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HomeMy WebLinkAbout23 UPI Public Hearing Res Nos. 2021-10 and 2021-11Resolutions Nos. 2021-10 and 2021-11 STAFF REPORT CITY OF PALM DESERT FINANCE DEPARTMENT MEETING DATE: April 22, 2021 PREPARED BY: Veronica Tapia, Senior Management Analyst REQUEST: Open Public Hearing, take testimony regarding Palm Desert Community Facilities District No. 2021-1 (University Park), and Close Public Hearing. Adopt Resolution Nos. 2021-10 and 2021-11, 1) A Resolution of Formation to establish City of Palm Desert Community Facilities District No. 2021-1 (University Park) and authorize the levy of a special tax therein, and 2) A Resolution to Declare the Necessity to Incur Bonded Indebtedness within the proposed City of Palm Desert Community Facilities District No. 2021-1 (University Park), respectively. ________________________________________________________________________ Recommendation That the City Council 1) Open public hearing to receive public testimony regarding Palm Desert Community Facilities District No. 2021-1 (University Park); and 2) Close public hearing; and 3) If majority protests are not received prior to the conclusion of the public hearing, proceed to: A. Waive further reading and adopt Resolution No. 2021-10, A Resolution of Formation to Establish City of Palm Desert Community Facilities District No. 2021-1 (University Park), to make findings under the California Environmental Quality Act with respect thereto, to establish an appropriations limit therefor, to authorize the levy of a special tax therein, and to submit the establishment of an appropriations limit and the levy of a special tax to the qualified electors thereof; and B. Waive further reading and adopt Resolution No. 2021-11, A Resolution to Declare the Necessity to Incur Bonded Indebtedness within City of Palm Desert Community Facilities District No. 2021-1 (University Park). April 22, 2021 - Staff Report Adopt Res. 2021-10, of Formation and Authorize Special Tax Levy Adopt Res. 2021-11, Declaring the Necessity to Incur Debt Page 2 of 4 \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\01 Staff Report - Open Public Hearing and Adopt Resolution of Formation and Debt UPI 4.22.21 rev 4.7.21.DOCX Strategic Plan Approval of the attached resolutions supports the Land Use, Housing and Open Space Priority 2 by taking the initial steps for a funding mechanism to assist in financing further development of University Park. Executive Summary University Park Investor, LLC (“UPI”) has requested that the City form a new Mello-Roos Community Facilities District (CFD) to be known as City of Palm Desert Community Facilities District No. 2021-1 - University Park (“CFD 2021-1”) and implement a coordinated plan of refunding consisting of the issuance of CFD 2021-1 Bonds and the refunding of the existing City of Palm Desert 2005-1 - University Park (“CFD 2005-1”) Bonds for special tax savings to all the property owners in the CFD. UPI has also requested that the City include authorization for the CFD 2021-1 bonds to finance additional facilities required as conditions of its development. The public hearing and approval of the two resolutions is another necessary step to form CFD 2021-1 and to facilitate the public financing needs of the development. Background CFD 2005-1 issued two series of debt in 2006 and 2007 with a combined par amount of $67.915 million. The repayment of that debt is a burden that is carried by the property owners within the boundaries of CFD 2005-1. At the time of issuance, it was anticipated that the properties would be developed with a mix of residential, commercial, office, and open space. Due to timing, market conditions and subsequent market downturn, only about 23% of the properties in CFD 2005-1 have been developed to date. The remaining 77% is now owned by UPI (63%) and the remaining 6 parcels (14%), are owned by other parties. UPI is actively engaged in the development process, while also determining the best way to fund the necessary public improvements. By a Petition submitted to the City in February 2021, UPI formally initiated the process under the Mello-Roos Act, as amended, commencing with Section 53311 of the California Government Code, to form CFD 2021-1 encompassing UPI’s property within University Park and for CFD 2021-1 to issue bonds to finance public facilities costs related to the development of UPI’s property. On March 11, 2021, the City Council approved two Resolutions of Intention: (i) a Resolution of Intention to establish CFD 2021-1 and authorize the levy of a special tax therein, and (ii) a Resolution of Intention to incur bonded debt within CFD 2021-1. April 22, 2021 - Staff Report Adopt Res. 2021-10, of Formation and Authorize Special Tax Levy Adopt Res. 2021-11, Declaring the Necessity to Incur Debt Page 3 of 4 \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\01 Staff Report - Open Public Hearing and Adopt Resolution of Formation and Debt UPI 4.22.21 rev 4.7.21.DOCX To establish the CFD, a public hearing is required to be held within 30 to 60 days after adoption of the Resolutions of Intention. At the hearing, the City Council will typically take testimony from the public for or against the establishment of the District, the extent of the District, the specified types of public facilities to serve the District, the proposed rate and method of apportionment of the special tax, and the incurrence of bonded indebtedness. A Notice of Public Hearing was published in the Desert Sun on March 25, 2021 and mailed on March 31, 2021 to each landowner within the boundaries of the proposed CFD 2021- 1, pursuant to the Mello-Roos Act. Approval of the resolutions will meet the requirements of the Mello-Roos Act and continue the process for formation of the district and the issuance of bonds. Staff recommends opening the public hearing, hearing any testimony and closing the public hearing. If majority protests are not received prior to the conclusion of the public hearing, staff also recommends approval of the Resolution of Formation to establish CFD 2021-1 and authorize Special Tax Levy and the Resolution Declaring the Necessity to Incur Indebtedness within CFD 2021-1. The next step in this process includes a Joint Community Facilities Financing Agreement (JCFA) among UPI, the Coachella Valley Water District (the “Water District”), and the City. The agreement is required under the Mello-Roos Act in order for CFD 2021-1 to finance Water District facilities and basically describes the Water District facilities proposed to be financed by CFD 2021-1 and specifies the rights and responsibilities of UPI, the City and the Water District relating to the improvements and the disbursement of CFD 2021-1 bond proceeds. It is anticipated that the Water District will consider approval of the Agreement at an upcoming Board meeting. This item, along with a CFD landowner election and other actions related to the development and financing, will be brought back to upcoming city council meetings for consideration. The Resolution of Formation specifies that the Water District’s improvements are only included as authorized facilities for CFD 2021-1 if both the Water District and the City Council approve the JCFA. Fiscal Analysis The costs of formation of CFD 2021-1 and issuance of the Refunding Bonds will be included and are eligible to be paid from proceeds of the Refunding Bonds, if and when issued. If the Refunding Bonds are not issued, any non-contingent costs will be paid by the developer pursuant to its deposit and reimbursement agreement with the City. April 22, 2021 - Staff Report Adopt Res. 2021-10, of Formation and Authorize Special Tax Levy Adopt Res. 2021-11, Declaring the Necessity to Incur Debt Page 4 of 4 The savings generated by the refunding will benefit the property owners within CFD 2021- 1 and provide capacity for CFD 2021-1 to finance the required public improvements for the development. LEGAL REVIEW DEPT. REVIEW FINANCIAL P,��'!�W ASSISTANT C�TY "JIANAG�R .To� C.u,�-��w►.o-� J� L u� �a� �n�.a William L. Strausz For Janet M. Moore For Janet M. Moore Bond Counsel Director of Finance Director of Finance City Manager, L. Todd Hileman: L. TOGiGi H�i.I.CVu.GivL ATTACHMENTS: Resolution No. 2021-10 Resolution No. 2021-11 C�TY COUNCTL�cCTION ' ' � APPROVED � DF.NrED ,�`� , � . rk. aCU�i (?�n �(a�l -11 �a . � 5-� Ud/� MEET G DAT C� �•��� �� r.�� AYES: � - ' , � %�I� 1\TOES: �m� ABSENT: �\ (�m� . ABSTAIN: %��� P V�RIFIED BY:�.����� _ Original on File with City C�rk's Office Andy Firestine Andy Firestine Assistant City Manager \\srv-everyone\everyone\Staft Reports - Shared 2\S[atf Reports o4-22-2021\4 -Gty Glerk - 04-22-2021�23 UPI Pubhc Heanng\01 Staff Report - Open Public Heanng and ACopt ReSoWtion of Formation and Deb[ UPI 422 21 rev 4 721 DOCX Resolution No. 2021-10 -1- \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX RESOLUTION NO. 2021-10 A RESOLUTION OF FORMATION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT TO ESTABLISH CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK), TO MAKE FINDINGS UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT WITH RESPECT THERETO, TO ESTABLISH AN APPROPRIATIONS LIMIT THEREFOR, TO AUTHORIZE THE LEVY OF A SPECIAL TAX THEREIN, AND TO SUBMIT THE ESTABLISHMENT OF AN APPROPRIATIONS LIMIT AND THE LEVY OF A SPECIAL TAX TO THE QUALIFIED ELECTORS THEREOF RECITALS: WHEREAS, in accordance with a request set forth in a petition signed by University Park Investor, LLC, the owner of certain of the land (the “Petitioning Landowner”) proposed for inclusion in a proposed community facilities district, the City Council (the “City Council”) of the City of Palm Desert, California (the “City”), has previously adopted its Resolution No. 2021-05, entitled “A Resolution of Intention of the City Council of the City of Palm Desert to Establish City of Palm Desert Community Facilities District No. 2021-1 (University Park) and to Authorize the Levy of a Special Tax within City of Palm Desert Community Facilities District No. 2021-1 (University Park)” (the “Resolution of Intention to Establish District”) stating its intention to conduct proceedings to form City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the “Act”) to finance certain public facilities necessary to meet the increased demands placed upon the public infrastructure, the City, and the Coachella Valley Water District as a result of the development of the property within the boundaries of the District, including development impact fees therefor, and to pay and defease a pro rata portion of outstanding Series 2006A Special Tax Bonds (the “CFD 2005-1 Bonds”) issued by, and secured by the special taxes of, existing City of Palm Desert Community Facilities District No. 2005-1 (University Park) (“CFD 2005-1”) and refinance the facilities previously financed thereby, all as more specifically described on Exhibit “A” hereto (collectively, the “Facilities”); and WHEREAS, a copy of the Resolution of Intention to Establish District setting forth a description of the proposed boundaries of the District, the Facilities to be financed by the District, including incidental expenses, and the rate and method of apportionment of the special tax proposed to be levied within the District is on file in the office of the City Clerk of the City and is incorporated herein by reference; and WHEREAS, the City Council has previously adopted its Resolution No. 2021-06, entitled “A Resolution of Intention of the City Council of the City of Palm Desert to Incur Bonded Indebtedness Within Proposed City of Palm Desert Community Facilities District No. 2021-1 (University Park)” (the “Resolution of Intention to Incur Bonded Indebtedness”) stating the City Council’s intention, acting as the legislative body of the District, to authorize the issuance and sale of one or more series of bonds for the District Resolution No. 2021-10 -2- \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX in maximum aggregate principal amount of $50,000,000 to finance the cost of Facilities; and WHEREAS, the Resolution of Intention to Establish District and Resolution of Intention to Incur Bonded Indebtedness set April 22, 2021 as the date of a public hearing on the establishment of the District, the extent of the District, the furnishing of Facilities to meet increased demands on infrastructure as a result of development in the District, the proposed rate and method of apportionment of the special tax within the District, and the proposed debt issue; and WHEREAS, a notice of the public hearing was published and was mailed to all landowners proposed to be included in the District pursuant to the Act; and WHEREAS, prior to the date of the public hearing there was filed with the City Council a report containing a description of the facilities necessary to adequately meet the needs of the District and an estimate of the cost of financing such facilities as required by Section 53321.5 of the Act (the “Report”); and WHEREAS, at the public hearing, all persons desiring to be heard on all matters pertaining to the establishment of the District, the extent of the District, the furnishing of Facilities to meet increased demands on infrastructure as a result of development in the District, the proposed rate and method of apportionment of the special tax, and the proposed debt issue were heard and a full and fair hearing was held; and WHEREAS, at the public hearing, evidence was presented to the City Council on the matters before it, and the City Council at the conclusion of the hearing is fully advised as to all matters relating to the formation of the District, the levy of the special tax, and the incurrence of bonded indebtedness therein; and WHEREAS, written protests with respect to the establishment of the District, the extent of the District, and the furnishing of Facilities to meet increased demands on infrastructure as a result of development in the District have not been filed with the City Clerk by fifty percent or more of any registered voters residing within the territory of the District or property owners of one-half or more of the area of land within the District and not exempt from the levy of the special tax; and WHEREAS, the special tax proposed to be levied in the District to pay for the costs of the Facilities has not been eliminated by protest by fifty percent or more of any registered voters residing within the territory of the District or property owners of one- half or more of the area of land within the District and not exempt from the levy of the special tax; and WHEREAS, on November 20, 2018, the Planning Commission of the City adopted Resolution No. 2745, which approved Tentative Tract Map 37506 and Precise Plan 18-0005 for the Petitioning Landowner’s proposed development project (the “Project”), consisting of development of a residential subdivision on the property within the District, and which contemplated and requires construction of the necessary public facilities including the Facilities described in Exhibit “A”, attached hereto and incorporated Resolution No. 2021-10 -3- \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX herein by this reference. In connection with approval of the Project, the City, pursuant to the provisions of the California Environmental Quality Act (Public Resources Code Sections 21000, et seq., and the State of California CEQA Guidelines, 14 Cal. Code Regs. 15000 et seq.; collectively “CEQA”), (i) determined that all impacts associated with the Project had been disclosed and analyzed in the adopted Environmental Impact Report [State Clearinghouse No. 2015081020] (the “EIR”) for the City’s General Plan Update and University Neighborhood Specific Plan, which was certified by the City Council on November 10, 2016; (ii) determined that no new impacts had been identified by the Project; (iii) adopted an addendum to the EIR (the “Addendum”); and (iv) incorporated all mitigation measures with Project-specific updates into the conditions of approval for the Project, in order to mitigate potential environmental impacts associated with development of the Project to less than significant levels. No challenges were brought either to the EIR or to the Addendum, both of which are now final and beyond challenge; and WHEREAS, the City Council desires to proceed with the establishment of the District and to make the necessary findings to incur the bonded indebtedness. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES HEREBY RESOLVE, FIND, DECLARE AND ORDER AS FOLLOWS: Section 1. Recitals. The above recitals are all true and correct. Section 2. Finding of Validity. Pursuant to Section 53325.1(b) of the Act, the City Council finds and determines that all of the proceedings prior hereto were valid and taken in conformity with the requirements of the law, and specifically the provisions of the Act. Section 3. Name of District. The City Council hereby establishes and declares the formation of a community facilities district pursuant to the Act to be designated “City of Palm Desert Community Facilities District No. 2021-1 (University Park).” Section 4. Boundaries of District. The exterior boundaries of the District are shown on the map entitled “Map of Proposed Boundaries, Community Facilities District No. 2021-1 (University Park), City of Palm Desert, County of Riverside, State of California” (the “Map”) and recorded in the Riverside County Recorder’s office in Book 86, Page 54, of Maps of Assessment and Community Facilities Districts. The Map is hereby approved and incorporated herein by reference. Section 5. Facilities. The type of Facilities proposed to be financed, or refinanced, under the Act shall consist of those facilities set forth on Exhibit “A” and incorporated herein by reference; provided, the inclusion of Facilities to be owned by the Coachella Valley Water District (which include development impact fees therefor, as described on Exhibit “A”) shall be subject to and conditioned upon the approval by the Board of the Coachella Valley Water District and the City Council of a joint community facilities agreement pursuant to Section 53316.2 of the Act prior to the adoption by the City Council of a resolution authorizing issuance of bonds by the District pursuant to Resolution No. 2021-10 -4- \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX Section 53356 of the Act, and the execution of such joint community facilities agreement by the Coachella Valley Water District and the City. The City Council hereby finds that the proposed Facilities, including development impact fees therefor, are necessary to meet increased demands placed upon the public infrastructure, the City, and the Coachella Valley Water District as a result of development occurring in the District. The City Council additionally finds that the adjustments to the descriptions of the facilities from the Resolution of Intention to Establish District (a) are merely for clarification purposes, (b) do not add any types of facilities that were not specified in the Resolution of Intention to Establish District, and (c) do not constitute a change in the types of authorized public facilities to be financed by the District. Section 6. CEQA Findings. To the extent that the Special Tax (as defined in Section 8) levied by the District, or proceeds of bonded indebtedness issued the District, are used to finance the Facilities described in Exhibit “A”, attached hereto and incorporated herein by this reference, the City Council adopts and incorporates the findings set forth in the recitals pertaining to CEQA above, and further finds that formation of the District (the “District Formation”), including but not limited to authorizing the levy of the Special Tax and the issuance of bonded indebtedness by the District, does not constitute a project under CEQA pursuant to 14 Cal. Code Regs. Sections 15378(b)(4) and 15378(b)(5), because it constitutes the creation of a government funding mechanism with respect to the Project, for which mitigation measures have already been imposed by the EIR and the Addendum to mitigate to less than significant levels potentially significant physical impacts on the environment associated with development of the Project. In addition, the District Formation does not constitute a project under CEQA, because it is an implementation action taken in furtherance of the University Neighborhood Specific Plan and therefore does not constitute a project as defined in Public Resources Code Section 21065 and 14 Cal. Code Regs. Section 15378(a). To the extent that the District Formation does constitute a project under CEQA, it is nonetheless exempt from environmental review pursuant to Government Code Section 65457 as an action undertaken to implement residential development under the University Neighborhood Specific Plan where there are no changed circumstances requiring further environmental review as set forth in Public Resources Code Section 21166; and pursuant to 14 Cal. Code Regs. Section 15061(b)(3) (common sense exemption). Staff is hereby directed to file a Notice of Exemption with the Riverside County Clerk within five (5) days of the adoption of this Resolution pursuant to 14 Cal. Code Regs. Section 15062. Section 7. No Majority Protest. The City Council hereby finds that written protests against the establishment of the District, against the furnishing of a specified type of facility to meet increased demands on infrastructure as a result of development in the District, or against the levying of a specified special tax within the District have not been filed by any property owner or registered voter within the boundaries of the District. Therefore, the City Council finds and declares that the special tax to be levied in the District has not been precluded by majority protest pursuant to Section 53324 of the Act. Section 8. Special Tax. Resolution No. 2021-10 -5- \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX (a) Except where funds are otherwise available to pay for the Facilities (including without limitation the payment and defeasance of a pro rata portion of outstanding CFD 2005-1 Bonds to refinance those facilities previously financed by CFD 2005-1) and/or the principal and interest as it becomes due on bonds of the District issued to finance the Facilities, a special tax (the “Special Tax”) is hereby authorized, subject to approval by two-thirds of the votes cast within the District, to be levied annually in accordance with the procedures of the Act within the boundaries of the District sufficient to pay for the costs thereof, including incidental expenses. The Special Tax will be secured by recordation of a continuing lien against all non-exempt real property in the District and will be collected in the same manner as ordinary ad valorem property taxes are collected, or in such other manner as may be provided by the City Council including, without limitation, direct billing of the affected property owner, and shall be subject to the same penalties, procedure, sale and lien priority in case of delinquency as applicable for ad valorem property taxes. In the first year in which the Special Tax is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the District pursuant to Section 53314 of the Act and interest thereon. (b) The proposed rate and method of apportionment of the Special Tax among parcels of real property in the District, in sufficient detail to allow each resident or landowner to estimate the maximum amount such resident or owner will have to pay, is shown in Exhibit “B”, attached hereto and incorporated herein by reference (the “Rate and Method”). The City Council additionally finds that the adjustments to the Rate and Method (a) are merely for clarification purposes, (b) does not increase the probable Special Tax to be paid by the owner of any lot or parcel in the District, and (c) does not increase the maximum special tax for any lot or parcel in the District. (c) In the case of any Special Tax to pay for the Facilities to be levied against any parcel used for private residential purposes: (i) the maximum Special Tax shall be specified as a dollar amount which shall be calculated and thereby established not later than the date on which the parcel is first subject to the tax because of its use for private residential purposes and which amount shall not be increased over time over two percent (2%) per year; (ii) the tax year after which no further Special Tax subject to this sentence shall be levied or collected shall be as set forth in Exhibit “B” hereto; and (iii) under no circumstances will the Special Tax levied against any parcel subject to this sentence be increased as a consequence of delinquency or default by the owner of any other parcel within the District by more than ten percent (10%). For the purposes hereof, a parcel is used for “private residential purposes” not later than the date on which an occupancy permit for private residential use is issued. Section 9. Notice of Special Tax Lien. Upon recordation of a notice of special tax lien with respect to the District pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the Special Tax shall attach to all nonexempt real property in the District, and this lien shall continue in force and effect until collection of the Special Tax by the City Council ceases. Section 10. Appropriations Limit. An appropriations limit for the District is hereby established, subject to voter approval, as an amount equal to all the proceeds of Resolution No. 2021-10 -6- \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX the Special Tax collected annually within such District and as defined by Article XIIIB of the California Constitution, as adjusted for changes in the cost of living and changes in population. Section 11. Preparation of Annual Roll. The then current Finance Director, 73-510 Fred Waring Drive, Palm Desert California 92260, telephone number (760) 346-0611, is designated to be responsible for preparing annually, or authorizing a designee to prepare, a current roll of Special Tax levy obligations by assessor’s parcel number and for estimating future Special Tax levies pursuant to Section 53340.2 of the Act. Section 12. Report. The Report is hereby approved, made a part of the record of the public hearing regarding the formation of the District, and ordered to be kept on file in the office of the City Clerk and open for public inspection. Section 13. Special Tax Accountability Measures. Pursuant to and in compliance with the provisions of Government Code Section 50075.1, the City Council hereby establishes the following accountability measures pertaining to the levy by the District of the Special Tax described in Section 8 above: (a) Such Special Tax shall be levied for the specific purposes set forth in Section 8(a) hereof. (b) The proceeds of the levy of such Special Tax shall be applied only to the specific purposes set forth in Section 8(a) hereof. (c) The District shall establish an account or accounts into which the proceeds of such Special Tax shall be deposited. (d) The City Manager, or his or her designee, acting for and on behalf of the District, shall annually file a report with the City Council as required pursuant to Government Code Section 50075.3. Section 14. Election. The proposition related to the incurring of the bonded indebtedness and the proposition relating to the levy of the Special Tax shall be combined into one ballot proposition, and shall be submitted to the qualified voters of the District, together with a proposition to establish an appropriations limit for the District. The election shall be held on May 13, 2021, in the City Council Chamber, 73-510 Fred Waring Drive, Palm Desert, California 92260. Pursuant to Section 53327 of the Act, the election shall be conducted by mail ballot in accordance with the California Elections Code and the voted ballots shall be returned to the City Clerk immediately following adoption of a resolution calling the special election. The election shall be closed when the qualified electors have voted, but not later than 8 p.m. on May 13, 2021. Section 15. Effective Date. This Resolution shall take effect immediately upon adoption. Resolution No. 2021-10 -7- \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX PASSED, APPROVED and ADOPTED by the City Council of the City of Palm Desert, California, on this 22nd day of April, 2021, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ________________________________ Kathleen Kelly, Mayor City of Palm Desert, California ATTEST: ________________________________ Gloria M. Sanchez, Acting City Clerk City of Palm Desert, California Resolution No. 2021-10 A-1 \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX EXHIBIT “A” DESCRIPTION OF FACILITIES The public facilities (the “Facilities”) described below are proposed to be financed by City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District’) and include storm drainage facilities, street improvements, landscaping and irrigation facilities, public open space and recreational facilities, water facilities, and sewer improvements, together with all appurtenances and appurtenant work, such as related clearing and grubbing, grading, and any removal or temporary signage or markings related thereto. The cost of the Facilities shall include incidental expenses, including costs associated with forming the District, issuance of bonds, determination of the amount of the Special Tax, collection of the Special Tax, payment of the Special Tax, costs incurred in order to carry out the authorized purposes of the District, and the costs of engineering, inspecting, coordinating, completing, planning and designing the Facilities, including the costs of environmental evaluations. Any of the Facilities to be constructed shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City of Palm Desert (or the Coachella Valley Water District, as applicable) and the officials thereof, including the City Engineer. In addition, inasmuch as the District is proposed to pay and defease a pro rata portion of outstanding Series 2006A Special Tax Bonds (the “CFD 2005-1 Bonds”) issued by, and secured by the special taxes of, existing City of Palm Desert Community Facilities District No. 2005-1 (University Park), the Facilities include such payment and defeasance of CFD 2005-1 Bonds and the resultant refinancing of the facilities previously financed thereby (including, but not limited to, street improvements, water improvements, traffic signals, sewer improvements, storm drain improvements, utilities improvements, park improvement and park site land acquisition, and landscaping). The Facilities are necessary to meet the increased demands placed upon the public infrastructure, the City of Palm Desert, and the Coachella Valley Water District as a result of the development of the property within the boundaries of the District, including development impact fees therefor (including, but not limited to, City of Palm Desert development impact fees for traffic signals, drainage, parks, Art in Public Places, and fire facilities, and Coachella Valley Water District development impact fees for water and sewer facilities). The final nature and location of the Facilities will be determined upon the preparation of final plans and specifications for such Facilities. Resolution No. 2021-10 B-1 \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\02 Resolution of Formation (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.DOCX EXHIBIT “B” RATE AND METHOD OF APPORTIONMENT FOR CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK) [see attached] [This page has intentionally been left blank.] - 1 - \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\03 Revised Resolution Declaring Necessity to Incur Bonded Indebtedness (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.docx RESOLUTION NO. 2021-11 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT TO DECLARE THE NECESSITY TO INCUR BONDED INDEBTEDNESS WITHIN CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK) RECITALS: WHEREAS, in accordance with a request set forth in a petition signed by University Park Investor, LLC, the owner of certain of the land proposed for inclusion in a proposed community facilities district, the City Council (the “City Council”) of the City of Palm Desert, California (the “City”), has previously adopted its Resolution No. 2021-05, entitled “A Resolution of Intention of the City Council of the City of Palm Desert to Establish City of Palm Desert Community Facilities District No. 2021-1 (University Park) and to Authorize the Levy of a Special Tax within City of Palm Desert Community Facilities District No. 2021-1 (University Park)” (the “Resolution of Intention to Establish District”) stating its intention to conduct proceedings to form City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the “Act”) to finance certain public facilities necessary to meet the increased demands placed upon the public infrastructure, the City, and the Coachella Valley Water District as a result of the development of the property within the boundaries of the District, including development impact fees therefor, and to pay and defease a pro rata portion of outstanding Series 2006A Special Tax Bonds issued by, and secured by the special taxes of, existing City of Palm Desert Community Facilities District No. 2005-1 (University Park) and refinance the facilities previously financed thereby, all as more specifically described in the “Resolution of Formation”; and WHEREAS, the City Council has previously adopted its Resolution No. 2021-06, entitled “A Resolution of Intention of the City Council of the City of Palm Desert to Incur Bonded Indebtedness Within Proposed City of Palm Desert Community Facilities District No. 2021-1 (University Park)” (the “Resolution of Intention to Incur Bonded Indebtedness”) stating the City Council’s intention, acting as the legislative body of the District, to authorize the issuance and sale of one or more series of bonds for the District in maximum aggregate principal amount of $50,000,000 to finance the cost of Facilities; and WHEREAS, the Resolution of Intention to Establish District and Resolution of Intention to Incur Bonded Indebtedness set April 22, 2021 as the date of a public hearing on the establishment of the District, the extent of the District, the furnishing of Facilities to meet increased demands on infrastructure as a result of development in the District, the proposed rate and method of apportionment of the special tax within the District (the “Rate and Method”), and the proposed debt issue; and WHEREAS, a notice of the public hearing was published and mailed to all landowners proposed to be included in the District pursuant to the Act; and Resolution No. 2021-11 - 2 - \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\03 Revised Resolution Declaring Necessity to Incur Bonded Indebtedness (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.docx WHEREAS, prior to the date of the public hearing there was filed with the City Council a report containing a description of the facilities necessary to adequately meet the needs of the District and an estimate of the cost of financing such facilities as required by Section 53321.5 of the Act (the “Report”); and WHEREAS, at the public hearing, all persons desiring to be heard on all matters pertaining to the establishment of the District, the extent of the District, the furnishing of Facilities to meet increased demands on infrastructure as a result of development in the District, the proposed Rate and Method, and the proposed debt issue were heard and a full and fair hearing was held; and WHEREAS, at the public hearing, evidence was presented to the City Council on the matters before it, and the City Council at the conclusion of the hearing is fully advised as to all matters relating to the formation of the District, the levy of the special tax, and the incurrence of bonded indebtedness therein; and WHEREAS, subsequent to the public hearing, the City Council adopted a Resolution entitled “A Resolution of Formation of the City Council of the City of Palm Desert to Establish City of Palm Desert Community Facilities District No. 2021-1 (University Park), to Make Findings Under the California Environmental Quality Act With Respect Thereto, to Establish an Appropriations Limit Therefor, to Authorize the Levy of a Special Tax Therein, and to Submit the Establishment of an Appropriations Limit and the Levy of a Special Tax to the Qualified Electors Thereof” (the “Resolution of Formation”); and WHEREAS, no written protests with respect to the matters material to the questions set forth in the Resolution of Intention to Incur Bonded Indebtedness have been filed with the City Clerk. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES HEREBY RESOLVE, FIND, DECLARE AND ORDER AS FOLLOWS: Section 1. Recitals. The above recitals are all true and correct. Section 2. Necessary to Incur Bonded Indebtedness. The City Council hereby declares that it is necessary to incur a bonded indebtedness for the District in an aggregate principal amount not to exceed $50,000,000 as authorized under the terms and provisions of the Act. Section 3. Purpose. The bonded indebtedness will be incurred for the purpose of financing the costs of the Facilities, as provided in the Resolution of Formation including, but not limited to, the financing of the costs associated with the issuance of the bonds and all other costs necessary to finance the Facilities which are permitted to be financed pursuant to the Act. Section 4. Special Tax. The whole of the property within the District, other than property exempted from the special tax pursuant to the provisions of the Rate and Method set forth in Exhibit “B” to the Resolution of Formation, shall pay for the bonded Resolution No. 2021-11 - 3 - \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\03 Revised Resolution Declaring Necessity to Incur Bonded Indebtedness (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.docx indebtedness through the levy of the special tax. The special tax is to be apportioned in accordance with such Rate and Method. Section 5. Terms. It is the intent of the City Council, acting as the legislative body of the District, to authorize the issuance and sale of one or more series of bonds in the maximum aggregate principal amount of $50,000,000, bearing interest payable annually or semi-annually, or in part annually and in part semiannually, at a maximum interest rate of twelve percent (12%) per annum or such rate not in excess of the maximum rate permitted by law at the time the bonds are issued; provided the first interest payment may be for a period of less than six months, and the actual rate or rates and times of payment shall be determined at the time or times of sale. The term of the bonds of each series shall be determined pursuant to a resolution of the City Council authorizing the issuance of such series, but such term shall in no event exceed forty (40) years from the date of issuance of such series of bonds or such longer term as is then permitted by law. Section 6. Accountability Measures. Pursuant to and in compliance with the provisions of Article 1.5 (commencing with Section 53410) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code, the City Council hereby establishes the following accountability measures pertaining to any bonded indebtedness incurred by or on behalf of the District: (a) Such bonded indebtedness shall be incurred for the specific purposes set forth in Section 3 above. (b) The proceeds of any such bonded indebtedness shall be applied only to the specific purposes identified in Section 3 above. (c) The document or documents establishing the terms and conditions for the issuance of any such bonded indebtedness shall provide for the creation of an account or accounts into which the proceeds of such indebtedness shall be deposited. (d) The City Manager, or his or her designee, acting for and on behalf of the District, shall annually file a report with the City Council as required by Government Code Section 53411. Section 7. Election. The proposition related to the incurring of the bonded indebtedness and the proposition relating to the levy of the special tax shall be combined into one ballot proposition, and shall be submitted to the qualified voters of the District, together with a proposition to establish an appropriations limit for the District. The election shall be held on May 13, 2021, in the City Council Chamber, 73-510 Fred Waring Drive, Palm Desert, California 92260. Pursuant to Section 53327 of the Act, the election shall be conducted by mail ballot in accordance with the California Elections Code and the voted ballots shall be returned to the City Clerk immediately following adoption of a resolution calling the special election, but in any event no later than 8 p.m. on May 13, 2021. The election shall be closed when the qualified electors have voted, but not later than 8 p.m. on May 13, 2021. Resolution No. 2021-11 - 4 - \\srv-everyone\everyone\Staff Reports - Shared 2\Staff Reports 04-22-2021\4 -City Clerk - 04-22-2021\23 UPI Public Hearing\03 Revised Resolution Declaring Necessity to Incur Bonded Indebtedness (Palm Desert CFD 2021-1 Univ Park) 4.22.21 rev 4.7.21.docx Section 8. Effective Date. This Resolution shall take effect immediately upon adoption. PASSED, APPROVED and ADOPTED by the City Council of the City of Palm Desert, California, on this 22nd day of April, 2021, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ________________________________ Kathleen Kelly, Mayor City of Palm Desert, California ATTEST: ________________________________ Gloria M. Sanchez, Acting City Clerk City of Palm Desert, California 1  RATE AND METHOD OF   APPORTIONMENT OF SPECIAL TAX  For the City of Palm Desert Community Facilities District No. 2021‐1  (University Park), County of Riverside, State of California  A Special Tax shall be levied on all Taxable Property within the boundaries of the City of Palm Desert  Community Facilities District No. 2021‐1 (University Park) (“CFD No. 2021‐1”) and collected each Fiscal  Year commencing in Fiscal Year 2021‐22, in an amount determined by the CFD Administrator through the  application of the procedures described below. All of the real property within CFD No. 2021‐1, unless  exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the  manner herein provided.  A. DEFINITIONS The terms hereinafter set forth have the following meanings:  “Acre” or “Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map,  or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable Final  Map. An Acre means 43,560 square feet of land.  “Act” means the Mello‐Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1  of Division 2 of Title 5 of the Government Code of the State of California.  “Administrative Expenses”  means the actual or reasonably estimated costs related to the administration  of CFD No. 2021‐1 including, but not limited to: the costs of preparing and computing the Special Tax  (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by  the City, the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the  Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the  costs to the City, CFD  No. 2021‐1, or any designee thereof complying with arbitrage rebate requirements,  including without limitation rebate liability costs and periodic rebate calculations; the costs to the City,  CFD No. 2021‐1, or any designee thereof complying with disclosure or reporting requirements of the City  or CFD No. 2021‐1, associated with applicable federal and State laws; the costs associated with preparing  Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs  to the City, CFD No. 2021‐1, or any designee thereof related to an appeal of the Special Tax; and the City’s  annual administration fees and third party expenses. Administrative Expenses shall also include amounts  estimated or advanced by the City or CFD No. 2021‐1 for any other administrative purposes of CFD No.  2021‐1, including but not limited to attorney’s fees and other costs related to commencing and pursuing  any foreclosure of delinquent Special Taxes.  “Annual Special Tax” means the Special Tax actually levied in any Fiscal Year on any Assessor’s Parcel.   “Apartment Property” means an Assessor’s Parcel of Developed Property on which all or any portion of  a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered  for rent and are not available for sale to individual owners. If Apartment  Property is subsequently  reclassified as Single Family Property, Special Taxes levied on such reclassified Assessor’s Parcels shall be  Exhibit "B"   2    modified to match those of Single Family Property, provided that the Building Square Footage of such  Single Family Property can be determined by the CFD Administrator. Otherwise, the property will continue  to be classified as Apartment Property.   “Apartment Unit” means one (1) for‐rent residential unit on Apartment Property.   “Approved Property” means all Assessor’s Parcels of Taxable Property: (i) that are included in a Final Map  that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being  levied, and (ii) that have not been issued a Building Permit on or prior to the May 1st preceding the Fiscal  Year in which the Special Tax is being levied.  “Assessor” means the Assessor of the County of Riverside.  “Assessor’s Parcel” means a lot or parcel shown on an Assessor’s Parcel Map with an assigned Assessor’s  Parcel Number.  “Assessor’s Parcel Map” means an official map of the Assessor designating parcels by Assessor’s Parcel  Number.  “Assessor’s Parcel Number” means the number assigned to an Assessor’s Parcel by the County for  purposes of identification.  “Assigned Special Tax” means the Special Tax of that name described in Section C.1 below.   “Backup Special Tax” means the Special Tax of that name described in Section C.2 below.   “Bonds” means any bonds or other Debt of CFD No. 2021‐1, whether in one or more series, secured by  the levy of Special Taxes.  “Building Permit” means a building permit for construction of a Residential Unit within CFD No. 2021‐1  issued by the City.  “Building Square Footage” means all of the square footage of usable area within the perimeter of a  residential structure or dwelling unit, as applicable, not including any carport, walkway, garage, overhang,  or similar area. The determination of Building Square Footage shall be made by reference to the Building  Permit(s) issued for such Assessor’s Parcel and/or by reference to appropriate records kept by the City.  “Calendar  Year”  means  the  period  commencing  January  1st  of  any  year  and  ending  the  following  December 31.  “CFD Administrator” means an authorized representative of the City, or designee thereof, responsible for  determining the Special Tax Requirement, for preparing the Special Tax roll and/or calculating the Backup  Special Tax.  “CFD No. 2021‐1” means the City of Palm Desert Community Facilities District No. 2021‐1 (University  Park).   “City” means the City of Palm Desert, California.  “Council” means the City Council of the City acting as the legislative body of CFD No. 2021‐1 under the  Act.    3    “County” means the County of Riverside, California.  “Debt” means any binding obligation to pay or repay a sum of money, including obligations in the form of  bonds, certificates of participation, long‐term leases, loans from government agencies, or loans from  banks, other financial institutions, private businesses, or individuals, or long‐term contracts.  “Debt Service” means for each Fiscal Year, the total amount of principal and interest payable on any  Outstanding Bonds during the Calendar Year commencing on January 1st of such Fiscal Year.  “Developed Property” means for each Fiscal Year, all Taxable Property, exclusive of Provisional Property,  for which a Building Permit was issued prior to May 1st of the previous Fiscal Year. An Assessor’s Parcel  classified as Developed Property but for which the Building Permit that caused such Assessor’s Parcel to  be classified as Developed Property has been cancelled and/or voided prior to the Fiscal Year for which  Special Taxes are being levied shall be reclassified as Approved Property, provided that and only if the levy  of the Special Tax less Administrative Expenses after such reclassification shall not be less than 1.1 times  the annual Debt Service on all Outstanding Bonds. If Bonds have not been issued, an Assessor’s Parcel  classified as Developed Property for which such a Building Permit has been cancelled and/or voided shall  be reclassified as Approved Property.  “Exempt Property” means for each Fiscal Year, all Assessor’s Parcels designated as being exempt from  Special Taxes pursuant to Section H below.  “Final Map” means a subdivision of property by recordation of a final map, parcel map, or lot line  adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or  recordation of a condominium plan pursuant to California Civil Code 4285 that creates individual Lots for  which Building Permits may be issued without further subdivision.  “Fiscal Year” means the period starting on July 1 and ending the following June 30.  “Indenture” means the indenture, fiscal agent agreement, resolution or other instrument pursuant to  which  Bonds  are  issued,  as  modified,  amended  and/or  supplemented  from  time  to  time,  and  any  instrument replacing or supplementing the same.  “Land Use Class” means any of the classes listed in Table 1 and Table 2 under Section C.1 below.  “Lot” means a parcel created by a Final Map capable of conveyance or rental, separate from adjacent  parcels or dwelling units and/or on which one or more Residential Units can be constructed.  “Lower Income Households Welfare Exemption Property” means, for each Fiscal Year, an Assessor’s  Parcel that is entitled to a welfare exemption under subdivision (g) of Section 214 of the California  Revenue and Taxation Code (or any successor statute), as indicated in the County Assessor’s roll finalized  as of January 1 of the previous Fiscal Year; provided that such property is not exempt from the Special Tax  if debt is outstanding and the property was subject to the Special Tax prior to receiving the exemption, in  which case the property shall remain subject to the Special Tax and the Special Tax shall be enforceable  against the property.  “Maximum Special Tax” means for each Assessor’s Parcel, the maximum Special Tax, determined in  accordance with Sections C.3 and C.4 below, which may be levied in a given Fiscal Year on such Assessor’s  Parcel of Taxable Property.    4    “Non‐Residential Property” means all Assessor’s Parcels of Developed Property for which a building  permit has been issued for the purpose of constructing one or more non‐residential units or facilities.  “Outstanding Bonds” means all Bonds, which are deemed to be outstanding under the Indenture.  “Prepayment Amount” means the amount required to prepay the Special Tax Obligation in full for an  Assessor’s Parcel as described in Section F.1 below or in part for an Assessor’s Parcel as described in  Section F.2 below.  “Property Owner Association Property” means any Assessor’s Parcel within the boundaries of CFD No.  2021‐1 owned in fee by a property owner association, including any master or sub‐ association.  “Proportionately” or “Proportionate” means for Developed Property, that the ratio of the actual Special  Tax levy to the applicable Assigned Special Tax or Backup Special Tax is equal for all Assessor’s Parcels of  Developed Property. For Approved Property or Undeveloped Property, “Proportionately” means that the  ratio of the actual Special Tax levy per Acre to the Maximum Sp ecial Tax per Acre is equal for all Assessor’s  Parcels of Approved Property or Undeveloped Property. “Proportionately” may similarly be applied to  other categories of Taxable Property as listed in Section D below.  “Provisional  Property”  means  all  Assessor’s  Parcels  of  Public  Property,  Property  Owner  Association  Property, Non‐Residential Property or property that would otherwise be classified as Exempt Property  pursuant to the provisions of Section H, 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 H.  “Provisional  Welfare  Property”  means  all  Assessor’s  Parcels  of  Lower  Income  Households  Welfare  Exemption Property that would otherwise be classified as Exempt Property pursuant to the provisions of  Section H, 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 H.  “Public  Property” means any property within the boundaries of CFD No. 2021‐1, which is owned by, or  irrevocably offered for dedication to the federal government, the State of California, the County, the City  or any other public agency; provided however that (i) any property owned by a public agency and leased  to a private entity and subject to taxation under Section 53340.1 of the Act and (ii) any property subject  to taxation pursuant to Section 53317.3 of the Act shall be taxed and classified in accordance with its use.  “Residential Property” means all Assessor’s Parcels of Developed Property for which a Building Permit  has been issued for the purpose of constructing one or more Residential Units.  “Residential Unit” means each separate residential dwelling unit that comprises an independent facility  capable of conveyance or rental, separate from adjacent residential dwelling units.  “Single Family Property” means all Assessor’s Parcels of Residential Property not classified as Apartment  Property.  “Special Tax” means any special tax levied within CFD No. 2021‐1 pursuant to the Act and this Rate and  Method of Apportionment of Special Tax.  “Special Tax Obligation” means the total obligation of an Assessor’s Parcel of Taxable Property to pay the  Special Tax for the remaining life of CFD No. 2021‐1.    5    “Special Tax Requirement” means that amount required in any Fiscal Year to: (i) pay regularly scheduled  Debt Service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding Bonds, including but not  limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative  Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding  Bonds; (v) accumulate funds to pay directly for acquisition or construction of facilities, provided that the  inclusion of such amount does not cause an increase in the Special Tax to be levied on Approved Property,  Undeveloped Property, or Provisional Property, until the date that all Bonds have been issued; and (vi)  pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes  levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the Special Tax levy, as  determined by the CFD Administrator pursuant to the Indenture.  “State” means the State of California.  “Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD No. 2021‐1, which  are not exempt from the levy of the Special Tax pursuant to law or Section H below.  “Trustee” means the trustee or fiscal agent under the Indenture.  “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed  Property, Approved Property or Provisional Property.  “Zone 1” means the area within CFD No. 2021‐1 depicted as such in Exhibit A hereto.  “Zone 2” means the area within CFD No. 2021‐1 depicted as such in Exhibit A hereto.  “Zone 3” means the area within CFD No. 2021‐1 depicted as such in Exhibit A hereto.  B.  LAND USE CLASSIFICATION  Each Fiscal Year, beginning with Fiscal Year 2021‐22, each Assessor’s Parcel within CFD No. 2021‐1 shall  be classified as Taxable Property or Exempt Property. In addition, all Taxable Property shall further be  classified  as  Developed  Property,  Approved  Property,  Undeveloped  Property,  Provisional  Welfare  Property, or Provisional Property, and all such Taxable Property shall be subject to the levy of Special  Taxes in accordance with this Rate and Method of Apportionment of Special Tax determined pursuant to  Section C below. Furthermore, each Assessor’s Parcel of Developed Property shall be classified as Single  Family Property, Apartment Property, or Non‐Residential Property.  Finally, each Assessor’s Parcel of  Single Family Property shall be classified   according to its applicable Land Use Class based on its Building  Square Footage.  C.  SPECIAL TAX RATES  1.  Assigned Special Tax for Developed Property and Provisional Welfare  Property  The Assigned Special Tax applicable to an Assessor’s Parcel classified as Developed Property or Provisional  Welfare Property commencing in Fiscal Year 2021‐22 shall be determined pursuant to Tables 1, 2 and 3  below.       6      Table 1  Zone 1 Assigned Special Tax Rates  Land Use  Cl Land Use Type Building  S Assigned  Sil 1  Single Family Property ≥ 2,500  $2,300 per Residential Unit  2  Single Family Property  2,400 – 2,499  $2,225 per Residential Unit  3  Single Family Property  2,300 – 2,399  $2,175 per Residential Unit  4  Single Family Property  2,200 – 2,299  $2,100 per Residential Unit  5  Single Family Property  2,100 – 2,199  $2,025 per Residential Unit  6  Single Family Property  2,000 – 2,099  $1,925 per Residential Unit  7  Single Family Property  1,900 – 1,999  $1,600 per Residential Unit  8  Single Family Property  1,800 – 1,899  $1,550 per Residential Unit  9  Single Family Property < 1,800  $1,275 per Residential Unit  10  Non‐Residential Property NA  NA         7    Table 2  Zone 2 Assigned Special Tax Rates  Land Use  Class Land Use Type Building Square  Footage Assigned Special Tax  1  Single Family Property ≥ 3,400  $3,025 per Residential Unit  2  Single Family Property  3,200 – 3,399  $2,975 per Residential Unit  3  Single Family Property  3,000 – 3,199  $2,875 per Residential Unit  4  Single Family Property  2,800 – 2,999  $2,800 per Residential Unit  5  Single Family Property  2,600 – 2,799  $2,675 per Residential Unit  6  Single Family Property  2,400 – 2,599  $2,625 per Residential Unit  7  Single Family Property  2,200 – 2,399  $2,600 per Residential Unit  8  Single Family Property  2,000 – 2,199  $2,575 per Residential Unit  9  Single Family Property < 2,000  $2,475 per Residential Unit  10  Non‐Residential Property NA NA         8    Table 3  Zone 3 Assigned Special Tax Rates  Land Use  Cl Land Use Type Building  S Assigned  Sil 1  Single Family Property  ≥ 2,500  $2,300 per Residential Unit  2  Single Family Property  2,400 – 2,499  $2,225 per Residential Unit  3  Single Family Property  2,300 – 2,399  $2,175 per Residential Unit  4  Single Family Property  2,200 – 2,299  $2,100 per Residential Unit  5  Single Family Property  2,100 – 2,199  $2,025 per Residential Unit  6  Single Family Property  2,000 – 2,099  $1,925 per Residential Unit  7  Single Family Property  1,900 – 1,999  $1,600 per Residential Unit  8  Single Family Property  1,800 – 1,899  $1,550 per Residential Unit  9  Single Family Property  < 1,800 $1,275 per Residential Unit  10  Apartment Property  NA $750 per Residential Unit  11  Non‐Residential Property  NA NA         9          On each July 1, commencing July 1, 2022, the Assigned Special Tax for Developed Property and Provisional  Welfare Property shall be increased by two percent (2%) of the amount in effect in the prior Fiscal Year.  2.  Backup Special Tax for Developed Property and Provisional Welfare  Property  The Backup Special Tax for Developed Property and Provisional Welfare Property commencing in Fiscal  Year 2021‐22 shall be $15,419 per Acre for Zone 1, $19,322 per Acre for Zone 2 and $22,662 per Acre for  Zone 3.  Each July 1, commencing July 1, 2022, the Backup Special Tax for Developed Property and Provisional  Welfare Property shall be increased by two percent (2%) of the amount in effect in the prior Fiscal Year.  For the purpose of calculating the Backup Special Tax, the land area applicable to Apartment Property  shall be computed from the Acreage of the Lot on which the Apartment Property is located, with the  Acreage for such Lot allocated equally among all of the Apartment Property located or to be located on  such Lot.  3.  Maximum Special Tax for Developed Property and Provisional Welfare  Property  The Maximum Special Tax for Developed Property and Provisional Welfare Property shall be the greater  of the Assigned Special Tax for Developed Property and Provisio nal Welfare Property or the Backup Special  Tax for Developed Property and Provisional Welfare Property.  4.  Maximum Special Tax for Provisional Property, Approved Property and  Undeveloped Property  The  Maximum  Special  Tax  for  Provisional  Property,  Approved  Property,  and  Undeveloped  Property  commencing in Fiscal Year 2021‐22 shall be $15,419 per Acre for Zone 1, $19,322 per Acre for Zone 2 and  $22,662 per Acre for Zone 3.  Each July 1, commencing July 1, 2022, the Maximum Special Tax for Provisional Property, Approved  Property and Undeveloped Property shall be increased by two percent (2%) of the amount in effect in the  prior Fiscal Year.  D.  METHOD OF APPORTIONMENT   For each Fiscal Year, commencing Fiscal Year 2021‐22, the CFD Administrator shall levy the Special Tax on  all Taxable Property in accordance with the following steps:  Step 1: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property at  up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement.    10    Step 2: If additional monies are needed to satisfy the Special Tax Requirement after Step 1 has been  completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Approved Property  in an amount up to 100% of the Maximum Special Tax for Approved Property.  Step 3: If additional monies are needed to satisfy the Special Tax Requirement after Step 2 has been  completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped  Property in an amount up to 100% of the Maximum Special Tax for Undeveloped Property.  Step 4: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps  have  been  completed,  then  the  Special  Tax  amount  determined  in Step  1  shall  be  increased  Proportionately  on  each  Assessor’s  Parcel  of  Developed  Property  in  an  amount  up  to  100%  of  the  Maximum Special Tax for Developed Property.  Step 5: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps  have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of  Provisional Welfare Property in an amount up to 100% of the Maximum Special Tax for Provisional  Property.  Step 6: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps  have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of  Provisional Property in an amount up to 100% of the Maximum Special Tax for Provisional Property.  Notwithstanding the above, under no circumstances will 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 be increased as a result of a delinquency or default in the payment of the Special Tax  applicable to any other Assessor’s Parcel within CFD No. 2021‐1 by more than ten percent (10%) above  what would have been levied in the absence of such delinquencies or defaults.  E.  COLLECTION OF SPECIAL TAXES   Collection of the Special Tax shall be made by the County in the same manner as ordinary ad valorem  property taxes are collected and the Special Tax shall be subject to the same penalties and the same lien  priority in the case of delinquency as ad valorem taxes; provided, however, that the Council may provide  for (i) other means of collecting the Special Tax, including direct billings thereof to the property owners;  and (ii) judicial foreclosure of delinquent Special Taxes.  F.  PREPAYMENT OF SPECIAL TAX OBLIGATION  1.  Prepayment in Full  Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with  the City as permitted under Government Code Section 53344. The following definitions apply to this  Section F:  “CFD Public Facilities Costs” means $30,000,000 or such lower number as (i) shall be determined by the  CFD Administrator as sufficient to acquire or construct the facilities to be financed under the Act and  financing program for CFD No. 2021‐1, or (ii) shall be determined by the Council concurrently with a  covenant that it will not issue any more Bonds (except refunding bonds).    11    “Construction Fund” means the fund (regardless of its name) established pursuant to the Indenture to  hold funds, which are currently available for expenditure to acquire or construct the facilities or pay fees  authorized to be funded by CFD No. 2021‐1.  “Future Facilities Costs” means the CFD Public Facilities Costs minus (i) costs previously paid from the  Construction Fund to acquire or construct the facilities, (ii) monies currently on deposit in the Construction  Fund, and (iii) monies currently on deposit in an escrow or other designated fund that are expected to be  available to finance CFD Public Facilities Costs.  “Outstanding Bonds” means all Previously Issued Bonds, which remain outstanding as of the first interest  and/or principal payment date following the current Fiscal Year excluding Bonds to be redeemed at a later  date with proceeds of prior Special Tax prepayments.  “Previously Issued Bonds” means all Bonds that have been issued prior to the date of prepayment.  The Special Tax Obligation applicable to an Assessor’s Parcel of Developed Property, Approved Property,  Undeveloped Property, or Provisional Property that has been included in a Final Map may be prepaid and  the obligation to pay the Special Tax for such Assessor’s Parcel permanently satisfied as described herein,  provided that a prepayment may be made with respect to a particular Assessor’s Parcel 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 eligible to prepay the Special Tax Obligation shall provide the CFD Administrator  with written notice of intent to prepay and designate or identify the company or agency that will be acting  as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the  Prepayment Amount for such Assessor’s Parcel within thirty (30) days of the request and may charge a  reasonable  fee  for  providing  this  service.  Prepayment  must  be  made at least 60 days prior to any  redemption date for the CFD No. 2021‐1 Bonds to be redeemed with the proceeds of such prepaid Special  Taxes, unless a shorter period is acceptable to the Trustee and the City.  The Prepayment Amount shall be calculated for each applicable Assessor’s Parcel or group of Assessor’s  Parcels as follows (capitalized terms are defined below):  Bond Redemption Amount   plus  Redemption Premium  plus  Future Facilities Costs   plus  Defeasance Amount  plus  Administrative Fees and Expenses   less  Reserve Fund Credit   less   Capitalized Interest Credit  Equals:           Prepayment Amount    The Prepayment Amount shall be determined as of the proposed prepayment date as follows:  1. Confirm that no Special Tax delinquencies apply to such Parcel.  2. For an Assessor’s Parcel of Developed Property, compute the Maximum Special Tax for the  Assessor’s Parcel as though all Assessor’s Parcels of Taxable Property within CFD No. 2021‐1 have  been built out.  For an Assessor’s Parcel of Approved Property or Undeveloped Property for which  a Building Permit has been issued, compute the Maximum Special Tax for the Parcel as though it    12    was already designated as Developed Property, based upon the Building Permit which has been  issued for the Assessor’s Parcel. For an Assessor’s Parcel of Approved Property or Undeveloped  Property for which a Building Permit has not been issued or Provisional Property to be prepaid,  compute the Maximum Special Tax for the Assessor’s Parcel.  3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the estimated total amount  of Special Taxes that could be levied at build out of all Assessor’s Parcels of Taxable Property based  on the applicable Maximum Special Tax for all such Assessor’s Parcels of Taxable Property not  including any Parcels for which the Special Tax obligation has been previously prepaid.  4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of the Outstanding  Bonds to determine the amount of Outstanding Bonds to be redeemed with the Prepayment  Amount (the “Bond Redemption Amount”).  5. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the  Outstanding Bonds to be redeemed (the “Redemption Premium”).  6. Determine the Future Facilities Costs.  7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined pursuant to  paragraph 6 to determine the portion of the Future Facilities Costs applicable to the Assessor’s  Parcel (the “Future Facilities Amount”).  8. Determine 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 on which Bonds can be redeemed from Special Tax  prepayments.  9. Determine the Special Taxes levied on the Assessor’s Parcel in the current Fiscal Year which have  not yet been paid.  10. Determine the amount the CFD Administrator reasonably expects to derive from the investment  of the Bond Redemption Amount and the Redemption Premium from the date of prepayment  until the redemption date for the Outstanding Bonds to be redeemed with the Prepayment  Amount.  11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the amount derived  pursuant to paragraph 10 (the “Defeasance Amount”).  12. Verify the administrative fees and expenses associated with the prepayment, including the cost  to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of  recording notices to evidence the prepayment of the Special Tax obligation for the Assessor’s  Parcel and the redemption of Outstanding Bonds (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 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    13    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 and/or principal payment following the current Fiscal Year, a capitalized interest  credit shall be calculated by multiplying the quotient computed pursuant to paragraph 3 by the  expected balance in the capitalized interest fund after such first interest and/or principal payment  (the “Capitalized Interest Credit”).  15. The amount to prepay the Special Tax Obligation is equal to the sum of the Bond Redemption  Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount and  the Administrative Fees and Expenses, less the Reserve Fund Credit and the Capitalized Interest  Credit.  16. From the Prepayment Amount, the Bond Redemption Amount, the Redemption Premium, and  Defeasance  Amount  shall  be  deposited  into  the  appropriate  fund as  established  under  the  Indenture and be used to redeem Outstanding Bonds or make Debt Service payments. The Future  Facilities Amount shall be deposited into the Construction Fund. The Administrative Fees and  Expenses shall be retained by the CFD.  The Prepayment Amount may be sufficient to redeem an amount other than a $5,000 increment of CFD  No. 2021‐1 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 redeem CFD No. 2021‐1 Bonds to be used with  the next prepayment of CFD No. 2021‐1 Bonds.  The CFD Administrator will confirm that all previously levied Special Taxes have been paid in full. With  respect to any Assessor’s Parcel for which the Special Tax Obligation is prepaid in full, once the CFD  Administrator has confirmed that all previously levied Special Taxes have been paid, the Council shall  cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the  Special Tax and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of the  owner of such Assessor’s Parcel to pay the Special Tax shall cease.  Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the aggregate amount  of Maximum Special Taxes less Administrative  Expenses  that  may be  levied  on  Taxable  Property,  respectively, after the proposed prepayment is at least 1.1 times the Debt Service on all Outstanding  Bonds in each Fiscal Year.  2.  Partial Prepayment  The  Special  Tax  on  an  Assessor’s Parcel  of  Developed  Property,  Approved  Property,  Undeveloped  Property, or Provisional Property that has been included in a Final Map may be partially prepaid. The  amount of the prepayment shall be calculated as in Section F.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:    14    PP = the partial prepayment  PE = the Prepayment Amount calculated according to Section F.1  F = the percentage by which the owner of the Assessor’s Parcel(s) is partially prepaying the Special Tax  Obligation  A = the Prepayment Administrative Fees and Expenses from Section F.1  The  owner  of  any  Assessor’s  Parcel  who  desires  such  partial  prepayment  shall  notify  the  CFD  Administrator of (i) such owner’s intent to partially prepay the Special Tax Obligation, (ii) the percentage  by which the Special Tax Obligation shall be prepaid, and (iii) the company or agency that will be acting as  the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the amount  required for the partial prepayment of the Special Tax Obligation for an Assessor’s Parcel within sixty (60)  days of the request and may charge a reasonable fee for providing this service.  With respect to any Assessor’s Parcel that is partially prepaid, the City shall (i) distribute the funds  remitted to it according to Section F.1., and (ii) indicate in the records of CFD No. 2021‐1 that there has  been a partial prepayment of the Special Tax Obligation and that a portion of the Special Tax with respect  to such Assessor’s Parcel, equal to the outstanding percentage (1.00 ‐ F) of the Maximum Special Tax, shall  continue to be levied on such Assessor’s Parcel.  Notwithstanding the foregoing, no partial prepayment shall be allowed unless the aggregate amount of  Maximum  Special  Taxes  less  Administrative  Expenses  that  may  be levied  on  Taxable  Property,  respectively,  after  the  proposed partial prepayment is at least 1.1 times the Debt Service on all  Outstanding Bonds in each Fiscal Year.  G.  TERM OF SPECIAL TAX  The Special Tax shall be levied as long as necessary to meet the Special Tax Requirement for a period not  to exceed forty‐five (45) Fiscal Years commencing with Fiscal Year 2021‐22, provided however that the  Special Tax will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined that all  required interest and principal payments on CFD No. 2021‐1 Bonds have been paid.  H.  EXEMPTIONS  The CFD Administrator shall classify as Exempt Property (i) Assessor’s Parcels of Public Property, (ii)  Assessor’s Parcels of Property Owner Association Property, (iii) Assessor’s Parcels which are used as places  of worship and are exempt from ad valorem property taxes because they are owned by a religious  organization, (iv) Assessor’s Parcels with public or utility easements making impractical their utilization  for other than the purposes set forth in the easement, (v) Lower Income Households Welfare Exemption  Property, and (vi) Assessor’s Parcels classified as Non‐Residential Property as determined reasonably by  the CFD Administrator, provided that no such classification would reduce the sum of all Taxable Property  in CFD No. 2021‐1 to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3.   Assessor’s Parcels of Lower Income Households Welfare Exemption Property which cannot be classified  as Exempt Property because such classification would reduce the sum of all Taxable Property in CFD No.  2021‐1 to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3 shall be classified  as Provisional Welfare Property and will continue to be subject to the CFD No. 2021‐1 Special Taxes  accordingly.  Assessor’s Parcels which cannot be classified as Exempt Property because such classification  would reduce the sum of all Taxable Property in CFD No. 2021‐1 to less than 44.86 Acres in Zone 1, 48.84  Acres in Zone 2 or 11.12 Acres in Zone 3 shall be classified as Provisional Property and will continue to be    15    subject to the CFD No. 2021‐1 Special Taxes accordingly. Tax exempt status for the purpose of this  paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes  eligible for classification as Exempt Property, except for Non‐Residential Property, which will be assigned  tax exempt status only after all other eligible property types have been classified as Exempt Property.  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 the first paragraph of Section H above 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.  I.  APPEALS AND INTERPRETATIONS  Any property owner claiming that the amounts or application of the Special Taxes is not correct may file  a written notice of appeal with the CFD Administrator not later than twelve months after having paid the  first installment of the Special Taxes that are disputed. The CFD Administrator shall promptly review the  appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the  amount of the Special Taxes, and rule on the appeal. If the decision of the CFD Administrator requires that  the Special Taxes for an Assessor’s Parcel be modified or changed in favor of the property owner, a cash  refund shall not be made but an adjustment shall be made to the Special Taxes on that Assessor’s Parcel  in the subsequent Fiscal Year(s) to compensate for the overpayment of the Special Taxes.  Any landowner who pays the Special Tax and claims the amount of the Special Tax levied on his or her  Assessor’s Parcel is in error shall first consult with the CFD Administrator regarding such error not later  than thirty‐six (36) months after first having paid the first installment of the Special Tax that is disputed.  If following such consultation, the CFD Administrator determines that an error has occurred, then the CFD  Administrator shall take any of the following actions, in order of priority, in order to correct the error:  i. Amend the Special Tax levy on the landowner’s Assessor’s Parcel(s) for the current Fiscal Year  prior to the payment date,  ii. Require the CFD to reimburse the landowner for the amount of the overpayment to the extent of  available CFD funds, or  iii. Grant a credit against, eliminate or reduce the future Special Taxes on the landowner’s Assessor’s  Parcel(s) in the amount of the overpayment.  If following such consultation and action by the CFD Administrator the landowner believes such error still  exists, such person may file a written notice of appeal with the Council. Upon the receipt of such notice,  the Council or designee may establish such procedures as deemed necessary to undertake the review of  any such appeal. If the Council or designee determines an error still exists, the CFD Administrator shall  take any of the actions described as (i), (ii) and (iii) above, in order of priority, in order to correct the error.  The Council or designee thereof shall interpret this Rate and Method of Apportionment of Special Tax for  purposes of clarifying any ambiguities and make determinations relative to the administration of the  Special Tax and any landowner appeals. The decision of the Council or designee shall be final.       A‐1      Exhibit A  Zone Descriptions         A‐2          A‐3          A‐4          A‐5          A‐6          A‐7          A‐8          A‐9          A‐10          A‐11          A‐12          A‐13          A‐14          A‐15          A‐16          A‐17          A‐18          A‐19          A‐20          A‐21          A‐22          A‐23          A‐24       A‐25         C I T Y O F Palm Desert CFD Report  City of Palm Desert   Community Facilities District   No. 2021-1 (University Park)        April 2021 Prepared by:      TABLE OF CONTENTS   I. INTRODUCTION ................................................................................................ 1 II. GENERAL DESCRIPTION & BOUNDARIES OF CFD NO. 2021‐1 .................................. 2 III. DESCRIPTION OF FACILITIES ............................................................................... 3 IV. COST ESTIMATES ............................................................................................ 4 V. RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ....................................... 5 EXHIBIT A (BOUNDARY MAP) .......................................................................... A‐1 EXHIBIT B (PRELIMINARY CFD BUDGET AND PHASING PLAN) ..................................B‐1 EXHIBIT C (RATE AND METHOD OF APPORTIONMENT) ........................................... C‐1 EXHIBIT D (ESTIMATED TAX RATES) .................................................................. D‐1 1 I. Introduction WHEREAS, the City Council of the City of Palm Desert (hereinafter referred to as the “City Council”), in the State of California, did, pursuant to the terms and provisions of Chapter 2.5 of Part 1, of Division 2, of Title 5 of the Government Code of the State of California, as amended (the “Act”), adopt a Resolution of Intention for the proposed formation of City of Palm Desert Community Facilities District No. 2021‐1 (University Park) (“CFD No. 2021‐1”). WHEREAS, this Community Facilities District Report (“Report”) is being provided to the City Council and generally contains the following: 1. A brief description of CFD No. 2021‐1; 2. A brief description of the Facilities (defined below) required at the time of formation to meet the needs of CFD No. 2021‐1. 3. A brief description of the boundaries of CFD No. 2021‐1; and 4. An estimate of the cost of financing the bonds used to pay for the Facilities, including all costs associated with formation of CFD No. 2021‐1, issuance of bonds, determination of the amount of any special taxes, collection of any special taxes, or costs otherwise incurred in order to carry out the authorized p urposes of the City with respect to CFD No. 2021‐1, and any other incidental expenses to be paid through the proposed financing. For particulars, reference is made to the Resolution of Intention, Resolution No. 2021‐05, as previously approved. All capitalized terms not defined herein are defined in the Rate and Method of Apportionment of Special Tax section, attached as Exhibit C to this report. NOW THEREFORE Willdan Financial Services, the appointed responsible firm directed to prepare the Report, pursuant to the provisions of the Act, does hereby submit the following: 2 II. General Description & Boundaries of CFD No. 2021‐1 A description of the exterior boundaries of the territory proposed for inclusion in CFD No. 2021‐ 1, including properties and parcels of land proposed to be subject to the levy of a Special Tax by CFD No. 2021‐1, is shown on the boundary map designated as “PROPOSED BOUNDARIES OF COMMUNITY FACILITIES DISTRICT NO. 2021‐1 (UNIVERSITY PARK), CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA”, which is on file in the office of the Clerk of the City Council of the City of Palm Desert and was recorded with t he County Recorder of the County of Riverside on April 1, 2021 in Book 86 of Maps of Assessment and Community Facilities Districts at Page 54 and as Instrument Number 2021‐0205428. A copy of the map is attached hereto as Exhibit A and hereby incorporated by reference. 3 III. Description of Facilities The General Description of the Facilities that may be acquired or constructed is as follows: The public facilities (the “Facilities”) described below are proposed to be financed by City of Palm Desert Community Facilities District No. 2021‐1 (University Park) (the “District”) and include storm drainage facilities, street improvements, landscaping and irrigation facilities, public open space and recreational facilities, water facilities, and sewer improvements, together with all appurtenances and appurtenant work, such as related clearing and grubbing, grading, and any removal or temporary signage or markings related thereto. The cost of the Facilities shall include incidental expenses, including costs associated with forming the District, issuance of bonds, determination of the amount of the Special Tax, collection of the Special Tax, payment of the Special Tax, costs incurred in order to carry out the authorized purposes of the District, and the costs of engineering, inspecting, coordinating, completing, planning and designing the Facilities, including the costs of environmental evaluations. Any of the Facilities to be constructed shall be constructed, whether or not acquired in their completed states, pursuant to plans and specifications approved by the City of Palm Desert (or the Coachella Valley Water District, as applicable) and the officials thereof, including the City Engineer. In addition, inasmuch as the District is proposed to pay and defease a pro rata portion of outstanding Series 2006A Special Tax Bonds (the “CFD 2005‐1 Bonds”) issued by, and secured by the special taxes of, existing City of Palm Desert Community Facilities District No. 2005‐1 (University Park), the Facilities include such payment and defeasance of CFD 2005‐1 Bonds and the resultant refinancing of the facilities previously financed thereby (including, but not limited to, street improvements, water improvements, traffic signals, sewer improvements, storm drain improvements, utilities improvements, park improvement and park site land acquisition, and landscaping). The Facilities are necessary to meet the increased demands placed upon the public infrastructure, the City of Palm Desert, and the Coachella Valley Water District as a result of the development of the property within the boundaries of the District, including development impact fees therefor (including, but not limited to, City of Palm Desert development impact fees for traffic signals, drainage, parks, Art in Public Places, and fire facilities, and Coachella Valley Water District development impact fees for water and sewer facilities). The final nature and location of the Facilities will be determined upon the preparation of final plans and specifications for such Facilities. 4 IV. Cost Estimates Two or more series of bonds are expected to be issued in an aggregate amount equal to the capacity of what can be supported with the Special Tax revenue stream generated by future Developed Property within CFD No. 2021‐1. Costs of formation and issuance associated with CFD No. 2021‐1 and the bonds are currently estimated at approximately $1.04 million. The proceeds of CFD No. 2021‐1 will be used to defease approximately $17.13 million in principal amount of outstanding CFD No. 2005‐1 bonds and fund additional public facilities and fees. The estimated facilities budget for CFD No. 2021‐1 is approximately $36 million in public facilities construction and impact fees, as detailed in Exhibit B of this Report. The amount of bond proceeds used to directly fund facilities and fees will be limited by the total financing capacity less the amount needed to defease CFD No. 2005‐1 bonds. A phasing plan is also included in Exhibit B of this Report. The annual administration costs for CFD No. 2021‐1 are expected to total $75,000 in Fiscal Year 2021/2022, escalating by two percent (2%) per year on July 1, 2022 and each July 1 thereafter. 5 V. Rate and Method of Apportionment of Special Tax  The Rate and Method of Apportionment (RMA) for each improvement area provides sufficient information to allow a property owner within CFD No. 2021‐1 to estimate the Maximum Special Tax for his or her property. It also includes method of prepayment in full or prepayment in part and the procedure for prepayments. For particulars on the rate and method of apportionment for CFD No. 2021‐1, reference is made to Exhibit C of this report. The estimated effective special tax rates for each planned land use are shown in Exhibit D to this report. A-1 EXHIBIT A Boundary Map A-2 B-1 EXHIBIT B Preliminary CFD Budget and Phasing Plan B-2 C-1 EXHIBIT C Rate and Method of Apportionment CFD No. 2021‐1 C-2 RATE AND METHOD OF   APPORTIONMENT OF SPECIAL TAX  For the City of Palm Desert Community Facilities District No. 2021‐1 (University Park), County of Riverside, State of California A Special Tax shall be levied on all Taxable Property within the boundaries of the City of Palm Desert Community Facilities District No. 2021‐1 (University Park) (“CFD No. 2021‐1”) and collected each Fiscal Year commencing in Fiscal Year 2021‐22, in an amount determined by the CFD Administrator through the application of the procedures described below. All of the real property within CFD No. 2021‐1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided. A.  DEFINITIONS  The terms hereinafter set forth have the following meanings: “Acre” or “Acreage” means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable Final Map. An Acre means 43,560 square feet of land. “Act” means the Mello‐Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. “Administrative Expenses” means the actual or reasonably estimated costs related to the administration of CFD No. 2021‐1 including, but not limited to: the costs of preparing and computing the Special Tax (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City, the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2021‐1, or any designee thereof complying with arbitrage rebate requirements, including without limitation rebate liability costs and periodic rebate calculations; the costs to the City, CFD No. 2021‐1, or any designee thereof complying with disclosure or reporting requirements of the City or CFD No. 2021‐1, associated with applicable federal and State laws; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs to the City, CFD No. 2021‐1, or any designee thereof related to an appeal of the Special Tax; and the City’s annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2021‐1 for any other administrative purposes of CFD No. 2021‐1, including but not limited to attorney’s fees and other costs related to commencing and pursuing any foreclosure of delinquent Special Taxes. “Annual Special Tax” means the Special Tax actually levied in any Fiscal Year on any Assessor’s Parcel. “Apartment Property” means an Assessor’s Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently C-3 reclassified as Single Family Property, Special Taxes levied on such reclassified Assessor’s Parcels shall be modified to match those of Single Family Property, provided that the Building Square Footage of such Single Family Property can be determined by the CFD Administrator. Otherwise, the property will continue to be classified as Apartment Property. “Apartment Unit” means one (1) for‐rent residential unit on Apartment Property. “Approved Property” means all Assessor’s Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a Building Permit on or prior to the May 1st preceding the Fiscal Year in which the Special Tax is being levied. “Assessor” means the Assessor of the County of Riverside. “Assessor’s Parcel” means a lot or parcel shown on an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number. “Assessor’s Parcel Map” means an official map of the Assessor designating parcels by Assessor’s Parcel Number. “Assessor’s Parcel Number” means the number assigned to an Assessor’s Parcel by the County for purposes of identification. “Assigned Special Tax” means the Special Tax of that name described in Section C.1 below. “Backup Special Tax” means the Special Tax of that name described in Section C.2 below. “Bonds” means any bonds or other Debt of CFD No. 2021‐1, whether in one or more series, secured by the levy of Special Taxes. “Building Permit” means a building permit for construction of a Residential Unit within CFD No. 2021‐1 issued by the City. “Building Square Footage” means all of the square footage of usable area within the perimeter of a residential structure or dwelling unit, as applicable, not including any carport, walkway, garage, overhang, or similar area. The determination of Building Square Footage shall be made by reference to the Building Permit(s) issued for such Assessor’s Parcel and/or by reference to appropriate records kept by the City. “Calendar  Year” means the period commencing January 1st of any year and ending the following December 31. “CFD Administrator” means an authorized representative of the City, or designee thereof, responsible for determining the Special Tax Requirement, for preparing the Special Tax roll and/or calculating the Backup Special Tax. “CFD No. 2021-1” means the City of Palm Desert Community Facilities District No. 2021‐1 (University Park). “City” means the City of Palm Desert, California. C-4 “Council” means the City Council of the City acting as the legislative body of CFD No. 2021‐1 under the Act. “County” means the County of Riverside, California. “Debt” means any binding obligation to pay or repay a sum of money, including obligations in the form of bonds, certificates of participation, long‐term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long‐term contracts. “Debt Service” means for each Fiscal Year, the total amount of principal and interest payable on any Outstanding Bonds during the Calendar Year commencing on January 1st of such Fiscal Year. “Developed Property” means for each Fiscal Year, all Taxable Property, exclusive of Provisional Property, for which a Building Permit was issued prior to May 1st of the previous Fiscal Year. An Assessor’s Parcel classified as Developed Property but for which the Building Permit that caused such Assessor’s Parcel to be classified as Developed Property has been cancelled and/or voided prior to the Fiscal Year for which Special Taxes are being levied shall be reclassified as Approved Property, provided that and only if the levy of the Special Tax less Administrative Expenses after such reclassification shall not be less than 1.1 times the annual Debt Service on all Outstanding Bonds. If Bonds have not been issued, an Assessor’s Parcel classified as Developed Property for which such a Building Permit has been cancelled and/or voided shall be reclassified as Approved Property. “Exempt Property” means for each Fiscal Year, all Assessor’s Parcels designated as being exempt from Special Taxes pursuant to Section H below. “Final Map” means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 4285 that creates individual Lots for which Building Permits may be issued without further subdivision. “Fiscal Year” means the period starting on July 1 and ending the following June 30. “Indenture” means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Table 1 and Table 2 under Section C.1 below. “Lot” means a parcel created by a Final Map capable of conveyance or rental, separate from adjacent parcels or dwelling units and/or on which one or more Residential Units can be constructed. “Lower Income Households Welfare Exemption Property” means, for each Fiscal Year, an Assessor’s Parcel that is entitled to a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute), as indicated in the County Assessor’s roll finalized as of January 1 of the previous Fiscal Year; provided that such property is not exempt from the Special Tax if debt is outstanding and the property was subject to the Special Tax prior to receiving the exemption, in which case the property shall remain subject to the Special Tax and the Special Tax shall be enforceable against the property. C-5 “Maximum Special Tax” means for each Assessor’s Parcel, the maximum Special Tax, determined in accordance with Sections C.3 and C.4 below, which may be levied in a given Fiscal Year on such 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 the purpose of constructing one or more non‐residential units or facilities. “Outstanding Bonds” means all Bonds, which are deemed to be outstanding under the Indenture. “Prepayment Amount” means the amount required to prepay the Special Tax Obligation in full for an Assessor’s Parcel as described in Section F.1 below or in part for an Assessor’s Parcel as described in Section F.2 below. “Property Owner Association Property” means any Assessor’s Parcel within the boundaries of CFD No. 2021‐1 owned in fee by a property owner association, including any master or sub‐ association. “Proportionately” or “Proportionate” means for Developed Property, that the ratio of the actual Special Tax levy to the applicable Assigned Special Tax or Backup Special Tax is equal for all Assessor’s Parcels of Developed Property. For Approved Property or Undeveloped Property, “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Sp ecial Tax per Acre is equal for all Assessor’s Parcels of Approved Property or Undeveloped Property. “Proportionately” may similarly be applied to other categories of Taxable Property as listed in Section D below. “Provisional  Property” means all Assessor’s Parcels of Public Property, Property Owner Association Property, Non‐Residential Property or property that would otherwise be classified as Exempt Property pursuant to the provisions of Section H, 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 H. “Provisional  Welfare  Property” means all Assessor’s Parcels of Lower Income Households Welfare Exemption Property that would otherwise be classified as Exempt Property pursuant to the provisions of Section H, 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 H. “Public  Property” means any property within the boundaries of CFD No. 2021‐1, which is owned by, or irrevocably offered for dedication to the federal government, the State of California, the County, the City or any other public agency; provided however that (i) any property owned by a public agency and leased to a private entity and subject to taxation under Section 53340.1 of the Act and (ii) any property subject to taxation pursuant to Section 53317.3 of the Act shall be taxed and classified in accordance with its use. “Residential Property” means all Assessor’s Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing one or more Residential Units. “Residential Unit” means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental, separate from adjacent residential dwelling units. “Single Family Property” means all Assessor’s Parcels of Residential Property not classified as Apartment Property. C-6 “Special Tax” means any special tax levied within CFD No. 2021‐1 pursuant to the Act and this Rate and Method of Apportionment of Special Tax. “Special Tax Obligation” means the total obligation of an Assessor’s Parcel of Taxable Property to pay the Special Tax for the remaining life of CFD No. 2021‐1. “Special Tax Requirement” means that amount required in any Fiscal Year to: (i) pay regularly scheduled Debt Service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) accumulate funds to pay directly for acquisition or construction of facilities, provided that the inclusion of such amount does not cause an increase in the Special Tax to be levied on Approved Property, Undeveloped Property, or Provisional Property, until the date that all Bonds have been issued; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. “State” means the State of California. “Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD No. 2021‐1, which are not exempt from the levy of the Special Tax pursuant to law or Section H below. “Trustee” means the trustee or fiscal agent under the Indenture. “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Approved Property or Provisional Property. “Zone 1” means the area within CFD No. 2021‐1 depicted as such in Exhibit A hereto. “Zone 2” means the area within CFD No. 2021‐1 depicted as such in Exhibit A hereto. “Zone 3” means the area within CFD No. 2021‐1 depicted as such in Exhibit A hereto. B.  LAND USE CLASSIFICATION  Each Fiscal Year, beginning with Fiscal Year 2021‐22, each Assessor’s Parcel within CFD No. 2021‐1 shall be classified as Taxable Property or Exempt Property. In addition, all Taxable Property shall further be classified as Developed Property, Approved Property, Undeveloped Property, Provisional Welfare Property, or Provisional Property, and all such Taxable Property shall be subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment of Special Tax determined pursuant to Section C below. Furthermore, each Assessor’s Parcel of Developed Property shall be classified as Single Family Property, Apartment Property, or Non‐Residential Property. Finally, each Assessor’s Parcel of Single Family Property shall be classified according to its applicable Land Use Class based on its Building Square Footage. C-7 C.  SPECIAL TAX RATES  1.  Assigned Special Tax for Developed Property and Provisional Welfare  Property  The Assigned Special Tax applicable to an Assessor’s Parcel classified as Developed Property or Provisional Welfare Property commencing in Fiscal Year 2021‐22 shall be determined pursuant to Tables 1, 2 and 3 below. Table 1  Zone 1 Assigned Special Tax Rates  Land Use  Cl Land Use Type Building  S Assigned  Sil 1 Single Family Property ≥ 2,500 $2,300 per Residential Unit 2 Single Family Property 2,400 – 2,499 $2,225 per Residential Unit 3 Single Family Property 2,300 – 2,399 $2,175 per Residential Unit 4 Single Family Property 2,200 – 2,299 $2,100 per Residential Unit 5 Single Family Property 2,100 – 2,199 $2,025 per Residential Unit 6 Single Family Property 2,000 – 2,099 $1,925 per Residential Unit 7 Single Family Property 1,900 – 1,999 $1,600 per Residential Unit 8 Single Family Property 1,800 – 1,899 $1,550 per Residential Unit 9 Single Family Property < 1,800 $1,275 per Residential Unit 10 Non‐Residential Property NA NA      C-8 Table 2  Zone 2 Assigned Special Tax Rates  Land Use  Class Land Use Type Building Square  Footage Assigned Special Tax  1 Single Family Property ≥ 3,400 $3,025 per Residential Unit 2 Single Family Property 3,200 – 3,399 $2,975 per Residential Unit 3 Single Family Property 3,000 – 3,199 $2,875 per Residential Unit 4 Single Family Property 2,800 – 2,999 $2,800 per Residential Unit 5 Single Family Property 2,600 – 2,799 $2,675 per Residential Unit 6 Single Family Property 2,400 – 2,599 $2,625 per Residential Unit 7 Single Family Property 2,200 – 2,399 $2,600 per Residential Unit 8 Single Family Property 2,000 – 2,199 $2,575 per Residential Unit 9 Single Family Property < 2,000 $2,475 per Residential Unit 10 Non‐Residential Property NA NA    C-9 Table 3  Zone 3 Assigned Special Tax Rates  Land Use  Cl Land Use Type Building  S Assigned  Sil 1 Single Family Property ≥ 2,500 $2,300 per Residential Unit 2 Single Family Property 2,400 – 2,499 $2,225 per Residential Unit 3 Single Family Property 2,300 – 2,399 $2,175 per Residential Unit 4 Single Family Property 2,200 – 2,299 $2,100 per Residential Unit 5 Single Family Property 2,100 – 2,199 $2,025 per Residential Unit 6 Single Family Property 2,000 – 2,099 $1,925 per Residential Unit 7 Single Family Property 1,900 – 1,999 $1,600 per Residential Unit 8 Single Family Property 1,800 – 1,899 $1,550 per Residential Unit 9 Single Family Property < 1,800 $1,275 per Residential Unit 10 Apartment Property NA $750 per Residential Unit 11 Non‐Residential Property NA NA      C-10 On each July 1, commencing July 1, 2022, the Assigned Special Tax for Developed Property and Provisional Welfare Property shall be increased by two percent (2%) of the amount in effect in the prior Fiscal Year. 2.  Backup Special Tax for Developed Property and Provisional Welfare  Property  The Backup Special Tax for Developed Property and Provisional Welfare Property commencing in Fiscal Year 2021‐22 shall be $15,419 per Acre for Zone 1, $19,322 per Acre for Zone 2 and $22,662 per Acre for Zone 3. Each July 1, commencing July 1, 2022, the Backup Special Tax for Developed Property and Provisional Welfare Property shall be increased by two percent (2%) of the amount in effect in the prior Fiscal Year. For the purpose of calculating the Backup Special Tax, the land area applicable to Apartment Property shall be computed from the Acreage of the Lot on which the Apartment Property is located, with the Acreage for such Lot allocated equally among all of the Apartment Property located or to be located on such Lot. 3.  Maximum Special Tax for Developed Property and Provisional Welfare  Property  The Maximum Special Tax for Developed Property and Provisional Welfare Property shall be the greater of the Assigned Special Tax for Developed Property and Provisio nal Welfare Property or the Backup Special Tax for Developed Property and Provisional Welfare Property. 4.  Maximum Special Tax for Provisional Property, Approved Property and  Undeveloped Property  The Maximum Special Tax for Provisional Property, Approved Property, and Undeveloped Property commencing in Fiscal Year 2021‐22 shall be $15,419 per Acre for Zone 1, $19,322 per Acre for Zone 2 and $22,662 per Acre for Zone 3. Each July 1, commencing July 1, 2022, the Maximum Special Tax for Provisional Property, Approved Property and Undeveloped Property shall be increased by two percent (2%) of the amount in effect in the prior Fiscal Year. D.  METHOD OF APPORTIONMENT   For each Fiscal Year, commencing Fiscal Year 2021‐22, the CFD Administrator shall levy the Special Tax on all Taxable Property in accordance with the following steps: Step 1: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement. Step 2: If additional monies are needed to satisfy the Special Tax Requirement after Step 1 has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Approved Property in an amount up to 100% of the Maximum Special Tax for Approved Property. C-11 Step 3: If additional monies are needed to satisfy the Special Tax Requirement after Step 2 has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property in an amount up to 100% of the Maximum Special Tax for Undeveloped Property. Step 4: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax amount determined in Step 1 shall be increased Proportionately on each Assessor’s Parcel of Developed Property in an amount up to 100% of the Maximum Special Tax for Developed Property. Step 5: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Provisional Welfare Property in an amount up to 100% of the Maximum Special Tax for Provisional Property. Step 6: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Provisional Property in an amount up to 100% of the Maximum Special Tax for Provisional Property. Notwithstanding the above, under no circumstances will 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 be increased as a result of a delinquency or default in the payment of the Special Tax applicable to any other Assessor’s Parcel within CFD No. 2021‐1 by more than ten percent (10%) above what would have been levied in the absence of such delinquencies or defaults. E.  COLLECTION OF SPECIAL TAXES   Collection of the Special Tax shall be made by the County in the same manner as ordinary ad valorem property taxes are collected and the Special Tax shall be subject to the same penalties and the same lien priority in the case of delinquency as ad valorem taxes; provided, however, that the Council may provide for (i) other means of collecting the Special Tax, including direct billings thereof to the property owners; and (ii) judicial foreclosure of delinquent Special Taxes. F.  PREPAYMENT OF SPECIAL TAX OBLIGATION  1.  Prepayment in Full  Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with the City as permitted under Government Code Section 53344. The following definitions apply to this Section F: “CFD Public Facilities Costs” means $30,000,000 or such lower number as (i) shall be determined by the CFD Administrator as sufficient to acquire or construct the facilities to be financed under the Act and financing program for CFD No. 2021‐1, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more Bonds (except refunding bonds). “Construction Fund” means the fund (regardless of its name) established pursuant to the Indenture to hold funds, which are currently available for expenditure to acquire or construct the facilities or pay fees authorized to be funded by CFD No. 2021‐1. C-12 “Future Facilities Costs” means the CFD Public Facilities Costs minus (i) costs previously paid from the Construction Fund to acquire or construct the facilities, (ii) monies currently on deposit in the Construction Fund, and (iii) monies currently on deposit in an escrow or other designated fund that are expected to be available to finance CFD Public Facilities Costs. “Outstanding Bonds” means all Previously Issued Bonds, which remain outstanding as of the first interest and/or principal payment date following the current Fiscal Year excluding Bonds to be redeemed at a later date with proceeds of prior Special Tax prepayments. “Previously Issued Bonds” means all Bonds that have been issued prior to the date of prepayment. The Special Tax Obligation applicable to an Assessor’s Parcel of Developed Property, Approved Property, Undeveloped Property, or Provisional Property that has been included in a Final Map may be prepaid and the obligation to pay the Special Tax for such Assessor’s Parcel permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor’s Parcel 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 eligible to prepay the Special Tax Obligation shall provide the CFD Administrator with written notice of intent to prepay and designate or identify the company or agency that will be acting as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the Prepayment Amount for such Assessor’s Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. Prepayment must be made at least 60 days prior to any redemption date for the CFD No. 2021‐1 Bonds to be redeemed with the proceeds of such prepaid Special Taxes, unless a shorter period is acceptable to the Trustee and the City. The Prepayment Amount shall be calculated for each applicable Assessor’s Parcel or group of Assessor’s Parcels as follows (capitalized terms are defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Costs plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals: Prepayment Amount The Prepayment Amount shall be determined as of the proposed prepayment date as follows: 1. Confirm that no Special Tax delinquencies apply to such Parcel. 2. For an Assessor’s Parcel of Developed Property, compute the Maximum Special Tax for the Assessor’s Parcel as though all Assessor’s Parcels of Taxable Property within CFD No. 2021‐1 have been built out. For an Assessor’s Parcel of Approved Property or Undeveloped Property for which a Building Permit has been issued, compute the Maximum Special Tax for the Parcel as though it was already designated as Developed Property, based upon the Building Permit which has been issued for the Assessor’s Parcel. For an Assessor’s Parcel of Approved Property or Undeveloped Property for which a Building Permit has not been issued or Provisional Property to be prepaid, C-13 compute the Maximum Special Tax for the Assessor’s Parcel. 3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the estimated total amount of Special Taxes that could be levied at build out of all Assessor’s Parcels of Taxable Property based on the applicable Maximum Special Tax for all such Assessor’s Parcels of Taxable Property not including any Parcels for which the Special Tax obligation has been previously prepaid. 4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of the Outstanding Bonds to determine the amount of Outstanding Bonds to be redeemed with the Prepayment Amount (the “Bond Redemption Amount”). 5. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”). 6. Determine the Future Facilities Costs. 7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined pursuant to paragraph 6 to determine the portion of the Future Facilities Costs applicable to the Assessor’s Parcel (the “Future Facilities Amount”). 8. Determine 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 on which Bonds can be redeemed from Special Tax prepayments. 9. Determine the Special Taxes levied on the Assessor’s Parcel in the current Fiscal Year which have not yet been paid. 10. Determine the amount the CFD Administrator reasonably expects to derive from the investment of the Bond Redemption Amount and the Redemption Premium from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the Prepayment Amount. 11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the amount derived pursuant to paragraph 10 (the “Defeasance Amount”). 12. Verify the administrative fees and expenses associated with the prepayment, including the cost to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the prepayment of the Special Tax obligation for the Assessor’s Parcel and the redemption of Outstanding Bonds (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 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. C-14 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 3 by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the “Capitalized Interest Credit”). 15. The amount to prepay the Special Tax Obligation is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount and the Administrative Fees and Expenses, less the Reserve Fund Credit and the Capitalized Interest Credit. 16. From the Prepayment Amount, the Bond Redemption Amount, the Redemption Premium, and Defeasance Amount shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make Debt Service payments. The Future Facilities Amount shall be deposited into the Construction Fund. The Administrative Fees and Expenses shall be retained by the CFD. The Prepayment Amount may be sufficient to redeem an amount other than a $5,000 increment of CFD No. 2021‐1 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 redeem CFD No. 2021‐1 Bonds to be used with the next prepayment of CFD No. 2021‐1 Bonds. The CFD Administrator will confirm that all previously levied Special Taxes have been paid in full. With respect to any Assessor’s Parcel for which the Special Tax Obligation is prepaid in full, once the CFD Administrator has confirmed that all previously levied Special Taxes have been paid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of the owner of such Assessor’s Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes less Administrative Expenses that may be levied on Taxable Property, respectively, after the proposed prepayment is at least 1.1 times the Debt Service on all Outstanding Bonds in each Fiscal Year. 2.  Partial Prepayment  The Special Tax on an Assessor’s Parcel of Developed Property, Approved Property, Undeveloped Property, or Provisional Property that has been included in a Final Map may be partially prepaid. The amount of the prepayment shall be calculated as in Section F.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 Prepayment Amount calculated according to Section F.1 F = the percentage by which the owner of the Assessor’s Parcel(s) is partially prepaying the Special Tax C-15 Obligation A = the Prepayment Administrative Fees and Expenses from Section F.1 The owner of any Assessor’s Parcel who desires such partial prepayment shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Special Tax Obligation, (ii) the percentage by which the Special Tax Obligation shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if any. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax Obligation for an Assessor’s Parcel within sixty (60) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor’s Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Section F.1., and (ii) indicate in the records of CFD No. 2021‐1 that there has been a partial prepayment of the Special Tax Obligation and that a portion of the Special Tax with respect to such Assessor’s Parcel, equal to the outstanding percentage (1.00 ‐ F) of the Maximum Special Tax, shall continue to be levied on such Assessor’s Parcel. Notwithstanding the foregoing, no partial prepayment shall be allowed unless the aggregate amount of Maximum Special Taxes less Administrative Expenses that may be levied on Taxable Property, respectively, after the proposed partial prepayment is at least 1.1 times the Debt Service on all Outstanding Bonds in each Fiscal Year. G.  TERM OF SPECIAL TAX  The Special Tax shall be levied as long as necessary to meet the Special Tax Requirement for a period not to exceed forty‐five (45) Fiscal Years commencing with Fiscal Year 2021‐22, provided however that the Special Tax will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined that all required interest and principal payments on CFD No. 2021‐1 Bonds have been paid. H.  EXEMPTIONS  The CFD Administrator shall classify as Exempt Property (i) Assessor’s Parcels of Public Property, (ii) Assessor’s Parcels of Property Owner Association Property, (iii) Assessor’s Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Lower Income Households Welfare Exemption Property, and (vi) Assessor’s Parcels classified as Non‐Residential Property as determined reasonably by the CFD Administrator, provided that no such classification would reduce the sum of all Taxable Property in CFD No. 2021‐1 to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3. Assessor’s Parcels of Lower Income Households Welfare Exemption Property which cannot be classified as Exempt Property because such classification would reduce the sum of all Taxable Property in CFD No. 2021‐1 to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3 shall be classified as Provisional Welfare Property and will continue to be subject to the CFD No. 2021‐1 Special Taxes accordingly. Assessor’s Parcels which cannot be classified as Exempt Property because such classification would reduce the sum of all Taxable Property in CFD No. 2021‐1 to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3 shall be classified as Provisional Property and will continue to be subject to the CFD No. 2021‐1 Special Taxes accordingly. Tax exempt status for the purpose of this paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes C-16 eligible for classification as Exempt Property, except for Non‐Residential Property, which will be assigned tax exempt status only after all other eligible property types have been classified as Exempt Property. 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 the first paragraph of Section H above 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. I.  APPEALS AND INTERPRETATIONS  Any property owner claiming that the amounts or application of the Special Taxes is not correct may file a written notice of appeal with the CFD Administrator not later than twelve months after having paid the first installment of the Special Taxes that are disputed. The CFD Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Taxes, and rule on the appeal. If the decision of the CFD Administrator requires that the Special Taxes for an Assessor’s Parcel be modified or changed in favor of the property owner, a cash refund shall not be made but an adjustment shall be made to the Special Taxes on that Assessor’s Parcel in the subsequent Fiscal Year(s) to compensate for the overpayment of the Special Taxes. Any landowner who pays the Special Tax and claims the amount of the Special Tax levied on his or her Assessor’s Parcel is in error shall first consult with the CFD Administrator regarding such error not later than thirty‐six (36) months after first having paid the first installment of the Special Tax that is disputed. If following such consultation, the CFD Administrator determines that an error has occurred, then the CFD Administrator shall take any of the following actions, in order of priority, in order to correct the error: i. Amend the Special Tax levy on the landowner’s Assessor’s Parcel(s) for the current Fiscal Year prior to the payment date, ii. Require the CFD to reimburse the landowner for the amount of the overpayment to the extent of available CFD funds, or iii. Grant a credit against, eliminate or reduce the future Special Taxes on the landowner’s Assessor’s Parcel(s) in the amount of the overpayment. If following such consultation and action by the CFD Administrator the landowner believes such error still exists, such person may file a written notice of appeal with the Council. Upon the receipt of such notice, the Council or designee may establish such procedures as deemed necessary to undertake the review of any such appeal. If the Council or designee determines an error still exists, the CFD Administrator shall take any of the actions described as (i), (ii) and (iii) above, in order of priority, in order to correct the error. The Council or designee thereof shall interpret this Rate and Method of Apportionment of Special Tax for purposes of clarifying any ambiguities and make determinations relative to the administration of the Special Tax and any landowner appeals. The decision of the Council or designee shall be final. C-A-1 Exhibit A  Zone Descriptions    C-A-2 C-A-3 C-A-4 C-A-5 C-A-6 C-A-7 C-A-8 C-A-9 C-A-10 C-A-11 C-A-12 C-A-13 C-A-14 C-A-15 C-A-16 C-A-17 C-A-18 C-A-19 C-A-20 C-A-21 C-A-22 C-A-23 C-A-24 C-A-25 D-1 EXHIBIT D Estimated Effective Tax Rates CFD No. 2021‐1 D-2