PRELIMINARY OFFICIAL STATEMENT - DRAFT DATED FEBRUARY 8, 2024
NEW ISSUE - BOOK-ENTRY RATING
S&P: _____
(See “ CONCLUDING INFORMATION - Rating on the Bonds” herein) In the opinion of Stradling Yocca Carlson & Rauth LLP , Bond Coun sel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bond s described herein is excluded from gross income for federa l income tax purposes and is not an item of tax preference for pur poses of calculating the federal alternative minimum tax impose d on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations for tax years beginning after December 31, 2022.
$31,845,000*
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS,
SERIES 2024
Dated: Date of Delivery Due: September 1, as shown on the Inside Front Cover The Chula Vista Municipal Financing Authority Local Agency Reve nue Refunding Bonds, Series 2024 (the “Bonds”) are being issued by the Chula Vista Municipal Financing Authority (the “Authority”) to (i) provide funds to purchase five separate series of special tax refunding bonds (collectively, the “Local Obligations”) (ii) purchase a debt service reserve insurance policy for deposit in the Reserve Fund to fund the initial Reserve Requirement; and ( iii) pay costs of issuance of the Bonds. The Local Obligatio ns are obligations issued by various community facilities districts formed by the City of Chula Vista pursuant to the Mello ‑Roos Community Facilities Act of 1982, as ame nded (Section 53311 et seq. of the Government Code of the State of California). The Local Obligations are being issued to re fund the Prior Bonds, as defined herein, an d simultaneously defease the Authority’s Special Tax Refunding Revenue Bonds, Series 2013. See “THE FINANCING PLAN - Estimated Uses of Funds” herein.
The Bonds are being issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985 and an Indenture of Trust, dated as of March 1, 2024 (the “Indenture”), by and be tween the Authority and Wilmington Trust, National Association, as trustee (the “Trustee”). The Bonds are special obligations of the Authority, payable solely from (i) Revenues of the Authority, consisting primarily of debt service payments on the Lo cal Obligations, which are to be made from Special Taxes received with respect to the Taxing Jurisdictions (as defined herein) and (ii) any other amounts pledged therefor under the Indenture, all as more fully described herein. See “ SOURCES OF PAYMENT FOR THE BONDS AND THE LOCAL OBLIGATIONS - Repayment of the Bonds” herein.
Interest on the Bonds is payable semiannually on September 1 and March 1 of each year, commencing on September 1, 2024, until maturity. The Bonds are not subject to optional redemption pri or to maturity but are subject to mandatory redemption from the redemption of Local Obligations resulting from prepayment of Special Taxes See “ THE BONDS - General Provisions” “- No Optional Redemption” and “- Special Redemption” herein. The Bonds will be issued in denominations of $5,000 or integral multiples thereof. The Bonds, when delivered, will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds as described herein under “APPENDIX G - THE BOOK-ENTRY SYSTEM.”
The cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must read the entire Official Statement to obtain information essential to the maki ng of an informed investment decision with respect to the Bonds. Investment in the Bonds involves risks. See “ RISK FACTORS” herein for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds.
The Bonds are offered, when, as and if issued, subject to the appro val as to their legality by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Community Facilities Districts and the Authority by Lounsbery Ferguson Altona & Peak LLP, Esco ndido California, as Acting City Attorney, and by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, as Disclos ure Counsel. Certain legal matters will be passed on for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California. It is anticipated that the Bonds, in book-entry form, will be available for delivery on or about March 19, 2024 through the facilities of DTC.
The date of the Official Statement is __________, 2024.
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* Preliminary, subject to change.
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circ umstances shall this Preliminary Official Statement constitute an offer 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 under the securities laws of such jurisdiction.
$31,845,000*
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS,
SERIES 2024
MATURITY SCHEDULE
(Base CUSIP®† ____)
Maturity Date Principal Interest Reoffering
September 1 Amount Rate Yield CUSIP®†
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
__________________________
* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by FactSet Research Systems Inc. Copyright (c) 2024 CUSIP Global Services. All rights reserved. CUSIP numbers have been assigned by an independent company not affiliated with the Authority, the City or the Municipal Advisor and are included solely for the convenience of the holders of the Bonds. Neither the Authority, the City nor the Municipal Advisor is responsible for the selection or use of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
CHULA VISTA, CALIFORNIA
CITY COUNCIL AND AUTHORITY BOARD MEMBERS
John McCann, Mayor
Carolina Chavez, Council Member District 1
Jose Preciado, Council Member District 2
Alonso Gonzalez, Council Member District 3
Andrea Cardenas, Council Member District 4
________________________________________
CITY STAFF
Maria Kachadoorian, City Manager
Tiffany Allen, Assistant City Manager
Sarah Schoen, Director of Finance/Treasurer
Kerry K. Bigelow, City Clerk
________________________________________
PROFESSIONAL SERVICES
Bond Counsel and Disclosure Counsel
Stradling Yocca Carlson & Rauth LLP
Newport Beach California
Acting City Attorney
Lounsbery Ferguson Altona & Peak LLP
Escondido, California
Municipal Advisor
Harrell & Company Advisors, LLC
Tustin, California
Special Tax Consultant
Spicer Consulting Group, LLC
Murrieta, California
Trustee and Escrow Bank
Wilmington Trust, National Association
Costa Mesa, California
Verification Agent
Robert Thomas CPA, LLC
Overland Park, Kansas
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Investment in the Bonds involves risks which are not appropriate for certain investors. Therefore, only persons with substantial financial resources (in net worth or income) who understand (either alone or with competent investment advice) those risks should consider such an investment.
Except where otherwise indicated, all in formation contained in this Official Statement has been provided by the Chula Vista Municipal Financing Authority, the City of Chula Vista, and the Community Facilities Districts. No dealer, broker, salesperson or other person has been authorized by the Authority, the City, the Community Facilities Districts, the Municipal Advisor or the Underwriter to give any information or to make any representations in connection with the offer or sale of the 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 Authority, the City, the Community Facilities Districts, the Municipal Advisor 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 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
The information set forth herein which has been obtained from third party sources is believed to be reliable but is not guaranteed as to accuracy or completeness by the Community Facilities Districts, the City or the Authority. This Official Statement is not to be constr ued as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such are not to be construed as representations of fact.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Offi cial Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities la ws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy of completeness of such information.
The information and expressions of opinion herein are subj ect to change without notice and neither the 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 Authority, the C ity, the Community Facilities Districts or any other parties described herein since the date hereof. All summaries of the Indenture, the Local Obligation Indentures or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provis ions. Reference is hereby made to such documents on file with the City for further information in connection therewith. While the City maintains an internet website for various purposes, none of the information on that website is incorporated by reference herein or intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds or any other bonds or obligations of the Authority, the City or the Community Facilities Districts. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded.
Certain statements included or incorporated by referenc e in this Official Statement constitute “forward-looking statements” within the meaning of the United States Priv ate Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generall y identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words.
The achievement of certain results or other expectations contained in such forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Authority does not plan to issue any updates or revisions to the forward-looking statements set forth in this Official Stat ement. The Authority is obligated to provide continuing disclosure for certain historical information only. See the caption “ CONCLUDING INFORMATION - Continuing
Disclosure” herein.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREV AIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE BONDS HA VE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HA VE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
TABLE OF CONTENTS
INTRODUCTION ...................................................... 1 The City of Chula Vista ............................................. 1 The Authority ............................................................. 1 Purpose ...................................................................... 2 Security and Sources of Repayment .......................... 2 Legal Authority .......................................................... 4 Sources of Payment for the Bonds and the Local
Obligations .............................................................. 4 Legal Matters ............................................................. 5 Offering of the Bonds ................................................ 5 Summary Not Definitive ............................................ 5 THE FINANCING PLAN .......................................... 6 The Refunding Plan ................................................... 6 Estimated Uses of Funds............................................ 6 THE BONDS ............................................................... 8 General Provisions ..................................................... 8 No Optional Redemption ........................................... 8 Special Redemption ................................................... 9 Scheduled Debt Service on the Bonds and the
Local Obligations .................................................. 10 Debt Service Coverage for the Bonds ...................... 11 SECURITY FOR THE BONDS .............................. 12 General ..................................................................... 12 Revenues and Flow of Funds ................................... 12 No Additional Bonds Except for Refunding Bonds . 15
SECURITY FOR THE LOCAL OBLIGATIONS . 15
General ..................................................................... 15 Local Obligation Indentures .................................... 16 No Additional Local Obligations Except for
Refunding Bonds .................................................. 18 Priority of Lien ........................................................ 18 Covenants of the Community Facilities Districts .... 18 Special Taxes Are Not Within Teeter Plan ............... 19 THE TAXING JURISDICTIONS ........................... 20 Location Map ........................................................... 20 The Taxing Jurisdictions in the Aggregate ............... 20 SPECIAL RISK FACTORS ..................................... 28 Risks of Real Estate Secured Investments
Generally ............................................................... 28 Limitation on Revenues ........................................... 28 The Bonds are Limited Obligations of the
Authority ............................................................... 28 No Obligation of the City ........................................ 29 No Cross-Collateralization Between Taxing
Jurisdictions .......................................................... 29 Potential Early Redemption of Bonds from
Prepayments or Other Sources .............................. 29 Property Values ........................................................ 29 Natural Disasters ...................................................... 30 Hazardous Substances ............................................. 31 Cybersecurity ........................................................... 31 Parity Taxes and Special Assessments ..................... 31 Payment of the Special Tax is not a Personal
Obligation of the Owners ...................................... 32 Disclosures to Future Purchasers ............................. 32 Special Tax Delinquencies ....................................... 32 Insufficiency of Special Taxes ................................. 33 Risks Associated with Reserve Policy ..................... 34 FDIC/Federal Government Interests in Properties ... 34
Bankruptcy and Foreclosure .................................... 35 Funds Invested in the County Investment Pool ........ 36 No Acceleration Provision ....................................... 36 Limitations on Remedies ......................................... 36 Loss of Tax Exemption ............................................ 36 Limited Secondary Market ...................................... 37 Proposition 218 ........................................................ 37 Ballot Initiatives ....................................................... 38 Litigation with Respect to Community Facilities
Districts ................................................................. 38 LEGAL MATTERS .................................................. 39 Enforceability of Remedies ...................................... 39 Approval of Legal Proceedings ................................ 40 No Litigation ............................................................ 40 TAX MATTERS ........................................................ 40 CONCLUDING INFORMATION .......................... 42
Rating on the Bonds ................................................. 42 Underwriting ............................................................ 42 The Municipal Advisor ............................................ 42 Continuing Disclosure ............................................. 43 Additional Information ............................................ 43 References ................................................................ 43 Execution ................................................................. 44 APPENDIX A – INFORMATION REGARDING
THE TAXING JURISDICTIONS
APPENDIX B - SUMMARY OF PRINCIPAL
LEGAL DOCUMENTS
APPENDIX C - GENERAL INFORMATION
REGARDING THE COUNTY OF SAN DIEGO
AND THE CITY OF CHULA VISTA
APPENDIX D - RATES AND METHODS OF
SPECIAL TAX APPORTIONMENT FOR THE
TAXING JURISDICTIONS
APPENDIX E - FORM OF OPINION OF BOND
COUNSEL
APPENDIX F - FORM OF CONTINUING
DISCLOSURE AGREEMENT
APPENDIX G - THE BOOK-ENTRY SYSTEM
1 OFFICIAL STATEMENT
$31,845,000*
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2024
INTRODUCTION
This Official Statement which includes the cover pa ge, the inside front cover page, and appendices (the “Official Statement”), is provided to furnish certain information concerning the sale of the Chula Vista Municipal Financing Authority (the “Authority”) Local Agency Revenue Refunding Bonds, Series 2024 (the “Bonds”), in the aggregate principal amount of $31,845,000*.
This Introduction contains only a brief description of th is issue and does not purport to be complete. The Introduction is subject in all respects to more comple te information in the entire Official Statement and the offering of the Bonds to potential investors is ma de only by means of the entire Official Statement and the documents summarized herein. Potential investors must read the en tire Official Statement to obtain information essential to the making of an informed investment decision (see “ RISK F ACTORS” herein).
For definitions of certain capitalized terms used here in and not otherwise defined, and the terms relating to the Bonds, see the summary included in “ APPENDIX B - SUMMARY OF PRINCIP AL LEGAL DOCUMENTS” herein.
The City of Chula Vista
The City of Chula Vista (the “City”) is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexi co border in an area generally known as “South Bay.” The City encompasses approximately 50 square miles. Based on population, Chula Vista is the second largest city in San Diego County (the “County”). See “ APPENDIX C - DEMOGRAPHIC INFORMATION REGARDING THE COUNTY OF SAN DIEGO AND THE CITY OF CHULA VISTA” herein.
Neither the Bonds nor the Local Obligations are a debt of the City, and no revenues of the City are pledged to repayment of the Bonds or the Local Obligations.
The Authority
The Authority is a joint exercise of powers authority between the City and the Housing Authority of the City of Chula Vista organized and existing pursuant to the Act. The purpose of the Authority is to provide, through the issuance of revenue bonds, a financ ing pool to fund capital improvement projects.
These revenue bonds are to be repaid solely from the revenues of certain local obligations. The Authority has no taxing power. The City Council acts as the governing body of the Authority.
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* Preliminary, subject to change.
2 Purpose
The Bonds. The Bonds are being issued by the Authority to acquire the “Local Obligations” described below, to purchase a debt service reserve insurance policy for deposit in the Reserve Fund to fund the initial Reserve Requirement, and to pay costs of issuance of the Bonds (see “FINANCING PLAN” herein).
The Local Obligations. The Local Obligations are being issued to provide funds to refund the Prior Bonds, as defined below, and simultaneously defeas e the Authority’s Special Tax Revenue Refunding Bonds, Series 2013 (the “2013 Bonds”) (see “FINANCING PLAN” herein).
Security and Sources of Repayment
The Bonds. The Bonds are payable from “Revenues,” as defined below, generally consisting of revenues received by the Authority as the result of the paym ent of debt service on the Local Obligations, and amounts held in the funds and accounts established a nd held for the benefit of the Bonds under the Indenture (as defined below).
Local Obligations. The “Local Obligations” consist of the five separate series of bonds described below issued by the following four community facilities dist ricts formed by the City pursuant to the Mello-Roos Community Facilities Act of 1982, as am ended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Mello-Roos Act”):
(i) City of Chula Vista Community Facilities District No. 06-I (Eastlake – Woods, Vistas and Land Swap) (“CFD No. 06-I”), which includes an Improvement Area A and an Improvement Area B; (ii) City of Chula Vista Community Facilities Distri ct No. 07-I (Otay Ranch Village Eleven) (“CFD No. 07-I”);
(iii) City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) (“CFD No. 08-I”); and
(iv) City of Chula Vista Community Facilities Distri ct No. 2001-2 (McMillin - Otay Ranch - Village Six) (“CFD No. 2001-2”).
CFD No. 06-I, CFD No. 07-I, CFD No. 08-I and CF D No. 2001-2, are each referred to herein as a “Community Facilities District” and collectively as the “Community Facilities Districts.” CFD No. 06-I IA A 2024 Special Tax Refunding Bonds
$9,885,000* City of Chula Vista Community Faciliti es District No. 06-I ((Eastlake – Woods, Vistas and Land Swap) Improvement Area A 2024 Special Tax Refunding Bonds (the “CFD No. 06-1 IA A Bonds”) are being issued by CFD No. 06-I to refund the outstanding City of Chula Vista Community Facilities District No. 06-I (Eastlake – Woods, Vi stas and Land Swap) Improvement Area A Special Refunding Tax Bonds, Series 2013 (the “Prior CFD No. 06-I IA A Bonds”). The CFD No. 06-1 IA A Bonds are payable from Special Taxes levied on taxable property in Improvement Area A of CFD No. 06-I.
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* Preliminary, subject to change.
3 CFD No. 06-I IA B 2024 Special Tax Refunding Bonds
$2,495,000* City of Chula Vista Community Faciliti es District No. 06-I ((Eastlake – Woods, Vistas and Land Swap) Improvement Area B 2024 Special Tax Refunding Bonds (the “CFD No. 06-1 IA B Bonds”) are being issued by CFD No. 06-I to refund the outstanding City of Chula Vista Community Facilities District No. 06-I (Eastlake – Woods, Vi stas and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013 (the “Prior CFD No. 06-I IA B Bonds”). The CFD No. 06-I IA B Bonds are payable from Special Taxes levied on taxable property in Improvement Area B of CFD No. 06-I.
CFD No. 07-I 2024 Special Tax Refunding Bonds
$9,525,000* City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) 2024 Special Tax Refunding Bonds (the “CFD No. 07-I Bonds”) are being issued by CFD No. 07-I to refund the outstanding City of Chula Vista Comm unity Facilities District No 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Seri es 2013 (the “Prior CFD No. 07-I Bonds”). The CFD No. 07-I Bonds are payable from Special Taxes levied on taxable property in CFD No. 07-I, on parity with the previously issued City of Chul a Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series 2015 (the “CFD No. 07-I 2015 Bonds”), currently outstanding in the amount of $9,550,000. See “
SECURITY FOR THE LOCAL OBLIGATIONS
– Local Obligations Indentures.”
CFD No. 08-I 2024 Special Tax Refunding Bonds
$6,545,000* City of Chula Vista Community Faciliti es District No. 08-I (Otay Ranch Village Six) 2024 Special Tax Refunding Bonds (the “CFD No. 08-I Bonds”) are being issued by CFD No. 08-I to refund the outstanding City of Chula Vista Comm unity Facilities District No 08-I (Otay Ranch Village Six) Special Tax Refunding Bonds, Series 2013 (the “Prior CFD No. 08-I Bonds”). The CFD No. 08-I Bonds are payable from Special Taxes levied on taxable property in CFD No. 08-I.
CFD No. 2001-2 2024 Special Tax Refunding Bonds
$3,395,000* City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - Village Six) 2024 Special Tax Refunding Bonds (t he “CFD No. 2001-2 Bonds”) are being issued by CFD No. 2001-2 to refund the outstanding City of Chula Vista Community Facilities District No 2001-2 (McMillin - Otay Ranch - Village Six) Sp ecial Tax Refunding Bonds, Series 2013 (the “Prior CFD No. 2001-2 Bonds”). The CFD No. 2001-2 Bonds are payable from Special Taxes levied on taxable property in CFD No. 2001-2.
Improvement Area A of CFD No. 06-I and Improvement Area B of CFD No. 06-I, CFD No. 07-I, CFD 08-I and CFD No. 2001-2 are each referred to in this Official Statement as a “Taxing Jurisdiction” and collectively as the “Taxing Jurisdictions.”
The Prior CFD No. 06-I IA A Bonds, the Prior CFD No. 06-I IA B Bonds, the Prior CFD No. 07-I Bonds, the Prior CFD No. 08-I Bonds and the Prior CFD No. 20 01-2 Bonds are collectively referred to in this Official Statement as the “Prior Bonds.”
[Remainder of Page Intentionally Left Blank]
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* Preliminary, subject to change.
4 Legal Authority
The Bonds. The Bonds are being issued under Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act ”) and an Indenture of Trust dated as of March 1, 2024 (the “Indenture”), by and between the Authorit y and Wilmington Trust, National Association, as trustee (the “Trustee”).
The Local Obligations. The Local Obligations are being issued pursuant to the Mello-Roos Act and five separate bond indentures, each dated as of March 1, 2024, each by and between a Community Facilities District and Wilmington Trust, National Association, as trustee (each, a “Local Obligation Indenture” and together, the “Local Obligation Indentures”).
Sources of Payment for the Bonds and the Local Obligations The Bonds. The Bonds are secured by a first lien on and pl edge of all of the Revenues. “Revenues” are defined in the Indenture to include:
(a) all amounts received from the Local Obligations;
(b) any proceeds of the Bonds originally deposited with the Trustee and all moneys deposited and held from time to time by the Trustee in the funds and accounts established under the Indenture with respect to the Bonds (other than the Admi nistrative Expense Fund, the Rebate Fund and the Surplus Fund); and
(c) investment income with respect to any moneys held by the Trustee in the funds and accounts established under the Indenture with respect to the Bonds (other than investment income on moneys held in the Administrative Expense Fund, the Rebate Fund and the Surplus Fund).
Certain Funds Not Pledged. Amounts held in the Administrative Expense Fund, the Rebate Fund and the Surplus Fund are not pledged to the repayment of the Bonds.
See “SECURITY FOR THE BONDS — Revenues and Flow of Funds” herein.
Reserve Fund for the Bonds. A Reserve Fund for the Bonds is esta blished pursuant to the Indenture in an amount equal to the Reserve Requirement. The R eserve Requirement for the Bonds, as of the date of issuance of the Bonds, equals $_________. The I ndenture establishes within the Reserve Fund an account with respect to each series of Local Obligations (each a “Res erve Account”). ____ has made a commitment to issue, simultaneously with the initial issuance of the Bonds, the Reserve Policy in the amount equal to the Reserve Requirement for deposit in the Reserve Fund, effective as of the date of issuance of the Bonds. See “SECURITY FOR TH E BONDS — Revenues and Flow of Funds” and “— Reserve Fund” herein.
Local Obligations. Each series of Local Obligations are secu red by Net Special Taxes collected in the applicable Taxing Jurisdictions as a result of the le vy of Special Taxes. Except for CFD No. 07-I, Net Special Taxes are the Gross Taxes which remain afte r the payment of Administrative Expenses up to the amount permitted by the applicable Local Obligation Inde nture. With respect to CFD No. 07-I, so long as the CFD No. 07-I 2015 Bonds are outstanding, Net Special Taxes are limited to the proportionate share of the proceeds of the Special Taxes received by CFD No. 07-I allocable to the CFD No. 07-I Bonds in accordance with the Local Obligatio n Indenture for the CFD No. 07-I Bonds. See “SECURITY FOR THE LOCAL OBLIGATIONS — Local Obligation Indentures.
5 The Local Obligations are not cross-collateralized. In other words, Special Taxes from one Taxing Jurisdiction cannot be used to cover any shortf all in the payment of debt service on the Local Obligation of another Taxing Jurisdiction. However, the Reserve Fund held by the Trustee and funded with the deposit therein of the Reserve Policy will be available in the event of delinquent Revenues to the extent set forth therein. See “
SECURITY FOR THE BONDS — Reserve Fund” herein.
Legal Matters
All legal proceedings in connection with the issuance of the Bonds are subject to the approving opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, as Bond Counsel (“Bond Counsel”).
Such opinion, and certain tax con sequences incident to the ownership of the Bonds, including certain exceptions to the tax treatment of interest, are described more fully under the heading “ TAX MATTERS” herein. Certain legal matters will be passed on fo r the Authority and the Community Facilities Districts by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, as Disclosure Counsel. Certain matters will be passed upon for the Authority a nd the Community Facilities Districts by Lounsbery Ferguson Altona & Peak LLP, Escondido California, Acting City Attorney, an d for the Underwriter by their Counsel, Kutak Rock LLP, Irvine, California.
Offering of the Bonds
Authority for Issuance and Delivery. The Bonds are to be issued pursuant to the Act, the Indenture and by Resolution No. _______ of the Authority adopted on _____, 2024.
Offering and Delivery of the Bonds. The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carl son & Rauth LLP, Newport Beach, California, Bond Counsel. It is anticipated that the Bonds, in book-entry form, will be available for delivery in New York, New York on or about March 19, 2024 th rough the facilities of DTC. See “ APPENDIX G - THE BOOK- ENTRY SYSTEM.”
Summary Not Definitive
The summaries and references contained herein with respect to the Indenture, the Local Obligation Indentures, the Bonds, the Local Obligations and ot her statutes or documents do not purport to be comprehensive or definitive and are qualified by re ference to each such document or statute, and references to the Bonds are qualified in their entirety by referen ce to the form thereof included in the Indenture. Copies of these documents may be obtained after delivery of the Bonds at the trust office of the Trustee, Wilmington Trust, National Associati on, 650 Town Center Drive, Suite 800, Costa Mesa, California 92626 or from the City of Chula Vista, 276 Fourth Street, Chula Vista, California 91910.
[Remainder of Page Intentionally Left Blank]
6 THE FINANCING PLAN
The Refunding Plan
In 2013, the Authority issued $72,100,000 aggregate principal amount of the 2013 Bonds in order to purchase the Prior Bonds.
On the date of issuance of the Bonds, a portion of the proceeds of the Bonds will be used to purchase the Local Obligations. These amounts will be transferred to the Fiscal Agent for the Prior Bonds. Such funds will be used, together with certain existing funds on deposit with the Fiscal Agent related to the Prior Bonds, to provide for the defeasance and refunding of the $44,425,000 outstanding 2013 Bonds and the related Prior Bonds. Money will be deposited into an escrow fund (the “Refunding Fund”) which will be held under an Escrow Agreement, dated as of March 1, 2024, between the Authority and the Trustee, as Escrow Bank (the “Escrow Agreement”).
Moneys in the Refunding Fund, if invested, will be invested in certain Fe deral Securities specified therein. The amount deposited in the Refunding Fund (together with interest earnings) will be sufficient to redeem the 2013 Bonds on April 1, 2024, without premium.
Upon the deposit of funds as provided in the Escrow Agreement, the 2013 Bonds and the related Prior Bonds will be legally defeased on such date of the issuance of the Bonds. Neither the moneys in the Refunding Fund nor the interest thereon will be available for the payment of the Bonds.
Robert Thomas CPA, LLC will verify from the inform ation provided to them the mathematical accuracy as of the date of the closing on the Bonds of the co mputations contained in the provided schedules to determine that the amounts listed in the schedules prepar ed by the Municipal Advisor, to be held under the Escrow Agreement, will be sufficient to pay, when due, the redemption price of the 2013 Bonds.
The Prior Bonds to be refunded are currently outstanding in the following amounts:
Prior CFD No. 06-I IA
A Bonds $13,410,000
Prior CFD No. 06-I IA B Bonds 3,440,000
Prior CFD No. 07-I Bonds 12,730,000
Prior CFD No. 08-I Bonds 10,220,000
Prior CFD No. 2001-2 Bonds 4,625,000
$44,425,000
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7 Estimated Uses of Funds
Under the provisions of the Indenture, the Trustee will receive the proceeds fro m the sale of the Bonds and will apply them as follows:
Principal Amount of Bonds
Net Original Issue Premium
Total Sources
Purchase of Local Obligations (1)
Costs of Issuance (2)
Total Uses
____________________________________
(1) Proceeds of the Bonds will be used to acquire the Local Obligations. (2) Includes Underwriter’s discount and Reserve Policy premium. The Trustee will retain and deposit in the Costs of Issuance Fund each Taxing Jurisdiction’s proportionate share of the costs of issuance of the Bonds.
The Local Obligations to be purchased are as follows:
CFD No. 06-I IA A Bonds $9,885,000*
CFD No. 06-I IA B Bonds 2,495,000*
CFD No. 07-I Bonds 9,525,000*
CFD No. 08-I Bonds 6,545,000*
CFD No. 2001-2 Bonds 3,395,000*
$31,845,000*
__________________________
* Preliminary, subject to change.
Proceeds of each issue of series of Local Obligations w ill be transferred to the Refunding Fund or applied to the payment of the Costs of Issuance of the Bo nds, which includes payment of rating agency fees, Trustee expenses, Bond Counsel, Disclosure Counsel, M unicipal Advisor and any other costs of issuing the Bonds and the Local Obligations.
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8 THE BONDS
General Provisions
Payment of the Bonds. The Bonds will be dated the date of deliv ery. Interest is payable on the Bonds at the rates per annum set forth on the inside front cover page hereof and will be computed on the basis of a year consisting of 360 days and tw elve 30-day months. Interest on the Bonds is payable semiannually on September 1 and March 1 of each year, commencing September 1, 2024, (each an “Interest Payment Date”) until maturity.
Each Bond will bear interest from the Interest Paym ent Date next preceding the date of authentication thereof, unless (a) it is authenticat ed after a Record Date (the 15th calendar day of the month preceding the month in which such Interest Payment Date occu rs, whether or not such day is a Business Day) and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or (b) it is authenticated on or before August 15, 2024 in which event it will bear interest from the Dated Date; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon, or from the Dated Date if no interest has been paid or made available for payment.
Interest on the Bonds will be payable on each Interest Payment Date to the person whose name appears on the Bond Register as the Owner as of the Record Date immediately preceding each Interest Payment Date. Interest will be paid by check of the Truste e mailed on the Interest Payment Date by first class mail, postage prepaid, to the Owner at the address as it appears on the Bond Register or by wire transfer to an account in the United States of America upon inst ructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds provided to the Tr ustee, in writing, at least five (5) Business Days before the Record Date for such Interest Payment Date. The Bonds are issued in fully registered form and will be registered in the name of Cede & Co., as nomi nee of DTC. DTC will act as securities depository of the Bonds. Ownership interests in the B onds may be purchased in book-entry form only in denominations of $5,000 and any integral multiple. See the “Payments of Principal and Interest: Book- Entry System” below.
Principal of and premium (if any) on any Bond will be paid upon presentation and surrender thereof, at maturity or the prior redemption thereof, at the Trust Office of the Trustee, except as provided in “APPENDIX G - THE BOOK-ENTRY SYSTEM.”
Payments of Principal and Interest; Book-Entry System. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as ma y be requested by an authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by wire of the Trustee to DTC which will in turn remit such interest and principa l to participants in DTC’s book-entry only system, which will in turn remit such inter est and principal to Beneficial Owner s (as defined herein) of the Bonds (see “APPENDIX G- THE BOOK-ENTRY SYSTEM” herein). As long as DTC is the registered owner of the Bonds and DTC’s book-entry method is used for the Bonds, the Trustee will send any notices to Bond Owners only to DTC. The Authority gives no assurance that DTC or the DTC Participants will distribute payments or notices to Beneficial Owners.
No Optional Redemption
The Bonds are not subject to optional redemption prior to maturity.
9 Special Redemption
The Bonds are subject to special redemption on any Interest Payment Date from proceeds of early redemption of Local Obligations from the prepayment of Special Taxes within a Taxing Jurisdiction, in connection with Local Obligations, in whole or in part, from maturities corresponding proportionately to the maturities of the Local Obligations simultaneously redeemed, at the principal amount thereof, plus a premium expressed below as a percentage of the princi pal amount so redeemed, plus accrued interest to the date of redemption thereof:
Redemption Dates Redemption Prices
Any Interest Payment Date from September 1, 2024 through March 1, 2031 103% September 1, 2031 and March 1, 2032 102
September 1, 2032 and March 1, 2033 101
Notice of Redemption. So long as the Bonds are held in book-entry form, notice of redemption will be sent by the Trustee to DTC and not to the Beneficial Owners of the Bonds under the DTC book-entry only system. Neither the Authority nor the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in accordance with the procedures in effect for the DTC book-entry system. See
APPENDIX
G — THE BOOK-ENTRY SYSTEM.
The Trustee on behalf, and at the expense of, the Authority shall send notice of any redemption to the respective Owners of any Bonds designated for rede mption at their respective addresses appearing on the Bond Register, and to the Securities Depositories and to the Information Services, at least thirty (30) but not more than sixty (60) days prior to the date fixe d for redemption. Neither failure to receive any such notice so sent nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the redemption place and the redemp tion price and shall designate the CUSIP numbers, Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the Trustee for re demption at the redemption price, giving notice also that further interest on such Bonds will not accrue after the redemption date.
In addition to the foregoing notice, further notice shall be sent by the Trustee in said form to any Bondowner whose Bond has been called for redempti on but who has failed to submit his Bond for payment by the date which is sixty days after the redemption date, but no defect in said further notice nor any failure to give or receive all or any portion of such further noti ce shall in any manner defeat the effectiveness of a call for redemption.
Selection of Bonds of a Maturity for Redemption . Unless otherwise provided under the Indenture, whenever provision is made in the Indenture for the redemption of less than all of the Bonds of a maturity, the Trustee shall select the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption, by lot in any manner which the Trust ee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds sh all be deemed to be comprised of separate $5,000 authorized denominations, and such separate authori zed denominations shall be treated as separate Bonds which may be separately redeemed.
Partial Redemption of Bonds . In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same maturity date, of authorized denominations in aggregate principal am ount equal to the unredeemed portion of the Bond to be redeemed.
10 Effect of Redemption. From and after the date fixed for rede mption, if funds available for the payment of the principal of and interest (and premium, if an y) on the Bonds so called for redemption have been duly provided, such Bonds so called will cease to be en titled to any benefit under the Indenture other than the right to receive paymen t of the redemption price, and no inte rest will accrue thereon from and after the redemption date specified in such notice. A ll Bonds redeemed pursuant to the Indenture will be cancelled and destroyed.
Scheduled Debt Service on the Bonds and the Local Obligations Annual debt service on the Bonds, assuming no early redemption of Bonds, is shown below.
Bond
Year Ending Bonds
September 1 Principal Interest Annual Total Total
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Total
__________________________
* Preliminary, subject to change.
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11 Annual debt service on the Local Obligations Bonds, which comprise the Revenues available to pay the Bonds, is shown in Table N o. 1 below.
Table No. 1 also assumes no early redemption of Local Obligations. The maturity of the CFD No. 06-I IA B Bonds and the CFD No. 07-I Bonds is one year later than CFD No. 06-I IA A Bonds, the CFD No. 08-I Bonds and the CFD No. 2001-2 Bonds.
TABLE NO. 1
REVENUES FROM LOCAL OBLIGATIONS
Bond Year
Ending
September 1
CFD No. 06-1
IA A Bonds *
CFD No. 06-I IA
B Bonds*
CFD No. 07-I
Bonds*
CFD No. 08-I
Bonds*
CFD No. 2001-2
Bonds*
Total Debt
Service on Local
Obligations*
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Total
_______________________________________
* Preliminary, subject to change
Debt Service Coverage for the Bonds
Scheduled payments of principal of and interest on the Bonds equals 100% of the projected Reve nues that will be generated by th e anticipated payment of debt service on each of the Local Obligations while th e Bonds are outstanding. According to the Special Tax Consultant, based on the annual debt service for the Local Obligations, with respect to ea ch Taxing Jurisdiction, the Special Taxes levied at the maximum Special Tax rates under the related Rate and Method (as defi ned below), less estimated Administrative Expenses and assuming no delinquencies, wou ld generate in each Fiscal Year not less than 110% of debt service payable with respect to each related series of Local Obligations. See APPENDIX A - “INFORMATION REGARDING THE TAXING JURISDICTIONS. However, under the Mello-Roos Act, under no circumstances may Special Taxes levied against any parcel of property used for private reside ntial purposes in a Taxing Jurisdiction be increased by more than ten percent (10%) as a consequence of delinquency or default by the owner of any other parcel within in such Taxing Jurisdiction. See “ SECURITY FOR THE LOCAL OBLIGATIONS.”
12 SECURITY FOR THE BONDS
General
As described below, the Bonds are payable prim arily from Revenues consisting primarily of amounts received by the Authority as the result of its acquisition of the Local Obligations.
The Bonds are special obligations of the Authorit y payable solely from and secured solely by the Revenues and amounts in certain funds and accounts pledged therefor in the Indenture. The Bonds are not a debt or liability of the City, the State of California or any political subdivisions thereof other than the Authority to the limited extent described herein. The faith and credit of the Authority is not pledged to secure the payment of Bonds, nor is any of its political subdivisions liable therefor, nor in any event shall the Bonds or any interest or redemption premium thereunder be payable out of any funds or properties other than those of the Authority as set forth in the Indenture. The Authority has no taxing power.
Revenues and Flow of Funds
Bonds; Revenues. Subject to the provisions of the Indenture, the Bonds are secured by a first lien on and pledge (which shall be effected in the manner and to the extent provided in the Indenture) of all of the Revenues. The Bonds are equally secured by a pl edge, charge and lien upon the Revenues without priority for any Bond over any other Bond; and the paym ent of the interest on and principal of the Bonds and any premiums upon the redemption of any Bonds are secured by an ex clusive pledge, charge and lien upon the Revenues. So long as any of the Bonds are Ou tstanding, the Revenues shall not be used for any purpose except as is expressly permitted by the Indenture.
Collection by the Trustee . The Authority has transferred in trus t, granted a security interest in and assigned to the Trustee, for the benefit of the Owners from time to time of the Bonds, respectively, all of the Revenues and all of the right, title and interest of the Authority in the Local Obligations, subject to the terms of the Indenture. The Trustee is entitled to a nd will collect and receive all of the Revenues and any Revenues collected or received by the Authority will be deemed to be held , and to have been collected or received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee. The Trustee also is entitled to and, subject to the provisions of the Indenture, the Trustee will take all steps, actions and proceedings reasonably necess ary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Au thority and all of the obligations of the City and the Community Facilities Districts under the Local Obligations.
Deposit of Revenues . All Revenues derived from the Local Obligations, other than Local Obligation Delinquency Revenues, will be promp tly deposited by the Trustee upon receipt thereof in the Revenue Fund. Any Revenues which represent the payment of delin quent principal of or interest on an issue of Local Obligations will be first applied to make pa yments required pursuant to the Indenture upon the occurrence of an Event of Default and next to be deposited to the Reserve Fund to replenish the amount on deposit therein to the Reserve Requirement, or to reimburse the Insurer for Policy Costs.
Application of Revenues . On each Interest Payment Date, the Trustee will transfer from the Revenue Fund, and deposit into the following respective a ccounts for the Bonds, the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
13 Interest Account. On each Interest Payment Date, th e Trustee shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on such In terest Payment Date on all Outstanding Bonds on such date. All moneys in the Interest Account sha ll be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity). In the event that the amounts on deposit in the Interest Account on any Interest Payment Date, afte r any transfers from the Reserve Fund pursuant to the Indenture, are insufficient for any reason to pa y the aggregate amount of interest then coming due and payable on the Outstanding Bonds, the Trust ee shall apply such amounts to the payment of interest on each of the Outstanding Bonds on a pro rata basis.
Principal Account. On each September 1 on whic h principal of the Bonds shall be payable, the Trustee shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of, and premium (if any) on, the Bonds coming due and payable on such date, or required to be redeemed on such date pursuant to the Indenture. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the principal of the Bonds at the maturity thereof or (ii) paying the principal of and premium (if any) on any Bonds upon the redemption thereof pursuant to the Indenture.
Reserve Fund. On each Interest Payment Date on which amounts are due to an insurer under the Reserve Policy, after making deposits to the Inter est Account and the Principal Account as described above, the Trustee shall transfer from the Revenue Fund, an amount sufficient to reimburse an insurer for draws under the Reserve Policy.
Deficiencies. If on any Interest Payment Date or date for redemption the amount on deposit in the Revenue Fund is inadequate to make the transfers ab ove as a result of a payment default on an issue of Local Obligations, the Trustee will immediately notify the issuer of such Local Obligations of the amount needed to make the required deposits under “- Application of Revenues.” In the event that following such notice the Trustee receives Local Obligations Deli nquency Revenues from the issuer of such Local Obligation to cure such shortfall, the Trustee shall deposit such amounts to the Revenue Fund for application in accordance with the Indenture. Th e Trustee shall disburse or transfer all Revenues representing Local Obligations Delinquency Revenues of a Community Facilities District first to cure any event of default on the Bonds caused by the nonpaym ent of the Local Obligations of such Taxing Jurisdiction and then to reimburse an insurer for draws under the Reserve Policy, subject to the limitations described under the caption “- Reserve Fund” below.
Rebate Fund. On each Interest Payment Date after ma king the transfers required described above, upon receipt of a Request of the Authority to do so, the Trustee shall transfer from the Revenue Fund to the Rebate Fund for deposit in the accounts therein the amounts specified in such Request of the Authority.
Surplus Fund . On September 1 of each year, after ma king the deposits describ ed above, and upon reimbursement to the Insurer for an y amounts owed under the Reserve Policy, the Trustee will transfer all amounts remaining on deposit in the Revenue Fund to the Administrative Expense Fund unless the Trustee has received a request of the Authority direc ting it to transfer all or a portion of the said amounts to the Surplus Fund, in which case the Trustee shall make the transfer to the Surplus Fund. Any amounts transferred to the Surplus Fund pursuant to the Inde nture shall no longer be considered Revenues and are not pledged to repay the Bonds. See APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS herein.
[Remainder of Page Intentionally Left Blank]
14 Reserve Fund
A Reserve Account for each issue of Local Obligati ons will be established in the Reserve Fund (each, a “Reserve Account”). The Reserve Policy (as defined below) in the amount of $_____* will be deposited into the Reserve Fund, which in the aggregate, equals the Reserve Requirement as of the date of issuance of the Bonds. Each Local Obligation’s initial Proportionate Share will initially be as follows:
$________* in the CFD No. 06-I IA A Reserve Account
$________* in the CFD No. 06-I IA B Reserve Account
$________* in the CFD No. 07-I Reserve Account
$________* in the CFD No. 08-I Reserve Account
$________* in the CFD No. 2001-2 Reserve Account
The Indenture defines “Proportionate Share” to mean as of the date of calculation for any issue of the Local Obligations, the ratio derived by dividing the remaining debt service of such Local Obligations by the remaining debt service of the Outstanding Bonds.
The aggregate of the foregoing amounts is equal to th e Reserve Requirement as of the date of issuance of the Bonds, which is an amount equal to 10% of the par amount of the Outstanding Bonds, Pursuant to the Indenture, the Reserve Requirement shall never be greater than the initial Reserve Requirement. In the event that the amount of the Reserve Requirement is changed, the Trustee will, upon receipt of a Request of the Authority, adjust the shares of each Reserve Account to reflect the new Reserve Requirement. ____ has made a commitment to issue, simultaneously with the initial issuance of the Bonds, a reserve surety policy (the “Reserve Policy”) in the amount e qual to the Reserve Require ment for deposit in the Reserve Fund, effective as of the date of issuance of the Bonds. Under the terms of the Reserve Policy, ___ will unconditionally and irrevocably guarantee to pay that portion of the scheduled payments of principal of and interest on the Bonds that beco mes due for payment but sh all be unpaid by reason of nonpayment by the Authority, to the extent set forth in the Reserve Policy and in the Indenture. See APPENDIX B — “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - AUTHORITY INDENTURE - REVENUES; FLOW OF FUNDS -Reserve Fund for provisions relating to the Reserve Policy.
Moneys in the Reserve Fund will be used to pay th e principal of and interest on the Bonds when the moneys in the Interest Account and the Principal Account of the Revenue Fund are insufficient therefor.
If the amounts in the Interest Account or the Principal Account of the Revenue Fund are insufficient to pay the principal of or interest on the Bonds when due, the Trustee shall withdraw from the applicable Reserve Account or Reserve Accounts an amount equa l to the deficiency resulting from the delinquency in the payment of scheduled debt ser vice on the applicable Series of Lo cal Obligations and transfer such amount to the Interest Account, the Principal Account or both, as applicable. If there are insufficient funds on deposit in a Reserve Account to cover a deficiency resulting from the delinquency in the payment of scheduled debt service on the applicable Series of Local Obligations, the Trustee shall withdraw from each of the other Reserve Account s an amount based upon the Proportionate Share applicable to each such Reserve A ccount of such remaining deficiency and transfer such amounts to the Interest Account, the Principal Account or both, as applicable.
__________________________
* Preliminary, subject to change.
15 Upon the transfer by the Trustee to the Reserve Fu nd of delinquent Revenues, such Revenues shall be allocated to the Reserve Accounts as follows:
First, to the Insurer to reimburse it for all Policy Co sts due as a result of a draw on the Reserve Policy.
Such reimbursements shall be credited first to each Reserve Account for any series of Local Obligations, other than the Reserve Account to which such delin quent Revenues relate on a Proportionate Share basis if such reimbursements are owing as a result from draws due to delinquencies in the payment of scheduled debt service on that series of Local Ob ligations from which such delinquent Revenues were received. Such reimbursements will next be cred ited to the Reserve Account for the series of Local Obligations from which the delinquent Revenues were received.
After reimbursing the Insurer for all Policy Costs due as a result of a draw on the Reserve Policy above, the remaining delinquent Revenues, if any, shall be transferred to the Revenue Fund.
No Additional Bonds Except for Refunding Bonds
The Authority may not issue any additional bonds, notes or other similar evidences of indebtedness (“Additional Bonds”) payable in whole or in part out of Revenues except bonds issued to fully or partially refund the Bonds or any Additional Bonds, as provided for in the Indenture. For a description of the conditions established in the Indenture for the issuance of Additional Bonds, see APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.
SECURITY FOR THE LOCAL OBLIGATIONS
General
Each series of Local Obligations is a limited oblig ation of the respective Community Facilities District payable solely from Net Special Taxes (defined below) collected in the applicable Taxing Jurisdiction and amounts deposited by the Community Facilities Districts in the applicable Special Tax Fund.
With respect to the CFD No. 07-I Bonds, howeve r, so long as the CFD No. 07-I 2015 Bonds are outstanding, Net Special Taxes with respect to the CFD No. 07-I Bonds only include the proportionate share of the proceeds of the Special Taxes recei ved by CFD No. 07-I allocable to the CFD No. 07-I Bonds, as further described below and does not include any Special Taxes of CFD No. 07-I allocable to the CFD 07-I 2015 Bonds (see APPENDIX A – INFORMATION REGARDING THE TAXING JURISDICTIONS – Community Facilities District No . 07-I). The Community Facilities Districts’ limited obligation to pay the principal of, premium, if any, and interest on the applicable Local Obligations from Net Special Taxes collected in the applicable Taxing Jurisdiction and amounts in the applicable Special Tax Fund is absolute and unconditional.
No Local Obligation (and no oblig ations issued on a parity ther ewith under the Local Obligation Indentures relating to the Local Obligations, each a “Local Obligation Parity Bond”) is a legal or equitable pledge, charge, lien or encumbrance upon a ny of the Community Faciliti es Districts’ respective property, or upon any of their income, receipts or re venues, except the Net Special Taxes collected in the applicable Taxing Jurisdiction and other amounts in th e applicable Special Tax Fund which are, under the terms of each Local Obligation Indentures and the Mello -Roos Act, set aside for the payment of the Local Obligations and interest thereon and neither the respective members of the legislative body of each Community Facilities District or the City Council nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance.
The “Special Taxes” for each Taxing Jurisdiction are levied and collected according to the rate and method of apportionment (each, a “Rate and Method”) established for such Taxing Jurisdiction. See
16 APPENDIX A - INFORMATION REGARDING THE TAXING JURISDICTIONS and APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
Except for the foregoing, no other taxes are pledged to the payment of the Local Obligations.
The Local Obligations are not cross-collateralized. In other words, Special Taxes collected in one Taxing Jurisdiction cannot be used to cover an y shortfall in the payment of debt service on the Local Obligations of another Taxing Jurisdiction . However, the Reserve Fund held by the Trustee and funded at the Reserve Requirement will be ava ilable in the event of delinquent Revenues. See “SECURITY FOR THE BONDS - Reserve Fund” herein.
The Local Obligations and any Local Obligation Pari ty Bonds are not general or special obligations of the City nor general obligations of the Community Facilities Districts, but are limited obligations of the Community Facilities Districts payable so lely from amounts deposited by the Community Facilities Districts in certain funds established under the Local Obligation Indentures, as more fully described herein. The Community Facilities District s’ limited obligation to pay the principal of, premium, if any, and interest on the Local Obligations and any Local Obligation Parity Bonds from amounts in certain funds established under the Local Obligation Indentures is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set- off whatsoever. No Owner of the Local Obligat ions or any Local Obligation Parity Bonds may compel the exercise of the taxing power by the Community Facilities Districts (except as pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on the Local Obligations and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction.
The Special Taxes are collected in the manner and at the same time as ad valorem property taxes are collected and is subject to the same penalties and th e same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes; provided, however, that the Community Facilities Districts may directly bill the Special Tax, and may collect Special Taxes at a different time or in a different manner as determined by the City Council.
Under the Mello-Roos Act under no circumstances will th e Special Taxes levied against any parcel in a Taxing Jurisdiction for which an occupancy permit for private residential use has been issued be increased by more than ten percent (10%) per fiscal year as a consequence of delinquency or default by the owner of any other parcel within such Taxing Jurisdiction. Therefore, even though the maximum Special Tax rates may allow for Special Tax increases greater than 10%, in the event of high delinquencies in a Taxing Jurisdiction, a Community Facilities District coul d not increase the Special Taxes in such Taxing Jurisdiction in the fiscal year following such delinqu encies by more than 10% on the residential units.
See “
SPECIAL RISK FACTORS - Special Tax Delinquencies.”
Local Obligation Indentures
The Local Obligations will be issued under separat e Local Obligation Indentures to be executed and delivered in connection with such issuance. The following describes certain provisions of the Local Obligation Indentures, which are substantially similar.
Under the Local Obligation Indentures, the “Net Speci al Taxes” pledged by the applicable Community Facilities District to the Local Obligations (and any re lated Local Obligation Parity Bonds) is defined as “Gross Special Taxes” minus amounts set aside to pay Administrative Expenses.
Other than with respect to the Local Obligation Indenture for the CFD No. 07-I Bonds, “Gross Special Taxes” is defined in each Local Obligation Indenture as the amount of all Special Taxes received by the Community Facilities District from the Taxing Jurisdicti on, together with the pr oceeds collected from the
17 sale of property pursuant to the foreclosure provisions of the Local Obligation Indenture for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions.
With respect to the CFD No. 07-I Local Obligation Indenture, “Gross Special Taxes” is defined as, so long as the CFD No. 07-I 2015 Bonds remain outstanding , a proportionate share of the proceeds of the Special Taxes received by CFD No. 07-I, includi ng any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redempti on or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon, allocable to the Bonds and any Local Obligation Parity B ond issued by CFD No. 07-I (“CFD No. 07-I Local Obligation Parity Bond”) in accordance with the CFD No. 07-I Local Obligation Indenture. The proportionate share shall of the Special Taxes allocable to the CFD No. 07-I Bonds and any CFD No. 07-I Local Obligation Parity Bonds in any Bond Year sha ll be the ratio derived by dividing the Annual Debt Service for the CFD No. 07-I Bonds and any CFD No. 07-I Local Obligation Parity Bonds due and payable during such Bond Year by the then aggregat e Annual Debt Service for the CFD No. 07-I Bonds, the CFD No. 07-I Local Obligation Parity Bonds and the CFD No. 07-I 2015 Bonds due and payable during such Bond Year. With respect to the CFD No. 07-I Local Obligation Indenture, so long as the CFD No. 07-I 2015 Bonds remain outstanding, “Gross Special Taxes” do not include any delinquent installments of Special Taxes and all penalties and in terest thereon that have been sold and assigned by CFD No. 07-I to a third party and from which third pa rty CFD No. 07-I has received funds equal to 100% of such delinquent installments of Special Taxes; provided, however, “Gross Special Taxes” shall include funds received from such third party equal to 100% of such delinquent installments of Special Taxes.
So long as the CFD No. 07-I 2015 Bonds are outstanding, only the proportion of the Net Special Taxes as determined in accordance with the foregoing definition of “Gross Speci al Taxes” will be available to pay debt service on the CFD No. 07-I Bonds. That is, no amount of the Special Taxes collected within CFD No. 07-I and allocated to pay the CFD No. 07-I 2015 Bonds will be available to pay debt service on the CFD No. 07-I Bonds (and vice versa). “Administr ative Expenses” are the administrative costs with respect to the calculation and collectio n of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Local Obligations or which are not otherwise pa id as Costs of Issuance, any costs related to the Community Facilities District’s compliance with state and federal laws requiring continuing disclosure of information concerning the Local Obligations, the Community Facilities District, and any other costs otherwise incurred by the City on behalf of the Comm unity Facilities District, in order to carry out the purposes of the Community Facilities District, as set forth in the Resolution of Formation and any obligation of the Community Facilities District unde r the Local Obligation Indenture. Administrative Expenses also include the administrative costs with respect to the collection of Delinquency Proceeds.
The portion of any Prepayment received by a Community Facilities District that is to be applied to the redemption of Local Obligations will be identifie d as such by the Community Facilities District and transferred to the Trustee for deposit in the Redemption Account. Except for the foregoing portion of any Prepayment to be deposited to the Redemption A ccount, the Community Facilities District will, as soon as practicable transfer the Special Taxes received by the Community Facilities District to the Trustee for deposit in the applicable Special Tax Fund to be held by the Trustee in trust for the Owners of the Local Obligations. The Trustee will transfer the Special Ta xes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the Local Obligation Indenture, in the following order of priority, to:
(1) The Administrative Expense Fund;
(2) The Interest Account of the Special Tax Fund;
(3) The Principal Account of the Special Tax Fund;
18 (4) The Trustee for deposit in the Reserve Acc ount under the Authority Indenture the amount necessary to reimburse the Insurer for any unpa id Policy Costs equal the Community Facilities Districts’ Proportionate Share of the Reserve Requirement;
(5) The Redemption Account of the Special Tax Fund; and
(6) The Surplus Fund.
No Additional Local Obligations Except for Refunding Bonds The Local Obligation Indentures authorize the Comm unity Facilities Districts to issue additional bonds payable from Net Special Taxes on a parity with the related Local Obligations but only for the purpose of refunding all or a portion of the applicable Local Obligations, and, in the case of Community Facilities District No. 07-I, for the purpose of refunding the CFD No. 07-I 2015 Bonds. Other than the CFD No. 07-I 2015 Bonds, there is no other indebtedness of the Community Facilities Districts that will be outstanding on the date that the Local Obligations are issued.
Local Obligations will only be refunded if a corresponding amount of Bonds is refunded. For a description of the conditions establis hed in each Local Obligation Inde ntures for the issuance of Local Obligation Parity Bonds, see APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.
Priority of Lien
Each installment of the Special Taxes and any inte rest and penalties thereon, constitutes a lien on the parcel of land on which it was imposed until the same is paid. Such lien is co-equal to and independent of the lien for general taxes, any other commun ity facilities district special taxes. See “THE TAXING JURISDICTIONS - The Taxing Jurisdictions in the Aggregate” herein.
Covenants of the Community Facilities Districts
In their respective Local Obligation Indenture, each Community Facilities District has made certain covenants, certain of which are described below.
Punctual Payment. The Community Facilities District will duly and punctually pay or cause to be paid the principal of and interest on every Local Obligati on and Local Obligation Parity Bond issued under its Local Obligation Indenture, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Local Obligations and Local Obligation Parity Bonds and in accordance with its Local Obligation Indenture to the extent that Net Special Taxes and other amounts pledged thereunder are available therefor, and that the payments into the Funds and Accounts created thereunder will be made, all in strict conformity with the terms of the Local Obligations, any Local Obligation Parity Bonds, and its Local Obligation Indenture, and that it will faithfully observe and perform all of the conditions, covenants and requirements of its Local Obligation Indenture and all Supplemental Indentures and of the Local Obligations and any Local Obligation Parity Bonds issued under its Local Obligation Indenture.
Against Encumbrance . The Community Facilities District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Speci al Taxes except as provided in the Local Obligation Indenture, and will not issue any obligation or security having a lien or charge upon the Net Special Taxes superior to or on a parity with the Local Obligations , other than Local Obligation Parity Bonds. Nothing in the Local Obligation Indenture shall prevent the Community Facilities District from issuing or incurring indebtedness which is paya ble from a pledge of Net Special Ta xes which is subordinate in all respects to the pledge of Net Special Taxes to repay the Local Obligations and the Local Obligation Parity Bonds.
19 Levy of Special Tax . So long as any Local Obligations or Local Obligation Parity Bonds issued are Outstanding, the Community Facilities District covenant s to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay (1) the principal of and interest on the Local Oblig ations and Local Obligation Parity Bonds when due, (2) the Administrative Expenses, (3) any amounts required to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement, (4) any amount s required to replenish the Reserve Account under the Authority Indenture to the Proportionate Share and pay all Policy Costs resulting from the delinquency in the payment of scheduled debt service on the Local Obligations and any Local Obligation Parity Bonds, (5) and any amounts due to the Bond In surer not included in (1) through (4) above. The Community Facilities District further covenants that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or th e Community Facilities District’s authority to levy the Special Tax for so long as the Local Obligati ons and any Local Obligation Parity Bonds are Outstanding.
Commence Foreclosure Proceedings. The Community Facilities District covenants for the benefit of the Owners of the Local Obligations and any Local Obliga tion Parity Bonds that it will review the public records of the County of San Diego, California, in co nnection with the collection of the Special Taxes not later than July 1 of each year to determine the amount of the Special Tax collected in the prior Fiscal Year and will commence judicial foreclosure proceedings against (i) properties under common ownership with delinquent Special Taxes in excess of $5,000 by the Oc tober 1 following the close of each Fiscal Year in which such Special Taxes were due and (ii) agains t all properties with delinquent Special Taxes in the aggregate of $2,500 or more by the October 1 followi ng the close of any Fiscal Year if the amount of the Reserve Fund is less than its reserve requirement or if the amount in the Reserve Account is less than the Reserve Requirement. Notwithstanding the foregoi ng, the Community Facilities District may elect to defer foreclosure proceedings on any parcel for wh ich the District has received funds equal to the delinquent installments of Special Taxes related to such parcel from any source (excluding draws from the Reserve Accounts), including without limitation th e proceeds of any sale and assignment of such delinquent installments to a third party, and such fund s are available to contribu te toward the payment of the principal of and interest on the Bonds and Parity Bonds when due. The Community Facilities District may, but shall not be obligated to, advance funds fro m any source of legally available funds in order to maintain such Reserve Accounts. The Community Facilities District may treat any delinquent Special Tax sold to an independent third-party or to any fu nds of the City for at least 100% of the delinquent amount as having been paid. Proceeds of any such sale up to 100% of the delinquent amount will be deposited in the Special Tax Fund.
Special Taxes Are Not Within Teeter Plan
The Special Taxes are not encompasse d within the alternate procedure for the distribution of certain property tax levies on the secured roll pursuant to Chapte r 3, Part 8, Division 1 of the California Revenue and Taxation Code (Section 4701 et seq.), commonly referred to as the “Teeter Plan.” The County has adopted a Teeter Plan under which a tax distribution procedure is implemented and secured roll taxes are distributed to taxing agencies within the County on the basis of the tax levy, rather than on the basis of actual tax collections. However, by policy, the C ounty does not include special taxes, assessments or assessments in its Teeter Plan. The Special Taxes of the Taxing Jurisdictions are not included in the County’s Teeter Plan.
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20 THE TAXING JURISDICTIONS
Location Map
A map showing the location of the Community Faciliti es Districts is found on the following page. In general, the Community Facilities Districts are situat ed east and west of California State Route 125 (known as the South Bay Expressway), near the eastern boundary of the City.
The Taxing Jurisdictions in the Aggregate
Introduction. Set forth under this caption is certain information describing the Taxing Jurisdictions in the aggregate. See APPENDIX A hereto for more information with r espect to each Taxing Jurisdiction.
Although the Authority believes the information with respect to the Taxing Jurisdictions, in the aggregate, is relevant to an informed decisi on to purchase the Bonds, investors should be aware that the debt service on one series of Local Obligations may not be used to make up any shortfall in the debt service on another series of Local Obligations. Moreover, the parcels in each Taxing Jurisdiction are taxed according to the applicable Rate and Method, and the applicable Special Taxes may only be applied to pay the debt service on the Local Obligations related to the Taxing Jurisdiction in which such Special Taxes are levied and not on the debt service of any other Local Obligations.
Potential investors should further be aware that Special Taxes are levied against individual parcels within each Taxing Jurisdiction and that any such parcel ma y have a value-to-lien ratio less than the overall value-to-lien ratio for such Taxing Jurisdiction a nd less than the value-to-lien ratio of the Taxing Jurisdictions in the aggregate.
Property Values & Development Status . As of December 1, 2023, over 99.9% of the parcels in the Taxing Jurisdictions were classified as developed under each Rate and Method. Each of the 5 remaining undeveloped parcels are located in Improvement Area A of CFD 06-I. Table 2 sets forth the development status of the property within the Taxing Jurisdic tions as of December 1, 2023 determined in accordance with the land use categories in each Rate and Met hod, the assessed valuation of such property taken from the County Assessor’s records for Fiscal Year 2023-24 and the Fiscal Year 2024-25 projected Special Tax levy by land use category. All of the Special Taxes are projected to be levied on property categorized as Developed Property (which includes residential a nd non-residential property) with no Special Tax expected to be levied on Undeveloped Property.
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21 22
TABLE 2
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
THE TAXING JURISDICTIONS IN AGGREGATE
DEVELOPMENT STATUS AS OF DECEMBER 1, 2023
Development Status
No. of
Parcels/
Units
Fiscal Year
2023-24 Assessed
Value
(1)
Maximum
Special Tax
(2)
Projected
Fiscal Year
2024-25 Special
Tax Levy(3)
% of Fiscal Year
2024-25 Special
Tax Levy
Developed Commercial 21 $ 98,633,314 $ 289,784 $ 63,779* 1.2% Developed Residential - Attached 2,929 (4) 1,216,497,561 3,852,258 1,598,948* 31.2 Developed Residential - Detached 4, 074 2,946,312,632 7, 805,226 3,460,483* 67.5 Undeveloped Commercial(5) 1 1,276,439 10,038 - 0.0
Undeveloped Residential(5) 4 2,993,136 35,480 - 0.0 Total 7,029 $4,265,713,082 $11,992,786 $5,123,210* 100.0% _____________________________________________________________________ (1) Total Assessed Value per County of San Diego as of January 1, 2023 lien date. (2) Pursuant to the Rate and Method for each Taxing Jurisdic tion, under no circumstances wi ll the Special Tax levied against any Assessor’s Parcel of Resi dential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Sp ecial Taxes by the owner of any other Assessor’s Parcel. See “SPECIAL RISK FACTORS - Insufficiency of Special Taxes.” (3) Amounts levied are used to pay debt service on, and other co sts associated with the Loca l Obligations and the CFD 07-I 2015 Bonds. Takes into account reduced debt service on the Local Obligations as a result of the issuance of the Bonds and the refunding of the Prior Bonds.
(4) Represents units, not parcels.
(5) All undeveloped parcels are located in Improvement Area A of CFD No. 06-I.
Source: County of San Diego Assessor’s Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
Value-To-Lien Ratios. The aggregate assessed value of all of the taxable property in the Taxing Jurisdictions, as established by th e County Assessor for Fiscal Year 2023-24 was $4,261,443,507. The aggregate principal amount of the Local Obligations is $31,845,000*. The following tables set forth the aggregate assessed value-to-lien ratios of all the taxa ble property in the Taxing Jurisdictions based on Fiscal Year 2023-24 assessed values in each of the Ta xing Jurisdictions and the principal amount direct and overlapping land-secured debt, including the Local Obligations.
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23 TABLE 3
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
TAXING JURISDICTIONS IN AGGREGATE
ASSESSED V ALUE-TO-LIEN RATIOS
Taxing Jurisdiction
Local
Obligations
(1)
Direct &
Overlapping
Land Secured
Debt(2)
Total
Land Secured
Debt
Fiscal Year
2023-24 Assessed
Value
(3)
Assessed
Value-to-Lien
Ratio
(4)
CFD No. 06-I IA A $9,885,000* $ 6,960,742 (5) $16,845,742* $1,601,709,192(6) 95.1:1* CFD No. 06-I IA B 2,495,000* 3,052,451 5,547,451* 328,562,829 59.2:1* CFD No. 07-I 9,525,000* 25,271,909 34,796,909* 1,218,811,562 35.0:1* CFD No. 08-I 6,545,000* 8,013,755 14,558,755* 670,003,366 46.0:1* CFD No. 2001-2 3,395,000* 6,053,864 9,448,864* 442,356,558 46.8:1* Total $31,845,000* $49,352,721 $81,197,721* $4,261,443,507 52.5:1*
(1) Based on aggregate principal am ount of the Local Obligations. (2) Includes CFD No. 07-I 2015 Bonds, but does not include any ge neral obligation bonded indebtedness applicable to property within the Taxing Jurisdictions. See APPENDIX A for a de scription of CFD No. 7-I 2015 Bonds and the overlapping general obligation bonded indebtedness applicable to the Taxing Jurisdictions. (3) Reflects Fiscal Year 2023-24 a ssessed value of all taxable property in the Taxing Jurisdictions. (4) Calculated by dividing the Assessed Va lue column by the Total Debt column. (5) Excludes Undeveloped Property.
(6) Excludes $41,359 overlapping land-secured debt allocated to Undeveloped Property.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
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24 TABLE 4
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
TAXING JURISDICTIONS IN AGGREGATE
ASSESSED V ALUE DIRECT AND OVERLAPPING DEBT
(DEVELOPED PROPERTY)
Estimated Assessed
Value-to-Lien Ratio
No. of
Parcels/
Units
Projected
Fiscal Year
2024-25 Special
Tax Levy (1)*
% of Projected
Fiscal Year
2024-25 Special
Tax Levy*
Fiscal Year
2023-24
Assessed
Value(2)
Total Direct &
Overlapping Tax
& Assessment
Debt(3)
Less than 10.00:1 5 $ 3,757 0.1% $ 499,727 $ 62,207 Between 10.00:1 to 20.00:1 49 44,101 0.9% 12,832,874 699,308 Between 20.01:1 to 30.00:1 843 782,531 15.3% 350,421,504 13,488,723 Between 30.01:1 to 40.00:1 1,414 1,219,006 23.8% 747,821,079 21,647,084 Between 40.01:1 to 50.00:1 1,162 889,914 17.4% 699,468,355 15,572,533 Between 50.01:1 to 60.00:1 757 461,253 9.0% 405,066,168 7,378,041 Between 60.01:1 to 70.00:1 613 374,582 7.3% 374,026,563 5,780,652 Between 70.01:1 to 80.00:1 453 266,328 5.2% 271,270,986 3,632,472 Between 80.01:1 to 90.00:1 494 285,753 5.6% 317,647,780 3,732,768 Between 90.01:1 to 100.00:1 458 254,507 5.0% 282,013,835 2,996,657 Greater than 100.01:1 776
541,479 10.6% 800,374,636 6,207,275
Total 7,024 $5,123,210 100.0% $4,261,443,507 $81,197,721 _________________________
(1) Projected Fiscal Year 2024-25 Special Tax levy taking into account lower debt service as a result of the refunding of the Prior Bonds.
(2) Total Assessed Value per County of San Diego as of January 1, 2023. Excludes undeveloped parcels. (3) Total includes Local Obligations in the amount of $31,845,000* and CFD 07-I 2015 Bonds in the amount of $9,550,000 plus $39,802,721 of additional overl apping tax and assessment debt, but does not include an y general obligation bonded indebtedness applicable to proper ty within the Taxing Jurisdictions . See APPENDIX A - INFORMATION REGARDING THE TAXING JURISDICTIONS for a description of CFD No . 7-I 2015 Bonds and the overlapping general obligation bonded indebtedness applicable to the Taxing Jurisdictions.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
Potential investors should be aware that Special Ta xes are levied against individual parcels within each Taxing Jurisdiction and that certain individual pa rcels will have a value-to-lien ratio less than the overall value-to-lien ratio for such Taxing Jurisdic tion and less than the overall value-to-lien ratio of the Taxing Jurisdictions in the aggregate. See APPENDIX A - INFORMATION REGARDING THE TAXING JURISDICTIONS for the value-to-lien analysis within each Taxing Jurisdiction. In addition, after September 1, 2032, the Revenues will only consist of the Net Special Taxes from CFD No. 06-I IA B and CFD No. 07-I.
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25 Table 5 sets forth the historical assessed values for th e taxable property in the Taxing Jurisdictions on an aggregate basis for each of the current and last four fiscal years.
TABLE 5
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
TAXING JURISDICTIONS IN AGGREGATE
HISTORICAL ASSESSED V ALUE
Fiscal Year
Land Assessed
Value
Structure Assessed
Value
Total Assessed
Value
% Change in Total
Assessed Value
2019-20 $1,499,345,007 $2,015, 283,167 $3,514,628,174
2020-21 1,555,605,971 2,075,512, 171 3,631,118,142 3.3% 2021-22 1,610,108,065 2,133,639, 300 3,743,747,365 3.1% 2022-23 1,758,842,481 2,291,204, 747 4,050,047,228 8.2% 2023-24 1,872,149,904 2,393,563, 178 4,265,713,082 5.3% ____________________________
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC.
Effective Tax Rates. Table 6A and Table 6B below show the av erage effective tax rates of property with completed homes within the Taxing Jurisdictions based on the average Fiscal Year 2023-24 assessed values, the average Fiscal Year 2023-24 actual levies for all other overlapping taxing jurisdictions and the actual Fiscal Year 2023-24 special tax levy for each Taxing Jurisdiction.
The average Special Tax is expected to be reduced between $80-130* for attached residential units and between $155-190* for detached residential units in Fi scal Year 2024-25 as a result of the issuance of the Bonds and the refunding of the Prior Bonds.
TABLE 6A
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
TAXING JURISDICTIONS IN AGGREGATE
A VERAGE DWELLING UNIT EFFECTIVE 2023-24 TAX RATES
ATTACHED RESIDENTIAL UNIT
Taxing Jurisdiction
Average
Assessed Value
– Completed
Dwelling Unit
Average
CFD
Special Tax
Average Ad
Valorem Taxes
Per Completed
Dwelling Unit
Average Other
Taxes and
Assessments Per
Completed
Dwelling Unit
Average
Effective Tax
Rate -
Completed
Dwelling Unit
CFD No. 06-I IA A $426,536 $ 396 $4,933 $1,189 1.53% CFD No. 06-I IA B 447,394 559 5,174 1,355 1.58
CFD No. 07-I 462,249 1,063 5,346 2,369 1.90
CFD No. 08-I 391,067 760 4,522 1,789 1.81
CFD No. 2001-2 426,911 684 4,937 2,236 1.84
____________________________
Source: Spicer Consulting Group, LLC.
__________________________
* Preliminary, subject to change.
26 TABLE 6B
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
TAXING JURISDICTIONS IN AGGREGATE
A VERAGE DWELLING UNIT EFFECTIVE 2023-24 TAX RATES
DETACHED RESIDENTIAL UNIT
Taxing Jurisdiction
Average
Assessed Value
– Completed
Dwelling Unit
Average
CFD
Special Tax
Average Ad
Valorem Taxes
Per Completed
Dwelling Unit
Average Other
Taxes and
Assessments Per
Completed
Dwelling Unit
Average
Effective Tax
Rate -
Completed
Dwelling Unit
CFD No. 06-I IA A $837,984 $ 815 $9,691 $2,604 1.56% CFD No. 06-I IA B 551,949 805 6,383 1,902 1.65
CFD No. 07-I 648,094 1,329 7,495 2,694 1.78
CFD No. 08-I 601,916 853 6,961 2,224 1.67
CFD No. 2001-2 730,612 1,087 8,449 4,871 1.97
____________________________
Source: Spicer Consulting Group, LLC.
Top Taxpayers within the Taxing Jurisdictions. No single owner owns more than thirteen parcels within any one Taxing Jurisdiction, and no sing le taxpayer is projected to be r esponsible for more than 6.6% of the projected Fiscal Year 2024-25 Special Taxes within any one Taxing Jurisdiction. See APPENDIX A - INFORMATION REGARDING THE TAXING JURISDICTIONS.
TABLE 7
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
TAXING JURISDICTIONS IN AGGREGATE
TOP TAXPAYERS
Property Owner
Assessor's
Parcels
Number
of
Parcels/
Units
Assessed
Value(1)
% of
Assessed
Value
Projected
Fiscal
Year 2024-
25 Special
Tax Levy
% of
Projected
Total
Fiscal
Year 2024-
25 Special
Tax Levy
Contessa V 6 LLC 1 108 $ 25,676,354 0.6% $ 58,827 1.1% Otay Ranch Fourteen LLC 1 98 30,200,000 0.7 44,762 0.9
San Diego Retail 1 LLC 1 1 58,029,297 1.4 37,217 0.7
Realty Income Properties 1 LLC 1 1 14,981,462 0.4 10,987 0.2 Shea Homes Limited Partnership 10 10 3,555,300 0.1 9,205 0.2 M M Manager LLC 13 13 3,792,648 0.1 7,273 0.1
Otay Lakes Professional Plaza LLC 1 1 7,509,670 0.2 5,159 0.1 Eastlake Properties LLC 6 6 2,420,518 0.1 4,469 0.1
Gramico Inc 4 4 1,481,119 0.0 3,682 0.1
Lutteroth Family Trust 04-01-09 3 3 4,800,743 0.1 3,563 0.1 Subtotal 41 245 152,447,111 3.6 185,143 3.6
All other individual property owners 6,779 6,779 4,108,996,396 96.4 4,938,067 96.4 Totals 6,820 7,024 $4,261,443 ,507 100.0% $5,123,210 100.0% _______________________
(1) Assessed Value is based on the information provided from the San Diego County Assessor's Equalized Roll as of January 1, 2023 and may not accurately reflect true market value. Excludes Undeveloped Property. (2) Responsibility of the par amount has been allocated based on the estimated Fiscal Year 2024-25 Special Tax levy, with development status as of December 1, 2023, and preliminary bond sizing as provided by the Municipal Advisor.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC.
27 Delinquencies. Special Taxes were levied against 6,778 parcels in the Taxing Jurisdictions in Fiscal Year 2022-23. For the Fiscal Year 2022-23 Special Tax levy, as of June 30, 2023, 66 parcels were delinquent in the payment of the 2022-23 Special Tax levy and 28 parcels were still delinquent in payment of Special Taxes for fiscal years 2018-19 through 2021-22. For the Special Tax levies, collections and delinquency rates in each of the Taxing Jurisdictions see
APPENDIX A - INFORMATION REGARDING THE TAXING
JURISDICTIONS.
TABLE 8
CHULA VISTA MUNICIPAL FINANCING AUTHORITY
TAXING JURISDICTIONS IN AGGREGATE
HISTORICAL DELINQUENCY RATES
AT FISCAL YEAR END(1)
Taxing Jurisdiction
% of Total Fiscal
Year 2024-25
Projected
Special Tax Levy
(2)
2019
2020
2021
2022
2023
CFD No. 06-I IA A 26.6% 0.91% 2.02% 1.44% 0.91% 1.93%
CFD No. 06-I IA B 6.6% 0.79% 0.97% 0.46% 0.56% 0.19%
CFD No. 07-I 39.9% 0.52% 0.60% 0.42% 0.51% 0.43%
CFD No. 08-I 17.4% 0.49% 0.70% 0.42% 0.41% 0.66%
CFD No. 2001-2 9.5%
0.35% 0.51% 0.09% 0.40% 0.58%
Total 100.0% 0.62% 1.02% 0.67% 0.59% 0.88%
(1) Does not include collections subsequent to the end of the Fiscal Year in which the Special Taxes were levied. (2) See “SPECIAL RISK FACTORS – Limitation on Revenues” herein. In the Fiscal Year 2032-33, the Bonds will only be secured by Net Special Taxes of Improvement Area B of CFD No. 06-I and CFD No. 07-I.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC
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28 SPECIAL RISK FACTORS
The purchase of the Bonds involves significant risks and is not a suitable investment for all investors.
The following is a discussion of certain risk factor s which should be considered, in addition to other matters set forth herein, in evaluating the investme nt quality of the Bonds. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the cr edit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the Taxing Jurisdictions to pay their Special Taxes wh en due. Such failures to pay Special Taxes could result in the inability of the Commun ity Facilities Districts to make full and punctual payments of debt service on the Local Obligations which comprise the Revenues available to pay debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the Taxing Jurisdictions . See “- Property Values” and “- Limited Secondary Market.”
Risks of Real Estate Secured Investments Generally
Because the timely payment of debt service on the B onds will be dependent up on the timely payment of the Local Obligations and the timely payment of the Local Obligations will be dependent upon the timely payment of Special Taxes, which are secured ultima tely by the Taxable Property within the Taxing Jurisdictions, the Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in and around the vicinity of the Taxing Jurisdictions, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without lim itation, zoning laws and la ws relating to endangered species and hazardous materials) and fiscal policies; ( iii) natural disasters (including, without limitation, earthquakes, wildfires, floods, drought and windsto rms), which may result in uninsured losses; and (iv) adverse changes in local market conditions.
Limitation on Revenues
The Revenues are limited by the final maturity of the Local Obligations. After September 1, 2032, the Bonds will be secured only by paymen ts received with respect to th e CFD 06-I IAB Bonds and the CFD 07-I Bonds. Prior to September 1, 2032, debt service on the CFD 06-I IA B Bonds represent 6.6% of Revenues and debt service on the CFD 07-I Bonds represent 39.9% of Revenues. In the final year Bond ending September 1, 2033 , debt service on the CFD 06-I IA B Bonds will represent 14.1% of Revenues and debt service on the CFD 07-I Bonds will represent 85.9% of Revenues.
The Bonds are Limited Obligations of the Authority
The Bonds are limited obligations of the Author ity payable only from amounts pledged under the Indenture, which consist primarily of payments made to the Trustee on the Local Obligations and the Reserve Fund. Funds for the payment of the principa l of and the interest on the Local Obligations are derived only from payments of Special Taxes. The am ount of Special Taxes that are collected could be insufficient to pay principal of and interest on th e Local Obligations due to non-payment of the Special Taxes levied or due to insufficient proceeds received from a judicial foreclosure sale of land within the Taxing Jurisdictions following delinquency. The Comm unity Facilities Districts’ legal obligations with respect to any delinquent Special Taxes is limited to the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes is delinquent. The Bonds cannot be accelerated in the event of any default.
29 Failure by owners of the parcels within the Taxing Jurisdictions to pay Special Tax installments when due, delay in foreclosure proceedings, or the inability of the Community Facilities Districts to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Special Taxes levied against such parcels may result in the inability of the Community Facilities Districts to make full or timely payments of debt service on the Local Obligations, which may, in turn, result in the depletion of the Reserve Fund and the inability of the Authority to make full or timely payment on the Bonds.
No Obligation of the City
The Local Obligations and the interest thereon, and in turn, the Bonds, are not payable from the general funds of the City. Except with respect to the Special Taxes, neither the credit nor the taxing power of the Community Facilities Districts or the City is pledge d for the payment of the Local Obligations or the interest thereon, and except to compel a levy of the Special Ta xes securing the Local Obligations, no Owner of the Bonds may compel the exercise of an y taxing power by the Community Facilities Districts or the City or force the forfeiture of any property of the City or the Community Facilities Districts. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or the Community Facilities Districts or a legal or equitable pledge, ch arge, lien or encumbrance upon any of the City’s or the Community Facilities Districts’ property or up on any of the City’s or the Community Facilities Districts’ income, receipts or revenues, excep t the Revenues and other amounts pledged under the Indenture.
No Cross-Collateralization Between Taxing Jurisdictions The Local Obligations are not cross-collateralized. In other words, the Speci al Taxes from one Taxing Jurisdiction cannot be used directly to cover any sh ortfall in the payment of debt service on the Local Obligations of another Taxing Jurisdiction. Howeve r, all amounts in the Reserve Fund are available to pay debt service on the Bonds if the amounts in the In terest Account or the Principal Account of the Revenue Fund are insufficient to pay the principal of or interest on the Bonds when due. See the caption “SECURITY FOR THE BONDS - Reserve Fund.”
Potential Early Redemption of Bonds from Prepayments or Other Sources Property owners within the Taxing Jurisdictions are pe rmitted to prepay their Special Taxes at any time.
Such prepayments could also be made from the pro ceeds of bonds issued by or on behalf of an overlapping community facilities district. Such prepayments will result in a redemption of Local Obligations on the first March 1 or September 1 whic h is more than 30 days following the receipt of the prepayment. The proceeds of the Local Obligations so redeemed will then be used to make a mandatory redemption of the Bonds. Such mandatory redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See “ THE BONDS - Special Redemption.”
Property Values
The value of property within the Taxing Jurisdictions is an important factor in evaluating the investment quality of the Bonds. In the event that a property owner defaults in the payment of a Special Tax installments, a Community Facilities District’s only reme dy is to judicially foreclose on that property.
Prospective purchasers of the Bonds should not assume that the property within the Taxing Jurisdictions could be sold for the assessed values described herein at a foreclosure sale for delinquent Special Tax installments or for an amount adequate to pay delinquent Special Tax installments.
The assessed values set forth in this Official Statement do not represen t market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current
30 owner, increased or decreased annually by an amount determined by the County Assessor based on current market conditions, generally not to exceed an increase of more than 2% per fiscal year from the date of purchase (except in the case of new construc tion subsequent to such acquisition). No assurance can be given that a parcel could actually be sold for its assessed value.
The actual market value of the property is subject to future events such as downturn in the economy, occurrences of certain acts of nature a nd the decisions of various governmental agencies as to land use, all of which could adversely impact the value of the property in the Taxing Jurisdictions which is the security for the Local Ob ligations, which secure the Bonds. As discussed herein, many factors could adversely affect property values within the Taxing Jurisdictions.
Natural Disasters
The Taxing Jurisdictions, like all California comm unities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Sout hern California is a seismically active area. Seismic activity represents a potential risk for damage to build ings, roads, bridges and property within the Taxing Jurisdictions. No known active or potentially active faults, as defined in the Alquist-Priolo Earthquake Fault Zone Act, cross the property with the Commun ity Facilities Districts, and the Community Facilities Districts are not located in an Alquist-Priolo Earthquake Study Zone. In addition, land susceptible to seismic activity may be subject to liquefaction duri ng the occurrence of such event. The Community Facilities Districts are not located in a flood plain area.
In recent years, wildfires have caused extensive da mage throughout the State, including within the County. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events.
In 2003, the Cedar Fire was a wildfire which started in the Cleveland National Forest in central San Diego County and eventually burned more than 280,0 00 acres, destroying over 2,800 structures.
Simultaneously, the Otay Fire burned more than 46,000 acres, but was stopped from spreading into housing developments by Otay Lake. Certain portions of the City were placed under evacuation orders, but no structures within the City were lost as a result of such wildfires. The Witch Creek Fire occurred in 2007, and again evacuations were ordered, but no damage was sustained in the City. The Harris Fire also occurred in 2007, starting in Potrero in the far sout h of San Diego County. It approached the eastern limits of the City before it was contained.
Based on mapping by the Department of Forestry and Fire Protection of the State of California (“CalFire”) that was last updated in 2023, the Comm unity Facilities Districts ar e located in an area directly adjacent to an area which the CalFire has designated as a very high fire hazard severity zone.
There is a risk of residential property within the Taxing Jurisdictions being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the vicinity of the Community Facilities Districts. Additionally, property located ad jacent to burn areas can be subject to mudslides and flooding, which can cause significant damage and destruction to property.
In the event of a severe earthquake, fire, flood or ot her natural disaster, there may be significant damage to both property and infrastructure in the Taxing Juri sdictions. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of property in the Taxing Jurisdictions could be dimini shed in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.
31 Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of th e most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by la w to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Super Fund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The eff ect, therefore, should any of the parcels within the Taxing Jurisdictions be affected by a hazardous substa nce, is to reduce the ma rketability and value by the costs of remedying the condition.
The Community Facilities Districts are not aware of the presence of any federally or state classified hazardous substances in violation of any environmental laws, located on the property within the Taxing Jurisdictions. However, it is possible that such materials do currently exis t and that the Community Facilities Districts are not aware of them.
It is possible that property in the Taxing Jurisdictions may be liable for hazardous substances in the future as a result of the existence, currently, of a substanc e presently classified as h azardous but which has not been released or the release of which is not presently threatened, or the exis tence, currently, on the property of a substance not presently classified as hazar dous but which may in the future be so classified.
Additionally, such liabilities may arise not simply fro m the existence of a hazardous substance but from the method of handling such substance. All of th ese possibilities could have the effect of reducing the value of the applicable property.
Cybersecurity
The City, like many other public and private entities, rely on computer and othe r digital networks and systems to conduct their operations. The City is pot entially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malw are and other attacks. No assurance can be given that the efforts of the City to manage cyber threat s and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, or the administration of the Bonds. The City is also reliant on other en tities and service providers in connection with the administration of the Bonds, including without lim itation the County tax collector for the levy and collection of Special Taxes and the Trustee. No as surance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
Parity Taxes and Special Assessments
Property within the Taxing Jurisdictions is subject to taxes and other charges levied by several other public agencies. See the discussion of di rect and overlapping indebtedness in APPENDIX A — INFORMATION REGARDING THE TAXING JURISDICTIONS . None of the Authority, the Community Facilities Districts or the City has control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments paya ble from all or a portion of the property within the Taxing Jurisdictions.
The Special Taxes and any penalties thereon will constitu te a lien against the lots and parcels of land on which they will be annually imposed until they are paid . Such lien is on a parity with the lien of all special taxes and special assessments levied by other agencies and is co -equal to and independent of the lien for general ad valorem property taxes regardless of when they are imposed upon the same property.
32 The Special Taxes have priority over all existing and future private liens imposed on the property. See “— Bankruptcy and Foreclosure” below.
None of the Authority, the Community Facilities District s or the City has control over the ability of other entities and districts to issue inde btedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within the Taxing Jurisdictions. In addition, the landowners within the Taxing Jurisdictions may, without the c onsent or knowledge of the Authority, the Community Facilities Districts or the City, petition other public agencies to issue public indebtedness secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad valorem taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated value- to-lien ratios for property within the Taxing Jurisdictions described in this Official Statement.
Payment of the Special Tax is not a Personal Obligation of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the proceeds received from the sale of a taxable parcel following a Special Tax deli nquency are not sufficient, taking into account other liens imposed by public agencies, to pay the full am ount of the Special Tax delinquency, the Community Facilities Districts have no recourse against the owner of the parcel.
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax may be affected by whether or not the owner was given due notice of the Special Ta x authorization at the time the owner purchased the parcel, was informed of the amount of the Special Ta x on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special Tax that may be levied against the taxable parcels in each Taxing Jurisd iction to be recorded in the Office of the Recorder for the County. While title companies normally refe r to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within the Taxing Jurisdictions or lending of money thereon.
The Mello-Roos Act requires the subdivider (or its ag ent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special ta x using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good fait h effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failu re by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willi ngness and ability of the purchaser or lessor to pay the Special Tax when due.
Special Tax Delinquencies
Under provisions of the Mello-Roos Act, the Special Taxes, from wh ich funds necessary for the payment of principal of and interest on the Local Obligations and, thus, the Bonds are derived, are customarily billed to the properties within the Taxing Jurisdictions on the ad valorem property tax bills sent by the County to owners of such properties. The Mello-R oos Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.
33 See the delinquency tables in APPENDIX A — INFORMATION REGARDING THE TAXING JURISDICTIONS for the delinquency history of each Taxing Jurisdication over the last five Fiscal Years.
See “SECURITY FOR THE LOCAL OBLIGATIONS - Covenants of the Community Facilities Districts - Commence Foreclosure Proceedings ,” for a discussion of the provisions which apply, and procedures which the Community Facilities Districts are obligated to follow under the Local Obligation Indentures, in the event of delinquencies in the payment of Special Taxes. See “- Bankruptcy and Foreclosure” below for a discussion of the policy of the Federal Deposit Insurance Corporation (the “FDIC”) regarding the payment of special taxes and assessment and limitations on the Community Facilities Districts’ ability to foreclose on the lien of the Special Taxes in certain circumstances.
The Community Facilities Districts have the authority and the obligation, subject to the Mello-Roos Act and the maximum Special Tax rates set forth in each Rate and Method, to increase the levy of Special Taxes against non-delinquent property owners in the applicable Taxing Jurisdiction in the event other owners within such Taxing Jurisdiction are delinque nt. Pursuant to each Rate and Method, under no circumstances may the Special Tax levied against a ny parcel for which an occupancy permit for private residential use has been issued be increased by more than 10% per fiscal year as a consequence of delinquency or default by the owner of any other parcel or parcels with in the Taxing Jurisdiction. Thus, the Community Facilities Districts may not be able to increase Special Tax levies in future fiscal years by enough to make up for delinquencies for prior fiscal year s. This would result in draws on the Reserve Fund, and if delinquencies continue and in the aggregate exceed th e Reserve Fund balance, defaults would occur in the payment of principal and interest on the Bonds.
Insufficiency of Special Taxes
Notwithstanding that the maximum Special Taxes that may be levied in the Taxing Jurisdictions exceeds debt service due on the Local Obligations, the Special Taxes collected could be inadequate to make timely payment of debt service either because of no npayment or because property becomes exempt from taxation. Each Rate and Method exempts certain specified property from the Special Tax levy. See
APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
If for any reason property within a Taxing Jurisd iction becomes exempt from taxation by reason of ownership by a non-taxable entity such as the fede ral government, another public agency or other organization determined to be exempt, subject to th e limitations of the maximum authorized rates, the Special Tax will be reallocated to the remaining taxabl e properties within such Taxing Jurisdiction. This could result in certain owners of property paying a gr eater amount of the Special Tax and could have an adverse impact upon the ability and willingness of the ow ners of such property to pay the Special Tax when due.
The Mello-Roos Act provides that, if any property w ithin a Taxing Jurisdiction not otherwise exempt from the Special Tax is acquired by a public entity thr ough a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and en forceable against the public entity that acquired the property. In addition, the Mello-Roos Act 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 Mello-Roos Act have not been tested in the courts. Due to problems of collecting taxes from public agencies, if a substantial portion of land within a Taxing Jurisdiction became owned by public agencies, collection of the Special Tax might become more difficult and could result in collections of the Special Tax which might not be sufficient to pay principal of and interest on the related Local Obli gations when due, or if a substantial portion of land within a Taxing Jurisdiction became exempt from th e Special Tax because of public ownership, or otherwise, the maximum Special Taxes which could be levied upon the remaining taxable property therein might not be sufficient to pay principal of and inte rest on the related Local Obligations when due, and in
34 either case a default could occur with respect to the pa yment of such principal and interest, and, in turn, a default could occur in the payment of the principal and interest on the Bonds.
Moreover, under no circumstances may the Special Tax levied against any parcel for which an occupancy permit for private residential use has been issued within a Taxing Juri sdiction be increased by more than 10% per fiscal year as a consequence of delinquency or default by the owner of any other parcel or parcels within such Taxing Jurisdiction. Thus, th e Community Facilities Districts may not be able to increase Special Tax levies in a Taxing Jurisdiction in future fiscal years by enough to make up for delinquencies within such Taxing Jurisdiction for prio r fiscal years. This may result in draws on the Reserve Fund, and if delinquencies continue and in the aggregate exceed th e Reserve Fund balance, defaults would occur in the payment of pr incipal and interest on the Bonds. See “
SECURITY FOR THE
LOCAL OBLIGATIONS.”
Risks Associated with Reserve Policy
(insert as needed).
FDIC/Federal Government Interests in Properties
General. The ability of a Community Facilities District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”), the Drug Enforcement Agency , the Internal Revenue Service, or other federal agency has or obtains an interest.
The supremacy clause of the United States Constitu tion reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in th e Constitution or Laws of any State to the contrary notwithstanding.”
This means that, unless Congress has otherwise provided , if a federal governmental entity owns a parcel that is subject to Special Taxes within the Taxi ng Jurisdictions but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if th e federal government has a mortgage interest in the parcel and a Community Facilities District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a privat e entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
The Community Facilities Districts have not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any inte rest (including a mortgage interest) in any of the parcels subject to the Special Taxes within the Taxing Jurisdictions, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.
FDIC. In the event that any financial institution making any loan which is secured by real property within the Taxing Jurisdictions is taken over by the FDIC , and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the pr operty by the FDIC, then the ability of a Community Facilities District to collect interest and penalties specified by State law and to foreclose the lien of
35 delinquent unpaid Special Taxes may be limited. Th e FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Stat ement”) provides that 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 pr operty 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 deli nquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC w ill 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 (i n 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, fo reclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.
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 Mello-Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from special taxes under the Mello-Roos Act.
The Community Facilities Districts are unable to pred ict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within a Taxing Jurisdiction in which the FDIC has or obtai ns an interest, although prohibiting the lien of the Special Taxes to be foreclosed out at a judicial fo reclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosur e sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, if enough proper ty were to become owned by the FDIC, a default in payment on the Bonds.
Bankruptcy and Foreclosure
In the event of a delinquency in the payment of th e Special Taxes, the Comm unity Facilities Districts, under certain circumstances, are required to comme nce enforcement proceedi ngs as described under the heading “ SECURITY FOR THE LOCAL OBLIGATIONS - Covenants of the Community Facilities Districts.” However, prosecution of such proceedi ngs could be delayed due to crowded local court calendars, dilatory legal tactics, or bankruptcy. It is also possible that the Community Facilities Districts will be unable to realize proceeds in an amount suffic ient to pay the applicable delinquency. Moreover, the ability of the Community Facilities Districts to commence and prosecute enforcement proceedings may be limited by bankruptcy, insolvency and other la ws generally affecting creditors’ rights (such as the Soldiers’ and Sailors’ Relief Act of 1940) and by the laws of the State relating to judicial and non-judicial foreclosure. Although bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished, the amount and priority of any Special Tax liens could be modified if the value of the property falls below the value of the lien. If the valu e of the property is less than the lien, such excess amount could be treated as an unsecured claim by the ba nkruptcy court. In addition, bankruptcy of a property owner could result in a delay in the enfo rcement proceedings because federal bankruptcy laws provide for an automatic stay of foreclosure and ta x sale proceedings. Any such delay could increase the likelihood of delay or default in payment of the prin cipal of and interest on the Local Obligations, and the possibility of delinquent tax installments not being paid in full. The various legal opinions delivered in
36 connection with the issuance of the Bonds, includ ing Bond Counsel’s approving legal opinion, are qualified as to the enforceability of the Bonds, the Indenture, the Local Obligations and the Local Obligation Indentures by reference to bankruptcy, reorga nization, moratorium, insolvency and other laws affecting the rights of creditors generally or agains t public corporations such as the Authority and the Community Facilities Districts.
Funds Invested in the County Investment Pool
On January 24, 1996, the United States Bankruptcy Court for the Central District of California held that a State statute providing for a priority of distribution of property held in trus t conflicted with, and was preempted by, federal bankruptcy law. In that case, the court addressed the priority of the disposition of moneys held in a county investment pool upon bank ruptcy of the county. Following payment of the Special Taxes to the Community Facilities Districts and prior to payment by Trustee of debt service on the Local Obligations, such funds may be invested in the name of the City or a Community Facilities District for a period of time in the County investment pool. In the event of a petition of or the adjustment of County debts under Chapter 9 of the Federal Bankrupt cy Code, a court might hold that the Community Facilities Districts and in turn the Authority and the B ond owners do not have a va lid and/or prior lien on the Special Taxes or debt service payments on the Local Obligations where such amounts are deposited in the County investment pool and may not provide the Bond owners with a priority interest in such amounts. In that circumstance, unless the Bond owne rs could “trace” the funds that have been deposited in the County investment pool, the Bond owners would be unsecured (rather than secured) creditors of the County. There can be no assurance that the Bond ow ners could successfully so trace the Special Taxes or debt service payments.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. Pursuant to the Indenture, an Owner of the Bonds is given the right for the equal be nefit and protection of all owners similarly situated to pursue certain remedies described in APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — SUMMARY OF AUTHORITY INDENTURE - EVENTS OF DEFAULT AND REMEDIES.
Limitations on Remedies
Remedies available to the Owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds.
Bond Counsel has limited its opinion as to the enfor ceability of the Bonds and of the Indenture to the extent that enforceability may be limited by ba nkruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other sim ilar laws affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion and by limitations on remedies against public agencies in the State. 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 Bonds.
Loss of Tax Exemption
As discussed under the caption “TAX MATTERS” herein, interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued, as a result of future acts or omissions of the Authority, the City or the Community Facilities Districts in violation of covenants in the Indenture or the Local Obligation Indentures, respectively. Should such an event of taxability occur, the 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 Indenture.
37 Future legislative proposals, if enacted into law, cl arification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirec tly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own ta x advisors regarding any pending or proposed federal or state tax legislation, regula tions or litigation, as to which Bond Counsel expresses no opinion.
It is possible that subsequent to the issuance of the B onds there might be federal, State, or local statutory changes (or judicial or regulatory interpretations of fede ral, State, or local law) that affect the federal, State, or local tax treatment of the Bonds or the ma rket value of the Bonds. No assurance can be given that subsequent to the issuance of the Bonds such ch anges or interpretations will not occur. See “TAX MATTERS” below.
Limited Secondary Market
There can be no guarantee that there will be a second ary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any partic ular price. Although the Authority has committed to provide certain statutorily require d financial and operating information, there can be no assurance that such information will be available to Bondowners on a timely basis. See “CONCLUDING INFORMATION - Continuing Disclosure” and APPENDIX F — FORM OF CONTINUING DISCLOSURE AGREEMENT . Any failure to provide annual financial information, if required, does not give rise to monetary damages but merely an action for specific performance. Occasiona lly, because of general market conditions, lack of current information, the absence of a credit rating for the Bonds or because of adverse history or economic prospects connected with a particular issu e, secondary marketing practices in connection with a particular issue are suspended or terminated. Add itionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.
Proposition 218
An initiative measure commonly referred to as the “Right to V ote 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 X IIID to the California Constitution. According to the “Title and Summary” of the Initiative prepared by the Californi a Attorney General, the Initiative limits “the authority of local governments to impose taxes and pr operty-related assessments, fees and charges.” The provisions of the Initiative continue to be interpre ted by the courts. The Initiative could potentially impact the Special Taxes available to the Community Facilities Districts to pay the principal of and interest on the Local Obligations as described below.
Among other things, Section 3 of Article XIII 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 Mello-Roos Act provides for a procedure which includ es notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Mello-Roos Act 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 Mello-Roos Act 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 August 1, 19 97, 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 Constitu tion, 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,
38 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 contractua l 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 Taxes if such reduction would interfere with the timely retirement of the Local Obligations.
The interpretation and application of the Initiative w ill continue to be determined by the courts with respect to a number of the matters discussed above, a nd it is not possible at this time to predict with certainty the outcome of such determination or the tim eliness of any remedy afforded by the courts. See “SPECIAL RISK FACTORS — Limitations on Remedies.”
Ballot Initiatives
Articles XIII A, XIII B, XIII C and XIII D, all of wh ich placed certain limitations on the power of local agencies to tax, collect and expend revenues, were adopted pursuant to measures qualified for the ballot pursuant to California’s constitutional initiative process a nd the State Legislature has in the past enacted legislation which has altered the spending limitati ons or established minimum funding provisions for particular activities. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the legislature. The adoptio n of any such initiative or legislation might place limitations on the ability of the State, the City, or the Community Facilities Districts to increase revenues or to increase appropriations or on the ability of th e landowners within the Taxing Jurisdictions to complete any remaining future development.
Litigation with Respect to Community Facilities Districts Shapiro. The California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro (2014) 228 Cal.App.4th 756 (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (“San Diego”). The CCFD is a financing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.
The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determ ining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, wh ich generally provides that, if a special tax will not be apportioned in any tax year on residential pr operty, the legislative body may provide that the vote shall be by the landowners of the proposed district w hose property would be subject to the special tax.
The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Sec tion 2 thereof require that the electors in such an election be the registered voters within the district.
Horizon. The Sacramento County Superior Court issued a ruling in Horizon Capital Investments, LLC v.
City of Sacramento et al . (Case No. 34-2017-80002661). As descr ibed below, this case involved an election to approve the levy of a special tax within a community facilities district (“CFD”) formed under the Act.
In 2017, the City of Sacramento initiated proceedings to form a CFD to finance certain costs to operate and maintain a streetcar line. As permitted by the Act, the proposed district included non-contiguous parcels of non-residential property. Because there we re fewer than 12 registered voters residing within the territory of the proposed CFD, the City Council s ubmitted the special tax proposed to be levied within
39 the proposed CFD to the owners of land within the proposed CFD, as required by the Act. The proposed special tax received the requisite two-thirds vote in the landowner election.
Petitioners Horizon Capital Investments, LLC et al. filed a writ of mandate and complaint for reverse validation and declaratory relief. Pe titioners argued, and the superior cour t agreed in its final ruling, that under section 4(a) of article XIII A of the California Constitution (which provides that “Cities, Counties and special districts, by a two-thirds vote of the qua lified electors of such district [sic], may impose special taxes on such district…”) the phrase “qualifie d electors” means the registered voters of the entire City of Sacramento and not just the owners of the property within the boundaries of the proposed CFD.
Citing the San Diego Decision, the tentative ruling states that the phrase “qualified electors of the district” refers to the registered voters of the entity imposing the special tax, which in this case was the City of Sacramento. Because the vote within the proposed CFD was by landowners only and not by all registered voters in the City of Sacramento, the final ruling states that the special tax is invalid.
The superior court’s final ruling is not binding upon other courts within the State and does not directly apply to the Taxing Jurisdictions, the Special Taxes, or the Local Obligations. The City of Sacramento did not appeal the superior court’s ruling.
The Special Tax Election in the Taxing Jurisdictions. With respect to the San Diego Decision, the facts of such case show that there were thousa nds of registered voters within the CCFD ( viz., all of the registered voters in San Diego). The elections held in the Taxing Jurisdictions had less than 12 registered voters at the time of the election to authorize the Sp ecial Taxes. In the San Diego Decision, the court expressly stated that it was not addressing the valid ity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewe r than 12 registered voters. Thus, by its terms, the court’s holding in the San Diego Decision does not apply to the Special Tax elections in the Taxing Jurisdictions. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. The petitioners in Horizon filed the writ of mandate within 30 days of the landowner election. V oters in each Taxing Jurisdictions approved their respective Special Tax more than twenty years ago. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, the Commun ity Facilities Districts believe that no successful challenge to the their respective Special Taxes being levied in accordance with the applicable Rate and Method may now be brought.
LEGAL MATTERS
Enforceability of Remedies
The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. In the case of any bankruptcy proceeding involving the City, th e rights of the Owners could be modified at the direction of the court. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceab ility of certain legal rights related to the Indenture and other pertinent documents is subject to limitatio ns imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of credito rs generally and by equitable remedies and proceedings generally.
40 Approval of Legal Proceedings
The validity of the Bonds and certain other legal matters are subject to the approving opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel to the Authority. A complete copy of the proposed form of Bond Counsel opinion is contained in “ APPENDIX E ” hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement.
The Authority and the City have no knowledge of any fact or other information which would indicate that the Indenture or the Bonds are not so enforceable against the Authority except to the extent such enforcement is limited by principles of equity, by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors’ rights ge nerally and by limitations on legal remedies against municipalities in the State.
Certain legal matters will be passed on by Stra dling Yocca Carlson & Rauth LLP, Newport Beach, California, as Disclosure Counsel and by Lounsber y Ferguson Altona & Peak LLP, Escondido California, Acting City Attorney. Certain legal matters will be passed on for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California. Fees payable to B ond Counsel, Disclosure C ounsel and Underwriter’s Counsel are contingent upon the sale and delivery of the Bonds.
No Litigation
The Authority will furnish a certificate dated the date of delivery of the Bonds to the effect that there is no litigation pending or, to the knowledge of the duly au thorized officer of the Authority executing the certificate, threatened, seeking to r estrain or enjoin the execution, sale or deliver y of the Bonds, in any way contesting or affecting the authority for the execution, sale or delivery of the Bonds, or the execution and delivery of the Indenture or the Continuing Disclosure Agreement, or in any way contesting the existence or powers of the Authority.
TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded fro m gross income for federal income tax purposes and is not an item of tax preference for purposes of calcu lating the federal alternative minimum tax imposed on individuals. However, it should be noted that for tax years beginning after December 31, 2022, with respect to applicable corporations as defined in Sec tion 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted fina ncial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the C ode on such corporations. In the further opinion of Bond Counsel, interest (and original issue discount ) on the Bonds is exempt from State of California personal income tax.
The excess of the stated redemption price at maturity of a Bond over the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) constitutes original issue discount. Original issue discount accru es under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income.
The amount of original issue discount deemed r eceived by the Beneficial Owner will increase the Beneficial Owner’s basis in the applicable Bond.
Bond Counsel’s opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the Authority, the
41 Community Facilities Districts, the City and others a nd is subject to the condition that the Authority, the Community Facilities Districts, the City and othe rs making such representations comply with all requirements of the Code that must be satisfied sub sequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be include d in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority, the Community Facilities Districts and the City have covenanted to comply with all such requirements.
The amount by which a Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purc hase price) exceeds the amount paya ble on maturity (or on an earlier call date) constitutes amortizable bond premium, wh ich must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Bene ficial Owner’s basis in the applicable bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Beneficial Owner realizing a taxable gain when a Bond is sold by th e Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Beneficial Owner. Purchasers of the Bonds should consult their ow n tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.
The Internal Revenue Service (the “IRS”) has in itiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an aud it of other similar bonds). No assurance can be given that in the course of an audit, as a result of an aud it, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the Bonds or their market value.
SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE, OR
LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR
INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL,
STATE, OR LOCAL TAX TREATMENT OF THE BONDS INCLUDING THE IMPOSITION OF
ADDITIONAL FEDERAL INCOME OR STATE TAXES BEING IMPOSED ON OWNERS OF TAX- EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET V ALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE
CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY
CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HA VING THE EFFECTS DESCRIBED ABOVE. BEFORE
PURCHASING ANY OF THE BONDS, ALL PO TENTIAL PURCHASERS SHOULD CONSULT
THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR
REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.
Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. B ond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds perm it certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and orig inal issue discount) on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.
42 Although Bond Counsel will render an opinion that inter est (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the Authority, the Community Facilities Districts and the City continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (a nd original issue discount) with respect to the Bonds may otherwise affect the tax liability of certain pe rsons. Bond Counsel e xpresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.
Should interest on the Bonds (including any original issue discount) become incl udable in gross income for federal income tax purposes, the Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX E.
CONCLUDING INFORMATION
Rating on the Bonds
Standard & Poor’s has assigned their rating of “___” to the Bonds. Such rating reflects only the views of the rating agency and any desired explanation of the significance of such rating, or any outlook associated with such rating, should be obtained from the rating agency. Generally, a rating agency bases its rating on the information and materials furnis hed to it and on investigations, st udies and assumptions of its own.
There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgmen t of such rating agency, circumstances so warrant. Any such downward revi sion or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
Underwriting
The Bonds were sold to Raymond James & Associates, Inc. (the “Underwriter”) pursuant to a Bond Purchase Agreement by and between the Underwriter and the Authority. The Underwriter purchased the Bonds at a price equal to $___________, which repre sents the principal amount of the Bonds plus a net original issue premium of $___________, less an Underwriter’s discount of $______________. The Underwriter will pay certain of its expenses relating to the offering from the Underwriter’s discount.
The Underwriter is offering the Bonds at the prices set forth on the inside front cover page hereof. The Underwriter may offer and sell the B onds to certain dealers and others at prices lower than the offering prices stated on the inside front cover page hereof. The offering prices may be changed from time to time by the Underwriter.
The Municipal Advisor
The material contained in this Official Statemen t was prepared by the Authority and the Community Facilities Districts with the assistance of the M unicipal Advisor who advised the Authority and the Community Facilities Districts as to the financial struct ure and certain other financial matters relating to the Bonds. The information set forth herein receive d from sources other than the City has been obtained by the Authority from sources which are believed to be reliable, but such information is not guaranteed by Municipal Advisor as to accuracy or completeness, nor has it been independently verified. Fees payable to the Municipal Advisor are contingent upon the sale and delivery of the Bonds.
43 Continuing Disclosure
The Authority will covenant to provide certain a nnual financial information (the “Annual Reports”) no later than January 31 of each year, commencing with the report due January 31, 2025, and notices of the occurrence of certain significant even ts in accordance with Rule 15c2- 12 of the Securities Exchange Act of 1934 as amended (the “Rule”). The Annual Reports and the notices will be filed by the Authority on the Electronic Municipal Market Access Website (“EMMA”) operated by the Municipal Securities Rulemaking Board (www.emma.msrb.org). The required content of the Annual Reports and the specific nature of the notices of significant events and certain other terms of the continuing disclosure obligation are included in APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT . These covenants will be made in order to assist the Underwriter in co mplying with the Rule. Failure of the Authority to provide the required ongoing informa tion may have a negative impact on the value of the Bonds in the secondary market.
The City and certain other entities related to the City , including the Authority, have entered into previous undertakings pursuant to the Rule. Within the last fi ve years, the City or the Authority have failed to comply with prior undertakings as described below.
(i) With respect to (a) the 2013 Bonds, (b) the Au thority’s Special Tax Revenue Refunding Bonds, Series 2015A and (c) the Authority’s Revenue Re funding Bonds, Series 2015B, the City filed unaudited financial statements on EMMA with its annual report for Fiscal Year 2021-22 by the required January 31, 2023 deadline because the City ’s audited financial statements were not yet complete. The City’s Dissemination Agent filed the City’s audited financial statements for Fiscal Year 2021-22 on all required CUSIPs other than w ith respect to the foregoing issues shortly after such audited financial statements became av ailable in March 2023. The Dissemination Agent filed the City’s audited financial statements for Fiscal Year 2021-22 for the foregoing issues on January 18, 2024 and a notice of the failure to timely file the Fiscal Year 2021-22 audited financial statements on January 24, 2024.
(ii) The City incurred a financial obligation (as defined in the Rule) on November 22, 2022, however, the notice of such incurrence was not filed on EMMA as required by the continuing disclosure undertaking with respect to the City’s Seri es 2021 Taxable Pension Obligation Bonds until January 24, 2024.
Additional Information
The summaries and references contained herein with respect to the Indenture, the Local Obligation Indentures, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or st atute and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of the Indenture and the Local Obligation Indentures may be obtained after delivery of the Bonds from the Trustee.
References
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority and the purchasers or Owners of any of the Bonds.
44 Execution
The execution of this Official Statement has been duly authorized by the Board of Directors of the Chula Vista Municipal Financing Authority.
CHULA VISTA MUNICIPAL
FINANCING AUTHORITY
By: ___________________________
Executive Director
A-1
APPENDIX A
INFORMATION REGARDING THE TAXING JURISDICTIONS
Community Facilities District No. 06-I Improvement Area A Location and Description . Community Facilities District No. 06 -I Improvement Area No. A (“CFD No. 06-I IA A”) is located north and south of Otay Lakes Road, adjacent to Otay Lake and Upper Otay Lake with Hunte Parkway forming the western border north of Otay Lakes Road and Wueste Road forming the eastern border south of Otay Lakes Road. The norther n border is generally Proctor Valley Road and the southern border is generally Olympic Parkway. Tw o small areas fall south of Olympic Parkway and one area falls west of Hunte Parkway.
CFD No. 06-I IA A includes 2,205 residences, of whic h are 1,607 single-family detached residences and 598 are single-family attached residences. CFD No. 06-I IA A encompasses approximately 737 gross acres. The residences range in size from 964 square f eet to 11,873 square feet for some custom homes.
There is 1 parcel zoned for commercial use and 4 pa rcels zoned for residential use categorized under the Rate and Method for CFD No. 06-I IA A as Unde veloped Property. The Undeveloped commercial property is 0.9 acres which could be developed with a pproximately 12,000 square feet of commercial use and the undeveloped residential prope rty consists of 4 custom home sites of a minimum 20,000 square feet. No assurance can be given that any of these remaining parcels will be developed.
Assigned Special Taxes. Table A-1 below sets forth the Special Ta xes that are projected to be levied on taxable property within CFD No. 06-I IA A in Fiscal Year 2024-25, taking into account the reduced debt service on the CFD No. 06-I IA A Bonds as a result of the issuance of the Bonds and the CFD No. 06-I IA A Bonds. The Special Taxes in CFD No. 06-I IA A may not be levied after Fiscal Year 2042-43. The final maturity of the CFD No. 06-I IA A Bonds is September 1, 2032.
TABLE A-1
CITY OF CHULA VISTA
CFD NO. 06-I IA A
ESTIMATED SPECIAL TAX LEVY FOR FISCAL YEAR 2024-25
Development Status
No. of
Parcels/
Units
Fiscal Year
2023-24 Assessed
Value
(1)
Maximum
Special Tax
(2)
Projected Fiscal
Year 2024-25
Special Tax
Levy(3)
% of Fiscal Year
2024-25 Special
Tax Levy
Developed Commercial - $ - $ - $ - 0.0% Developed Residential - Attached 598
(4) 255,068,709 610,266 188,975 13.8
Developed Residential - Detached 1, 607 1,346,640,483 3, 421,526 1,176,525 86.2 Undeveloped Commercial 1 1,276,439 10,038 - 0.0
Undeveloped Residential 4 2,993,136 35,480 - 0.0 Total 2,210 $1,605,978,767 $4,077,310 $1,365,500 100.0% _____________________________________________________________________ (1) Total Assessed Value per County of San Diego as of January 1, 2023 lien date. (2) Pursuant to the Rate and Method for CFD No. 06-I IA A, unde r no circumstances will the Sp ecial Tax levied against any Assessor’s Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of a ny other Assessor’s Parcel. (3) Takes into account reduced debt service as a result of the issuance of the Bonds and the CFD No. 06-I IA A Bonds. (4) Represents units, not parcels.
Source: County of San Diego Assessor’s Office; Spicer Consulting Group, LLC.
A-2
The Assigned Special Tax for each Assessor’s Parcel of Developed Property (as those terms are defined in the Rate and Method for CFD No. 06-I IA A) is calculated as set forth below. The terms “Residential Property”, “Residential Floor Area”, “Commercial Property”, “Hotel Property” and “Acre” are defined in the Rate and Method for CFD No. 06-I IA A included in APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
For Zone 1 (Vistas)
Residential Property Commercial Property and Hotel Property $0.58 per square foot of Residential Floor Area $6,000 per Acre
For Zone 2 (Woods)
Residential Property Commercial Property and Hotel Property $0.67 per square foot of Residential Floor Area $6,000 per Acre
As shown in Table A-1 above, the projected Special Tax levy for CFD No. 06-I IAA in Fiscal Year 2024-25 is $1,365,500, which is approximately 33.5% of the maximum Assigned Special Tax for all Developed Property in CFD No. 06-I IA A. The Special Tax is levied first on all Developed Property to satisfy the Special Tax Requirement before being levied on Undeveloped Property , therefore, the Special Tax is not anticipated to be levied on Undeveloped Property.
For the complete text of the CFD No. 06-I IA A Rate and Method, see APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
Delinquencies. Table A-2 is a summary of Special Tax levies, collections and delinquency rates in CFD No. 06-I IA A for Fiscal Years 2018-19 through 2022-23.
TABLE A-2
CITY OF CHULA VISTA
CFD NO. 06-I IA A
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
Delinquencies at Fiscal Year End(1)
Delinquencies as of June 30, 2023
Fiscal
Year
Amount
Levied
Parcels
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2018-19 $1,781,184 2,200 13 $16,144 0.91%
1 $ 721 0.04%
2019-20 1,740,160 2,202 33 35,119 2.02
2 2,104 0.12
2020-21 1,730,596 2,202 24 24,887 1.44
3 3,050 0.18
2021-22 1,722,584 2,203 25 15,758 0.91
9 6,072 0.35
2022-23 1,719,867 2,205 31 33,209 1.93
31 33,209 1.93
___________________________
(1) As of June 30 of each Fiscal Year.
Source: Spicer Consulting Group, LLC
[Remainder of Page Intentionally Left Blank]
A-3
Top Taxpayers. Table A-3 below sets forth the top ten property owners in CFD No. 06-I IA A based on the projected Special Tax levy for Fiscal Year 2024-25
.
TABLE A-3
CITY OF CHULA VISTA
CFD NO. 06-I IA A
TOP TAXPAYERS
Property Owner
Assessor's
Parcels
Projected Fiscal
Year 2024-25
Special Tax
Levy*
% of Projected
Total Fiscal Year
2024-25 Special
Tax Levy
Assessed
Value(1)
Lutteroth Family Trust 04-01-09 3 $ 3,563 0.26% $ 4,800,743 Park John & Aesuk 3 3,353 0.25 2,179,590
Baker, Robert & Daniel Revocable 3 3,272 0.24 2,344,601 Villalvazo Sual & Mattei Erika 1 3,072 0.22 3,700,000
Carrillo Frank & Silvia 1 3,070 0.22 4,369,680
Crosthwaite Alejandro & Midred 1 3,063 0.22 3,700,000
Yoon Don 3 2,963 0.22 2,012,110
Limon Elsa 1 2,927 0.21 3,669,690
Canopy LLC 1 2,883 0.21 3,121,200
Gandara Enrique Trust 11-12-15 1 2,615 0.19 2,614,248 Subtotal 18 30,781 2.25 32,511,862
All other individual property owners 2,187 1,334,719 97.75 1,569,197,330 Totals 2,205 $1,365,500 100.00% $1,601,709,192
_______________________
(1) Assessed Value is based on the information provided from the San Diego County Assessor's Equalized Roll as of January 1, 2023 and may not accurately reflect true market value. Excludes Undeveloped Property.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
[Remainder of Page Intentionally Left Blank]
A-4
Direct and Overlapping Debt . The property within CFD No. 06-I IA A is subject to taxation by a number of taxing agencies, some of which have issued debt secured by taxes and assessments levied on such property.
The table below sets forth the direct and overlapping debt for CFD No. 06-I IA A as of December 1, 2023.
As of December 1, 2023, the Prior CFD 06-I IA A Bonds were outstanding in the amount of $13,410,000. The CFD 06-I IA A Bonds will be issued in the amount of $9,885,000*.
TABLE A-4
CITY OF CHULA VISTA
CFD NO. 06-I IA A
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 1, 2023
I. Assessed Value (1) $1,605,978,767
II. Land Secured Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable
Amount
CHULA VISTA ELEMENTARY SCHOOL DISTRICT CFD NO. 1 CFD $ 18,382,591 35.092% $ 6,450,780 SWEETWATER UNION HIGH SCHOOL DISTRICT CFD NO. 1 CFD 8,288,523 34.805% 551,321 CITY OF CHULA VISTA CFD NO. 06-I IA A, SERIES 2024c CFD 9,885,000 100.000% 9,885,000* TOTAL LAND SECURED BONDED DEBT 16,887,101*
III. General Obligation Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable(2)
Amount
METROPOLITAN WATER DEBT SERVICE GO $ 19,215,000 1.304% 250,592 SOUTHWESTERN COMMUNITY COLLEGE DISTRICT GO 758,619,345 2.232% 16,929,271 SWEETWATER UNION HIGH SCHOOL DISTRICT GO 596,765,971 2.756% 16,447,646 CHULA VISTA ELEMENTARY SCHOOL DISTRICT GO 220,417,000 3.801% 8,377,211 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT 42,044,721
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $58,891,822*
IV . Ratios to Assessed Value
Outstanding Land Secured Bonded Debt 95.1:1*
Total Outstanding Bonded Debt 27.3:1*
___________________________
(1) Total Assessed Value per County of San Diego as of January 1, 2023. Includes Undeveloped Property. (2) Calculated by dividing the assessed value by the total assessed value for FY 2023-24.
Source: Spicer Consulting Group, LLC
[Remainder of Page Intentionally Left Blank]
__________________________
* Preliminary, subject to change.
A-5
Value-To-Lien Ratios. Table A-5 below sets forth the estimated assessed value-to-lien ratio of all the Developed Property in Improvement Area A of CFD No. 06-I within certain ranges based on the Fiscal Year 20 23-24 assessed value of the Developed Property, the principal amo unt of the CFD No. 06-I IA A Bonds and the overlapping debt payable from taxes and assessments on the Developed Property within CFD No. 06-I IA A as of December 1, 2023.
TABLE A-5
CFD NO. 06-I IA A
ESTIMATED ASSESSED V ALUE-TO-LIEN RATIOS
INCLUDING DIRECT AND OVERLAPPING DEBT
(DEVELOPED PROPERTY)
Value-to-Lien Category
Number
of
Parcels/
Units
Assessed
Value (1)(2)
% of
Assessed
Value
Projected
Fiscal
Year 2024-
25 Special
Tax Levy
% of
Projected
Fiscal Year
2024-25
Special Tax
Levy
CFD No. 06-I
IA A Proposed
2024 Bonds (3)
All Other
Overlapping
Land-
Secured
Debt(4)
Total
Overlapping
Land-
Secured
Debt
Aggregate
Value-to-
Lien
Less than 30.00:1 (4) 5 $ 1,322,021 0.1% $ 5,086 0.4% $ 36,819 $ 19,059 $ 55,878 23.7:1 Between 30.00:1 to.60.00:1 129 49,723,353 3.1 67,769 5.0 490,585 415,479 906,064 54.9:1 Between.60.01:1 to 90.00:1 982 587,696,836 36.7 601,781 44.1 4,356,357 3,312,347 7,668,704 76.6:1 Between 90.01:1 to 120.00:1 740 549,878,733 34.3 430,801 31.5 3,118,617 2,262,607 5,381,224 102.2:1 Greater than 120.01:1(5) 349 413,088,249 25.8 260,063 19.1 1,882,621 951,251 2,833,8721 145.8:1 Totals 2,205 $1,601,709,192 100.0% $1,365,500 100.0% $9,885,000* $6,960,742 $16,845,742* 95.1:1* _________________________
(1) Assessed value is based on the informati on provided from the San Diego County Assessor' s Equalized Roll as of January 1, 2023 a nd may not accurately reflect true market value.
(2) Assessed value does not include 5 Undeveloped Properties that are not anticipated to be levied for Fiscal Year 2024-25, which have a total Assessed Value of $4,269,575. (3) Responsibility of the par amount has been allocated based on the es timated Fiscal Year 2024-25 Speci al Tax levy, with developme nt status as of D ecember 1, 2023, and preliminary bond sizing as provided by the Municipal Advisor. (4) Excludes $41,359 overlapping land-secured debt allocated to the Undeveloped Property. (5) The minimum value to lien in the “Less than 30.00:1” category is 8.6:1. The maximum value to lien in the “Greater than 120.01:1” category is 359.4:1.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
A-6
Community Facilities District No. 06-I Improvement Area B Location and Description . Community Facilities District No. 06-I Improvement Area No. B (“CFD No. 06-I IA B”) is generally located north of Olympic Parkwa y west of SR 125. There is also a small area at the intersection of Otay Lakes Road and SR 125.
CFD No. 06-I IA B includes 599 residences, of whic h 191 are single-family detached residences and 408 are single-family attached residences. The reside nces range in size from 1,259 square feet to 2,747 square feet. There are 13 acres of commercial uses developed with 149,000 s quare feet of commercial and office space, including office condominiums. CFD No. 06-I IA B is fully developed.
Assigned Special Taxes. Table A-6 below sets forth the Special Ta xes that are projected to be levied on taxable property within CFD No. 06-I IA B in Fiscal Year 2024-25, taking into account the reduced debt service on the CFD No. 06-I IA B Bonds as a result of the issuance of the Bonds and the CFD No. 06-I IA B Bonds. The Special Taxes in CFD No. 06-I IA B may not be levied after Fiscal Year 2043-44. The final maturity of the CFD No. 06-I IA B Bonds is September 1, 2033.
TABLE A-6
CITY OF CHULA VISTA
CFD NO. 06-I IA B
ESTIMATED SPECIAL TAX LEVY FOR FISCAL YEAR 2024-25
Development Status
No. of
Parcels/
Units
Fiscal Year
2023-24 Assessed
Value
(1)
Maximum
Special Tax
(2)
Projected
Fiscal Year
2024-25 Special
Tax Levy(3)
% of Fiscal Year
2024-25 Special
Tax Levy
Developed Commercial 20 $ 40,604, 017 $ 71,095 $ 26,563 7.9% Developed Residential - Attached 408 (4) 182,536,618 511,179 190,116 56.5 Developed Residential - Detached 191 105,422,194 293,118 119,821 35.6 Total 619 $328,562,829 $875,393 $336,500 100.0%
_____________________________________________________________________ (1) Total Assessed Value per County of San Diego as of January 1, 2023 lien date. (2) Pursuant to the Rate and Method for CFD No. 06-I IA B, under no circumstances will the Sp ecial Tax levied against any Assessor’s Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of a ny other Assessor’s Parcel. (3) Takes into account reduced debt service as a result of the issuance of the Bonds and the CFD No. 06-I IA B Bonds. (4) Represents units, not parcels.
Source: County of San Diego Assessor’s Office; Spicer Consulting Group, LLC.
The Assigned Special Tax for each Assessor’s Parcel of Developed Property (as those terms are defined in the Rate and Method for CFD No. 06-I IA B) is calculated as follows: (1) for Residential Property, $0.74 per square foot of Residential Floor Area and (2) fo r Commercial Property, $6,0 00 per Acre. The terms “Residential Property”, “Residential Floor Area”, “Commercial Property” and “Acre” are defined in the Rate and Method for CFD No. 06-I IA B included in APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
As shown in Table A-6 above, the projected Special Tax levy for Improvement Area B of CFD No. 06-I in Fiscal Year 2024-25 is $336,500, which is approximately 38.4% of the maximum Assigned Special Tax for all Developed Property in Improvement Area B of CFD No. 06-I.
For the complete text of the CFD No. 06-I IA B Rate and Method, see APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
A-7
Delinquencies. Table A-7 is a summary of Special Tax levies, collections and delinquency rates in CFD No. 06-I IA B for Fiscal Years 2018-19 through 2022-23.
TABLE A-7
CITY OF CHULA VISTA
CFD NO. 06-I IA B
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
Delinquencies at Fiscal Year End(1)
Delinquencies as of June 30, 2023
Fiscal
Year
Amount
Levied
Parcels
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2018-19 $433,088 619 8 $3,414 0.79% 1 $596 0.14%
2019-20 417,797 619 10 4,041 0.97 1 575 0.14
2020-21 418,609 619 5 1,911 0.46 1 577 0.14
2021-22 416,959 619 5 2,326 0.56 1 574 0.14
2022-23 413,300 619 3 791 0.19 3 791 0.19
___________________________
(1) As of June 30 of each Fiscal Year.
Source: Spicer Consulting Group, LLC
Top Taxpayers. Table A-8 below sets forth the top ten property owners in CFD No. 06-I IA B based on the projected Special Tax levy for Fiscal Year 2024-25.
.
TABLE A-8
CITY OF CHULA VISTA
CFD NO. 06-I IA B
TOP TAXPAYERS
Property Owner
Assessor's
Parcels
Projected Fiscal
Year 2024-25
Special Tax
Levy*
% of Projected
Total Fiscal Year
2024-25 Special
Tax Levy
Assessed
Value(1)
Realty Income Properties 1 LLC 1 $ 10,987 3.27% $ 14,981,462 Otay Lakes Professional Plaza LLC 1 5,159 1.53 7,509,670 Trima LLC 2 1,711 0.51 2,590,800
TBR Propco LLC 2 1,637 0.49 2,215,998
Net Global Invest LLC 2 1,508 0.45 941,655
Abdalas Revocable Living TrustC 3 1,414 0.42 1,039,950
A L U InvestmentsLC 3 1,362 0.40 1,284,078
Otay Lakes Professional Plaza LLC 2 1,190 0.35 2,760,916 Gonza Group Holdings LLC 2 1,042 0.31 1,640,464
Rancho Vista Covenant Church Inc 2 1,042 0.31 1,867,593 Subtotal 20 27,051 8.04 36,832,586
All other individual property owners 599 309,449 91.96 291,730,243 Totals 619 $336,500 100.00% $328,562,829
_______________________
(1) Assessed Value is based on the information provided from the San Diego County Assessor's Equalized Roll as of January 1, 2023 and may not accurately reflect true market value.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
A-8
Direct and Overlapping Debt . The property within CFD No. 06-I IA B is subject to taxation by a number of taxing agencies, some of which have issued debt secured by taxes and assessments levied on such property.
The table below sets forth the direct and overlapping debt for CFD No. 06-I IA B as of December 1, 2023.
As of December 1, 2023, the Prior CFD 06-I IA B Bonds were outstanding in the amount of $3,440,000. The CFD 06-I IA B Bonds will be issued in the amount of $2,495,000*.
TABLE A-9
CITY OF CHULA VISTA
CFD NO. 06-I IA B
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 1, 2023
I. Assessed Value (1) $328,562,829
II. Land Secured Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable
Amount
CHULA VISTA ELEMENTARY SCHOOL DISTRICT CFD NO. 1 CFD $18,382,591 11.426% $ 2,100,450 SWEETWATER UNION HIGH SCHOOL DISTRICT CFD NO. 1 CFD 8,288,523 11.486% 952,001 CITY OF CHULA VISTA CFD NO. 06-I IA B, SERIES 2024 CFD 2,495,000 100.000% 2,495,000* TOTAL LAND SECURED BONDED DEBT 5,547,451*
III. General Obligation Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable(2)
Amount
METROPOLITAN WATER DEBT SERVICE GO $ 19,215,000 0.267% 51,268 SOUTHWESTERN COMMUNITY COLLEGE DISTRICT GO 758,619,345 0.457% 3,463,514 SWEETWATER UNION HIGH SCHOOL DISTRICT GO 596,765,971 0.564% 3,364,979 CHULA VISTA ELEMENTARY SCHOOL DISTRICT GO 220,417,000 0.778% 1,713,871 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT 8,593,632
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $14,141,083*
IV . Ratios to Assessed Value
Outstanding Land Secured Bonded Debt 59.2:1*
Total Outstanding Bonded Debt 23.2:1*
___________________________
(1) Total Assessed Value per County of San Diego as of January 1, 2023. (2) Calculated by dividing the assessed value by the total assessed value for FY 2023-24.
Source: Spicer Consulting Group, LLC
[Remainder of Page Intentionally Left Blank]
__________________________
* Preliminary, subject to change.
A-9
Value-To-Lien Ratios. Table A-10 below sets forth the estimated assessed value-to-lien ratio of all the Developed Property in Improvement Area B of CFD No. 06-I within certain ranges based on the Fiscal Year 20 23-24 assessed value of the Developed Property, the principal amo unt of the CFD No. 06-I IA B Bonds and the overlapping debt payable from taxes and assessments on the Developed Property within Improvement Area B of CFD No. 06-I as of December 1, 2023.
TABLE A-10
CFD NO. 06-I IA B
ESTIMATED ASSESSED V ALUE-TO-LIEN RATIOS
INCLUDING DIRECT AND OVERLAPPING DEBT
Value-to-Lien Category
Number
of
Parcels/
Units
Assessed
Value (1)
% of
Assessed
Value
Projected
Fiscal
Year 2024-
25 Special
Tax Levy
% of
Projected
Fiscal Year
2024-25
Special Tax
Levy
CFD No. 06-I
IA B Proposed
2024 Bonds (2)
All Other
Overlapping
Land-
Secured
Debt
Total
Overlapping
Land-
Secured Debt
Aggregate
Value-to-
Lien
Less than 20.00:1 - $ - 0.0% $ - 0.0% $ - $ - $ - N/A Between 20.00:1 to
40.00:1(3) 59 27,615,511 8.4 36,335 10.8 269,407 496,784 766,190 36.0:1 Between 40.01:1 to 60.00:1 245 124,630,307 37.9 147,320 43.8 1,092,314 1,385,674 2,477,988 50.3:1 Between 60.01:1 to 80.00:1 189 96,153,280 29.3 91,943 27.3 681,719 733,475 1,415,194 67.9:1 Greater than 80.01:1(3) 126 80,163,731 24.4 60,902 18.1 451,560 436,519 888,079 90.3:1 Totals 619 $328,562,829 100.0% $336,500 100.0% $2,495,000* $3,052,451 $5,547,451* 59.2:1* _________________________
(1) Assessed value is based on the informati on provided from the San Diego County Assessor' s Equalized Roll as of January 1, 2023 a nd may not accurately reflect true market value.
(2) Responsibility of the paramount has been allocated based on the estimated Fiscal Year 2024-25 Special Tax levy, with developmen t status as of December 1, 2023, and preliminary bond sizing as provided by the Municipal Advisor. (3) The minimum value to lien in the “Between 20.00:1 and 40.00:1” category is 28.9:1. The maximum value to lien in the “Greater than 80.01:1” category is 305.4:1.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
A-10
Community Facilities District No. 07-I
Location and Description . Community Facilities District No. 07-I (“CFD No. 07-I”) is located south of Olympic Parkway, east of Eastlake Parkway and north and west of Hunte Parkway.
CFD No. 07-I includes 1,968 residences, of which 1,351 are single-family detached residences and 617 are single-family attached residences. The reside nces range in size from 1,279 square feet to 3,817 square feet. There is 9-acre commercial parcel deve loped with 106,000 square feet of retail uses. CFD No. 07-I is fully developed.
Assigned Special Taxes. Table A-11 below sets forth the Special Taxes that are projected to be levied on taxable property within CFD No. 07-I in Fiscal Year 2024-25, taking into account the reduced debt service on the CFD No. 07-I Bonds as a result of the i ssuance of the Bonds and the CFD No. 07-I Bonds.
The Special Taxes in CFD No. 07-I may not be levied after Fiscal Year 2043-44. The final maturity of the CFD No. 07-I Bonds is September 1, 2033.
TABLE A-11
CITY OF CHULA VISTA
CFD NO. 07-I
ESTIMATED SPECIAL TAX LEVY FOR FISCAL YEAR 2024-25
Development Status
No. of
Parcels/
Units
Fiscal Year
2023-24 Assessed
Value
(1)
Maximum
Special
Tax(2)(3)
Projected
Fiscal Year
2024-25 Special
Tax Levy(3)(4)
% of Fiscal Year
2024-25 Special
Tax Levy
Developed Commercial 1 $ 58,029,297 $ 218,689 $ 37,217 1.8% Developed Residential - Attached 617 (5) 285,207,783 1,054,904 521,213 25.5 Developed Residential - Detached 1,351 875,574,482 2,453,737 1,486,780 72.7 Total 1,969 $1,218,811,562 $3,727,329 $2,045,210 100.0% _____________________________________________________________________ (1) Total Assessed Value per County of San Diego as of January 1, 2023 lien date. (2) Pursuant to the Rate and Method for CFD No. 07-I, under no circumstances will the Special Tax levied against any Assessor’s Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of a ny other Assessor’s Parcel. (3) Includes amounts levied to pay debt serv ice on, and other costs associated with the CFD No. 07-I 2015 Bonds. The debt service on the CFD No. 07-I Bonds represents approximately 60%]of total debt service. (4) Takes into account reduced debt service as a result of the issuance of the Bonds and the CFD No. 07-I Bonds. (5) Represents units, not parcels.
Source: County of San Diego Assessor’s Office; Spicer Consulting Group, LLC.
The Assigned Special Tax for each Assessor’s Parcel of Developed Property (as those terms are defined in the Rate and Method for CFD No. 07-I) is calculated as follows: (1) for Re sidential Property with 8 or less Dwelling Units per Acre, $1,675 per Dwelling Unit, (2) for Residential Property with more than 8 but no more than 20 Dwelling Units per Acre, $1,340 per Dwelling Unit, (3) for Residential Property more than 20 Dwelling Units per Acre, $1,005 per Dwelling Unit and (4) for Non-Residential Property, $6,000 per Acre.
The Assigned Special Tax for each Assessor’s Parcel of Mixed Use Property shall equal the total of (i) the Assigned Special Tax that would be applicable to such Assessor’s Parcel if it was classified only as Residential Property and (ii) the Assigned Special Tax that would be applicable to such Assessor’s Parcel if it was classified as Non-Residential Property.
A-11
As shown in Table A-11 above, the projected Special Tax levy for CFD No. 07-I in Fiscal Year 2024-25 is $2,045,210, which is approximately 54.9% of the maximum Assigned Special Tax for all Developed Property in CFD No. 07-I. Approximately 59.7% and 40.3% of the Special Tax levy each year is expected to be allocated to debt service on the CFD No. 07-I Bonds and the CFD No. 07-I 2015 Bonds, respectively
For the complete text of the CFD No. 07-I Rate and Method, see APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
Delinquencies. Table A-12 is a summary of Special Tax levies, collections and delinquency rates in CFD No. 07-I for Fiscal Years 2018-19 through 2022-23.
TABLE A-12
CITY OF CHULA VISTA
CFD NO. 07-I
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
Delinquencies at Fiscal Year End(1)
Delinquencies as of June 30, 2023
Fiscal
Year
Amount
Levied
Parcels
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2018-19 $2,397,759 1,926 12 $412,380 0.52% - $ - 0.00% 2019-20 2,383,788 1,926 19 14,222 0.60% - - 0.00%
2020-21 2,392,430 1,926 14 10,019 0.42% 1 412 0.02%
2021-22 2,396,922 1,926 15 12,238 0.51% 1 825 0.03%
2022-23 2,365,301 1,927 12 10,246 0.43% 12 10,246 0.43% ___________________________
(2) As of June 30 of each Fiscal Year.
Source: Spicer Consulting Group, LLC
[Remainder of Page Intentionally Left Blank]
A-12
Top Taxpayers. Table A-13 below sets forth the top ten property owners in CFD No. 07-I based on the projected Special Tax levy for Fiscal Year 2024-25.
.
TABLE A-13
CITY OF CHULA VISTA
CFD NO. 07-I
TOP TAXPAYERS
Property Owner
Assessor's
Parcels
Projected Fiscal
Year 2024-25
Special Tax
Levy*
% of Projected
Total Fiscal Year
2024-25 Special
Tax Levy
Assessed
Value(1)
San Diego Retail 1 LLC 1 $ 37,217 1.82% $ 58,029,297 Shea Homes Limited Partnership 10 9,205 0.45 3,555,300
Gramico Inc 4 3,682 0.18 1,481,119
Investments of the Baja Californias 3 2,531 0.12 811,332 Gadallah Luay & Ramy Btissam 2 2,301 0.11 1,179,522
Ruvalcaba Jose 2 2,301 0.11 1,343,001
Eastlake Properties LLC 2 2,071 0.10 769,507
HGM Properties LLC 2 2,071 0.10 1,012,882
Peluso/Aertgeerts Family Trust 3 2,071 0.10 774,182
Luna Felipe & Alejandra 2 1,841 0.09 980,795 Subtotal 31 65,291 3.19 69,936,937
All other individual property owners 1,938 1,979,919 96.81 1,148,874,625 Totals 1,969 $2,045,210 100.00% $1,218,811,562
_______________________
(1) Assessed Value is based on the information provided fro m the San Diego County Assessor's Equalized Roll as of January 1, 2023 and may not accurately reflect true market value.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
[Remainder of Page Intentionally Left Blank]
A-13
Direct and Overlapping Debt . The property within CFD No. 07-I is subject to taxation by a number of taxing agencies, some of which have issued debt secured by taxes and assessments levied on such property. The table below sets forth the direct and overlapping debt for CFD No. 07-I as of December 1, 2023.
In 2015, CFD No. 07-I issued the CFD No. 07-I 2015 Bonds in the principal amount of $11,845,000. The CFD No. 07-I 2015 Bonds are payable from an allocable share of Special Taxes levied within CFD No. 07-I.
The CFD No. 07-I 2015 Bonds mature on September 1, 2036.
As of December 1, 2023, the Prior CFD No. 07-I Bonds were outstanding in the amount of $12,730,000. The CFD No. 07-I Bonds will be issued in the amount of $9,525,000*. The CFD No. 07-I 2015 Bonds remain outstanding in the amount of $9,550,000.
TABLE A-14
CITY OF CHULA VISTA
CFD NO. 07-I
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 1, 2023
I. Assessed Value (1) $1,218,811,562
II. Land Secured Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable
Amount
CHULA VISTA ELEMENTARY SCHOOL DISTRICT CFD NO. 1 CFD $13,470,983 95.680% $12,888,995 SWEETWATER UNION HIGH SCHOOL DISTRICT CFD NO. 1 CFD 2,962,574 95.623% 2,832,914 CITY OF CHULA VISTA CFD NO. 07-I, SERIES 2015 CFD 9,550,000 100.000% 9,550,000 CITY OF CHULA VISTA CFD NO. 07-I, SERIES 2024 CFD 9,525,000 100.000% 9,525,000* TOTAL LAND SECURED BONDED DEBT 34,796.909*
III. General Obligation Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable(2)
Amount
METROPOLITAN WATER DEBT SERVICE GO $ 19,215,000 0.990% 190,180 SOUTHWESTERN COMMUNITY COLLEGE DISTRICT GO 758,619,345 1.694% 12,847,985 SWEETWATER UNION HIGH SCHOOL DISTRICT GO 596,765,971 2.092% 12,482,469 CHULA VISTA ELEMENTARY SCHOOL DISTRICT GO 220,417,000 2.884% 6,357,644 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT 31,878,279
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $66,675,188*
IV . Ratios to Assessed Value
Outstanding Land Secured Bonded Debt 35.0:1*
Total Outstanding Bonded Debt 18.3:1*
___________________________
(1) Total Assessed Value per County of San Diego as of January 1, 2023. (2) Calculated by dividing the assessed value by the total assessed value for FY 2023-24.
Source: Spicer Consulting Group, LLC
__________________________
* Preliminary, subject to change.
A-14
Value-To-Lien Ratios. Table A-15 below sets forth the estimated assessed value-to-lien ratio of all the taxable property in CFD No. 07-I within certa in ranges based on the Fiscal Year 2023-24 assessed value, the principal amount of the CFD No. 07-I Bonds and the CFD 07-I 2015 Bo nds and the overlapping debt payable from taxes and assessments within CFD No. 07-I as of December 1, 2023.
TABLE A-15
CFD NO. 07-I
ESTIMATED ASSESSED V ALUE-TO-LIEN RATIOS
INCLUDING DIRECT AND OVERLAPPING DEBT
Value-to-Lien Category
Number
of
Parcels/
Units
Assessed
Value (1)
% of
Assessed
Value
Projected
Fiscal
Year 2024-
25 Special
Tax Levy
% of
Projected
Fiscal Year
2024-25
Special Tax
Levy
CFD No. 07-I
Proposed
2024
Bonds (2)
CFD
No. 07-I
2015 Bonds (3)
All Other
Overlapping
Land-Secured
Debt
Total
Overlapping
Land-
Secured Debt
Aggregate
Value-to-
Lien
Less than 10.00:1 (4) 2 $ 245,237 0.0% $ 2,071 0.1% $ 9,645 $ 9,671 $ 12,481 $ 31,797 18.2:1 Between 10.00:1 to 20.00:1 44 11,822,620 1.0 40,961 2.0 190,763 191,264 267,718 649,745 25.7:1 Between 20.01:1 to 30.00:1 641 291,902,830 23.9 660,203 32.3 3,074,713 3,082,783 5,202,185 11,359,681 34.4:1 Between 30.01:1 to 40.00:1 816 491,845,024 40.4 831,639 40.7 3,873,131 3,883,297 6,551,795 14,308,223 44.3:1 Between 40.01:1 to 50.00:1 433 333,327,459 27.3 441,593 21.6 2,056,596 2,061,994 3,410,886 7,529,476 97.7:1 Greater than 50.01:1(4) 33 89,668,392 7.4 68,743 3.4 320,151 320,991 276,845 917,987 18.2:1 Totals 1,969 $1,218,811,562 100.0% $2,153,960 100.0% $9,525,000* $9,550,000 $15,721,909 $34,796,909* 35.0:1* _________________________
(1) Assessed value is based on the informati on provided from the San Diego County Assessor' s Equalized Roll as of January 1, 2023 a nd may not accurately reflect true market value.
(2) Responsibility of the par amount has been allocated based on the es timated Fiscal Year 2024-25 Speci al Tax levy, with developme nt status as of D ecember 1, 2023, and preliminary bond sizing as provided by the Municipal Advisor. (3) Responsibility of the MFA Series 2015 Bonds as of December 1, 2023 has been allocated based on the estimated FY 2024-25 Special Tax levy. (4) The minimum value to lien in the “Less than 10.00:1” category is 5.9:1. The maximum value to lien in the “Greater than 50.01:1” category is 167.2:1.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
A-15
Community Facilities District No. 08-I
Location and Description. Community Facilities District No. 08-I (“CFD No. 08-I”) is generally located in two areas: east of La Media Road, north of Birch Road, and south of Olympic Parkway, west of SR 125.
CFD No. 08-I includes 1,537 residen ces, of which 444 are single-family detached residences and 1,093 are single-family attached residences. The residenc es range in size from 959 square feet to 3,525 square feet. Of the 1,093 single-family attached reside nces, 206 units are included on 7.25-acres of two developed residential parcels. CFD No. 08-I is fully developed.
Assigned Special Taxes. Table A-11 below sets forth the Special Taxes that are projected to be levied on taxable property within CFD No. 08-I in Fiscal Year 2024-25, taking into account the reduced debt service on the CFD No. 08-I Bonds as a result of the issuance of the Bonds and the CFD 08-I Bonds. The Special Taxes in CFD No. 08-I may not be levied afte r Fiscal Year 2039-40. The final maturity of the CFD No. 08-I Bonds is September 1, 2032.
TABLE A-16
CITY OF CHULA VISTA
CFD NO. 08-I
ESTIMATED SPECIAL TAX LEVY FOR FISCAL YEAR 2024-25
Development Status
No. of
Parcels/
Units
Fiscal Year
2023-24 Assessed
Value
(1)
Maximum
Special Tax
(2)
Projected
Fiscal Year
2024-25 Special
Tax Levy(3)
% of Fiscal Year
2024-25 Special
Tax Levy
Developed Residential - Attached 1,093 (4) $402,752,470 $1,470,834 $587,401 65.9% Developed Residential - Detached 444 267,250,896 808,064 304,099 34.1 Total 1,537 $670,003,366 $2,278,898 $891,500 100.0%
_____________________________________________________________________ (1) Total Assessed Value per County of San Diego as of January 1, 2023 lien date. (2) Pursuant to the Rate and Method for CFD No. 08-I, under no circumstances will the Special Tax levied against any Assessor’s Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of a ny other Assessor’s Parcel. (3) Takes into account reduced debt service as a result of the issuance of the Bonds and the CFD No. 08-I Bonds. (4) Represents units, not parcels.
Source: County of San Diego Assessor’s Office; Spicer Consulting Group, LLC.
The Assigned Special Tax for each Assessor’s Parcel of Developed Property (as those terms are defined in the Rate and Method for CFD No. 08-I) is calculated as follows: (1) for Resi dential Property, $800 per Dwelling Unit plus $0.35 per square foot of Residential Floor Area, and (2) for Non-Residential Property, $6,000 per Acre. The terms “Residential Property”, “Residential Floor Area”, “Non-Residential Property,” and “Acre” are defined in the Rate and Method for CFD No. 08-I included in
APPENDIX D - RATES AND METHODS OF
APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
As shown in Table A-16 above, the projected Special Tax levy for CFD No. 08-I in Fiscal Year 2024-25 is $891,500, which is approximately 39.1% of the maximum Assigned Special Tax for all Developed Property in CFD No. 08-I.
For the complete text of the CFD No. 08-I Rate and Method, see APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
A-16
Delinquencies. Table A-17 is a summary of Special Tax levies, collections and delinquency rates in CFD No. 08-I for Fiscal Years 2018-19 through 2022-23.
TABLE A-17
CITY OF CHULA VISTA
CFD NO. 08-I
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
Delinquencies at Fiscal Year End(1)
Delinquencies as of June 30, 2023
Fiscal
Year
Amount
Levied
Parcels
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2018-19 $1,349,067 1,333 9 $6,558 0.49% - $ - 0.00% 2019-20 1,207,963 1,333 17 8,487 0.70% 1 973 0.08%
2020-21 1,201,170 1,333 7 5,072 0.42% 1 968 0.08%
2021-22 1,192,929 1,333 8 4,857 0.41% 3 1,998 0.17%
2022-23 1,203,711 1,333 14 7,927 0.66% 14 7,927 0.66%
___________________________
(1) As of June 30 of each Fiscal Year.
Source: Spicer Consulting Group, LLC
Top Taxpayers. Table A-18 below sets forth the top ten property owners in CFD No. 08-I based on the projected Special Tax levy for Fiscal Year 2024-25.
TABLE A-18
CITY OF CHULA VISTA
CFD NO. 08-I
TOP TAXPAYERS
Property Owner
Assessor's
Parcels
Projected Fiscal
Year 2024-25
Special Tax
Levy*
% of Projected
Total Fiscal Year
2024-25 Special
Tax Levy
Assessed
Value(1)
Contessa V 6 LLC 1 $ 58,827 6.60% $ 25,676,354
Otay Ranch Fourteen L L C 1 44,762 5.02 30,200,000
M M Manager LLC 13 7,273 0.82 3,792,648
G I S Estate Trust 4 2,113 0.24 1,129,598
Mich DOS LLC 3 1,773 0.20 933,574
Toby Puck LLC 3 1,773 0.20 956,784
Premiere Maroon Properties LLC 3 1,583 0.18 635,688
Barajas Francisco & Karina 2 1,562 0.18 1,541,330
Moreno Christopher & Ramirez K 2 1,381 0.15 826,567
Recasas Jeffrey & Hazelle Rev Trust 2 1,374 0.15 917,438 Subtotal 34 122,420 13.73 66,609,981
All other individual property owners 1,299 769,080 86.27 603,393,385 Totals 1,333 $891,500 100.00% $670,003,366
_______________________
(1) Assessed Value is based on the information provided from the San Diego County Assessor's Equalized Roll as of January 1, 2023 and may not accurately reflect true market value.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
A-17
Direct and Overlapping Debt . The property within CFD No. 08-I is subject to taxation by a number of taxing agencies, some of which have issued debt secured by taxes and assessments levied on such property. The table below sets forth the direct and overlapping debt for CFD No. 08-I as of December 1, 2023.
As of December 1, 2023, the Prior CFD 08-I Bonds were outstanding in the amount of $10,220,000. The CFD 08-I Bonds will be issued in the amount of $6,545,000*.
TABLE A-19
CITY OF CHULA VISTA
CFD NO. 08-I
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 1, 2023
I. Assessed Value (1) $670,003,366
II. Land Secured Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable
Amount
CHULA VISTA ELEMENTARY SCHOOL DISTRICT CFD NO. 1 CFD $7,879,469 83.910% $ 6,611,670 SWEETWATER UNION HIGH SCHOOL DISTRICT CFD NO. 1 CFD 1,687,480 83.087% 1,402,085 CITY OF CHULA VISTA CFD NO. 08-I, SERIES 2024 CFD 6,545,000 100.000% 6,545,000* TOTAL LAND SECURED BONDED DEBT 14,558,755*
III. General Obligation Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable(2)
Amount
METROPOLITAN WATER DEBT SERVICE GO $ 19,215,000 0.544% 104,545 SOUTHWESTERN COMMUNITY COLLEGE DISTRICT GO 758,619,345 0.931% 7,062,776 SWEETWATER UNION HIGH SCHOOL DISTRICT GO 596,765,971 1.150% 6,861,845 CHULA VISTA ELEMENTARY SCHOOL DISTRICT GO 220,417,000 1.586% 3,494,915 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT 17,524,082
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $32,082,837*
IV . Ratios to Assessed Value
Outstanding Land Secured Bonded Debt 46.0:1*
Total Outstanding Bonded Debt 20.9:1*
___________________________
(1) Total Assessed Value per County of San Diego as of January 1, 2023. (2) Calculated by dividing the assessed value by the total assessed value for FY 2023-24.
Source: Spicer Consulting Group, LLC
[Remainder of Page Intentionally Left Blank]
__________________________
* Preliminary, subject to change.
A-18
Value-To-Lien Ratios. Table A-20 below sets forth the estimated assessed value-to-lien ratio of all the taxable property in CFD No. 08-I within certa in ranges based on the Fiscal Year 2023-24 assessed value, the principal amount of the CFD No. 08-I Bonds and the overlapping debt payable from taxes and assessments on the taxable property within CFD No. 08-I as of December 1, 2023.
TABLE A-20
CFD NO. 08-I
ESTIMATED ASSESSED V ALUE-TO-LIEN RATIOS
INCLUDING DIRECT AND OVERLAPPING DEBT
Value-to-Lien Category
Number
of
Parcels/
Units
Assessed
Value (1)
% of
Assessed
Value
Projected
Fiscal
Year 2024-
25 Special
Tax Levy
% of
Projected
Fiscal Year
2024-25
Special Tax
Levy
CFD No. 08-I
Proposed
2024 Bonds (2)
All Other
Overlapping
Land-Secured
Debt
Total
Overlapping
Land-
Secured Debt
Aggregate
Value-to-
Lien
Less than 20.00:1(3) 3 $ 419,118 0.1% $ 1,698 0.2% $ 12,466 $ 15,912 $ 28,379 14.8:1 Between 20.00:1 to 40.00:1 504 173,747,793 25.9 301,987 33.9 2,217,055 3,146,181 5,363,236 32.4:1 Between 40.01:1 to 60.00:1 769 359,753,965 53.7 448,809 50.3 3,294, 957 3,938,063 7,233,019 49.7:1 Greater than 60.01:1(3) 261 136,082,490 20.3 139,006 15.6 1,020,522 913,599 1,934,121 70.4:1 Totals 1,537 $670,003,366 100.0% $891,500 100.0% $6,545,000* $8,013,755 $14,558,755* 46.0:1* _________________________
(1) Assessed value is based on the informati on provided from the San Diego County Assessor' s Equalized Roll as of January 1, 2023 a nd may not accurately reflect true market value.
(2) Responsibility of the par amount has been allocated based on the es timated Fiscal Year 2024-25 Speci al Tax levy, with developme nt status as of D ecember 1, 2023, and preliminary bond sizing as provided by the Municipal Advisor. (3) The minimum value to lien in the “Less than 20.00:1” category 7.1:1. The maximum value to lien in the “Greater than 60.01:1” category is 91.9:1.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
A-19
Community Facilities District No. 2001-2
Location and Description . Community Facilities District No. 2001-2 (“CFD No. 2001-2”) is generally located south of Olympic Parkway and north of Birc h Road, between SR 125 to the east and La Media Road to the west. Its boundaries wrap around CFD No. 08-I.
CFD No. 2001-2 includes 694 residences, of which 481 are single-family detached residences and 213 are single-family attached residences. The reside nces range in size from 1,245 square feet to 3,864 square feet. CFD No. 2001-2 is fully developed.
Assigned Special Taxes. Table A-21 below sets forth the Special Ta xes that are projected to be levied on taxable property within CFD No. 2001-2 in Fiscal Year 2024-25, taking into account the reduced debt service on the CFD No. 2001-2 Bonds as a result of the issuance of the Bonds and the CFD 2001-2 Bonds. The Special Taxes in CFD No. 2001-2 may not be levied after Fiscal Year 2037-38. The final maturity of the CFD No. 2001-2 Bonds is September 1, 2032.
TABLE A-21
CITY OF CHULA VISTA
CFD NO. 2001-2
ESTIMATED SPECIAL TAX LEVY FOR FISCAL YEAR 2024-25
Development Status
No. of
Parcels/
Units
Fiscal Year
2023-24 Assessed
Value
(1)
Maximum
Special Tax
(2)
Projected
Fiscal Year
2024-25 Special
Tax Levy(3)
% of Fiscal Year
2024-25 Special
Tax Levy
Developed Residential - Attached 213 (4) $ 90,931,981 $ 205,075 $111,243 23.0% Developed Residential - Detached 481 351,424,577 828,780 373,257 77.0 694 $442,356,558 $1,033,855 $484,500 100.0%
_____________________________________________________________________ (1) Total Assessed Value per County of San Diego as of January 1, 2023 lien date. (2) Pursuant to the Rate and Method for CFD No. 2001-2, under no circumstances will the Sp ecial Tax levied against any Assessor’s Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of a ny other Assessor’s Parcel. (3) Takes into account reduced debt service as a result of the issuance of the Bonds and the CFD No. 2001-2 Bonds.. (4) Represents units, not parcels.
Source: County of San Diego Assessor’s Office; Spicer Consulting Group, LLC.
The Assigned Special Tax for each Assessor’s Parcel of Developed Property (as those terms are defined in the Rate and Method for CFD No. 2001-2) is calculated as follows: (1) for Residential Property, $440 per Dwelling Unit plus $0.34 per square foot of Residen tial Floor Area, and (2) for Non-Residential Property, $11,365 per Acre. The terms “Residen tial Property”, “Residential Floor Area”, “Non-Residential Property,” and “Acre” are defined in the Rate and Method for CFD No. 2001-2 included in
APPENDIX D - RATES AND
METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
As shown in Table A-21 above, the projected Special Tax levy for CFD No. 2001-2 in Fiscal Year 2024-25 is $484,500, which is approximately 46.9% of the maximum Assigned Special Tax for all Developed Property in CFD No. 2001-2.
For the complete text of the CFD No. 2001-2 Rate and Method, see APPENDIX D - RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS.
A-20
Delinquencies. Table A-22 is a summary of Special Tax levies, collections and delinquency rates in CFD No. 2001-2 for Fiscal Years 2018-19 through 2022-23.
TABLE A-22
CITY OF CHULA VISTA
CFD NO. 2001-2
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
Delinquencies at Fiscal Year End(1)
Delinquencies as of June 30, 2023
Fiscal
Year
Amount
Levied
Parcels
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2018-19 $615,062 694 3 $2,162 0.35% - $ - 0.00%
2019-20 606,449 694 4 3,123 0.51% - - 0.00%
2020-21 604,781 694 1 553 0.09% - - 0.00%
2021-22 606,726 694 4 2,454 0.40% 2 774 0.13%
2022-23 599,299 694 6 3,499 0.58% 6 3,499 0.58%
___________________________
(1) As of June 30 of each Fiscal Year.
Source: Spicer Consulting Group, LLC
Top Taxpayers. Table A-23 below sets forth the top ten property owners in CFD No. 2001-2 based on the projected Special Tax levy for Fiscal Year 2024-25.
.
TABLE A-23
CITY OF CHULA VISTA
CFD NO. 2001-2
TOP TAXPAYERS
Property Owner
Assessor's
Parcels
Projected Fiscal
Year 2024-25
Special Tax
Levy*
% of Projected
Total Fiscal Year
2024-25 Special
Tax Levy
Assessed
Value(1)
Immobu LLC 2 $ 1,796 0.37% $ 2,354,160
Salfel Family Trust 2 1,714 0.35 1,364,882
Aymerich Fidel 2 1,691 0.35 1,651,400
Radoc Manuel & Janet 2 1,623 0.33 1,581,259
Moschese Massimo 2 1,500 0.31 902,611
TJH Properties LLC 2 1,352 0.28 1,132,050
Eastlake Properties LLC 2 1,352 0.28 796,710
Perez Rodolfo 1 951 0.20 626,534
Balaguer Lucia 2005 Revocable Trust 1 951 0.20 918,875
Alonso Gustavo &Vanessa K 1 951 0.20 574,040 Subtotal 17 13,882 2.87% 11,902,521
All other individiual property owners 677 470,618 97.13% 430,454,037 Totals 694 $484,500 100.00% $442,356,558
_______________________
(1) Assessed Value is based on the information provided fro m the San Diego County Assessor's Equalized Roll as of January 1, 2023 and may not accurately reflect true market value.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
A-21
Direct and Overlapping Debt . The property within CFD No. 2001-2 is subject to taxation by a number of taxing agencies, some of which have issued debt secured by taxes and assessments levied on such property.
The table below sets forth the direct and overlapping debt for CFD No. 2001-2 as of December 1, 2023.
As of December 1, 2023, the Prio r CFD 2001-2 Bonds were outstanding in the amount of $4,625,000. The CFD 2001-2 Bonds will be issued in the amount of $3,395,000*.
TABLE A-24
CITY OF CHULA VISTA
CFD NO. 2001-2
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 1, 2023
I. Assessed Value (1) $442,356,558
II. Land Secured Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable
Amount
CHULA VISTA ELEMENTARY SCHOOL DISTRICT CFD NO. 1 CFD $16,994,461 29.167% $ 4,965,851 SWEETWATER UNION HIGH SCHOOL DISTRICT CFD NO. 1 CFD 2,712,605 40.441% 1,097,013 CITY OF CHULA VISTA CFD NO. 2001-2, SERIES 2024 CFD 3,395,000 100.000% 3,395,000* TOTAL LAND SECURED BONDED DEBT 9,448,864*
III. General Obligation Bond Indebtedness
Outstanding Direct and Overlapping Bonded Debt
Type
Outstanding
%
Applicable(2)
Amount
METROPOLITAN WATER DEBT SERVICE GO 19,215,000 0.359% 69,024 SOUTHWESTERN COMMUNITY COLLEGE DISTRICT GO 758,619,345 0.615% 4,663,059 SWEETWATER UNION HIGH SCHOOL DISTRICT GO 596,765,971 0.759% 4,530,399 CHULA VISTA ELEMENTARY SCHOOL DISTRICT GO 220,417,000 1.047% 2,307,449 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT 11,569,931
TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $21,018,795*
IV . Ratios to Assessed Value
Outstanding Land Secured Bonded Debt 46.8:1*
Total Outstanding Bonded Debt 21.1:1*
___________________________
(1) Total Assessed Value per County of San Diego as of January 1, 2023. (2) Calculated by dividing the assessed value by the total assessed value for FY 2023-24.
Source: Spicer Consulting Group, LLC
[Remainder of Page Intentionally Left Blank]
__________________________
* Preliminary, subject to change.
A-22
Value-To-Lien Ratios. Table A-25 below sets forth the estimated assessed value-to-lien ratio of all the taxable property in CFD No. 2001-2 within certain ranges based on the Fiscal Year 2023-24 assessed value, the principal amount of the CFD No. 2001-2 Bonds and the overla pping debt payable from taxes and assessments on the taxable property within CFD No. 2001-2 as of December 1, 2023.
TABLE A-25
CFD NO. 2001-2
ESTIMATED ASSESSED V ALUE-TO-LIEN RATIOS
INCLUDING DIRECT AND OVERLAPPING DEBT
Value-to-Lien Category
Number
of
Parcels/
Units
Assessed
Value (1)
% of
Assessed
Value
Projected
Fiscal
Year 2024-
25 Special
Tax Levy
% of
Projected
Fiscal Year
2024-25
Special Tax
Levy
CFD No.
2001-2
Proposed
2024 Bonds (2)
All Other
Overlapping
Land-Secured
Debt
Total
Overlapping
Land-
Secured Debt
Aggregate
Value-to-
Lien
Less than 10.00:1(3) 1 135,595 0.0% $ 740 0.2% $ 5,185 $ 9,794 $ 14,978 9.1:1 Between 10.00:1 to 20.00:1 1 204,596 0.0 558 0.1 3,909 6,364 10,273 19.9:1 Between 20.01:1 to 30.00:1 36 13,911,391 3.1 24,989 5.2 175,105 317,098 492,203 28.3:1 Between 30.01:1 to 40.00:1 195 94,932,526 21.5 138,754 28.6 972, 277 1,780,103 2,752,381 34.5:1 Between 40.01:1 to 50.00:1 194 121,006,014 27.4 136,388 28.2 955, 700 1,706,822 2,662,522 45.4:1 Between 50.01:1 to 60.00:1 131 96,951,364 21.9 91,741 18.9 642, 848 1,138,153 1,781,001 54.4:1 Greater than 60.01:1(3) 136 115,215,072 26.0 91,331 18.9 639,976 1,095,530 1,735,505 66.4:1 Totals 694 $442,356,558 100.0% $484,500 100.0% $3,395,000* $6,053,864 $9,448,864* 46.8:1* _________________________
(1) Assessed value is based on the informati on provided from the San Diego County Assessor' s Equalized Roll as of January 1, 2023 a nd may not accurately reflect true market value.
(2) Responsibility of the par amount has been allocated based on the es timated Fiscal Year 2024-25 Speci al Tax levy, with developme nt status as of D ecember 1, 2023, and preliminary bond sizing as provided by the Municipal Advisor. (3) The minimum value to lien in the “Less than 10.00:1” category 9.1:1. The maximum value to lien in the “Greater than 60.01:1” category is 78.6:1.
Source: County of San Diego Assessor's Office; Spicer Consulting Group, LLC. __________________________
* Preliminary, subject to change.
B-1
APPENDIX B
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
C-1
APPENDIX C
DEMOGRAPHIC INFORMATION REGARDING THE COUNTY
OF SAN DIEGO AND THE CITY OF CHULA VISTA
The Bonds are not obligations of the City of Chula Vista (the “City”) or the County of San Diego (the “County”) and do not represent a lien or charge against a ny funds or property of the City or the County.
The following information is provided only to give prospective investors an overview of the general economic condition of the City, the County and the State of California (the “State”).
General
Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in an area generally known as “South Bay.” Chula Vista’s city limits cover approximately 50 square miles. Neighboring communities include the City of San Diego and National City to the north and the City of Imperial Beach and the co mmunities of San Ysidro and Otay Mesa to the south. With a January 2023 estimated po pulation of nearly 275,000, Chula Vista is the second largest city in the County.
Population
The following table offers population figures as of each January 1 for the City, the County and the State for 2019 through 2023.
Area
2019 2020 2021 2022 2023
City of Chula Vista 271,362 273,384 274,540 274,077 274,784 County of San Diego 3,333,319 3,331,279 3,283,113 3,275,435 3,269,755 State of California 39,605,361 39,648,938 39,286,510 39,078,674 38,940,231
Source: California State Department of Finance, Demographic Research Unit.
Building Activity
The following tables provide summa ries of the building permit valuations and the number of new dwelling units authorized in the City and County from 2019 through 2023.
BUILDING PERMIT V ALUATIONS
City of Chula Vista
2019-2023
(Dollars in Thousands)
2019 2020 2021 2022 2023
Residential
Non-residential
Total*
Total Permits
___________________________
Source: Construction Indu stry Research Board.
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Employment
The following tables show the largest employers located in the City and County as of June 30, 2023.
LARGEST EMPLOYERS
City of Chula Vista
(as of June 30, 2023)
Name of Business Employees T ype of Business
Sweetwater Union High School District 3,993 Education
Chula Vista Elementary School District 3,776 Education
Sharp Chula Vista Medical Center 2,823 Healthcare
Southwestern Community College 1,792 Higher Education
Wal-Mart 1,413 Retail- General Merchandise
City of Chula Vista 1,398 Municipal Governmen t
Rohr Inc./Goodrich Aerospace 1,307 Aerospace/Manufacturing Scripps Mercy Hospital Chula Vista 1,073 Healthcare
Costco Wholesale 707 Retail- General Merchandise
Transdev Services 602 Transportation
__________________________
Source: City of Chula Vista Annual Comprehensive Financial Report for the year ending June 30, 2023.
County of San Diego
(as of June 30, 2023)
Name of Business Employees T ype of Business
U.C. San Diego 35,802 Higher Education
Sharp Healthcare 19,468 Healthcare
County of San Diego 17,954 Municipal Governmen
t
City of San Diego 11,820 Municipal Governmen t
General Atomics and affiliates 6,745 Technology
San Diego State University 6,454 Higher Education
Rady Children’s Hospital
– San Diego 5,711 Healthcare
San Diego Community College District 5,400 Higher Education Sempra Energy 5,063 Energy
YMCA of San Diego County 5,057
Non-profit Organization
_________________________
Source: County of San Diego Comprehensive Annual Financial Report for the year ending June 30, 2023.
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Employment and Industry
Employment data by industry is not separately reported on an annual basis for the City but is compiled for the San Diego-Carlsbad Metropolitan Statistical Area (the “MSA).
The following table represents the Annual Average Labor Force and Industry Employment for the San Diego-Carlsbad MSA for the period from 2018 through 2022.
SAN DIEGO-CARLSBAD MSA
INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL A VERAGE
Industry 2018 2019 2020 2021 2022
Government 248,100 248,600 237,100 237,900 246,800
Other Services 55,500 56,400 44,800 47,500 54,500
Leisure and Hospitalit
y 199,600 201,700 144,800 161,600 193,400
Educational and Health Services 208,900 216,600 210,900 216,700 227,600 Professional and Business Services 249,000 255,800 248,300 265,300 285,200 Financial Activities 76,000 76,500 74,800 76,200 77,000 Information 23,600 23,500 22,100 21,500 22,000
Transportation, Warehousin
g and Utilities 33,300 34,300 33,300 37,100 40,200
Service Producing
Retail Trade 147,900 145,600 133,200 137,600 138,300
Wholesale Trade 43,800 44,000 41,300 42,100 43,800
Manufacturin
g
Nondurable Goods 28,600 29 ,400 28,400 30,500 32,500
Durable Goods 83,700 86,300 85,400 83,900 84,900
Minin
g, Logging and Construction 84,000 84,300 81,600 84,100 87,800 Total Nonfarm 1,482,000 1,503,000 1,386,000 1,442,000 1,534,000 Farm 9,300 9,700 9,200 9,000 9,500 Total (all industries) 1,491,300 1,512,700 1,395,200 1,451,000 1,543,500 __________________________________________
Source: State of California Employment Development Department, Labor Market Information Division, “ Industry Employment & Labor Force.”
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The following table summarizes the labor force, employment and unemployment figures for the period from 2018 through 2022 for the City, the County, the State and the nation as a whole.
CITY OF CHULA VISTA,
COUNTY OF SAN DIEGO,
STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment Civilian Unemployment
Year and Area Labor Force Employment Unemployment Rate
2018
Chula Vista 122,800 118,300 4,500 3.6%
San Diego County 1,579,800 1,526,600 53,200 3.4
California 19,263,900 18,442,400 821,500 4.3
United States 162,075,000 155,761,000 6,314,000 3.9
2019
Chula Vista 124,500 120,100 4,400 3.5%
San Diego County 1,583,600 1,532,200 51,400 3.2
California 19,353,700 18,550,500 803,200 4.2
United States 163,539,000 157,538,000 6,001,000 3.7
2020
Chula Vista 122,500 109,500 13,000 10.6%
San Diego County 1,547,300 1,401,900 145,400 9.4
California 18,821,200 16,913,100 1,908,100 10.1
United States 160,742,000 147,795,000 12,947,000 8.1
2021
Chula Vista 122,300 113,100 9,200 7.5%
San Diego County 1,547,800 1,447,500 100,300 6.5
California 18,973,400 17,86,300 1,387,100 7.3
United States 161,204,000 152,581,000 8,623,000 5.3
2022
Chula Vista 124,800 119,900 4,900 3.9%
San Diego County 1,589,600 1,534,800 54,700 3.4
California 19,252,000 18,440,900 811,100 4.2
United States 164,287,000 158,291,000 5,996,000 3.6
__________________________________
Note: The unemployment rate is calculated using unrounded data. Data may not add due to rounding.
Source: California State Employment Development Department and United States Bureau of Labor Statistics.
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Per Capita Personal Income
Per capita personal income information for the City, the County, the State of California and the United States are summarized in the following table.
PER CAPITA PERSONAL INCOME
CITY OF CHULA VISTA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA
AND UNITED STATES
2018 – 2022
Year City of Chula Vista(1) County of San Diego(2) State of California(3) United States(3) 2018 $51,508 53,318 $63,759 $54,581
2019 53,825 57,151 66,745 56,474
2020 57,057 51,828 71,480 59,729
2021 60,482 49,703 76,614 64,143
2022 Not available 51,045 77,339 65,423
____________________________________
Source: (1) City of Chula Vista Annual Comprehensive Financial Report for the year ending June 30, 2023. (2) County of San Diego Comprehensive Annual Financial Report for the year ending June 30, 2023. (3) Department of Commerce, Bureau of Economic Analysis.
Taxable Sales
Taxable transactions by type of business for the City are summarized below for calendar years 2018 through 2022.
CITY OF CHULA VISTA
TAXABLE TRANSACTIONS BY TYPE OF BUSINESS
(in thousands)
2018 – 2022
2018 2019 2020 2021 2022
Retail and Food Services
Motor Vehicle and Parts Dealers $ 266,277 $ 268,853 $ 248,946 $ 336,006 $ 392,158 Home Furnishings and Appliance Stores 189,346 177,838 152,753 192,293 177,282 Building Material, Garden Supplies 137,896 137,842 176,994 187,030 193,023 Food and Beverage Stores 149,341 156,487 178,700 180,726 189,597 Gasoline Stations 333,338 322,283 218,730 319,825 378,776 Clothing and Accessories Stores 188,824 205,650 135,662 198,309 224,553 General Merchandise 705,117 747,405 657,855 778,798 887,687 Food Services and Drinking Places 443,169 467,724 397,256 519,762 585,523 Other Retail Group 221,775 212,490 199,236 245,247 278,290 Total Retail and Food Services 2,635,083 2,696,571 2,366,132 2,957,997 3,306,890 All Other Outlets 344,528 342,578 280,148 343,915 425,226 Total All Outlets $2,979,611 $3,039,149 $2,646,280 $3,301,912 $3,732,116 __________________________________________
Note: Detail may not compute to total due to rounding.
Source: California Department of Tax and Fee Administration, “Taxable Sales - Cities by Type of Business.”
C-6
COUNTY OF SAN DIEGO
TAXABLE TRANSACTIONS
(in thousands)
2018-2022
Year Permits
Taxable
Transactions
2018 100,674 $59,041,042
2019 101,901 61,365,277
2020 109,428 58,814,528
2021 98,392 71,714,655
2022 101,259 80,699,961
Source: Taxable Sales in California, California Department of Tax and Fee Administration.
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.
D-1
APPENDIX D
RATES AND METHODS OF APPORTIONMENT OF SPECIAL
TAXES FOR THE TAXING JURISDICTIONS
RATE AND METHOD OF APPORTIONMENT
FOR CITY OF CHULA VISTA
COMMUNITY FACILITIES DISTRICT NO. 06-I
IMPROVEMENT AREA A
(Eastlake – Woods, Vistas and Land Swap)
Property within the City of Chula Vista Community Facilities District No. 06-I, Improvement Area A (“Improvement Area A”) and collected each Fisca l Year commencing in Fiscal Year 2003-2004 in an amount determined by the City Council through the application of the appropriate Special Tax for “Developed Property,” and “Undeveloped Property” as de scribed below. All of the Taxable Property in Improvement Area A, unless exempted by law or by th e provisions hereof, A Special Tax as hereinafter defined shall be levied on each Assessor’s Parcel of Taxable shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meaning:
“Acre or Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’ s Parcel Map, the land area shown on the applicable Final Subdivision Map, parcel map, condominium plan , record of survey, or other recorded document creating or describing the land area. If the preceding maps for a land area are not available, the Acreage of such land area shall be determined by the City Engineer. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. “Administrative Expenses” means the actual or reasonably estimated costs directly related to the administration of Improvement Area A including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD- 06-I, or any designee thereof of complying with arbitr age rebate requirements; the costs to the City, CFD- 06-I, or any designee thereof of providing continuing disclosure; the costs associated with preparing Special Tax disclosure statements and respondi ng to public inquiries regarding the Special Taxes; the costs of the City, CFD-06-I, or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD-06-I, for any other administrative purposes of Improvement Area A, including, but not lim ited to attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. “Assessor’s Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel number.
D-2
“Assessor’s Parcel Map” means an official map of the County Assessor of the County designating parcels by Assessor’s Parcel number.
“Assigned Special Tax” means the Special Tax for each Land Use Category of Developed Property as determined in accordance with Section C.1.a. “Available Funds” means the balance in the reserve fund established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, delinquent Special Tax payments not required to fund the Special Tax Requirement for any preceding Fiscal Year, and Special Tax prepayments collected to pay interest on Bonds, an d other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. “Backup Special Tax” means the Special Tax amount set forth in Section C.1.b. “Bonds” means any bonds or other debt (as defined in the Act), whether in one or more series, issued or incurred by CFD-06-I for Improvement Area A under the Act. “Bond Year” means a one-year period beginning on Se ptember 2nd in each year and ending on September 1st in the following year, unless defined otherwise in the applicable Indenture. “CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. “CFD-06-I” means City of Chula Vista Community Facilities District No. 06-I. “City” means the City of Chula Vista.
“Commercial Property” means all Assessors’ Parcels of Developed Property, for which a building permit(s) was issued for a non-residential use, excluding Community Purpose Facility Property and Hotel Property.
“Community Purpose Facility Property” means all Assessors’ Parcels which are classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452. “Council” means the City Council of the City, acting as the legislative body of CFD-06-I. “County” means the County of San Diego.
“Developed Property” means, for each Fiscal Year, all Taxable Property for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year. “Exempt Property” means property not subject to the Special Assigned Tax due to its classification as either Public Property, Property Owner Association Property, Community Purpose Facility Property, public or utility easements.
“Final Subdivision Map” means a subdivision of property, created by recordation of a Final Subdivision Map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et se q.) or recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which residential building permits may be issued without further subdivision of such property.
“Fiscal Year” means the period starting July 1 and ending on the following June 30. “Hotel Property” means any Assessor’s Parcel(s) of Commercial Property within the boundaries D-3
of CFD 06-I entitled or otherwise designated by the City to be used as a Hotel site. “Hotel” means a building or group of buildings comprising six or more individual sleeping or living units without kitchens, except as otherwise provided herein, for the accommodation of transient guests.
“Improvement Area A” means Improvement Area A of CFD No. 06-I known as the Woods, Vistas and Land Swap.
“Indenture” means the indenture, fiscal agent agreemen t, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Tables 1 and 2 of Section C. “Lot” means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. “Master Developer” means the owner of the predominant amount of Undeveloped Property in Improvement Area A.
“Maximum Annual Special Tax” means the maximum annual Speci al Tax, determined in accordance with the provisions of Section C, which may be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property.
“Outstanding Bonds” means all Bonds, which remain outstanding as defined in the Indenture. “Property Owner Association Property” means any property within the boundaries of Improvement Area A owned by or dedicated to a property owner association, including any master or sub- association.
“Proportionately” means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Annual Special Tax or the Backup Special Tax is equal for all Assessors’ Parcels of Developed Property within Improvement Area A. For Undeveloped Property “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximu m Annual Special Tax per Acre is equal for all Assessor’s Parcels of Undeveloped Property within Improvement Area A. “Public Property” means any property within the boundari es of Improvement Area A that is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency.
“Residential Property” means all Assessors’ Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. “Residential Floor Area” means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by the CFD Administrator by reference to appropriate records kept by the City’s Building De partment. Residential Floor Area for a residential structure will be based on the building permit(s) issued for such structure. “Special Tax” means the annual special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement.
D-4
“Special Tax Requirement” means that amount of Special Tax revenue required in any Fiscal Year for Improvement Area A to: (i) pay annual debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancem ent and rebate payments on Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Inde nture; and (v) pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD-06-I provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on the Undeveloped Property and for Improvement Area A ; less (vi) a credit for Available Funds. “State” means the State of California.
“Taxable Property” means all of the Assessor’s Pa rcels within the boundaries of Improvement Area A that are not exempt from the Special Tax pursuant to law or Section E below. “Trustee” means the trustee, fiscal agent, or paying agent under the Indenture. “Undeveloped Property” means, for each Fiscal year, all Taxable Property not classified as Developed Property.
“Zone 1” means a specific geographic location known as the Vistas development area as depicted in Exhibit A attached herein.
“Zone 2” means a specific geographic location known as the Woods development area as depicted in Exhibit A attached herein.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessors’ Parcels of Taxable Property within Improvement Area A shall be classified as Developed Property or Undeveloped Property and shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Developed Property shall be assigned to Zone 1 or Zone 2 and shall be further classified as Residential Property, Commercial Property or Hotel Property.
C. MAXIMUM ANNUAL SPECIAL TAX RATE
1. Developed Property
The Maximum Annual Special Tax for each Assessor’s Parcel of Residential Property, Commercial Property or Hotel Property shall be the greater of (1) the Assigned Special Tax described in Tables 1 and 2 below or (2) the Backup Special Tax computed pursuant to b. below. a. Assigned Special Tax
The Assigned Special Tax for each Assessor’s Parcel of Developed Property is shown in Tables 1 and 2.
[Remainder of Page Intentionally Left Blank]
D-5
Table 1
Zone 1 (Vistas)
Assigned Annual Special Tax for Developed
Property
Land Use Class Description Assigned Annual Special Tax
1 Residential Property $0.58 per square foot
of Residential Floor
Area
2 Commercial Property $6,000 per Acre
3 Hotel Property $6,000 per Acre
Table 2
Zone 2 (Woods)
Assigned Annual Special Tax for Developed
Property
Land Use Class Description Assigned Annual Special Tax
1 Residential Property $0.67 per square foot
of Residential Floor
Area
2 Commercial Property $6,000 per Acre
b. Backup Special Tax
When a Final Subdivision Map is recorded within Zone 1 and 2 of Improvement Area A the Backup Special Tax for Assessor’s Parcels of classified as Residential Property, Commercial Property or Hotel Property shall be determined as follows:
For each Assessor’s Parcel of Residential Property or for each Assessor’s Parcel of Undeveloped Property to be classified as Reside ntial Property upon its devel opment within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula:
Zone 1 (Vistas)
$11,037 x A
B =
L
Zone 2 (Woods)
$8,332 x A
B = -------------
- L
The terms above have the following meanings:
B = Backup Special Tax per Lot in each Fiscal Year.
A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map.
L = Lots in the Final Subdivision Map whic h are classified or to be classified as D-6
Residential Property
For each Assessor’s Parcel of Commercial Property or Hotel Property or for each Assessor’s Parcel of Undeveloped Property to be cl assified as Commercial Property or Hotel Property within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $11,037 for Zone 1 and $8,332 for Zone 2 by the total Acre age of each Assessor’s parcels of the Commercial or Hotel Property and Undeveloped Property to be classified as Commercial Property or Hotel Property within the Final Subdivision Map area.
Notwithstanding the foregoing, if Assessor’s Parcels of Residential Property, Commercial Property, Hotel Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently change d or modified by recordation of a new or amended Final Subdivision Map, then the Backup Special Tax applicable to such Assessor’s Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place.
2. Undeveloped Property
The Maximum Annual Special Tax for each Assessor’s Parcel classified as Undeveloped Property shall be $11,037 per acre for Zone 1 and $8,332 per acre for Zone 2.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2003-04 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall le vy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows:
First: The Special Tax shall be levied Proportio nately on each Assessor’s Parcel of Developed Property within Zones 1 or 2 at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be le vied Proportionately on each Assessor’s Parcel of Undeveloped Property, excluding a ny Assessor’s Parcels classified as U ndeveloped Property pursuant to Section E, at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax is derived by th e application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Assessor’s Parcel.
Fourth: If additional monies are n eeded to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel classified as Undeveloped Property pursuant to Section E at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Notwithstanding the above, under no circumstance s will the Special Tax levied against any Assessor’s Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Assessor’s Parcel.
D-7
E. EXEMPTIONS
1. The CFD Administrator shall classify the follo wing Assessor Parcel(s) as Exempt Property:
(i) Public Property, (ii) Property Owner Associati on Property, (iii) Community Purpose Facility Property, and
(iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided, howeve r, that no such classification shall reduce the sum of all Taxable Property within Zone 1 (Vistas) to less than 180.03 Acres and within Zone 2 (Woods) to less than
166.23 acres. Assessor’s Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than for Zone 1 (Vistas) 180.03 acres and Zone 2 (Woods) 166.23 acres will be classified as Undeveloped Property and shall be taxed as such. Tax exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes Exempt Property.
2. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which cannot be classified as Exempt Property as described in paragraph 1 of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property to such public agency. Until the Maximum Annual Tax obligation for any such Public Pr operty is prepaid, the property shall continue to be subject to the levy of the Special Tax as Undeveloped Property.
F. REVIEW/APPEAL COMMITTEE
Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor’s Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred; the CFD Administrator may amend the amount of the Special Tax levied on such Assessor’s Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor’s Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establi sh as part of the proceedings and administration of CFD-06-I a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Ta x and any landowner or resi dent appeals, as herein specified. The decision of the Review/Appeal Committ ee shall be final and binding as to all persons.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD- 06-I, may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclo se on Assessor’s Parcels of Taxable Property that are delinquent in the payment of Special Taxes.
Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
D-8
“CFD Public Facilities” means either $34.5 million in 2002 dollars, which shall increase by the Construction Inflation Index on July 1, 2003, and on each July 1 thereaf ter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the public facilities under the authorized bonding program for CFD No. 06-I Improveme nt Area A, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. “Construction Fund” means an account specifically identifie d in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. “Construction Inflation Index” means the annual percentage change in the Engineering News- Record Building Cost Index for the City of Los Ange les, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the C onstruction Inflation Index shall be another index as determined by the CFD Admi nistrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles. “Future Facilities Costs” means the CFD Public Facilities minus public facility costs available to be funded through existing construction fund, or funded by the Outstanding Bonds as defined below, minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment, and minus public faciliti es costs paid directly with Special Taxes. “Outstanding Bonds” means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date follo wing the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes.
1. Prepayment in Full
The Maximum Annual Special Tax obligation may on ly be prepaid and permanently satisfied for an Assessor’s Parcel of Developed Property, Undeveloped Property for which a building permit has been issued, or Public Property. The Maximum Annual Speci al Tax obligation applicable to such Assessor’s Parcel may be fully prepaid and the obligation of the Assessor’s Parcel to pay the Special Tax permanently satisfied as described herein; provided, however that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at th e time of Prepayment. An owner of an Assessor’s Parcel intending to prepay the Maxi mum Annual Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of th e Prepayment amount of such Assessor’s Parcel. The CFD Administrator may charge a reasonable fee for providing this figure.
The Prepayment Amount shall be calculated as summarized below ( capitalized terms as defined
below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less R eserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows:
D-9
Step No.:
1. For Assessor’s Parcels of Developed Property, compute the Maximum Annual Special Tax for the Assessor’s Parcel to be prepaid. For Assess or’s Parcels of Undeveloped Property for which a building permit has been issued to be prepaid, compute the Maximum Annual Special Tax for that Assessor’s Parcel as though it was already designate d as Developed Property, based upon the building permit, issued for that Assessor’s Parcel. For Assessor’s Parcels of Public Property to be prepaid, compute the Maximum Annual Special Tax for that Assessor’s Parcel using the Maximum Annual Special Tax for Undeveloped Property.
2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Maximum Annual Special Tax revenues which may be levied within Improvement Area A excluding any Assessors Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid.
3. Multiply the quotient computed pursuant to pa ragraph 2 by the principal amount of the Outstanding Bonds to compute the amount of Outs tanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).
4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption premium on the next possible Bond call date, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium” ).
5. If all the Bonds authorized to be issued fo r Improvement Areas A have not been issued, compute the Future Facilities Costs.
6. Multiply the quotient computed pursuant to paragraph 2 by the amount if any, determined pursuant to paragraph 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor’s Parcel (the “Future Facilities Amount” ).
7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principa l payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.
8. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
9. Determine the Special Taxes levied on the As sessor’s Parcel in the current Fiscal Year, which have not yet been paid.
10. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Administrative Fees and Expenses (including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any noti ces to evidence the prepayment and the redemption) from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to para graphs 7 and 9 and subtract the amount computed pursuant to paragraph 10 (the “Defeasance Amount” ).
12. Determine the administrative fees and expenses of CFD-06-I, applicable prepayment totals, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the cost of recording any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses” )
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13. The reserve fund credit (the “Reserve Fund Credit” ) shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defi ned in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the pr epayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indent ure) 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.
14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursua nt to paragraph 2 by the expected balance in the capitalized interest fund after such first interest payment (the “Capitalized Interest Credit”).
15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 6, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the “Prepayment Amount” ).
16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 11, 13, and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount comput ed pursuant to paragraph 12 shall be retained by CFD-06. The amount computed pursu ant to paragraph 5 shall be deposited in the Construction Fund.
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the ne xt prepayment of bonds or to make debt service payments.
As a result of the payment of the current Fi scal Year’s Special Tax levy as determined under paragraph 9 above, the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax pr epayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within Improvement Area A both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds.
Tenders of Bonds in prepayment of Maximu m Annual Special Taxes may be accepted upon the terms and conditions established by th e Council pursuant to the Act. Ho wever, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council.
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2. Prepayment in Part
The Maximum Annual Special Tax on an Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Sec tion H 1; except that a partial prepayment shall be calculated according to the following formula:
PP = (PE x F) + A
These terms have the following meaning:
PP = the partial prepayment
P
E = the Prepayment Amount calculated accordi ng to Section H.1, minus Administrative Expenses and Fees determined pursuant to Step 12.
F = the percent by which the owner of the A ssessor’s Parcel(s) is partially prepaying the Maximum Annual Special Tax.
A= the Administrative Expenses and F ees determined pursuant to Step 12.
The owner of an Assessor’s Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by which the Maximu m Annual Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount re quired for the partial prepayment of the Maximum Annual Special Tax for an Assessor’s Parcel within 30 days of the request and may charge a reasonable fee for providing this service.
With respect to any Assessor’s Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Step 16 of Section H.1, and (ii) indicate in the records of CFD-06-I that there has been a partial prepayment of the Maximum A nnual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percen tage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor’s Parcel pursuant to Section D.
I. TERM OF MAXIMUM ANNUAL SPECIAL TAX
The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2042-2043 Fiscal Year.
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AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL
TAX CITY OF CHULA VISTA
COMMUNITY FACILITIES DISTRICT NO. 06-I
IMPROVEMENT AREA B
(Eastlake – Woods, Vistas and Land Swap)
A Special Tax as hereinafter defined shall be levied on each Assessor’s Parcel of Taxable Property within the City of Chula Vista Community Facilities District No. 06-I, Improvement Area B (“Improvement Area B”) and collected each Fiscal Year commencing in Fiscal Year 2003-2004 in an amount determined by the City Council through the application of the ap propriate Special Tax for “Developed Property,” and “Undeveloped Property” as described below. All of the Taxable Property in Improvement Area B, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meaning:
“Acre or Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an A ssessor’s Parcel Map, the land area shown on the applicable Final Subdivision Map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps for a land area are not available, the Acreage of such land area shall be determined by the City Engineer. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. “Administrative Expenses” means the actual or reasonably estimated costs directly related to the administration of Improvement Area B including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in th e discharge of the duties required of it under the Indenture; the costs to the City, CFD-06-I or an y designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD-06-I or any designee thereof of providing continuing disclosure; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD-06-I or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD-06-I for any other administrative purposes of Improvement Area B, including, but no t limited to attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. “Assessor’s Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel number.
“Assessor’s Parcel Map” means an official map of the County Assessor of the County designating parcels by Assessor’s Parcel number.
“Assigned Special Tax” means the Special Tax for each Land Use Category of Developed Property as determined in accordance with Section C.1.a.
“Available Funds” means the balance in the reserve fund established pursuant to the terms of the D-13
Indenture in excess of the reserve requirement as defined in such Indenture, delinquent Special Tax payments not required to fund the Special Tax Requirement for any preceding Fiscal Year, Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. “Backup Special Tax” means the Backup Special Tax amount set forth in Section C.1.b. “Bonds” means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD-06-I for Improvement Area B under the Act. “Bond Year” means a one-year period beginning on Se ptember 2nd in each year and ending on September 1st in the following year. Unless defined differently in the applicable Indenture. “CFD Administrator ” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and prov iding for the levy and collection of the Special Taxes.
“CFD 06-I” means City of Chula Vista, Community Facilities District No. 06-I. “City” means the City of Chula Vista.
“Commercial Property” means all Assessors’ Parcels of Developed Property, for which a building permit(s) was issued for a non-residential use, excluding Community Purpose Facility Property. “Community Purpose Facility Property ” means all Assessors’ Parcels which are classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452.
“Council” means the City Council of the City, acting as the legislative body of CFD-06-I. “County” means the County of San Diego.
“Developed Property” means, for each Fiscal Year, all Taxable Property for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year. “Exempt Property” means property not subject to the Special Tax due to its classification as either Public Property, Property Owner A ssociation Property Community Purpose Facility Property.
“Final Subdivision Map ” means a subdivision of property, created by recordation of a Final Subdivision Map, parcel map or lot line adju stment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq .) or recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which residential building permits may be issued without further subdivision of such property. “Fiscal Year” means the period starting July 1 and ending on the following June 30. “Improvement Area B” means Improvement Area B of CFD No. 06-I known as the “Land Swap”. “Indenture” means the indenture, fiscal agent agreemen t, trust agreement, resolution or other instrument pursuant to which Bonds are issued , as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same.
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“Land Use Class” means any of the classes listed in Table 1 of Section C. “Lot(s)” means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. “Master Developer” means the owner of the predominant amount of Undeveloped Property in Improvement Area B.
“Maximum Annual Special Tax ” means the maximum annual Sp ecial Tax, determined in accordance with the provisions of Section C, wh ich may be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property.
“Outstanding Bonds” mean all Bonds, which remain outstanding as defined in the Indenture. “Property Owner Association Property ” means any property within the boundaries of Improvement Area B owned by or dedicated to a property owner association, including any master or sub- association.
“Proportionately” means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal for all Assessors’ Parcels of Developed Property within Improvement Area B. For Undeveloped Property “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor’s Parcels of Undeveloped Property within Improvement Area B. “Public Property” means any property within the boundaries of Improvement Area B that is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency.
“Residential Property” means all Assessors’ Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. “Residential Floor Area” means all of the square footage of living area within the perimeter of a residential structure, not including any carport, wa lkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Resi dential Floor Area shall be made by the CFD Administrator by reference to appropriate reco rds kept by the City’s Building Department.
Residential Floor Area for a residential structure will be based on the building permit(s) issued for such structure.
“Special Tax” means the annual special tax to be levi ed in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement. “Special Tax Requirement ” means that amount of Special Tax revenue required in any Fiscal Year for Improvement Area B to: (i) pay annual debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iii) pay Administrative Expen ses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD-06-I provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on the Undeveloped Property for Improvement Area B; less (vi) a credit for Available Funds.
“State” means the State of California.
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“Taxable Property ” means all of the Assessor’s Parcel s within the boundaries of CFD-06-I, Improvement Area B that are not exempt from the Special Tax pursuant to law or Section E below. “Trustee” means the trustee, fiscal agent, or paying agent under the Indenture. “Undeveloped Property ” means, for each Fiscal year, all Taxable Property not classified as Developed Property.
“Zone 3” means a specific geographic area as depicted in Exhibit A attached hereto. “Zone 4” means a specific geographic area as depicted in Exhibit A attached hereto.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor’s Parcels of Taxabl e Property within , Improvement Area B shall be (a) categorized as being located in either Zone 3 or Zone 4, (b) classified as Developed Property or Undeveloped Property and (c) shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Furthermore, all Developed Property shall then be classified as Residential or Commercial Property.
C. MAXIMUM ANNUAL SPECIAL TAX RATE
1. Developed Property
The Maximum Annual Special Tax for each Asse ssor’s Parcel of Residential Property or Commercial Property shall be the greater of (1) the Assigned Special Tax described in Table 1 below or (2) the Backup Special Tax computed pursuant to b. below. a. Assigned Special Tax
The Assigned Special Tax for each Assessor’s Pa rcel of Developed Property is shown in Table 1.
TABLE 1
ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY
WITHIN ZONE 3 AND ZONE 4
Land Use Class Description Assigned Special Tax
1 Residential Property $0.74 per square foot of Residential Floor Area
2 Commercial Property $6,000 per Acre
b. Backup Special Tax
When a Final Subdivision Map is recorded within Zone 3 or Zone 4, the Backup Special Tax for Assessor’s Parcels of Developed Property classified as Residential Property or Commercial Property shall be determined as follows:
For each Assessor’s Parcel of Residential Property or for each Assessor’s Parcel of Undeveloped Property to be classified as Residential Property upon its development within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula:
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Zone 3
$20,563 x A
B =
L
Zone 4
$6,667 x A
B =
L
The terms above have the following meanings:
B = Backup Special Tax per Lot in each Fiscal Year.
A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map.
L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property.
For each Assessor’s Parcel of Commercial Pr operty or for each Assessor’s Parcel of Undeveloped Property to be classified as Commercial Property within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $20,563 for Zone 3 and
$6,667 for Zone 4 by the total Acreage of each Assessor’s Parcels of the Commercial Property and Undeveloped Property to be cl assified as Commercial Property within the Final Subdivision Map area.
Notwithstanding the foregoing, if Assessor’s Parcels of Residential Property, Commercial Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Subdivision Map, then the Backup Special Tax applicable to such Assessor’s Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place.
2. Undeveloped Property
The Maximum Annual Special Tax for each Assessor’s Parcel classified, as Undeveloped Property shall be $20,563 per Acre for Zone 3 and $6,667 per Acre for Zone 4.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2003-04 and for ea ch following Fiscal Year , the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Spec ial Tax shall be levied each Fiscal Year as follows:
First: The Special Tax shall be levied Proportio nately on each Assessor’s Parcel of Developed Property within Zone 3 and Zone 4 at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step D-17
has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property within Zone 3 and Zone 4, excluding any Assessor’s Parcels classified as Undeveloped Property pursuant to Section E, at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Assessor’s Parcel.
Fourth: If additional monies are n eeded to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel classified as Undeveloped Property pursuan t to Section E at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Notwithstanding the above, under no circumstance s will the Special Tax levied against any Assessor’s Parcel of Residential Property be in creased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Assessor’s Parcel.
E. EXEMPTIONS
1. The CFD Administrator shall classify the follo wing Assessor Parcel(s) as exempt property:
(i) Public Property, (ii) Property Owner Association Property, (iii) Community Purpose Facility Property, and (iv) Assessor’s Parcel s with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided, however, that no such classification shall re duce the sum of all Taxable Property to less than
36.50 Acres in Zone 3 and 52.00 Acres in Zone 4. Assessor’s Parcels which cannot be classified as exempt property because such cl assification would reduce the Acreage of all Taxable Property to less than 36.50 Acres in Zone 3 and 52.00 Acres in Zone 4 will be classified as Undeveloped Property and shall be taxed as such. Tax-exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes exempt property.
2. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which cannot be classified as exempt property as described in pa ragraph 1 of Section F shall be prepaid in full by the seller pursuant to Section I.1, prior to the transfer/dedication of such property to such public agency. Until the Maximum Annua l Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Undeveloped Property.
F. REVIEW/APPEAL COMMITTEE
Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor’s Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator dete rmines that an error has occurred; the CFD Administrator may amend the amount of the Speci al Tax levied on such Assessor’s Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor’s Parcel. Upon the receipt D-18
of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administ ration of CFD-06-I and a special three-member Review/Appeal Committee. The Review/Appeal Co mmittee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review /Appeal Committee shall interpret this Rate and Method of Apportionment an d make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD-06-I, Improvement Area B may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations , and may covenant to foreclose and may actually foreclose on Assessor’s Parcels of Taxable Property that are delinquent in the payment of Special Taxes.
Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. Ho wever, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
“CFD Public Facilities ” means those public facilities authorized to be financed by CFD-06-I Improvement Area B.
“CFD Public Facilities Costs ” means either $12.3 million, or such lower number as shall be determined either by (a) the CFD Administrator as sufficient to finance the CFD Public Facilities, or
(b) the Council concurrently with a covenant that it will not issue any more Bonds to be secured by Special Taxes levied under this Rate and Method of Apportionment. “Construction Fund ” means an account specifically identif ied in the Indenture to hold funds which are currently available for expenditure to acquire or construct the CFD Public Facilities. “Future Facilities Costs” means the CFD Public Facilities Costs minus that (a) portion of the CFD Public Facilities Costs previously funded (i) from the proceeds of all previously issued Bonds,
(ii) from interest earnings on the Construction Fund actually earned prior to the date of prepayment and (iii) directly from Special Tax revenues and (b ) the amount of the proceeds of all previously issued Bonds then on deposit in the Construction Fund.
“Outstanding Bonds” means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date fo llowing the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes.
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1. Prepayment in Full
The Maximum Annual Special Tax obligation may on ly be prepaid and permanently satisfied for an Assessor’s Parcel of Developed Property, U ndeveloped Property for wh ich a building permit has been issued, or Public Property. The Maxi mum Annual Special Tax obligation applicable to such Assessor’s Parcel may be fully prepaid and the obligation of the Assessor’s Parcel to pay the Special Tax permanently satisfied as described he rein; provided, however that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel intending to prepay the Maximum Annual Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay.
Within 30 days of receipt of such written no tice, the CFD Administrator shall notify such owner of the Prepayment amount of such Assesso r’s Parcel. The CFD Administrator may charge a reasonable fee for providing this figure.
The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption
Premium
plus Future Facilities
Amount plus Defeasance
Amount
plus Prepayment Fees and
Expenses less R eserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows:
Step No.:
1. For Assessor’s Parcels of Developed Property, compute the Maximum Annual Special Tax for the Assessor’s Parcel to be prepaid. Fo r Assessor’s Parcels of Undeveloped Property for which a building permit has been issued to be prepaid, compute the Maximum Annual Special Tax for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the building permit issued for that Assessor’s Parcel. For Assessor’s Parcels of Public Property to be prepaid, compute the Maximum Annual Special Tax for that Assessor’s Parcel using the Maximum Annual Special Tax for Undeveloped Property.
2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Maximum Annual Special Tax revenues which may be levied within Improvement Area B excluding any Assessors Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid.
3. Multiply the quotient computed pursuant to pa ragraph 2 by the principal amount of the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).
4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption premium on the next possible Bond call date, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
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5. If all the Bonds authorized to be issued fo r Improvement Area B have not been issued, compute the Future Facilities Costs.
6. Multiply the quotient computed pursuant to paragraph 2 by the amount determined pursuant to paragraph 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor’s Parcel (the “Future Facilities Amount”).
7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.
8. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
9. Determine the Special Taxes levied on the As sessor’s Parcel in the current Fiscal Year, which have not yet been paid.
10. Determine the fees and expenses of CFD-06-I, including but not limited to, the costs of computation of the prepayment, the costs to i nvest the prepayment proceeds, the costs of redeeming Bonds from the proceeds of such pr epayment, and the cost of recording any notices to evidence the prepayment and th e redemption (the “Prepayment Fees and Expenses”).
11. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the prepayment amount less the Prepayment Fees and Expenses, as determined pursuant to step 10, from the date of prepayment until the redemption date for the outstanding bonds to be redeemed with the prepayment.
12. Add the amounts computed pursuant to para graphs 7 and 9 and subtract the amount computed pursuant to paragraph 11 (the “Defeasance Amount”).
13. The reserve fund credit (the “ Reserve Fund Credit ”) shall equal the lesser of: (a) the expected reduction in the reserve requiremen t (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 prep ayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following th e current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 2 by the expected balance in the cap italized interest fund after such first interest payment (the “Capitalized Interest Credit”).
15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 6, 10, and 12, l ess the amounts computed pursuant to paragraphs
13 and 14 (the “Prepayment Amount”).
16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 12, 13, and 14 shall be deposited into the appropria te fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 10 shall be retained by CFD-06-I. The amount computed pursuant D-21
to paragraph 6 shall be deposited in the Construction Fund.
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integr al multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments.
As a result of the payment of the current Fi scal Year’s Special Tax levy as determined under paragraph 9 above, the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in complia nce with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax pr epayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within Improvement Area B both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds.
Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council.
2. Prepayment in Part
The Maximum Annual Special Tax on an Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Undeveloped Property for which a build ing permit has been issued may be partially prepaid. The amount of the prepayment shall be cal culated as in Section H 1; except that a partial prepayment shall be calculated according to the following formula:
PP = (PE x F) + A
These terms have the following meaning:
PP = the partial prepayment
PE = the Prepayment Amount calculated according to Section H.1, minus Prepayment Fees and Expenses determined pursuant to Step 10.
F = the percent by which the owner of the Asses sor’s Parcel(s) is partially prepaying the Maximum Annual Special Tax.
A = the Prepayment Fees and Expenses determined pursuant to Step 10.
The owner of an Assessor’s Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by wh ich the Maximum Annual Special Tax shall be prepaid, and
(iii) the company or agency that will be acti ng as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a st atement of the amount required for the partial prepayment of the Maximum Annual Special Tax fo r an Assessor’s Parcel within 30 days of the request and may charge a reasonable fee for providing this service.
With respect to any Assessor’s Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Step 16 of Section H.1, and (ii) indicate in the records of CFD-06-I, Improvement Area B that there has been a partial prepayment of the Maximum Annual Special Tax D-22
and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor’s Parcel pursuant to Section D.
I. TERM OF MAXIMUM ANNUAL SPECIAL TAX
The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2043-2044 Fiscal Year.
[Remainder of Page Intentionally Left Blank]
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RATE AND METHOD OF APPORTIONMENT
FOR CITY OF CHULA VISTA
COMMUNITY FACILITIES DISTRICT NO. 07-I
(Otay Ranch Village Eleven)
A Special Tax as hereinafter defined shall be levied on each Assessor’s Parcel of Taxable Property within the City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven), and collected each Fiscal Year commencing in Fiscal Y ear 2004-2005 in an amount determined by the City Council through the application of the appropriate Special Tax for “Developed Property,” “Approved Property”, “Undeveloped Property” and “Provisional Undeveloped Property” as described below. All of the Taxable Property within CFD-07-I, shall be taxe d for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meaning:
“ ‘A’ Map” shall mean a master final subdivision or pa rcel map, filed in accordance with the Subdivision Map Act and the Chula Vista Municipal Code, which subdivides the land or a portion thereof shown on a tentative map into “super bl ock” lots corresponding to units or phasing of combination of units as shown on such tenta tive map and which may further show Community Purpose Facility Property, Property Owner Associat ion Property, Public Property, open space lot dedications, backbone street dedications and utility easements required to serve such “super block” lots.
“Acre or Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an A ssessor’s Parcel Map, the land area shown on the applicable Final Subdivision Map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the land area. If the preceding maps for a land area are not available, the Acreage of such land area shall be determined by the City Engineer. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. “Administrative Fees and Expenses” means the actual or reasonably estimated costs directly related to the administration of CFD-07-I including, but not limited to, the following: the costs of computing the Special Taxes and preparing the an nual Special Tax collection schedules (whether by the City or designee thereof or both); the cost s of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of rem itting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD-07-I, or any designee thereof of complying with arbitrage rebate requirements and/or responding to any audit of the Bonds by the Internal Revenue Service; the costs to the City, CFD-07-I, or any designee thereof of providing continuing disclosure; the costs of the City, CFD-07-I or any designee thereof of preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD-07-I, or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advan ced by the City or CFD-07-I, for any other administrative purposes, including, but not limited to attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.
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“Approved Property” means all Assessor’s Parcels of Taxable Property: (i) that are included in an ‘A’ Map, excluding lettered lots thereon, or a Final Subdivision Map, excluding lettered lots thereon, that were recorded pr ior to January 1st for the Fiscal Year ending July 31, 2005, and prior to March 1st for each subsequent Fiscal Year thereafter preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that ha ve not been issued a building permit prior to the March 1st preceding the Fiscal Year in which the Special Tax is being levied. “Assessor’s Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel number.
“Assessor’s Parcel Map” means an official map of the County Assessor of the County designating parcels by Assessor’s Parcel number.
“Assigned Special Tax” means the Special Tax for each Land Use Class of Developed Property as determined in accordance with Section C.1.a.
“Available Funds” means (a) the balance in the reserve f und established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, (b) delinquent Special Tax payments not required to fund th e Special Tax Requirement for any preceding Fiscal Year, that portion of Special Tax prepayme nts allocated to the payment of interest on Bonds, and (c) other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture.
“Backup Special Tax” means the Special Tax as determined in accordance with Section C.1.b. “Bonds” means any bonds or other debt (as defined in the Act), whether in one or more series, issued or incurred by CFD-07-I under the Act.
“Bond Year” means a one-year period beginning on Se ptember 2nd in each year and ending on September 1st in the following year, unless defined otherwise in the applicable Indenture. “CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and prov iding for the levy and collection of the Special Taxes.
“CFD-07-I” means City of Chula Vista Community Facilities District No. 07-I. “City” means the City of Chula Vista.
“Community Purpose Facility Property” means all Assessor’s Parcels which are (a) classified as community purpose facilities and meet the require ments of City of Chula Vista Ordinance No. 2002- 2883 as amended on November 5, 2002 or (b) designated on an “A” Map or a Final Subdivision Map as a community purpose facility.
“Council” means the City Council of the City, acting as the legislative body of CFD-07-I. “County” means the County of San Diego.
“Density” means for each Assessor’s Parcel of Residential Property the number of Dwelling Units per gross acre determined pursuant to those provi sions of Ordinance No. 2866, in effect as of January 7, 2003, that provide for the calculation of density for purposes of calculating Transportation Development Impact Fees.
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“Developed Property” means all Assessor’s Parcels of Taxable Property for which a building permit has been issued prior to March 1st precedi ng the Fiscal Year in which the Special Tax is being levied.
“Dwelling Unit” means each separate residential dwelli ng unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. “Exempt Property” means all Assessor’s Parcels that are exempt from the Special Tax pursuant to Section E.1.
“Final Subdivision Map” means a subdivision of property, created by recordation of a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which residential building permits may be issued without further subdivision of such property. “Fiscal Year” means the period starting July 1 and ending on the following June 30. “Indenture” means the indenture, fiscal agent agreemen t, trust agreement, resolution or other instrument pursuant to which Bonds are issued , as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Table 1 of Section C. “Maximum Annual Special Tax” means the maximum annual Sp ecial Tax, determined in accordance with the provisions of Section C, wh ich may be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property.
“Mixed Use Property” means all Assessor’s Parcels that have been classified by the City to allow both Residential Property and N on-Residential Property uses on each such Assessor’s Parcel. For an Assessor’s Parcel of Mixed Use Property, each Land Use Class thereon is subject to taxation pursuant to the provisions of Section C regardless of the geographic orientation of such Land Use Classes on such Assessor’s Parcel.
“Non-Residential Property” means all Assessor’s Parcels of Developed Property, for which a building permit(s) has been issued to allow the construction of one or more buildings or structures for a non-residential use, excluding Community Purpose Facility Property. “Open Space” means property within the boundaries of CFD 07-I in which prior to June 1st of the preceding Fiscal Year (a) has been designated with specific boundaries and acreage on an ‘A’ Map or Final Subdivision Map as open space, (b) is classified by the County Assessor as open space, (c) has been irrevocably offered for dedication as ope n space to the federal government, the State of California, the County, the City, or any other pu blic agency or (d) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space. “Outstanding Bonds” means all Bonds, which remain outstanding as defined in the Indenture. “Property Owner Association Property” means any property within the boundaries of CFD-07- I which is (a) owned by a property owner association or (b) is designated with specific boundaries and acreage on an ‘A’ Map or Final Subdivision Map as property owner association property. As used in this definition, a property owner association includes any master or sub-association.
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“Proportionately” means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal for all Assessors’ Parcels of the Developed Property. For Approved Property, Undeveloped Property and Provisional Undeveloped Property “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal fo r all Assessor’s Parcels of like classification. “Provisional Undeveloped Property” means all Assessor’s Parcels of Public Property, Property Owner Association Property, Community Purpose Facility Property, Open Space or other property that would otherwise be classified as Exempt Property pursuant to the provisions of Section E, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum acreage as set forth in Section E.1 for Zone A or Zone B as applicable.
“Public Property” means any property within the boundaries of CFD-07-1 which (a) is owned by a public agency, (b) has been i rrevocably offered for dedication to a public agency or (c) is designated with specific boundaries and acreage on an ‘A’ Map or Final Subdivision Map as property which will be owned by a public agency. For purposes of this definition, a public agency includes the federal government, the State of Califor nia, the County, the City or any other public agency.
“Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit has been issued to allow the construction of one or more buildings or structures for use as residential dwelling units.
“Special Tax” means the annual special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement. “Special Tax Requirement” means that amount of Special Tax revenue required in any Fiscal Year for to: (i) pay annual debt service on all Outstanding Bonds due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic co sts on Outstanding Bonds, including but not limited to, credit enhancement and rebate payment; (iii) pay Administrative Fees and Expenses; (iv) pay any amounts required to establish or replenish a ny reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay direc tly for acquisition and/or construction of public improvements which are authorized to be financed by CFD-07-I provided that the inclusion of such amount does not cause an increase in the levy of Sp ecial Tax on the Undeveloped Property; less (vi) a credit for Available Funds.
“State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD 07-I that are not exempt from the Special Tax pursuant to law or Section E below. “Trustee” means the trustee, fiscal agent, or paying agent under the Indenture. “Undeveloped Property” means, for each Fiscal year, all Taxable Property not classified as Developed Property, Approved Property or Provisional Undeveloped Property. “Zone A” means a specific geographic area as depicted in Exhibits A and B attached hereto. “Zone B” means a specific geographic area as depicted in Exhibits A and B attached hereto.
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B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessors’ Parcels of Taxable Property within CFD-07-I shall be (a) categorized as being located in either Zone A or Zone B, (b) classified as Developed Property, Approved Property, Undeveloped Property or Provisional Undevel oped Property and (c) subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Developed Property shall be further classified as either R esidential Property, Non-Residential Property or Mixed Use Property. The Land Use Class of each Assessor’s Parcel of Residential Property or Mixed Use Property shall be determined based on its Density.
C. MAXIMUM ANNUAL SPECIAL TAX RATE
1. Developed Property
The Maximum Annual Special Tax for each Assesso r’s Parcel of Residential Property, Non- Residential Property or Mixed Use Property shall be the greater of (1) the Assigned Special Tax described in Section a. below or (2) the Backup Special Tax computed pursuant to Section b. below. a. Assigned Special Tax
The Assigned Special Tax for each Land Use Class of Developed Property is shown in Table 1.
TABLE 1
Assigned Special Tax for Developed
Property Within Zone A and Zone B:
Density
Land Use Class Description (DU/Acre) Assigned Special Tax 1 Residential Property 0 to 8 $1,675 per Dwelling Unit
2 Residential Property >8 to 20 $1,340 per Dwelling Unit 3 Residential Property >20 $1,005 per Dwelling Unit
4 Non Residential Property N/A $6,000 per Acre
The Assigned Special Tax for each Assessor’s Parcel of Mixed Use Property shall equal the total of (i) the Assigned Special Tax that would be applicable to such Assessor’s Parcel if it was classified only as Residential Property and (ii) the Assigned Special Tax that would be applicable to such Assessor’s Parcel if it was classified as Non-Residential Property. b. Backup Special Tax
When a Final Subdivision Map is recorded within Zone A or Zone B, the Backup Special Tax for Residential Property and Non-Residential Property, shall be determined as follows:
For each Assessor’s Parcel of Residential Pr operty or Unde veloped Property and Approved Property to be classified as Residential Property upon its development within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Dwelling Unit calculated according to the following formula:
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Zone A
$13,955 x A
B =
U
Zone B
$24,218 x A
B =
U
The terms above have the following meanings:
B = Backup Special Tax per Dwelling Unit in each Fiscal Year.
A = Acreage classified or to be classified as Resi dential Property in such Final Subdivision Map.
U = Number of Dwelling Units in the Final Subdivision Map which are classified or expected to be classified as Residential Property.
For each Assessor’s Parcel of Developed Property classified as Non-Residential Property or for each Assessor’s Parcel of Approved or Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area, th e Backup Special Tax shall be determined by multiplying $13,955 for Zone A and $24,218 for Zone B by the total Acreage of any such Assessor’s Parcel.
For each Assessor’s Parcel of Mixed Use Property, the Backup Special Tax shall be determined by multiplying $13,955 for Zone A and $24,218 for Zone B by the total Acreage of any such Assessor’s Parcel.
Notwithstanding the foregoing, if Assessor’s Par cels of Residential Property, Non-Residential Property, Mixed Use Property, Approved Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Subdivision Map, then the Bac kup Special Tax applicable to such Assessor’s Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place.
2. Approved Property
The Maximum Annual Special Tax for each Ass essor’s Parcel of Approved Property shall be $13,955 per Acre for Zone A and $24,218 per Acre for Zone B.
3. Undeveloped Property and Provisional Undeveloped Property The Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property and Provisional Undeveloped Property shall be $13,955 per Acre for Zone A and $24,218 per Acre for Zone B.
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D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2004-2005 and for e ach following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Spec ial Tax shall be levied each Fiscal Year as follows:
First: The Special Tax shall be levied Proportionately on all Developed Property at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on all Approved Property at up to 100% of the Maximum Annual Special Tax for Approved Property.
Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied Prop ortionately on all Undeveloped Property within Zone A and Zone B, at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. In determining the Acreag e of an Assessor’s Parcel of Undeveloped Property for purposes of determining the annual Special Tax to be levied on such Assessor’s Parcels of Undeveloped Property, the CFD Administrato r shall not include any Acreage shown on any applicable tentative subdivision map or other land use entitlement approved by the City that designates such Acreage for a use that woul d be classified as Open Space, Property Owner Association Property, Community Purpose Facility or Public Property.
Fourth: If additional monies are n eeded to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax to be levied on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Assessor’s Parcel.
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on all Provisional Undeveloped Property at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Notwithstanding the above, under no circumstance s will the Special Tax levied against any Assessor’s Parcel of Residential Property be in creased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Taxable Property.
E. EXEMPTIONS
1. The CFD Administrator shall classify the follo wing as Exempt Property: (i) Public Property, (ii) Property Owner Association Property, (iii) Community Purpose Facility Property, (iv) Open Space and (v) Assessor’s Parcel s with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided, however, that no such classification shall re duce the sum of all Taxable Property to less than 147.15 Acres for Zone A and 59.04 Acres for Zone B. Assessor’s Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 147.15 Acres for Zone A and 59.04 Acres for Zone B will be classified as Provisional Undeveloped Propert y and shall be taxed pursuant to the fifth step of Section D. Exempt status for purpo ses of this paragraph will be assigned by the CFD Administrator in the chronological or der in which property becomes Exempt D-30
Property. In the event the Taxable Property will be reduced below the minimum Acreage noted above for either Zone A or Zone B as a result of the recordation of a single “A” Map, the CFD Administrator shall classify property within Zone A or Zone B that is shown on such “A” Map as Exempt Property up to the limits of Exempt Property applicable to such Zone or Zones in the following priority or der: 1) Community Purpose Facility Property, 2) Property Owner Association Property, 3) Public Property, 4) Open Space, 5) other public or utility easements making impractical their utilization for no other such purpose.
2. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which is classified as Provisional Undeveloped Property pursuant to E.1 above shall be prepaid in full by the seller pursuant to Section H.1, prior to the tr ansfer/dedication of such property to such public agency. Until the Maximum Annual Speci al Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Provisional Undeveloped Property.
3. If the use of an Assessor's Parcel of Exempt Property changes so that such Assessor's Parcel is no longer classified as one of the uses set forth in paragraph 1 that would make such Assessor's Parcel eligible to be classified as Exempt Property, such Assessor's Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property.
F. REVIEW/APPEAL COMMITTEE
Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor’s Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator de termines that an error has occurred the CFD Administrator may amend the amount of the Speci al Tax levied on such Assessor’s Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and admini stration of CFD-07-I a special three-member Review/Appeal Committee. The Review/Appeal Co mmittee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determ inations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD-07-I, may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes.
Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council.
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H. PREPAYMENT OF SPECIAL TAX
The following definitions apply to this Section H:
“CFD Public Facilities” means those public facilities authorized to be financed by CFD-07-I. “CFD Public Facilities Costs” means either $35 million, or such lower number as shall be determined either by (a) the CFD Administrator as sufficient to finance the CFD Public Facilities, or
(b) the Council concurrently with a covenant that it will not issue any more Bonds to be secured by Special Taxes levied under this Rate and Method of Apportionment. “Construction Fund” means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct the CFD Public Facilities. “Future Facilities Costs” means the CFD Public Facilities Costs minus that (a) portion of the CFD Public Facilities Costs previously funded (i) from the proceeds of all previously issued Bonds, (ii) from interest earnings on the Construction Fund actually earned prior to the date of prepayment and (iii) directly from Special Tax re venues and (b) the amount of the proceeds of all previously issued Bonds then on deposit in the Construction Fund. “Outstanding Bonds” means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date follo wing the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes.
1. Prepayment in Full
The Maximum Annual Special Tax obligation may onl y be prepaid and permanently satisfied for an Assessor’s Parcel of Developed Property, Undeveloped Property or Approved Property for which a building permit has been issued, or Provisional Undeveloped Property. The Maximum Annual Special Tax obligation applicable to such Assessor’s Parcel may be fully prepaid and the obligation of the Assessor’s Parcel to pay the Special Tax permanently satisfied as described herein; provided, however that a prepayment may be ma de only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel intending to prepay the Maximum Annual Special Tax obligation shall provide the CFD Administrator with written notice of intent to pr epay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor’s Parcel. The CFD Administrator may char ge a reasonable fee for providing this figure, which can be collected prior to preparing such calculation.
The prepayment amount shall be calculated as su mmarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium plus
Future Facilities Amount plus
Defeasance Amount
plus Prepayment Fees and Expenses
less R eserve Fund Credit
less Capitalized Interest Credit
equals Prepayment Amount
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As of the proposed date of prepay ment, the Prepayment Amount (def ined below) shall be calculated as follows:
Step No.:
1. For Developed Property, compute the Maxi mum Annual Special Ta x for the Assessor’s Parcel to be prepaid. For Assessor’s Parcels of Approved Property or Undeveloped Property to be prepaid, compute the Maximu m Annual Special Tax for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the building permit issued for that Assessor’s Parcel . For Assessor’s Parcels of Provisional Undeveloped Property to be pr epaid, compute the Maximum Annual Special Tax for that Assessor’s Parcel using the Maximum Annua l Special Tax for Provisional Undeveloped Property.
2. Divide the Maximum Annual Special Tax computed pursuant to step 1 by the sum of the total expected Maximum Annual Special Tax revenues which may be levied within CFD- 07-I excluding any Assessors Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid.
3. Multiply the quotient computed pursuant to step 2 by the principal amount of the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).
4. Multiply the Bond Redemption Amount computed pursuant to step 3 by the applicable redemption premium(s) on the next possible Bond call date, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
5. If all the 2004 Bonds authorized to be issued by CFD-07-I have not been issued, then compute the Future Facilities Costs.
6. Multiply the quotient computed pursuant to step 2 by the amount if any, determined pursuant to step 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor’s Parcel (the "Future Facilities Amount").
7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.
8. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
9. Determine the Special Taxes levied on the As sessor’s Parcel in the current Fiscal Year, which have not yet been paid.
10. Determine the fees and expenses of CFD-07-I, including but not limited to, the costs of computation of the prepayment, the costs to i nvest the prepayment proceeds, the costs of redeeming Bonds from the proceeds of such pr epayment, and the cost of recording any notices to evidence the prepayme nt and the redemption (the “ Prepayment Fee and Expenses”).
11. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the prepayment amount, less the Prepayment Fees and Expenses, pursuant to step 10, from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment.
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12. Add the amounts computed pursuant to steps 7 and 9 and subtract the amount computed pursuant to step 11 (the “Defeasance Amount”).
13. The reserve fund credit (the “ Reserve Fund Credit ”) shall equal the lesser of: (a) the expected reduction in the reserve requiremen t (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 prep ayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following th e current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quo tient computed pursuant to step 2 by the expected balance in the capitalized interest fund after such first interest payment (the “Capitalized Interest Credit”).
15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to steps 3, 4, 6, 10, and 12, less the amounts computed pursuant to steps 13 and 14 (the “Prepayment Amount”).
16. From the Prepayment Amount, the amounts computed pursuant to steps 3, 4, 12, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to step 10 shall be retained by CFD-07-I. The amount computed pursuant to step 6 shall be deposited in the Construction Fund.
The prepayment amount may be sufficient to red eem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integr al multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year’s Special Tax levy as determined under step 9 above, the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax pr epayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within both prior to and 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 Annual Special Tax on an Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Approved Property or Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as presented in
Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (P
E x F) + A
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These terms have the following meaning:
PP = the partial prepayment
PE = the Prepayment Amount calculated according to Section H.1, minus Prepayment Fees and Expenses determined pursuant to step 10.
F = the percent by which the owner of the Assessor’s Parcel(s) is partially prepaying the Maximum Annual Special Tax.
A= the Prepayment Fees and Expenses determined pursuant to step 10.
The owner of an Assessor’s Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by wh ich the Maximum Annual Special Tax shall be prepaid, and
(iii) the company or agency that will be acti ng as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a st atement of the amount required for the partial prepayment of the Maximum Annual Special Tax fo r an Assessor’s Parcel within 30 days of the request and may charge a reasonable fee for providing this service.
With respect to any Assessor’s Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to step 16 of Section H.1, and (ii) indicate in the records of CFD-07-I that there has been a partial prepayment of the Ma ximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor’s Parcel pursuant to Section D.
I. TERM OF MAXIMUM ANNUAL SPECIAL TAX
The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2004-2005 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2043-2044 Fiscal Year.
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RATE AND METHOD OF APPORTIONMENT
FOR CITY OF CHULA VISTA
COMMUNITY FACILITIES DISTRICT NO. 08-I
(Otay Ranch Village Six)
A Special Tax as hereinafter defined shall be levied on each Assessor's Parcel of Taxable Property within the City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) collected each Fiscal Year commencing in Fiscal Year 2003-2004 in an amount determined by the City Council through the application of the appropriate Special Tax fo r “Developed Property”, “U ndeveloped Property”, and “Provisional Undeveloped Property” as described below. All of the Taxable Property in CFD-08-I, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meaning:
“ ‘A’ Map” shall mean a master final subdivision or parcel map, filed in accordance with the Subdivision Map Act and the Chula Vista Municipal Code, which subdivides the land or a portion thereof shown on a tentative map into “super block” lots corresponding to units or phasing of a combination of units as shown on such tentativ e map and which may further show open space lot dedications, backbone street dedications and utility easements required to serve such “super block” lots.
“Acre or Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an A ssessor’s Parcel Map, the land area shown on the applicable Final Subdivision Map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the land area. If the preceding maps for a land area are not available, the Acreage of such land area shall be determined by the City Engineer. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. “Administrative Fees and Expenses” means the actual or reasonably estimated costs directly related to the administration of CFD-08-I including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of rem itting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in th e discharge of the duties required of it under the Indenture; the costs to the City, CFD-08-I, or any designee thereof of co mplying with arbitrage rebate requirements; the costs to the City, CF D-08-I, or any designee thereof of providing continuing disclosure; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD-08-I, or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD-08-I, for any other administrative purposes of CFD-08-I, including, but not limited to attorney’s fees and other costs related to commencing and pursuing to completion any forecl osure on an Assessor’s Parcel with delinquent Special Taxes.
“Assessor’s Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel number.
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“Assessor’s Parcel Map” means an official map of the County Assessor designating parcels by Assessor’s Parcel number.
“Assigned Special Tax” means the Special Tax for each Land Use Class of Developed Property as determined in accordance with Section C.1.a.
“Available Funds” means (a) the balance in the reserve f und established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, (b) delinquent Special Tax payments not required to fund the Special Tax Requirement for any preceding Fiscal Year,(c) that portion of Special Tax prepayments allocated to the payment of interest on Bonds, and (d) other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture.
“Backup Special Tax” means the Special Tax amount set forth in Section C.1.b. “Bonds” means any bonds or other debt (as defined in the Act), whether in one or more series, issued or incurred by CFD-08-I under the Act.
“Bond Year” means a one-year period beginning on Se ptember 2nd in each year and ending on September 1st in the following year, unless defined otherwise in the applicable Indenture. “CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and provi ding for the levy and collection of the Special Taxes.
“CFD-08-I” means City of Chula Vista Community Facilities District No. 08-I. “City” means the City of Chula Vista.
“Community Purpose Facility Property” means all Assessor’s Parcels which are (a) classified as community purpose facilities and meet the require ments of City of Chula Vista Ordinance No. 2002- 2883 as amended on November 5, 2002 or (b) designated with specific boundaries and acreage on an ‘A’ Map or Final Subdivision Map as a community purpose facility. “Council” means the City Council of the City, acting as the legislative body of CFD-08-I. “County” means the County of San Diego.
“Developed Property” means, for each Fiscal Year, all Taxable Property for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year in which the Special Tax is being levied.
“Exempt Property” means property not subject to the Special Tax due to its classification as either Public Property, Property Owner Association Property, Community Purpose Facility Property, public or utility easements in accordance with section E.1. “Final Subdivision Map” means a subdivision of property, created by recordation of a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which residential building permits may be issued without further subdivision of such property. “Fiscal Year” means the period starting July 1 and ending on the following June 30.
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“Indenture” means the indenture, fiscal agent agreemen t, trust agreement, resolution or other instrument pursuant to which Bonds are issued , as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Table 1 of Section C.1.a. “Lot(s)” means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. “Maximum Annual Special Tax” means the maximum annual Sp ecial Tax, determined in accordance with the provisions of Section C, wh ich may be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property.
“Non-Residential Property” means all Assessor’s Parcels of Developed Property, for which a building permit(s) was issued for a non-residen tial use, excluding Comm unity Purpose Facility Property.
“Open Space” means property within the boundaries of CFD 08-I which (a) has been designated with specific boundaries and acreage on an ‘A’ Map or Final Subdivision Map as open space, (b) is classified by the County Assessor as open space (c ) has been irrevocably offered for dedication as open space, prior to June 1st of the preceding Fi scal Year, to the federal government, the State of California, the County, the City, any other pub lic agency or (d) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space. “Outstanding Bonds” mean all Bonds, which remain outstanding as defined in the Indenture. “Property Owner Association Property” means any property within the boundaries of CFD-08- I which is (a) owned by a property owner association or (b) is designated with specific boundaries and acreage on an ‘A’ Map or Final Subdivision Map as property owner association property. As used in this definition, a Property Owner A ssociation Property includ es any master or sub- association.
“Proportionately” means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax or Backup Special Tax is equal for all Assessors’ Parcels of Developed Property within CFD-08-I. For Undeveloped Prop erty or Provisional Undeveloped Property “Proportionately” means that the ratio of the act ual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor’s Parcels of Undeveloped Property and equal for all Assessor’s Parcels of Provisional Undeveloped Property within CFD-08-I. “Provisional Undeveloped Property” means all Assessor’s Parcels of Public Property, Property Owner Association Property, Community Purpose Facility Property, Open Space or other property that would otherwise be classified as Exempt Property pursuant to the provisions of Section E, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum acreage as set forth in Section E.1 for Zone A or Zone B as applicable.
“Public Property” means any property within the boundaries of CFD-08-1 that which (a) is owned by a public agency, (b) has been irrevocably offered for dedication, prior to June 1st of the preceding Fiscal Year, to a public agency or (c) is designated with specific boundaries and acreage on an ‘A’ Map or Final Subdivision Map as property which will be owned by a public agency. For purposes of this definition, a public agency includes the federal government, the State of California, the County, the City or any other public agency.
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“Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. “Residential Floor Area” means all of the square footage of living area within the perimeter of a residential structure, not including any carport, wa lkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Resi dential Floor Area shall be made by the CFD Administrator by reference to appropriate reco rds kept by the City’s Building Department.
Residential Floor Area for a residential structur e will be based on the initial building permit(s) issued for such structure.
“Special Tax” means the annual special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement. “Special Tax Requirement” means that amount of Special Ta x revenue required in any Fiscal Year for CFD-08-I to: (i) pay annual debt service on all Outstanding Bonds due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments; (iii) pay Administrative Fees and Expenses; (iv) pay any amounts required to estab lish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of public improvements which are au thorized to be financed by CFD-08-I provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on the Undeveloped Property; (vi) less a credit for Available Funds. “State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD-08-I that are not exempt from the Special Tax pursuant to law or Section E below. “Trustee” means the trustee, fiscal agent, or paying agent under the Indenture. “Undeveloped Property” means, for each Fiscal year, all Taxable Property not classified as Developed Property.
“Zone A” means a specific geographic area as depicted in Exhibits A and B attached hereto. “Zone B” means a specific geographic area as depicted in Exhibits A and B attached hereto.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor’s Parcels of Taxable Property within CFD-08-I shall be (a) categorized as being located in either Zone A or Zone B, (b) classified as Developed Property, Undeveloped Property or Provisiona l Undeveloped Property and (c) subject to the levy of annual Special Taxes determined pursuant to Sections C and D. Furthermore, all Developed Property shall then be classified as Residential Property or Non-Residential Property.
C. MAXIMUM ANNUAL SPECIAL TAX RATE
1. Developed Property
The Maximum Annual Special Tax for each Asse ssor’s Parcel of Residential Property or Non-Residential Property shall be the greater of (1) the Assigned Special Tax described in Table 1 which follows or (2) the Backup Special Tax computed pursuant to 1b which follows.
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a. Assigned Special Tax
The Assigned Special Tax for each Assessor’s Parcel of Develope d Property is shown in Table 1.
TABLE 1
Assigned Special Tax for Developed Property within Zone A and Zone B:
Land Use
Class
Description Assigned Special
Tax
1 Residential
Property
$800 per unit plus $.35 per square foot of
Residential Floor Area
2 Non-Residential
Property
$6,000 per Acre
b. Backup Special Tax
When a Final Subdivision Map is recorded w ithin Zone A or Zone B the Backup Special Tax for Residential Property, Non-Residentia l Property and Undevel oped Property shall be determined as follows:
For each Assessor’s Parcel of Residential Property or Undeveloped Property to be classified as Residential Property upon its development w ithin the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula:
Zone A
$16,858 x A
B =
L
Zone B
$26,445 x A
B =
L
The terms above have the following meanings:
B = Backup Special Tax per Lot in each Fiscal Year.
A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map.
L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property.
For each Assessor’s Parcel of Non-Residential Property or Undeveloped Property to be classified as Non-Residential Property upon the development thereof within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $16,858 for Zone A and $26,445 for Zone B by the to tal Acreage of all Non-Residential Property and Undeveloped Property to be classifi ed as Non-Residential Property upon the D-40
development thereof within the Final Subdivision Map area.
Notwithstanding the foregoing if an Assessor’s Parcel of Residential Property, Non- Residential Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or m odified by recordation of a new or amended Final Subdivision Map, then the Backup Special Tax applicable to such Assessor’s Parcel shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place.
2. Undeveloped Property and Provisional Undeveloped Property The Maximum Annual Special Tax for each Assessor’s Parcel of Undeveloped Property or Provisional Undeveloped Property shall be $16,858 per Acre for Zone A and $26,445 per Acre for Zone B.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2003-04 and for ea ch following Fiscal Year , the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Spec ial Tax shall be levied each Fiscal Year as follows:
First: The Special Tax shall be levied Proportiona tely on all Developed Property within Zone A and Zone B at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be le vied Proportionately on all Undeveloped Property within Zone A and Zone B, at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. In determining the Acre age of an Assessor’s Parcel of Undeveloped Property for purposes of determining the annual Special Tax to be levied on such Assessor’s Parcel, the CFD Administrator shall not include any Acreage shown on any applicable tentative subdivision map or other land use entitlement appr oved by the City that designates such Acreage for a use that would be classified as Open Space, Property Owner Association Property, Community Purpose Facility or Public Property.
Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Developed Property.
Fourth: If additional monies are n eeded to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on all Provisional Undeveloped Property at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Notwithstanding the above, under no circumstance s will the Special Tax levied against any Assessor’s Parcel of Residential Property be in creased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Taxable Property.
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E. EXEMPTIONS
1. The CFD Administrator shall classify the follo wing as Exempt Property: (i) Public Property, (ii) Property Owner Association Property, (iii) Community Purpose Facility Property, (iv) Open Space and (v) Assessor’s Parcel s with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided, however, that no such classification shall re duce the sum of all Taxable Property to less than
40.98 Acres in Zone A and 42.43 Acres in Zone B. Property which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 40.98 Acres in Zone A and 42.43 Acres in Zone B will be classified as Provisional Undeveloped Property and shall be taxed pursuant to the fourth step of Section D. Tax exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes Exempt Property.
2. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which is classified as Provisional Undeveloped Property pursuant to paragraph 1 of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property to such public agency. Until the Maximum Annual Special Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Provisional Undeveloped Property.
3. If the use of an Assessor's Parcel of Exempt Property changes so that such Assessor's Parcel is no longer classified as one of the uses set forth in paragraph 1 that would make such Assessor's Parcel eligible to be classified as Exempt Property, such Assessor's Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property.
F. REVIEW/APPEAL COMMITTEE
Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor’s Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator de termines that an error has occurred the CFD Administrator may amend the amount of the Speci al Tax levied on such Assessor’s Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forwar d a copy of such notice to the City Manager who shall establish as part of the proceedings and ad ministration of CFD-08-I a special three-member Review/Appeal Committee. The Review/Appeal Co mmittee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determin ations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD-08-I, may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes.
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Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. Ho wever, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
“CFD Public Facilities” means those public facilities authorized to be financed by CFD-08-I. “CFD Public Facilities Costs” means either $20 million, or such lower number as shall be determined either by (a) the CFD Administra tor as sufficient to finance the CFD Public Facilities, or
(b) the Council concurrently with a covenant that it will not issue any more Bonds to be secured by Special Taxes levied under this Amended Rate and Method of Apportionment. “Construction Fund” means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct the CFD Public Facilities. “Future Facilities Costs” means the CFD Public Facilities Costs minus that (a) portion of the CFD Public Facilities Costs previously funded (i) from the proceeds of all previously issued Bonds,
(ii) from interest earnings on the Construction Fund actually earned prior to the date of prepayment and (iii) directly from Special Tax revenues and (b ) the amount of the proceeds of all previously issued Bonds then on deposit in the Construction Fund.
“Outstanding Bonds” means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date follo wing the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes.
1. Prepayment in Full
The Maximum Annual Special Tax obligation may onl y be prepaid and permanently satisfied for an Assessor’s Parcel of Developed Property, U ndeveloped Property for wh ich a building permit has been issued, or Provisional Undeveloped Property. The Maximum Annual Special Tax obligation applicable to such Assessor’s Parcel may be fully prepaid and the obligation of such Assessor’s Parcel to pay the Special Tax perman ently satisfied as described herein; provided, however that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel intending to prepay the Maximum Annual Special Tax obliga tion shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the pr epayment amount of such Assessor’s Parcel. The CFD Administrator may charge a reasonable fee fo r providing this figure, which can be collected prior to preparing such calculation.
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The prepayment amount shall be calculated as su mmarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Prepayment Fees and Expenses
less R eserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows:
Step No.:
1. For Developed Property, compute the Maxi mum Annual Special Ta x for the Assessor’s Parcel to be prepaid. For Undeveloped Pr operty for which a building permit has been issued to be prepaid, compute the Maximum Annual Special Tax for that Assessor’s Parcel as though it was already designated as De veloped Property, based upon the building permit, issued for that Assessor’s Parcel. For Provisional Undevel oped Property to be prepaid, compute the Maximum Annual Special Tax for such Assessor’s Parcel using the Maximum Annual Special Tax for Undeveloped Property.
2. Divide the Maximum Annual Special Tax computed pursuant to step 1 by the sum of the total expected Maximum Annual Special Tax revenues which may be levied within CFD- 08-I excluding any Assessor’s Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid.
3. Multiply the quotient computed pursuant to step 2 by the principal amount of the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).
4. Multiply the Bond Redemption Amount computed pursuant to step 3 by the applicable redemption premium on the next possible Bond call date, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
5. If all the Bonds authorized to be issued fo r CFD-08-I have not been issued, compute the Future Facilities Costs.
6. Multiply the quotient computed pursuant to step 2 by the amount if any, determined pursuant to step 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor’s Parcel (the "Future Facilities Amount").
7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.
8. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
9. Determine the Special Taxes levied on the As sessor’s Parcel in the current Fiscal Year, which have not yet been paid.
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10. Determine the fees and expenses of CFD-08-I, including but not limited to, the costs of computation of the prepayment, the costs to i nvest the prepayment proceeds, the costs of redeeming Bonds from the proceeds of such prepayment, and the cost of recording any notices to evidence the prepayme nt and the redemption (the “ Prepayment Fees and Expenses”)
11. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the prepayment amount less the Prepayment Fees and Expenses, as determined pursuant to step 10, from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment.
12. Add the amounts computed pursuant to steps 7 and 9 and subtract the amount computed pursuant to step 11 (the “Defeasance Amount”).
13. The reserve fund credit (the “ Reserve Fund Credit ”) shall equal the lesser of: (a) the expected reduction in the reserve requiremen t (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 prep ayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following th e current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quo tient computed pursuant to step 2 by the expected balance in the capitalized interest fund after such first interest payment (the “Capitalized Interest Credit”).
15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to steps 3, 4, 6, 10, and 12, less the amounts computed pursuant to steps 13 and 14 (the “Prepayment Amount”).
16. From the Prepayment Amount, the amounts computed pursuant to steps 3, 4, 12, 13, and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to step 10 shall be retained by CFD-08-I. The amount computed pursuant to step 6 shall be deposited in the Construction Fund.
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integr al multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year’s Special Tax levy as determined under step 9 above, the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax pr epayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levi ed on Taxable Property within CFD-08-I, both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service D-45
on all Outstanding Bonds.
2. Prepayment in Part
The Maximum Annual Special Tax on an Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Undeveloped Property for which a build ing permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1, except that a partial prepayment shall be calculated according to the following formula:
PP = (P
E x F) + A
These terms have the following meaning:
PP = the partial prepayment
PE = the Prepayment Amount calculated accordi ng to Section H.1, minus Prepayment Fees and Expenses determined pursuant to step 10.
F = the percent by which the owner of the Assessor’s Parcel(s) is partially prepaying the Maximum Annual Special Tax.
A= the Prepayment Fees and Expenses determined pursuant to step 10.
The owner of an Assessor’s Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by wh ich the Maximum Annual Special Tax shall be prepaid, and
(iii) the company or agency that will be acti ng as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a st atement of the amount required for the partial prepayment of the Maximum Annual Special Tax fo r an Assessor’s Parcel within 30 days of the request and may charge a reasonable fee for providing this service.
With respect to any Assessor’s Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to step 16 of Section H.1, and (ii) indicate in the records of CFD-08-I that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstan ding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be le vied on such Assessor’s Parcel pursuant to Section D.
I. TERM OF MAXIMUM ANNUAL SPECIAL TAX
The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2039- 2040 Fiscal Year.
[Remainder of Page Intentionally Left Blank]
D-46
RATE AND METHOD OF APPORTIONMENT
FOR CITY OF CHULA VISTA
COMMUNITY FACILITIES DISTRICT NO. 2001-2
(McMillin Otay Ranch Village Six)
A Special Tax as hereinafter defined shall be levied on each Assessor’s Parcel of Taxable Property within the City of Chula Vista Community Facilities District No. 2001-2 (“CFD No. 2001-2”) and collected each Fiscal Year commencing in Fiscal Year 2002- 2003 in an amount determined by the City Council through the application of the appropriate Special Tax for “Developed Prop erty,” and “Undeveloped Property as described below. All of the Taxable Property in CFD No. 2001-2, unless exempted by law or by the provisions hereof, shall be ta xed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meaning:
“Acre or Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final map, parcel map, condominiu m plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps for a land area are not available, the Acreage of such land area shall be determined by the City Engineer. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. “Administrative Expenses” means the actual or reasonably estimated costs directly related to the administration of CFD No. 2001-2 including, but not limited to, the following: the costs of computing the Special Taxes and prepar ing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2001-2 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-2 or any designee thereof of providing continuing disclosure; the costs associ ated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2001-2 or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associ ated with the release of funds from an escrow account, if any.
Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2001-2 for any other administrative purposes of CF D No. 2001- 2, including, but not limited to attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.
“Assessor’s Parcel” means a lot or parcel shown in an Assessor’s Parcel Map with an assigned Assessor’s Parcel number.
“Assessor’s Parcel Map” means an official map of the County Assessor of the County designating parcels by Assessor’s Parcel number.
“Assigned Special Tax” means the Special Tax for each Land Use Category of Developed Property as determined in accordance with the provision of Section C.1.a. below. “Available Funds” means the balance in the reserve fund established pursuant to the terms D-47
of the Indenture in excess of the reserve require ment as defined in such Indenture, delinquent Special Tax payments not required to fund the Special Tax Requirement for any preceding Fiscal Year, the Special Tax prepayments collected to pa y interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. “Backup Special Tax” means the Special Tax determ ined in accordance with the provisions of Section C.1.b below.
“Bonds” means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD No. 2001-2 under the Act.
“Bond Year” means a one-year period beginning on September 2nd in each year and ending on September 1st in the following year. Un less defined differently in the applicable Indenture.
“CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and provi ding for the levy and collection of the Special Taxes.
“CFD No. 2001-2” means City of Chula Vista, Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six).
“City” means the City of Chula Vista.
“Community Purpose Facility Property” means all Assessor’s Parcels which are classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452.
“Council” means the City Council of the City, acting as the legislative body of CFD No. 2001-2.
“County” means the County of San Diego.
“Developed Property” means, for each Fiscal Year, all Taxable Property for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year. “Final Subdivision Map” means a subdivision of property created by recordation of a final map, parcel map, or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creat es individual lots for which residential building permits may be issued without furt her subdivision of such property. “Fiscal Year” means the period starting July 1 and ending on the following June 30. “Indenture” means the indenture, fiscal agent agreem ent, trust agreement, resolution or other instrument pursuant to wh ich Bonds are issued, as modified , amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Tables 1 and 2 of Section C. “Lot(s)” means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. “Master Developer” means the owner of the predom inant amount of Undeveloped D-48
Property in CFD No. 2001-2.
“Maximum Annual Special Tax” means the maximum annual Special Tax, determined in accordance with the provisions of Section C below, which may be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property.
“Non-Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit has been issued for purpos es of constructing one or more non-residential structures, excluding Community Purpose Facility Property. “Occupied Residential Property” means all Assessors’ Parcels of Residential Property for which title is owned by an end user (homeowner).
“Outstanding Bonds” means all Bonds which remain outstanding as defined in the Indenture.
“Property Owner Association Property” means any property within the boundaries of CFD No. 2001-2 owned by or dedicated to a prope rty owner association, including any master or sub- association.
“Proportionately” means for Developed Property that th e ratio of the actual Special Tax levy to the Assigned Annual Special Tax or Backup Special Tax is equal for all Assessor’s Parcels of Developed Property within CFD No. 2001-2. For Undeveloped Property “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor’s Parcels of Undeveloped Property within CFD No. 2001-2. “Public Property” means any property within the boundaries of CFD No. 2001-2 that is owned by or dedicated to the federal government, th e State of California, the County, the City or any other public agency.
“Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. “Residential Floor Area” means all of the square footage of living area within the perimeter of a residential structure, not includi ng any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determinati on of Residential Floor Area shall be made by the CFD Administrator by reference to appropriate r ecords kept by the City’s Building Department.
Residential Floor Area for a residential structure will be based on the building permit(s) issued for such structure prior to it being classified as Occupied Residential Property, and shall not change as a result of additions or modifications made to su ch structure after such classification as Occupied Residential Property.
“Special Tax” means the annual special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement. “Special Tax Requirement” means that amount required in any Fiscal Year for CFD No. 2001-2 to: (i) pay debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic cost s on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; (v) pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD No. 2001- 2 provided that inclusion of such amount does no t cause an increase in the levy of Special Taxes D-49
on Undeveloped Property; and (vi) less a credit for Available Funds. “State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD No. 2001-2 which are not exempt from the Special Tax pursuant to law or Section E below. “Trustee” means the trustee, fiscal agent, or paying agent under the Indenture. “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor Parcels within CFD No. 2001-2 shall be classified as Taxable Property or Exempt Property. All Taxabl e Property shall then be classified as Developed Property or Undeveloped Property, and shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Furthermore, all Developed Property shall then be classified as Residential Propert y or Non-Residential Property.
C. MAXIMUM ANNUAL SPECIAL TAX RATE
1. Developed Property
The Maximum Annual Special Tax for each Assessor’s Parcel of Residential Property or Non-Residential Property shall be the greater of (1) the Assigned Special Tax described in Table 1 below or (2) the amount derived by application of the Backup Special Tax.
a. Assigned Special Tax
The Assigned Special Tax for each Assessor’s Parcel classified as Developed Property shall be the amount shown in Table 1 below:
TABLE 1
Assigned Special Tax for Developed Property
Land
Use
Class
Description Maximum Annual Special
Tax
1 Residential
Property
$440 per unit plus $.34 per square foot
of Residential Floor Area
2 Non-Residential
Property
$11,365 per Acre
b. Backup Special Tax
When a Final Subdivision Map is record ed within CFD No. 2001-2, the Backup Special Tax for Assessor’s Parcels of Developed Property classified as Residential Property or Non-Residential Propert y shall be determined as follows:
D-50
For each Assessor’s Parcel of Developed Property classified as Residential Property or for each Assessor’s Parcel of Un developed Property to be classified as Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula:
$11,365 x A
B =
L
The terms above have the following meanings:
B = Backup Special Tax per Lot in each Fiscal Year.
A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map.
L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property.
For each Assessor’s Parcel of Developed Property classified as Non-Residential Property or for each Assessor’s Parcel of Undeveloped Property to be classified as Non- Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $11,365 by the total Acreage of both the Non-Residential Property and Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area.
Notwithstanding the foregoing, if Assessor’s Parcels of Residential Property, Non- Residential Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or m odified by recordation of a new or amended Final Subdivision Map (by an applicable final map, parcel map, condominium plan, record of survey, or other recorded document creati ng the parcels) then the Backup Special Tax applicable to such Assessor’s Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change or modification did not take place.
2. Undeveloped Property
The Maximum Annual Special Tax for each Assessor’s Parcel classified, as Undeveloped Property shall be the amount shown in Table 2 below:
TABLE 2
Maximum Annual Special Tax for Undeveloped Property
Land
Use
Class
Description Maximum Annual Special
Tax
3 Undeveloped Property $11,365 per Acre
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2002-2003 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement a nd shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement . The Special Tax shall be levied each Fiscal Year as follows:
D-51
First: The Special Tax shall be levied Pr oportionately on each Assessor’s Parcel of Developed Property at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to sa tisfy the Special Tax Requirement after the first step has been completed, th e Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property, excluding an y Assessor’s Parcels classified as Undeveloped Property pursuant to paragraphs 2 and 3 in Sec tion E, at up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Third: If additional monies are needed to sa tisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor’s Parcel whose Maximum Annual Special Tax is derived by the a pplication of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Assessor’s Parcel.
Fourth: If additional monies are needed to sa tisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel classified as Undeveloped Property pursuant to paragraphs 2 and 3 in Section E at up to 100% of the Maximum Annual Special Tax for Undeveloped Property.
Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor’s Parcel of Occupied Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in th e payment of Special Taxes by the owner of any other Taxable Property.
E. EXEMPTIONS
1. The CFD Administrator shall classify up to 53 Acres within Assessor Parcel number 643- 052-05 and any future subdivisions therein as property exempt from the Special Taxes provided that all or a portion of the property is planned for or is being developed or used for Community Purpose Facility Property a nd school land uses approved by the City pursuant to the Tentative Map approved for McMillin Otay Ranch, Village Six on February 26, 2002. It is possible that land use entitleme nts (such as parcel map, final map or any other such division of land) may be approved prior to January 1st of any Fiscal Year for all or any portion of such area(s) which woul d authorize the development or use of such area(s) for purposes not exempt from the levy of the Special Tax pursuant to this Section E. The adjusted area(s) shall then be classifi ed as Taxable Property in the next Fiscal Year as Developed Property or Undeveloped property in Step 2 of Section D, as applicable.
2. The CFD Administrator shall also classify the following Assessor Parcel(s) as exempt property: (i) Public Property, (ii) Property Owner Association Property, (iii) all Assessor’s Parcels defined as Community Purpose Facility Property which are in addition to the property described in paragraph 1 above, and (iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided, however, that no such classification shall reduce the sum of all Taxable Property to less than 75.48 Acres. Notwith standing the preceding sentence, the CFD Administrator shall not classify an Assessor’s Parcel described in this paragraph as exempt property if such classification would reduce th e sum of all Taxable Property to less than
75.48 Acres. Assessor’s Parcels which cannot be classified as exempt property because such classification would reduce the Acreage of all Taxable Property to less than 75.48 Acres will be classified as Undeveloped Prope rty and shall be taxed as such. Tax-exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the D-52
chronological order in which property becomes exempt property.
3. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which cannot be classified as exempt property as described in pa ragraph 2 of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property to such public agency. Until the Maximum A nnual Tax obligation for any such Public Property is prepaid, the property shall con tinue to be subject to the levy of the Special Tax as Undeveloped Property.
F. REVIEW/APPEAL COMMITTEE
Any landowner or resident who pays the Special Tax and feels that the amount of the Special Tax levied on their Assessor’s Parcel is in error shall first consult with the CFD Administrator regarding such error. If followi ng such consultation, the CFD Administrator determines that an error has occurred, the CFD Administrator may amend the amount of the Special Tax levied on such Assessor’s Parcel. If following such consultation and action, if any by the CFD Administrator, the landowner or resident believes such error still exits, such person may file a written notice with the City Clerk of the City app ealing the amount of the Special Tax levied on such Assessor’s Parcel. Upon the receipt of any su ch notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of CFD No. 2001-2, a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it de ems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The d ecision of the Review/Appeal Committee shall be final and binding as to all persons.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2001-2 may directly bill the Special Tax, may collect Special Taxes at a differe nt time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Assessor’s Parcels of Taxable Property that are delinquent in the payment of Special Taxes.
Tenders of Bonds may be accepted for pa yment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
“Outstanding Bonds” means all previously issued Bonds which will remain outstanding after the first interest and/or principal paymen t date following the current Bond Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes.
1. Prepayment in Full
The Maximum Annual Special Tax obligati on may only be prepaid and permanently satisfied by an Assessor’s Parcel of Develope d Property, Undeveloped Property for which a D-53
building permit has been issued, or Public Property. The Maximum Annual Special Tax obligation applicable to such Assessor’s Parcel may be fu lly prepaid and the obligation of the Assessor’s Parcel to pay the Special Tax permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment. An owner of an A ssessor’s Parcel intending to prepay the Maximum Annual Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such writte n notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assesso r’s Parcel. The CFD Administrator may charge a reasonable fee for providing this figure. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):
Bond Redemption Amount plus
Redemption Premium
plus Defeasance Amount
plus Administrative Fees and Expenses
less R eserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows:
Paragraph No.:
1. For Assessor’s Parcels of Developed Property, compute the Maximum Annual Special Tax for the Assessor’s Parcel to be prepaid. For Assessor’s Parcels of Undevelope d Property for which a building permit has been issued to be prepaid, compute the Maximum Annual Special Tax for that Assessor’s Parcel as though it was already desi gnated as Developed Property, based upon the building permit which has already been issued fo r that Assessor’s Parcel. For Assessor’s Parcels of Public Property to be prepaid, compute th e Maximum Annual Special Tax for that Assessor’s Parcel using the Maximum Annual Special Tax for Undeveloped Property.
2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Maximum Annual Special Tax revenue excluding any Assessor’s Parcels which have been prepaid.
3. Multiply the quotient computed pursuant to paragraph 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond Redemption Amount”).
4. Multiply the Bond Redemption Amount computed pu rsuant to paragraph 3 by the applicable redemption premium on the next possible Bond call da te, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
5. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date follo wing the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.
6. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
7. Determine the Special Taxes levied on the Assessor’s Parcel in the current Fiscal Year which have not yet been paid.
8. Compute the amount the CFD Administrator reasona bly expects to derive from the reinvestment D-54
of the Prepayment Amount (less the Administrative Fees and Expenses) from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment.
9. Add the amounts computed pursuant to paragraphs 5 and 7 and subtract the amount computed pursuant to paragraph 8 (the “Defeasance Amount”).
10. Verify the administrative fees and expenses of CFD No. 2001-2, including the costs of computation of the prepayment, the costs to invest the prep ayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to ev idence the prepayment and the redemption (the “Administrative Fees and Expenses”).
11. The reserve fund credit (the “ Reserve Fund Credit ”) 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.
12. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient co mputed pursuant to paragraph 2 by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the “Capitalized Interest Credit”).
13. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 9, and 10, less th e amounts computed pursuant to paragraphs 11 and 12 (the “Prepayment Amount”).
14. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 9, 11, and 12 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments . The amount computed pursuant to paragraph 10 shall be retained by CFD No. 2001-2.
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the ne xt prepayment of bonds or to make debt service payments.
As a result of the payment of the current Fi scal Year’s Special Tax levy as determined under paragraph 7 above, the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax pr epayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within CFD No. 2001-2 both prior to and after the proposed prepayment is at l east 1.1 times the maximum annual debt service on all Outstanding Bonds.
Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by th e Council pursuant to the Act. Ho wever, the use of Bond tenders D-55
shall only be allowed on a case-by-case basis as specifically approved by the Council.
2. Prepayment in Part
The Maximum Annual Special Tax on an Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Sec tion H.1; except that a partial prepayment shall be calculated according to the following formula:
PP = (PE x F) + A
These terms have the following meaning:
PP = the partial prepayment
PE = the Prepayment Amount calculated accord ing to Section H.1, minus Administrative Expenses and Fees pursuant to Step 10.
F = the percent by which the owner of the Assessor’s Parcel(s) is partially prepaying the Maximum Annual Special Tax.
A = the Administrative Expenses and Fees pursuant to Step 10.
The owner of an Assessor’s Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by which the Maxi mum Annual Special Tax shall be prepaid, and (iii) company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount re quired for the partial prepayment of the Maximum Annual Special Tax for an Assessor’s Parcel within 30 days of the request and may charge a reasonable fee for providing this service.
With respect to any Assessor’s Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Paragraph 14 of Section H.1, and (ii) indicate in the records of CFD No. 2001-2 that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Asse ssor’s Parcel pursuant to Section D.
I. TERM OF MAXIMUM ANNUAL SPECIAL TAX
The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2037-2038 Fiscal Year.
[Remainder of Page Intentionally Left Blank]
E-1
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
Chula Vista Municipal Financing Authority
Chula Vista, California
Re: $__________ Chula Vista Municipal Financing Authority Local Agency Revenue Refunding Bonds, Series 2024
Ladies and Gentlemen:
We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the Chula Vista Municipal Financing Authority (the “Authority”) taken in connection with the issuance by the Authority of its Chula Vista Municipal Financing Authority Local Agency Revenue Refunding Bonds, Series 2024 (the “Bonds”) and such other information and documents as we consider necessary to render this opinion.
In rendering this opinion, we have relied upon certain representations and certifications of fact made by the Authority, the City, the Community Facilities Districts, the initial purchaser of the Bonds and others and opinions of counsel to the Authority and the Community Facilities Districts. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.
The Bonds have been issued pursuant to the Marks Roos Local Bond Pooling Act of 1985, as amended (Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code) (the “Act”), that certain Indenture of Trust dated as of March 1, 2024 (the “I ndenture”), by and between the Authority and Wilmington Trust, National Association, as Trustee, and an authoriz ing resolution adopted by the Board of Directors of the Authority (the “Board”) on February 20, 2024 (the “Resolution”). Capitalized terms not defined herein shall have the meanings set forth in the Indenture.
We have assumed the genuineness of all documents and signatures presented to us, the authenticity of documents submitted as originals and the conformity to originals of documents submitted as copies. We have not undertaken to verify independently, and have assu med, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions referred to in the preceding paragraphs of this opinion. Furthermore, we have assumed compliance with all covenants and agreements contained in the Bonds and the Indenture. We express no opinion herein with respect to any indemnification, contribution, choice of law, choice of forum, penalty or waiver provisions contained in the Bonds and the Indenture.
We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting credit ors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against public agencies in the State of California.
Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:
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(1) The Bonds have been duly and validly authorized by the Authority and are legal, valid and binding limited obligations of the Authority, enforceable in accordance with their terms and the terms of the Indenture.
(2) The Indenture has been duly executed and delivered by the Authority. The Indenture creates a valid pledge of the Revenues to secure the Bonds and the amounts on deposit in certain funds and accounts established under the Indenture to secure the Bonds, as and to the extent provided in the Indenture. The Indenture constitutes the valid and binding agreement of the Authority and is enforceable in accordance with its terms.
(3) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals; however, for tax years beginning after December 31, 2022, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed on such corporations. The foregoing opinion is subject to the condition that the Authority, the City and the Community Facilities Districts comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purpos es retroactive to the date of issuance of the Bonds.
The Authority, the City and the Community Facilities Districts have covenanted to comply with all such requirements.
(4) The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owner will increase the Bond Owner’s basis in the applicable Bond.
(5) The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax- exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner.
(6) Interest (and original issue discount) on the Bonds is exempt from State of California personal income tax.
Except as set forth in paragraphs (3) through (6) above, we express no opinion as to any tax consequences related to the Bonds. Other provisions of the Code may give rise to adverse federal income tax consequences to particular Bond Owners. The scope of this opinion is limited to matters addressed above and no opinion is expressed hereby regarding other federal tax consequences that may arise due to ownership of the Bonds.
Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate and the Local Obligation Bond Indentures may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions se t forth in such documents, upon the advice or with the E-3
approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion herein as to the effect on the exclusion from gross inco me for federal income tax pu rposes of interest on any Bond if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than Stradling Yocca Carlson & Rauth LLP.
Our opinion is limited to matters governed by the laws of the State of California and federal income tax law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities.
By delivering this opinion, we are not expressing any opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set- off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the Bonds or the Indenture, nor are we expressing any opinion with respect to the state or quality of title to or interest in any assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the descrip tion contained therein of, or the remedies available to enforce liens on any assets thereunder.
The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Our engagement as Bond Counsel terminates upon the issuance of the Bonds and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken (or not taken) or do occur (or do not occur).
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Bonds or other offering material relating to the Bonds and expressly disclaim any duty to advise the Owner of the Bonds with respect to matters contained in the Official Statement.
Respectfully submitted,
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APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (“Disclosure Agreement”), dated as of March 1, 2024, is executed and delivered by the CHULA VISTA MUNICIPAL FINANCING AUTHORITY (the “Issuer”), and SPICER CONSULTING GROUP, LLC, as Dissemination Agent (the “Dissemination Agent”) in connection with the issuance of $____________ aggregate principal amount of the Chula Vista Municipal Financing Authority Local Agency Revenue Refunding Bonds, Series 2024 (the “Bonds”). The Bonds are being i ssued pursuant to an Indenture of Trust (the “Indenture”) dated as of March 1, 2024 between the Issuer and Wilmington Trust, National Association (the “Trustee”). The proceeds of the Bonds will be used to acquire the Local Obligations (as defined below) and refund certain outstanding bonds of the Districts (as defined below), to fund the reserve fund securing the Bonds and to pay costs of issuance of the Bonds. The Issuer and the Dissemination Agent covenant and agree as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Underwriter in comply ing with Rule 15c2-12(b)(5) of the Securities and Exchange Commission.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Section 3 and 4 of this Disclosure Agreement. “Beneficial Owner” shall mean any person which (a ) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermed iaries), or (b) is treated as the owner of any Bonds for federal income purposes.
“City” shall mean the City of Chula Vista, California.
“Disclosure Representative” shall mean the Execu tive Director of the Issuer, or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean Spicer Consulting Group, LLC, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee and the Issuer a written acceptance of such designation.
“Districts” shall mean City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods, Vistas and Land Swap), City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven), City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) and City of Chula Vista Community Facilities District No. 2001-2 (McMillin – Otay Ranch – Village Six).
“EMMA” shall mean the Electronic Municipal Market Access system of the MSRB.
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“Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. “Official Statement” means the Official Statement for the Bonds dated ________, 2024. “Participating Underwriter” shall mean Raymond James & Associates, Inc.. “Owners” shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee.
“Repository” shall mean the MSRB or any ot her entity designated or authorized by the Securities and Exchange Commission to receive re ports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. “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. “Taxing Jurisdictions” shall mean, collectively, the City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods, Vistas and Land Swap) Improvement Area A, the City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods, Vistas and Land Swap) Improvement Area B, the City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven), the City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) and the City of Chula Vista Community Facilities District No. 2001-2 (McMillin – Otay Ranch – Village Six).
Section 3. Provision of Annual Reports.
(a) The Issuer shall, or upon written direction shall cause the Dissemination Agent to, not later than January 31 after the end of the Issuer’s Fiscal Year (currently June 30) commencing with the report due by January 31, 2025, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual 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 of this Disclosure Agreement; provided that the audited financial statements of the Issuer and the City, if any exist, may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the fiscal year of the Issuer or the City changes, the Issuer shall give notice of such change in the same manner as for a Listed Event under Section 5(d). The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report.
(b) Not later than (15) business days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Issuer shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) business days prior to such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to inquire if the Issuer is in compliance with subsection (a).
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(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repository by the date required in subsection (a), the Dissemination Agent shall send a notice in a timely manner to the Repository, in the form required by the Repository. If the Issuer is the Dissemination Agent and the Issuer is unable to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall se nd a notice in a timely manner to the Repository, in the form required by the Repository.
(d) The Dissemination Agent shall:
(i) determine each year prior to date for providing the Annual Report the name and address of the Repository if other than the MSRB; and (ii) file a report with the Issuer certifying that the Annual Report has been sent to the Repository and the date it was provided.
(e) Notwithstanding any other provision of this Disclosure Agreement, all filings shall be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule.
Section 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the Issuer and the City for the prior fiscal year, if any have been prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board; provided, however, that the Issuer and the City may, from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the Issuer or the City shall modify the basis upon which its financial statements are prepared, the Issuer or the City, as applicable, shall provide the information referenced in Section 8 below. If the Issuer or the City are preparing audited financial statements and such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the audited financial statements may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report.
(b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following:
(i) the principal amount of Bonds outstand ing as of the September 2 preceding the filing of the Annual Report;
(ii) the balance in each fund under the Indenture and the Reserve Requirement as of the September 2 preceding the filing of the Annual Report; (iii) any changes to the Rates and Methods of Apportionment of the Special Taxes approved or submitted to the qualified electors for approval prior to the filing of the Annual Report;
(iv) an update of the information set forth in Table 3 in the Official Statement; provided, however, that such update need not include overlapping special tax, assessment or general obligation indebtedness;
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(v) an update by Taxing Jurisdiction similar to Table A-2 in the Official Statement of the total Special Taxes levied and collected in the most recent prior fiscal year, and the total Special Taxes that remain unpaid for the prior fiscal year in which Special Taxes were levied and the number of delinquent parcels in each Taxing Jurisdiction; (vi) an update by Taxing Jurisdiction similar to Table A-1 in the Official Statement showing the Special Tax levy for the then current fiscal year; (vii) a statement regarding the amount of Special Tax prepayments, if any, in the Fiscal Year for which the Annual Report is being prepared; (viii) a statement as to whether any of the Taxing Jurisdictions is participating in the County’s Teeter Program and whether the City has entered into an agreement to sell delinquent installments of Special Taxes of any of the Taxing Jurisdictions to a third party and if so, in either case, identifying which of the Taxing Jurisdictions are included; (ix) the status of any foreclosure actions being pursued by the Districts with respect to delinquent Special Taxes; and
(x) any information not already included under (i) through (ix) above that the Districts are required to file in the annual report to the California Debt and Investment Advisory Commission pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended.
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 Issuer or related public entities, which have been submitted to each of the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Sec tion 5, the Issuer shall give, or cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) business days after the event:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service rese rves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers, or their failure to perform;
5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB);
6. tender offers;
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7. defeasances;
8. ratings changes; and
9. bankruptcy, insolvency, receivership or similar proceedings.
Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
(b) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
1. unless described in paragraph 5(a)(5) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;
2. the consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;
3. appointment of a successor or additional trustee or the change of the name of a trustee;
4. nonpayment related defaults;
5. modifications to the rights of Owners of the Bonds;
6. notices of redemption;
7. release, substitution or sale of property securing repayment of the Bonds; and
8. incurrence of a financial obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of F-6
a financial obligation of the obligated person, any of which reflect financial difficulties.
(c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event under Section 5(b) above, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws.
(d) If the Issuer determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the Issuer shall file a notice of such occurrence with the Repository in a timely manner not more than 10 business days after the event. (e) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Issuer and that the Dissemination Agent shall not be responsible for determining whether the Issuer’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.
(f) For purposes of the events identified in subparagraphs (a)(10) and (b)(8) under this Section 5, the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement ha s been provided to the MSRB consistent with the Rule.
Section 6. Termination of Reporting Obligation. The Issuer’s obligations under this Disclosure Agreement 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 Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5.
Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be Spicer Consulting Group, LLC. The Dissemination Agent may resign by providing thirty (30) days written notice to the Issuer and the Trustee.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver related to the provisions of Sections 3(a), 4, or 5, it may only be made in connection with a change in circumstances that arises from a 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 the type of business conducted; (b) The undertaking hereunder, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule F-7
at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture 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.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment is related to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(a), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narra tive form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the formed accounting principles.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Agreement, the Trustee at the written direction of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, 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 Issuer to comply with its obligations under this Disclosure Agreement, but only to the extent funds have been provided to it or it has been otherwise indemnified to its satisfac tion from any cost, liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees and expenses of its attorney. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement 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 Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and 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 obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
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Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:
Issuer: Chula Vista Municipal Financing Authority
276 Fourth Avenue
Chula Vista, CA 91910
Attention: Executive Director
Dissemination Agent: Spicer Consulting Group, LLC
41880 Kalmia Street, Suite 145
Murrieta, CA 92562
Attention: Shane Spicer
Participating Underwriter: Raymond James & Associates, Inc. 39 East Union Street
Pasadena, CA 91103
Attention: Public Finance
Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notice or communications should be sent.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Trustee, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds , and shall create no rights in any other person or entity.
Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
CHULA VISTA MUNICIPAL FINANCING
AUTHORITY
By:
Its: Executive Director
SPICER CONSULTING GROUP, LLC, as
Dissemination Agent
By:
Its: Authorized Officer
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APPENDIX G
THE BOOK-ENTRY SYSTEM
The following description of the Depository Trus t Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interest s in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in th e Bonds and other related transacti ons 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 foregoing informa tion with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, princi pal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DT C or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a time ly basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exc hange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), Ne w York, NY , will act as securities depository for the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggr egate principal amount of such issue, and will be deposited with DTC.
If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principa l amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities de pository, is a limited-purpose trust company organized under the New York Banking Law, a “banki ng organization” within the meaning of the New York Banking Law, a member of the Federal Rese rve 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 Exch ange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U. S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in depos ited securities, through electronic computerized book- entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Particip ants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corpor ations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trus t & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agen cies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to othe rs such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Partic ipant, either directly or indirectly (“Indirect
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Participants”). DTC has a Standard & Poor’s ra ting of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exch ange Commission. More information about DTC can be found at www.dtcc.com. The information contained on such Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC syst em must be made by or through Direct Participants, which will receive a credit for the Secu rities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner ”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of th eir holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the tr ansaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on th e books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Own ers will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all S ecurities deposited by Direct Participants with DTC are registered in the name of DTC’s partners hip nominee, Cede & Co., or such other name as may be requested by an authorized representative of DT C. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such othe r DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Bene ficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Secu rities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communica tions by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transm ission to them of notices of signifi cant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents.
For example, Beneficial Owners of Securities ma y wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain a nd transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If l ess than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the in terest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any ot her DTC nominee) will consent or vote with respect to Securities unless authorized by a Dir ect Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on th e record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds and distributions on the Securities will be made to Cede & Co., or such other nominee as may be requested by an author ized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s recei pt of funds and corresponding detail information from Issuer or Agent, on payable date in accord ance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or
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registered in “street name,” and will be the responsib ility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agen t. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information in this section concerni ng DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.