April 1, 2002 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 Area A of the District is as shown in Exhibit "A" attached hereto and hereby made a part hereof. A brief description of the facilities required to adequately meet the needs of Area B of the District is as shown in Exhibit`B" attached hereto and hereby made a part hereof. It should be noted that the list of facilities is identical for both Area A and Area B as each area requires the same facilities. It is not the intent to duplicate the financing of facilities. Rather, the entire list of facilities is included as eligible District facilities for each separate area. This provides the flexibility to annex anywhere from a portion to all of Area B into Area A and finance, potentially, all the facilities through Area A. Area B, which is intended to be developed after Area A, would also have the ability to separately finance eligible facilities that were not previously financed by Area A. Ultimately, Area A and Area B, together, will have the ability to finance any or all of the facilities listed in Exhibits"A" and`B". 3 PART III Cost Estimate The estimate of the fair and reasonable cost of the proposed facilities required by Area A and delineated on Exhibit "A" are deemed to be not to exceed $13,000,000. The estimate of the fair and reasonable cost of the proposed facilities required by Area B and delineated on Exhibit "B" are deemed to be not to exceed $13,000,000. 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, rights-of-way and easements, and any physical facilities required in conjunction therewith, and incidental expenses in connection with said acquisition and construction, also including the cost of proposed bond financing and all other related costs as provided in the Act. Here again, it is noted that, while the total authorized amount for Area A and Area B is $13,000,000 each, it is not anticipated that the total combined bond financing for Area A and Area B, together, will exceed $13,000,000 in total, as discussed in Part II, herein. A detailed breakdown of the design, acquisition and construction cost estimate for each Area corresponding to the line items in Exhibits "A"and`B"is shown on Exhibit"C". A summary breakdown of the cost estimate for each Area is shown below: DESIGN, ACQUISITION & CONSTRUCTION $10,586,720 BOND RELATED EXPENSES 2,413,280 TOTAL TO BE BOND FINANCED $13,000,000 Design, acquisition and construction costs relate to those facilities described in Part II, herein. The major bond related expenses include reserve fund estimated at $1,300,000 and capitalized interest estimated at $250,000, with the remaining bond related expenses estimated at $863,280 and 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 and all other incidental expenses. 4 EXHIBIT A IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA A OF THE DISTRICT FACILITIES It is intended that Improvement Area A of the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road, new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road, new Delta Lane, and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the'new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. A-1 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way that is intended to be dedicated by the recording of a final map, 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. OTHER Improvement Area A of 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 IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA B OF THE DISTRICT FACILITIES It is intended that Improvement Area B of the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road, new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road,new Delta Lane, and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. B-1 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way that is intended to be dedicated by the recording of a final map, 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. OTHER Improvement Area B of 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. B-2 RESOLUTION NO.2002-40 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH CALLING SPECIAL ELECTION WITHIN IMPROVEMENT AREA A AND WITHIN IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) WHEREAS, on this date, this City Council adopted a resolution entitled "A Resolution of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington.Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution of Formation'), ordering the formation of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area A"), and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area B"), authorizing the levy of a special tax on property within Area A and within Area B and preliminarily establishing an appropriations limit for Area A and for Area B; and On this date, this City Council also adopted a resolution entitled."A Resolution of the City Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area A, and within Improvement Area B, of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution to Incur Indebtedness"), determining the necessity to incur bonded indebtedness in the maximum aggregate principal amount of $13,000,000 for each of Area A and of Area B (but not more than $13,000,000 in total for both areas) upon the security of the special tax to be levied within Area A and Area B,respectively; and Pursuant to the provisions of said resolutions, the propositions of the levy of said special tax, the establishment of the appropriations limit and the incurring of the bonded indebtedness for each of Area A and of Area B is to be submitted to the qualified electors of Area A and Area B, respectively, as required by the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code,the"Law"). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. Pursuant to the Code and Sections 53325.7, 53326 and 53351 of the Act, the issues of the levy of said special tax, the incurring of bonded indebtedness and the establishment of said appropriations limit 'for Area A shall be submitted to the qualified electors of Area A at an election called therefor as provided below. Pursuant to the Code and Sections 53325.7, 53326 and 53351 of the Act, the issues of the levy of said special tax, the incurring of bonded indebtedness and the establishment of said appropriations limit for Area B Res.No.2002-40 shall be submitted to the qualified electors of Area B at an election called therefor as provided below. Section 2. As authorized by Section 53353.5 of the Act, the three propositions described in paragraph 1 above for each of Area A and Area B shall be combined into a single ballot measure for Area A and for Area B,respectively,.the forms of which measures being as set forth in the form of ballot attached hereto as Exhibit A and by this reference incorporated herein. The form of the ballot in Exhibit A is hereby approved. Section 3. This City Council hereby finds that fewer than 12 persons have been registered to vote within the territory of Area A for each of the ninety (90) days preceding the close of.the public hearings heretofore conducted and concluded by this City Council for the purposes of these proceedings. Accordingly, and pursuant to the Code and Section 53326(b) of the Act, this City Council finds that for purposes of these proceedings the qualified electors for Area A are the owners of land within Area A that may be subject to the levy of special taxes and that the vote with respect to Area A shall be by said landowners or their authorized representatives, each having one vote for each acre or portion thereof such landowner owns in Area A as of the close of the public hearings. This City Council hereby finds that fewer than 12 persons have been registered to vote within the territory of Area B for each of the ninety (90) days preceding the close of the public hearings heretofore conducted and concluded by this City Council for the purposes of these proceedings. Accordingly, and pursuant to the Code and Section 53326(b) of the Act, this City Council finds that for purposes of these proceedings the qualified electors for Area B are the owners of land within Area B that may be subject to the levy of special taxes and that the vote with respect to Area B shall be by said landowners or their authorized representatives, each having one vote for each acre or portion thereof such landowner owns in Area B as of the close of the public hearings. Section 4. This City Council hereby calls a special election to consider the measures described in Section 2 above, which election shall be held immediately following adoption of this Resolution in the Chambers of the City Council of the City of Huntington Beach. The City Clerk is hereby designated as the official to conduct said election, It is hereby acknowledged that the City Clerk has on file the Resolution of Formation, a map of the proposed boundaries of Area A and of Area B, and a sufficient description to allow the City Clerk to determine the boundaries of Area A and of Area B. The voted ballots shall be returned to the City Clerk no later than immediately following the adoption of this Resolution; and when all of the qualified voters have voted, the election shall be closed. Section 5. Pursuant to the Code and Section 53327 of the Act, the election shall be conducted by mail or hand delivered ballot pursuant to the California Elections Code. This City Council hereby finds that paragraphs (a), (b), (c) (1) and (c)(3) of Section 4000 of the California Elections Code are applicable to this special election. Section 6. This City Council acknowledges that the City Clerk has caused to be delivered to the qualified elector of Area A, and to the qualified elector of Area B, a ballot in the -2- Res.No.2002-40 form set forth in Exhibit A hereto. The ballot indicates the number of votes to be voted by the landowner with respect to each ballot measure. The ballot was accompanied by all supplies and written instructions necessary for the use and return of the ballot. The envelope to be used to return the ballot was enclosed with the ballot, had the return postage.prepaid, and contained the following: (a) the name and address of the landowner, (b) a declaration,under penalty of perjury, stating that the voter is the owner of record or authorized representative of the landowner entitled to vote and is the person whose name appears on the envelope, (c) the printed name, signature and address of the voter, (d) the date of signing and place of execution of the declaration pursuant to clause (b) above, and (e) a notice that the envelope contains an official ballot and is to be opened only by the City Clerk. Analysis and arguments with respect to the ballot measures were waived by the owner of all of the land in Area A and in Area B that will be subject to the levy of special taxes in its petition to form the District as well as in the voted ballot,as permitted by the Code and Section 53327(b) of the Act. Section 7. The City Clerk shall accept the ballot of the qualified elector upon and prior to the adoption of this Resolution, whether the ballot was personally delivered or received by mail. The City Clerk shall have available a ballot which may be marked in the City Council chambers on the election day by the qualified elector. Section 8. This City Council hereby further finds.that the provision of the Act requiring a minimum of.90 days following the adoption of the Resolution of Formation to elapse before said special election is for the protection of the qualified electors of Area A and Area B. The petition previously submitted by the sole owner of land in Area A and in Area B that will be subject to the levy of special taxes and the voted ballot of the sole qualified elector of Area A and Area B contain an acknowledgment of a waiver of any time limit pertaining to the conduct of the election and of a waiver of any requirement for analysis and arguments in connection with the election. Accordingly, this City Council finds and determines that the qualified elector has been fully apprised of and has agreed to the shortened time for the election and waiver of analysis and arguments, and has thereby been fully protected in these proceedings. This City Council also finds and determines that the City Clerk has concurred in the shortened time for the election. Section 9. Pursuant to the Local Agency Special Tax and Bond Accountability Act, Sections 50075.1 et. seq. and Sections 53410 et. seq. of the California Government Code, (a) the ballot measures referred to in Section 4 above each contain a statement indicating the specific purposes of the special tax referenced in the respective ballot measure, the proceeds of the special tax will be applied only to the purposes specified in the applicable ballot measure, there shall be created by the City Treasurer accounts.into which proceeds of the.special tax levies of Area .A and of. Area B, respectively, will be deposited, and the Director of Administrative Services is hereby directed to provide an annual report to this City Council as required by Section 50075.3 of the California Government Code; and (b) the ballot measures contain a statement indicating the purpose of the bonds referenced in the respective ballot measure, the proceeds of the bonds will be applied only to the purpose specified in the applicable ballot measure, there shall be created by the City Treasurer accounts into which the proceeds of the -3- Res.No.2002-40 bonds will be deposited (which need not be separate bank accounts,but which may be separate general ledger accounts so long as such proceeds can be separately accounted for), and the Director of Administrative Services is hereby directed to provide an annual report to this City Council as required by Section 53411 of the California Government Code. Section 10. The City Clerk is hereby directed to cause to be published in a newspaper of general circulation circulating within Area A and Area B a copy of this resolution and a copy of the Resolution to Incur Indebtedness, as soon as practicable after the date of adoption of this Resolution. Section 11. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of June , 2002. Mayor. ATTEST: APPROVED AS TO FORM: City Clerk 6"-L 5 3/0 Z City Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED: City-Administrator Director of Economic Development 08003.07:J6155 4/19/02 -4- Res.No.2002-40 Ex.A EXHIBIT A CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS.PARK) OFFICIAL BALLOT Special Tax and Bond Election (JUNE 3,2002) This ballot is for a special, landowner election. You must return this ballot in the enclosed postage paid envelope to the City Clerk of the City of Huntington Beach no later than immediately after adoption of the resolution of the City Council calling said election, either by mail or in person. To vote, mark a cross (X) on the voting line after the word "YES" or after the word "NO". All marks otherwise made are forbidden. All distinguishing marks are forbidden and make the ballot void. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Huntington Beach and obtain another. BALLOT MEASURE A: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount.of$13,000,000,with interest at a rate or rates not to exceed the maximum interest rate permitted by law_at the time of sale of such bonds on . behalf of Improvement Area A of"the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park)("Area A"),the Yes: proceeds of which will be used only to finance the costs of improvements specified in the Resolution of Intention to form Area A and the costs of issuing the bonds as well as the establishment of a bond reserve fund; shall a special tax No: _ payable solely from lands within Area A be levied annually upon lands within Area A to be applied only to the payment of the principal and interest upon such bonds to be issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area A; and shall the annual appropriations limit of Area A be established in the amount of$13,000,000? BALLOT MEASURE B: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount of$13,000,000,with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on behalf of Improvement Area B of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park)("Area B"),the Yes: proceeds of which will be used only to finance the costs of improvements specified in the Resolution of Intention to form Area B and the costs of issuing the bonds as well as the establishment of a bond reserve fund; shall a special tax No: payable solely from lands within Area B be levied annually upon lands within Area B to be applied only to the payment of the principal and interest upon such bonds to be issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area B; and shall the annual appropriations limit of Area B be established in the amount of$13,000,000? Res.No.200240 Ex.A By execution in the space provided below,you also indicate your waiver of the time limit pertaining to the conduct of the election and any requirement for analysis and arguments with respect to the ballot measure, as such waivers are described and permitted by Sections 53326(a) and 53327(b)of the California Government Code. Number of Votes for Ballot Measure A: 41 Number of Votes for Ballot Measure B: 49 Property Owner: McDonnell Douglas Corporation By: Its: Res. No. 2002-40 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 a regular meeting thereof held on the 3rd day of June, 2002 by the following vote: AYES: Green, Dettloff, Boardman, Cook, Winchell, Bauer NOES: None ABSENT: Houchen (out of room) ABSTAIN: None City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California RESOLUTION NO.2002-41 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DECLARING RESULTS OF SPECIAL ELECTION AND DIRECTING RECORDING OF NOTICE OF SPECIAL TAX LIEN WHEREAS, in proceedings heretofore conducted by this City Council pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello-Roos. Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), this City Council on this date adopted a resolution entitled "A Resolution of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)",•calling for a special election of the qualified electors within Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area A") and of the qualified electors within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area B");and Pursuant to the terms of said resolution, which are by this reference incorporated herein, the special election was held on this date, and the City Clerk has on file.a Canvass.and Statement of Results of Election, a copy of which is attached hereto as Exhibit A;and This City Council has reviewed the canvass and hereby approves it. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. The issues presented at the special election were the incurring of a bonded indebtedness in the maximum aggregate principal amount for each of Area A and Area B of $13,000,000, the levy of a special tax within each of Area A and Area B to be levied in accordance with the respective formula for such improvement area heretofore approved by this City Council by its resolution adopted this date entitled "A Resolution of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)," and the approval of an appropriations limit for each of Area A and Area B of not to exceed$13,000,000 pursuant to said resolution. Section 2. Pursuant to the canvass of the special election on file with the City Clerk, the issues presented at the special election with respect_to Area A were approved by the qualified elector of Area A by more than two-thirds of the votes cast at the special election regarding Area A, and the issues presented at the special election with respect to Area B were approved by the qualified elector of Area B by more than two-thirds of the votes cast at the special election regarding Area B. Res.No.2002-41 Section 3. Pursuant to such voter approval, Area A is hereby declared to be fully formed with the authority to incur bonded indebtedness and to levy special taxes as heretofore provided in these proceedings and in the Law,and Area B is hereby declared to be fully formed with the authority to incur bonded indebtedness and to levy special taxes as heretofore provided in these proceedings and in the Law. Section 4. It is hereby found that all prior proceedings and actions taken by this City Council with respect to each of Area A and Area B were valid and in conformity with the Law. Section 5. The City Clerk is hereby directed to execute and cause to be recorded in the office of the County.Recorder of the County of Orange a notice of special.tax lien for Area A and Area B in the form required by the Act, said recording to occur no later than fifteen days following adoption by the City Council of this Resolution. Section 6. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of June 2002. wlk4A A-A Mayor ATTEST: APPROVED AS TO FORM: City Clerk C 4-0 z City Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED: City A strator Director of Econo 'c Development 08003.07:J6156 4/19/02 Res.No.2002-41 Ex.A EXHIBIT A CANVASS AND STATEMENT OF RESULT OF ELECTION CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) I hereby certify that on June 3, 2002, I canvassed the returns of the special elections held on June 3, 2002, in Improvement Areas A and B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) and the total number of ballots cast in said election and the total number of votes cast for and against the respective ballot measures are as follows and the totals as shown for and against the measure are full, true and correct: Qualified Landowner Votes Votes Cast YES NO Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) .41 41 41 0 Special.Tax and Bond Election June 3, 2002. BALLOT MEASURE A: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount of $13,000,000, with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on behalf of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area A"), the proceeds of which will be used only to finance the costs of improvements specified in the Resolution of Intention to form Area A and the costs of issuing the bonds as well as the establishment of a bond reserve fund; shall a special tax payable solely from lands within Area A be levied annually upon lands within Area A to be applied only to the payment of the principal and interest upon such bonds to be issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area A; and shall the annual appropriations limit of Area A be established in the amount of$13,000,000? Qualified Landowner Votes Votes Cast YES NO Improvement Area B of the City .of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) 49 49 49 0 Special Tax and Bond Election June 3, Res.No.2002-41 Ex.A 2002. BALLOT MEASURE B: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount of $13,000,000, with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on behalf of Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area B"), the proceeds of which will be used only to finance the costs of improvements specified in the Resolution of Intention to form Area B and the costs of issuing the bonds as well as the establishment of a bond reserve fund; shall a special tax payable solely from lands within Area B be levied annually upon lands within Area li to be applied only to the payment of the principal and interest upon such bonds to be issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area B; and shall the annual appropriations limit of Area B be established in the amount of$13,000,000? IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND this .3 Ada y 2002 By: City Clerk, City of Huntington Beac -4- Res. No. 2002-41 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 a regular meeting thereof held on the 3rd day of June, 2002 by the following vote: AYES: Green, Dettloff, Boardman, Cook, Winchell, Bauer NOES: None ABSENT: Houchen (out of room) ABSTAIN: None City Clerk and ex-officio C erk of the City Council of the City of Huntington Beach, California ORDINANCE NO.3557 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH LEVYING SPECIAL TAXES WITHIN IMPROVEMENT AREA A AND IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) WHEREAS, on April 1, 2002, this City Council of the City of Huntington Beach (the "City") adopted a resolution 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"), stating its intention to establish the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "District") pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code,the "Law"),to finance certain public improvements (the"Facilities"); The Resolution of Intention designated a portion of the District as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and a portion of the District as "Improvement Area B of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park)" ("Area B"), as authorized by Section 53350 of the Act (Area A and Area B are sometimes referred to below individually as an "improvement area" and, collectively, as the "improvement areas"); and Notice was published as required by the Law relative to the intention of this City Council to form Area A and Area B of the District and to provide for the Facilities; This City Council has held a noticed public hearing as required by Law relative to the determination to proceed with the formation of Area A and Area B and the rate and method of apportionment of the special tax to be levied within Area A and Area B, respectively, to finance the costs of the Facilities; At the public hearing all persons desiring to be heard on all matters pertaining to the formation of Area A and the formation of Area B and the levy of the special taxes within the respective improvement areas were heard, substantial evidence was presented and considered by this City Council and a full and fair hearing was held; Subsequent to said hearing, this City Council adopted resolutions entitled "A Resolution of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution of Formation"), "A Resolution of the City Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area A, and Within Improvement Area B, of the Cih,of lm/McD CDF/Ord J6153 Ord. No. 3557 Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution of Necessity") and"A Resolution of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and Within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)", which resolutions established Area A and Area B, authorized the levy of a special tax within Area A and within Area B, and called an election within Area A and within Area B on the proposition of incurring indebtedness, levying a special tax and establishing an appropriations limit within each such improvement area; and On May 6, 2002 an election was held within Area A and within Area B in which the eligible landowner elector in each such improvement area approved said propositions for such improvement area by more than the two-thirds vote required by the Law. 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 Area A of the District pursuant to the Law and Sections 53328 and 53340 of the Act, at the rate and in accordance with the rate and method of apportionment of special taxes set forth in Exhibit A to the Resolution of Formation which Resolution is by this reference incorporated herein. The special taxes are hereby levied commencing in fiscal year 2002-2003 and in each fiscal year thereafter until payment in full of any bonds issued by the City for Area A of the District (the "Area A Bonds") as contemplated by the Resolution of Formation and the Resolution of Necessity, and all costs of administering Area A of the District have been paid. By the passage of this Ordinance this City Council hereby authorizes and levies special taxes within Area B of the District pursuant to the Law and Sections 53328 and 53340 of the Act, at the rate and in accordance with the rate and method of apportionment of special taxes set forth in Exhibit B to the Resolution of Formation. The special taxes are hereby levied commencing in the fiscal year for which the levy may be timely transmitted to the County of Orange for inclusion on the ad valorem tax roll following the date bonds are first issued by the City for such improvement area (taking into account any capitalized interest funded with bond proceeds), and in each fiscal year thereafter until payment in full of any bonds issued by the City for Area B of the District (the "Area B Bonds") as contemplated by the Resolution of Formation and the Resolution of Necessity, and all costs of administering Area B of the District have been paid. Section 2. The City Director of Administrative Services is hereby authorized and directed each fiscal year to determine the specific special tax rate and amount to be levied for each parcel of real property within each improvement area of the District, in the manner and as provided in the Resolution of Formation. . Section 3. Properties or entities of the State, federal or local governments shall be exempt from any levy of the special taxes, to the extent set forth in the Rate and Method of Apportionment of the Special Taxes for each improvement area in the forms attached to the Resolution of Formation. In no event shall the special taxes be levied on any parcel within an -2- Ord. No. 3557 improvement area of the District in excess of the maximum tax specified in said Rate and Method of Apportionment of the Special Taxes for such improvement area. Section 4. All of the collections of the special tax for an improvement area shall be applied solely as provided for in the Resolution of Formation and the ballot measure that approved the levy of the special tax for such improvement area. Section 5. The special taxes shall be collected from time to time within an improvement area as necessary to meet the financial obligations of such improvement area on the secured real property tax roll in the same manner as ordinary ad valorem taxes are collected. 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. The Director of Administrative Services 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 each improvement area of the District in each fiscal year until the Area A Bonds and the Area B Bonds, as applicable, are paid in full and provision has been made for payment of all of the administrative costs of such improvement area of the District. Notwithstanding the foregoing, the Director of Administrative Services may collect one or more installments of the special taxes by means of direct billing by the City of the property owners within an improvement area of the District, if, in the judgment of the Director of Administrative Services, such means of collection will reduce the administrative burden on the City in administering the District or is otherwise appropriate in 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. Section 6. The City Treasurer is hereby directed to establish an account for each improvement area (which need not be a separate deposit account, but may be a separate general ledger account so long as such proceeds can be separately accounted for) into which proceeds of the special tax levied for such improvement area will be deposited, and the Director of Administrative Services is hereby directed to file an annual report-with this City Council as required by Section 50075.3 of the California Government Code. Section 7. 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 an improvement area of 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 improvement areas of the District shall not be affected. Section 8. This ordinance shall take effect thirty (30) days after its passage. -3- Ord. No. 3557 PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 17th day of June 2002. Mayor ATTEST: APPROVED AS TO FORM: City Clerk -X City.Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED: C. Ci Administrator Director of Economic Development 08003.07:J6153 4/19/02 -4- Ord. No. 3557 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 3rd day of June,2002, and was again read to said City Council at a regular meeting thereof held on the 17th day of June,2002, and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council. AYES: Green, Boardman, Cook, Houchen, Winchell, Bauer NOES: None ABSENT: Dettloff 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 2002 In accordance with the City Charter of said City City Clerk and eX-OfC10 Clerk Connie Brockway,City Clerk of the City Council of the City Dewty City Clerk of Huntington Beach, California � I SRN FRANCISCO 2&JC� ��/ CA 94111 / 111F $0.570 $0.570 $0.570 Land Owner and Voter: CITY_ OF $0.570 W METER ' McDonnell Douglas Corporation �Ie,-,l 4Z—, 7— '1 cc HUNT I N u l O w BEACH. CA c/o Boeing Realty Corporation �G- �lh U 3804336 3760 Kilroy Airport Way#500 1O01 MAY 2 q P 12: 1 Long Beach,CA 90806 Attn:Jim Schulte i 1 1 To: City Clerk City of fiuntington Beach 2000 Main Street Huntington Beach, CA 92648 I hereby declare under penalty of perjury that the voter listed on the enclosed ballot is the owner of record or the authorized representative of the land owner entitled to vote said ballot. Executed on �- L- , 2002 Attention: This envelope contains an official ballot and is at L D Pq Po 44 , California. to be opened only by the,canvassing board with respect to the City of Huntington Beach Community Facilities McDonnell Douglas Corpo 'on District No. 2002-1 (McDonnell Centre Business Park) special election to be held'on June 3, 2002. i By: A4 Its: Ste en J.Barb u CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 = (MCDONNELL CENTRE BUSINESS PARK) o ti OFFICIAL BALLOT c, Special Tax and Bond Election -- (June 3, 2002) rl _ This ballot is for a special, landowner election. You must return this ballot in the7?nclosed postage paid envelope to the City Clerk of the City of Huntington Beach no later than immediately Per adoption of the resolution of the City Council calling said election,either by mail or in person. J" To vote, mark a cross (X) on the voting line after the word "YES" or after the word "NO". All marks otherwise made are forbidden. All distinguishing marks are forbidden and make the ballot void. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Huntington Beach and obtain another. BALLOT MEASURE A: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount of $13,000,000, with interest at a rate or rates not to exceed the maximum interest rate permitted by law at / the time of sale of such bonds on behalf of Improvement Area A of the v/ City of Huntington Beach Community Facilities District No. 2002-1 Yes: (McDonnell Centre Business Park) ("Area A"), the proceeds of which will be used only to finance the costs of improvements specified in the Resolution of Intention to form Area A and the costs of issuing the bonds No: as well as the establishment of a bond reserve fund; shall a special tax payable solely from lands within Area A be levied annually upon lands within Area A to be applied only to the payment of the principal and interest upon such bonds to be issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area A; and shall the annual appropriations limit of Area A be established in the amount of$13,000,000? BALLOT MEASURE B: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount of$13,000,000,with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on behalf of Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Yes: Centre Business Park) ("Area B"), the proceeds of which will be used only to finance the costs of improvements specified in the Resolution of Intention to form Area B and the costs of issuing the bonds as well as the No: establishment of a bond reserve fund; shall a special tax payable solely from lands within Area B be levied annually upon lands within Area B to be applied only to the payment of the principal and interest upon such bonds to be issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area B; and shall the annual appropriations limit of Area B be established in the amount of $13,000,000? -1- By execution in the space provided below, you also indicate your waiver of the time limit pertaining to the conduct of the election and any requirement for analysis and arguments with respect to the ballot measure, as such waivers are described and permitted by Sections 53326(a) and 53327(b) of the California Government Code. Number of Votes for Ballot Measure A: 41 Number of Votes for Ballot Measure B: 49 The property that is the subject of this Ballot is identified for Ballot Measure A as Orange County Assessor Parcel Nos. 195-111-34 (portion), 195-111-24, and 195-111-31; and for Ballot Measure B is identified as Orange County Assessor Parcel Nos. 195-111-29 (portion), 195-111-34 (portion) and 195- 111-03. Property Owner: McDonnell Douglas Corporation By: eplon J.Bow Its: A tkorized SiA w -2- RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Formation of and Special Election for City of Huntington Beach Community Facilities District No. 2002-1 McDonnell Centre Business Park COUNCIL MEETING DATE: May 6, 2002 .. ......... .... - - 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 Attached Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attome Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attome Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement Unbudget, over $5,000) Not Applicable Bonds If applicable Not Applicable Staff Report If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Find in s/Conditions for Approval and/or Denial Not Applicable . .. . :EXPLANATION FOR MISSING ATTACHMENTS: REVIEWED RETURNED:: -.-.--....--FORWARDED: Administrative Staff Assistant City Administrator Initial City Administrator Initial v� rCity Clerk �. ... -EXPLANATION FOR RETURN OFITEM.- (Below SpaceFor RCA Author: Teague, 5088 CITY OF HUNTINGTON BEACH. InterOffice Communication Economic Development Department S c N 6::� ' nG _ TO: Honorable Mayor and City Council Members Z tv VIA: Ray Silver, City Administrator v FROM: David C. Biggs, Director of Economic Development DATE: June 3, 2002 SUBJECT: 'Late Communication—Item D-1 Attached is the Power Point Presentation for Item D-1 on the June 3, 2002 City Council Agenda for the Formation of and Special Election for City of Huntington Beach Community Facilities District No. 2002-1 (.McDonnell Centre Business Park). If you have any questions, please contact me at 536-5909. Attachment T� , TD14 C,oMMI�N�� bl� _> McDonnell Centre Business Park CFD x y- June 3, 2002 r Agenda Item D-1 1 1-11 f Awl McDonnell Centre Business Park CFD Municipal Code Section 3.56 provides -' for Community Facilities Districts z yya (CFD). Boeing Realty seeking to use CFD h financing for public improvements for 'q3 the proposed McDonnell Centre F Business Park Phase II. 1 McDonnell Centre Business Park � - CFD Background McDonnell Douglas Specific Plan z * Adopted October 6, 1997 r , # Specific Plan serves as zoning for McDonnell Centre Business Park area r Environmental Impact Report prepared with Specific Plan R rr 307 Gross acres in Specific Plan area t � WE McDonnell Centre Business Park �$ t CFD Background Phase I— Complete 97 Gross acres fully sold and occupied-companies such as: 9 Sharp Electronics • Dynamic Cooking Systems • Konica Y • C & DAeros� pace • Air Tech • Extended Stay America Hotel + Cambro + Dix Metals • Pacific Shoe • Morgan Metals 2 aw*_ McDonnell Centre Business Park CFD Background Phase II—38 Acres Available +► Contiguous sites from 2.5 to 23 acres for sale or build-to-suit. t • Parcel Map near approval and recordation. x-. r Boeing has requested Community Facilities District also known as Mello Roos District. • Allows Boeing Realty to competitively price property in Orange f`< County/Los Angeles County market. + Lots of early interest in new sites. g_ `' McDonnell Centre Business Park CFD Background r Y �.. 3 McDonnell Centre Business Park CFD Background p McDonnell Centre Business Park CFD Background Community Facilities District Bonds F +r Maximum amount of Bonds to each Improvement Area $13,000,000. g s Proposed amount for Improvement Area A: 4 900 000. ► Purpose to provide funding for acquisition/ s construction of: r - Streets/roadway improvements - Intersections/street lights - Sewer lift station/sanitary sewers/treatment facilities y x« >- - Landscaping 4 y ..4 McDonnell Centre Business Park CFD Background Community Facilities District Bonds 0 Fixed rate, un-rated issue. # Bonds secured by value of land 3:1 ratio F. Bonds repaid by Special Tax on parcels in y Improvement Area A of the District. McDonnell Centre Business Park Community Facilities District a Major City Council Steps 1 +r 3/4/02 - Initiate amended ordinance. +r 4/1/02 - Approve Tax Rate and Method, Boundary Map, Resolution to Incur Bond Debt and Set Public Hearing. t • 6/3/02 — Public Hearing, Approve CFD Report,Special Election and Introduce Ordinance. 6/17/02 — Adoption of Ordinance; Complete Establishment of District; 4 Approve Bond Documents. 5 Recommended Actions ra 0 Conduct Public Hearing; a Adopt Resolution No. 2002-38 to Form Improvement Areas; Adopt Resolution No. 2002-39 Determining Necessity to Incur Bonded Indebtedness; + Adopt Resolution No. 2002-40 Calling Special 3r = Election; - : Recommended Actions 0 City Clerk to Conduct Special Election; ♦ Adopt Resolution No. 2002-41 Declaring Results of y-' Special Election; '- # Introduce Ordinance No. 3557 Levying Special rt Taxes. 6 Fin CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION ION BEACH Connie Brockway,City Clerk Office of the City Clerk Liz Ehring, Deputy City Clerk II To: Date: `j Meeting Date: Co ✓Z Agenda Item:3 Proposed City Council Agenda Items: The City Clerk's Office/City Administrator's Office must return your agenda item due to the following requirements that have not been met. When our Agenda Item is ready to resubmit,please return to: Elaine Kuhnke, Management Assistant, Administ tion 1. Signature(s)Needed A On RCA B On Agreement C Other 2. Attachments A Missing B Not identified C Other XIV 3. Exhibits A Missing B Not identified C Other 4. 1 Insurance Certificate(Proof Of Insuranc A I Not attached _ B Not approved by City Attorney's Office/ C Signed form notifying City Clerk that degfirtmen,t will be responsible for obtaining insurance certificate on this item.(See form attached) 5. Wording On Request For Coun22 Action(RCA)Unclear A Recommended Action on RCA 96t complete B Clarification needed on RCA C Other 6. 1 City Attorney Approva equired 7. Agreement Needs T Be Changed A Page No. 8. Other �csJ G:a9enda/misdreaiorm e .. v � RESOLUTION NO. 2002-38 A RESOLUTION OF THE CITY COUNCIL OF THE CITr OF HUNTINGTON BEACH OF FORMATION OF/J IMPROVEMENT AREA A AND IMPROVEMENT AREA B I OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDO.1 'NELL CENTRE BUSINESS PARK WHEREAS, on April 1, 2002, this City Council adopted a resolution entitled "A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention to Establish a Community Facilities District and to Auth9rize the Levy of Special Taxes Therein" (the "Resolution of Intention") stating its intention to form the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "District") pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello- Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the "Law"); and The Resolution of Intention designated a portion of the District as Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and a portion of the District as "Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area B"), as authorized by Section 53350 of the Act (Area A and Area B are sometimes referred to below individually s an "improvement area" and, collectively, as the "improvement areas"); and �7 The Resolution of ' tention, incorporating by reference a map of the proposed boundaries of Area A.and of Area Pnd stating the improvements to be provided by Area A and Area B (collectively, the "Fac�plecial ties"), the cost of providing the Facilities, and the rate and method of apportionment of the tax to be levied within Area A and Area B to pay the costs of the Facilities and the p 'ncipal and interest on bonds proposed to be issued with respect to Area A and Area B, is on/ile with the City Clerk and the provisions thereof are incorporated herein by this reference as ' fully set forth herein; and On thi date, this City Council held a noticed public hearing as required by the Law and the Resoluti of Intention relative to the proposed formation of Area A and of Area B; and Aft the hearing all interested persons desiring to be heard on all matters pertaining to the formatio of Area A and of Area B, the Facilities to be provided by each such improvement area of the 1 istrict and the levy of the special tax in each such improvement area were heard and a full a d fair hearing was held; and At the hearing certain changes were presented to the rate and method of apportionment of special taxes for the improvement areas, and the revised rate and method of apportionment of special taxes for Area A is attached to this Resolution as Exhibit A and the revised rate and method of apportionment of special taxes for Area B is attached hereto as Exhibit B, and/' At the hearing evidence was presented to this City Council on the matte' rs before it, including a report by the Director of Public Works of the City (the "Report") as to the Facilities to be provided by each improvement area of the District and the costs thereof copy of which is on file with the City Clerk, and this City Council at the conclusion of the hearing was fully advised regarding each improvement area of the District; and The sole owner of the land in the improvement areas that will/be subject to the levy of the special taxes has been furnished with copies of this Resolution/including Exhibits A and B hereto; and Written protests with respect to the formation of the improvement areas of the District and/or the furnishing of specified types of Facilities by such improvement areas as described in the Report have not been filed with the City Clerk by fifty percent (50%) or more of the registered voters residing within the territory of eitherf the improvement areas of the District or property owners of one-half(1/2) or more of the area of land within either of the improvement areas of the District and not exempt from the specidtax; and The special tax proposed to be levied in'Area o pay A t for the Facilities to be provided � thereby, as set forth in Exhibit A to this Resolution, has not been eliminated by protest by fifty percent (50%) or more of the registered vo(ers residing within the territory of Area A or the owners of one-half(1/2) or more of the area of land within Area A and not exempt from the special tax; and The special tax proposed to be levied in Area B to pay for the Facilities to be provided thereby, as set forth in Exhibit B this Resolution, has not been eliminated by protest by fifty percent (50%) or more of the registered voters residing within the territory of Area B or the owners of one-half (1/2) or more of the area of land within Area B and not exempt from the special tax; and NOW, THEREFORE/BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. The/foegoing recitals are true and correct. Section 2. Thesed special tax to be levied within the Area A of the District has not been precluded by ijonty protest pursuant to Section 53324 of the California Government Code. The propose special tax to be levied within the Area B of the District has not been precluded by majo ' y protest pursuant to Section 53324 of the California Government Code. -2- G:Mulvi hill:McDonne]I DouglasCFD:ResoFormationJ6158 Section 3. All prior proceedings taken by this City Council in connection with the establishment of Area A of the District and the establishment of Area B of the District and the levy of the special tax in each such improvement area have been duly considered and are hereby found and determined to be valid and in conformity with the Law. Section 4. The community facilities district improvement areas designated " ' provement Area A of the City of Huntington Beach Community Facilities District No. 20)2 1 (McDonnell Centre Business Park)" and designated "Improvement Area B of the City of,,Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre zistrict, sPark)" are hereby established pursuant to the Law. Section 5. The boundaries of Area A and of Area B of th as described in the Resolution of Intention and set forth in the boundary map of t�d istrict recorded in the Orange County Recorder's Office at Book 85 of Maps of AssessmentCommunity Facilities Districts at Pages 3-6 (Instrument Number 20020279386), are hereby approved, are incorporated herein by this reference and shall be the boundaries of Area A and of ea B,respectively, of the District. Section 6. The type of public facilities proposed to be financed by Area A of the District pursuant to the Law shall consist of those items liste Ias Facilities on Exhibit A to the Resolution of Intention which Exhibit is by this reference inc orated herein. The type of public facilities proposed to be financed by Area B of the Distric ursuant to the Law shall consist of those items listed as Facilities on Exhibit B to the Resoluti n of Intention which Exhibit is by this reference incorporated herein. This City Council her=by finds that the Facilities are necessary to meet increased demands placed upon local agencj es as the result of development occurring in the applicable improvement area of the District. Section 7. Except to the extent that funds are otherwise available to Area A of the District to pay for the Facilities and/or the principal and interest as it becomes due on bonds of Area A of the District issued to finance the Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of ha continuing lien against all non-exempt real property in Area A of the District, will be levied annually within Area A of the District and collected in the same manner as ordinary ad valorem/property taxes or in such other manner as this City Council shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area A of the District, in sufficient detail to allow each landowner within the proposed District to estimate the maximum amount suc/owner will have to pay, are described in Exhibit A to this Resolution which Exhibit is by this reference incorporated herein. Except to the extent that funds are otherwise available to Area B of the District to pay for the Facilities and/or/the principal and interest as it becomes due on bonds of Area B of the District issued to fi ance the Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of atontinuing lien against all non-exempt real property in Area B of the District, will be levied annually within Area B of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment f the special tax among the parcels of real property within Area B of the District, -3- G:Mulvihill:Mc Donne]I Doug]asCFD:ResoFormationJ6158 in sufficient detail to allow each landowner within the proposed District to/estimate the maximum amount such owner will have to pay, are described in Exhibit B to this Resolution which Exhibit is by this reference incorporated herein. Section 8. The Director of Administrative Services of the City of Huntington Beach, 2000 Main Street, Huntington Beach, California, 92648, telephone5/number (714) 536-5236, is the officer of the City that will be responsible for preparing annually a current roll of special tax levy obligations by assessor's parcel number and which will be responsible for estimating future special tax levies pursuant to Section 53340.2 of the California Government Code. Section 9. Upon recordation of a notice of specialftax lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing,.ien to secure each levy of the special tax shall attach to all nonexempt real property in each/of Area A and Area B of the District, respectively, and this lien shall continue in forc"d effect until the special tax obligation imposed in the respective improvement area is fully paid or prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the tax in the applicable improvement area by the City ceases. ��J Section 10. In accordance with Section 53325.7 of the California Government Code, the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, of Area A of the District i hereby preliminarily established at $13,000,000 and said appropriations limit shall be submitted to the voters of the District as provided below. In accordance with Section 53325.7 of the California Government Code, the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, of Area B of the District is hereby prelimina ly established at $13,000,000 and said appropriations limit shall be submitted to the voters of the District as provided below. The proposition establishing an appropriations limit shall Pecome effective if approved by the qualified electors voting thereon and shall be adjusted ifn accordance with the applicable provisions of Section 53325.7 of the California Government Code. Section 11. Pursuant to the provisions of the Law, the proposition of the levy of the p p p special tax and the proposition of the establishment of the appropriations limit specified above for Area A shall be subTitted to the qualified electors of Area A of the District at an election, the time, place and conditions of which election shall be as specified by a separate resolution of this City Council. Pursuant to the provisions of the Law, the proposition of the levy of the special tax and the proposition bf the establishment of the appropriations limit specified above for Area B shall be submitted to the qualified electors of Area B of the District at an election, the time, place and conditionY112. %which election shall be as specified by a separate resolution of this City Council. Sectio This Resolution shall take effect upon its adoption. -4- G:Mulvihill:Mc Donne]IDouglasCFD:ResoFormationJ6158 PASSED AND ADOPTED at a regular meeting of the City Council of the City of Hun gton Beach on this 6th day of May, 2002. ayor ATTEST: APPROVED A TO FORM: City Clerk City Attorney GW t,1�Z����L REVIEWED AND APPROVED: MTIATED AND APPROVED: City Administrator Director of Economic Development a� -5- G:M ulvihill:McDonnellDouglasCFD:ResoFonnationJ6158 RESOLUTION NO.2002-39 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DETERMINING THE NECESSITY TO INCUR BONDED INDEBTEDNESS WITHIN IMPROVEMENT AREA A, AND WITHIN IMPROVEMENT AREA B, OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARIG) WHEREAS, on April 1, 2002, this City Council .adopted a re lution entitled "A Resolution of the City Council of the City of Huntington Beach De faring Its Intention to Establish a Community Facilities District and to Authorize the Levy ?Special Taxes Therein' (the "Resolution of Intention") stating its intention to form the ity of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Bu mess Park) (the "District"), pursuant to the provisions of Chapter 3.56 (commencing with S tion 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code") and, a applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constitug Section 53311 et seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), to fund certain public improvements (the "Facilities"),as descred therein; and The Resolution of Intention designated a portion of the District as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and a portion of the District as"Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area B"), as authorized by Section 53350 of the Act (Area A and Area B are sometimes referred to below as an"improvement area"and,collectively, as "improvement areas"); and On April 1, 2002, this City Council also adopted a resolution entitled A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention to Incur Bonded Indebtedness of the Proposed City/of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution of Intention to Incur Indebtedness") stating its intention to incur bonded indebtedness within the boundaries of Area A and its intention to incur bonded indebtedness within the boundaries of Area B for the purpose of financing the cost's,of the Facilities; and On this date, this City in Council held a noticed public hearing as required by the Law relative to the determation to proceed with the formation of the improvement areas of the District, the provision o e Facilities for each of the improvement areas as specified in the Resolution of Intention and the rate and method of apportionment of the special tax to be levied within each of the improvement areas of the District to pay the principal and interest on the proposed indebtedness and the administrative costs of the City relative to the District; and At the hearing all persons desiring to be heard on all matters pertaining to the formation of each of the improvement areas of the District, the provision of the Facilities and the levy of the special tax on property within each of the improvement areas of the District were heard and a full and fair hearing was held; and Subsequent to the hearing, this City Council adopted a resolution entitled "A Resolution of the City Council of the City of Huntington Beach of Formation of Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution of Formation"), which incorporated by reference the description of the Facilities to be provided by each improvement area of the District as set forth in the exhibits to the Resolution of Intention, and incorporated by reference the rate and method of apportionment of the special tax for each improvement area of the District as set forth in exhibits to the Resolution of Formation; and On this date, this City Council held a noticed public hearing as required by the Law relative to the matters material to the questions set forth in the solution of Intention to Incur Indebtedness; and No written protests with respect to the matters material to the questions set forth in the Resolution of Intention to Incur Indebtedness have been f ed with the City Clerk. NOW, THEREFORE, BE IT RESOLVED by th City Council of the City of Huntington Beach as follows: Section 1. The foregoing recitals are true d correct. Section 2. This City Council deems ' necessary to incur bonded indebtedness in the maximum aggregate principal amount of $ 3,000,000 within the boundaries of Area A of the District, and bonded indebtedness in the aximum aggregate principal amount of $13,000,000 within the boundaries of Area B of the D' trict; provided that in no event shall the total bonded indebtedness of the District exceed$13, 0,000. Section 3. The indebtedness be incurred in each improvement area of the District is for the purpose of financing the osts of the Facilities, as provided in the Resolution of Formation including, but not limi ed to, the costs of issuing and selling bonds to finance the Facilities and the costs of the C' in administering the respective improvement area of the District. Section 4. The whole f Area A of the District shall pay for the bonded indebtedness with respect to Area A thro gh the levy of the special tax. The special tax for Area A is to be apportioned in accordanc with the formula set forth in Exhibit A to the Resolution of Formation. The whole of Area B of the District shall pay for the bonded indebtedness with respect to Area B throu the levy of the special tax. The special tax for Area B is to be apportioned in accord ce with the formula set forth in Exhibit B to the Resolution of Formation. Section 5. Th maximum amount of bonded indebtedness to be incurred for Area A of the District is $13,00 ,000 and the maximum term of the bonds to be issued shall in no event exceed forty (40) ye rs. The maximum amount of bonded indebtedness to be incurred for Area B of the District i $13,000,000 and the maximum term of the bonds to be issued shall in no event exceed for (40) years. Notwithstanding the foregoing, in no event shall the total bonded indebtedness of the District,including both improvement areas,exceed$13,000,000. -2- Section 6. The bonds for each improvement area shall bear interest at a rate or rates not to exceed the maximum interest rate permitted by applicable law at the time of sale of the bonds, payable semiannually or in such other manner as this City Council or its designee shall determine, the actual rate or rates and times of payment of such interest to be determined by this City Council or its designee at the time or times of sale of the bonds. t' Section 7. The proposition of incurring the bonded indebtedness herein authorized for each improvement area of the District shall be submitted to the qualified electors of the respective improvement area of the District and shall be consolidated with elections on the proposition of levying special taxes within such improvement area of`the District and the establishment of an appropriations limit for such improvement area yffthe District pursuant to Section 53353.5(a) of the Act. The time, place and conditions of said election shall be as specified by separate resolution of this City Council. Section 8. This Resolution shall take effect upon its ad6ption. PASSED AND ADOPTED at a regular meeting of the /ityCouncil of the City of Huntington Beach on this 6th day of May,2002. Mayor ATTEST: APPROVED AS TO FORM: City Clerk City Attorney A A L1 IN(0-L REVIEWED AND APPRO ED: INITIATED AND APPROVED: lt�� &d e, Zw 1ty Administrator birector of Economic Development 08003.07:J6157 4/19/02 -3- 6 RESOLUTION NO.2002-40 !) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH CALLING SPECIAL ELECTION WITHIN IMPROVEMENT AREA A AND WITHIN IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT N0. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) WHEREAS, on this date, this City Council adopted a resolu ' n entitled "A Resolution of the City Council of the City of Huntington Beach of Formatio f Improvement Area A and Improvement Area B of the City of Huntingto/ande Comm Facilities District No. 2002-1 (McDonnell Centre Business Park)" (the "Resf For on"), ordering the formation of Improvement Area A of the City of HuntingtCo unity Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area provement Area B of the City of Huntington Beach Community Facilities Dist02-1 (McDonnell Centre Business Park) ("Area B"), authorizing the levy of a special toperty within Area A and within Area B and preliminarily establishing an appropriatiofor Area A and for Area B; and On this date, this City Council also a resolution entitled "A Resolution of the City Council of the City of Huntington B ach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area , and within Improvement Area B, of the City of Huntington Beach Community Facilities 1 istrict No. 2002-1 (McDonnell Centre Business Park)" (the "Resolution to Incur Indebted ess"), determining the necessity to incur bonded indebtedness in the maximum aggre-ate principal amount of $13,000,000 for each of Area A and of Area B (but not more than .13,000,000 in total for both areas) upon the security of the special tax to be levied within Are A and Area B,respectively; and Pursuant 'to the provis}ons of said resolutions, the propositions of the levy of said special tax, the establishme f of the appropriations limit and the incurring of the bonded indebtedness for each of Ar a A and of Area B is to be submitted to the qualified electors of Area A and Area B, respectively, as required by the provisions of Chapter 3.56 (commencing with Section 3.56.010) of e Municipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. f the California Government Code (the "Act," and, together with the Code, the "Law"). NOW, THE EFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section Pursuant to the Code and Sections 53325.7, 53326 and 53351 of the Act, the issues of the evy of said special tax, the incurring of bonded indebtedness and the establishment of said appropriations limit for Area A shall be submitted to the qualified electors of A ea A at an election called therefor as provided below. Pursuant to the Code and Sections 533 5.7, 53326 and 53351 of the Act, the issues of the levy of said special tax, the incurring o bonded indebtedness and the establishment of said appropriations limit for Area B i shall be submitted to the qualified electors of Area B at an election called therefor as provided below. Section 2. As authorized by Section 53353.5 of the Act, the three propositions de cribed in paragraph 1 above for each of Area A and Area B shall be combined into a s' gle ballot measure for Area A and for Area B,respectively, the forms of which measures be' as set forth in the form of ballot attached hereto as Exhibit A and by this reference mco orated herein. The form of the ballot in Exhibit A is hereby approved. Section 3. This City Council hereby finds that fewer than persons have been registered to vote within the territory of Area A for each of the nine (90) days preceding the close of the public hearings heretofore conducted and concluded this City Council for the purposes of these proceedings. Accordingly, and pursuant to th ode and Section 53326(b) of the Act, this City Council finds that for purposes of these proc dings the qualified electors for Area A are the owners of land within Area A that may be bject to the levy of special taxes and that the vote with respect to Area A shall be by s d landowners or their authorized representatives, each having one vote for each acre or po 'on thereof such landowner owns in Area A as of the close of the public hearings. This City Council hereby finds that fewer n 12 persons have been registered to vote within the territory of Area B for each of the nin (90) days preceding the close of the public hearings heretofore conducted and concluded y this City Council for the purposes of these proceedings. Accordingly, and pursuant to t Code and Section 53326(b) of the Act, this City Council finds that for purposes of these pr eedings the qualified electors for Area B are the owners of land within Area B that may be ubject to the levy of special taxes and that the vote with respect to Area B shall be by said 1 ndowners or their authorized representatives, each having one vote for each acre or portio thereof such landowner owns in Area B as of the close of the public hearings. Section 4. This City Coun it hereby calls a special election to consider the measures described in Section 2 above, wh'6h election shall be held immediately following adoption of this Resolution in the Chambers f the City Council of the City of Huntington Beach. The City Clerk is hereby designated as a official to conduct said election. It is hereby acknowledged that the City Clerk has on fil the Resolution of Formation, a map of the proposed boundaries of Area A and of Area B, a a sufficient description to allow the City Clerk to determine the boundaries of Area A and Area B. Th/Electis ballo s shall be returned to the City Clerk no later than immediately following tion of this Resolution; and when all of the qualified voters have voted, the election shose . Secrsuant to the Code and Section 53327 of the Act, the election shall be conducted ' or hand delivered ballot pursuant to the California Elections Code. This City Couny finds that paragraphs (a), (b), (c) (1) and (c)(3) of Section 4000 of the California s Code are applicable to this special election. SecThis City Council acknowledges that the City Clerk has caused to be delivered talified elector of Area A, and to the qualified elector of Area B, a ballot in the . -2- form set forth in Exhibit A hereto. The ballot indicates the number of votes to be voted by the landowner with respect to each ballot measure. The ballot was accompanied by all supplies and written instructions necessary for the/ use and return of the ballot. The envelope to be used to return the ballot was enclosed with the ballot, had the return postage prepaid, and contained the following: (a) the name and address of the landowner, (b) a declaration,under penalty of perjury, stating that the voter is th owner of record or authorized representative of the landowner entitled to vote and is e person whose name appears on the envelope, (c) the printed name, signature and address f the voter, (d) the date of signing and place of execution of the declaration pursuant to cl . se (b) above, and (e) a notice that the envelope contains an official ballot and is to be open /only by the City Clerk. Analysis and arguments with respect to the ballot measures weir waived by the owner of all of the land in Area A and in Area B that will be subject to the vy of special taxes in its petition to form the District as well as in the voted ballot, as permi d by the Code and Section 53327(b) of the Act. Section 7. The City Clerk shall accept the ballot of th qualified elector upon and prior to the adoption of this Resolution, whether the ballXwasersonally delivered or received by mail. The City Clerk shall have available a ballot ay be marked in the City Council chambers on the election day by the qualified electoSection 8. This City Council hereby further t the provision of the Act requiring a minimum of 90 days following the adoption of e Resolution of Formation to elapse before said special election is for the protection of the ualified electors of Area A and Area B. The petition previously submitted by the sole own of land in Area A and in Area B that will be subject to the levy of special taxes and the v ed ballot of the sole qualified elector of Area A and Area B contain an acknowledgment of waiver of any time limit pertaining to the conduct of the election and of a waiver of any re irement for analysis and arguments in connection with the election. Accordingly,this City ouncil finds and determines that the qualified elector has been fully apprised of and has agr d to the shortened time for the election and waiver of analysis and arguments, and has theAy been fully protected in these proceedings. This City Council also finds and determines at the City Clerk has concurred in the shortened time for the election. Section 9. Pursuant to - e Local Agency Special Tax and Bond Accountability Act, Sections 50075.1 et. seq. and S tions 53410 et. seq. of the California Government Code, (a) the ballot measures referred to in�Section 4 above each contain a statement indicating the specific purposes of the special tax�eferenced in the respective ballot measure, the proceeds of the special tax will be applied y to the purposes specified in the applicable ballot measure, there shall be created by the Ci Treasurer accounts into which proceeds of the special tax levies of Area A and of Area B, espectively, will be deposited, and the Director of Administrative Services is hereby dire ted to provide an annual report to this City Council as required by Section 50075.3 of th California Government Code; and (b) the ballot measures contain a statement indicating e purpose of the bonds referenced in the respective ballot measure, the proceeds of the bonds will be applied only to the purpose specified in the applicable ballot measure, there shall be created by the City Treasurer accounts into which the proceeds of the -3- bonds will be deposited (which need not be separate bank accounts,but which may be separate general ledger accounts so long as such proceeds can be separately accounted for), and the Director of Administrative Services is hereby directed to provide an annual report to this City Council as required by Section 53411 of the California Government Code. Section 10. The City Clerk is hereby directed to cause to be published in a newspaper of general circulation circulating within Area A and Area B a copy of this resolution and-'a copy of the Resolution to Incur Indebtedness, as soon as practicable after the date of adoption of this Resolution. Section 11. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED at a regular meeting of the City Council the City of Huntington Beach on this 6th day of May,2002. Mayor ATTEST: APPROVED AS TO FORM: i City Clerk City Attorney LI (pl, REVIEWED AND APPROVED: INITIATED AND APPROVED: ity Administrator Director of Economic Development 08003.07:J6155 4/19/02 -4- EXHIBIT A CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 r (MCDONNELL CENTRE BUSINESS PARK) / OFFICIAL BALLOT Special Tax and Bond Election (May 6, 2002) This ballot is for a special, landowner election. You must return this ballot in the enclosed postage paid envelope to the City Clerk of the City of Huntington Beach no later than immediately.after adoption of the resolution of the City Council calling said election either by mail or in person. To vote, mark a cross (X) on the voting line after tl e word "YES" or after the word "NO". All marks otherwise made are forbidden. All distinguishing marks are forbidden and make the ballot void. If you wrongly mark, tear, or deface this balloot, return it to the City Clerk of the City of Huntington Beach and obtain another. BALLOT MEASURE A: Shall the Ci of Huntington Beach incur an indebtedness and issue bonds in o e or more series in the maximum aggregate principal amount of $1 ,000,000, with interest at a rate or rates not to exceed the maximum int rest rate permitted by law at the time of sale of such bonds on behalf •f Improvement Area A of the City of Huntington Beach Communi Facilities District No. 2002-1 Yes: (McDonnell Centre Business Park) ("Ar a A"),the proceeds of which will be used only to finance the costs f improvements specified in the Resolution of Intention to form Are A and the costs of issuing the bonds No: as well as the establishment of a and reserve fund; shall a special tax payable solely from lands ti�ithin Area A be levied annually upon lands within Area A to be applied o y to the payment of the principal and interest upon such bonds to b issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area A; and shall the annual approp iations limit of Area A be established in the amount of$13,000,000? A-1 BALLOT MEASURE B: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount of$13,000,000,with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on behalf of Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Yes: Centre Business Park) ("Area B"), the proceeds of which will be used only to finance the costs of improvements specified in the Resolution of Intention to form Area B and the costs of issuing the bonds as well as the No: establishment of a bond reserve fund; shall a special tax payable solely from lands within Area B be levied annually upon lands within Area B to be applied only to the payment of the principal and interest upon such bonds to be issued and to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area B; and shall the annual appropriations limit of Area B be established in the amount of $13,000,0007 By execution in the space provided below, you also indi to your waiver of the time limit pertaining to the conduct of the election and any requirement for analysis and arguments with respect to the ballot measure, as such waivers are described and permitted by Sections 53326(a) and 53327(b) of the California Government Code. Number of Votes for Ballot Meas//eA: 41 Number of Votes for Ballot Mefaas`ure B: 49 Property Owner: McDonnell Douglas Corporation By: Its: A-2 i RESOLUTION NO. 2002-41 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DECLARING RESULTS OF SPECIAL ELECTION AND DIRECTING RECORDING OF NOTICE OF SPECIAL TAX LIEN WHEREAS, in proceedings heretofore conducted by this City Council pursuant to the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Munieipal Code of the City of Huntington Beach (the "Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et sc-/q. of the California Government Code (the "Act," and, together with the Code, the "Law'), this City Council on this date adopted a resolution entitled "A Resolution of the City Council of the City of Huntington Beach Calling Special Election Within Improv me ent Area A and within Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)",calling for a special election of the qualified electors within Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area A") and of the qualified electors within Improvement Area B of the City of Huntington Beach Co mmu 'thy Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area B"); and 7 f Pursuant to the terms of said resgl'ution, which are by this reference incorporated herein, the special election was held on�s date, and the City Clerk has on file a Canvass and Statement of Results of Election, a copy f which is attached hereto as Exhibit A; and This CityCouncil has revieed the canvass and hereby approves it. Y Pp NOW, THEREFORE, B IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. The iss es presented at the special election were the incurring of a bonded indebtedness in the ma imum aggregate principal amount for each of Area A and Area B of $13,000,000, the levy f a special tax within each of Area A and Area B to be levied in accordance with the espective formula for such improvement area heretofore approved by this City Council by it resolution adopted this date entitled "A Resolution of the City Council of the City of Hun ' gton Beach of Formation of Improvement Area A and Improvement Area B of the City of ntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park ,' and the approval of an appropriations limit for each of Area A and Area B of not to excee 13,000,000 pursuant to said resolution. Se lion 2. Pursuant to the canvass of the special election on file with the City Clerk, the issu/A, sented at the special election with respect to Area A were approved by the qualified elec Area A by more than,two-thirds of the votes cast at the special election regarding Arend the issues presented at the special election with respect to Area B were approved by the qualified elector of Area B by more than two-thirds of the votes cast at the special election regarding Area B. Section 3. Pursuant to such voter approval, Area A is hereby declared to be fully formed with the authority to incur bonded indebtedness and to levy special taxes as heretofore provided in these proceedings and in the Law,and Area B is hereby declared to be fully formed with the authority to incur bonded indebtedness and to levy special taxes as provided in these proceedings and in the Law. ` Section 4. It is hereby found that all prior proceedings and actions taken by this City Council with respect to each of Area A and Area B were valid and in conformity with the Law. Section 5. The City Clerk is hereby directed to execute and cause to be recorded in the office of the County Recorder of the County of Orange a notice of Pecial tax lien for Area A and Area B in the form required by the Act, said recording to occur no later than fifteen days following adoption by the City Council of this Resolution. Section 6. This Resolution shall take effect upon itadoption. PASSED AND ADOPTED at a regular meeting of the.,City Council of the City of Huntington Beach on this 6th day of May,2002. Mayor ATTEST: APPROVED AS TO FORM: � 'all City Clerk City Attorney G HM ON 1U1. REVIEWED AND APP VED: INITIATED AND APPROVED: i Administrator Director of Economic Development 08003.07:J6156 4/19/02 -2- EXHIBIT A CANVASS AND STATEMENT OF RESULT OF ELECTION CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) I hereby certify that on May 6, 2002, I canvassed the returns of the,special elections held on May 6, 2002, in Improvement Areas A and B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) and the total number of ballots cast in said election and the total number of votes cast for and against the respective ballot measures are as follows and the totals as shown for and against/the measure are full, true and correct: Qualified Landowner Votes Votes' Cast YES NO Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) 41 Special Tax and Bond Election May 6,/ 2002. /I l BALLOT MEASURE A: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series/in the maximum aggregate principal amount of $13,000,000, with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on/Uehalf of Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area A"), the proceeds of which will be/used only to finance the costs of improvements specified in the Resolution of Intention to form Area A and the costs of issuing the bonds as well as the establishment of a bond/reserve fund; shall a special tax payable solely from lands within Area A be levied annually upon lands within Area A to be applied only to the payment of the principal and intere € upon such bonds to be issued and to replenish the reserve fund for the bonds and to pa the costs of the City in administering Area A; and shall the annual appropriations li it of Area A be established in the amount of$13,000,000? Qualified Landowner Votes Votes Cast YES NO A-1 e Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) 49 Special Tax and Bond Election May 6, �, 2002. BALLOT MEASURE B: Shall the City of Huntington Beach incur an indebtedness and issue bonds in one or more series in the maximum aggregate principal amount of $13,000,000, with interest at a rate or rates not to exceed the maximum interest rate perrotted by law at the time of sale of such bonds on behalf of Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) ("Area B"), the proceeds of which will be used only to finance the costs of imp ovements specified in the Resolution of Intention to form Area B and the costs of issuing the bonds as well as the establishment of a bond reserve fund; shall a special tax payable solely from lands within Area B be levied annually upon lands within Area B to be applied only to the payment of the principal and interest upon such bonds to be issued and>to replenish the reserve fund for the bonds and to pay the costs of the City in administering Area B; and shall the annual appropriations limit of Area B be established in the amount of$13,000,000? 1 IN WITNESS WHEREOF; I HAVE HE Z-UNTO SET MY HAND this 6th day of May, 2002 By. - City Clerk, City of Huntington Beach i r r/ A-2 UIUt � ThimmiguP One Embarcadero Center, Suite 2420 San Francisco,CA 94111-3737 Attorneys at Law Telephone:415/765-1550 Telecopier:415/765-1555 bquint@qtllp.com pthimmig@gtllp.com May 17, 2002 VIA FEDERAL EXPRESS -Monday Delivery c i N � Jim Schulte ;?-r C _ Boeing Realty Corporation `) . 3760 Kilroy Airport Way #500 N o Long Beach, California 90806 Email:james.w.schulte@boeing.com y' Connie Brockway, N -r City Clerk -) City of Huntington Beach n 2000 Main Street Huntington Beach, California 92648 Email: brockwayc@surfcity-hb.org Re: City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Special Tax Bonds, Series 2002-A Dear Mr. Schulte and Ms. Brockway: Enclosed with this letter to each of you is a revised Official Ballot and Official Return Envelope for the Special Tax and Bond Election that has been rescheduled to the June 3`d City Council meeting. The enclosures are identical to those sent to you under my cover letter of April 29d', except for a change to the date of the election from May 6'to June 3rd Jim needs to have an appropriate officer of McDonnell Douglas Corporation check the "Yes" lines for both of the ballot measures on the first page of the Ballot, execute the Ballot on the signature line on the second page of the Ballot and fill-in the title of the person executing the Ballot. The executed Ballot should then be inserted into the Return Envelope, the Envelope should be sealed, and the representative of McDonnell Douglas Corporation should execute the signature line on the outside of the Envelope and fill-in the date and location where the Envelope was signed and the title of the officer who executed the Ballot and the Envelope. The voted Ballot then needs to be filed with the City Clerk at or prior to the June 3`d City Council meeting. It would be helpful if you could deliver the executed Ballot and Return Envelope to the City Clerk at least a few days in advance of June 3rd The copy of the Official Ballot and Official Return Envelope included with this letter to Ms. Brockway should be retained by her and brought to the June 3`d City Council meeting in case the voter looses the Official Ballot sent to Jim or otherwise wants to change its vote at the Council Meeting. Although either such event is highly unlikely, relevant State law requires the City Clerk to have a duplicate Ballot and Return Envelope available at the City Council meeting. Jim Schulte Boeing Realty Corporation Connie Brockway,City Clerk City of Huntington Beach May 17, 2002 Page 2 When Ms. Brockway receives the voted Ballot and Return Envelope from Jim, she should bring it to the June 3`d City Council meeting, to be opened only following the adoption by the City Council of the Resolution Calling Special Election. Following the adoption of that Resolution,the City Clerk will open the Ballot Envelope and announce the results of the election (the voter gets one vote for each acre or portion of an acre in the applicable improvement area, so there are 41 votes with respect to Ballot Measure A and 49 votes with respect to Ballot Measure B). After the announcement of the results of the election, the City Clerk will fill-in the vote tally and execute a copy of the Canvass and Statement of Results of Election in the form attached to the Resolution Declaring Results of the Election and Directing Recording of the Notice of Special Tax Lien. Please do not hesitate to call me if you have any questions regarding the foregoing. Very truly yours, -'A2a I Paul J.Thirmnig PJT:cra Enclosures cc: (via email only,cover letter only) David C. Biggs Christy Teague Clay Martin Leonie Mulvihill,Esq. Lewis G. Feldman,Esq. Robert M. Haight,Jr.,Esq. CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH Connie Brockway, City Clerk Office of the City Clerk Liz Ehring, Deputy City Clerk II r To: \ Date: Meeting Date: Agenda Item: Proposed City Council Agenda Items: The City Clerk's Office/City Administrator's Office must return your agenda item due to the following requirements that have not been met. When your Agenda Item is ready to resubmit,please return to: Elaine Kuhnke, Management Assistant, Administration 1. Signature(s)Needed A On RCA B On Agreement C Other 2. Attachments A Missing B Not identified C Other 3. Exhibits A Missing B Not identified C Other 4. Insurance Certificate(Proof Of Insurance) A Not attached B Not approved by City Attorney's Office C Signed form notifying City Clerk that department will be responsible for obtaining insurance certificate on this item.(See form attached) 5. Wording On Request For Council Action(RCA)Unclear A Recommended Action on RCA not complete B Clarification needed on RCA C Other l 6. City Attorney Approval Required 7. Agreement Needs To Be Changed A Page No. /8. 1 Others i - G:a genda/m iselreafo rm 0 CITY OF HUNTINGTON. BEACH ti C InterOffice Communication ti Economic Development Department -_ Cr -��.f D D TO: Honorable Mayor and City Council Members .fU, D VIA: Ray Silver, City Administrator FROM: David C. Biggs, Director of Economic Development DATE: May 6, 2002 SUBJECT: Late Communication—Item D-3 Boeing has requested continuation of the Formation of and Special Election for City of Huntington Beach Community Facilities District No. 2002-I (McDonnell Centre Business Park). It is recommended the Mayor open the public hearing, with a motion made to continue the public hearing open to the June 3, 2002 City Council meeting. If you have any questions,please contact me at 536-5909. Cam" Fn CITY OF HUNTINGTON BEACH Inter-Department Communication TO: Connie Brockway, City Clerk FROM: Scott Field,Assistant City Attorney DATE: April 17, 2002 SUBJECT: Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) Please publish each of the attached Notice of Public Hearing in a newspaper of general circulation one time at least seven (7) days prior to the public hearing to be held on May 6, 2002. f )/ Scott F. Field Assistant City Attorney /tv Attachments G:Mu1vihi11/02Memo/McDonne11 CFD-Clerk ' Pk6�ls� e4�U-dz Public Hearing Scheduled on May 6, 2002 at 7:00 p.m. CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) NOTICE OF PUBLIC HEARING Notice is hereby given that on April 1, 2002,the City Council of the City of Huntington Beach adopted a Resolution entitled"A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention To Incur Bonded Indebtedness of the Proposed City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)." Pursuant to the provisions of Chapter 3.56 of the Municipal Code of the City of Huntington Beach and, as applicable,the Mello-Roos Community Facilities Act of 1982,the City Council of the City of Huntington Beach hereby gives notice as follows: A. The text of said Resolution is as follows: (Res. No. .2002-27) WHEREAS, this City Council has this date adopted its Resolution 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," stating its intention to form a community facilities district pursuant to the provisions of 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 (collectively, the "Law"), for the purpose of financing a portion of t the costs of certain public improvements (the "Facilities"), as further provided in said Resolution; and This City Council estimates the amount required for the financing of a portion of the costs of the Facilities to be the sum of$11,000,000;and In order to finance said Facilities it is necessary to incur bonded indebtedness for each improvement area identified below as"Area A" and"Area B" in the amount of not to exceed$13,000,000. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. It is necessary to incur bonded indebtedness within the boundaries of the proposed Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Area A") in the amount of not to exceed$13,000,000 to finance a portion of the costs of the Facilities. It is necessary to incur bonded indebtedness within the boundaries of the proposed Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Area B") in the amount of not to exceed $13,000,000 to finance a portion of the costs of the Facilities. i.. N Section 2. The bonded indebtedness for each improvement area described in Section 1 is proposed to be incurred for the purpose of financing a.portion of the costs of the Facilities,including costs incidental to or connected with the accomplishment of said purposes and of the financing thereof. Section 3. This City Council, acting as legislative body for Area A, intends to authorize the issuance and sale of bonds in one or more series in the maximum aggregate principal amount of$13,000,000,bearing interest payable semi-annually or in such other manner as this City Council shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of .such bonds,and maturing not to exceed forty (40) years from the date of the issuance of said bonds. This City Council,acting as legislative body for Area B,intends to authorize the issuance and sale of bonds in one or more series in the maximum aggregate principal amount of $13,000,000,bearing interest payable semi-annually or in such other manner as this City Council shall determine,at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and maturing not to exceed forty (40)years from the date of the issuance of said bonds. Section 4. Monday, May 6, 2002, at 7:00 p.m. or as soon thereafter as the matter may be heard,in the regular meeting place of this City Council,City Council Chambers, City Hall, 2000 Main Street, Huntington Beach, California, be, and the same are hereby appointed and fixed as the time and place when and where this City Council, as _legislative body for each improvement area described in Section 1,will conduct a public hearing on the proposed debt issue for each of the improvement areas and.consider.and finally.determine whether the public interest, convenience and necessity require the issuance of bonds of the City of Huntington Beach for each respective improvement area. Section 5. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper of general circulation circulated within the District. The publication of said notice shall be completed at least seven (7) days before the date herein set for said public hearing. The notice shall substantially in the form of Exhibit A hereto. Section 6.This Resolution shall take effect upon its adoption. B. The hearing referred to in the aforesaid Resolution shall be at the time and place specified in the Resolution. C. At that time and place any person interested, including persons owning property in the area of the proposed community facilities district, will be heard upon the proposed debt issue. Dated: April 1, 2002. /s/Connie Brockway City Clerk, City of Huntington Beach �N7bJe0 c1-Ihot Public Hearing Scheduled on May 6, 2002 at 7:00 p.m. CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) NOTICE OF PUBLIC HEARING Notice is hereby given that on April 1, 2002,the City Council of the City of Huntington Beach adopted a Resolution 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." Pursuant to the provisions of Chapter 3.56 of the Municipal Code of the City and,as applicable, the Mello-Roos Community Facilities Act of 1982,the City Council of the City hereby gives notice as follows: A. The text of said Resolution of Intention is as follows: (Res. No. 2002-26) WHEREAS, under the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code') and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et.seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), this.City Council may commence proceedings for the establishment of a community facilities district,and The has been submitted to this City Council a Petition (Including Waiver) of McDonnell Douglas Corporation (the "Petition"), requesting the formation by this City Council of a community facilities district under the Law to be known as the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the"District")comprised of two separate improvement areas;and There has also been submitted to this City Council a Deposit/Reimbursement Agreement(the "Deposit Agreement") wherein the petitioner has agreed to pay all costs of the City of Huntington Beach (the"City") related to the formation of the District;and Under the Law, this City Council is the legislative body for the proposed District and is empowered with the authority to establish the District and levy special taxes within the District;and This City Council now desires to proceed with the actions necessary to consider the establishment of the District and the designation of improvement areas therein. . NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: i Section 1. This City Council proposes to begin the proceedings necessary to establish the District pursuant to the Law. Receipt of the Petition to form the District and the Deposit Agreement is hereby acknowledged. The City Administrator is hereby authorized to execute the Deposit Agreement and the Director of Administrative Services of the City, working with the City Treasurer, is hereby authorized to cash the deposit referenced therein and to expend the deposits for costs of formation of the District,as contemplated by the Deposit Agreement. Section 2. The name proposed for the District is City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). Pursuant to Section 53350 of the Act, the City Council hereby designates a portion of the District. as"Improvement Area A of the City of Huntington Beach Community Facilities District . No. 2002-1 (McDonnell Centre Business Park)" ("Area A"),and a portion of the District as "Improvement Area B of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park)" ("Area B"). Section 3. The proposed boundaries of Area A and of Area B of the District are as shown on the map of the District on file with the City Clerk of the City, which boundaries are hereby preliminarily approved. The City Clerk is hereby directed to record, or cause to be recorded, the map of the boundaries of the District in the office of the County Recorder as soon as practicable after the adoption of this Resolution. Section 4. The type of public facilities (the "Area A Facilities") proposed to be eligible for funding by Area A and pursuant to the Law shall consist of those items listed . on Exhibit'A hereto under the heading "Facilities," which Exhibit is by this reference incorporated herein. The type of public facilities (the"Area B Facilities") proposed to be eligible for funding by Area B and pursuant to the Law shall consist of those items listed on Exhibit B hereto under the heading "Facilities," which Exhibit is by this reference incorporated herein. Section 5. Except to the extent that funds are otherwise available to Area A of the District to pay for the Area A Facilities and/or pay the principal and interest as it becomes due on bonds of Area A of the District issued to finance the Area A Facilities, a special tax sufficient to pay the costs thereof,secured by recordation of a continuing lien against all non-exempt real property in Area A of the District,will be levied within Area A of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area A of the District, in sufficient detail to allow each landowner within the proposed Area A of the District to estimate the maximum amount such owner will have to pay, is described in Exhibit C attached hereto which Exhibit is by this reference incorporated herein.. Except to the extent that funds are otherwise available to Area B of the District to pay for the Area B Facilities and/or pay the principal and interest as it becomes due on bonds of Area B of the District issued to finance the Area B Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in Area B of the District, will be levied within Area B of the District and collected in the same manner as ordinary ad valorem property taxes.or in such other manner as this City Council or its designee shall determine,including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area B of the District, in sufficient detail to allow each landowner within the proposed Area B of District to estimate the maximum amount such owner will have to pay, is described in Exhibit D attached hereto which Exhibit is by this reference incorporated herein. This City Council finds that the provisions of Section 53313.6, 53313.7 and 53313.9 of the Act (relating to adjustments to ad valorem property taxes and schools financed by a community facilities district) are inapplicable to either Area A or Area B of the District Section 6. It is the intention of this City Council,acting as the legislative body for Area A of the District, to cause bonds of the City to be issued for Area A of the District pursuant to the Law to finance a portion of the costs of the Area A Facilities. If so issued, the bonds shall be issued in one or more series in an aggregate principal amount of not to exceed $13,000,000, shall bear interest payable semi-annually or in such other manner as this City Council shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance thereof. It is the intention of.this City-Council, acting as the legislative body.for Area B of . the District, to cause bonds of the City to be issued for Area B of the District pursuant to the Law to finance a portion of the costs of the Area B Facilities. If so issued, the bonds shall be issued in one or more series in an aggregate principal amount of not to exceed $13,000,000, shall bear interest payable semi-annually or in such other manner as this City Council shall determine,at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance thereof. Section T .This City Council reserves to itself the right and authority to allow any interested owner of property in either Area A or Area B of the District, subject to the provisions of Section 53344.1 of the Act and such requirements as it may otherwise impose,and any applicable prepayment penalties as prescribed in the indenture or fiscal agent agreement for any bonds of the City for the respective improvement area of the District, to tender to the Director of Administrative Services of the City (who shall remit the same to the City Treasurer) in full payment or part payment of any installment of special taxes for such improvement area of the- District or the interest or penalties thereon which may be due or delinquent, but for which a bill has been received, any bond or other obligation secured thereby, in the manner described in Section 53344.1 of the Act. Section 8. The levy of the proposed special tax in each improvement area of the District shall be subject to the approval of the qualified electors of such improvement area at a special election. The proposed voting procedure shall be by mailed or hand- delivered ballot among the landowners in the proposed improvement area of the District,with each owner having one vote for each acre or portion of an acre of land such owner owns in the respective improvement area of the District. Section 9. Except as may otherwise be provided by law or the rate and method of apportionment of the special tax for the respective improvement area of the District, all lands owned by any public entity,including the United States,the State of California and/or the City, or any departments or political subdivisions of any thereof, shall be omitted from the levy of the special tax to be made to cover the costs and expenses of the facilities,the issuance of bonds by the City for such improvement area of the District and any expenses of the respective improvement area of the District. Section 10. The Director of Public Works of the City is hereby directed to study said proposed facilities for each improvement area of the District and to make, or cause to be made,and file with the City Clerk a report in writing,presenting the following: (a) A brief description of the facilities for.each improvement area of the District. (b) An estimate of the fair and reasonable cost of providing the facilities for each improvement area of the District, including the incidental expenses in connection therewith, including the costs of the proposed bond financing,any City administrative costs and all other related costs. Said report shall be made a part of the record of the public hearing provided for below. Section 11. Monday, May 6,2002, at 7:00 p.m. or as soon thereafter as the matter may be heard,in the regular meeting place of this City Council,City Council Chambers, City Hall, 2000 Main Street, Huntington Beach, California, be, and the same are hereby appointed and fixed as the time and place when and where this City Council, as legislative body for the District, will conduct a public hearing on the establishment of each improvement area of the District and consider and finally determine whether the public interest, convenience and necessity require the formation of each improvement area of the District and the levy of said special tax within the respective improvement area. Section 12. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper published in the area of the District. The publication of said notice shall be completed at least seven days before the date herein set for said hearing. Said notice shall be substantially in the form of Exhibit E hereto.: Section 13. The firms of Michael Swan Consulting and Quint & Thimmig LLP are hereby designated as special tax consultant and bond counsel and disclosure counsel, respectively, to the City for the District. The City Director of Administrative Services and the City Attorney, respectively, are hereby authorized to execute agreements with said firms for their services related to the District provided that all fees and expenses of such firms are payable solely from a deposit by the landowner in the District or the proceeds of the bonds, if any, issued by the City for either of the improvement areas of the District Section 14. This Resolution shall take effect upon its adoption. B. The exhibits to the Resolution which describe the facilities eligible to be funded and the rate and method of apportionment of the special taxes for each improvement area of the district are on file in the office of the City Clerk of the City of Huntington Beach. C. The time and place established under said Resolution for the public hearing required under the Law are Monday,May 6, 2002, at the hour of 7:00 p.m. or as soon thereafter as the matter may be heard,in the regular meeting place of the City Council of the City of Huntington Beach, City Council Chambers, City Hall, 2000 Main Street,Huntington Beach, California. D. At said hearing,the testimony of all interested persons or taxpayers for or against the establishment of each of the improvement areas of the district,the extent of each of the improvement areas of the district or the furnishing by each improvement area of the specified types of facilities will be heard. Any person interested may file a protest in writing with the City Clerk. If fifty percent or more of the registered voters,or six registered voters,whichever is more,residing in the territory proposed to be included in an improvement area of the district,or the owners of one-half or more of the area of land in the territory proposed to be included in an improvement area of the district and not exempt from the special tax file written protests against the.establishment of such improvement area and the protests are not withdrawn to reduce the value of the protests to less than a majority,the City Council shall take no further action to establish such improvement area or levy the special taxes in such improvement area for a period of one year from the date of the decision of the City Council, and if the majority protests of the registered voters or the landowners are only against the furnishing of a type or types of facilities within an improvement area of the district, or against levying a specified special tax in such improvement area,those types of facilities or the specified special tax will be eliminated from the proceedings to form such improvement area. E. The proposed voting procedure shall be by special mail or hand-delivered ballot to the property owners within the territory proposed to be included in eaeh respective improvement area of the district. Dated: April 1 , 2002 /s/Connie Brockway City Clerk, City of Huntington Beach Public Hearing Schedule May 6, 2002 at 7:00 p.m. T CITY OF HUNTINGTON BEACH CO Y FACILITIES DISTRICT NO. 2002-1 (MCDONNELL._C%, BUSINESS PARK) NOTICE OF PUBLIC HEARING Voke is hereby given that on April 1,2002,the City Council of the City of Huntington Beach adopted a Resolution entitled"A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention To Establish A Community Facilities District And.ToAuthorize The Levy Of Special Taxes Therein:"Pursuant to the provisions of Chapter 3.56 of the Municipal Code of the City and,as applicable,the Mello-Roos Community Facilities Act of 1982,the City Council of the City hereby gives notice as follows: N.The text of said Resolution of Intention is as follows:(Res.No.2002-26) WHEREAS,under the provisions of Chapter 3.56(commencing with Section 3.56.010)of the Municipal Code of the City of Huntington Beach(the"Code")and,as applicable tinder the Code,the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 at seq.of the California Government Code(the"Act,"and,together with the Code,the"Law"),this City Council may commence proceedings for the establishment of a community facilities district;and There has been submitted to this City Council a Petition(including Waiver)of McDonnell Douglas Corporation(the "Petition"),requesting the formation by this City Council of a community facilities district under the Law to be known as the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park)(the"District") comprised of two separate improvement areas;and There has also been submitted to this City Council a DeposiUReimburse'ment Agreement(the"Deposit Agreement")wherein the petitioner has agreed to pay all costs of the City of Huntington Beach(the"City')related to the formation of the District; and. Under the Law,this City Council is the legislative body for the proposed District and is empowered with the authority to establish the District and levy special taxes within the District;and This City Council now desires to proceed with the actions necessary to consider the establishment of the District and the designation of improvement areas therein. NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: )ection I.This City Council proposes to begin the proceedings necessary to establish the District pursuant to the Law.Receipt of the Petition to form the District and the Deposit Agreement is hereby acknowledged.The City Administrator is hereby authorized to execute the Deposit Agreement end the Director of Administrative Services of the City,working with the City Treasurer,is hereby authorized to cash the deposit referenced therein and to expend the deposits for costs of formation of the District,as contemplated by the Deposit Agreement. ;action 2.The name proposed for the District is City of Huntington Beach Community Facilities District No,2002-1(McDonnell. Centre Business Park).Pursuant to Section 53350 of the Act,the City Council hereby designates a portion of the District as i "Improvement Area A of the City of Huntington Beach Community Facilities District No.2002=1(McDonnell Centre Business I Park)"("Area A"),and a portion of the District as"Improvement Area B of the City of Huntington Beach Community Facilities District No.2002-1(McDonnell Centre Business Park)"("Area 131. ;ection 3.The proposed boundaries of Area A and of Area B of the District are as shown on the map of the District on file with the City Clerk of the City,which boundaries are hereby preliminarily approved.The City Clerk is hereby directed to record,or cause to be recorded,the map of the boundaries of the District in the office of the County Recorder as soon as practicable after the adoption of this Resolution. ;ection 4.The type of public facilities(the"Area A Facilities")proposed to be eligible for funding by Area A and pursuant to the Law shall consist of those items listed on Exhibit A hereto under the heading"Facilities"which Exhibit is by this reference incorporated herein.The type of public facilities(the"Area B Facilities")proposed to be eligible for.funding by Area B and pursuant to the Law shall consist of those items listed on Exhibit B hereto under the heading"Facilities,"which Exhibit is by this reference incorporated.herein. ;action 5.Except to the extent that funds are otherwise available to Area A of the District to pay for the Area A Facilities and/or pay the principal and interest as it becomes due on bonds of Area A of the District issued to finance the Area A Facilities,a special tax sufficient to pay the costs thereof,secured by recordation of a continuing lien against all non-exempt real property in Area A of the District,will be levied within Area A of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine,including direct billing of the affected property owners.The proposed rate and method of apportionment of the special tax among the parcels of real property within Area A of the District,in sufficient detail to allow each landowner within the proposed Area A of the District to estimate the maximum amount such owner will have to pay,is described in Exhibit C attached hereto which Exhibit is by this reference incorporated herein. ' Except to the extent that funds are otherwise available to Area B of the District to pay for the Area B Facilities and/or pay the principal and interest as it becomes due on bonds of Area B of the District issued to finance the Area B Facilities,a special tax sufficient to pay the costs thereof,secured by recordation of a continuing lien against all non-exempt real property in Area B of the District,will be levied within Area B of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine,including direct billing of the affected property owners.The proposed rate and method of apportionfrient of the special tax among the parcels of real propW— within Area B of the District,in sufficient detail to allow each landowner within the proposed Area B of District to estimate the maximum amount such owner will have to pay,is described in Exhibit D attached hereto which Exhibit is by this reference incorporated herein. This City Council finds that the provisions of Section 53313.6,53313.7 and 533.13.9 of the Act(relating to adjustments to ad valorem,property taxes and schools financed by a community facilities district)are inapplicable to either Area A or Area B of the District. ection 6.It is the intention of this City Council,acting as the legislative body for Area A of the District,to cause bonds of the City to be issued for Area A of the District pursuant to the Law to finance a portion of the costs of the Area-A•Facilities.If so issued,the bonds shall,be issued in one or more series in an aggregate principal amount of not to exceed$13,000,000,shall bear interest payable semi-annually or in such other manner as this City Council shall determine,at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the a time of.sale of such bonds,and,shall mature not to exceed 40 years from the date of the issuance thereof. It is the intention of this City Council,acting as the legislative body for Area B of the District,to cause bonds of the City to be issued for Area B of the District pursuant to the Law to finance a portion of the costs of the Area B Facilities.If so issued,the bonds shall be issued in one or more series in an aggregate principal amount of not to exceed$13,000,000,shall.bear interest payable semi-annually or in such other manner as this City Council shall determine,at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds,and shall mature not to exceed 40 years from the date of the issuance thereof. ection 7.This City Council reserves to itself the right and authority to allow any interested owner of property in either Area A or Area B of the District,subject to the provisions of Section 53344.1 of the Act and such requirements as it may otherwise impose,and any applicable prepayment penalties as prescribed in the indenture or fiscal agent agreement for any bonds of the City for the respective improvement area of the District,to tender to the Director of Administrative Services of the City (who shall remit the same to the City Treasurer)in full payment or part payment of any installment of special taxes for such Improvement area of the District or the interest or penalties thereon which may be due or delinquent,but for which a bill has been received,any bond or other obligation secured thereby,in the manner described in Section,53344.1.of the Act. ection 8.The levy of the proposed special tax in each improvement area of the District shall be subject to the approval of the qualified electors of such improvement area at a'special election.The proposed voting procedure shall be by mailed or hand- delivered ballot among the landowners in the proposed improvement area of the District,with each owner having one vote for each acre or portion of an acre of land such owner owns in the respective improvement area of the District. ection 9.Except as may otherwise be provided by law or the rate and method of apportionment of the special tax for the respective improvement area of the District,all lands owned by any public entity,including the United States,the State of California and/or the City,or any departments or political subdivisions of any thereof,shall be omitted from the levy of the special tax to be made to cover the costs and expenses of the facilities,the issuance of bonds by the City for such improvement area of the District and any expenses of the respective improvement area of the District. ection 10.The Director of Public Works of the City is hereby directed to study said proposed facilities for each improvement area of the District and to make,or cause to be made,and file with the City Clerk a report in writing,presenting the following: (a)A brief description of the facilities for each improvement area of the District. (b)An estimate of the fair and reasonable cost of providing the facilities for each improvement area of the District,including the incidental expenses in connection therewith,including the costs of the proposed bond financing,any City administrative costs and all other related costs. Said report shall be made a part of the record of the public hearing provided for below. ection 11.Monday,May 6,2002,at 7:00 p.m.or as soon thereafter as the matter may be heard,in the regular meeting'place. of this City Council,City Council Chambers,City Hall,2000 Main Street,Huntington Beach,California,be,and the same are hereby appointed and fixed as the time and place when and where this City Council,as legislative body for the District,will conduct a public hearing on the establishment of each improvement area of the District and consider and finally determine. whether the public interest,convenience and necessity require the formation of each improvement area of the District and the levy of said special tax within the respective improvement area. ection 12.The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper published in the area of the District.The publication of said notice shall be completed at least seven days before the date herein set for said hearing.Said notice shall be substantially in the form of Exhibit E hereto. , ection 13.The firms of'Michael Swan Consulting and Quint&Thimmig LLP are hereby designated as special tax consultant and bond counsel and disclosure counsel,respectively,to the City for the.District.The City Director of Administrative Services and the City Attorney,respectively,are hereby authorized to execute agreements with said firms for their services related to the District provided that all fees and expenses of such firms are payable solely from a deposit by the landowner in the District or the proceeds of the bonds,if any,issued by the City for either of the improvement areas of the District. nflon 14.This Resolution shall take effect upon its adoption. B.The exhibits to the Resolution which describe the facilities eligible to be funded and the rate and method of apportionment Df the special taxes for each improvement area of the district are on file in the office of the City Clerk of the City of Huntington Beach. C.The time and place established under said Resolution for the public hearing required under the Law are Monday,May 6, 2002,at the hour of 7:00 p.m.or as soon thereafter as the matter may be heard,in the regular meeting place of the City Council of the City of Huntington Beach,City Council Chambers,City Hall,2000 Main Street,Huntington Beach,California. D.At said hearing,the testimony of all interested persons or taxpayers for or against the establishment of each of the mprovement areas of the district,the extent of each of the improvement areas of the district or the furnishing by each mprovement area of the specified types of facilities will be heard.Any person interested may file a protest in writing with the amity Clerk.If fifty percent or more of the registered voters,or six registered voters,whichever is more,residing in the territory Droposed to be included in an improvement area of the district,or the owners of one-half or more of the area of land in the territory proposed to be included in an improvement area of the district and not exempt from the special tax file written Drotests against the establishment of such improvement area and the protests are not withdrawn to reduce the value of the Drotests to less than a majority,the City Council shall take no further action to establish such Improvement area or levy the special taxes in such improvement area for a period of one year from the date of the decision of the City Council,and if the najority protests of the registered voters or the landowners are only against the furnishing of.a type or types of facilities vithin an Improvement area of the district,or against levying a specified special tax In such improvement area,those types of acilities or the specified special tax will bet eliminated from the proceedings to form such improvement area. :.The proposed voting procedure shall be by special mail or hand-delivered ballot to the property owners within the territory roposed to be included in each respective improvement area of the district. Dated:April 1,2002: /s/Connie Brockway City Clerk, City of Huntington Beach Published Huntington Beach Independent April 11,2002 042-979 PROOF OF PUBLICATION 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: April 11, 2002 I declare, under penalty of perjury, that the foregoing is true and correct. Executed on April 11 , 2002 at Costa Mesa, California. Signature PROOF OF PUBLICATION _ Public Heerin terest as ma -be—autho�- 9. provement area identi- y Scheduled on fie d below as "Area A" ized by applicable law at May 6, 2002 and "Area B" in the the time of sale of such STATE OF CALIFORNIA) amount of not to exceed bonds, and maturing not �, ..et 7:00 pp M. $13,000,000. to exceed forty (40) y;j CITY OF ears from the date of NOW, THEREFORE, y 'nn HUNTINGTON BE IT RESOLVED by the issuance of said SS. BEACH the City Council of the bonds. :�,-COMMUNITY City of Huntington ,Section 4. Monday, May County of Orange ) FACILITIES Beach as follows: '6, 2002, at 7:00 p.m. or hn DISTRICT NO. Section 1__ It is neces- ;as soon thereafter as the ih" '2002 sary to incur bonded in- :matter may be heard, in MCDONNELL debtedness within the 'the regular meeting ( boundaries of the Ptace.of this City I am a Citizen of the United States and a 119�:. CENTRE proposed Improvement ]Council, City Council -BUSINESS PARK) Area A of the City of Chambers, City Hall, resident of the County aforesaid; I am NOTICE OF Huntington Beach Com- '2000 Main street, Hunt- -VUBLIC HEARING muni Facilities District i ington Beach, California, over the age of eighteen years and not a g (McDonnell be, and the same are Notice Is hereby Ivan No. 00Bu MDll hereby appointed and -that on April 1,2002,the Centre Business Park) �fixed as the time and party to or interested - in the below ""Council of the City (the "Area A") in the place when and where of, 'Huntington Beach amount of not to exceed 'this City Council, as leg- entitled matter. I am a principal clerk of �8opted Resolution $13,000,000 to finance a islative body for each im- 96titled "A Resolution of portion of the costs of ftie Ci Council of`the the Facilities. It is neces= provement nt area de- the HUNTINGTON BEACH INDEPENDENT/ a tY scribed in Section 1, will City.."of Huntington dsaryeb to incur bonded he iconduct a public hearing newspaper of. general_circulation printed nted each Declaring Its In- debtedness within the ji on the proposed debt g / P tgptioh To Incur Bonded. boundaries of the . b .Indebtedness of the pro oied improvement issue for each of the im- and published in the City of Huntington : P P ._._ provement areas and Proposed`City of Hunt- Area B of the City ,of consider and finally de- Beach County of Orange State of ington Beach, Com- termine whether -the r / munity Facilities District. Huntington Beach Com- I public interest, conve- California and that attached Notice is a No. 2002-1 (McDonnell munity Facilities District ,nience and necessity re- / Centre Business Park)." No. 2002-1 (MCDonnll I quire the issuance of Pursuant to the Centre Business Park) ,bonds, of the City of true and complete copy as was printed provisions of Chapter,(the "Area B") in the (Huntington Beach for 3.56 of the Municipal amount of not to exceed each respective im- and published in the Huntington Beach Code of the City of Hunt- $13,000,000 to finance a provement area. ington- Beach and, as portion of the costs of Section 5.The City Clerk and Fountain Valle issues of said applicable, the Mello-,the Facilities. is hereby directed to y Roos Community Facil-• Section 2. The 'bonded cause notice of said newspa news er to wit the issue(s) of: ities Act of 1982,the City indebtedness for each public hearing to be aper Council of the City of improvement area de- given by publication one Huntington - Beach .scribed in Section 1.is time in a newspaper of hereby gives notice as Proposed to be incurred general circulation follows: for. the purpose of fi- circulated within the Dis- A. The'.text of said,nancing a portion of the trict. The publication of Resolution is as follows:(.costs of the Facilities, in- said notice shall be com- (Res. No. 2002-27) cluding costs incidental pleted at least seven (7) WHEREAS, this City to or connected with the days before the date April 11 2002 Council has this date accomplishment of said herein set for said public adopted its Resolution purposes and of the fi- hearing. Then notice entitled "A Resolution of nancing thereof. shall substantially in the the City Council of the Section 3. The City form of Exhibit A hereto. City .of Huntington Council, acting as legis- Section 6. This Resolu- Beach Declaring Its'In-. lative body for Area A, tion shall take effect tention to Establish a intends to authorize the upon its adoption. declare under penalty of perjury, that I issuance and sale of B. The hearing referred / / Community Facilities bonds in one or more to in the aforesaid Reso- �District and To Authorize series in the maximum lution shall be at the time the foregoing is true an correct. the Levy of Special aggregate principal and place specified in .-Taxes Therein," stating the Resolution. its-intention to form a amount of $13,000,000, C. At the time and place community. facilities dis- bearing interest payable any person interested, trio pursuant to the semi-annually or in such. including persons own- Executed on April 11 , 2002 provisions of Chapter other manner as this ing property on the area 3.56-(commencing with City Council shall de- of the proposed com- at Costa Mesa, California. Section 3.56.010) of the termine, at a rate,not to munit facilities district, Municipal Code of the exceed the maximum y City of Huntington 'rate of interest as may will be heard upon the Beach and, as ap- I be authorized by ap. proposed debt issue. plicable, the Mello-Roos plicable law at the time Dated: April 1, 2002' Community Facilities Act; of sale of such bonds, /S/Connle Brockway of 1982 (collectively, the i and maturing not to ex- City Clerk "Law"), for the purpose'iceed forty (40) years City of of financinga portion of from the date of the is. Huntington Beach the costs f ceain pub-1 1suance of said bonds.' Published Huntington lic improvements (the (This City Council, acting Beach Independent April "Facilities"), as further l:as legislative body for 11, 2002 provided in said Resolu=:Area B intends to au-) _ 042-980 Signature tion;and This City Coun-;'thorize the issuance and cil estimates the amount sale of bonds in one or required for the financ- more series n- the ing of a.portion of the maximum aggregate costs of the-Facilities to principal amount of be the sum of $13,000,000, bearing in- $11,000,000; and terest payable semi-an- In order to finance said nually or in such other, Facilities it-is necessary manner as this City to incur bonded indebt Council shall determine, edness .for each im- at a rate not to exceed L the maximum rare of in- Quint&Thimnug LLP 4/19/02 Script for Use by the Mayor in Conducting zjvv►e 3,2co ity Council Agenda Items Related to: CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) 1. Staff and consultants make presentations regarding agenda items. 2. The Mayor makes the following remarks to open the public hearings: " This is the time and place for the public hearings in this City Council''s proceedings for the Improvement Areas A and B of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park). The hearings are to inquire into the formation of the Improvement Areas, the levy of special taxes in the Improvement Areas and the need to incur bonded indebtedness in the Improvement Areas. "Before I formally open the hearings,are there any owners of property in the Improvement Areas or registered voters residing in the Improvement Areas who wish to file written protests?. If so, they must be fled with the City Clerk now. [Pause to see if there are any protests.] " The hearings are now officially open. We will now receive testimony from any interested persons: When all comments have been received the hearings will be closed." A/ sue' 3. Time for comments and questions from audience. 4. When all testimony has been received,the Mayor announces: "The hearings are now officially closed. Do any Councilmembers have any questions or comments regarding the Improvement Areas of the proposed Community Facilities District?" 5. The City Council may then ask questions and discuss the Improvement Areas. 6. When discussion is through,the City Council considers for adoption the following recommended motions: i Aa'o Re so of the City Council of the City of Huntington Beach of o of Improvement Area A and Improvement Area B of the City of 19021.04:J5115 i Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business P • A PeCity Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Within Improvement Area B,of the City of Huntington Beach Co ounity acilities District No.2002-1 (McDonnell Centre Business Park) • esolution of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and,Within Improvement Area B of the City of Huntington Beach Community Facilities Distn t No.2002-1 (McDonnell Centre Business Park) ROLL CALL VOTE 7. The Mayor then announces: "At this time,I ask the City Clerk to open the ballot of the sole owner of land in the Improvement Areas and announce the results of the election." [Pause for opening of ballot.] 8. The City Clerk opens the ballot and announces the results of the election. The City Clerk then completes one copy of the Canvass and Statement of Result of Election. 9. The Mayor then announces: " The results of the election being unanimously in favor of the levy of the special taxes, the establishment of the appropriations limit and the incurring of bonded indebtedness, we may now proceed with the final actions for the two Improvement Areas of the District." 10. The City Council shall considers the following motions: • To adopt Resolution No.2002-41 of the City Council of the City of Huntington Beach Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien ROLL CALL VOTE After the City Clerk reads ordinance by title: • Approve first reading of Ordinance No.3557 of the City of Huntington Beach Levying Special Taxes Within Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park) ROLL CALL VOTE End of Item. -2- 46, Quint&Thimmig LLP 4/19/02 Script for Use by the Mayor in Conducting vnz Aa -&,-28E}2-City Council Agenda Items Related to: CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) 1. Staff and consultants make presentations regarding agenda items. 2. The Mayor makes the following remarks to open the public hearings: " This is the time and place for the public hearings in this City Council' s proceedings for the Improvement Areas A and B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). The hearings are to inquire into the formation of the Improvement Areas, the levy of special taxes in the Improvement Areas and the need to incur bonded indebtedness in the Improvement Areas. " Before I formally open the hearings,are there any owners of property in the Improvement Areas or registered voters residing in the Improvement Areas who wish to file written protests?. If so,they must be filed with the City Clerk now. [Pause to see if there are any protests.] "The hearings are now officially open. We will now receive testimony from any interested persons. When all comments have been received the hearings will be closed." 3. Time for comments and questions from audience. 4. When all testimony has been received,the Mayor announces: "The hearings are now officially closed. Do any Councilmembers have any questions or comments regarding the Improvement Areas of the proposed Community Facilities District?" 5. The City Council may then ask questions and discuss the Improvement Areas. 6. When discussion is through, the City Council considers for adoption the following recommended motions: • A Resolution of the City Council of the City of Huntington Beach of 3 Formation of Improvement Area A and Improvement Area B of the City of 19021.04:J5115 Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) • A Resolution of the City Council of the City of Huntington Beach Determining the Necessity to Incur Bonded Indebtedness Within Improvement Area A,and Within Improvement Area B,of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park) • A Resolution of the City Council of the City of Huntington Beach Calling Special Election Within Improvement Area A and Within Improvement Area B of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park) ROLL CALL VOTE 7. The Mayor then announces: "At this time,I ask the City Clerk to open the ballot of the sole owner of land in the Improvement Areas and announce the results of the election." [Pause for opening of ballot.] 8. The City Clerk opens the ballot and announces the results of the election. The City Clerk then completes one copy of the Canvass and Statement of Result of. Election. 9. The Mayor then announces: " The results of the election being unanimously in favor of the levy of the special taxes, the establishment of the appropriations limit and the incurring of bonded indebtedness, we may now proceed with the final actions for the two Improvement Areas of the District." 10. The City Council shall considers the following motions: • To adopt Resolution No.2002-41 of the City Council of the City of Huntington Beach Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien ROLL CALL VOTE After the City Clerk reads ordinance by title: • Approve first reading of Ordinance No.3557 of the City of Huntington Beach Levying Special Taxes Within Improvement Area A and Improvement Area B of the City of Huntington Beach Community Facilities District No.2002-1 (McDonnell Centre Business Park) ROLL CALL VOTE End of Item. -2- • V" CITY OF HUNTINGTON BEACH Inter-Department Communication TO: Connie Brockway, City Clerk FROM: Gail Hutton, City Attorney DATE: April 29, 2002 SUBJECT: Boundary Map for CFD 2002-1 Improvement Areas A and B - McDonnell Centre Business Park This memorandum is written in response to your memorandum dated April 16, 2002. Our office has confirmed with the City's bond counsel, Quint and Thimmig, that the recordation requirement relating to the formation of CFD 2002-1 requires that the boundary map be on file on the day that the City Council considered approving the formation of CFD 2002-1 As the map was on file as of April 1, 2002, this requirement has been met. If you have any questions, please contact Leonie Mulvihill or myself. GAIL HUTTON City Attorney c: Ray Silver David Biggs Robert Rhigetti Scott Field GAM ulvihill\02-Memo\Clerk-BoundaryMap.doc CITY OF HUNTINGTON BEACH ' INTERDEPARTMENTAL COMMUNICATION DATE: April 16, 2002 TO: Gail Hutton, City Attorney Leonie Mulvihill, Deputy City Attorney Robert Rigetti, Project Manager FROM: Connie Brockway, City Clerk SUBJECT: Boundary Map for CFD 2002-1 Improvement Areas A& B— McDonnell Centre Business Park Attached is a copy of the Recorded Boundary Map that the city's special tax consultant, Michael Swan, recorded with the Orange County Recorder. Mr. Swan had originally penned the date of March 20, 2002 as the date the map was filed in my office. I advised him I could not attest to the date of March 20,.2002 for recording as the map had not been filed in.my office on that date. Mr. Swan's company had filed.it in the Economic Development Office, on March 20, not the City Clerk's Office. Mr. Swan informed me that on March 20 my office had refused to receive the map. Upon asking the Deputy City Clerks, I ascertained that on March 20 Mr. Swan's courier person had not known to whom to deliver the map and he had taken it to the Economic Development Department. I advised Mr. Swan that I was able to accurately execute the map using a date of March 27, 2002. This is the date a copy of the map was provided to the City Clerk's Office for the Council Agenda packet. It may be that there is a ten (10) day lead-time requirement for the map to be on file in the Clerk's office. If so, this requirement was not met, and hopefully it is not a substantial error. Please verify that the boundary map is properly recorded. Please advise when I may expect to receive a copy of the official recorded map as the one provided to.me is a "conformed-copy". Will you ensure that consultants, in the future deliver documents in person or with proper Y � P P P written instructions to their courier service. Mr. Swan was incorrect in his statement to me that my office refused service. cc: Ray Silver, City Administrator David Biggs, Economic Development Director GAC8MEM0S\2002cbmem\Map CFD 2002-1.dx C Y OF HUNTINGTC BEACH INTERDEPARTMENTAL COMMUNICATION TO: Connie Brockway, City Clerk FROM: Robert Righetti, Project Manager SUBJECT: CFD No. 2002-1 (McDonnell Centre Business Park) Recorded Map DATE: April 16, 2002 Please find attached a copy of the recorded CFD Map for the McDonnell Douglas CFD No. 2002- 1. The map was recorded on the 3`d of April. The final parcel map for the subject development is still in plan review. However it is schedule to be recorded in a few weeks. If you have any questions about these or the additional information required, please feel free to contact me at 374-1731. cc: file Christy Teague, Economic Development Leonie Mulvihill, Deputy City Attorney C= C 0 A r-� cj:: � Cr W S N n pp D 1 r. • • r.ONFORMED COPY N91 Compaw n9A OH91991 ' 3 4 ` PROPOSED BOUNDARIES OF SHEET 1 OF 4 0 IMPROVEMENT AREAS A AND B OF THE CITY OF HUNIINGTON BEACH GRAPHIC SCALE COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. FILED IN THE OFFICE OF E CITY CLERK OF THE CITY OF HUNTINGTON BEACH. THIS_IL DAY OF 2002. •M Na 2002_1 BOUNDW THE BEAf9NG5 SHOWN HEREON ARE BASED UPON THE CENTERLINE OF BOLSA AVENUE.BEARING ® N89'25'201V,PER PARCEL MAP NO.97-190 �'.�( [tK.tl�CH4v.7� E)�T LAB FILED IN BOOK 299.PACES 3 AND 4 OF PARCEL CONNIE AY.THE CLERK OF THE CRY Of HUNTINCfON BEACH NAPS.RECORDS OF ORANGE COUNTY.CALIFORNIA I HEREBY CERM THAT THE WITHIN LAP SHOWING PROPOSED BOUNDARIES OF IMPROVEMENT WROVELOW AREA A AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE E=ESS PARK).COUNTY OF ORANGE.STATE OF CALI ORNW ® WAS APPROVED BY THE CITY COUNCL OF THE C0Y OF HUHNMIpI BEACH AT A REGULAR MEETING IPFq Sa f AREA 6 THER OF H ON THE 10 OF 2002.BY ITS RESOLUTION NO. . NM BY: .�� L.1.AT•Y SEE SHEET 4 FOR'NAP.' CONNIE-BROCKWAY.THE CLERK OF THE CITY OF HUNTINGTON BEACH DETAILS AND DIMENSIONS. RECORDING REQUESTED BY:CRY OF HUNTING70N BEACH FILED _ Y.•CURVE TABLE 05 OF Y � [ G MAPS OF ASSESSMENT AND FACILITIES DISTRICTS AT IN CURVE DELTA I RADIUS I LENGTT PAGE 6 KA4 IN THE OFFICE OF THE COUNTY RECORDER IN THE COUNTY OF ORANGE. CI 89.42'22- 23.00 39.14 STATE OF CALIFORNIA C6 09'37'S2' 47MOO 79.00 EYGNp C7 89.40'31- 2780 4226 2OO2ons3a CID 89'5947• 1 27JKI 1 42.41 C11 15'40'24• 1 53OA0 1 144.98 B... LINE TABLE J.BOOM.INTERIM COUNTY RECORDER OF COUNTY OF ORANGE LINE LENGTH I BEARING L1 155.85 I NDO.32'09'E / L2 51.76 1 NB9'27'51•V ` �. �d N✓.V 3•T-az L3 15153 N00.32'09'E L4 28129 N89.23'56'V f� JAN ADAMS R.C.E.21687 EXP 9-30-2005 LS 127.43 N39.29'546V L6 28181.55SS N50.30.06'E L7 20MA7 N89.23'49'V LB 130.78 N39.2WS4'V _ _ y L9 173.73 NB9.26'4 v . ./' • \ q{� +1.AOi. L1O 29445 N89.26'40 LIl 307.60 LL1134 25163..8883 NNOO'32'03'E / • •.I. � 94 PA 216P L2 23.6 N0 >FA5 el TL O vp n ,/' + ' 10 •\ S9 J W. C1 - R_1047.75' T°6S S1 09 L-24,Ir// / £ .X $ . . . 8 S I : R-now L,42.19' 1 i -W4O 69P40'm' 1° MV2 '1044',I••. ROAD 4 1 --. bYY- N12'2T35E R 4 KAP Np 27.W 1 Y L-42-W T-27.15' 1 S b.9P1Y19• W ---------- W� MAP. lrAylxiogl° Wk nlY 5yL 1Iftoo 9919 I �\ B16AP. I 'Pg I-y . I 1 i �0' s.• m.00' 1 7 1 I 93' I _:. F1 1.9 JW.91' FL"TWSAM IM $I -�C/L BOILS'A1 AV6V!!E -- A UM•STF EEM Na 11.NO49>a IbN G014 IN 00093 r CONFORMEDCOPY a Not Compered weft"I W i SHEET 2 OF 4 PROPOSED BOUNDARIES OF IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. JI .on.ua as � � 6 a9aD9eoa � t <OFD NO. 212-1 / VK*W MAP eor ro wuc 1� 4 FOR LEGAL DESCRFTION OF CFD NO.2OD2—t BOUNDARY,SEE SHEET 3. 195-111—® 195-111- 195-111- 193-111- paQ MAD NA) Sy� m SCALE T-4W BCX.BA AMEME ASSESSOR'S PARCEL MAP 1LA1DMEWED w ADAMS eraEWER am oaram nc IMM014f101b W Oil --� im Om / CONFORMED COPY ^ Nol Compared wllh OrWinaf PROPOSED BOUNDARIES OF SHEET 3 OF 4 IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. LEW L DEBCRP IM OF OFD.NO.2002-1 BOUPDARY PARCEL, PARCEL 6 AND PARCEL 3 AS SHOWN ON THE MAP FILED IN BOOK 1,PAGES 3 THROUGH 5 OF PARCEL MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA. EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER OF PARCEL MAR NO.87-424.AS SHOWN ON THE MAP FILED IN BOOK 237, PAGES 4,5,AND 6 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER OF PARCEL MAP N0.97-198,AS SHOWN ON THE MAP FILED IN BOOK 299,PAGES 8 AND 9 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITH THE DISTINCTIVE BORDER OF PARCEL MAP NO.97-189,AS SHOWN ON THE MAP FILED IN BOOK 299,PAGES 1 AND 2 OF SAID PARCEL MAPS. , ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER OF PARCEL MAP NO.97-190,AS SHOWN ON MAP FILED IN BOOK 299, PAGES 3 AND 4 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM PARCEL 4 OF PARCEL MAP NO.95-186 AS SHOWN ON THE MAP FILED IN BOOK 296, PAGES 3 AND 4 OF SAID PARCEL MAPS. PARCEL 2 PARCEL'A'DF PARCEL MAP 97-190,IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE,STATE OF CALIFORNIA,AS SHOWN ON THE MAP FILED IN BOOK 299,PAGES 3 AND 4 OF PARCELS MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL% THAT PORTION OF SKYLAB ROAD,IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE,STATE OF CALIFORNIA.AS SHOWN ON PARCEL MAP NO.95-186, FILED IN BOOK 296,PAGES 3 AND 4 OF PARCEL MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,LYING WESTERLY OF THE FOLLOWING DESCRIBED LINE BEGINNING AT THE WESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS 'NORTH 89'24'21'WEST 502.81 FEET'ON THE NORTH LINE OF PARCEL 4 OF SAID MAP;THENCE NORTHERLY IN A DIRECT LINE TO THE WESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS'NORTH 89'24'21'WEST 592.38 FEET'ON THE SOUTH LINE OF PARCEL 1 OF PARCEL MAR NO.97-190,FILED IN BOOK 299, PAGES 3 AND 4 OF PARCEL MAPS,IN SAID OFFICE OF THE COUNTY RECORDER. Y {y' SCALE 7-•00' RHEAS 11DAD I 1 BEE&1ffT 4 f i FOR NAP.DEFALS I i E —1 i I i I I I L------------------ 6a84 A4131fB _-_--__-_ PLANS PREPM®SO SHEET INDEX MAP ADAMS•SWEETER LTcaLE r- mwOYDq...eoo4ar 3�DD15W y CONFORMEOCOP► tW-• Nol care* rO0 Or100u1 6 PROPOSED BOUNDARIES OF SHEET a of a IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CAUFORNIA. LINE TABLE LINE TABLE LINE LENGTH BEARING L32 156.33 NUO'35'05'E L1 370.50 NOO.35'05'E L33 M" N00.35.05'E L2 13300 N89.24'S5'V L34 21344 N89.2454V L3 13320 N89.24'S5'V 335 258 N00.35'05'E L4 IM42 N00.35'OS'E L36 9.93 N89.24'95'V L5 141.75 N89.24'S5'V L37 2.58 N00.35'05'E L6 141.75 N89.24'55'V L38 15.17 N89.24'55'V L7 120.42 NOO.35'05'E L39 558 N00.35'O5'E LB 129.66 NW35.05E L40 IL95 NB9.2455'V L9 64A7 N89.24'S5'V L41 11.95 N89.24.55'V L10 18.66 N00.35'O'E L42 5.58 NOO'35'O5'E Lit 238A4 N89.2455'V EL4265.16 N89.2455'V L12 4.75 N00.35'05'E 25B N00.35'05'E L33 1L95 N89'24.55'V 9.03 N89.24'S5'V L14 IL95 N89'24'S5'V 258 N00.35'O5LIS 558 35'O5'E I5.17 N99.245Ll6 1517 N89.24'S5'V 558 N00.35'OS'E L17 2.58 N00.35'OS'E 11.95 N89.24.55'V LIB 9M N89'2455'V 206.33 N00.35'05'EL19 258 N00.35'05'E 422 N89.2455'V L20 240.16 N89'24'SS'V 9.83 N00'35.03'E L21 2.58 N00.35'05'E L53 422 N89.2455'V L22 9.03 N89.24*55'V L54 19.42 N00.35'OS'E L23 2.58 N00.35'05'E L55 64.07 N89.2455V L24 15.17 N89.2455N L56 222.50 N00.35'05'E L25 5.58 N00'35'O5'E L57 210.00 N00'35'05'E L26 1L95 N89.24.95'V L58 310A0 N09'2455'V - L 235.58 N00.35.OS'E L59 53.60 N00.35.056E L2728 55.51 N00.35'05'E L60 10637 NB9'2455'V L29 038 NB9'21'SS'V 1.61 156.40 N00.35'05'E L30 9A3 MV35'05'E L62 203.63 N89'2455'Y L31 0.38 N89.24.55'1 L4 L47 N L55 L49 L43 L80 g J J NAP. NAP. 0 � o'u L 8CA Z-Tr lw L51 L82 l34 L55 \ L2 0 J Li LIP L11 LB a 1 � NAP. 9 NAP. � N LS 14 18 18 L2 L20 l22 PLAWFWXMW ENADAMS•B GMN WL 6 NC. ro.o.oP.e�rrnrea n.waMarPsro4na:r ON .w aos4o • ice CITY OF HUNTINGTON BEACH Inter-Department Communication TO: Connie Brockway, City Clerk FROM: Gail Hutton,City Attorney DATE: April 3, 2002 SUBJECT: Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) On April 1, 2002, the City Council approved the formation of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). Concurrent with this approval, the City Council approved the proposed Boundary Maps of Community Facilities District No. 2002-1. Please release the certified Boundary Maps, as approved by City Council, to the City's Special Tax Consultant, Michael Swan, for the purposes of recordation with the County of Orange. Gail Hutton City Attorney j" o��tit�ao K nct f 10,7 4i Ga`-7�p ynd�o `uh 4" • ��- Z 71 G:\Mulvihill\02-Memo\.Clerk-BoeingMap.doc A4, �� , ��TH�E Cis r�� �OF H>,UNTI� A�t',T'QN� BEACH_r= a ! Council/Agency Meeting Held: Deferred/Continued to: XP Approved ❑ Conditionally Approved ElDenied p�_P- City Clerk ignature =7--a t � Council Meeting Date: April 1, 2002 Department ID Number: ED 02-10 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION ti 0 SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS a c, SUBMITTED BY: RAY SILVER, City Administrator 6zd,� —' �0) rn � ,- PREPARED BY: DAVID C. BIGGS, Economic Development Director 9P apes Nos ?o0 ? a&"? aooa_ a-7 o �. SUBJECT: Approve the Formation of City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) FS atement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: Boeing has requested City assistance in formation of a Community Facilities District (CFD) for the McDonnell Centre Business Park second phase. CFD formations have become increasingly common as a financing and marketing tool. This CFD will allow Boeing land to be marketed competitively with other industrial properties with CFDs already in place throughout the region. The area is,divided into two parts, Area A and Area B. The final amount has not been determined, but Boeing has requested funding authority for each area in an amount of not to exceed $13,000,000. The final amount of the CFD bonds for Area A will be set forth in the CFD Report scheduled to be submitted to the City Council on May 6, 2002. Funding Source: Funding for this CFD will come from bonds issued later this year after appropriate actions are considered by the City Council. Boeing has provided funds to reimburse the City for 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: The formation of the Community Facilities District requires various sequential steps to be taken by the City Council. This is the first step in the process set forth by state law. The recommended actions are the following: CITY COUNCIL ACTION: - .- -. . 1. Approve the Rate and Method of Apportionment of Special Tax for Area A and Area B, identified as Exhibit C and Exhibit D in proposed Resolution No.-?ac ;�- Resolution of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes. REQUEST FOR CITY COUNCIL AC i► iON MEETING DATE: April 1, 2002 DEPARTMENT ID NUMBER: ED 02-10 2. Adopt Resolution No. 2002-26 Resolution of Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes. 3. Adopt Resolution No. 2002-27 Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 2002-01 (McDonnell Centre Business Park) and schedule public hearing for May 6, 2002. 4. Approve Proposed Boundary Maps of Community Facilities District No. 2002-1 (McDonnell Centre Business Park), Attachment #4. 5. Set Public Hearing to Establish Community Facilities District at the regular City Council meeting to be held on May 6, 2002 as set forth in Resolution No. 2002-26. Alternative Action(s): The City Council has the option of not forming the Community Facilities District. This will negatively impact the ability of Boeing Realty Corporation to compete in the Orange County and Los Angeles industrial market. Analysis: The formation of a Community Facilities District is a method to finance approved public improvement and other costs required of Boeing in the early phases of development. A CFD will allow the price structure for development parcels in the McDonnell Centre Business Park to be similar to other industrial parcels available for sale and development in the region. The actions considered by the City Council in the formation of the Community Facilities District will assist Boeing as they begin their second phase of the very successful McDonnell Centre Business Park. 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. Facilitating the formation of a CFD and the issuance of CFD bonds will assist in the development of the second phase of the McDonnell Centre Business Park. This action will ultimately benefit the City through the following: 1) Attraction of new and retention of existing companies; 2) Job creation; 3) Improvement of the Jobs/Housing balance; 4) Increased public revenues through property tax and possible business to business sales tax; and 5) Increased economic activity through a more diversified industrial base. On March 4, 2002, the City Council considered changes to Municipal Code 3.56 to allow maintenance costs to be included in City Community Facilities District bond amounts. This action was prompted by the anticipation of the formation of this Community Facilities District, but will also allow maintenance costs to be included in future City CFDs. G:\Christy\CFD\RCACFD40102.doc -2- 3/26/2002 2:04 PM REQUEST FOR CITY COUNCIL AM iON MEETING DATE: April 1, 2002 DEPARTMENT ID NUMBER: ED 02-10 Environmental Status: EIR No. 96-1 was approved with McDonnell Centre Business Park Specific Plan No. 11, adopted by City Council on October 6, 1997. Attachment(s): City Clerk's Page Number No. Description 1. Petition (Including Waiver) to Create a Community Facilities District from Boeing Realty Corporation. 2 Resolution No. 2002-26 Resolution of Intention to Establish a Community Facilities District and Authorize the Levy of Special Taxes, Rate and Method of Apportionment of Special Tax attached as Exhibits C and D. 3 Resolution No. 2002-27 Resolution of Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 2002- 01 (McDonnell Centre Business Park). 4. Proposed Boundary Maps of Community Facilities District No. 2002-1 (McDonnell Centre Business Park). RCA Author: Christy Teague x5088 GAChristy\CFD\RCACFD40102.doc -3- 3/26/2002 2:04 PM Quin[&Thimmig LLP 2/10/02 3/15/02 3/19/02 MARKED TO SHOW CHANGES. PETITION (Including Waiver) To Create a Community Facilities District and With Respect to Related Matters To the City Council City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Dear Councilmembers: This is a petition to create a community facilities district, and with respect to related matters, under the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach and, as applicable, Sections 53311 and following of the California Government Code (collectively, the "Law"), and the undersigned hereby states as follows: 1. Petitioners. This petition is submitted by the entity identified below as the owner of all of the parcels of land identified below (with the exception of all or a portion of APN No. 195-111-24 which will be a water well site to be owned by the City of.Huntington Beach). By submitting this petition,we warrant to the City of Huntington Beach (the "City") that we are the owner of such land and are authorized to execute this petition. 2. Proceedings Requested. Petitioners hereby ask that the City Council of the City undertake proceedings under the Law to (a) create a community facilities district (the "CFD") with two separate improvement areas,with one such area to be designated "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and with the other such area to be designated "Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area B"), (b) to authorize the levy of special taxes in Area A and in Area B; and (c) to authorize special tax bonds for Area A in an amount of not to exceed $13,600,000 and to authorize special tax bonds for Area B in an amount of not to exceed $13,000,000. 3. Boundaries of CFD. Petitioners hereby ask that the territory within the boundaries of Area A and in Area B include those parcels of real property identified by Orange County Assessor Parcel numbers listed below. 4. Purpose of CFD. Petitioners hereby ask that Improvement Areas A and B of the CFD be created, the special taxes be levied and the bonds be issued to finance all or a portion of the costs of the public improvements identified on Exhibit A hereto, and to finance the costs of issuing the special tax bonds. 5. Election. Petitioners hereby ask that the special election to be held under the Law to authorize the special taxes and the issuance of the bonds and to establish an appropriations limit for each of the improvement areas of the CFD be consolidated into a single election and that the election be conducted by the City and its officials, using mailed or hand- 08003.07:i6056 delivered ballots and that such ballots be opened and canvassed and the results certified at the same meeting of the City Council of the City as the public hearings on the CFD under the Law or as soon thereafter as possible. 6. Waivers. To expedite the completion of the proceedings for the CFD,all notices of hearings and all notices of election,applicable waiting periods under the Law for the election and all ballot analysis and arguments for the election are hereby waived. We also waive any requirement as to the specific form of the ballot to be used for the election,whether under the Law, the California Elections Code or otherwise. 7. Deposit. We have submitted $41,165.00 (the "Deposit") to the City to be used by the City to pay the costs incurred by the City in connection with the formation of the CFD. The Deposit shall be administered in accordance with that certain agreement between the City and McDonnell Douglas Corporation,entitled Deposit/Reimbursement Agreement. This petition is dated March 20, 2002. The property that is the subject The name of the owner of record of such property of this Petition is identified for and the Petitioner is: Area A as Orange County Assessor Parcel Nos. 195-111- MCDONNELL DOUGLAS CORPORATION 34 (portion), 195-111-24, and 195-111-31; and for Area B is identified as Orange County Assessor Parcel Nos. 195-111- BY j(.P�� 29 (portion), 195-111-34 Its: StepinIBMW (portion) and 195-111-03. Authddzed SiVatoq Address: c/o Boeing Realty Corporation 3760 Kilroy Airport Way#500 Long Beach, CA 90806 Attention: Jim Schulte with a copy to: Pillsbury Winthrop LLP 10100 Santa Monica Boulevard, Suite 2300 Los Angeles, CA 90067-4008 Attention: Robert M.Haight,Jr.,Esq. -2- EXHIBIT A IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA A OF THE DISTRICT FACILITIES It is intended that Improvement Area A of the District will finance all or a portion of the costs of any of the following: ir 1. The construction of sewer lines in existing Skylab Road, new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road,new Delta Lane,and new Astronautics Lane. 9. The construction of street,'curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. A-1 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way that is intended to be dedicated by the recording of a final map, 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. OTHER Improvement Area A of 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 IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA B OF THE DISTRICT FACILITIES It is intended that Improvement Area B of the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road, new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road,new Delta Lane,and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. B-1 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new _ .sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way (including right-of-way that is intended to be dedicated by the recording of a final map), 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. OTHER Improvement Area B of 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. B-2 Res.No.2002-26 RESOLUTION NO 2002-26 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 WHEREAS, under the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach(the"Code") and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the_California Government Code (the "Act," and, together with the Code, the"Law"), this City Council may commence proceedings for the establishment of a community facilities district; and There has been submitted to this City Council a Petition (Including Waiver) of McDonnell Douglas Corporation(the "Petition"), requesting the formation by this City Council of a community facilities district under the Law to be known as the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the"District") comprised of two separate improvement areas; and There has also been submitted to this City Council a Deposit/Reimbursement Agreement(the "Deposit Agreement")-wherein the petitioner has agreed to pay all costs of the City of Huntington Beach (the "City") related to the formation of the District, subject to possible reimbursement through the District as provided in the Deposit Agreement; and Under the Law, this City Council is the legislative body for the proposed District and is empowered with the authority to establish the District and levy special taxes within the District; and This City Council now desires to proceed with the actions necessary to consider the establishment of the District and the designation of improvement areas therein. NOW, THEREFORE,BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. This City Council proposes to begin the proceedings necessary to establish the District pursuant to the Law. Receipt of the Petition to form the District and the Deposit Agreement is hereby acknowledged. The City Administrator is hereby authorized to execute the Deposit Agreement and the Director of Administrative Services of the City, working with the City Treasurer, is hereby authorized to cash the deposit referenced therein and to expend the deposits for costs of.formation of the District, as contemplated by the Deposit Agreement. Section 2. The name proposed for the District is City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). Pursuant to Section 53350 of the Act, the City Council hereby designates a portion of the District as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and a portion of the District as "Improvement Area B of the City of Res.No.2002-26 Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)"("Area B"). Section 3. The proposed boundaries of Area A and of Area B of the District are as shown on the map of the District on file with the City Clerk of the City,which boundaries are hereby preliminarily approved: The City Clerk is hereby directed to record, or cause to be recorded, the map of the boundaries of the District in the office of the County Recorder as soon as practicable after the adoption of this Resolution. Section 4. The type of public facilities (the"Area A Facilities")proposed to be eligible for funding by Area A and pursuant to the Law shall consist of those items listed on Exhibit A hereto under the heading"Facilities,"which Exhibit is by this.reference incorporated herein. The type of public facilities (the"Area B Facilities") proposed to be eligible for funding by Area B and pursuant to the Law shall consist of those items listed on Exhibit B hereto under the heading"Facilities,"which Exhibit is by this reference incorporated herein. . Section 5. Except to the extent that funds are otherwise available to Area A of the District to pay for the Area A Facilities and/or pay the principal and interest as it becomes due on bonds of Area A of the District issued to finance the Area A Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in Area A of the District, will be levied within Area A of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area A of the District, in sufficient detail to allow each landowner within the proposed Area A of the District to estimate the maximum amount such owner will have to pay, is described in Exhibit C attached hereto which Exhibit is by this reference incorporated herein. Except to the extent that funds are otherwise available to Area B of the District to pay for the Area B Facilities and/or pay the principal and interest as it becomes due on bonds of Area B of the District issued to finance the Area B Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in Area B of the District, will be levied within Area B of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area B of the District, in sufficient detail to allow each landowner within the proposed Area B of District to estimate the maximum amount such owner will have to pay, is described in Exhibit D attached hereto which Exhibit is by this reference incorporated herein. This City Council finds that the provisions of Section 153313.6, 53313.7 and 53313.9 of the Act (relating to adjustments to ad valorem property taxes and schools financed by a community facilities district) are inapplicable to either Area A or Area B of the District. Section 6. It is the intention of this City Council, acting as the legislative body for Area A of the District, to cause bonds of the City to be issued for Area A of the District pursuant to the Law to -2- Res.No.2002-26 finance a portion of the costs of the Area A Facilities. If so issued, the bonds shall be issued in one or more series in an aggregate principal amount of not to exceed $13,000,000, shall bear interest payable semi-annually or in such other manner as this City Council shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance .thereof. It is the intention of this City Council, acting as the legislative body for Area B of the District, to cause bonds of the City to be issued for Area B of the District pursuant to the Law to finance a portion of the costs of the Area B Facilities. If so issued, the bonds shall be issued in one or more series in an aggregate principal amount of not to exceed$13,000,000, shall bear interest payable semi-annually or in such other manner as this City Council shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance thereof. Section 7. This City Council reserves to itself the right and authority to allow any interested owner of property in either Area A or Area B of the District, subject to the provisions of Section 53344.1 of the Act and such requirements as it may otherwise impose, and any applicable prepayment penalties as prescribed in the indenture or fiscal agent agreement for any bonds of the City for the respective improvement area of the District, to tender to the Director of Administrative Services of the City(who shall remit the same to the City Treasurer) in full payment or part payment of any installment of special taxes for such improvement area of the District or the interest or penalties thereon which may be due or delinquent,but for which a bill has been received, any bond or other obligation secured thereby, in the manner described in Section 53344.1 of the Act. Section 8. The levy of the proposed special tax in each improvement area of the District shall be subject to the approval of the qualified electors of such improvement area at a special election. The proposed voting procedure shall be by mailed or hand-delivered ballot among the landowners in the proposed improvement area of the District,with each owner having one vote for each acre or portion of an acre of land such owner owns in the respective improvement area of the District. Section 9. Except as may otherwise be provided by law or the rate and method of apportionment of the special tax for the respective improvement area of the District, all lands owned by any public entity, including the United States,the State of California and/or the City, or any departments or political subdivisions of any thereof, shall be omitted from the levy of the special tax to be made to cover the costs and expenses of the facilities, the issuance of bonds by the City for such improvement area of the District and any expenses of the respective improvement area of the District. Section 10. The Director of Public Works of the City is hereby directed to study said proposed facilities for each improvement area of the District and to make, or cause to be made, and file with the City Clerk a report in writing, presenting the following: -3- Res.No.2002-26 (a) A brief description of the facilities for each improvement area of the District. (b) An estimate of the fair and reasonable cost of providing the facilities for each improvement area of the District, including the incidental expenses.in connection therewith, including the costs of the proposed bond financing, any City administrative costs and all other related costs. Said report shall be made a part of the record of the public hearing provided for below. Section 11. Monday,May 6, 2002, at 7:00 p.m. or as soon thereafter as the matter may be heard, in.the regular meeting place of this City Council, City Council Chambers, City Hall, 2000 Main Street,Huntington Beach, California,be, and the same are hereby appointed and fixed as the time and place when and where this City Council, as legislative body for the District, will conduct a public hearing on the establishment of each improvement area of the District and consider and finally determine whether the.public interest, convenience and necessity require the formation of each improvement area of the District and the levy of said special tax within the respective improvement area. Section 12. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper published in the area of the District. The publication of said notice shall be completed at least seven days before the date herein set for said hearing. Said notice shall be substantially in the form of Exhibit E hereto. Section 13. The firms.of Michael Swan Consulting and Quint&Thimmig LLP are hereby - designated as special tax consultant and bond counsel and disclosure,counsel-, respectively, to the City for the District. The City Director of Administrative Services and the City Attorney, respectively, are hereby authorized to execute agreements with said firms for their services related to the District provided that all fees and expenses of such firms are payable solely from a deposit by the landowner in the District or the proceeds of the bonds, if any, issued by the City for either of the improvement areas of the District. -4- Res.No.2002-26 Section 14. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Huntington Beach on this 1st day of April,2002. z /4, Mayor ATTEST: APPROVED AS TO FORM: City Clerk o4-67-62 City Attorney 3121101 REVIEWED AND APPROVED: INITIATED AND APPROVED: City dnvnistrator Director of Economic Development 08003.07:J6058 3/19/02 -5- Res.No.2002-26.- Ex.A EXHIBIT A IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA A OF THE DISTRICT FACILITIES It is intended that Improvement Area A of the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road,new Delta Lane and new Astronautics Lane. 2. The construction of streets,curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road,new Delta Lane,and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab Road. 10. The construction of a waterline in new Delta Lane from Bolsa Avenue to Skylab Road. A-1 Res.No.2002-26 Ex.A 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to.be financed shall include the costs of the acquisition of right-of- way (including right-of-way that is intended to be dedicated by.the recording of a final map), 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. OTHER Improvement Area A of 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 Res.No.2002-26 Ex.B EXHIBIT B IMPROVEMENT AREA B OF THE CITY OF HUNT NGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) DESCRIPTION OF FACILITIES ELIGIBLE TO BE FUNDED BY IMPROVEMENT AREA B OF THE DISTRICT FACILITIES It is intended that Improvement Area B of the District will finance all or a portion of the costs of any of the following: 1. The construction of sewer lines in existing Skylab Road,new Delta Lane and new Astronautics Lane. 2. The construction of streets, curbs, and gutters from the extension of Skylab Road from its current terminus at Astronautics Lane west to approximately 400 feet west of new Delta Lane. 3. The construction of streets, curbs, and gutters from the new Delta Lane between . . Skylab Road north to new Astronautics Lane. 4. The construction of streets, curbs, and gutters for the new Astronautics Lane from its current terminus west to Rancho Road. 5. The construction of street, curbs, and gutters for the new Skylab Lane from new Astronautics Lane south approximately 200 feet. 6. The construction of the waterline in Rancho Road connecting its current terminus east of Bolsa Chica Road to the existing waterline north of the Navy Railroad. 7. The construction of onsite waterlines in extended Skylab Road, new Delta Lane and new Astronautics Lane. 8. The construction of conduit and fixtures for new street lighting in extended Skylab Road,new Delta Lane,and new Astronautics Lane. 9. The construction of street, curbs, and gutters for the new Delta Lane from Bolsa Avenue north to Skylab.Road.. 10. The construction of a waterline in new Delta'Lane from Bolsa Avenue to Skylab Road. B-1 Res.No.2002-26 Ex.B 11. The construction of storm drains in new Skylab Road, new Delta Lane new Astronautics Lane and new Skylab Lane. 12. Roadway improvements at the intersection of Bolsa Avenue and Delta Lane including modifications to the existing traffic signal. 13. Roadway improvements at the intersection of Rancho Road and Astronautics Lane including construction of the new traffic signal. 14. Roadway improvements to Rancho Road consisting of installation of new sidewalk. The Improvements to be financed shall include the costs of the acquisition of right-of- way (including right-of-way that is intended to be dedicated by the recording of a final map), 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. OTHER Improvement Area B of 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. B-2 Res.No.2002-26 Ex.C EXHIBIT C IMPROVEMENT AREA A OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 . (MCDONNELL CENTRE BUSINESS PARK 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. 2002-1 (McDonnell Centre Business Park) (herein"CFD No. 2002-1") shall be levied and collected according to the special tax liability determined by the Administrator through the application of the procedures described below. The real property in Improvement Area A of CFD No. 2002-1, unless exempted by law or by the provisions hereof, shall be specially 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 of Special Tax: Acre or Acreage means the land area of an Assessor's Parcel as shown on the applicable final map, parcel map, or 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 that 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 Improvement Area A of CFD No. 2002-1: the fees and expenses of any Fiscal Agent (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; costs related to credit enhancement for the Bonds;the expenses of the Administrator and the City in carrying out their duties under any Indenture, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, Bond redemption expenses, charges levied by the County or any division or office thereof in connection with the levy and collection of the 1 Res.No.2002-26 Ex.C Special Tax, audits, and amounts needed to pay arbitrage rebate to the federal government with respect to the 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 any delinquent Special Tax; 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 Improvement Area A of CFD No. 2002-1 or any Bonds. Administrator means the Director of Administrative Services of the City or such other person or entity designated by the City Administrator 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 that is located within Improvement Area A of CFD No. 2002-1. 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 Improvement Area A of CFD No. 2002-1 under the Act. Bond Fund means the fund or account created pursuant to the Indenture in which the collections of the Special Tax are deposited. Bond Year means the one year period from September 2 to the following September 1. 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. 2002-1. County means the County of Orange. Delinquencies mean the amount, if any, equal to delinquencies in payment of the Special Tax levied in Improvement Area A of CFD No. 2002-1 in the previous Fiscal Year. Exempt Land means (1) any real property within the boundaries of Improvement Area A of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes, including, but not limited to, streets, water well production facilities, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and (2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent or trustee who is a party to the Indenture. 2 Res.No.2002-29- Ex.C 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. Improvement Area A means any real property within the boundaries of CFD No. 2002- 1, as depicted on the boundary map for said CFD entitled "Proposed Boundaries of The City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park), County of Orange, State of California" and approved by the City Council. Said Improvement Area A is comprised generally of Parcels 4 through 11, the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Astronautics Road, Street `B' and Street `C'; as shown on Tentative Parcel Map No. 2001-122 on file with the City. Said Improvement Area A is also envisioned to include Parcels 1 through 8, the proposed public well site and adjacent portions of the following roadway right-of-way; Skylab Road, Delta Lane and Astronautics Lane; as shown on proposed Final Parcel Map No. 2001-226 and encompassing approximately 40.339 gross acres and 33.286 net taxable acres. In no case shall the net taxable acres in Improvement Area A be less than 33.286. 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. Infrastructure means the public improvements authorized to .be financed by Improvement Area A of CFD No. 2002-1 in accordance with the terms of the Act. Interest Payment Date means any date on which regularly scheduled principal and/or interest payments are due on the Bonds. Maximum Special Tax means, with respect to any Assessor's Parcel of Taxable Property, the maximum Special Tax determined in accordance with Section C that can be levied in any Fiscal Year on such Assessor's Parcel. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Property Owner means the owner of an Assessor's Parcel within the boundaries of Improvement Area A of CFD No. 2002-1 as determined from the latest equalized tax rolls of the County or as proved through some other acceptable manner to the Administrator. Reserve Fund means the fund of that name created under the Indenture. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax on Taxable Property within Improvement Area A of CFD No. 2002-1. 3 Res.No.2002-26- Ex.C Special Tax Requirement means the amount required in any Fiscal Year for Improvement Area A of CFD No. 2002-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond 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 due and estimated by the Administrator to become due prior to the next levy of the Special_Tax, and (iv) to cure any Delinquencies in the payment of principal or interest on indebtedness of Improvement Area A of CFD No. 2002-1. The Special Tax Requirement shall be reduced by the following: (i) any credit from interest earnings on the Reserve Fund or other Bond funds the earnings on which are available under the terms of the Indenture to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax Levy, and (iii) any other funds legally available to apply against the Special Tax Requirement as determined by the Administrator. Taxable Property means all of the Assessor's Parcels within the boundaries of Improvement Area A of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. B. IDENTIFYING TAXABLE PROPERTY On or about each July I", the Administrator shall determine which Assessor's Parcels in Improvement Area A of CFD No. 2002-1 are Taxable Property.: The Taxable Property shall be subject to the Special Tax 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 each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maximum Special Tax shall increase in every Fiscal Year thereafter by two percent (2%) of the Maximum Special Tax for the prior Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003, and during each Fiscal Year thereafter, the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent (100%) of the Maximum Special Tax for that Fiscal Year, as described. in Section C, above, as needed to satisfy the Special Tax Requirement. 4 Res.No.2002-N Ex.C E. LIMITATIONS No Special Tax shall be levied on an Assessor's Parcel after such Assessor's Parcel becomes Exempt Land. The:Special Tax may be levied and collected on Taxable Property commencing with Fiscal Year 2002-2003, 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). Upon determination by the Administrator that this requirement has-been met, the Special Tax lien shall be removed from all Assessor's Parcels in Improvement Area A of CFD No. 2002-1. F. MANNER OF COLLECTION The Special Tax shall be collected at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2002-1 may at any time directly bill the Special Tax, may collect the Special Tax at a different time or 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. G. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section G.: 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 that will be applied to debt service payments on the Redemption Date. Outstanding Bonds means all Bonds which 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 in Improvement Area A,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 5 Res.No.2002-2E� Ex.C 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. 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). 6 Res.No.2002-26 Ex.C 8. Determine the administrative fees and expenses of Improvement Area A 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 Improvement Area A of CFD No. 2002-1 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 G.1, except that a partial prepayment shall be calculated according to the following formula: Res.No.200246 Ex.C PP=(PH xF)+G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section G.1, minus the amounts determined in Paragraph No. 8 of Section G.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 G.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. 2002-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section G.1, and (ii) indicate in the records of Improvement Area A of CFD No. 2002-1 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. H. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES Any property owner.claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Administrator not later.than one calendar year after having paid the Special Tax that is disputed. The Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Administrator's decision requires that the Special Tax be modified or.changed in favor of the property owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be .made to the next Special Tax levy. Any dispute over the decision of the Administrator shall be referred to the City Council and the decision of the City Council shall be final. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. 8 Res.No.2002-26t Ex.D EXHIBIT D IMPROVEMENT AREA B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) 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. 2002-1 (McDonnell Centre Business Park) (herein "CFD No. 2002-1") shall be levied and collected according to the special tax liability determined by the Administrator through the application of the procedures described below. The real property in Improvement Area B of CFD No. 2002-1, unless exempted by law or by the provisions hereof, shall be specially 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 of Special Tax: Acre or Acreage means the land area of an Assessor's Parcel as shown on the applicable final map, parcel map, or 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 that 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 Improvement Area B of CFD No. 2002-1: the fees and expenses of any Fiscal Agent(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; costs related to credit enhancement for. the Bonds; the expenses of the Administrator and the City in carrying out their duties under any Indenture, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of legal counsel, Bond redemption expenses, charges levied by the County or any division or office thereof in connection with the levy and collection of the 1 Res.No.2002-26::- Ex.D Special Tax, audits, and amounts needed to pay arbitrage rebate to the federal government with respect to the.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 any delinquent Special Tax; 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 Improvement Area B of CFD No. 2002-1 or any Bonds. Administrator means the Director of Administrative Services of the City or such other person or entity designated by the City Administrator 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 that is located within Improvement Area B of CFD No. 2002-1. 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 Improvement Area B of CFD No. 2002-1 under the Act. Bond Fund means the fund or account created pursuant to the Indenture in which the collections of the Special Tax are deposited. Bond Year means the one year period from September 2 to the following September 1. 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. 2002-1. County means the County of Orange. Delinquencies mean the amount, if any, equal to delinquencies in payment of the Special Tax levied in Improvement Area B of CFD No. 2002-1 in the previous Fiscal Year. Exempt Land means (1) any real property within the boundaries of Improvement Area B of CFD No. 2002-1 which is owned by a governmental agency for public right of way purposes, including, but not limited to, streets, water well production facilities, public walkway corridors, and slopes as determined in each Fiscal Year by the Administrator, and(2) any Assessor's Parcel for which the Special Tax has been paid in full. Fiscal Agent means the fiscal agent or trustee who is a party to the Indenture. 2 Res.No.2002-26 Ex.D 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. Improvement Area B means any real property within the boundaries of CFD No. 2002-1 . as depicted on the boundary map for said CFD entitled"Proposed Boundaries of The City of Huntington Beach Community Facilities District No. 20024 (McDonnell Centre Business Park), County of Orange, State of California" and approved by the City Council. Said Improvement Area B is comprised generally of Parcels 1 through 3, Parcels 12 through 20 and adjacent portions of the following roadway right-of-way; Skylab Road, Street `A', Street `C' and Street `D'; as shown on Tentative Parcel Map No. 2001-122 on file with the City and encompassing approximately 48.803 gross acres and 43.785 net taxable acres. In no case shall the net taxable acres in Improvement Area B be less than 43.785. 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. Infrastructure means the public improvements authorized to be financed by Improvement Area B of CFD No. 2002-1 in accordance with the terms of the Act. Interest Payment Date means any date on. which regularly scheduled principal and/or interest payments are due on the Bonds. Maximum Special Tax means, with respect to any Assessor's Parcel of Taxable Property, the maximum Special Tax determined in accordance with Section C that can be levied in any Fiscal Year on such Assessor's Parcel. Outstanding Bonds means all Bonds that are then outstanding under the Indenture. Property Owner means the owner of an Assessor's Parcel within the boundaries of Improvement Area B of CFD No. 2002-1 as determined from the latest equalized tax rolls of the County or as proved through some other acceptable manner to the Administrator. Reserve Fund means the fund of that name created under the Indenture. Special Tax means the special tax to be levied pursuant to the Act and this Rate and Method of Apportionment of Special Tax on Taxable Property within Improvement Area B of CFD No. 2002-1. Special Tax- Requirement means the amount required in any Fiscal Year for Improvement Area B of CFD No. 2002-1 necessary: (i) to pay the annual scheduled debt service on the Outstanding Bonds due in the next succeeding Bond Year which 3 Res.No.2002-25 Ex.D 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 due and estimated by the Administrator to become due prior to the next levy of the Special Tax, and (iv) to cure any Delinquencies in the payment of principal or interest on indebtedness of Improvement Area B of CFD No. 2002-1. The Special Tax Requirement shall be reduced,by the following: (i) any credit from interest earnings on the Reserve Fund or other Bond funds the earnings on which are available under the terms of the Indenture to pay debt service on the Bonds, (ii) the collection of delinquent Special Tax since the last Special Tax Levy, and (iii) any other funds legally available to apply against the Special Tax Requirement as determined by the Administrator. Taxable Property means all of the Assessor's Parcels within the boundaries of Improvement Area B of CFD No. 2002-1, which are not Exempt Land, or otherwise exempt from the Special Tax pursuant to the Act. B. IDENTIFYING TAXABLE PROPERTY On or about each July 1", the Administrator shall determine which Assessor's Parcels in Improvement Area B of CFD No. 2002-1 are Taxable Property. The Taxable Property shall be subject to the Special Tax 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 each Parcel of Taxable Property is $11,200 per Acre commencing in Fiscal Year 2002-2003 and such Maximum Special Tax shall increase in every Fiscal Year thereafter by two percent (2%) of the Maximum Special Tax for the prior Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003, and during each-Fiscal Year thereafter, the City Council or its designee shall levy the Special Tax proportionally on each Assessor's Parcel of Taxable Property at up to one hundred percent (100%) of the Maximum Special Tax for that Fiscal Year, as described in Section C, above, as needed to satisfy the Special Tax Requirement. 4 Res.No.200246 Ex.D E. LIMITATIONS No Special Tax shall be levied on an Assessor's Parcel after such Assessor's Parcel becomes Exempt Land. The Special Tax may be levied and collected.on Taxable Property commencing with Fiscal Year 2002-2003, 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). Upon determination by the Administrator that this requirement has been met, the Special Tax lien shall be removed from all Assessor's Parcels in Improvement Area B of CFD No. 2002-1. F. MANNER OF COLLECTION The Special Tax shall be collected at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2002-1 may at any time directly bill the Special Tax, may collect the Special Tax at a different time or 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. G. PREPAYMENT OF SPECIAL TAX The following definitions apply solely to this Section G.: 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 that will be applied to debt service payments on the Redemption Date. Outstanding Bonds means all Bonds which 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 in Improvement Area B 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 5 Res.No.2002-N Ex.D 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. 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). 6 Res.No.2002-29 Ex.D 8. Determine the administrative fees and expenses of Improvement Area B 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 Improvement Area B of CFD No. 2002-1 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 G.1, except that a partial prepayment shall be calculated according to the following formula: Res.No.2002-2fi Ex.D PP =(PH xF)+G Where these terms are defined as follows: PP = the partial prepayment PH= the Prepayment Amount calculated according to Section G.1, minus the amounts determined in Paragraph No. 8 of Section G.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 G.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. 2002-1 shall (i) distribute the funds remitted to it according to Paragraph 11 of Section G.1, and (ii) indicate in the records of Improvement Area B of CFD No. 2002-1 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. H. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Administrator not later than one calendar year after having paid the Special Tax that is disputed. The Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Administrator's decision requires that the Special Tax be modified or changed in favor of the property owner, a cash refund shall not be made (except for the last year of the levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Administrator shall be referred to the City Council and the decision of the City Council shall be final. This procedure shall be exclusive and. its exhaustion by any property owner shall be a condition precedent to any legal action by such owner. 8 Res.No.2002-26 Ex.E EXHIBIT E CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) NOTICE OF PUBLIC HEARING Notice is hereby given that on April 1, 2002, the City Council of the City of Huntington Beach adopted a Resolution 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." Pursuant to the provisions of Chapter 3.56 of the Municipal Code of the City and, as applicable,the Mello-Roos Community Facilities Act of 1982, the City Council of the City hereby gives notice as follows: A. The text of said Resolution of Intention is as follows: WHEREAS, under the provisions of Chapter 3.56 (commencing with Section 3.56.010) of the Municipal Code of the City of Huntington Beach (the "Code') and, as applicable under the Code, the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et.seq. of the California Government Code (the "Act," and, together with the Code, the "Law"), this City Council may commence proceedings for . the establishment of a community facilities district;and There has been submitted to this City Council a Petition (Including Waiver) of McDonnell Douglas Corporation (the "Petition'), requesting the formation by this City Council of a community facilities district under the Law to be known as the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the"District") comprised of two separate improvement areas; and There has also been submitted to this City Council a Deposit/Reimbursement Agreement (the"Deposit Agreement") wherein the petitioner has agreed to pay all costs of the City of Huntington Beach (the"City") related to the formation of the District;and Under the Law, this City Council is the legislative body for the proposed District and is empowered with the authority to establish the District and levy special taxes taxes within the District; and This City Council now desires to proceed with the actions necessary to.consider the establishment of the District and the designation of improvement areas therein. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: E-1 Res.No.2002-26 Ex.E Section 1. This City Council proposes to begin the proceedings necessary to establish the District pursuant to the Law. Receipt of the Petition to form the District and the Deposit Agreement is hereby acknowledged. The City Administrator is hereby authorized to execute the Deposit Agreement and the Director of Administrative Services of the City, working with the City Treasurer, is hereby authorized to cash the deposit referenced therein and to expend the deposits for costs of formation of the District,as contemplated by the Deposit Agreement. Section 2. The name proposed for the District is City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park). Pursuant to Section 53350 of the Act, the City Council hereby designates a portion of the District as "Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area A"), and a portion of the District as "Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)" ("Area B"). Section 3. The proposed boundaries of Area A and of Area B of the District are as shown on the map of the District on file with the City Clerk of the City, which boundaries are hereby preliminarily approved. The City Clerk is hereby directed to record, or cause to be recorded, the map of the boundaries of the District in the office of the County Recorder as soon as practicable after.the adoption of this Resolution. Section 4. The type of public facilities (the "Area A Facilities") proposed to be eligible for funding by Area_A and pursuant to the Law shall consist of those items listed on Exhibit A hereto under the heading "Facilities;" which Exhibit is by this reference incorporated herein. The type of public facilities (the "Area B Facilities") proposed to be eligible for funding by Area B and pursuant to the Law shall consist of those items listed on Exhibit A hereto under the heading "Facilities," which Exhibit is by this reference incorporated herein. Section 5. Except to the extent that funds are otherwise available to Area A of the District to pay for the Area A Facilities and/or pay the principal and interest as it becomes due on bonds of Area A of the District issued to finance the Area A Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all non-exempt real property in Area A of the District,will be levied within Area A of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine, including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels of real property within Area A of the District, in sufficient detail to allow each landowner within the proposed Area A of the District to estimate the maximum amount such owner will have to pay, is described . in Exhibit C attached hereto which Exhibit is by this reference_incorporated herein. Except to the extent that funds are otherwise available to Area B of the District to pay for the Area B Facilities and/or pay the principal and interest as it becomes due on bonds of Area B of the District issued to finance the Area B Facilities, a special tax sufficient to pay the costs thereof, secured by recordation of a continuing lien against all E-2 Res.No.2002-26 Ex.E non-exempt real property in Area B of the District, will be levied within Area B of the District and collected in the same manner as ordinary ad valorem property taxes or in such other manner as this City Council or its designee shall determine,including direct billing of the affected property owners. The proposed rate and method of apportionment of the special tax among the parcels Of.Teal property within Area B of the District, in sufficient detail to allow each landowner within the proposed Area B of District to estimate the maximum amount such owner will have to pay, is described in Exhibit D attached hereto which Exhibit is by this reference incorporated herein. This City Council finds that the provisions of Section 53313.6, 53313.7 and 53313.9 of the Act (relating to adjustments to ad valorem property taxes and schools financed by.a community facilities district) are inapplicable to either Area A or Area B of the District. Section 6. It is the intention of this City Council,acting as the legislative body for Area A of the District, to cause bonds of the City to be issued for Area A of the District pursuant.to the Law to finance a portion of the costs of the Area A Facilities. If so issued, the bonds shall be issued in one or more series in an aggregate principal amount of not to exceed $13,000,000, shall bear interest payable semi-annually or in such other manner as this City Council shall determine,at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance thereof. It is the intention of this City Council, acting as the legislative body for Area B of the District, to cause bonds of the City to be issued for Area B of the District pursuant to the Law to finance a portion of the costs of the Area B Facilities. If so issued, the bonds shall be issued in one or more series in an aggregate principal amount of not to exceed $13,000,000, shall bear interest payable semi-annually or in such other manner as this City Council shall determine,at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and shall mature not to exceed 40 years from the date of the issuance thereof. Section 7. This City Council reserves to itself the right and authority to allow any interested owner of property in either Area A or Area B of the District, subject to the provisions of Section 53344.1 of the Act and such requirements as it may otherwise impose, and any applicable prepayment penalties as prescribed_ in the indenture or fiscal agent agreement for any bonds of the City for the respective improvement area of the District, to tender to the Director of Administrative Services of the City (who shall remit the same to the City Treasurer) in full payment or part payment of any installment of special taxes for such improvement area of the- District or the interest or penalties thereon which may be due or delinquent, but for which a bill has been received, any bond or other obligation secured thereby, in the manner described in Section 53344.1 of . the Act. Section 8. The levy of the proposed special tax in each improvement area of the District shall be subject to the approval of the qualified electors of such improvement area at a special election. The proposed voting procedure shall be by mailed or hand- E-3 Res.No.2002-26 Ex.E delivered ballot among the landowners in the proposed improvement area of the District,with each owner having one vote for each acre or portion of an acre of land such owner owns in the respective improvement area of the District. Section 9. Except as may otherwise be provided by law or the rate and method of apportionment of the special tax for the respective improvement area of the District, all lands owned by any public entity, including the United States, the State of California and/or the City, or any departments or political subdivisions of any thereof, shall be . omitted from the levy of the special tax to be made to cover the costs and expenses of the facilities,the issuance of bonds by the City for such improvement area of the District and any expenses of the respective improvement area of the District. Section 10. The Director of Public Works of the City is hereby directed to study said proposed facilities for each improvement area of the District and to make, or cause to be made,and file with the City Clerk a report in writing,presenting the following: (a) A brief description of the facilities for.each improvement area of the District. (b) An estimate of the fair and reasonable cost of providing the facilities for each improvement area of the District, including the incidental expenses in connection therewith, including the costs of the proposed bond financing, any City administrative costs and all other related costs. Said report shall be made a part of the record of the public hearing provided for below. Section 11. Monday, May 6, 2002, at 7:00 p.m. or as soon thereafter as the matter may be heard,in the regular meeting place of this City Council,City Council Chambers, City Hall, 2000 Main Street, Huntington Beach, California, be, and the same are hereby appointed and fixed as the time and place when and where this City Council, as legislative body for the District, will conduct a public hearing on the establishment of each improvement area of the District and consider and finally determine whether the public interest, convenience and necessity require the formation of each improvement area of the District and the levy of said special tax within the respective improvement area. Section 12. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper published in the area of the District. The publication of said notice shall be completed at least seven days before the date herein set for said hearing. Said notice shall be.substantially in the form of Exhibit C hereto. Section 13. The firms of Michael Swan Consulting and Quint & Thimmig LLP are hereby designated as special tax consultant and bond counsel and disclosure counsel, respectively, to the City for the District. The City Director of Administrative Services and the City Attorney, respectively, are hereby authorized to execute E-4 Res.No.2002-26 Ex.E agreements with said firms for their services related to the District provided that all fees and expenses of such firms are payable solely from a deposit by the landowner in the District or the proceeds of the bonds, if any, issued by the City for either of the improvement areas of the District. Section 14. This Resolution shall take effect upon its adoption. B. The exhibits to the Resolution which describe the facilities eligible to be funded and the rate and method of apportionment of the special taxes for each improvement area of the district are on file in the office of the City Clerk of the City of Huntington Beach. C. The time and place established under said Resolution for the public hearing required under the Law are Monday, May 6, 2002, at the hour of 7:00 p.m. or as soon thereafter as the matter may be heard, in the regular meeting place of the City Council of the City of Huntington Beach, City Council Chambers, City Hall, 2000 Main Street,Huntington Beach, California. D. At said hearing, the testimony of all interested persons or taxpayers for or against the establishment of each of the improvement areas of the district, the extent of each of the improvement areas of the district or the furnishing by each improvement area of the specified types of facilities will be heard. Any person interested may file a protest in writing with the City Clerk. If fifty percent or more of the registered voters, or six registered voters, whichever is more, residing in the territory proposed to be included in an improvement area of the district, or the owners of one-half or more of the area of land in the territory proposed to be included in an improvement area of the district and not exempt from the special tax file written protests against the establishment of such improvement area and the protests are not withdrawn to reduce the value of the protests to less than a majority, the City Council shall take no further action to establish such improvement area or levy the special taxes in such improvement area for a period of one year from the date of the decision of the City Council, and if the majority protests of the registered voters or the landowners are only against the furnishing of a type or types of facilities within an improvement area of the district, or against levying a specified special tax in such improvement area,those types of facilities or the specified special tax will be eliminated from the proceedings to form such improvement area. E. The proposed voting procedure shall be by special mail or hand-delivered ballot to the property owners within the territory proposed to be included in each respective improvement area of the district. Dated: April 2002 /s/ Connie Brockway City Clerk, City of Huntington Beach E-5 Res. No. 2002-26 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 a regular meeting thereof held on the 1st day of April, 2002 by the following vote: AYES: Green, Dettloff, Bauer, Cook, Houchen;Winchell, Boardman NOES: None ABSENT: None ABSTAIN: None City Clerk-and ex-officio d1erk of the City Council of the City of Huntington Beach, California RESOLUTION NO. 2002-27 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DECLARING ITS INTENTION TO INCUR BONDED INDEBTEDNESS OF THE PROPOSED CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.2002-1 (MCDONNELL CENTRE BUSINESS PARK) WHEREAS,this City Council has this date adopted its Resolution 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," stating its intention to form a community facilities district pursuant to the provisions of 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 (collectively, the"Law"), for the purpose of financing a portion of the costs of certain public improvements (the "Facilities"), as further provided in said Resolution; and This City Council estimates the amount required for the financing of a portion of the costs of the Facilities to be the sum of$11,000,000; and In order to finance said Facilities it is necessary to incur bonded indebtedness for each improvement area identified below as "Area A" and"Area B"in the amount of not to exceed S 13,000,000. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. It is necessary to incur bonded indebtedness within the boundaries of the proposed Improvement Area A of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Area A") in the amount of not to exceed $13,000,000 to finance a portion of the costs of the Facilities. It is necessary to incur bonded indebtedness within the boundaries of the proposed Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the"Area B").in the amount of not to exceed S 13,000,000 to finance a portion of the costs of the Facilities. Section 2. The bonded indebtedness for each improvement area described in Section 1 is proposed to be incurred for the purpose of financing a portion of the costs of the Facilities, including costs incidental to or connected with the accomplishment of said purposes and of the financing thereof. Section 3. This City Council, acting as legislative body for Area A, intends to authorize the issuance and sale of bonds in one or more series in the maximum aggregate principal amount of S13,000,000,bearing interest payable semi-annually or in such other manner as this City Council shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and maturing not to exceed forty(40) years from the date of the issuance of said bonds. This City Council, acting as legislative body for Res.No.2002-27 Area B, intends to authorize the issuance and sale of bonds in one or more series in the maximum aggregate principal amount of$13,000,000,bearing interest payable semi-annually or in such other manner as this City Council shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and maturing not to exceed forty(40) years from the date of the issuance of said bonds. Section 4. Monday, May 6, 2002, at 7:00 p.m. or as soon thereafter as the matter may be heard, in the regular meeting place of this City Council, City Council Chambers, City Hall, 2000 Main Street, Huntington Beach, California,be, and the same are hereby appointed and fixed as the time and place when and where this City Council, as legislative body for each improvement area described in Section 1, will conduct a public hearing on the proposed debt issue for each of the improvement areas and consider and finally determine whether the public interest, convenience and necessity require the issuance of bonds of the City of Huntington Beach for each respective . improvement area. Section 5. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication onetime in a newspaper of general circulation circulated within the District. The publication of said notice shall be completed at least seven (7) days before the date herein set for said public hearing. The notice shall substantially in the form of Exhibit A hereto. Section 6. This Resolution shall take effect upon its adoption. PASSED.AND ADOPTED at a regular meeting of the City Council of the .City of Huntington Beach on this 1st day of April,2002,by the following vote,.to wit: AYES: NOTE: ABSENT: Mayor ATTEST: APPROVED AS TO FORM: City Clerk Qy-03-eZ City Attorney LW �l�y 3.25-02 REVIEWED AND APPROVED: INITIATED AND APPROVED: A, c ity Administrator Director of Economic Development -2- Res.No.2002-27 Ex.A EXHIBIT A CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK) NOTICE OF PUBLIC HEARING Notice is hereby given that on April 1, 2002, the City Council of the City of Huntington Beach adopted a Resolution entitled"A Resolution of the City Council of the City of Huntington Beach Declaring Its Intention To Incur Bonded Indebtedness of the Proposed City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park)." Pursuant to the provisions of Chapter 3.56 of the Municipal Code of the City of Huntington Beach and, as applicable, the Mello-Roos Community Facilities Act of 1982,the City Council of the City of Huntington Beach hereby gives notice as follows: A. The text of said Resolution is as follows: WHEREAS, this City Council has this date adopted its Resolution 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," stating its intention to form a community facilities district pursuant to the provisions of 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 (collectively, the "Law"), for the purpose of.financing a portion of the costs of certain public improvements (the "Facilities"), as further provided in said Resolution; and This City Council estimates the amount required for the financing of a portion of the costs of the Facilities to be the sum of$11,000,000;and In order to finance said Facilities it is necessary to incur bonded indebtedness for each improvement area identified below as"Area A" and "Area B" in the amount of not to exceed$13,000,000. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. It is necessary to incur bonded indebtedness within the boundaries of the proposed Improvement Area A of the City of Huntington Beach Community Facilities .District No. 2002-1 (McDonnell Centre Business Park) (the "Area A") in the amount of not to exceed$13,000,000 to finance a portion of the costs of the Facilities. It is necessary to incur bonded indebtedness within the boundaries of the proposed Improvement Area B of the City of Huntington Beach Community Facilities District No. 2002-1 (McDonnell Centre Business Park) (the "Area B") in the amount of not to exceed $13,000,000 to finance a portion of the costs of the Facilities. A-1 I Res.No.2002-27 Ex.A Section 2. The bonded indebtedness for each improvement area described in Section 1 is proposed to be incurred for the purpose of financing a portion of the costs of the Facilities,including costs incidental to or connected with the accomplishment of said purposes and of the financing thereof. Section 3. This City Council, acting as legislative body for Area A, intends to authorize the issuance and sale of bonds in one or more series in the maximum aggregate principal amount of$13,000,000,bearing interest payable semi-annually or in such other manner as this City Council shall determine, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and maturing not to exceed forty (40) years from the date of the issuance of said bonds. This City Council,acting as legislative body for Area B, intends to authorize the issuance and sale of bonds in one or more series in the maximum aggregate principal amount of $13,000,000, bearing interest payable semi-annually or in such other manner as this City Council shall determine,at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds, and maturing not to exceed forty (40) years from the date of the issuance of said bonds. Section 4. Monday, May 6, 2002, at 7:00 p.m. or as soon thereafter as the matter may be heard,in the regular meeting place of this City Council, City Council Chambers, City Hall, 2000 Main Street, Huntington Beach, California, be, and the same are hereby appointed and fixed as the time and place when and where this City Council, as legislative body for each improvement area described in Section 1, will conduct a public hearing on.the proposed debt issue for each of the improvement areas and consider and finally determine whether the public interest, convenience and necessity require the issuance of bonds of the City of Huntington Beach for each respective improvement area. Section 5. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper of general circulation circulated within the District. The publication of said notice shall be completed at least seven (7) days before the date herein set for said public hearing. The notice shall substantially in the form of Exhibit A hereto. Section 6.This Resolution shall take effect upon its adoption. B. The hearing referred to in the aforesaid Resolution shall be at the time and place specified in the Resolution. C. At that time and place any person interested, including persons owning property in the area of the proposed community.facilities district, will be heard upon the proposed debt issue. Dated: April 2002 /s/Connie Brockway City Clerk, City of Huntington Beach A-2 Res. No. 2002-27 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) 1, 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 a regular meeting thereof held on the 1st day of April, 2002 by the following vote: AYES: Green, Dettloff, Bauer, Cook, Houchen, Winchell, Boardman NOES: None ABSENT: None ABSTAIN: None J City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California PROPOSED BOUNDARIES OF SHEET 1 OF 4 0 IMPROVEMENT AREAS A AND B OF aoa THE CITY OF HUNTINGTON BEACH GRAPHIC SCAM COMMUNITY FACILITIES DISTRICT NO. 2002-1 (MCDONNELL CENTRE BUSINESS PARK), IaIQTI �°•�°� COUNTY OF ORANGE, STATE OF CALIFORNIA. BASS O FILED IN THE OFFICE OF THE CITY CLERK OF THE CRY OF HUNTINGTON BEACH, CFD No,2002-1 BOUNDARY THE BFAfCNGS SHOWN HEREON ARE BASED UPON THIS DAY OF 2002. THE CENTERUNE OF BOLSA AVENUE,BEARING NB9'25,20-W.PER PARCEL MAP NO.97-190 �' J, IX�,r�� FILED IN BOOK 299,PAGES 7 AND 4 OF PARCEL CONNIE BROCKWAY,THE CITY CLERK OF THE CITY OF HUNTINGTON BEACH MAPS,RECORDS OF ORANGE COUNTY,CALIFORNIA. ❑ I HEREBY CERTIFY THAT THE WITHIN MAP SHOWING PROPOSED BOUNDARIES OF IMPROVEMENT WROYBAW AREA A AREAS A AND 8 OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (Mc00NNELL CENTRE BUSSINESS PARK),COUNTY OF GRAMM STATE OF CAUFORNM, WAS APPROVED BY THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AT A REGULAR MFEONG \� DAIflOVEMW AREA 8 HEREOF HELD ON THE DAY Oi •2002,BY ITS RESOLUTION BY: SEE SHEET 4 FOR-NAP.• CONNIE BROCKWAY.THE CITY CLERK OF THE CITY OF HUNTINGTON BEACH DETAILS AND DIMENSIONS. RECORDING REQUESTED BY:CITY OF HUNTINGTON BEACH FILED DING OF 2002.AT THE HOUR OF_O'CLOCK_.M.,IN CURVE TABLE BOOK OF MAPS OF ASSESSMENT AND COMMUNITY FACILITIES DISTRICTS AT CURVE DELTA RADIUS I LENGTT PAGE IN THE OFFICE OF THE COUNTY RECORDER IN THE COUNTY OF ORANGE. C1 89'42'22 29.00 39.14 STATE OF CALIFORNIA. C6 09,37,22' 470.00 79.00 FEE: C7 89'40'31' 27.00 42.26 INSTRUMENT NO. CIO 89.59.47' 1 27.00 1 42.41 C11 15'40'24• 1 530.00 144.9E BY: LINE TABLE DARLENE J.BLOOM,INTERIM COUNTY RECORDER OF COUNTY OF ORANGE LINE LENGTH BEARING L1 155.85 N00'32'09'E / L2 12.76 N89'27.51-V L3 151.53 N00.32.09'E L4 281.29 N89.23.56'V f� JAN ADAMS R.C.E.21687 EXP 9-30-2005 L5 127.43 N39.29'54•V L6 281.55 N5V30'06'E L7 200.07 N89.23'49'V LB 130.. N39.29'S4'V / q_•, _•. _.\ Z�J- �A L9 173.73 N89.26'40'V - 'V `79 L10 294.05 NR9'26'40'V L11 307.60 N00.32'03'E ' W k 2197 L12 223.96 N00.35'00'E / �(, \ # EV,9_," • U3 56.88 N89'26'40'V 'L4• Yp CVYIL ,�{� L14 24393 2364'41'E /' L2 � LID d/q- \ rL - R-1a7.79' UI L-m • \\\ T-361al,14i' _ _ w \ R-27.00' L-47-2e' - •' -•' '' 6-e940'25' . W22'43 \Ne Y\s,Tw I • • _ 342.e0'c .' _ ,NeBNVO W 104434' �CYLA9 ROAD � \\\\ x,nsxt QQQ I g NAP. NAP. / �\ a-27.00 /m L-42.55' �J D. \ ,soSt�� 29e.eoKAP. �- \ a°-'inaooTO•\R$ LZ \11i903'70TE\ \ _________ L. / \7 / / CIO' 7._ /,3W.5V/I 5Se.65' ,500.1Y ' -- \,.°� __ _ __ _ ----------- _ ---_ Necss'4e ne9a5' xev _11s 11.AIB 11RSA1r®BA $� �C��S/1.4 ME -- - - CIVL 8NOWEEFA W_ •Oeps61YAFMG°140F arMO�®bMOWl1 MLC bVlnaaMN�YJo EeOT Y0A>� 4410 4PGYi-YQM1 SHEET 2 OF 4 PROPOSED BOUNDARIES OF IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. JL i jjClD NO.2002-1 W*m MAP wr ro auc mm FOR LEGAL DESCRIPTION OF CFO NO.2002-1 BOUNDARY,SEE SHEET J. ABSEBOORB PARCEL 195-111- 195-111- 195-111- 195-111—( 195-111— MM V! ® O _ ROAD SCALE r-400' NAP. ASSESSOR'S PARCEL MAP RAW WAMft AOA16•erFEM 1 CM,eaae,W. ecaFvna rr.aw,ua® IbMO1�ObMOaH® M¢1pnaMYrwWO DeT N1C a/tlAda OP-Qaei-•aLR LC PROPOSED BOUNDARIES OF SHEET 3 OF 4 IMPROVEMENT AREAS A AND B OF THE CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. LEGAL DEBcwnON OF CFD.NO.2002-1 BOI�IDARri PARCEL* i PARCEL 6 AND PARCEL 3 AS SHOWN ON THE MAP FILED IN BOOK 1,PAGES 3 THROUGH 5 OF PARCEL MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA. EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER OF PARCEL MAR NO.87-424,AS SHOWN ON THE MAP FILED IN BOOK 237, PAGES 4,5.AND 6 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER IM OF PARCEL MAP NO.97-198.AS SHOWN ON THE P FILED IN BOOK 299.PAGES 8 AND 9 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITH THE DISTINCTIVE BORDER OF PARCEL MAP NO.97-189.AS SHOWN ON THE MAP FILED IN BOOK 299.PAGES 1 AND 2 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM THE LAND INCLUDED WITHIN THE DISTINCTIVE BORDER OF PARCEL MAP NO.97-190.AS SHOWN ON MAP FILED IN BOOK 299. PAGES 3 AND 4 OF SAID PARCEL MAPS. ALSO EXCEPTING THEREFROM PARCEL 4 OF PARCEL MAR NO.95-186 AS SHOWN ON THE MAP FILED IN BOOK 296.PAGES 3 AND 4 OF SAID PARCEL MAPS. PARCEL A PARCEL'A'OF PARCEL MAP 97-190.IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE,STATE OF CALIFORNIA.AS SHOWN ON THE MAR FILED IN BOOK 299,PAGES 3 AND 4 OF PARCELS MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL S THAT PORTION OF SKYLAB ROAD,IN THE CRY OF HUNTINGTON BEACH,COUNTY OF ORANGE,STATE OF CALIFORNIA,AS SHOWN ON PARCEL MAP NO.95-186. FILED IN BOOK 296,PAGES 3 AND 4 OF PARCEL MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,LYING WESTERLY OF THE FOLLOWING DESCRIBED LINE BEGINNING AT THE WESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS 'NORTH 89'24'21'WES T 502.81 FEET'ON THE NDRTH LINE OF PARCEL 4 OF SAID MAP:THENCE NORTHERLY IN A DIRECT UNE TO THE WESTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS'NORTH 89'24'21'WEST 592.38 FEET'ON THE SOUTH LINE OF PARCEL 1 OF PARCEL MAP NO.97-190.FILED IN BOOK 299. - PAGES 3 AND 4 OF PARCEL MAPS,IN SAID OFFICE OF THE COUNTY RECORDER. y i 0 ` SCALE f-4DD' eNliLi�ienow I - I NAP. NAP. i BEE BF�T 1 ' FOR NAP.CETALB i 1 i i 1 __________________L _________ BMA4 AN9li �v PLAW PfEPAM SO SHEET INDEX MAP ADA16 SCALE f-100' e�r m�oL rswai4morowo4ms M•�WIOtlMiNgVEC Ole11 MR l/!V✓® w-Y�faQfJ PROPOSED BOUNDARIES OF SHEET 4 OF 4 IMPROVEMENT AREAS A AND B OF THE CITY OF HUN71NGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 2002-1 (McDONNELL CENTRE BUSINESS PARK), COUNTY OF ORANGE, STATE OF CALIFORNIA. LINE TABLE LINE TABLE LINE I LENGTH I BEARING L32 156.33 NDO'35'05'E LI 370.50 N00'35'05'E L33 1866 N00'35'05'E L2 133.00 N89.24'55'V L34 213.04 N89'24'55'V L3 133.00 N89'24'55'V L35 2.58 NDO'35'05'E _ L4 120.42 N00.35'05'E L36 9.83 N89.24'55'V L5 141.75 N89.24.55'V L37 2.58 NDO'35'05'E L6 141.75 NB9.24'55'V L38 15.17 NB9'24'55'V L7 120.42 N00.35'05'E L39 5.58 N00'35'05'E L8 129.66 NOO'35'05'E L40 11.95 N89'24'55'V L9 64.07 N89*P4'55'WI L41 11.95 N89.24'55'V L10 18.66 N00.35'05'E L42 S58 N00'35'05'E L11 238.04 N89.24'55'V L43 265.16 N89.24'55'V L12 4.75 NOO.351054E L44 2.50 N00'35'05'E L13 11.95 N89.24'55'V Log 9.83 N89.24.55'V L14 11.95 N89'24'55'V L46 2.58 NDO'35'03'E L13 3.38 N00'33'03'E L47 15.17 N89'24'35'V L16 15.17 N89.24'53W L48 5.58 N00.35'OYE L17 2.59 NDO.35'O5'E L49 11.95 N89'24'55'V L18 9.03 N89'24.55'V L50 206.33 N00.35.05'E L19 2.58 NDO.35'05'E L51 4.22 N89'24'55'V L20 240.16 N89.24'55'1 L52 9.83 N00.3500YE L21 2.58 NOO'35'05'E L53 1 4.22 INS9.24'55'V L22 9.83 N89'24'55'V L54 19.42 N00.35'05'E L23 2.58 NDO'35'05'E L55 64.07 NB9'24'55'V L24 15.17 N89'24'55'V L56 222.50 N00'35'05'E L25 5.58 NOO'35'D5'E L57 210.00 NDO'35'05'E L26 11.95 N89.24155'V L58 310.00 N89.24'55V L27 235.58 NOO.35'03'E L59 5360 N00.35'05'E L28 55'51 N00'35'03'E L60 106.37 N89'24'55'V _ L29 0.38 N89.24'gg•V L61 156.40 NOO.35'05'E L30 9.83 N00.35'OS'E L62 203.63 N89.24'55'V L31 0.38 N89'24'55'v L4 L47 L58 L4 41 L47 L60 Mn � NAP. � G90G,fit G� L SCALe T-by Ls1 Lez L� L34 La LSg \ �9 7 33n Lz 0 Ll L9 L11 LB L29 1 NA.P. Ji NAP. � L5 14 L26 18 L2 18 l20 L22 N A 1LAW H@Aim W ADAMS INN04�MN04d! M M�an]NMYMYV1e drn M4 .IA�/+N RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Approve the Formation of City of Huntington Beach Community Facilities District No. 2002-1 McDonnell Centre Business Park COUNCIL MEETING DATE: I Aril 1 , 2002 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 Attached Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attome Not Applicable Subleases, Third Party Agreements, etc. (Approved as to form by City Attome 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 Find in s/Conditions for Approval and/or Denial LNot Applicable EXPLANATION FOR MISSING.-ATTACHMENTS'; EEWED RETURNED FORWARDED RV[ Administrative Staff zga Assistant City Administrator Initial City Administrator Initial GIB City Clerk EXPLANATION FOR RETURN OF ITEM. r e°_ . (Below • . For Only) RCA Author: Teague, x 5088