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COMMUNITY FACILITIES
DISTRICT REPORT
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 3
(THE PINES AT SUNRISE VILLAGE )
Report Date: August 3, 2023
www.FinanceDTA.com 18201 Von Karman, Suite 220
Irvine, CA 92612
COMMUNITY FACILITIES DISTRICT REPORT
FOR
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 3
(THE PINES AT SUNRISE VILLAGE )
Prepared for:
City of Fullerton
303 W Commonwealth Avenue
Fullerton, CA 92832
TABLE
OF CONTENTS
SECTION
I INTRODUCTION ................................ .............................. 1 II PROJECT DESCRIPTION ................................ ................ 2
III DESCRIPTION AND ESTIMATED COSTS OF PUBLIC
FACILITIES ................................ ................................ ........ 3 A Description of Public Facilities ................................ ........ 3 B Estimated Costs of Public Facilities ................................ 4
IV BONDED INDEBTEDNESS AND INCIDENTAL
EXPENSES ................................ ................................ .......... 6 A Projected Bond Sales ................................ ......................... 6 B Incidental Bond Issuance Expenses to be
Included in the Proposed Bonded
Indebtedness ................................ ................................ ....... 6 C Incidental Expenses to be Incl uded in the
Annual Levy of Special Taxes ................................ ........... 6 V RATE AND METHOD OF APPORTIONMENT .............. 7
A Explanation for Special Tax Apportionment ................. 7 B Maximum Special Tax ................................ ........................ 8 C Backup Special Tax ................................ ............................. 9 D Accuracy of Information ................................ ................... 9 VI BOUNDARIES OF THE CFD ................................ .......... 10 VII GENERAL TERMS AND CONDITIONS ....................... 11 A Substitution of Facilities ................................ .................. 11 B Appeals and Interpretations ................................ ........... 11 C Prepayment of Special Tax ................................ ............. 11
APPENDICES
APPENDIX A RATE AND METHOD OF
APPORTIONMENT
APPENDIX B BOUNDARY MAP
1 SECTION I
INTRODUCTION
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
I INTRODUCTION
WHEREAS, the City Council of the City of Fullerton (hereinafter referred to as the "Council") did, pursuant to the provision of the "Mello-Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2 of Title 5 (commencing with Section 53311) of the Government Code of the State of California (hereinafter referred to as the "Act"), and specifically Section 53321.5 thereof, expressly order the filing of a written "Report" with the legislative body of the proposed Community Facilities District (“CFD”). This CFD being City of Fullerton CFD No. 3 (The Pines at Sunrise Village) shall hereinafter be referred to as:
"CFD No. 3"; and,
WHEREAS, on June 20, 2023, Council, pursuant to the Act, adopted a resolution entitled “RESOLUTION OF INTENTION TO ESTABLISH COMMUNITY FAC ILITIES DISTRICT" (hereinafter referred to as the "Resolution of Intention") directing that the Report generally contain the following:
1. A description of the public facilities by type that will be required to adequately meet the needs of CFD No. 3; and
2. An estimate of the fair and reasonable cost of the public facilities, including without limitation any cost of acquisition of lands, rights-of-way and easements, any physical facilities required in conjunction therewith and incidental expenses in connection therewith, including the costs of the proposed bond financing and all other related costs as provided in Section 53345.3 of the Act.
WHEREAS, the Director of Administrative Services of the City of Fullerton (hereinafter referred to as the "City") has hereby directed DTA, Inc. to study the proposed public facilities to be financed by CFD No. 3 and, at or before the time of the public hearing on the establishment of CFD No. 3, file the Report wit h the City Clerk pursuant to the provisions of the Resolution of Intention.
NOW, THEREFORE, DTA, Inc. does hereby submit the Re port. 2 SECTION II
PROJECT DESCRIPTION
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
II PROJECT DESCRIPTION
CFD No. 3 encompasses approximately 12.52 gross acr es of land in the City generally located west of Euclid Street between Rosecrans Ave nue and Paseo Dorado. Of this acreage, approximately 3.78 acres are expected to be developed into uses subject to a Mello-Roos Special Tax 1. At buildout, it is currently anticipated that CFD No. 3 will consist of approximately 113 for-sale residential units, comprised of 49 single family homes ranging in size from 1,926 to 2,546 square feet and 64 townhomes ranging in size from 1,797 to 1,929 square feet.
1 Please note that all capitalized terms used herein, unless otherwise indicated, shall have the meanings defined in the Rate and Method of Apportionment for CFD No. 3. 3 SECTION I II
DESCRIPTION AND ESTIMATED
COSTS OF PUBLIC FACILITIES
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
III DESCRIPTION AND ESTIMATED COSTS OF PUBLIC FACILITIE S A CFD may provide for the purchase, construction, expansion or rehabilitation of any real or tangible property, including public facilities and infrastructure improvements, with an estimated useful life of five (5) years or longer, which is necessary to meet increased demands placed upon local agencies as a result of d evelopment or rehabilitation occurring within the CFD. In addition, a CFD may p ay in full all amounts necessary to eliminate any fixed special assessment liens or to pay, repay, or defease any obligation to pay for any indebtedness secured by any tax, fee, charge, or assessment levied within the area of the CFD. A CFD may also provide for financing of certain public services to meet these demands.
A Description of Public Facilities
The type of public facilities proposed to be eligible for funding by CFD No. 3, as identified in the resolution establishing CFD No. 3 (the "Resolution of Formation"), shall consist of those listed below:
A.1 Facilities
The types of public facilities proposed to be eligible for funding by CFD No. 3 are as follows. The public facilities shall have a useful life of five years or more, shall be owned and operated by the City, and shall be constructed, whether or not acquired in their completed states, pursuant to the plans and specifications approved by the City:
• Rehabilitation and preservation of streets, curbs, gutters, landscaping, undergrounding of utilities, and related improvements
• Park improvements included in the City’s park impact fee program
• Sewer improvements, including the acquisition of sewer treatment capacity funded with sewer capacity contributions
The public facilities may be located within or outside the CFD No. 3 boundaries.
The public facilities to be financed or funded shall include, without limitation, the following costs: earthwork related to the public facilities; appurtenances to and improvements related to the public facilities; acquiring rights-of-way (including any right-of-way intended to be dedicated by the recording of a final map); design, engineering and planning; any environmental review o r environmental studies, traffic studies, surveys, geotechnical studies, soils testing, or other studies related to the public facilities; permits, plan check and inspection fees; insurance, legal and related overhead costs; project management, coordina tion and supervision; and any other costs or appurtenances related to any of the foregoing.
CFD No. 3 may also finance or fund, and the special taxes may also be used, to 4 SECTION I II
DESCRIPTION AND ESTIMATED
COSTS OF PUBLIC FACILITIES
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
directly pay for the purchase, construction, expans ion, improvement or rehabilitation of any of the public facilities, and to reimburse the City or any third parties for advances made to purchase, construct, expand, improve or rehabilitate any of the public facilities.
A.2 Other Authorized Costs
CFD No. 3 may also finance or fund, and the special taxes may also be used for, all of the following:
1. To pay principal of, interest on, and any premium due with respect to, any CFD No. 3 bonds (the “Bonds”) or other indebtedness issued or entered into by the City with respect to CFD No. 3, and to pay l ease payments or installment sale payments with respect to any of the public facilities.
2. To pay all expenses related to the issuance of Bonds or other indebtedness by the City with respect to CFD No. 3, including wi thout limitation:
underwriters discount; reserve fund; capitalized interest; fees, expenses and premium associated with any letter of credit or other credit enhancement; fees and expenses of bond counsel, disclosure couns el and City attorney; fees and expenses of the City’s municipal advisors, special tax consultants, appraisers, engineers, and other City consultants; and all other incidental expenses.
3. Administrative fees and expenses of the City and the bond trustee or fiscal agent related to CFD No. 3 and the Bonds, including without limitation the costs incurred to determine, levy and collect the special taxes, including compensation of City employees for administrative w ork performed in relation to CFD No. 3, the fees of consultants and legal counsel, the costs of collecting installments of the special taxes upon t he general tax rolls, preparation of required reports, and any other cost s incurred in the administration of CFD No. 3 and the Bonds by the City.
4. Reimbursement of costs related to the formation of CFD No. 3 advanced by the City, the landowners in CFD No. 3, or any party related to any of the foregoing, as well as reimbursement of any costs advanced by the City, the landowners in CFD No. 3 or any party related to any of the foregoing, for public facilities, fees or other purposes or costs of CFD No. 3.
B Estimated Costs of Public Facilities
The estimated costs of infrastructure and facilities currently expected to be financed through CFD No. 3 are set forth in the table below. The costs listed below are estimates only and actual costs may differ from those estimates herein. It is intended that CFD No. 3 will be authorized to finance all or a portion of the costs of any of the following public facilities:
5 SECTION I II
DESCRIPTION AND ESTIMATED
COSTS OF PUBLIC FACILITIES
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
CFD No. 3 (THE PINES AT SUNRISE VILLAGE )
DESCRIPTION O F PUBLIC FACILITIES AMOUNT [1]
Circulation and Traffic Improvements [2] $4,181,740
Park and Recreational Facilities [3] $1,358,260
Sewer Facility Improvements
$160,000
TOTAL ESTIMATED COSTS $5,700,000
[1] Estimates provided by the Project Developer and subject to review and confirmation. [2] Estimates are inclusive of undergrounding of electric utilities, and contingency for (i) prevailing wage costs (ii) construction management costs, and (iii) other soft costs. [3] Based on the City of Fullerton park dwelling fees in effect at the time of this Report.
6 SECTION IV
BONDED INDEBTEDNESS AND
INCIDENTAL EXPENSES
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
IV BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES
A Projected Bond Sales
The maximum authorized bonded indebtedness for CFD No. 3 is $9,500,000. It is anticipated that CFD No. 3 will sell one or more series of Bonds, as determined necessary and appropriate by Council, over a period of years as development progresses within CFD No. 3.
B Incidental Bond Issuance Expenses to be Included in the Proposed Bonded Indebtedness
Pursuant to Section 53345.3 of the Act, bonded inde btedness may include all costs and estimated costs incidental to, or connected with, the accomplishment of the purpose for which the proposed debt is to be incurred, including, but not limited to, the estimated costs of construction or acquisition of buildings, or both; acquisition of land, rights-of-way, water, sewer, or other capacity or connection fees; satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the bonds are issued, architectural, engineering, inspection, legal, fiscal, and financial consultant fees; bond and other reserve funds; discount fees; interest on any bonds of the district estimated to be due and payable within two years of issuance of the bon ds; election costs; and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, disclosure counsel and the City's general counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs. For the Bonds proposed to be issued by CFD No. 3, the reser ve requirement is estimated at approximately nine percent of the principal amount of Bonds, capitalized interest is estimated at approximately six percent of the principal amount of Bonds, and all other incidental bond issuance expenses are estimated at approximately seven percent of the principal amount of Bonds. Actual bond issuance expenses, including the amount of Bond funded capitalized interest, may vary from the above estimates.
C Incidental Expenses to be Included in the Annual Le vy of Special Taxes Pursuant to Section 53340 of the Act, the proceeds of any special tax may only be used to pay, in whole or part, the costs of providing public facilities, services and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the costs of planning and designing public facilities to be financed, including the costs of environmental evaluations of those public facilities; the costs associated with the creation of the district, issuance of bonds, determination of the amount of taxes, collection of taxes, payment of taxes, or costs otherwise incurred in order to carry out the authorized purposes of the district; any other expenses incidental to the construction, completion, and inspection of the authorized work; and the costs associated with the retirement of existing bonded indebtedness. While the actual costs of administering CFD No. 3 may vary, it is anticipated that the amount of Special Taxes which can be collected will be sufficient to fund at least $30,000 in annual administrative expenses, which shall also be subject to an increase of 2% annually.
7 SECTION V
RATE AND METHOD OF
APPORTIONMENT
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
V RATE A ND METHOD OF APPORTIONMENT
All of the property located within CFD No. 3, unless exempted by law or by the Rate and Method of Apportionment (defined below), shall be t axed for the purpose of funding public facilities authorized to be financed by CFD No. 3. Pursuant to Section 53325.3 of the Act, the tax imposed “is a special tax and not a sp ecial assessment, and there is no requirement that the tax be apportioned on the basi s of benefit to any property.” The special tax “may be based on benefit received by pa rcels of real property, the costs of making authorized facilities available to each parc el or other reasonable basis as determined by the legislative body,” although the special tax may not be apportioned on an ad valorem basis pursuant to Article XIIIA of the California Constitution.
The rate and method of apportionment of the special tax (the "Rate and Method of Apportionment") proposed to be levied within CFD No . 3 is described in Exhibit B to the Resolution of Formation. This proposed Rate and Me thod of Apportionment, also provided as Appendix A, provides information suffic ient to allow each property owner within CFD No. 3 to estimate the maximum annual Spe cial Tax he or she will be required to pay.
Sections A through D below provide additional infor mation on the Rate and Method of Apportionment.
A Explanation for Special Tax Apportionment
When a CFD is formed, a special tax may be levied o n each parcel of taxable property within the CFD to pay for the construction, acquisi tion and rehabilitation of public facilities, to pay for authorized services or to repay bonded indebtedness or other related expenses incurred by a CFD. This special tax must be apportioned in a reasonable manner; however, the tax may not be apportioned on an ad valorem basis.
When more than one type of land use is present with in a CFD, several criteria may be considered when apportioning the special tax. Gene rally, criteria based on building square footage, acreage, and land use are selected, and categories based on such criteria are established to differentiate between parcels of property. These categories are a direct result of the projected product mix, and are reflective of the proposed land use types within that CFD. Specific special tax levels are assigned to each land use class, with all parcels within a land use class assigned the same special tax rate.
The Act does not require that special taxes be apportioned to individual parcels based on benefit received. However, in order to ensure fairness and equity, benefit principles have been incorporated in establishing the Special Tax rates for CFD No. 3.
The major assumption inherent in the Special Tax rates set forth in the Rate and Method of Apportionment is that the level of benefit received from the proposed public facilities is a function of land use and/or product type. This assumption is borne out through an examination of commonly accepted statistical measures for public facility usage. 8 SECTION V
RATE AND METHOD OF
APPORTIONMENT
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
For example, in measuring average weekday vehicle t rip-ends, the Institute of Transportation Engineer's Trip Generation manual id entifies land use as the primary determinant of trip-end magnitude. Larger residential dwelling units typically generate a greater number of trip-ends than do smaller residential dwelling units, and therefore, will tend to receive more benefit from road grading, roa d landscaping and road improvements.
Sewer treatment costs are based on plant capacity to treat Biochemical Oxygen Demand (“BOD”), Suspended Solids (“SS”), and the flow rate. Other variables for water and sewer requirements include storage and fire flow requirem ents, as well as the number of bathrooms and fixture units in the home and the pop ulation of the household, which tends to vary directly with the size of the dwelling unit.
In addition, larger buildings typically generate a greater number of “person hours,” or the number of hours per week that residents associated with a specific type of land use could potentially use park and recreation facilities.
Therefore, Special Tax rates have been established for residential and non-residential land use classes for CFD No. 3. In addition, in order to ensure fairness, the Special Tax rates are uniformly applied within each land use class. The Special Tax for a parcel of Residential Property in CFD No. 3 will vary directly based on t he type of use and the amount of Residential Floor Area for each residential dwelling unit on such parcel. The Special Tax for Non-Residential Property, if any, in CFD No. 3 will vary directly with the acreage of such parcel.
Based on the types of public facilities that are proposed for CFD No. 3 and the factors described above, the Special Taxes assigned to Deve loped Properties are generally proportionate to the relative benefits received by them, and, accordingly, the Special Taxes in CFD No. 3 can be considered fair and reasonable.
B Maximum Special Tax
Table 1 within the Rate and Method of Apportionment lists the Fiscal Year 2023-2024 Assigned Special Tax that may be levied on each Assessor’s Parcel classified as Developed Property within CFD No. 3 to fund the Special Tax R equirement. The Fiscal Year 2023- 2024 Special Tax for an Assessor’s Parcel of Developed Property cannot exceed the rates shown in such Table 1, except when the Backup Speci al Tax is applied as discussed in Section C below. Furthermore, the Fiscal Year 2023 -2024 Assigned Special Taxes, identified in such Table 1, shall increase annually, commencing on July 1, 2024 and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. In addition, the Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property, Tax able Public Property, and Taxable Property Owner Association Property shall equal $13 8,860 per Acre and shall increase annually thereafter, commencing on July 1, 2024 and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2.00%) of the Maximum Special Tax for the previous Fiscal Year.
9 SECTION V
RATE AND METHOD OF
APPORTIONMENT
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
C Backup Special Tax
Pursuant to the Rate and Method of Apportionment, t he Maximum Special Tax for each Assessor’s Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $138,860 per Acre and shall increase annually thereafter, commencing on July 1, 2024 and on July 1 of each Fi scal Year thereafter, by an amount equal to two percent (2.00%) of the Backup Special Tax for the previous Fiscal Year.
D Accuracy of Information
In order to establish the Maximum Special Tax rates for CFD No. 3 as set forth in the Rate and Method of Apportionment, DTA has relied on info rmation including, but not limited to, absorption, land-use types, building square footage, and net taxable acreage provided to it by others. DTA has not independently verified such data and disclaims responsibility for the impact of inaccurate data, if any, on the Rate and Method of Apportionment for CFD No. 3, including the inability to meet the financial obligations within CFD No. 3. 10 SECTION VI
BOUNDARIES OF THE CFD
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
VI BOUNDARIES O F THE CFD
The boundaries of CFD No. 3 include all land on whi ch the Special Taxes may be levied.
A reduced scale map showing the area initially included within the boundaries of CFD No. 3 is provided as Appendix B. A full-scale map is on file with the City Clerk of the City and was recorded on June 26, 2023 in Book 109 of Maps o f Assessment and Community Facilities Districts at Page 29, as Document No. 2023000152252, in the office of the County Recorder in the County of Orange.
Due to the circumstance that the current assessor parcel lines do not adequately define the eventual boundaries of CFD No. 3, additional properties located on the northern edge of the district (as geographically identified in the map included as Exhibit “A” to the Rate and Method of Apportionment) will initially be included within the boundaries of CFD No.
3. This area will be released from CFD No. 3 once a final map has been recorded that creates unique assessor parcel numbers for such area pursuant to Section G of the Rate and Method of Apportionment.
11 SECTION VII
GENERAL TERMS AND
CONDITIONS
City of Fullerton August 3, 2023
Community Facilities District No. 3 (The Pines at Sunrise Village)
www.FinanceDTA.com
VII GENERAL TERMS AND CONDITIONS
A Substitution of Facilities
The descriptions of the public facilities, as set forth herein, are general in their nature. The City will determine the final nature, location, and costs of facilities upon the preparation of final plans and specifications. The final plans ma y show substitutes, in lieu of modifications to the proposed work in order to accomplish the work of improvement, and any such substitution shall not be a change or modification in the proceedings as long as the public facilities provide a service substantially similar to that as set forth in this Report.
B Appeals and Interpretations
Pursuant to Section I of the Rate and Method of App ortionment, any landowner or resident who feels that the amount of the Special Tax levied on his/her Assessor’s Parcel is in error may submit a written appeal to the CFD Administrator, provided that the appellant is current in his/her payment of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The CFD Administrator shal l review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, a cash refund shall not be made (except for the last year of levy), but the amount of the Special Tax levied shall be appropriately modified through an adjustment to the Special Tax levy in the following Fiscal Year. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the Council by filing a written notice of appeal with the City Clerk, provided that the appellant is current in his/her payment of Special Taxes. This second appeal must specify the reasons for its disagreement with the CFD Administrator's determination.
The CFD Administrator shall interpret the Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or resident ap peals. Any decision of the CFD Administrator shall be subject to appeal to the Council whose decision shall be final and binding as to all persons.
C Prepayment of Special Tax
The Special Tax applicable to an Assessor’s Parcel in CFD No. 3 may be prepaid according to the prepayment provisions identified in Section J of the Rate and Method of Apportionment.
APPENDIX A
City of Fullerton
Community Facilities District No. 3
(The Pines at Sunrise Village)
RATE AND METHOD OF
APPORTIONMENT
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 1
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF FULLERTON COMMUNITY FACILITIES DISTRICT NO. 3
(THE PINES AT SUNRISE VILLAGE)
A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of Taxable Property in City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village) ("CFD No. 3") and collected each Fiscal Year, in an amoun t determined by the City Council of the City of Fullerton, through the application of this Rate and Method of Apportionment as described below. All of the real property in CFD No. 3, unle ss exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area expressed in acres of an Asses sor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County map or the land area calculated to the reaso nable satisfaction of the CFD Administrator using the boundaries set forth on such map or plan. The square footage of an Assessor’s Parcel is equal to the Acreage of such parcel multiplied by 43,560.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 (commencing with Sect ion 53311) of the California Government Code.
"Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 3, includi ng but not limited to: 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 col lecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Sp ecial Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discha rge of the duties required of it under the Indenture; the costs to the City, CFD No. 3 or any designee thereof of complying with arbitrage rebate requirements with respect to the Special Tax and CFD No. 3 Bonds; the costs to the City, CFD No. 3 or any designee thereof of complying with disclosure requirements of the City, CFD No. 3 or obligated persons associated with applicab le federal and state securities laws and the Act; the costs associated with preparing Special Ta x disclosure statements and responding to public inquiries regarding the Special Taxes; the c osts of the City, CFD No. 3 or any designee thereof related to an appeal of the Special Tax; an d the City’s annual administration fees and third party expenses related to CFD No. 3 Bonds. A dministrative Expenses shall also include amounts estimated or advanced by the City or CFD No . 3 for any other administrative purposes of CFD No. 3, including attorney’s fees and other c osts related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.
"Assessor" means the Assessor of the County.
"Assessor's Parcel" means a lot or parcel to which an Assessor’s parce l number is assigned as determined from an Assessor’s Parcel Map or the applicable assessment roll.
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 2 "Assessor's Parcel Map" means an official map of the Assessor designating parcels by Assessor’s Parcel number.
"Assigned Special Tax" means the Special Tax for each Land Use Class of D eveloped Property, as determined in accordance with Section C.1.(b) below.
"Attached Residential Property" means Assessor’s Parcels of Developed Property for which building permits have been issued for a residential dwelling unit that shares, or will share, an inside wall with another residential dwelling unit.
"Authorized Facilities" means those facilities eligible to be funded by CFD No. 3.
"Backup Special Tax" means the Special Tax applicable to each Assessor' s Parcel of Developed Property, as determined in accordance with Section C.1.(c) below.
"Buildout" means, for CFD No. 3, that all expected building p ermits for residential dwelling units and/or non-residential development to be cons tructed within CFD No. 3 have been issued (not including the Future Excluded Area), as reasonably determined by the CFD Administrator.
"CFD Administrator" means an official of the City, or designee thereof , responsible for determining the Special Tax Requirement, providing for the levy and collection of the Special Taxes, and performing other duties as set forth herein.
"CFD No. 3" means City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village).
"CFD No. 3 Bonds" means any bonds or other debt (as defined in Secti on 53317(d) of the Act), whether in one or more series, issued by CFD No. 3 and secured by the Special Tax levy on property within the boundaries of CFD No. 3 under the Act.
"City" means the City of Fullerton, California.
"Council" means the City Council of the City acting as the legislative body of CFD No. 3.
"County" means the County of Orange.
"Detached Residential Property" means Assessor’s Parcels of Developed Property for which building permits have been issued for a residential dwelling unit that is or is expected to be surrounded by freestanding walls and that does not share an inside wall with any other residential dwelling unit.
"Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Associat ion Property, for which the Final Subdivision was recorded on or before January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, and f or which a building permit for new construction, other than the construction of a garage, parking lot, or parking structure, was issued after January 1, 2023 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied.
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 3 "Final Subdivision" means (i) a subdivision of property by recordation of a final map, parcel map, or lot line adjustment approved by the City pu rsuant to the Subdivision Map Act (California Government Code Section 66410 et seq. ) that creates individual lots or parcels for which building permits may be issued, or (ii) for c ondominiums, a final map approved by the City and a condominium plan recorded pursuant to Ca lifornia Civil Code Section 4285 that creates an individual lot(s) for which a building p ermit(s) may be issued without further subdivision. The term "Final Subdivision" shall no t include any Assessor’s Parcel Map or subdivision map or portion thereof that does not cr eate individual lots for which a building permit may be issued, including Assessor’s Parcels that are designated as remainder parcels.
Notwithstanding the above, a condominium plan for w hich one or more building permits have been issued, but no individual lots have been creat ed for such building permits, shall be considered a Final Subdivision, and the portion of the condominium plan for which building permits have been issued shall be defined as Developed Property.
"Fiscal Year" means the period starting July 1 and ending on the following June 30.
"Future Excluded Area" means all property located within Lot 3, Lot 4 and Lot 5 as depicted for commercial uses on Tentative Tract Map No. 1914 8 approved by Council on January 3, 2023 and as geographically identified in Exhibit A attac hed hereto. The area geographically identified within the boundaries of the Future Excluded Area m ay be amended from time-to-time or modified pursuant to a final map or precise site pl an for such property only at the discretion of the CFD Administrator provided that such change wil l not reduce the amount of Assigned Special Taxes below the sum of (i) 1.10 times the d ebt service necessary to support the remaining Outstanding Bonds in each corresponding F iscal Year, and (ii) Administrative Expenses.
"Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which CFD No. 3 Bonds are is sued, as modified, amended and/or supplemented from time to time.
"Land Use Class" means any of the classes listed in Table 1 herein.
"Lower Income Households Welfare Exemption Property " means, for each Fiscal Year, an Assessor’s Parcel within the boundaries of CFD No. 3 that is subject to a welfare exemption under subdivision (g) of Section 214 of the Califor nia Revenue and Taxation Code (or any successor statute), as indicated in the County’s as sessment roll finalized as of the last preceding January 1 .
"Maximum Special Tax" means the maximum Special Tax, determined in accor dance with Section C herein, that can 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) has been issued by the City perm itting the construction of one or more non- residential structures or facilities.
"Outstanding Bonds" means all CFD No. 3 Bonds which are outstanding under the Indenture.
"Property Owner " means, Sunrise Village Owner, LLC and/or its successor.
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 4 "Property Owner Association Property" means, for each Fiscal Year, (i) any property with in the boundaries of CFD No. 3 for which the owner of record, as determined from the County’s assessment roll for the Fiscal Year in which the Sp ecial Tax is being levied, is a property owner’s association, including any master or sub-as sociation, or (ii) any property located in a Final Subdivision that was recorded as of the Janua ry 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determine d from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street. Notwithstanding the foregoing, any property previously classified as De veloped Property and subsequently owned in fee or by easement, or dedicated to, a property own er association, including any master or sub- association, shall remain classified as Developed Property.
"Proportionately" means that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor’s Parcels of Develope d Property. For Undeveloped Property, "Proportionately" means that the ratio of the actua l Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor’s Pa rcels of Undeveloped Property. The term "Proportionately" shall similarly be applied to oth er categories of Taxable Property as listed in Section E herein.
"Public Property" means, for each Fiscal Year, any property within t he boundaries of CFD No. 3 that is (i) owned by, irrevocably offered or dedi cated to the federal government, the State, the County, the City, or any local government or other public agency, provided, however, that any property leased by a public agency to a private ent ity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified ac cording to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement.
"Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 3.
"Residential Floor Area" means all of the square footage of living area wit hin 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 for an Assessor’s Parcel shall be as set forth in the building permit(s) issued fo r such Assessor’s Parcel and/or as set forth in the appropriate records kept by the Building and Sa fety Division of the City, or other applicable City department, as determined by the CFD Administrator.
"Residential Property" means all Assessor’s Parcels of Developed Property for which a building permit(s) has been issued by the City permitting the construction thereon of one or more residential dwelling units.
"Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Y ear on each Assessor’s Parcel of Taxable Property within C FD No. 3 to fund the Special Tax Requirement.
"Special Tax Requirement" means, for any Fiscal Year, that amount required, after taking into account available amounts held in the funds and acc ounts under the Indenture, for the following items: (i) debt service on all Outstanding Bonds du e in the calendar year commencing in such Fiscal Year; (ii) periodic costs with respect to the CFD No. 3 Bonds, including but not limited to, costs of credit enhancement and federal rebate payments due in the calendar year commencing in
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Community Facilities District No. 3 (The Pines at S unrise Village) Page 5 such Fiscal Year; (iii) pay Administrative Expenses ; (iv) any amounts required to establish or replenish any reserve funds for all Outstanding Bon ds; (v) without duplicating any amounts described in clause (iv), above, reasonably anticip ated Special Tax delinquencies based on the delinquency rate for the Special Tax in the previou s Fiscal Year, as said levy for delinquencies shall be limited by the Act; and (vi) pay directly for the acquisition or construction of Authorized Facilities, provided that the inclusion of such amo unt does not increase the Special Tax levy beyond the first step in Section E herein.
"State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the bou ndaries of CFD No. 3 which are not exempt from the Special Tax pursuant to applicable law or Section F herein.
"Taxable Property Owner Association Property" means all Assessor’s Parcels of Property Owner Association Property that are not exempt pursuant to Section F herein.
"Taxable Public Property" means all Assessor’s Parcels of Public Property th at are not exempt pursuant to Section F herein.
"Trustee" means the trustee or fiscal agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property.
Please refer to additional definitions in Section J herein relating to the Prepayment of Special Tax.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, commencing with Fiscal Year 2023- 2024, all Taxable Property within CFD No. 3 shall be classified as Developed Property, Un developed Property, Taxable Public Property or Taxable Property Owner Association Property, and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionme nt determined pursuant to Sections C, D and E herein.
C. MAXIMUM SPECIAL TAX RATE
Residential Property shall be assigned to Land Use Classes 1 through 6 as listed in Table 1 below based on the type of use and the Residential Floor Area for each residential dwelling unit. Non- Residential Property shall be assigned to Land Use Class 7.
1. Developed Property
(a). Maximum Special Tax
The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by a pplication of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax.
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Community Facilities District No. 3 (The Pines at S unrise Village) Page 6 (b). Assigned Special Tax
The Fiscal Year 2023-2024 Assigned Special Tax that shall be levied for each Land Use Class is shown below in Table 1.
Table 1
Assigned Special Tax for Developed Property
City of Fullerton CFD No. 3 (The Pines at Sunrise Village) Fiscal Year 2023-2024
Land
Use
Class Description
Residential Floor
Area (square feet)
Assigned
Special Tax
1 Detached Residential Property 2,400 or greater $5 ,178 per unit 2 Detached Residential Property 2,200 to less than 2,400 $4,968 per unit 3 Detached Residential Property 2,000 to less than 2,200 $4,672 per unit 4 Detached Residential Property Less than 2,000 $4, 577 per unit 5 Attached Residential Property 1,900 or greater $3 ,690 per unit 6 Attached Residential Property Less than 1,900 $3,580 per unit 7 Non-Residential Property NA $124,980 per Acre
(c). Backup Special Tax
The Fiscal Year 2023-2024 Backup Special Tax for an Assessor’s Parcel of Developed Property shall equal the lesser of (a) $138,860 per Acre, or (b) in connection with any reduction in the Assigned Special Taxes as set fort h in Section D herein, the amount per Acre calculated pursuant to the formula below:
BFST = AFST ATP
These terms have the following meaning:
BFST = the reduced Backup Special Tax
AFST = The total estimated Assigned Special Tax lev y for CFD No. 3 based on the reduced Assigned Special Taxes for Developed Property permitted pursuant to Section D herein which could be levied on all expec ted development assuming Buildout of CFD No. 3.
ATP = The sum of the Acreage of all Taxable Property within a Final Subdivision (assuming Buildout) within CFD No. 3 (after excludi ng Public Property and Property Owner Association Property as set forth in Section F herein) multiplied by 90%.
Furthermore, all Assessors’ Parcels within CFD No. 3 shall be relieved simultaneously and permanently from the obligation to pay and disc lose the Backup Special Tax if the CFD Administrator calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax th at shall be levied against all
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 7 Assessors’ Parcels of Developed Property in CFD No. 3 results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 3 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.1 0 times the debt service necessary to support the remaining Outstanding Bonds in each cor responding Fiscal Year, and (b) Administrative Expenses), and (ii) all authorized C FD No. 3 Bonds have already been issued or the Council has covenanted that it shall not issue any additional CFD No. 3 Bonds (except refunding bonds) to be supported by the Special Tax in CFD No. 3.
(d). Increase in the Assigned Special Tax and Back up Special Tax
The Fiscal Year 2023-2024 Assigned Special Taxes, i dentified in Table 1, above, and the Fiscal Year 2023-2024 Backup Special Tax for CFD No . 3 shall increase annually, commencing on July 1, 2024 and on July 1 of each Fi scal Year thereafter, by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year.
(e). Multiple Land Uses
In some instances an Assessor’s Parcel may contain both Developed Property and Undeveloped Property. In such cases, the Acreage o f the Assessor’s Parcel shall be allocated between Developed Property and Undeveloped Property based on the portion of the Assessor’s Parcel for which building permits ha d been issued prior to May 1 of the prior Fiscal Year and the portion of the Assessor’s Parcel for which building permits had not been issued prior to May 1 of the prior Fiscal Year.
Furthermore, Developed Property may contain more th an one Land Use Class. In such cases, the Acreage that is considered Developed Pro perty shall be allocated between Residential Property and Non-Residential Property b ased on the amount of Acreage designated for each land use as determined by reference to the site plan approved for such Assessor’s Parcel. The Maximum Special Tax that ca n be levied on such Assessor’s Parcel shall be the sum of the Maximum Special Tax that can be levied on each type of property located on that Assessor’s Parcel.
The CFD Administrator’s allocation to each type of property shall be final.
2. Undeveloped Property, Taxable Public Property, a nd Taxable Property Owner Association Property
The Fiscal Year 2023-2024 Maximum Special Tax for e ach Assessor’s Parcel of Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be $138,860 per Acre, an d shall increase annually thereafter, commencing on July 1, 2024 and on July 1 of each Fi scal Year thereafter, by an amount equal to two percent (2.00%) of the Maximum Special Tax for the previous Fiscal Year.
D. MAXIMUM SPECIAL TAX REDUCTION
When CFD No. 3 Bonds have been issued and Council h as covenanted that it shall not issue any additional CFD No. 3 Bonds (except refunding bonds) to be supported by the Special Taxes in CFD No. 3, the Assigned Special Taxes identified in Table 1 herein shall be reduced
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 8 commencing the next July 1 to the amount required, based upon the Assigned Special Tax revenues at Buildout assumed in sizing the CFD No. 3 Bonds, to equal the sum of (a) 1.10 times the debt service necessary to support the Outstandi ng Bonds in each corresponding Fiscal Year, assuming the 2.00% increase each Fiscal Year pursua nt to Section C.1.d, and (b) annual Administrative Expenses, not to exceed $30,000 in F iscal Year 2023-2024, also increasing at
2.00% per Fiscal Year thereafter. The Assigned Spe cial Tax reductions permitted pursuant to this Section D, and in connection with such reducti on in the Assigned Special Tax the Backup Special Tax reduction calculated pursuant to Sectio n C.1.c herein, shall be reflected in an amended notice of Special Tax lien which CFD No. 3 shall cause to be recorded with the Orange County Recorder as soon as practicable after all au thorized CFD No. 3 Bonds have been issued or the Council has covenanted that it shall not iss ue any additional CFD No. 3 Bonds (except refunding bonds) to be supported by the Special Tax in CFD No. 3, provided that all of the following are true:
(a) The balance in the reserve fund established und er the Indenture is at or above the reserve requirement (as defined in the Indenture);
(b) CFD No. 3 is not in default in the payment of i nterest on and principal of all Outstanding Bonds;
(c) The amount of Assigned Special Taxes that may b e levied on Taxable Property (assuming Buildout) within CFD No. 3 in each future Fiscal Year (after excluding Public Property and Property Owner Association Prop erty as set forth in Section F herein), after the proposed reduction, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Out standing Bonds in each corresponding Fiscal Year, and (ii) Administrative Expenses. (d) The Special Tax delinquencies in CFD No. 3 for the current Fiscal Year, or if delinquency information is not yet available for th e current Fiscal Year than the Special Tax delinquencies in CFD No. 3 for the most recent Fiscal Year closed, are less than 5% of the total CFD No. 3 Special Tax levy for such Fiscal Year.
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2023-2024, and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requi rement and shall provide for the levy of the Special Tax each Fiscal Year as follows:
First: The Special Tax shall be levied on each Ass essor’s Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax;
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be l evied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Spe cial Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is det ermined through the application of the Backup Special Tax shall be increased in equal perc entages from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel;
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 9 Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special T ax shall be levied Proportionately on each Assessor’s Parcel of Taxable Public Property and Ta xable Property Owner Association Property at up to 100% of the Maximum Special Tax for Taxabl e Public Property and Taxable Property Owner Association Property, as needed to satisfy the Special Tax Requirement.
Notwithstanding the above, the CFD Administrator sh all, in any Fiscal Year, calculate a levy Proportionately less than 100% of the Assigned Spec ial Tax in step one (above), when (i) the CFD Administrator is no longer required to provide for the levy of the Special Tax pursuant to steps two through four above in order to meet the S pecial Tax Requirement; and (ii) all authorized CFD No. 3 Bonds have already been issued or the Council has covenanted that it shall not issue any additional CFD No. 3 Bonds (except re funding bonds) to be supported by the Special Tax in CFD No. 3.
Further notwithstanding the above, under no circums tances shall the Special Tax levied in any Fiscal Year against any Assessor’s Parcel of Residential Property for which an occupancy permit for private residential use has been issued (in acc ordance with Section 53321(d)(3) of the California Government Code), be increased as a cons equence of delinquency or default by the owner of any other Assessor’s Parcel within CFD No. 3 by more than ten percent above the amount that would have been levied in that Fiscal Y ear had there never been any such delinquencies or defaults. To the extent that the levy of the Special Tax on Residential Property is limited by the provision in the previous sentenc e, the levy of the Special Tax on each Assessor’s Parcel of Non-Residential Property shall continue in equal percentages up to 100% of the applicable Maximum Special Tax.
F. EXEMPTIONS
No Special Tax shall be levied on up to 6.1 Acres o f Public Property and/or Property Owner Association Property in CFD No. 3, and up to 2.7 ac res of Future Excluded Area. Tax-exempt status shall be assigned by the CFD Administrator i n the chronological order in which property in CFD No. 3 becomes Public Property or Property Ow ner Association Property. However, should an Assessor’s Parcel no longer be classified as Public Property or Property Owner Association Property, it shall, from that point forward, be subject to the Special Tax.
Notwithstanding the above, an Assessor’s Parcel in CFD No. 3 that is transferred to a public agency or property owner’s association prior to the issuance of the first series of CFD No. 3 Bonds that causes the Acreage of Public Property an d Property Owner Association Property to exceed the 6.1 Acreage limit that can be designated by the CFD Administrator under this Section F shall also be exempted from paying the Sp ecial Tax.
Public Property or Property Owner Association Prope rty that is not exempt from the Special Tax under this Section F shall be subject to the levy o f the Special Tax and shall be taxed Proportionately as part of the fourth step in Secti on E herein, at up to 100% of the applicable Maximum Special Tax for Taxable Public Property and Property Owner Association Property.
In addition, no Special Tax shall be levied on Lowe r Income Households Welfare Exemption Property, provided that if, in any Fiscal Year, app licable law does not require that an Assessor’s Parcel that is Lower Income Households Welfare Exem ption Property be exempt from the Special Tax, then the Special Tax shall be levied o n such Assessor’s Parcel in accordance with
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 10 this Rate and Method of Apportionment as if such As sessor’s Parcel were not classified as Lower Income Households Welfare Exemption Property.
G. RELEASE OF PROPERTY
As soon as practicable after the CFD Administrator’ s receipt of a recorded map by the Property Owner which creates separate legal lots for the pro perty within the Future Excluded Area, the CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act to indicate the release of the Special Tax lien on such property within the Future Excluded Area.
H. MANNER OF COLLECTION
The Special Tax shall be collected in the same mann er and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 3 may directly bill the Special Tax, and/or may collect Special Taxes at a different tim e or in a different manner if necessary to meet financial obligations, and may covenant to foreclos e and may actually foreclose on delinquent Assessor’s Parcels.
I. APPEALS AND INTERPRETATIONS
Any landowner or resident who feels that the amount of the Special Tax levied on his/her Assessor’s Parcel is in error may submit a written appeal to the CFD Administrator, provided that the appellant is current in his/her payment of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The CFD Admini strator shall review the appeal, meet with the appellant if the CFD Administrator deems necess ary, and advise the appellant of its determination. If the CFD Administrator agrees wit h the appellant, a cash refund shall not be made (except for the last year of levy), but the am ount of the Special Tax levied shall be appropriately modified through an adjustment to the Special Tax levy in the following Fiscal Year(s). If the CFD Administrator disagrees with t he appellant and the appellant is dissatisfied with the determination, the appellant then has 30 d ays in which to appeal to the Council by filing a written notice of appeal with the City Clerk, pro vided that the appellant is current in his/her payment of Special Taxes. This second appeal must specify the reasons for its disagreement with the CFD Administrator's determination.
The CFD Administrator shall interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations re lative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the CFD Administrator shall be subject to appeal to the Council whose dec ision shall be final and binding as to all persons.
J. PREPAYMENT OF SPECIAL TAX
Under this Rate and Method of Apportionment, an Ass essor’s Parcel within CFD No. 3 is permitted to prepay the Special Tax. The obligatio n of the Assessor’s Parcel to pay the Special Tax may be fully prepaid and permanently satisfied or partially prepaid as described herein, provided that a prepayment may be made only for Ass essor’s Parcels of Developed Property, or for an Assessor’s Parcel of Undeveloped Property fo r which a building permit has been issued after January 1, 2023, and only if there are no del inquent Special Taxes with respect to such
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 11 Assessor’s Parcel at the time of prepayment. An ow ner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of suc h written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor's Parcel. The CFD Administrator may charge such owner a reasonable fee for providin g this service. If there are Outstanding Bonds, prepayment must be made not less than 30 day s prior to a date that notice of redemption of CFD No. 3 Bonds from the proceeds of such prepay ment may be given by the Trustee pursuant to the Indenture that is specified in the report of the Special Tax Prepayment Amount (defined below).
The following additional definitions apply to this Section J:
"CFD Public Facilities Costs" means either $5,711,068 in 2023 dollars, which shall increase by the Construction Inflation Index on July 1, 2024, a nd on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Admini strator as sufficient to provide funding for the Authorized Facilities under the authorized bond ing program for CFD No. 3, or (ii) shall be determined by the Council concurrently with a covenant that it shall not issue any more CFD No. 3 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment.
"Construction Inflation Index" means the annual percentage change in the Engineer ing News Record Building Cost Index for the City of Los Ange les, measured as of the month of December in the calendar year which ends in the previous Fis cal Year. In the event this index ceases to be published, the Construction Inflation Index shall b e another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News Record Building Cost Index for the City of Los Angeles.
"Future Facilities Costs" means the CFD Public Facilities Costs minus (i) co sts of Authorized Facilities previously paid from the Improvement Fun d, (ii) moneys currently on deposit in the Improvement Fund available to pay costs of Authoriz ed Facilities, and (iii) the amount the CFD Administrator reasonably expects to derive from the reinvestment of these funds.
"Improvement Fund" means a fund or account specifically identified in the Indenture (or prior to the issuance of the first series of CFD No. 3 Bo nds a fund or account held by the City) to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities.
"Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first int erest and/or principal payment date following the current Fiscal Year.
1. Prepayment in Full
The Special Tax Prepayment Amount (defined below) s hall be calculated as summarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 12 plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Special Tax Prepayment Amount
As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs:
1. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
2. For Assessor’s Parcels of Developed Property, compu te the Assigned Special Tax and Backup Special Tax for the Assessor’s Parcel to be prepaid. For Assessor’s Parcels of Undeveloped Property for which a building permit ha s been issued after January 1, 2023, compute the Assigned Special Tax and Backup Special Tax for that Assessor’s Parcel as though it was already designated as Developed Prope rty, based upon the building permit which has already been issued for such Assessor’s Parcel.
3. (a) Divide the Assigned Special Tax computed pursua nt to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 3 based on the Assigned Special Taxes for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 3, excluding any Assessor’s Parcels which have been prepaid, and
(b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 3, excluding any Assessor’s Parcels which have been prepaid.
4. Multiply the larger quotient computed pursuant to p aragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Pr eviously Issued Bonds to be redeemed (the "Bond Redemption Amount").
5. Multiply the Bond Redemption Amount computed pursua nt to paragraph 4 by the applicable redemption premium (e.g., the redemption price minus 100%) set forth in the Indenture, if any, on the Previously Issued Bonds t o be redeemed (the "Redemption Premium").
6. Compute the current Future Facilities Costs.
7. Multiply the larger quotient computed pursuant to p aragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the a mount of Future Facilities Costs to be prepaid (the "Future Facilities Amount").
8. Compute the amount needed to pay interest on the Bo nd Redemption Amount from the first bond interest and/or principal payment date f ollowing the current Fiscal Year until the redemption date for the Previously Issued Bonds specified in the report of the Special Tax Prepayment Amount.
9. Determine the Special Tax levied on the Assessor’s Parcel in the current Fiscal Year which has not yet been paid.
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Community Facilities District No. 3 (The Pines at S unrise Village) Page 13
10. Compute the minimum amount the CFD Administrator re asonably expects to derive from the reinvestment of the Special Tax Prepayment Amou nt, less any interest earnings attributed to the Future Facilities Amount, and les s any interest earnings attributed to the Administrative Fees and Expenses (defined below) fr om the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 a nd 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount").
12. The administrative fees and expenses of CFD No. 3 a re as calculated by the CFD Administrator and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 3 Bonds, and the costs of recording any notices to evidence the prepayment an d the redemption (the "Administrative Fees and Expenses").
13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as d efined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new re serve requirement (as defined in the Indenture) in effect after the redemption of Previo usly Issued 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. No Reserve Fu nd Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture).
14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of the date immediately following the first interes t and/or principal payment following the current Fiscal Year, a capitalized interest cre dit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit").
15. The Special Tax prepayment is equal to the sum of t he amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts com puted pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount").
2. Prepayment in Part
The amount of the prepayment shall be calculated as in Section J.1; except that a partial prepayment shall be calculated according to the following formula:
PP = [(PE – A) x F] + A
These terms have the following meaning:
PP = the partial prepayment.
PE = the Special Tax Prepayment Amount calculated according to Section J.1.
F = the percentage, expressed as a decimal, by whic h the owner of the Assessor’s Parcel is partially prepaying the Special Tax.
City of Fullerton June 12, 2023
Community Facilities District No. 3 (The Pines at S unrise Village) Page 14 A = the Administrative Fees and Expenses calculated according to Section J.1.
3. General Provisions Applicable to the Prepayment of Special Tax
(a). Use of the Special Tax Prepayment Amount
The Special Tax Prepayment Amount, less the Adminis trative Fees and Expenses calculated according to Section J.1 which shall be retained by CFD No. 3, and less the Future Facilities Amount calculated according to Se ction J.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Out standing Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds.
(b). Full Prepayment of Special Tax
Upon confirmation of the payment of the current Fis cal Year’s entire Special Tax obligation, 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 in accordance with Section J.1, the CFD Administrator shall cause a suitable notice to be recorded in compliance with t he Act, to indicate the prepayment of the Special Tax 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.
(c). Partial Prepayment of Special Tax
With respect to any Assessor’s Parcel that is parti ally prepaid, the CFD Administrator shall (i) distribute or cause to be distributed the funds remitted to it according to Section J.3.(a) and (ii) indicate in the records of CFD No. 3 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor’s parcel, equal to the outstanding percent age (1.00 – F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor’s Parcel pursuant to Section E herein.
(d). Debt Service Coverage
Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Tax able Property (assuming Buildout) within CFD No. 3 in each future Fiscal Year (after excluding Public Property and Property Owner Association Property as set forth in Section F herein), after the proposed prepayment, is at least equal to the sum of (i) 1.1 0 times the debt service necessary to support the remaining Outstanding Bonds in each cor responding Fiscal Year, and (ii) Administrative Expenses.
K. TERM OF SPECIAL TAX
The Special Tax shall be levied for the period nece ssary to fully satisfy the Special Tax Requirement, but in no event shall the Special Tax be levied after Fiscal Year 2072-2073.
T/Clients/Fullerton/Mello/The Pines (2023)/Rate and Method/Fullerton CFD No. 3 (The Pines at Sunrise Village) Amended RMA v4.docx Printed: June 12, 2023
EXHIBIT A
FUTURE EXCLUDED AREA
APPENDIX B
City of Fullerton
Community Facilities District No. 3
(The Pines at Sunrise Village)
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IRVINE , CA 92612
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