NEW ISSUE-BOOK-ENTRY ONLY RATINGS: Moody's Investors Service: "Aaa" Standard & Poor's Ratings Group: "AAA" DC Boncf (Ambac Insured) Underlying rating: S&P "A-" See "CONCLUDING INFORMATION - Ratings" herein.
In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel, under existing law, the interest on the Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the tax covenants described herein, interest on the Bonds is excluded pursuant to section 103(a) of the InternalRevenue Code of 1986 from the gross income of the owners thereof for federal income tax purposes and is not an item of preference for purposes of the federal alternative minimum tax. See "CONCLUDING INFORMATION - Tax Exemption " herein. $8,200,000 WEST CAMARILLO COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF CAMARILLO SPECIAL TAX BONDS, SERIES 2004
Dated: Delivery Date Due: September 1, as shown on inside cover The West Camarillo Community Facilities District No. I of the City of Camarillo, Special Tax Bonds, Series 2004 (the "Bonds") are being issued by West Camarillo Community Facilities District No. I of the City of Camarillo (the "District"), pursuant to a Bond Indenture, dated as of February I, 1999 (the "Master Indenture"), as amended and supplemented by a First Supplemental Indenture, dated as of May 1, 2001 (the "First Supplemental Indenture") and further amended and supplemented by a Second Supplemental Indenture, dated as of September 1, 2004 ( the "Second Supplemental Indenture") (the Master Indenture, the First Supplemental Indenture and the Second Supplemental Indenture is herein referred to as to the "Indenture"), each by and between the District and U.S. Bank National Association, as trustee and successor trustee (the "Trustee"). The Bonds will be secured as described herein. The Bonds are being issued to: (i) to finance the acquisition and/or construction of a portion of certain drainage and bridge facilities of benefit to the District; (iii) to fund additionaldeposits to a reserve fund; and (iv) to pay costs of issuance related to the Bonds. The Bonds are issued on a parity lien basis with the District's Special Tax RefundingBonds, Series 1999 (the "1999 Bonds") issued under the Master Indenture. Subject to certain conditions, additional obligations on a parity basis with the Bonds and the 1999 Bonds may be issued in the future by the District. The Bonds, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the Bonds. Individual purchases of the Bonds will be made in book-entry form only, in denominations of $5,000 principal amount or any integral multiple thereof. Purchasers of the Bonds will not receive physical delivery of the Bonds purchased by them. Principal of, premium, if any, and interest on the Bonds will be paid directly to DTC by the Trustee. Upon its receipt of payments of principal and interest, DTC is in tum obligated to remit such principal and interest to OTC participants for subsequent disbursement to the beneficial owners of the Bonds as described herein. See "THE BONDS - Book-Entry Only System" herein. Interest on the Bonds is payable on March 1, 2005 and semiannually thereafter on each March I and September 1. The Bonds are subject to optional, mandatory and extraordinary mandatory redemption prior to maturity as set forthherein. See "THE BONDS - Redemption" herein. The Bonds are limited obligations of the District. The Bonds are payable solely from Special Tax Revenues (as defined herein), consisting primarily of Special Taxes and proceeds fromforeclosure sales pursuant to the Indenture, as more fully described herein. If a delinquency occurs in the payment of any installment of Special Tax (as defined herein) securing the Bonds, the Trustee will have a duty only to transfer from the Reserve Fund the amount necessary to pay principal of or interest on the Bonds when due. There is no assurance that sufficient funds will be available in the Reserve Fund for this purpose. See "SOURCES OF PAYMENT FOR THE BONDS - Reserve Fund." Payment of the principal of and interest on the Bonds when due will be insured by a financial guaranty insurance policy to be issued by Ambac Assurance Corporation to be issued simultaneously with the delivery of the Bonds. Ambac NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT, THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAX REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY OR THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM CERTAIN AMOUNTS DEPOSITED BY THE DISTRICT IN THE SPECIAL TAX FUND AS MORE FULLY DESCRIBED HEREIN. See the section of this Official Statement entitled"RISK FACTORS" for a discussion of certain risk factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. This cover page contains certain information for quick reference only. It is not a complete summary of the Bonds. Investors should read the entire OfficialStatement to obtain information essential to the making of an informed investment decision. The Bonds were awarded to Citigroup Global Markets Inc. (the "Underwriter") on September 13, 2004 pursuant to the terms of a competitive bid. The Bonds are offered when, as and if issued, subject to approval as to their legality by Fulbright & Jaworski L.L.P., Los Angeles, California, and certain other conditions. Certain legal matters will be passed on for the City and the District by Burke, Williams & Sorensen, L.L.P., Los Angeles, California, the City Attorney, and by Fulbright & Jaworski L.L.P., Los Angeles, California, Disclosure Counsel. It is anticipated that the Bonds will be available for deliveryto DTC in New York, New York on or about September 29, 2004.
Dated: September 13, 2004 MATURITY SCHEDULE
$4,665,000 Serial Bonds (CUSIP Base: 951686)
Maturity Principal Interest Maturity Principal Interest (SeI!tember l} Amount Rm XW!! CUSIPNo.' (SeI!tember I} fil!!.!!.!!!!.! .B!!£ Yield CUSIP No.' 2005 $105,000 5.250% 1.2503% BC7 2016 $240,000 3.625% 3.7000% BP8 2006 80,000 5.250 1.6004 BD5 2017 250,000 3.750 3.8001 BQ6 2007 85,000 5.250 1.8003 BE3 2018 260,000 3.875 3.9001 BR4 2008 90,000 5.250 2.2001 BFO 2019 265,000 4.000 4.0500 BS2 2009 95,000 4.750 2.5000 BG8 2020 280,000 4.000 4.1000 BTO 2010 100,000 4.750 2.8001 BH6 2021 290,000 4.125 4.2000 BU7 2011 105,000 4.750 3.0001 BJ2 2022 300,000 4.250 4.3500 BV5 2012 110,000 3.200 3.2501 BK9 2023 315,000 4.375 4.4000 BW3 2013 215,000 3.300 3.3500 BL7 2024 330,000 4.400 4.5000 BXl 2014 225,000 3.400 3.4501 BM5 2025 340,000 4.500 4.5000 BY9 2015 230,000 3.500 3.6001 BN3 2026 355,000 4.600 4.6000 BZ6
$3,535,000 Term Bonds $1,175,000 4.625% Term Bonds due September 1, 2029-Price: 100% to Yield: 4.625% CUSIP·: 951686CAO
$2,360,000 4. 750% Term Bonds due September 1, 2034 - Price: 100% to Yield: 4. 750% CU SIP*: 951686CB8
• CUSIP data, copyright 2003, American Bankers Association. CUSIP data herein are provided forconvenience of reference only. Neither the District, the City nor the Underwriter assume any responsibility for the accuracy of such data. CITY OF CAMARILLO VENTURA COUNTY, CALIFORNIA
CITY COUNCIL
Don Waunch, Mayor Kevin B. Kildee, Vice Mayor Jeanette L. McDonald, Council Member Michael D. Morgan, Council Member Charlotte Craven, Council Member
CITYOFF ICIALS
Jerry Bankston, CityManager Deborah A. Harrington, City Clerk Brian A. Pierik, CityAttorney Anita Lawrence, Director ofFinance Tom Fox, Director of Public Works
SPECIAL SERVICES
Bond Counsel and Disclosure Counsel Fulbright & Jaworski L.L.P. Los Angeles, California
Financial Advisor to the District C.M. de Crinis & Co., Inc. Studio City, California
Special Tax Consultant Special District Financing & Administration San Diego, California
Trustee U.S. Bank National Association Los Angeles,California No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations in connection with the offer or sale of the Bonds described herein, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, or the Financial Advisor to the District. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Bonds by any person in any jurisdiction in which it is unlawfulfor such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City, the District, and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness. The information and expressions of opinion stated herein are subject to change without notice. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the City, the District or any major property owner within the District since the date hereof. The Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriterhas reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAILIN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS ACTING AS AGENTS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIMEBY THE UNDERWRITER.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HA VE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
Other than with respect to information concerning Ambac Assurance Corporation ("Ambac Assurance" or Insurer") contained under the caption "BOND INSURANCE" and "APPENDIXF FORM OF FINANCIAL GUARANTY INSURANCE POLICY" herein, none of the information in this Official Statement has been supplied or verified by Ambac Assurance and Ambac Assurance makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the Bonds; or (iii) the tax exempt status of the interest on the Bonds. VICINITY MAP City of Camarillo --Ventura County, California
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N Oc W*E ecl !] s (THIS PAGE INTENTIONALLY LEFT BLANK) TABLE OF CONTENTS
Page
INTRODUCTORY STATEMENT ...... 1 General ...... 1 Use of Proceeds ...... 1 Security for the Bonds ...... 2 The District ...... 3 The City ...... 3 The Act ...... 3 Description of the Bonds ...... 4 Tax Matters ...... 4 ProfessionalsInvolved in the Offering...... 4 Offering and Delivery of the Bonds ...... 5 Bond Owners' Risks ...... 5 CONTINUING DISCLOSURE ...... 5 THE FINANCING PLAN AND THE PROJECT ...... 5 Sourcesand Uses of Funds ...... 6 The Project ...... 6 Debt Service Schedule ...... 7 THE BONDS ...... 8 Description of the Bonds ...... 8 Redemption ...... 8 Book-Entry Only System ...... 11 SOURCES OF PAYMENT FOR THEBONDS ...... 12 Special Tax ...... 12 Covenant forSuperior Court Foreclosure ...... 17 Reserve Fund ...... 18 Establishment of Funds and Accounts and Flow of Funds ...... 19 The Cooperative Agreement...... 20 Additional Bonds ...... 21 BONDINSURANCE ...... 22 Payment Pursuant to Financial Guaranty InsurancePolicy ...... 22 Ambac Assurance Corporation...... 23 Available Information ...... 24 Incorporation of Certain Documents by Reference...... 24 THE DISTRICT ...... 25 Formation of District and Levy of Special Tax ...... 25 Description of the Project and the Special Tax ...... 25 Property Description and Ownership ...... 27 Assessed Valuation and Value to Lien Ratios ...... 29 Major Property Owners and Undeveloped Land ...... 31 Direct and Overlapping Debt ...... 35 Delinquency Summary...... 36 RISK FACTORS ...... 37 Limited Obligations ...... 37 Collection of Special Taxes ...... 37 Risks of Real Estate Secured Investments Generally ...... 38 Concentration of Ownership ...... 38 Notice of Special Taxes ...... 38 Prepayment Risk ...... 38 Undeveloped Property Within the District...... 38 TABLE OF CONTENTS (c ontinued) Page
Land Value ...... 39 Value to Lien Ratios ...... 39 Direct and Overlapping Indebtedness ...... 40 Failure to Develop Land ...... 40 Seismic Considerations ...... 41 Bankruptcyand Foreclosure Delays ...... 41 Property Controlled by FDIC...... 42 Tax Sale forDelinquent Ad Valorem Taxes ...... 43 Future Land Use Regulations and Growth Control Initiatives...... 44 Endangered Species ...... 44 Hazardous Substances ...... 45 Loss of Tax Exemption ...... 45 Limitation on Remedies ...... 45 Secondary Market ...... 46 No Acceleration ...... 46 PROPERTY TAX.ATION IN CALIFORNIA...... 46 Property Tax Collection Procedures ...... 46 Supplemental Assessments ...... 47 Proposition 218 ...... 47 Future Initiatives ...... 48 CONCLUDING INFORMATION ...... 48 Undel'\Vriting...... 48 Legal Opinion ...... 48 Tax Exemption ...... 49 No Litigation ...... 51 Rating ...... 51 Professional Fees ...... 51 Miscellaneous ...... 51
APPENDIX A - AMENDEDRATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ...... A-1 APPENDIX B -THE CITY OF CAMARILLO...... B-1 APPENDIX C - SUMMARY OF THE BOND INDENTURE ...... C-1 APPENDIX D - FORM OF BOND COUNSEL OPINION ...... D-1 APPENDIX E -FORM OF CONTINUING DISCLOSURE AGREEMENT ...... E-1 APPENDIX F - FORM OF FINANCIAL GUARANTY INSURANCE POLICY ...... F-1 APPENDIX G - BOOK-ENTRY ONLY SYSTEM ...... G-1
ii OFFICIAL STATEMENT
$8,200,000 WEST CAMARILLO COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF CAMARILLO SPECIAL TAX BONDS SERIES 2004
INTRODUCTORY STATEMENT
This Introductory Statement is not a summary of this Offi cial Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed informationconta ined in the entire Offi cial Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A fullre view should be made of the entire Off icial Statement. Th e sale and delivery of the Bonds to potential investors are made only by means ofthe entire Offi cial Statement.
General
This Official Statement, including the cover page, the inside cover page and the Appendices hereto, is provided to furnish certain information in connection with the issuance and sale by West Camarillo Community Facilities District No. 1 of the City of Camarillo (the "District"), of its Special Tax Bonds, Series 2004 (the "Bonds") in the aggregate principal amount of $8,200,000.
The Bonds will be issued pursuant to the provisions of a Bond Indenture, dated as of February 1, 1999 (the "Master Indenture"), as amended and supplemented by a First Supplemental Indenture, dated as of May 1, 200 1 (the "First Supplemental Indenture") and further amended and supplemented by a Second Supplemental Indenture, dated as of September 1, 2004 (the "Second Supplemental Indenture") (the Master Indenture, the First Supplemental Indenture and the Second Supplemental Indenture are herein referred to as to the "Indenture"), each by and between the District and U.S. Bank National Association, as trustee (the "Trustee"), an authorizing resolution of the City Council of the City of Camarillo, California (the "City") acting as the legislative body of the District, pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the "Act"), and pursuant to the provisions of Chapter 3 of Part 1 of Division 2 of Title 5, commencing with section 53580, of the CaliforniaGovernment Code.
For the definitions of capitalized terms used herein and not otherwise defined, see "APPENDIXC - SUMMARY OF THE BOND INDENTURE."
Use of Proceeds
The proceeds of the Bonds will be used to: (i) finance the acquisition and/or construction of a portion of certain drainage and bridge facilities of benefit to the District (the "Project"); (ii) fund an additional deposit to a reserve fund; and (iii) pay costs of issuance related to the Bonds, and the premium of the municipal bond insurance policy to be issued by Ambac Assurance. See "THE FINANCING PLAN AND THE PROJECT"herein.
The Project consists of the acquisition and/or construction of a portion of the Drainage Facilities and Bridge Facilities (as hereinafter defined). See "THE FINANCING PLAN AND THE PROJECT" herein. Security for the Bonds
The Bonds are special obligations of the District secured by and payable from Special Tax Revenues and interest earned on the Special Tax Revenues. The Bonds are secured on a parity basis with the District's previously issued Special Tax Bonds, Series 1999 (the "1999 Bonds"), originally issued in the aggregate principal amount of $11,235,000 and currently outstanding in the principal amount of $6,920,000. The 1999 Bonds were issued to refund the District's previously issued $13,955,000 Series 1990 Special Tax Bonds (the "Prior Bonds"). The Prior Bonds were issued to finance a portion of the costs of construction and installation of certain sewer facilities.
"Special Tax Revenues" consist of Special Taxes (less the Administrative Expense Requirement) and Delinquency Proceeds. "Special Taxes" consist of the taxes authorized to be levied by the District in accordance with an ordinance of the City adopted on September 10, 1990, Resolution No. 90-47 of the City Council of the City adopted on March 14, 1990, the Act and the voter approval obtained at the March 21, 1990 special election and the July 12, 1995 special election held on behalf of the District by the City, and described in the Amended Rate and Method of Apportionment of the Special Tax (the "RMA") adopted by the legislative body of the District. The Special Taxes are collected on the regular property tax bills sent to the owners of real property within the District. "Administrative Expense Requirement" means an annual amount equal to $20,000 to be allocated for administrative expenses. "Delinquency Proceeds" consist of amounts collected (a) from the redemption of delinquent Special Taxes, including the penalties and interest thereon, and (b) fromthe sale of propertysold as a result of the foreclosure of the lien of the Special Taxes resulting from the delinquency in the payment of Special Taxes due and payable on such property. See "SPECIAL TAXES - Payment of Special Tax" and "APPENDIXA - AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." See also "SOURCES OF PAYMENT FOR THE BONDS."
At the March 21, 1990 election, the qualified electors authorized the District to incur bonded indebtedness in an amount not to exceed $31 ,000,000 (the "CFD Bonds"). The Prior Bonds constituted the first series of a total authorization of $31 ,000,000 of CFD Bonds. A portion of the proceeds of the 1999 Bonds advance refunded the Prior Bonds. The remaining portion of the proceeds of the 1999 Bonds, $980,000, was used to finance a portion of the Drainage Facilities and constituted the second series of the CFD Bonds. The Bonds constitute the third series of the CFD Bonds. Total CFD Bonds issued under the $31 ,000,000 authorization issued will be $22,755,000 afterissuance of the Bonds. At a later time, Additional Bonds, up to an amount equal to $8,245,000, or in such greater amount as may be authorized by the qualifiedelectors of the District, may be issued on a parity with the Bonds and the 1999 Bonds. Such Additional Bonds may be issued to provide funds to complete the acquisition and construction of the Bridge Facilities (as hereinafter defined).
Concurrently with the issuance of the Bonds, Ambac Assurance Corporation ("Ambac Assurance") will issue its Financial Guaranty Insurance Policy for the Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the formof the Policy. See "BOND INSURANCE"herein .
As additional security for the Bonds and the 1999 Bonds, the Indenture establishes the Reserve Fund to be funded in an amount equal to the Reserve Requirement. The Reserve Requirement is defined as the amount as of any date of calculation equal to the least of (i) Maximum Annual Debt Service on the Outstanding Bonds and any Additional Bonds, (ii) 125% of Average Annual Debt Service on the Outstanding Bonds and any Additional Bonds, or ( iii) 10% of the initial principal amount of the Bonds and any Additional Bonds less original issue discount, if any, plus original issue premium, if any. Proceeds from the 1999 Bonds procured a Municipal Bond Reserve Insurance Policy ( the "Reserve Policy") issued by FSA in the amount of $561 ,750. The remaining portion of the Reserve Requirement is
2 funded by a combination of proceeds of the 1999 Bonds and the Bonds. The Insurer has provided the District with an option to purchase a surety in the amount of $780,000. The District may elect to substitute the cash reserve with the surety within the next year.
To the extent there are insufficientmoneys in the Special Tax Fund and the Bond Service Fund to pay interest on and principal of the Bonds and the 1999 Bonds when due, cash and investments in the Reserve Fund and claims under the Reserve Policy in an amount not to exceed the available coverage of such policy, in that order, are available to pay interest and principal on the Bonds and the 1999 Bonds. See "SOURCES OF PAYMENT FOR THE BONDS - Reserve Fund."
NEITHER THE FAITH AND CREDIT NOR THE TAXINGPOWER OF THE DISTRICT, THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAX REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY OR THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM CERTAIN AMOUNTS DEPOSITED BY THE DISTRICT IN THE SPECIAL TAX FUND AS MORE FULLY DESCRIBED HEREIN.
The District
The District is located in the western portion of the City and currently consists of approximately 891 acres. The District was formed for the purpose of acquiring and constructing a portion of certain bridge facilities (the "Bridge Facilities"), a portion of certain drainage facilities (the "Drainage Facilities") and certain sewer facilities (the "Sewer Facilities") which are of benefit to the properties within the District. Collectively, the Bridge Facilities, the Drainage Facilities and the Sewer Facilities are referred to herein as the "Facilities." There are properties currently outside the boundaries of the District which would also benefit from one or all of the Facilities if and when such properties develop. It is anticipated that at the time these properties are developed, proceedings will be initiated to include such properties within the District. See ''THE DISTRICT" herein.
The City
The City of Camarillo is located in Ventura County, approximately midway between Los Angeles and Santa Barbara on Highway IO1, nine (9) miles inland from the Pacific Ocean. The City comprises just over 19 square miles with a population of over 60,000. It is 45 miles northwest of Los Angeles and 379 miles south of San Francisco. The City was incorporated as a general law city on October 22, 1964. For general demographic and economic information regarding the City see "APPENDIXB - THE CITY OF CAMARILLO."
The Act
The Act was enacted by the California Legislature to provide an alternate method of financing certain public facilities and services, especially in developing areas. Once duly established, a community facilities district is a legally constituted governmental entity established for the purpose of financing specific facilities and services within definedboundari es. Subject to approval by a two-thirds vote of the qualified electors within a district and compliance with the provisions of the Act, a community facilities district may issue bonds and levy and collect special taxes to repay its bonds.
3 Description of the Bonds
For a more complete description of the Bonds and the Indenture pursuant to which they are being issued, see "THE BONDS"and "APPENDIXC - SUMMARY OF THE BOND INDENTURE" herein.
General. The Bonds will be dated as of and bear interest fromtheir Delivery Date, at the rates set forth on the inside cover page hereof. See "THE BONDS." The Bonds, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the Bonds. Individual purchases of the Bonds will be made in book-entry form only. Principal of and interest and premium, if any, on the Bonds will be payable by DTC through the DTC participants. See "THE BONDS - Book-Entry Only System" herein. Purchasers of the Bonds will not receive physical delivery of the Bonds purchased by them.
Redemption. The Bonds are subject to optional, mandatory and extraordinary mandatory redemption as described herein. See "THE BONDS - Redemption" herein.
Denomination. The Bonds are being delivered in the minimum denominations of $5,000 or any integral multiple thereof within a single maturity.
Registration, transfe rs and exchanges. The Bonds will be issued and delivered as fullyregistered Bonds and will be subject to transfer, exchange and replacement as described herein. See ''THEBONDS" and "APPENDIXC - SUMMARY OF THE BOND INDENTURE" herein.
Payments. Interest on the Bonds will be payable semiannually on March I and September I of each year (each an "Interest Payment Date") commencing March 1, 2005. Principal of the Bonds will be payable upon the presentation and surrender thereof at the principal corporate trust office of the Trustee, in Los Angeles, California (the "Principal Corporate Trust Office") when due. Interest on the Bonds is payable by check of the Trustee mailed on or before each Interest Payment Date to the persons in whose names such Bonds are registered at the close of business on the Record Date, which is the fifteenth (15th) day of the month immediately preceding any Interest Payment Date, or by wire transfer pursuant to the procedure described herein.
Tax Matters
In the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions and assuming (among other things) compliance with certain covenants, interest on the Bonds is excluded from gross income for federal tax purposes and is exempt from State of Californiapersonal income taxes. In the opinion of Bond Counsel, interest on the Bonds is not specific preference item for purposes of federal individual or corporate alternative minimum taxes, although Bond Counsel observes that it is included in adjusted current earnings in calculating federal corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences caused by the ownership or disposition of, or the accrual or receipt or interest on the Bonds. See "CONCLUDING INFORMATION - Tax Exemption" herein.
Professionals Involved in the Offering
U.S. Bank National Association, Los Angeles, California, will act as Trustee with respect to the Bonds pursuant to the Indenture and as Escrow Agent forthe Prior Bonds. C.M. de Crinis & Co., Inc., Studio City, California,has served as Financial Advisor in connection with the Bonds and has assisted the District in structuring the Bonds.
4 All proceedings in connection with the issuance of the Bonds are subject to the approval of Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel. Certain legal matters will be passed on by Fulbright & Jaworski L.L.P., in its capacity as disclosure counsel. Certain other legal matters will be passed on by Burke, Williams & Sorensen, L.L.P., Los Angeles, California, the City Attorney.
For information relating to the above-mentioned professionals, advisors, counsel and agents with respect to their financial or other interest in the offering of the Bonds, see "CONCLUDING INFORMATION - Professional Fees" herein.
Offering and Delivery of the Bonds
The Bonds are offered when, as and if issued and received by the Underwriter, subject to approval as to their legality by Bond Counsel and the satisfaction of certain other conditions. It is anticipated that the Bonds will be available fordeliv ery in New York, New York, on or about September 29, 2004.
Bond Owners' Risks
Certain events could affect the ability of the District to make the payments of the principal of, premium, if any, and interest on the Bonds when due. See "RISK FACTORS" herein fora discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds.
CONTINUING DISCLOSURE
The Districthas covenanted for the benefit of owners of the Bonds to provide certain financial informationand operating data relating to the District not later than February 1 in each year, commencing February 1, 2005 (the "Annual Report"), and to provide notices of the occurrences of certain enumerated events, if material. The Annual Report will be filed by the Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the "Disclosure Dissemination Agent" or "DAC'') on behalf of the District with each Nationally RecognizedMunicipal Securities InformationRepos itory and with the appropriate State information depository, if any. The notices of material events will be filed by the Trustee on behalf of the District with the Municipal Securities Rulemaking Board (and with the appropriate State information depository, if any). The specific nature of information to be contained in the Annual Report or the notice of material events is summarized in "APPENDIXE - FORM OF CONTINUING DISCLOSURE AGREEMENTS." These covenants have been made by the District in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (the "Rule"). Neither the District nor the City has ever failed to comply in all material respects with any previous undertakings with regard to the Rule to provide annual reports or notices of material events. See "APPENDIXE - FORM OF CONTINUING DISCLOSURE AGREEMENTS."
THE FINANCING PLAN AND THE PROJECT
The proceeds of the Bonds are to be used to finance the acquisition and/or construction of the Project, to fundan additional depositto the Reserve Fund and to pay costs of issuance of the Bonds.
5 Sources and Uses of Funds The proceeds fromthe sale of the Bonds are estimated to be used as follows:
SOURCES AND USES OF FUNDS
Sources of Funds Principal Amount ...... $8,200,000.00 Plus Net Original Issue Premium ...... 35,379.00 Less Underwriters' Discount ...... (117,379.00)
TOTAL SOURCES ...... $8, 1 1 8,000.00
Uses of Funds Project Fund ...... $7,523,000.00 Bond Reserve Fund ...... 228,440.27 Costs of Issuance Fund <1> ...... 366,559.73
TOTAL USES ...... $8,1 18,000.00
(1) Includes bond insurance premiums, costs oflegal counsel and other miscellaneous costs of issuance.
The Project
A portion of the proceeds of the Bonds will be deposited into the Project Fund to pay Project Costs. The Project consists of the financingof a portion of the cost of the acquisition and construction of a part of the Drainage Facilities and the Bridge Facilities.
The Drainage Facilities consist of trenching, installing and backfillof storm drain channels, storm drain pipe, junction structures, channel outlets, catch basins, and appurtenances, and resurfacing on trenching areas in existing streets. The Bridge Facilities consist of an overpass bridge facility and/or freewayinterchange spanning Highway 101.
The Districthas the ability to issue Additional Bonds to financethe acquisition or construction of the remaining portion of the Bridge Facilities. See "SOURCE OF PAYMENT FOR THE BONDS - Additional Bonds" below.
6 Debt ServiceSche dule
The followingtable presents the schedule of principal and interest payments on the Bonds.
ANNUALDEBT SERVICE SCHEDULE*
Bond Year Ending Se�tember 1 Princieal Interest Annual Debt Service 2005 $105,000.00 $332,463.42 $437,463.42 2006 80,000.00 354,990.00 434,990.00 2007 85,000.00 350,790.00 435,790.00 2008 90,000.00 346,327.50 436,327.50 2009 95,000.00 341,602.50 436,602.50 2010 100,000.00 337,090.00 437,090.00 2011 105,000.00 332,340.00 437,340.00 2012 110,000.00 327,352.50 437,352.50 2013 215,000.00 323,832.50 538,832.50 2014 225,000.00 316,737.50 541,737.50 2015 230,000.00 309,087.50 539,087.50 2016 240,000.00 301,037.50 541,037.50 2017 250,000.00 292,337.50 542,337.50 2018 260,000.00 282,962.50 542,962.50 2019 265,000.00 272,887.50 537,887.50 2020 280,000.00 262,287.50 542,287.50 2021 290,000.00 251,087.50 541,087.50 2022 300,000.00 239,125.00 539,125.00 2023 315,000.00 226,375.00 541,375.00 2024 330,000.00 212,593.75 542,593.75 2025 340,000.00 198,073.75 538,073.75 2026 355,000.00 182,773.75 537,773.75 2027 375,000.00 166,443.75 541,443.75 2028 390,000.00 149,100.00 539,100.00 2029 410,000.00 131,062.50 541,062.50 2030 430,000.00 112,100.00 542,100.00 2031 450,000.00 91,675.00 541,675.00 2032 470,000.00 70,300.00 540,300.00 2033 495,000.00 47,975.00 542,975.00 2034 515,000.00 24,462.50 539,462.50 TOTAL $8,200,000.00 $7,1 87,273.42 $15,387,273.42
• Preliminary, subject to change.
7 THE BONDS
Descriptionof the Bonds
Payment of the Bonds. The principal of and redemption premium, if any, on the Bonds shall be payable in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof, at maturity or prior redemption thereof, at the principal corporate trust office of the Trustee.
The Bonds will be issued as one fully registered bond without coupons for each maturity and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (the "DTC"). DTC will act as securities depository of the Bonds. Individual purchases may be made in book-entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchasers will not receive certificatesrepresenting their interest in the Bonds purchased. Principal and interest will be paid to DTC, which will in tum remit such principal and interest to its participants forsubsequent disbursement to the beneficialowners of the Bonds as described herein.
Interest on the Bonds will be paid in lawful money of the United States of America semiannually on March 1 and September 1 of each year ( each, an "Interest Payment Date"), commencing on March 1, 2005. futerest on the Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day months. Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such date of authentication is an futerest Payment Date, in which event interest will be payable from such date of authentication; (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest will be payable fromthe Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the firstRecord Date, in which event interest will be payable fromthe date of the Bond; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond will bear interest from the last date to which the interest has been paid or made available for payment. futerest on any Bond will be paid to the person whose name appears in the Bond Register as the Owner of such Bond as of the close of business on the Record Date. Such interest will be paid by check of the Trustee mailed by first class mail to such Owner at his or her address as it appears on the Bond Register, or by wire transfer to an account in the United States for any Owner of at least $1,000,000 aggregate principal amount of Bonds who has delivered written wire instructions to the Trustee on or before the applicable Record Date.
The Bonds mature on September 1 in the principal amounts and years as shown on the inside cover page hereof and are subject to optional, mandatory and extraordinary mandatory redemption as shown below.
Redemption
Optional Redemption
The Bonds maturing on or before September 1, 2014 are not subject to call and redemption prior to maturity. The Bonds maturing on or after September 1, 2015 may be redeemed at the option of the District prior to maturity as a whole on any date, or in part on any Interest Payment Date, on or after September 1, 2014, from such maturities as are selected by the District, and by lot within a maturity, without premium, from any source of funds, at the redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption:
8 ExtraordinaryMandatory Redempt ion.
The Bonds may be redeemed on any Interest Payment Date, prior to maturity, as a whole or in part fromsuch maturities as are selected by the District, fromthe prepayment of Special Taxes pursuant to the RMA or, at the discretion of the District, fromthe proceeds of any moneys received by the District from the owners of property subsequently annexed to the District. Such extraordinary mandatory redemption of the Bonds will be at the following redemption prices ( expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption. The District covenants to redeem all of the 1999 Bonds prior to the redemption of any of the Bonds.
Redemption Date Redemption Price
Each March I and September I, through 103% March I, 2014 September I, 2014 and each March I and 100% September I thereafter
MandatorySinking Fund Redemption
The Bonds maturing on September I, 2029 and September I, 2034, shall also be subject to redemption prior to their stated maturity, in part, by lot, from mandatory sinking fund payments, on any September I on and afterSeptember 1, 2027 and September I, 2030, respectively, at the principal amount thereof plus accrued interest thereon to the date fixedfor redemption, without premium, as follows:
2029 TERM BONDS Sinking Account Payment Dates Sinking Account (September I) Payments 2027 $375,000 2028 390,000 2029* 410,000
·maturity
2034 TERM BONDS
Sinking Account Payment Dates Sinking Account (September I) Payments 2030 $430,000 2031 450,000 2032 470,000 2033 495,000 2034* 515,000 . .matunty
9 Purchase in Lieu of Redemption
In lieu of such an optional, mandatory or extraordinary mandatory redemption, the District may elect to purchase such Bonds at public or private sale at such prices as the District may in its discretion determine; provided, that, unless otherwise authorized by law, the purchase price (including brokerage and other charges) thereof does not exceed the principal amount thereof plus accrued interest to the purchase date.
Notice and Selection of Bonds forRedempti on
In the event the District elects to redeem Bonds as provided in the Indenture, the District will give written notice to the Trustee of its election to so redeem, the redemption date, the principal amount of the Bonds to be redeemed, the maturities from which such Bonds are to be redeemed and the principal amount of the Bonds to be redeemed from each such maturity, the Bonds or portions thereof to be selected forredempt ion.
The notice to the Trustee will be given not less than sixty (60) days prior to the redemption date or such shorter period as shall be acceptable to the Trustee. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the District will treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000. If less than all of a maturity of the Bonds are to be redeemed, the Trustee will select the Bonds to be redeemed by lot in any manner which the Trustee deems fair.
Notice of Redemption
Notice by Mail to Bondholders: The Trustee will mail, at least thirty (30) days but not more than forty-five ( 45) days prior to the date of redemption, notice of intended redemption, by first-class mail, postage prepaid, to the original purchasers of the Bonds and the respective registered Owners of the Bonds at the addresses appearing on the Bond registry books. The notice of redemption will: (a) state the redemption date; (b) state the redemption price; (c) state the bond registration numbers, dates of maturity and CUSIP numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part, the respective principal portions to be redeemed; provided, however, that whenever any call includes all Bonds of a maturity, the numbers of the Bonds of such maturity need not be stated; (d) state that such Bonds must be surrendered at the principal corporate trust office of the Trustee; (e) state that further interest on such Bonds will not accrue fromand afterthe designated redemption date; (f)state the date of the issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state that any other descriptive information needed to identify accurately the Bonds being redeemed as the District will direct. So long as such notice by first class mail has been provided, the actual receipt by the Owner of any Bond of notice of such redemption will not be a condition precedent to redemption, and failureto receive such notice will not affect the validity of the proceedings forredemption of such Bonds or the cessation of interest on the date fixedfor redemption.
Further Notice: Further notice of redemption will be sent at least two (2) days beforethe notice of redemption is mailed to the Bondholders by registered or certified mail or overnight delivery service to the registered securities depositories and the national informationservices listed within the Indenture that disseminate notice of redemption of obligations similar to the Bonds or, in accordance with the then current guidelines of the Securities and Exchange Commission, such other securities depositories and services providing information on called bonds, or no such other securities depositories and services, as Districtmay determine in its sole discretion. No defect in said further notice nor any failure to give all or
10 any portion of such furthernotice will in any manner defeatthe effectiveness of a call for redemption if notice thereof is given as above prescribed in the Indenture.
Effect of Notice of Redemption
When notice of redemption has been given substantially as provided for in the Indenture, and when the amount necessary for the redemption of the Bonds called for redemption is set aside for that purpose in the Redemption Fund, the Bonds designated for redemption will become due and payable on the date fixed for redemption thereof, and upon presentation and surrender of said Bonds at the place specified in the notice of redemption, with the formof assignment endorsed thereon executed in blank, said Bonds will be redeemed and paid at the redemption price out of the Redemption Fund and no interest will accrue on such Bonds or portions of Bonds called for redemption fromand after theredem ption date specified in said notice, and the Owners of such Bonds so called for redemption after such redemption date will look for the payment of principal and premium, if any, of such Bonds or portions of Bonds only to said Redemption Fund. All Bonds redeemed will be canceled by the Trustee. Upon surrender of Bonds redeemed in part, a new Bond or Bonds of the same maturity will be registered, authenticated and delivered to the registered Owner at the expense of the District, in the aggregate principal amount of the unredeemed portion. All unpaid interest payable at or prior to the date fixed for redemption will continue to be payable to the respective registered owners of such Bonds or their order, but without interest thereon.
Book-Entry Only System
The Depository Trust Company, New York, New York ("DTC"), will act as securities depository forthe Bonds. The Bonds will be registered in the name of Cede & Co. (DTC's partnership nominee), and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners shall mean Cede & Co., and shall not mean the ultimate purchasers of the Bonds. Payments of the principal of,premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee, so long as DTC or Cede & Co. is theregistered owner of the Bonds. Disbursements of such payments to DTC's Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is theres ponsibility of DTC's Participants and Indirect Participants. See "APPENDIX G -- BOOK-ENTRY ONLY SYSTEM."
[R emainder of page intentionally left blank.]
11 SOURCES OF PAYMENT FOR THE BONDS
The Bonds and the 1999 Bonds, the interest thereon and any amounts required to replenish the balance in the Reserve Fund to the Reserve Requirement are primarily payable, subject to the maximum rates and amounts of the Special Tax, from (1) the annual Special Tax to be levied and collected by the District on land within the District (or, with respect to any parcels sold at foreclosure sales on account of delinquent Special Tax installments, the proceeds of such sales), less the Administrative Expense Requirement, (2) accrued interest and (3 ) certain portions of the interest earned on funds held pursuant to the Indenture. The governing body of the District has the power and is obligated to cause the levy and collection of the Special Tax.
Special Tax
The District will levy and the Treasurer-Tax Collector (the "Treasurer") of the County will collect the annual Special Tax on behalf of the District, pursuant to the terms and conditions of the Act, at the same time and in the same manner as ad valorem property taxes are collected within the County. For the formula for levying and collecting the Special Tax, see "APPENDIXA - AMENDED RA TE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
The District has covenanted to cause the Special Tax to be levied in each fiscal year in accordance with the RMA in an amount (up to the maximum rates and amounts permitted by the RMA) sufficient to pay ( a) 110% of the principal of and interest on the Bonds and the Additional Bonds, if any, (b) the Administrative Expenses and ( c) any amounts required to maintain the Reserve Fund at the Reserve Requirement so long as any Bonds are Outstanding. The RMA is formulated to result in the collection of the full amount each year of 110% of such debt service, plus the Administrative Expenses, and any amounts required to replenish the applicable accounts in the Reserve Fund, to the extent permitted by the RMA.
The RMA classifies the land in the District within eleven (11 ) subareas and sets maximum rates and amounts for each Sub Area, which strictly limits the Special Tax levied each year. The Special Tax is classified as Special Taxes A through I. Residential projects are taxed on an equivalent dwelling unit basis (EDU) and commercial or industrial are taxed on a gross acre basis. Sub Area 7 is not discussed herein since its corresponding special tax was fullyprepaid prior to the issuance of the Prior Bonds. See "APPENDIXA - AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
Each of these subareas has a maximum Special Tax amount per EDU or per gross acre. The maximum Special Tax rate fora parcel is not affected based on the development status of that parcel.
Table 1 shows the maximum Special Taxes and the actual tax levy for 2004-05. The District may lower the maximum Special Taxes upon annexation or contributions from other sources to the District without an election of the qualified electors as provided in the Act and the RMA, subject to the terms and provisions of the Indenture, and provided that the resulting maximum Special Taxes which may be levied against Developed Property and all property within the District will equal at least 103% and 153%, respectively, of the sum of the estimated annual Administrative Expenses and the Maximum Annual Debt Service. See "APPENDIXC - SUMMARY OF THE BOND INDENTURE" herein.
12 Table 1
THE DISTRICT MAXIMUMSPECIAL TAX & 2004-05 LEVY (as of July 1, 2004)
Actual Drainage Bridge %of Gross Tax Sewer Component Component Component Facilities 2004-05 Special Max SubArea Acreage ED Us Class Unit Descri�tion Max. Tax Max. Tax Max. Tax Maximum Tax Tax Levy Tax 138.82 150°) C/E Single Family $942.24/EDU $1,304.86/EDU $1,023.87/EDU $3,270.97/EDU $1,902.78 58.17% 2 217.58 28 C/E Clubhouse $942.24/EDU $1,304.86/EDU $1,023.87/EDU $3,270.97/EDU $1,902.78 58.17%
3 11.40 91°) C/E Single Family2i $942.24/EDU $1,304.86/EDU $1,023.87/EDU $3,270.97/EDU $1,902.78 58.17% 4 46.16 81 C/E Single Family $942.24/EDU $1,304.86/EDU $1,023.87/EDU $3,270.97/EDU $1,902.78 58.17% 5 89.94 A Com/Industrial $3,818.72/GA NA NA $3,818. 72/GA $2,493.65 65.30% 6 49.00 B Commercial $2,3 79 .42/GA $88 1.37/GA NA $3,260. 79/GA $2,414.22 74.04% 8 237.43 290 F Single Family $679.29/EDU NA $650.07/EDU $1,329.36/EDU $451.83 33.99% 9 62.71 G Commercial $3,701 .40/GA $881 .37/GA NIA $4,582. 77 /GA $3,277.48 71.52% 10 16. 10 11 H Single Family $679.29/EDU $1,290.01/EDU $1,162.13/EDU $3,131.43/EDU $1,717.71 54.85% 11 21.76 I Commercial $3,701.40/GA $881.37/GA $794.00/GA $5,376. 77/GA $3,287.56 61.14%
(1 ). Actual number after final map recorded and/or prepayments (1 prepayment in Sub Area 1/ final map recorded at 91 instead of 92 in Sub Area 3). (2) Originally listed as condominiums, the units are detached units and therefore fall within the definitionof single-family. So urce: Sp ecial District and Financing Administration.
13 So long as any Bonds, 1999 Bonds or Additional Bonds are Outstanding, the Special Tax is levied each year in an amount (up to the maximum rates and amounts permitted by the RMA) required to pay (a) 110% of the principal of and interest on the Bonds and 1999 Bonds, (b) the Administrative Expenses, and ( c) any amounts required to maintain the Reserve Fund at the Reserve Requirement, taking into account any amounts on deposit for such purposes. The Special Tax may be prepaid as provided in the RMA. See "APPENDIX A - AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
Table 2 shows the historical special tax levies for the years 1999-00 through 2003-04 and the current year levy approved on June 23, 2004.
Table 2
THE DISTRICT HISTORICAL SPECIAL TAX LEVY
Special Tax Requirement FY 1999-00 FY2000-01 FY 2001-02 FY2002-03 FY 2003-04 FY 2004-05<1l
Principal Due (110%)<2> $737,000.00 $720,500.00 $748,000.00 $770,000.00 $797,500.00 $825,000.00
Interest Due ( 1 10%) 463,663.75 463,663.75 419,216.88 370,555.62 343,605.63 798,111.25
AdministrativeExpenses 30,000.00 28,874.07 25,300.00 26,160.00 20,000.00 17,250.00
Less: Sanitary DistrictCredit <3> (75,000.00) (75,000.00) (37,538.42) (75,000.00) 0.00 0.00
Less: Available Fund Balances (132.235.98) (131.961.14) (163.764.88) (73,746.50 (270,578. 18) (203 ,531. 3 7)
Total Special Tax Levy $1,023,427.77 $1,006,076.68 $991,213.58 $1,017,969.12 $890,527.45 $1,436,829.88
(1) Assumes no FY 2004/05 principal forthe Bonds andreflects 110% of actual interest due for 1999 Bonds and 110% of maximum debt service forthe Bonds. (2) Rate & Method of Apportionment calls forthe special tax levy computation to include 110% of actual annualdebt service. (3) The CFD does not expect to receive any more credits fromthe Camarillo Sanitary District. (4) Reflectsavailable fundbalances asof June of each year less the pending September debt service payment. Source: Sp ecial District Financing & Administration
14 Table 3 shows the available taxing capacity for each Sub Area. Additional Bonds may only be issued if, among other requirements, the maximum amount of Special Taxes that may be levied by the District on Developed Property (as defined in the Indenture) and on all parcels within the District is at least 1.05 times and 1.25 times, respectively, and the overall value-to-lien ratio exceeds a ratio of at least 8: 1. The available tax capacity is limited by the test for Additional Bonds as shown on Table 3. The District may lower the maximum Special Taxes upon annexation or contributions fromother sources to the District without an election of the qualifiedelectors as providedin the Act and the RMA, subject to the terms and provisions of the Indenture; and provided that the resulting maximum Special Taxes which may be levied against Developed Property and all property within the District will equal at least 103% and 153%, respectively, of the sum of the estimated annual Administrative Expenses and the Maximum Annual Debt Service.
Table 3
THE DISTRICT AVAILABLE MAXIMUM TAX CAPACITY ALLOCATED TO BONDS
Remaining Available Tax Actual Tax % of Available Maximum Less 110% of Maximum Capacity for Capacity Tax Capacity Sub Tax Units Tax 1999 Bond Tax Additional Used due to Allocated to Area ED Us/Acres* Tax Max Tax Rate Capacity Debt Service Capacity Bonds ABT Bonds
1-4 351 .00 c $3,270.97/EDU $1,147,168 ($360,506) $786,662 $715,148 $338,563 46.62% 5 89.94* A 3,818.72/GA 343,456 (281,636) 61,820 56,200 0 0.00 6 49.00* B 3,260.79/GA 159,779 (104,100) 55,679 50,617 31,497 58.24 8 290.00 F 1,329.36/EDU 385,514 (161,537) 223,978 203,616 2,378 1.14 9 62.71* G 4,582.77/GA 287,386 (201,206) 86,179 78,345 40,3 10 47.35 10 11.00 H 3 ,131.43/EDU 34,446 (8,918) 25,528 23,207 10,510 44.78 11 21.76* I 5,376.77/GA 116,999 (26,663) 90,336 82,123 14,205 31.39 $2,474,747 ($1,144,566) $1,330,181 $1,209,255 $437,463 36.18%
* Per Gross Acres Source: Sp ecial District Financing & Administration
15 As shown on Table 4, property currently within the District which is fully developed, built out and/or occupied (which excludes parcels which are merely graded, vacant, under construction or model homes) ("Developed Parcels") is subject to a maximum annual Special Tax capacity of $2,084,82 1, which is equal to approximately 141% of the estimated total maximum annual debt service for the Bonds and the 1999 Bonds of $1,480,720. Maximum Special Taxes relating to all currently taxable property within the District would produce 167% coverage for the maximum annual debt service forthe Bonds and the 1999 Bonds. Table 4 THE DISTRICT COVERAGE TABLE
Maximum Annual Debt Service Aggregate Debt Maximum 1999 Bonds Unallocated Bonds Aggregate Service Sub Area Tax Capaci MADs<•> MADs<•> MADs<•> Covera e<1> Developed Parcels 1-4 $1,094,833 $302,254 $715,991 $323,130 $625,384 175.07% 5 326,844 243,369 92,476 0 234,369 139.46 6 159,779 91,170 61,042 31,497 122,667 130.25 8 385,514 141,258 244,257 2,378 143,636 268.40 9 6, 141 3,763 2,171 861 4,625 132.78 10 34,446 7,844 24,115 10,510 18,355 187.67 11 77,264 40,359 34,686 9,381 49,740 155.34 Total $2,084,821 $821,018 $1,174,737 $377,758 $1,198,775 173.91% Undeveloped Parcels 1-4 $52,336 $14,468 $34,209 $15,433 $29,901 175.03 5 16,611 11,911 4,700 0 11,911 139.46 9 281,245 172,362 99,406 39,448 211,810 132.78 11 39,734 20,755 17,838 4,824 25,580 155.34 Total $389,926 $2 19,497 $156,153 $59,706 $279,202 139.66%
All Taxable Property Aggregate $2,474,747 $1,040,514 $1,330,890 $437,463 $1,477,978 167.44%
COMPONENT: Aggregate Component Debt Service Coverage from Developed Property: 173.91% Aggregate Component Debt Service Coverage fromUn developed Property: 139.66% TOTAL: Aggregate Debt Service Coverage fromDeveloped Property 141.06% Aggregate Debt Service Coverage from All Taxable Property: 167.44%
(1) Maximum annual debt service without talcinginto account 110% coverage.
Source: Sp ecial District Financing & Administration.
16 The property dedicated or conveyed, or designated by specificplan and any improvement plans to be dedicated or conveyed, to a public agency or utilized for the specifiedpurposes of roads, flood control, public school, park/open space, nature reserve/open space, treatment plant site, neighborhood park or undevelopable slopes, is exempt from the Special Tax. Amendments to a specificplan could identify additional property for such purposes, which would have the result of increasing the Special Tax on non exempt properties, but only to the extent permitted by law and the RMA.
Although the Special Tax installments will constitute liens on taxed parcels within the District, they do not constitute personal indebtedness of the owners of such parcels. There is no assurance that the owners will be financiallyable to pay the annual Special Tax installments or that they will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled "RISK FACTORS".
Upon receipt of Special Tax Revenues, including regular and any other apportionments of tax revenues from the County's Auditor-Controller, the District, pursuant to the Indenture, is to direct the deposit of such Special Tax Revenues to the Trustee for deposit into the Special Tax Fund created and held under the Indenture.
Covenant for Superior Court Foreclosure
Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax on a taxed parcel, the District may order the institution of a superior court action to foreclose the lien on the taxed parcel within specifiedtime limits. Insuch an action, the real property subject to the unpaid amount may be sold at judicial foreclosuresale. The ability of the District to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain instances and may require prior consent of the property owner in the event the property is owned by or in receivership of the Federal Deposit Insurance Corporation(the "FDIC"). See "RISK FACTORS - Bankruptcyand Foreclosure Delays" herein.
Such judicial foreclosure action is not required by law. However, the District has covenanted for the benefit of the owners of the Bonds that it will review the public records of the County of Ventura, California, in connection with the collection of the Special Tax not later than July 1st of each Fiscal Year to determine the amount of Special Tax collected in the prior Fiscal Year. With respect to individual delinquencies, if the District determines that any single parcel subject to the Special Tax is delinquent in the payment of Special Taxes in the aggregate of $5,000 or more, the District will, not later than August 15th of such Fiscal Year, send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner. With respect to aggregate delinquencies throughout the District, if the District determines that it has collected less than 95% of the Special Taxes levied in the prior Fiscal Year, then the District will, not later than August 15th of such Fiscal Year, send or cause to be sent a notice of delinquency ( and a demand for immediate payment thereof) to the owner of each delinquent parcel (regardless of the amount of such delinquency). The District will cause judicial foreclosure proceedings to be filed in the Superior Court not later than November 15th of such Fiscal Year against any property which is subject to the notice of delinquency requirement and for which the Special Taxes remain delinquent.
Subject to the maximum rates and amounts specified in the formula for apportioning the Special Tax, the Special Tax is formulated to encompass 110% of a given year's debt service, Administrative Expenses (not otherwise paid through earningson funds and accounts other than the Rebate Fund held by the Trustee) and replenishment of the Reserve Fund to the Reserve Requirement, including an amount equal to the prior year's delinquency. Through the RMA, such amounts are apportioned among all non exempt properties within the District. However, in the event superior court foreclosure proceedings are necessary, and if the Reserve Fund is depleted, there could be a delay in payments of principal of and
17 interest on the Bonds pending prosecution of the foreclosurepr oceedings and receipt by the District of the proceeds of the foreclosure sale.
No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See "RISK FACTORS" herein.
Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not specifythe obligation of the District with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale. The Act specifies that special taxes levied under the Act will have the same lien priority as ad valorem taxes but does not further specify the priority relationship, if any, between the Special Tax and other special taxes andad valorem taxes on the taxed parcel.
There could be a defaultor a delay in payments to the Owners of the Bonds, pending prosecution of foreclosure proceedings and receipt by the District of foreclosure sale proceeds, if any. However, within the limits of the RMA and the Act, the District may adjust the Special Tax levied on all property within the District to provide the amount required to pay Administrative Expenses and debt service on the Bonds. Pursuant to the Act, in some instances, the Special Tax related to parcels used for private residential purposes may not be increased by more than 10% as a consequence of the delinquency or defaultby any other owner or owners within the District.
A judgmentdebtor (property owner) has 140 days fromthe date of service of the notice of levy in which to redeem the property to be sold and may have other redemption rights afforded by law. If a judgment debtor failsto so redeem and the property is sold, his only remedy is an action to set aside the sale, which may be brought only if the purchaser at the sale was the judgment creditor, and which must be brought within 6 months of the date of sale. If a foreclosure sale is thereby set aside, the judgment is revived and the judgmentcreditor is entitled to interest on the revived judgmentas if the sale had not been made. (Section 70 1.680 of the California Code of Civil Procedure.) The constitutionality of the aforementioned statute, which repeals the former one-year redemption period, has not been tested and there can be no assurance that, if tested, such statute will be upheld.
If foreclosure proceedings were ever instituted, any holder of a mortgage or deed of trust on the affected property could, but would not be required to, advance the amount of the delinquent Special Tax payment to protect its securityintere st.
Notwithstanding the above, foreclosure proceedings may be delayed for a variety of reasons including the filing by a property owner of a petition for protection under the federalbankrupt cy laws or State insolvency laws. Filing of a petition in bankruptcy operates as an automatic stay against a foreclosure action, and delays of over two years in foreclosure proceedings are possible. See "RISK FACTORS - Bankruptcy and Foreclosure Delays." A delay in payment of Special Taxes to the District may be partially offset by an increase in Special Taxes within the limit of the RMA (subject to the limitations on parcels used forprivate residential purposes discussed above). However, there is a risk that the ability to levy Special Taxes may be limited by a voter-approved reduction in maximum Special Taxes without Bondholder consent. See "PROPERTY TAXATION IN CALIFORNIA - Proposition 218."
Reserve Fund
In order to further secure the payment of principal of and interest on the Bonds and the 1999 Bonds, the District is required to fund, maintain and apply the Reserve Fund in the amount of the Reserve
18 Requirement. The "Reserve Requirement" is definedas the amount as of any date of calculation equal to the least of (i) Maximum Annual Debt Service on the Outstanding Bonds and any Additional Bonds, (ii) 125% of Average Annual Debt Service on the Outstanding Bonds and any Additional Bonds, or (iii) 10% of the initial principal amount of the Bonds and any Additional Bonds less original issue discount, if any, plus original issue premium, if any. $228,440.27 of the proceeds of the Bonds shall be added to the existing Reserve Fund to maintain the Reserve Fund in the amount of the new Reserve Requirement. Following the issuance of the Bonds, the new Reserve Requirement for the Bonds and the 1999 Bonds equals $1,477,315.00.
At the time of issuance of the 1999 Bonds, in lieu of a cash deposit for a portion of the Reserve Requirement, a municipal bond debt service reserve policy (the "Reserve Policy") in an amount equal to $561,750 was deposited in the Reserve Fund. The Insurer has provided the District with an option to purchase a surety in the amount of $780,000. The District may elect to substitute the cash reserve with the surety within the next year.
Cash and investments on deposit in the Reserve Fund, and then, coverage under the Reserve Policy, in that order, will be used solely forthe purpose of paying the principal of and interest on the Bonds and the 1999 Bonds when due in the event that the moneys in the Special Tax Fund and the Bond Service Fund are insufficient therefor or moneys in the Redemption Fund are insufficient to make a mandatory redemption in accordance with the provisions of the Indenture.
Whenever moneys are withdrawn from the Reserve Fund or claims are made under the Reserve Policy, the Trustee will transfer to the Reserve Fund from the first available moneys in the Special Tax Fund an amount necessary to firstrepay any Policy Costs (as defined underthe Reserve Policy) due and payable to FSA and then to increase moneys on deposit in the Reserve Fund so that the balance of the moneys therein together with the coverage under the Reserve Policy is equal to the Reserve Requirement.
Moneys in the Reserve Fund in excess of the Reserve Requirement will be withdrawn from the Reserve Fund by the Trustee after making the determination of the Reserve Requirement on each September 1 and transferred to the Bond Service Fund.
Establishment of Funds and Accounts and Flow of Funds
The Indenture establishes the Special Tax Fund, the Reserve Fund, the Administrative Expense Fund, the Bond Service Fund (and within the Bond Service Fund, the Interest Account and the Principal Account), the Redemption Fund, the Cost of Issuance Fund, the Project Fund and the Rebate Fund.
The Treasurer will, no later than the tenth (10th ) Business Day afterwhich Special Tax Revenues have been received by the District on behalf of the District and in any event not later than February 15th and August 15th transfersuch Special Tax Revenues to the Trustee fordeposit in the Special Tax Fund.
(a) The Special Tax Revenues deposited in the Special Tax Fund will be held in trust and deposited into the following funds and/ortr ansferred to the District on the dates and in the amounts set forth in the following paragraphs,in the followingorder of priority, to:
(1 ) The Interest Account of the Bond Service Fund, on each Interest Payment Date and date forredemption of the Bonds and the 1999 Bonds, an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest due or becoming due and payable on such Interest Payment Date on all Outstanding Bonds and 1999 Bonds or to be paid on the Bonds and 1999 Bonds being redeemed on such date.
19 (2) The Principal Account of the Bond Service Fund, on each Interest Payment Date and redemption date on which the principal of the Bonds and the 1999 Bonds shall be payable, an amount required to cause the aggregateamount on deposit in the Principal Account to equal the principal amount of, and premium (if any) on, the Bonds and the 1999 Bonds coming due and payable on such Interest Payment Date, or required to be redeemed on such date pursuant to the Indenture.
(3) The Reserve Fund pursuant to the Indenture.
( 4) On or afterSeptem ber 2 of each year after making the transfers required under (1) through (3) above, upon receipt of written instructions from an Authorized Representative, the Trustee will transferfrom the Special Tax Fund to the Rebate Fund the amount specifiedin such request.
(5) On or after September 2 of each year after making the transfers required under (1) through (4) above, upon receipt of a written request of an Authorized Representative, the Trustee will transfer from the Special Tax Fund to the District for deposit into the Administrative Expense Fund the amounts specified in such request to pay those Administrative Expenses which the District reasonably expects (a) will become due and payable during such Fiscal Year or the cost of which Administrative Expenses have previously been incurred and paid by the District from fundsother than the Administrative Expense Fund and (b) the cost of which Administrative Expenses will be in excess of the Administrative Expense Requirement for such Fiscal Year.
(6) If, on or afterSeptember 2 of each year, after making the transfersrequired under (1) through (5) above, moneys remain in the Special Tax Fund, such moneys shall remain on deposit in the Special Tax Fund and shall be subsequently deposited or transferredpursuant to the provisions of (1) through (5) above.
(b) When there are no longer any Bonds or 1999 Bonds Outstanding, any amounts then remaining on deposit in the Special Tax Fund will be transferredto the District and used forany lawful purpose under the Act.
The Cooperative Agreement
The City and the Camarillo Sanitary District, a public agency and subsidiary district organized and existing pursuant to Division 6 of the Health and Safety Code (the "Sanitary District") have entered into a Cooperative Agreement, dated April 26, 1990 (the "Cooperative Agreement") which provided for the construction and acquisition of the Sewer Facilities, the expenditure of Prior Bond proceeds and contribution to the Special Tax Fund. Pursuantto the Cooperative Agreement, the Sanitary District owns, operates and maintains the Sewer Facilities and pledges for deposit in the Special Tax Fund certain line extension fees and charges received by the Sanitary Districtduring the prior fiscal year forany dwelling unit, or its equivalent, outside the boundaries of the District which is tributary to the Sewer Facilities. The pledge was payable fromsuch fees and charges actually collected by the Sanitary District and was capped at $75,000 per year. The Sanitary District prepaid its obligation to the District under the Cooperative Agreement. The annual contribution by the Sanitary District has been satisfied and will no longer be collected.
20 Additional Bonds
The Indenture provides for the issuance of Additional Bonds payable from the Special Tax Revenues on a parity with the Bonds and the 1999 Bonds. The District, at any time after the issuance and delivery of the Bonds, may issue Additional Bonds secured by and payable froma lien on the Special Tax Revenues equal in priority to the lien and charge securing the Outstanding Bonds and 1999 Bonds, subject only to the following specific conditions, which are conditions precedent to the issuance of any such Additional Bonds:
(a) The District 1s m compliance with all covenants set forth in the Indenture and a Certificate to that effect shall have been filed with the Trustee; provided, however, that Additional Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Additional Bonds the District will be in compliance with all such covenants.
(b) The issuance of such Additional Bonds has been duly authorized pursuant to the Act and all applicable laws and the issuance of such Additional Bonds has been provided for by a Supplemental Indenture.
(c) The District has received the certificate of a Independent Financial Consultant certifying that the revenues to be generated by the maximum amount of Special Taxes that may be levied by the District on Developed Property (as defined in the Indenture) and on all parcels within the District is at least 1.05 times and 1.25 times, respectively, the Maximum Annual Debt Service on all Outstanding Bonds, 1999 Bonds and the Additional Bonds proposed to be issued fromthe date of such determination through the final maturity of all Bonds Outstanding.
( d) The District has received a report from an Independent Financial Consultant certifying that the aggregatevalue of all parcels and the improvements thereon within the District is at least four (4) times the sum of (I) the aggregate principal amount of all Bonds then Outstanding, plus (2) the aggregateprin cipal amount of the Additional Bonds proposed to be issued, plus (3) the applicable aggregate principal amount of all assessment district bonds then outstanding and payable from assessments to be levied on such parcels, plus (4) a portion of the aggregate principal amount of other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on such parcels (the "Other CFD Bonds") equal to the aggregate principal amount of the Other CFD Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other CFD Bonds on such parcels, and the denominator of which is the total amount of special taxes levied for the Other CFO Bonds on all parcels of land. The value of the parcels may be established by the assessed value of all developed parcels and the appraised value of all undeveloped parcels. The appraised value of undeveloped parcels will be established by an appraisal performed by an Independent MAI Appraiser utilizing the assumptions and limiting conditions pursuant to which the Appraisal was conducted.
(e) Parcels of property in the District responsible for the payment of at least 95% of the Special Taxes required to be collected to pay debt service on the Outstanding Bonds are not then delinquent.
(f) The District has received an opinion of Bond Counsel substantially to the effect that (A) such Additional Bonds and the Indenture are valid and binding limited obligations of the
21 District, enforceable in accordance with their terms ( except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcementof creditors' rights generally), (B) the Indenture and such Additional Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture; and (C) assuming compliance by the District with certain tax covenants, the issuance of the Additional Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any Outstanding Bonds, 1999 Bonds and Additional Bonds theretofore issued or the exemption from State of California personal income taxation of interest on any Outstanding Bonds, 1999 Bonds and Additional Bonds theretofore issued.
(g) Provisions have been made for the deposit into the ReserveFund or other similar account of an amount at least equal to the amount necessary to cause the amount of deposit in the Reserve Fund or other similar account to equal the Reserve Requirement, as calculated immediately afterthe issuance of such Additional Bonds.
(h) The District shall certify that, so long as the Bonds are insured by Insurer, the assessed value of the land and improvements within the District subject to the Special Tax exceeds the principal amount of the Bonds outstanding by a ratio of at least 8 to I.
BOND INSURANCE PaymentPursuant to Financial Guaranty Insurance Policy
Ambac Assurance has made a commitment to issue a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy"), relating to the Bonds, effective as of the date of issuance of the Bonds. A formof the Financial Guaranty Insurance Policy is attached hereto as AppendixF.
Under the terms of the Financial Guaranty Insurance Policies, Ambac Assurance will pay to The Bank of New York, in New York, New York or any successor thereto (the "Insurance Trustee") that portion of the principal of and interest on the Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpayment (as such terms are defined in the Financial Guaranty Insurance Policy) by the District. Ambac Assurance will make such payments to the Insurance Trustee on the later of the date on which such principal and interest becomes Due forPayment or within one business day following the date on which Ambac Assurance shall have received notice of Nonpayment from the Trustee. The insurance will extend for the term of the Bonds and, once issued, cannot be canceled by Ambac Assurance.
The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and mandatory sinking fundinstal lment dates, in the case ofprincipal, and on stated dates forpayment, in the case of interest. If the Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Bonds, Ambac Assurance will remain obligated to pay principal of and interest on outstanding Bonds on the originally scheduled interest and principal payment dates including any mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration.
In the event the Trustee has notice that any payment of principal of or interest on a Bond which has become Due forPayment and which is made to a registered owner by or on behalf of the District has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the
22 United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficientfunds are not otherwise available.
The Financial Guaranty Insurance Policies do not insure any risk other than Nonpayment, as defined in the Financial Guaranty Insurance Policies. Specifically, the Financial Guaranty Insurance Policies do not cover:
1. payment on acceleration, as a result of a call for redemption (other than mandatory sinking fundredemption) or as a result of any other advancement of maturity.
2. payment of any redemption, prepayment or acceleration premium.
3. nonpayment of principal or interest caused by the insolvency or negligence of any Trustee.
If it becomes necessary to call upon a FinancialGuaranty Insurance Policy, payment of principal requires surrender of Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Bonds to be registered in the name of Ambac Assurance to the extent of the payment under the applicable Financial Guaranty Insurance Policy. Payment of interest pursuant to a Financial Guaranty Insurance Policy requires proof of the owner's entitlement to interest payments and an appropriate assignment of the owner's right to payment to Ambac Assurance.
Upon payment of the insurance benefits, Ambac Assurance will become the owner of the Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Bond and will be fully subrogated to the surrendering owner's rights to payment.
In the event that Ambac Assurance were to become insolvent, any claims arising under the Financial Guaranty Insurance Policies would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California.
Ambac Assurance Corporation Ambac Assurance Corporation ("Ambac Assurance") is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of approximately $8,142,000,000 (unaudited) and statutory capital of approximately $4,824,000,000 (unaudited) as of June 30, 2004. Statutory capital consists of Ambac Assurance's policyholders' surplus and statutory contingency reserve. Standard & Poor's Credit Markets Services, a Division of The McGraw-Hill Companies, Moody's Investors Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance.
Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an obligation by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such obligation and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy provisions substantially identical to those contained in its financial guaranty insurance policy shall be treated forfederal income tax purposes in the same manner as if such payments were made by the District.
Ambac Assurance makes no representation regarding the Bonds or the advisability of investing in the Bonds and makes no representation regarding, nor has it participated in the preparation of, the Official
23 Statement other than the information supplied by Ambac Assurance and presented under the heading "Bond Insurance."
Available Information
The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 forfurther information on the public reference room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including the Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005.
Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New York 10004 and (212) 668-0340.
Incorporation of Certain Documents by Reference
The following documents filed by the Company with the SEC (File No. 1-10777) are incorporatedby referencein this OfficialStatement:
1. The Company's Annual Report on Form 10-K forthe fiscal year ended December 31, 2003 and filedon March 15, 2004;
2. The Company's Current Report on Form 8-K dated April 21, 2004 and filed on April22, 2004;
3. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended March 31, 2004 and filed on May 10, 2004;
4. The Company's Current Report on Form 8-K dated July 21, 2004 and filed on July 22, 2004;
5. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended June 30, 2004 and filed on August 9, 2004; and
6. TheCompany 's Current Report on Form 8-K dated August 19, 2004 andfiled on August 20, 2004.
All documents subsequently filedby the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described above in "Available Information."
24 (THIS PAGE INTENTIONALLY LEFT BLANK) CITY FACILITY DISTRICT MAP City of Camarillo Ventura County , California ) 7 � \/ �
W�'F" E
s THE DISTRICT
Formation of District and Levy of Special Tax
Pursuant to the Act, the City, acting on behalf of the District on February 14, 1990, adopted Resolution No. 90-25 (the "Resolution of Intention"), stating its intent to establish the District, to finance the construction of certain improvements within the District and to levy a tax to generate special tax revenues within the boundaries of the District to pay for the construction and related costs of those improvements. On the same date the City adopted Resolution No. 90-26 declaring an intent to incur bonded indebtedness to defray the cost of those improvements. Following the required public hearing, the City Council adopted Resolution Nos. 90-48 and 90-49 forming the District and determining the necessity to impose a Special Tax and incur bonded indebtedness therefor in an amount not to exceed $31,000,000. The levy of the Special Tax was approved by the qualified electors of the District on July 30, 1991. The City adopted an ordinance to authorize the levy of the Special Tax on September 10, 1991.
The validity of the Special Tax and the issuance of bonded indebtedness was confirmed by a judgment entered in the Superior Court of the State of California in and for the County of Ventura on July 6, 1990.
The RMA was modified by the qualified voters at a special election held on July 12, 1995 to reduce the Sewer, Drainage and Bridge components of the maximum Special Tax and again was modified upon the annexation of Sub Area 8 to the District in August 1998 and the annexation of Sub Areas 9, 10 and 11 in 2000 and 2002.
Description of the Project and the Special Tax
On September 26, 1990, the District sold the Prior Bonds for the Sewer Facilities in the aggregate principal amount of $13,955,000. The Sewer Facilities have been constructed. On March 17, 1999 the District sold its 1999 Bonds in the aggregate principal amount of $11,235,000, of which $6,920,000 is currently outstanding. The 1999 Bonds were issued to refund the Prior Bonds and to provide funds to finance a portion of the Drainage Facilities. The 2004 Bonds are being issued to finance the remaining portion of Drainage Facilities and a portion of the Bridge Facilities. Additional Bonds for the remaining portion of the Drainage Facilities and the Bridge Facilities have not been issued, nor has the District commenced constructionof such remaining Facilities. Following issuance of the bonds, the District will have $8,245,000 of authorized but unissued bonds.
The District encompasses approximately 891 acres, divided into eleven subareas (the "Sub Areas"). Boundaries for the original District included Sub Areas 1 through 7. The property owner for Sub Area 7 prepaid its Special Tax obligation prior to the issuance of the Prior Bonds and therefore such Sub Area 7 is not addressed extensively herein. Sub Area 8 was annexed into the District in August 1998. Sub Areas 9 and 10were annexed into the District in 2000 and Sub Area 11 was annexed into the District in 2002. The City and the qualifiedelectors of the District have approved the RMA, which was amended on July 12, 1995 by the qualified electors and again upon annexations in 1998, 2000 and 2002. See "APPENDIXA - Amended Rate and Method of Apportionmentof Special Taxes." This RMA sets forth the methodology for determining both the annual levy of Special Taxes and the maximum authorized annual levy of Special taxes applicable to all classes of propertysub ject to taxation.
The RMA establishes nine separate Special Taxes:
25 Special Tax A: Applies to the taxable property within Sub Area 5 and covers that area's share of the Sewer Facilities only (excluding line G Sewer Improvements).
Special Tax B: Applies to the taxable property within Sub Area 6 and covers that area's share of the Sewer Facilities (excluding line G) and the Drainage Facilities.
Special Tax C: Applies to the taxable property within Sub Areas 1, 2, 3 and 4 and covers that area's share of the Sewer Facilities and the Drainage Facilities and the Bridge Facilities.
Special Tax D: Applies to the taxable property within Sub Area 7 and covers that area's share of the Sewer Facilities (excluding line G). Special Tax D has been paid in full.
Special Tax E: Applies to the taxable property within Sub Areas 1, 2, 3 and 4 and will be used as a one-time payment for the Sewer Facilities based on the recordation of a final subdivision or tractmap containing less than the assignednumber ofEDUs within the corresponding area.
Special Tax F: Applies to the taxable property within Sub Area 8 and covers that area's share of the Sewer Facilities (excluding line G) and the Bridge Facilities (which Bridge Facilities are proposed to be constructed at a later date).
Special Tax G: Applies to the taxable property within Sub Area 9 and covers that area's share of the Sewer Facilities (excluding line G), and Drainage Facilities.
Special Tax H: Applies to the taxable property within Sub Area 10 and covers that area's share of the Sewer Facilities ( excluding line G), Drainage Facilities and Bridge Facilities.
Special Tax I: Applies to the taxable property within Sub Area 11 and covers that area's share of the Sewer Facilities ( excluding line G), Drainage Facilities and Bridge Facilities.
The rate of the annual levy of Special Taxes is based upon the determination of the City Council of the amount of money to be collected from theTaxa ble Property in the Districtfor the applicable fiscal year. This amount includes all sums determined to be necessary (a) to pay the cost of acquiring and/or constructing the Facilities which have been or will be constructed or acquired by the District, (b) to pay for current and future debt service on indebtedness (including redemption prior to maturity) of the District, ( c) to create or replenish the Reserve Fund, and ( d) to pay for all Administrative Expenses and services to be paid from the Special Taxes.
The District has covenanted to cause the Special Tax to be levied in each fiscal year in accordance with the RMA in an amount (up to the maximum rates and amounts permitted by the RMA) sufficientto pay (a) 110% of the principal of and interest on the Bonds and the Additional Bonds, if any, (b) the Administrative Expenses and ( c) any amounts required to maintain the Reserve Fund at the Reserve Requirement so long as any Bonds are Outstanding. The RMA is formulated to result in the collection of the full amount each year of 110% of such debt service, plus the Administrative Expenses, and any amounts required to replenish the applicable accounts in the Reserve Fund, to the extent permitted by the RMA.
The Special Taxes are included on the regular property tax bill prepared by the County of Ventura Treasurer!fax Collector (the "County Treasurer") and mailed to the record owners of property within the District. The City reviews the public records of the Treasurer in connection with the collection of the Special Tax no later than July 1 of each year to determine the amount of the Special Tax collected in the previous Fiscal Year, and has covenanted to institute foreclosure proceedings as provided in the Indenture
26 no later than the next succeeding November 15, as authorized by the Act, in order to enforce the lien of certain delinquent installments of the Special Tax and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale.
Although the Special Taxes will be levied against taxed parcels within the District, they do not constitute a personal indebtedness of the respective property owners. There is no assurance that the property owners will be financiallyable to pay the annual Special Taxes or that they will pay such taxes even if financially ableto do so.
In the event that delinquencies occur in the receipt of the District's Special Taxes in any fiscal year, the District may increase its Special Tax levy in the following fiscal year up to the maximum amount permitted under the RMA, subject to the Act relating to private residential properties. Although the Special Tax levy may be increased, Special Tax Revenues resulting from the increase would not be available to cure any delinquencies for a period of one year or more. In addition, an increase in the Special Tax rates may adversely affect the ability or willingness of propertyowners to pay their Special Taxes. See "Rate and Method of Apportionment of Special Taxes" above and "APPENDIXA - AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" hereto for a description of the District's procedures for levyingSpecial Taxes, and "RISK FACTORS."
The District may lower the maximum Special Taxes upon annexation or contributions fromother sources to the District without an election of the qualifiedelectors as provided in the Act and the RMA, subject to the terms and provisions of the Indenture; and provided that the resulting maximum Special Taxes which may be levied against Developed Property and all property within the District will equal at least 103% and 153%, respectively, of the sum of the estimated annual Administrative Expenses and the Maximum Annual Debt Service.
There are properties currently located outside the boundaries of the District which will also benefit from the Facilities, if and when such properties develop. It is anticipated that at the time such properties are developed proceedings will be initiated to include such properties in the District.
Property Description and Ownership
Sub Areas 1-4: Spanish Hills.
District property located in Sub Areas 1-4 represent residential development, occupying approximately 450 acres. Spanish Hills is located north of U.S. Highway 101, east of Central Avenue, south of Beardsley Road and west of Las Posas Road, and consists of three types of residential projects, a private golf course and a golf course clubhouse. The first project (Sub Area 1 and a portion of Sub Area 3) is made up of 151 custom residential homes occupied by various individual homeowners (150 are subject to the Special Tax, 1 dwelling unit prepaid the sewer component of the Special Tax). As of January 1, 2004, 135 were partially or fullyimpr oved, and 16 lots were under construction or in finished condition. Property within Sub Area 1 has assessed values between $172,047 and $2,537,173. The second project (remaining portion of Sub Area 3) consists of the built out and occupied Villas project built by Larwin. This project is made up of 91 detached condominium units which have been sold to various homeowners (original 92 units were reduced to 91 units). The third project (Sub Area 4) is made up of 81 residential homes occupied by various individual homeowners. Sub Area 4 was fullybuilt out in 2002. Property within Sub Area 4 has assessed values between $389,551 and $739,553. The residential proj ects are taxed on a per EDU basis. The golf course clubhouse (Sub Area 2) is taxed at 28 EDUs. As of July 1, 2004, there are delinquencies of Special Tax (2003-04) on 9 parcels in Sub Areas 1 and 3 totaling $5451 and on 4 parcels in Sub Area 4 totaling $2271. There are currently no delinquencies of Special Tax on property within Sub Area 2.
27 There is currently outstanding an assessment lien on Sub Area 1 in the aggregate amount of $453,789, relating to the City of Camarillo 1915 Act Limited Obligation Improvement Bonds Assessment District No. 88-1 (Mission de Camarillo) Series 1989 (the "Assessment Bonds"). The Assessment Bonds were issued to finance the construction of public infrastructureimprovements within Sub Area 1.
Sub Area 5: Camarillo Premium Outlet and Edwards Theater.
District property located in Sub Area 5 consists of approximately 90 acres, developed primarily for commercial uses as the 448, 702 square foot Camarillo Premium Outlet Stores, a 64,205 square foot Edwards Theater complex, a 79,000 square foot industrial building and a 59,300 square foot mini warehouse. Sub Area 5 is located south of U.S. Highway 101 between Las Posas Road and Camarillo Center Drive. Camarillo Premium Outlet Stores, owned by Chelsea GCA Realty Inc., currently consists of over 125 stores. Located within the Camarillo Premium Outlet Stores are outlets for Barneys New York, Ann Taylor Loft, Donna Karan, Reebok, Versace and Guess. Adjacent to the Camarillo Premium Outlet Stores is the Edwards Cinema Palace, a 12-theater complex which opened in 1994. Edwards Theatres ( owned by Regal Entertainment Group) has acquired the adjoining 8 acres. The remaining 2. 79 acres for Sub Area 5 is owned by the Automobile Club of Southern California which plans to build an office building for their use on the site. The commercial property is taxed on a per gross acre basis. There are currently no delinquencies of Special Tax on property within Sub Area 5.
Sub Area 6: Town Center.
Sub Area 6 consists of approximately 49 acres which has been developed as the Camarillo Town Center. The Town Center is a 357,000 square foot development located south of U.S. Highway 101 at Las Posas Road. The Town Center features Target, Sportsmart, Linens N' Things, Ross Dress for Less, Petco and several major restaurant chains. The commercial property is taxed on a per gross acre basis. There arecurrently no delinquencies of Special Tax on property within Sub Area 6.
Sub Area 7: Prepaid.
Sub Area 7 consists of approximately 3 acres and its owner prepaid its Special Tax obligation of $48,934 (Special Tax D) prior to the issuance of the Prior Bonds.
Sub Area 8: Sterling Hills.
Sub Area 8 consists of 237 acres and made up of three residential projects, a daily-fee golf course and a golf course clubhouse. Western Pacific Housing built two projects with single family homes: the Classics with 120 homes and the Masters with 87 homes. The third proj ect consists of 73 single family homes ( detached golf villas). Sub Area 8 was fully built out in 2001. Property within Sub Area 8 (excluding the clubhouse) has assessed values between $72,055 and $895,920. The residential units are taxed on a per EDU basis. The golf course clubhouse is taxed at 10 EDU s. As of July 1, 2004, there are delinquencies of Special Tax (2003-04) on 7 parcels in Sub Area 8 totaling $3,515.
Sub Area 9: Chelsea.
Sub Area 9 was annexed into the District in fall 2002 and consists of approximately 63 acres located adjacent to Sub Area 5 and the Camarillo Premium Outlet and Edwards Theater. Las Posas Car Wash occupies a 1.34 acre parcel. A 220,000 square footretail center was approved for a 29.65 acre site formerly owned by Prime Realty and currently owned by Chelsea GCA (owner of Camarillo Premium Outlets). The center would include retail, bookstore, restaurants and parking. Chelsea also owns an additional site within Sub Area 9 planned forret ail development. Chelsea GCA is reported to merge with
28 Simon Property Group, Inc. prior to the end of calendar year 2004. A local farming/developer owns an 11-acre site across from Camarillo Center Drive. Another site is planned fora hotel with over 200 rooms and conferencefacilities . The commercial property is taxed on a per gross acre basis. There are currently no delinquencies of Special Tax on property within Sub Area 9.
Sub Area 10: Concordia.
Sub Area 10 was annexed into the District in fall 2000 and consists of 11 single family homes on approximately 16.1 acres which was developed by Concordia Homes. Build out occurred in 2001. Property within Sub Area 10 has assessed values between $841,207 and $1,235,352. The property is taxed on an EDU basis. As of July 1, 2004, there are delinquencies of Special Tax (2003-04) on 1 parcel in Sub Area 10 totaling $759.98.
Sub Area 11: Home Depot.
Sub Area 11 was annexed to the District in summer 2002 and consists of approximately 22 acres developed as the Camarillo Town Center West and is located south of U.S. Highway 101 at Las Posas Road adjacent to the Town Center. The Town Center West features a Home Depot store. A 7.39 acre parcel owned by Camarillo Capital Investors is undeveloped and is proposed to be developed as a two story office building plus a storage facility. A 0.9 acre parcel contains a four tenantret ail building. The commercial property is taxed on a per gross acre basis. There are currently no delinquencies of Special Tax on property within Sub Area 11.
Assessed Valuation and Value to Lien Ratios
The direct and overlapping debt and total tax burden on each parcel varies within the District. The assessed value-to-lien ratio of individual parcels is significantbecause in the event of a delinquency in the payment of Special Taxes the District may foreclose only on the delinquent parcels. The lower the value-to-lien ratio on a parcel, the lower the likelihood that foreclosure sale proceeds will cover the Special Tax delinquency on that parcel. The assessed valuations of the 650 parcels within the District securing the Bonds range from$30,872 to $35,601,645 per parcel and collectively equal $598,300,032 for 2004-05. The total amount of the aggregate bonded indebtedness within the District, including Bonds, the 1999 Bonds and the Assessment Bonds, is estimated to be $15,234,951. The cumulative assessed value to lien ratio for the District is approximately 39: 1. There can be no assurance that the proceeds realized from thesale of any parcel will equal its assessed value.
Table 5 and Table 6 present the breakdown of the property within the District based on residential or commercial/industrial Developed or Undeveloped Parcels. The development status of the parcels are as of June 2004. To the extent that residential or commercial developers complete or have completed the development of individual parcels and transfer them to individual homeowners or commercial and industrial end users, and other end users, the information shown in Table 5 and Table 6 will change. The Special Tax levy may change in futureyears .
29 Table 5
THE DISTRICT LEVY BREAKDOWN & VALOE TO LIEN RATIOSBY LAND USE STATUS
o/oofMax Number of FY 2004-05 %of Maximum Special Aggregate Outstanding Lots or Special Tax 2004-05 Special Tax Tax Outstanding Proposed AD 88-1 Aggregate Assessed Value to PropertyStatus Parcels Levy Levy Capacity Capacity 1999 Bonds Bonds<1> Bonds Bonded Debt Value<2> Lien Ratio
Developed Residential 600 $786,738 54.8% $1,5 14,793 61.2 $3,246,546 $6,295,532 $384,172 $9,926,043 $408,785,368 41.18:1 Undeveloped Residential 16 30,444 2.1 52,336 2.1 111,242 289,402 35,779 436,410 7,915,756 18.14:1 Developed Commercial 25 383,362 26.7 570,028 23.0 2,289,781 783,659 0 3,073,592 163,682,922 53.25 :1 Undeveloped Commercial 9 236,281 16.4 331,590 13.7 1,272,431 83 1,407 0 2,103,905 17,915,986 8.52:1
Totals 650 $1,436,826 100.0% $2,474,747 100.0 $6,920,000 $8,200,000 $419,951 $15,539,951 $598,300,032 38.50:1
(1) Assumes maximum annual debt service of $1,477,315 through 2012 and $542,975 from 2013 through 2034 fordebt allocated to drainage facilities with $120,000 principal amount of bridge improvements. (2) Valuation date of January 1, 2004. So urce: Sp ecial District and Financing Administration.
30 Table 6
IBE DISTRICT VALUE TO LIEN INFORMATION
FY04-05 Aggregate High & No. of Assessed Outstanding Average Low VTL Value to Lien Ratio Parcels Value Debt AV to Lien Ratio
DEVELOPED RESIDENTIAL Greater than 200: 1 76 $ 57,057,020 $256,440 222.50:1 265.52:1 Greater than 100: 1 but Less than 200: 1 193 105,197,201 673,249 156.25:1 Greater than 50: 1 but Less than 100: 1 52 68,969,351 1,047,653 59.74: 1 Greater than 15: 1 but Less than 50: 1 225 156,219,450 5,664,414 28.58:1 Greater than 10: 1 but Less than 15: 1 40 18,970,264 1,694,298 1 l.62:1 Less than 10: 1 14 2,372,082 344,496 6.89:1 3.04:1 Aggregate Valueto Lien 600 $408,785,368 $9,681,225 42.22:1
UNDEVELOPED RESIDENTIAL Greater than 15: 1 11 $6 ,513,437 $290,618 22.41:1 38.58:1 Greater than 10: 1 but Less than 15: 1 4 1,230,272 105, 118 11 .70: 1 Less than 10: 1 1 172,047 26,024 6.61:1 6.61:1 Aggregate Value to Lien 16 $7,915,756 $42 1,760 18.77:1
DEVELOPED COMMERCIAL Greater than 50:1 18 113,273,303 1,544,011 73.36:1 98.95:1 Greater than 15:1 but Less than 50: 1 7 50,409,619 1,698,010 29.69:1 15.10:1 Less than 15:1 0 0 0 NA NA Aggregate Value to Lien 25 $163 ,682,922 $3,242,022 50.49:1
UNDEVELOPED COMMERCIAL Greater than 15: 1 2 $6,084,903 $366,031 16.62:1 19.58:1 Greater than 10: 1 but Less than 15: 1 2 508,541 41,614 12.22:1 Less than 10: 1 5 11,322,542 1,787,300 6.33 5.18:1 Aggregate Value to Lien 9 $17,915,986 $2,194,945 8. 16: 1
TOTAL 650 $598,300,032 $15,539,951 38.50:1
Source: Sp ecial District and Financing Administration.
Major Property Owners and Undeveloped Land
Table 7 shows the largest Special Tax payers in the District for the 2004-05 tax year based on total annual 2004-05 Special Tax levy.
31 Table 7
THE DISTRICT LARGEST PROPERTY OWNERS SUBJECT TO SPECIAL TAXES BASED ON SPECIAL TAX OBLIGATION Fiscal Year 2004-05 (as of May 28, 2004)
Aggregate Assessed Assessed Total Value - % of 2004- Property Sub Taxable 04-05 Special Land Improvement Assessed to-Lien OS Tax Owner Land Use Area Parcels Tax Value<•) Value<1> Value Ratio<2) Obligation
1. CPG Partners (afflof Chelsea Commercial 9 4 $166,135.40 $9,426,798 ---- $9,426,798 5.34 11.56% PropertyGroup) 2. Chelsea GCA Realty Partners Commercial 5 2 137,250.38 9,379,210 $57,998,181 67,377,391 46.22 9.55 3. EdwardsTheatres CircuitInc. Commercial 5 3 62,416.42 7,362,102 7,030,680 14,392,782 21.71 4.35 4. Dayton Hudson Corp Commercial 6 1 56,613.40 3,664,309 4,993,382 8,657,691 14.40 3.94 5. NPG RealtySub LP Commercial 2 1 53,277.84 938,685 6,148,598 7,087,283 12.53 3.71 6. Home Depot USA Inc Commercial 11 1 44,217.66 11,885,000 4,750,000 16,635,000 35.42 3.08 7. Scripps JohnP. Newspapers Commercial 5 1 33,489.68 1,161,819 8,664,954 9,826,773 27.63 2.33 8. Esj Centers LLC Commercial 6 8 32,374.60 15,464,689 13,179,215 28,643,904 83.31 2.25 9. CamarilloCapital Investors Commercial 11 1 24,295.06 1,895,744 ...___ 1,895,744 7.35 1.69 10. Camarillo Storage Lp Commercial 5 1 15,809.72 400,932 2,014,156 2,415,088 14.38 1.10
Remaining OwnersDevelop Residential/ 627 $810,945.54 $194,732,176 $23 7 ,209,402 $43 1,941,578 50.15 56.44 Commercial
TOTAL 650 $1,436,825. 7 0 $256,311,464 $341,988,568 $598,300,032 39.27 100.00
(1) Valuation date of January 1, 2004. (2) Value to lien ratio equals the total assessed value divided by the product of the percent of the tax obligation and the outstanding aggregate bonds amount. The outstanding aggregate bond amount is assumed to be $15,260,000, consisting of proposed Bonds and outstanding 1999 Bonds.
Source: Sp ecial District Financing and Administration.
32 Property owners owning land within the District which is subject to ten percent (10%) or more of the annual Special Tax levy are referred to herein as "Major Property Owners." The information set forth in this section of the Official Statement regarding ownership and development has been provided by the owners of such property and sources which the City believes to be reliable. No assurance can be given that the proposed development will occur, or that it will proceed to completion within any specified time period. This information should not be construed to mean that the Bonds or the Special Tax levy are personal obligations of the Major Property Owners or any successor property owners within the District.
Major Property Owners. The largest property owners within the District are CPG Partners L.P. and Chelsea GCA Realty Partnership L.P. ("Chelsea L.P."), making up over 21 % of the annual levy of the District's Special Taxes. CPG Partners and Chelsea L.P. (both owned by Chelsea Property Group, Inc. (Chelsea")) own the approximately 448,700 square foot Camarillo Premium Outlet Stores within Sub Area 5 and undeveloped property adjacent thereto in Sub Area 9. Chelsea is a fully integrated, self administered and self-managed real estate investment trust specializing in the development, leasing, marketing, management and long-term ownership of 20 manufacturers' outlet centers, containing approximately 5.0 million square feet of gross leasable area, in 12 states, primarily on the east and west coasts of the United States. Chelsea's leading properties include Woodbury Common Premium Outlets (near New York City), Desert Hills Premium Outlets (near Palm Springs, California), Clinton Crossing Premium Outlets (on the Connecticut coastline), Waikele Premium Outlets (outside of Honolulu), Wrentham Village Premium Outlets (near Boston), and the outlet within the District, Camarillo Premium Outlets near Los Angeles. Chelsea has been listed on the New York Stock Exchange since 1993 and is traded under the symbol "CCG." For the nine months ending September 1998, revenues of Chelsea were approximately $95,500,000. Chelsea has been current in its special tax payments.
A publicly traded real estate investment trust (REIT) since 1993, Chelsea Property Group, Inc. (NYSE: CPG) is the world's largest owner and operator of manufacturers' outlet centers. Chelsea's total market capitalization on December 31, 2003 was approximately $4 billion. At the end of 2003, Chelsea wholly or partially owned 60 Premium Outlet® and other shopping centers - containing more than 16.1 million square feet of gross leasable area - located in 31 states and Japan. During the year, Premium Outlet tenant sales averaged $399 per square foot, among the highest in retail real estate. Other Chelsea properties in the United States include Woodbury Common Premium Outlets, near New York City; Orlando Premium Outlets, in Orlando, Florida; Wrentham Village Premium Outlets, near Boston; and Desert Hills Premium Outlets, near Palm Springs, California. Chelsea Japan Co., Ltd. - our Tokyo-based joint venture - is the leading developer and owner of Premium Outlet centers in Japan, focusing on that country's major metropolitan markets. More information about Chelsea can be foundat www.cpgi.com.
Chelsea and Simon Property Group, Inc., a real estate investment trust engaged in the ownership, development and management of income-producing properties, recently announced that they have signed a definitive merger agreement whereby Simon will acquire all of the outstanding common stock and operating partnership units of Chelsea in a transaction valued at approximately $3 .5 billion. The Chelsea operating partnership, CPG Partners, L.P., will become a wholly owned subsidiary of the Simon operating partnership, Simon Property Group, L.P. The transaction is expected to close during the fourth quarter of 2004.
Simon (NYSE: SPG) headquartered in Indianapolis, Indiana, is a real estate investment trust engaged in the ownership, development and management of income-producing properties, primarily regional malls and community shopping centers. Through its subsidiary partnerships, it currently owns or has an interest in 246 properties in North America containing an aggregate of 192 million square feet of gross leasable area in 3 7 states plus Canada and Puerto Rico. The Company also holds interests in 48 properties in Europe (in France, Italy, Poland, and Portugal). Simon is the largest publicly traded retail
33 real estate company in North America with a total market capitalization of approximately $28 billion as of July 31, 2004. More informationabout Simon can be foundat www.simon.com.
Undeveloped or Unimproved Property
Sub Areas 1 and 4. The Spanish Hills development consists of Sub Areas 1-4. Within Sub Areas 1 and 3 are 16 lots owned by various individuals or trusts in various stage of development which as of January 1, 2004 did not have any improvement value.
Sub Area 5. The undeveloped portion of Sub Area 5 consists of 2.79 acres owned by the Automobile Club of SouthernCalifornia.
Sub Area 9. The majority of the undeveloped property of Sub Area 9 is owned by Chelsea or affiliates and is planned forret ail. A 0.69 acre parcel is adjacent to the Las Posas Car Wash owned by GDG Land Development. The remaining properties are is owned by a local farming developer family and others and are planned fora multi-tenant industrial building and hotel complex.
Sub Area 11. A 7.39 acre undeveloped parcel is owned by Camarillo Capital Investors and is planned fora two-story officebuilding and storage facilities.
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34 Direct and Overlapping Debt
Table 8 shows the total direct and overlapping debt imposed on property within the District. The table is included for general information purposes only. The District believes such information to be reliable but makes no representations as to its completeness or accuracy. See "RISK FACTORS - Direct and Overlapping fudebtedness"here in.
Table 8
DIRECT AND OVERLAPPING INDEBTEDNESS WESTCAMARILLO COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF CAMARILLO
2003-04 Assessed Valuation: $570, 1 72,506
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % A1mlicable Debt 6/1/04 Metropolitan Water District 0.036% $ 161,091 Ventura County Community College District 0.801 622,377 Oxnard Union High School District 2.575 1,338,998 Mesa Union School District 32.372 1,262,508 Pleasant Valley School District 4.495 1,971,732 Camarillo Community Facilities District No. 1 100. 7,645,000(1) City of Camarillo Assessment DistrictNo. 2001-1 100. 776,500 TOTAL DIRECTAND OVERLAPPING TAX AND ASSESSMENT DEBT $13,778,206
OVERLAPPING GENERAL FUND OBLIGATION DEBT: % A1mlicable< 2> Debt 6/l/04 Ventura County General Fund Obligations 0.669% $ 711,849 Ventura County Pension Obligations 0.669 49 1,514 Ventura County Superintendent of Schools Obligations 0.669 92,690 Ventura County Community College DistrictCertificates of Participation 0.669 54,022 Oxnard Union High School DistrictCertificates of Participation 2.146 387,568 Pleasant Valley School DistrictCertific ates of Participation 3.009 100,200 City of Camarillo General Fund Obligations 6.674 888,601 Camarillo SanitaryDistr ict Certificates of Participation 9.867 755,381 Pleasant Valley County Water District Certificatesof Participation 3.797 38,965 TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT $3,292,137
3 COMBINED TOTAL DEBT $17,298,996( ) (!)Excludes Mello-Roos Act bonds to be sold. (2) Based on redevelopment adjusted assessed valuation of $442,063,768. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.
Ratios to 2003-04 Assessed Valuation: Direct Debt ($7,645,000) ...... 1.34% Total Direct and Overlapping Tax and Assessment Debt...... 2.42% Combined Total Debt ...... 3.03% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/03: $0
Source: CaliforniaMu nicipal Statistics, Inc.
35 Delinquency Summary
Existing Special Tax delinquencies in the District, which includes Special Tax payments due through the 2003-04 year, computed as of the reporting date, totaled $31,528. This constituted 3.54% of the $890,523 2003-04 Special Tax levy. As of July 1, 2004, current outstanding delinquencies have been reduced to $11,997.80 over 21 parcels, which constitutes 1.35% of the 2003-04 Special Tax levy.
Table 9 summarizes Special Tax delinquencies for the District for the past five years. All delinquencies prior to 1999-00 have been brought current. The outstanding delinquencies are summarized in Table 10.
Table 9
fflE DISTRICT SPECIAL TAX DELINQUENCY SUMMARY
Delinquent Delinquency Uncollected Current Fiscal Reporting Aggregate Special Tax % Reporting Delinquent Special Delinquency Year Date Special Tax Amount(I> Date Tax Amount<•> % 2003/04 05/10/2004 $ 890,523 $31,528 3.54% $11,997.80 1.35% 2002/03 06/30/2003 1,017,969 9,515 0.93% 908.54 .09% 2001/02 06/30/2002 967,792 13,487 1.39% 886.38 .09% 2000/01 06/30/2001 961,626 73,794 7.67% 0.00 .00% 1999/00 06/30/2000 1,023,429 7,789 0.76% 944.54 .09%
(1) In addition to the amount due, parcels which have an existing foreclosure judgment recorded against them will include judicial foreclosurecosts not included in this column. Source: Sp ecial District Financing and Administration and the Cityof Camarillo.
Table 10
fflE DISTRICT PARCEL SPECIAL TAX DELINQUENCIES (As of June 30, 2004)
# of Parcels with # of Parcels with Cumulative Delinquent Delinquent First and Delinquent Second Delinquent Installment Amount Second Installments Installment Only Amount 2003-04 > $500 1 $ 1,850.14 < $500 8 12 10,147.66 2002-03 < $500 1 * 908.54 2001-02 < $500 1 * 886.38 1999-00 < $500 1 ** 944.54 TOTAL 11 13 $14,737.26
* Parcel 152-0-282-135 is also included within 2003-04. ** Parcel 152-0-242-095 is also includedwithin 2003-04. Source: Sp ecial District Financing & Administration and Cityof Camarillo.
36 RISK FACTORS
The fo llowing summaries do not purport to be a complete statement of all fa ctors which may be considered as risks in evaluating the credit quality of the Bonds, and the Offi cial Statement should be read in its entirety. The occurrence of one or more of the events discussed herein could adversely affe ct the ability or willingness of property owners in the District to pay their Sp ecial Taxes when due. Such fa ilures to pay Sp ecial Taxes could result in the inability of the District to make fu ll and punctual payments ofdebt service on the Bonds. In addition, the occurrence of one or more ofthe events discussed herein could adversely affe ct the value of the property in the District. Purchasers of the Bonds should not assume that the land within the District could be sold fo r the assessed or appraised values set fo rth in this Off icial Statement at a fo reclosure sale fo r de linquent taxes.
Limited Obligations
The legal obligation of the District with respect to any delinquent installments of Special Taxes is solely the institution of judicial foreclosure proceedings, as set forth in the Indenture and summarized in this Official Statement.
As discussed in the "SPECIAL TAXES" section herein, in the event of a delinquency in payment of any unpaid installment of Special Taxes, the City has no obligation to advance to the Bond Fund any moneys of the District, to purchase land at the delinquent Special Taxes foreclosure sale (in the absence of any bidder at a foreclosure sale) or to pay future delinquent installments of Special Taxes or interest thereon.
Collection of Special Taxes
In order to pay debt service on the Bonds, it is necessary that the Special Tax levied against land within the District be paid in a timely manner. As of June 30, there are 21 parcels delinquent in the payment of such levy for the 2003-04 year totaling $11,997 .80 which constitutes 1.35% delinquency rate. There can be no assurance that any owner will pay when due any future Special Tax levy. Although the District has established and covenanted to maintain the Reserve Fund to be used to pay debt service on the Bonds to the extent other funds are not available therefor, delays or delinquencies in the collection of the Special Tax could cause a delay or defaultin payment of debt service if the Reserve Fund is depleted. See "SOURCES OF PAYMENT FOR THE BONDS."
Under provisions of the Act, the Special Tax will be levied on the properties within the District on the regular property tax bills sent to owners of such properties. Such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do regular property tax installments. See "PROPERTY TAXATION IN CALIFORNIA - Property Tax Collection Procedures." Special Tax installment payments cannot be made separately from other property tax amounts.
If property within the District in addition to that designated for future public use at the time the voters of the Districtapproved the Special Tax formula becomes exempt fromtaxation through ownership by a non-taxable entity, such as the State or a local government, for a public purpose (for example, through dedication or condemnation of property for use as a public street or highway), the Special Tax allocable to such exempted property will in effect be reallocated to the other properties within the District, subject to the maximum rate of levy permitted for such property and subject to the provisions of the Act relating to private residential properties, if applicable. This would result in an increase in the Special Tax payments to be made by the owners of such properties and could reduce their ability or willingness to pay their Special Tax installments. See "SOURCES OF PAYMENT FOR THE BONDS - Special Tax."
37 Risks of Real Estate Secured Investments Generally
The Bondowners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of commercial and industrial buildings and/or sites in the event of sale or foreclosure,(ii) changes in real estate tax rate and other operating expenses, government rules (including, without limitation, zoning laws and restrictions relating to threatened and endangered species) and fiscal policies and (iii) natural disasters (including, without limitation, earthquakes and floods), which may result in uninsured losses.
Concentration of Ownership
Concentration of ownership of the property in the District presents a risk which could become more significantif land development within the District is slowed or halted. As of January 2004, property owners within the Districtheld 23 parcels not constituting "Developed Parcels" as such term is referredto herein (meaning parcels which are fully developed, built out and/or occupied and which exclude parcels graded, vacant, under construction or model homes) (the "Undeveloped Parcels"). Such Undeveloped Parcels in the aggregateaccount for 18% of the Special Tax levy for2004-05 (2% forresidential and 16% for commercial/industrial). The Major Property Owners (any owner of property subject to 10% or more of the annual levy of Special Taxes) account for 21 % of the 2004-05 Special Tax levy. See "THE DISTRICT -Major Property Owners and Undeveloped Property" herein. To the degree that the Special Tax levied on a propertyrepresents a large portion of the total Special Tax levied, a delinquency in such owner's payment can be expected to result in more rapid depletion of the Reserve Fund, and a greater possibility of delay or default in payment of the Bonds.
Notice of Special Taxes
The District has recorded a notice of the Special Tax in the Officeof the County Recorder of the County of Ventura. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a home or purchase or lease of a commercial facility or the lending of money thereon. Failure to disclose the existence of the Special Tax may affect the willingness and ability of future owners ofland within the District to pay the Special Tax when due.
Prepayment Risk
The Bonds are subject to special mandatory redemption triggered by prepayments of Special Taxes. The Bonds are also subject to optional redemption. See "THE BONDS - Redemption." Prepayments may be made at any time on propertywithin the District. See "APPENDIXA - AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Neither the City nor the District has control over, or is able to predict the amount of, such prepayments.
Undeveloped Property Within the District
The existence of Undeveloped Parcels within the District presents a risk to Bondholders in that the ratio of the total tax burden on such property to the value of such property may be so high as to affect the ability or willingness of the owner thereof to pay taxes, including Special Taxes, on the property. As of January 2004, 627 of the 650 parcels within the District have been built out. Of the 23 parcels defmed as Undeveloped Property, 9 parcels are zoned commercial. While owners of Undeveloped Parcels typically intend to develop and occupy the property or sell the developed property to other users, there
38 can be no assurance that such development will take place. See ''THE DISTRICT - Property Ownership" herein.
Land Value
The value of land within the District is an important factor in evaluating the investment quality of the Bonds. In the event that a property owner defaults in the payment of Special Tax installments, the District's only remedy is to judicially foreclose on that property. Prospective purchasers of the Bonds should not assume that the property within the District could be sold forthe assessed value described in the Official Statement at a foreclosure sale for delinquent Special Tax installments or for an amount adequate to pay delinquent Special Tax installments. Reductions in property values within the District due to a downturn in the economy or the real estate market, events such as earthquakes, droughts, or floods, stricter land use regulations, threatened or endangered species or other events may adversely impact the security underlying the Special Taxes.
The property values set forth in the various tables herein are the assessed values of the property determined by the County Auditor-Controller. Prospective purchasers of the Bonds should not assume, however, that the land within the District could be sold for the assessed amount described herein at the present time or at a foreclosure sale fordelinquent Special Taxes. The actual market value of the property is subject to future events such as a downturn in the economy, fluctuation of mortgage interest rates and occurrences of certain acts of nature, all of which could adversely impact the value of the land in the District which is the security for the Bonds. As discussed herein, many factors could adversely affect property values or prevent or delay land development within the District. Furthermore, the estimated value-to-lien ratio of individual parcels may vary. No assurance can be given that, should a parcel with delinquent Special Taxes be foreclosed upon and sold for the amount of the delinquency, any bid will be received for such property or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes.
Value to Lien Ratios
Value to lien ratios have traditionally been used in land-secured bond issues as a measure of the "collateral" supporting the willingness of property owners to pay their special taxes and assessments (and, in effect, their general property taxes as well). The value to lien ratio is mathematically a fraction, the numerator of which is the value of the property and the denominator of which is the "lien" of the assessments or special taxes. A value to lien ratio should not, however, be viewed as a guarantee for credit-worthiness. Land values are more volatile in the early stages of a development, and are especially sensitive to economic cycles. A downturn of the economy or other market factors may depress land values and hence the value-to-lien ratios, by increasing risk to investors and lenders, and lengthening the absorption period for new development projects. Further, the value-to-lien ratio cited for a bond issue is an average. Individual parcels in a community facilities district may fall above or below the average, sometimes even below a 1: 1 ratio. (With a ratio below 1:1, the land is worth less than the debt on it.) If property ownership in a community facilities district is highly concentrated during the early stages of development, the delinquency of a major property owner can deplete the bond's reserve fundand threaten the timely payment of the debt service, even though the value-to-lien ratio is adequate. Although judicial foreclosure proceedings can be initiated rapidly, the process can take several years to complete, and the bankruptcy courts may impede the foreclosure action. No assurance can be given that, should a parcel with delinquent Special Taxes be foreclosed upon and sold for the amount of the delinquency, any bid will be received for such property or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. Finally, local agencies may formoverlapping community facilities districts or assessment districts because they typically do not coordinate their bond issuances. Debt issuance by another entity can dilute value-to-lien ratios.
39 Direct and Overlapping Indebtedness
There is currently outstanding an assessment lien on Sub Area 1 in the aggregate amount of $453,789, relating to the Assessment Bonds. In addition, Additional Bonds in the amount of $8,245,000 may be issued forDrainage and Bridge Facilities, subject to the levy of Special Taxes up to the maximum Special Tax Rate. See "THE DISTRICT - Direct and Overlapping Debt."
The ability of an owner of land within the District to pay the Special Taxes could be affectedby the existence of other taxes and assessments imposed upon taxable parcels. In addition, other public agencies whose boundaries overlap those of the District acting without the consent of the District or the City, could impose additional taxes or assessment liens on the property within the District in order to finance public improvements or services to be located or provided inside of or outside of such area. The imposition of such additional taxes and assessments may affect the ability or willingness of a property owner to pay the Special Taxes. The District has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property within the District. Any such additional special taxes or assessments may have a lien on such property on a parity with the Special Taxes. Since the ability of a landowner within the District to pay the Special Taxes could be adversely affected if additional debt is issued, the imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of the landowners to pay the Special Taxes and would increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes
Failure to Develop Land
The recession during the earlyand mid 1990's in Californiaadv ersely affected both the real estate market and the construction industry. There can be no assurance that land development within the District will not be adversely affected by a future deterioration of the real estate market and economic conditions, or future local, State and federal governmental policies relating to real estate development, the income tax treatment of real property ownership, or the State or national economy. A slowdown of the development process and the absorption rate of developed properties could adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special Taxes, which would affect the ability of the District to pay debt service on the Bonds when due. See APPENDIX Gherein for a summary of the market absorption study conducted for undeveloped residential properties within the District.
The development potential of the Undeveloped Parcels in the District is based, in part, on the costs associated with complying with requirements for obtaining governmental approval to build a home or commercial structure, or in some cases, to subdivide land and build homes or commercial structures. The future development of the Undeveloped Parcels within the District may be adversely affected by existing or future governmentalpolicies restricting or controlling the development of land in the District.
Measure A and an ordinance of the City adopted in response thereto, limits the number of new housing allotments to 400 dwelling units per year. Property owners are permitted to accumulate their allotments and certain other projects are exempt fromthe limitation on allotments.
Measure C (the Camarillo Save Open Space and Agricultural Resources Ordinance or "SOAR") was approved by voters in November 1998 and amended the City general plan to protect existing agricultural andop en space lands within the City's boundaries and sphere of influence. However, it does not affect the properties within the District or those designated within the ultimate boundaries of the District.
40 There can be no assurance that the owners of the Undeveloped Parcels in the District will be willing and able to secure the necessary discretionary governmental approvals if they choose to develop their properties.
In addition to reducing the ability and/or willingness of the owners of the Undeveloped Parcels in the District to make Special Tax payments when due, a reduction of the development potential of the land could adversely affect land values and reduce the proceeds which could be collected at a foreclosure sale in the event that Special Taxes are not paid when due.
Further, there can be no assurance that the vesting tentative maps or any development agreements applicable to the Undeveloped Parcels within the District will ultimately exempt the development of such property fromthe provisions of futurerestri ctions on land use development imposed either by the City, by the County or by voter initiative.
Bond Owners should assume that any event that significantly impacts the ability to develop land in the District would cause the property values on Undeveloped Parcels within the District to decrease substantially fromtheir currentmarket values and could affect the willingness and ability of the owners of Undeveloped Parcels within that District to pay the Special Taxes when due. Despite the amount of development that has already taken place, payment of the Bonds is currently partially dependent upon receipt of Special Taxes levied on Undeveloped Parcels. Generally, Undeveloped Parcels are less valuable per unit of area than Developed Parcels, especially ifthere are no plans to develop such land or if there are severe restrictions on the development of such land. The Undeveloped Parcels also provide less security to the Bond Owners should it be necessary for theDistrict to foreclose on Undeveloped Parcels due to the nonpayment of the Special Taxes. Furthermore, an inability to develop the land within the District increases the Bond Owners' dependency upon timely payment of the Special Taxes levied on Undeveloped Parcels. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of the owners of the property therein to make Special Tax payments on Undeveloped Parcels, and could greatly reduce the value of such property in the event it has to be foreclosedup on.
Seismic Considerations
The District, like all California communities, may be subject to unpredictable seismic activity. There is no evidence that a ground surface rupture will occur in the event of an earthquake, but there is significant potential for destructive ground-shaking during the occurrence of a major seismic event. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such an event. In the event of a severe earthquake, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such an earthquake, reducing or eliminating the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes. The District is located in a moderate to high risk seismic environment. The nearest active fault isthe San Andreas fault located approximately 35 miles from the District. The City has adopted the Uniform Building Code and the Uniform Building Code Standards adopted by the State of California. All new construction is required to comply with the highest earthquake resistance design standard.
Bankruptcy and Foreclosure Delays
The payment of Special Taxes and the ability of the City to foreclose against properties having delinquent Special Taxes may be limited by bankruptcy, insolvency, or other laws generally affecting
41 creditors' rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or legal delaying tactics.
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.
In addition, bankruptcy of a property owner (or a property owner's partner or equity owner) would likely result in a delay in procuring Superior Court foreclosureproceedings unless the bankruptcy court consented to permit such foreclosure action to proceed. Such delay would increase the likelihood of a delay or default in payment of the principal of, and interest on, the Local Obligations and the possibility of delinquent tax installments not being paid in full.
Under 11 U.S.C. Section 362(b)(I8), in the event of a bankruptcy petition filed on or after October 22, 1994, the lien for ad valorem taxes in subsequent fiscal years will attach even if the property is part of the bankruptcy estate. Bondowners should be aware that the potential effect of 11 U.S.C. Section 362(b)(l8) on the Special Taxes depends upon whether a court were to determine that the Special Taxes should be treated like ad valorem taxes forthis purpose.
On July 30, 1992, the United States Court of Appeals forthe Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on the property. Although the court upheld the priority of unpaid taxes imposed before thebankruptcy petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be "administrative expenses" of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre-petition taxes.
According to the court's ruling, as administrative expenses, post petition taxes would be paid, assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise), it would at that time become subject to current ad valorem taxes.
The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how a bankruptcy court would treat the lien for Special Taxes levied afterthe filingof a petition in bankruptcy. Glasply is controllingprecedent on bankruptcy courts in the State. If the Glasply precedent was applied to the levy of the Special Taxes, the amount of Special Taxes received fromparcels whose owners declare bankruptcycould be reduced.
Property Controlled by FDIC
The District's ability to collect interest and penalties specified by State law and to foreclosethe lien of delinquent Special Tax payments may be limited in certain respects with regard to properties in which the Internal Revenue Service, the Drug Enforcement Agency, the Federal Deposit Insurance Corporation (the "FDIC") or other similar federal agencies has or obtains an interest. The District is not aware of any such interest of a federal agency in the land within the District. On June 4, 1991 the FDIC issued a Statement of Policy Regarding the Payment of State and Local Real Property Taxes. The 1991
42 Policy Statement was revised and superseded by a new Policy Statement effective January 9,1997 (the "Policy Statement"). The Policy Statement provides that real property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its proper tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice arid the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC owned property are secured by a valid lien (in effect before theproperty became owned by the FDIC), the FDIC will pay those claims. The Policy Statement furtherprovides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permita lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent.
The Policy Statement states that the FDIC generally will not pay non ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixedat the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purportsto secure the payment of any such amounts. Special taxes imposed under the Act and a special tax formula which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and thereforecovered by the FDIC's federalimm unity.
The FDIC has filed claims against one California county in United States Bankruptcy Court contending, among other things, that special taxes authorized under the Act are not ad valorem taxes and therefore not payable by the FDIC, and seeking a refund of any special taxes previously paid by the FDIC. The FDIC is also seeking a ruling that special taxes may not be imposed on properties while they are in FDIC receivership. The Bankruptcy Court ruled in favor of the FDIC's positions and, on August 28, 2001, the United States Court of Appeals for the Ninth Circuit affirmed the decision of the Bankruptcy Court, holding that the FDIC, as an entity of the federal government, is exempt from post receivership special taxes levied under the Act. This is consistent with provision in the Act that the federalgovernment is exempt fromspecial taxes.
The District is unable to predict what effectthe application of the Policy Statement would have in the event of a delinquency with respect to a parcel in which the FDIC has an interest, although prohibiting the lien of the FDIC to be foreclosed on at a judicial foreclosuresale would likely reduce the number of or eliminate the persons willing to purchase such a parcel at a foreclosuresale. Owners of the Bonds should assume that the District will be unable to foreclose on any parcel owned by the FDIC. Such an outcome would cause a draw on the Reserve Fund and perhaps, ultimately, a default in paymentof the Bonds. The District has not undertaken to determine whether the FDIC or any FDIC-insured lending institution currently has, or is likely to acquire, any interest in any of the parcels, and therefore expresses no view concerningthe likelihood thatthe risks described above will materialize while the Bonds are outstanding.
Tax Sale forDelinquent Ad Va lorem Taxes
Five years aftera property goes into default on the payment of ad valorem taxes, such property may be sold at a tax sale to recover such past due taxes. Section 3695 of the California Revenue & Taxation Code states that unless a "taxing agency" objects to a tax sale (in the manner provided), "the lien of its taxes or assessments and any rights which it may have to the property as a result of such taxes or assessments are canceled" and the taxing agency "is entitled to its proper share" of the sale proceeds.
43 Section 3695 also provides that, if the taxing agency does object to the sale, "the lien of its taxes or assessments or any rights which the taxing agency may have to the property are not affected." Notwithstanding the above, under section 3695, a "city or district for which the county officers assess propertyand collect taxes or assessments" may not object to a tax sale unless it fileswith such objection a proposed agreementto purchase the property at an amount that is not less than the minimum bid.
It is unclear whether the District is thetype of district which is required by section 3695 to filea proposed purchase agreementin order to protest a tax sale, and whether, if the Districtfailed to object to a tax sale, amounts of Special Taxes which may have been removed from the tax rolls in order to pursue foreclosure proceedings as required by the Indenture and the Act would be included in the tax sale minimum bid. There can be no assurance that the District would receive notice of a tax sale, or that the District's legislative body would exercise its discretion to object to the tax sale. Any of these possibilities, if they were to occur, could result in the District's inability to recoup defaulted Special Tax payments from a foreclosure sale or a tax sale of the tax defaulted property, or may affect the validity of the Special Tax lien as to subsequent installments which provide security for theBonds.
Future Land Use Regulations and Growth Control Initiatives
It is possible that future growth control initiatives, similar to Measure A and Measure C, could be enacted by the voters or future local, state or federal land use regulations could be adopted by governmental agencies and be made applicable to the development of the Undeveloped Property within the District with the effect of negatively impacting the ability of the owners of such land to complete the development of such land if they should desire to develop it. See also "Endangered Species" below. This possibility presents a risk to prospective purchasers of the Bonds in that an inability to complete desired development increases the risk that the Bonds will not be repaid when due. The owners of the Bonds should assume that any reduction in the permitted density or significant increase in the cost of development of the Undeveloped Parcels due to more restrictive land use regulations would cause the values of the Undeveloped Parcels within the District to decrease due to diminished development potential. A reduction in land values reduces the likelihood that in the event of a default in payment of Special Taxes a foreclosure action will result in adequate fundsto repay the Bonds when due.
Under current State law, it is generally accepted that proposed development is not exempt from future land use regulations until building permits have been issued and substantial work has been performed and substantial liabilities have been incurred in good faith reliance on the permits. Because future development of property in the District could occur over many years, if at all, the application of future land use regulations to the development of the Undeveloped Parcels could cause significant delays and cost increase not currently anticipated, thereby reducing the development potential of the Undeveloped Parcels andthe ability or willingness of owners of such land to pay the Special Taxes when due or causing the values of such Undeveloped Parcels within the District to decrease substantially. See "Failure to Develop Land" herein.
Endangered Species
During the past several years, there has been an increase in activity at the State and federallevels related to the listing and possible listing of certain plant and animal species found in the State as endangered species. There can be no assurance that future action by the State or federal governments to protect species will not adversely impact the ability of the owners of Undeveloped Parcels to develop such land. Such action could reduce the likelihood of timely payment of the Special Taxes levied against such Undeveloped Parcels and would likely reduce the value of such property and the potential revenues available at foreclosure sales for delinquent Special Taxes. See "Failure to Develop Land" above.
44 Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of the most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners of and operators on a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Super Fund Act," is the most well known and widely applicable of these laws, but State laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance that caused the condition. The effect, should any of the parcels within the District be affected by a hazardous substance, would be to reduce the marketability and value by an amount at least equal to the costs of remedying the condition, because the prospective purchaser of such a parcel would, upon becoming the owner of such parcel, become obligated to remedy the condition just as the seller of such a parcel is so obligated.
The assessed values of the parcels ofland within the District do not take into account the possible liability of the owner ( or operator) for the remedy of any hazardous substance affecting anysuch parcel. Neither the District nor the City has independently verified whether, and are not aware whether, the owners (or operators) of any of the parcels within the District have such a current liability with respect to such a parcel. However, it is possible that such liabilities do currently exist and that the City and the District are not aware of such liabilities. No steps whatsoever have been taken in connection with the issuance of the Bonds to determine whether such liabilities exist.
Further, it is possible that such hazardous substance liabilities may arise in the future with respect to any of the parcels within the District resulting fromthe existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance. All of these possibilities could significantlyaff ect the value of parcels.
Loss of Tax Exemption
As discussed in this Official Statement under the caption "CONCLUDING INFORMATION - Tax Exemption," interest on the Bonds could become includable in gross income forpurposes of federal income taxation retroactive to the date the Bonds were issued, as a result of future acts or omissions of the District in violation of its covenants in the Indenture. Should such an event of taxability occur, the Bonds are not subject to a special redemption and will remain outstanding until maturity or until redeemed under one of the redemption provisions contained in the Indenture.
Limitation on Remedies
Remedies available to Bondholders may be limited by a variety of factorsand may be inadequate to assure the timely payment of principal of and interest on the Bonds, or to preserve the tax-exempt status of the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds and the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, or similar laws affecting generally the enforcement of creditors' rights. Additionally, the Bonds are not subject to acceleration in the event of the breach of any covenant or duty under the Indenture. Lack of remedies may entail risks of delay, limitation,or modificationof Bondowner rights.
45 Enforceability of the rights and remedies of the Bond Owners, and the obligations incurred by the District, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor's rights generally, now or hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the Constitution, the reasonable and necessaryexercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against community facilities districts in the State. See "RISK FACTORS - Bankruptcyand Foreclosure."
Secondary Market
There can be no assurance that there will be a secondary market for the Bonds, or if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, pricing of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could substantially differ fromthe original purchase price.
No Acceleration
The Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other defaultunder the terms of the Bonds or the Indenture or upon any adverse change in the tax status of interest on the Bonds. There is no provision in the Act or the Indenture for acceleration of the Special Taxes in the event of a payment defaultby an owner of a parcel within the District. Pursuant to the Indenture, a Bond Owner is given the right for the equal benefitand protection of all Bond Owners to pursue certain remedies described in "APPENDIX C -- SUMMARY OF THE BOND INDENTURE/'
PROPERTYTAXA TION IN CALIFORNIA
PropertyTax Collection Procedures
Taxes are levied each fiscal year on taxable real and personal property which is situated in the District as of the preceding January 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State-assessed public utilities property and real property on which the taxes are a lien, sufficient,in the opinion of the county assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll."
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscalyear. If unpaid, such taxes become delinquent on December 10 and April 10, respectively and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquent penalty, plus a redemption penalty of 1.5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and is then subj ect to sale by the countytax collector.
Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on August 31 of each fiscalyear. A 10% penalty attaches to delinquent taxes on property of the unsecured roll, and an additional penalty of 1.5% per month begins to accrue beginning November 1 of
46 the fiscal year. The trucing authority has four ways of collecting unsecured personal property taxes: (a) a civil action against the taxpayer; (b) filing a certificatein the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; ( c) filing a certificate of delinquency for record in the county recorder's office in order to obtain a lien on certain property of the taxpayer; and (d) seizure and sale of personal property, improvements or possessory interest belonging or assessed to the assets.
Supplemental Assessments
A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498) provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next March 1 truc lien date followingthe change, and thus delayed the realization of increased property taxes from the new assessments forup to 14 months.
Collection of taxes based on supplemental assessments will occur throughout the year. Trucesdue will be pro-rated according to the amount of time remaining in the tax year, with the exception of trucbills dated March 1 through May 31, which will be calculated on the basis of the remainder of the current fiscalyear and the full twelve monthsof the next fiscalyear.
Proposition 218
On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Right to Vote on Truces Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which articles contain a number of provisions affectingthe ability of the District to levy and collect both existing and future taxes, assessments, fees and charges. According to the "Official Title and Summary" of Proposition 218 prepared by the California State AttorneyGeneral, Proposition 218 limits the "authority of local governments to impose taxes and property-related assessments, fees and charges." On July 1, 1997 California State Senate Bill 919 ("SB 919") was signed into law. SB 919 enacted the "Proposition 218 Omnibus Implementation Act," which implements and clarifies Proposition 218 and prescribes specific procedures and parameters for local jurisdictions in complying with ArticlesXIIIC and XIIID.
Article XIIID of the State Constitution reaffirms that the proceedings for the levy of any Special Taxes by the District under the Act must be conducted in conformity with the provisions of Section 4 of Article XIIIA. The District has completed its proceedings for the levy of Special Taxes in accordance with the provisions of Section 4 of Article XIIIA. Under Section 53358 of the California Government Code, any action or proceeding to review, set aside, void, or annul the levy of a special tax or an increase in a Special Tax (including any constitutional challenge) must be commenced within 30 days after the Special Tax is approved by the voters.
Article XIIIC removes certain limitations on the initiative power in matters of local truces, assessments, fees and charges. The Act provides fora procedure, which includes notice, hearing, protest and voting requirements, to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting a resolution to reduce the rate of any special tax if the proceeds of that tax are being utilized to retire any debt incurred pursuant to the Act unless such legislative body determines that the reduction of that trucwould not interfere with the timely retirement of that debt. Although the matter is not free from doubt, it is likely that exercise by the voters of the initiative power referred to in Article XIIIC to reduce or tenninate the Special Truc is subject to the same restrictions as are applicable to the City Council, as the legislative body of the District, pursuant to the Act. Accordingly, although the matter is not free from doubt, it is likely that Proposition 218 has not
47 conferred on the voters the power to repeal or reduce the Special Taxes if such repeal or reduction would interfere with the timely retirement of the Bonds.
It may be possible, however, forvoters or the City Council, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greaterthan the amount necessary forthe timely retirement of the Bonds.
Proposition 218 and the implementing legislation have yet to be extensively interpreted by the courts; however, the CaliforniaCourt of Appeal in April 1998 upheld the constitutionality of Proposition 218 's balloting procedures as a condition to the validity and collectibility of local governmental assessments. A number of validation actions forand challenges to various local governmental taxes, fees and assessments have been filed in Superior Court throughout the State, which could result in additional interpretations of Proposition 218. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and the outcome of such determination cannot be predicted at this time with any certainty.
Future Initiatives
Proposition 218 was adopted as a measure that qualified for the ballot pursuant to California's initiative process, as have other statutory and State constitutional measures affecting the taxing power of local authorities. From time to time other initiative measures could be adopted which could affect the ability of the District to levy and collect the Special Tax.
CONCLUDING INFORMATION
Underwriting
The Bonds were sold at competitive bid to Citigroup Global Markets Inc. as Underwriter, at a purchase price of $8,118,000.00, which includes an Underwriter's discount of $117,379.00 and a net original issue premium of $35,379.00. The Underwriter intends to offer the Bonds to the public initially at the prices set forth on the inside cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice.
The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers may reallow any such discounts on sales to other dealers.
Legal Opinion
The legal opinion of Fulbright & Jaworski L.L.P., Los Angeles, California,approving the validity of the Bonds, in substantially the form set forth in APPENDIXD hereto, will be made available to purchasers at the time of original delivery. Bond Counsel has not undertaken on behalf of the Owners or the Beneficial Owners of the Bonds to review the Official Statement and assumes no responsibility to such Owners and Beneficial Owners for the accuracy of the informationcontained herein. Certain legal matters will be passed upon for the City and the District by Burke, Williams & Sorensen, L.L.P., Los Angeles, California, as City Attorney, and by Fulbright & Jaworski L.L.P., Los Angeles, California, as Disclosure Counsel.
48 Tax Exemption
The Internal Revenue Code of 1986, as amended (the "Code"), imposes certain requirements that must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for fe deral income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in grossincome for federal income tax purposesretro active to the date of issuance of the Bonds. The District has covenanted in the Indenture to comply with each applicable requirement of the Code necessary to maintain the exclusion pursuant to section 103(a) of the Code of the interest on the Bonds fromthe gross income of the owners thereof for federal income tax purposes.
In the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, under existing law, interest on the Bonds is exempt frompersonal income taxes of the State of Californiaand, assuming compliance with the aforementioned covenant, the Bonds are not "specific private activity bonds" within the meaning of section 57(a)(5) of the Code and, therefore, that the interest on the Bonds will not be treated as an item of tax preferences for purposes of computing the alternative minimum tax imposed by section 55 of the Code. The receipt or accrual of interest on the Bonds owned by a corporation may affect the computation of the alternative minimum taxable income, upon which the alternative minimum tax is imposed, to the extent that such interest is taken into account in determining the adjusted current earnings of that corporation (75 percent of the excess, if any, of such adjusted current earnings over the alternative minimum taxable income being an adjustment to alternative minimum taxable income ( determined without regard to such adjustment or to the alternative tax net operating loss deduction)).
To the extent that a purchaser of a Bond acquires that Bond at a price that exceeds the aggregate amount of payments ( other than payments of qualified stated interest within the meaning of section 1.1273-1 of the Treasury Regulations) to be made on the Bonds (determined, in the case of a callable Bond, under the assumption described below), such excess will constitute "bond premium" under the Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder, provide generally that bond premium on a tax-exempt obligation must be amortized on a constant yield, economic accrual basis; the amount of premium so amortized will reduce the owner's basis in such obligation forfederal income tax purposes, but such amortized premium will not be deductible forfederal income tax purposes. In the case of a purchase of a Bond that is callable, the determination whether there is amortizable bond premium, and the computation of the accrual of that premium, must be made under the assumption that the Bond will be called on the redemption date that would minimize the purchaser's yield on the Bond ( or that the Bond will not be called prior to maturity if that would minimize the purchaser's yield). The rate and timing of the amortization of the bond premium and the correspondingbasis reduction may result in an owner realizing a taxable gain when a Bond owned by such owner is sold or disposed of foran amount equal to or in some circumstances even less than the original cost of the Bond to the owner.
The excess, if any, of the stated redemption price at maturity of Bonds of a maturity over the initial offering price to the public of the Bonds of that maturity set forth on the inside cover of this Official Statement is "original issue discount." Such original issue discount accruing on a Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes and exempt fromRhode Island personal income tax. Original issue discount on any Bond purchased at such initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term of the Bond on the basis of a constant yield method and, within each semiannual period, will accrue on a ratable daily basis. The amount of original issue discount on such a Bond accruingduring each period is added to the adjusted basis of such Bond to determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such Bond. The Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers of Bonds who purchase such Bonds other than at the initial offering price and pursuant to the initial offering.
49 Any person considering purchasing a Bond at a price that includes bond premium should consult his or her own tax advisors with respect to the amortization and treatment of such bond premium, including, but not limited to, the calculation of gain or loss upon the sale, redemption or other disposition of the Bond. Any person considering purchasing a Bond of a maturity having original issue discount should consult his or her own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering and at the original offering price, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternativeminimum taxes.
Bond Counsel has not undertaken to advise in the future whether any events after the date of issuance of the Bonds may affect the tax status of interest on the Bonds or the tax consequences of the ownership of the Bonds. No assurancecan be given that future legislation, or amendments to the Code, if enacted into law, will not contain provisions that could directly or indirectly eliminate, or reduce the benefit of, the exclusion of the interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. Furthermore, Bond Counsel expresses no opinion as to any federal, state or local tax law consequences with respect to the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of bond counsel if such advise or approval is given by counsel other that Bond Counsel.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded fromthe gross income of the owners thereof for federal income tax purposes, and is exempt from personal income taxes of the State of California an owner's federal, state or local tax liability may otherwise be affected by the ownership or disposition of the Bonds. The nature and extent of these other tax consequences will depend upon the owner's tax status and other items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Bonds should be aware that (i) section 265 of the Code denies a deduction forinterest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of an owner's interest expense allocated to interest on the Bonds, (ii) with respect to insurance companies subject to the tax imposed by section 831 of the Code, sect 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Bonds, (iii) interest on the Bonds earnedby certain foreign corporations doing business in the United States couldbe subj ect to a branch profits taximposed by section 884 of the Code, (iv) passive investment income, including interest on the Bonds, may be subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income, (v) section 86 of the Code requires recipients of certain Social Security and certain receipts or accruals of interest on the Bonds, and (vi) under section 32(i) of the Code, receipt of investment income, including interest on the Bonds, may disqualifythe recipient thereof from obtaining the earnedincome credit. Bond Counsel has expressed no opinion regarding any such other tax consequences.
Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the District described above. No ruling has been sought from the Internal Revenue Service (the "Service") with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel's Opinion is not binding on the Service. The Service has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Bonds is commenced, under current procedures the Service is likely to treat the District as the "taxpayer," and the Owners would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the interest on the Bonds, the District may have different or conflicting
50 interest from the Owners. Further, the disclosure of the initiation of an audit may adversely affect the market price of the Bonds, regardless of the final disposition of the audit.
No Litigation
A certificate of the District to the effect that no litigati on is pending or threaten ed concerning the validity of the Bonds will be furnished to the Underwriter at the time of the original delivery of the Bonds. The District is not aware of anylitig ation pending or threatened which questions the existence of the District or contests the authority of the District to levy and collect the Special Taxes or to issue and retire the Bonds.
Rating
Moody's Investors Service and Standard & Poor's Ratings Group have given the Bonds a rating of "Aaa" and "AAA", resp ectively, with the understanding that upon delivery of the Bonds, a policy insuring the payment when due of principal of and interest on the Bonds will be issued by Ambac Assurance Corporation. Such ratings express only the views of each rating agency and an explanation of the significance of such rating and any ratings on any of the District's outstanding obligations may be obtained only from such rating agencies as follows: Moody's Investor Services, 99 Church Street, New York, New York 10004; Standard & Poor's Ratings Group, 25 Broadway, New York, New York 10004.
Professional Fees
In connecti on with the issuance of the Bonds, fees payable to certain professionals, including C.M. de Crinis & Co., Inc., as the Financial Advisor, Fulbright & Jaworski L.L.P., as Bond Counsel and Disclosure Counsel, and U.S. Bank National Association, as Trustee, are contingent upon the issuance of the Bonds.
Miscellaneous
All of the preceding summaries of the Indenture, other applicable legislati on, agreements and other documents are made subject to th e provisions of such documents and do not purport to be complete summaries of any or all of such provisions. Referen ce is hereby made to such documents on file with the District forfurth er information in connection therewith.
This Official Statement does not constitute a contract with the purchasers of the Bonds.
Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.
The governing board of the District has duly authorized the execution and delivery of this Official Statement on behalf of the District.
WESTCAMARILLO COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF CAMARILLO
By: ����----'-"/s�/=Je=n:y.:../-'B==anks===to=ne.-���--�� City Manager
51 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A
AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
FOR
WEST CAMARILLO COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF CAMARILLO
A-1 (THIS PAGE INTENTIONALLY LEFT BLANK) RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR WEST CAMARILLO COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF CAMARILLO
A Special Tax applicable to each Assessor's Parcel in West Camarillo Community Facilities District No. 1 (herein "CFD No. 1 ") shall be imposed and collected according to the tax liability determination by the City Council of the City of Camarillo acting in its capacity as the legislative body of CFD No. 1 (herein the "Board") through the application of the appropriate amount or rate for Sub Areas, as described below. All of the property in CFD No. 1, unless exempted by law or by the provisions herein, shall be taxed forthe purposes, to the extent and in the manner herein provided.
SECTION A -- DEFINITIONS
The terms hereinafter set fo rth have the following meanings:
"A irport North " means the Assessor's Parcels within Sub Area 6 as shown on Appendix 1 attached hereto.
"A nnual Bridge Debt SeNice" means 110 percent of the gross debt service required in any Fiscal Year to pay the principal and interest on that portion of the bonds issued or obligations incurred by CFD No. 1 to finance construction of the bridge facilities.
"A nnual Drainage Debt Service" means 110 percent of the gross debt service required in any Fiscal Year to pay the principal and interest on that portion ofthe bonds issued or obligations incurred by CFD No. 1 to finance construction of the drainage facilities.
"A nnual Sewer Debt Service" means 110 percent of the gross debt service required in any Fiscal Year to pay the principal and interest, minus $75,000 annual contribution by the City, on that portion of the bonds issued by CFD No. 1 to finance the construction of the sewer facilities, excluding sewer facilities forLine G.
"A nnual Sewer Debt SeNice -- Line G" means 110 percent of the gross debt service required in any Fiscal Year to pay the principal and interest on that portion of the bonds issued by CFD No. 1 to financethe construction of the Line G sewer facilities.
"A nnual Special Tax" or "Special Tax" means Special Tax A, B, C, D, E, F, G and/or H, depending on the context, or any combination thereof.
"A ssessor's Parcel" means a parcel of land designated on maps of the Ventura County Assessor and assigned a discrete identifying number. "Bridge District" means the Assessor's Parcels within a bridge benefit area, including but not limited to Sub Areas 1,2,3, and 4 as shown on Appendix 1 attached hereto.
"Clubhouse" means all of the facilities at and/or in support of the proposed "Spanish Hills" Golf Course, which includes all Assessor's Parcels within Sub Area 2 as shown on Appendix 1 attached hereto.
"Condominium/Townhouse" means any residential property other than a Single Family Detached unit or the Clubhouse located within Sub Area 3 as shown on Appendix 1 attached hereto.
"Developed Property" means all Assessor's Parcels in CFO No. 1 for which a final subdivision or tract map has been recorded on or before March 1 of the preceding Fiscal Year for the construction of a Condominium, Townhouse, Single Family Detached unit, the Clubhouse facility or a commercial or industrial facility.
"Drainage District" means the Assessor's Parcels within a drainage benefit area, including but not limited to Sub Areas 1, 2, 3, 4, and 6 as shown on Appendix 1 attached hereto.
"Equivalent Dwelling Unit" or "EDU" means a land use equivalency unit based on (i) the generation of sewage effluentrela tive to effluent generation of a Single Family Detached unit (for sewer facilities) or (ii) the benefit received relative to benefit received by a Single Family Detached unit (for drainage and bridge facilities).
"Freestyle" means the Assessor's Parcels within Sub Area 7 as shown on Appendix 1 attached hereto.
"Fiscal Ye ar" means the period starting on July 1 and ending the fo llowing June 30.
"Home Depot" means Assessor's Parcel Nos. 230-0-020-135 and 230-0-020-195 which are located within Sub Area 11 as shown on Appendix 5 attached hereto and which were annexed to the CFO as Annexation #5.
"Gross Acreage" means the gross acreage as shown on the Assessor's Parcel Map, increased for internal and perimeter street right-of-way and public dedications and reduced for public parks, public schools and principal public utility rights-of-way. The special taxes for all commercial/industrial property shall be described in terms of Gross Acreage.
"Hertel" means the Assessor's Parcels located within Sub Area 8 as shown on Appendix 2 attached hereto and which was annexed to the CFO as Annexation #1.
"Koll/Leonard" means the Assessor's Parcels located within Sub Area 5 as shown on Appendix 1 attached hereto.
"L os Posas Car Wash" means Assessor's Parcel Nos. 229-0-010-605 and 229-0-010-625 created as a result of Lot Line Adjustment No. 990017910 and which are located within Sub Area
-2- 9 as shown on Appendix 4 attached hereto and which were annexed to the CFD as Annexation #3.
"Prime Retail" means a portion of the property which is located within Sub Area 9 as shown on Appendix 3 attached hereto and which was annexed to the CFD as Annexation #2.
"Residential" means all residential property including Single Family Detached, Condominium/Townhouse unit and the Clubhouse.
"Single Family Detached" means a single family detached residential unit.
"Special Tax A"means the Special Tax determined in accordance with Section C hereof which can be imposed by the Board in any Fiscal Year forSub Area 5.
"Special Tax B" means the Special Tax determined in accordance with Section C hereof which may be imposed by the Board in any Fiscal Year for SubArea 6.
"Special Tax C" means the Special Tax determined in accordance with Section C hereof which may be imposed by the Board in any Fiscal Year for Sub Areas 1, 2, 3 and 4.
"Special TaxD ,,means the Special Tax determined in accordance with Section C hereof for Sub Area 7 to be prepaid prior to issuance of bonds.
"Special Tax E" means the one-time payment by a developer in accordance with Section C hereof for Sub Areas 1, 3 and 4.
"Special Tax F" means the Special Tax determined in accordance with Section C hereof which may be imposed by the Board in any Fiscal Year for Sub Area 8.
"Special Tax G" means the Special Tax determined in accordance with Section C hereof which Fiscal Year the Board in any Fiscal Year can impose forSub Area 9.
"Sp ecial Tax H" means the Special Tax determined in accordance with Section C hereof which may be imposed by the Board in any Fiscal Year forSub Area 10.
"Special Tax r means the Special Tax determined in accordance with Section C hereof which may be imposed by the Board in any Fiscal Year for Sub Area 11.
''Taxable Property"means all of the area within the boundaries of CFD No. 1 which is not exempt from the Annual Special Tax pursuant to law or Section E below.
-3- "Tract 422r means the Assessor's Parcels within Sub Area 1 as shown on Appendix 1 attached hereto.
'Tra ct 439r means the Assessor's Parcels within Sub Area 4 as shown on Appendix 1 attached hereto.
"Tra ct 4948" means the Assessor's Parcels within Sub Area 8 as shown on Appendix 2 attached hereto.
"Tra ct 5127"means the Assessor's Parcels located within Sub Area 10 as shown on Appendix 5 attached hereto and which were annexed to the CFD as Annexation #4.
"Undeveloped Property" means all Taxable Property in CFD No. 1 not classified as Developed Property.
SECTION B -- ASSIGNMENT TO Sue AREAS
As of July 1 of each year, all Taxable Property within CFD No. 1 shall be subject to special taxation in accordance with the rate and method of apportionment determined pursuant to Sections C and D below. For purposes of determining the applicable Annual Special Tax pursuant to Section C, Taxable Property shall be assigned to one of the Sub Areas eleven (1 through 11) designated in Table 1 below based on the definitions above. CFD No. 1 contains seven developments which have been separated into eleven (11) Sub Areas. The EDUs have been calculated and assigned to each Sub Area as shown on Table 1. Table 1 (1) Gross Acreage and Sewer EDUs Assigned to Each Sub Area
Sub Area Description Sewer EDU's Gross Acres 1 Tract 4227 - SF 155 190.96 2 Clubhouse 28 221 .29 3 CondominiumfT own house 92 11.40 4 Tract 4397 - SF 81 46.16 5 Koll/Leonard 516 89.93 6 Airport North 272 49.00 (:.!) 7 Freestvle NA. 2.97 8 Hertel 290 237.43 9 Prime Retail & LPCW 348 62.71 10 Tract 5127 11 16.10 11 Home Depot 121 21.76
(1) Drainage components of the Special Taxes are spread on a per Gross Acre basis fo r Sub Areas 1, 2, 3, 4, 6, 9 10 and 11. Bridge components of the Special Taxes are spread on a per Gross Acre basis fo r Sub Areas 1, 2, 3, 4, 8, 9, 10 and 11. (2) Not applicable; Sub Area 7 sewer component of the Special Tax is based on a prepayment amount.
-4- SECTION C -- MAXIMUM SPECIAL TAX RATE
Table 2 shows the maximum Annual Special Tax Rates that may be imposed within CFD No. 1 starting in Fiscal Year 2002-03. It is the intention of the Board that the maximum Annual Special Tax Rates fo r sewer component shown in Table 2 will be reduced in the event of future annexations, if any, into CFD No. 1 of properties not currently included in CFD No. 1, as provided in Section G. Table 2
Maximum Annual Special Tax Rates
Specia Drainage Bridge - Sewer Component Component Comoonent Total A $3,818.72/Gross Acre Not applicable Not applicable $3,818. 72/Gross Acre B $2,379.42/Gross Acre $881 .37/Gross Acre Not applicable $3,260.79/Gross Acre c $942.24/EDU $1,304.86/EDU $1,023.87/EDU $3,270.97/EDU D $48,934.00 one-time Not applicable Not applicable Not applicable payment E $33,645.80/EDU one- Not applicable Not applicable Not applicable time payment F $679.29/EDU Not aoolicable $650.07/EDU $1,329.36/EDU G $3,701.40/Gross Acre $881.37/Gross Acre Not applicable $4,582. 77/Gross Acre H $679.29/EDU $1,290.01/EDU $1, 162.13/EDU $3, 131.43/EDU I $3,701.40/Gross Acre $881.37/Gross Acre $794.00/Gross Acre $5,376.77/Gross Acre
1. Special Tax A.
Special Tax A applies to each Assessor's Parcel of Taxable Property within Sub Area 5, and covers Sub Area 5's share of sewer fa cilities constructed by CFD No. 1, excluding Line G sewer facilities. Special Tax A shall not exceed the maximum amount per Gross Acre shown in Table 2. This maximum amount was computed by (i) dividing the number of EDUs within Sub Area 5 by the number of Total EDUs within Sub Area 5 shown in Table 1 (ii) multiplying by an estimate of Annual Sewer Debt Service, and (iii) dividing by the number of Gross Acres in Sub Area 5 as shown in Table 1.
As shown in Table 2, the Maximum Annual Special Tax A shall be $3,818.72 per Gross Acre.
2. Special Tax B.
Special Tax B applies to each Assessor's Parcel of Taxable Property within Sub Area 6, and covers Sub Area 6's share of (i) sewer fa cilities constructed by CFD No. 1, excluding Line G sewer facilities, and (ii) drainage facilities constructed by CFD No. 1.
-5- The sewer component of the Special Tax B shall not exceed the maximum amount per Gross Acre shown in Table 2. This maximum amount was computed by (i} dividing the number of EDUs within Sub Area 6 by the number of Total EDUs shown in Table 1, and (ii} multiplying by an estimate of Annual Sewer Debt Service, and (iii) dividing by the number of Gross Acres in Sub Area 6 as shown in Table 1. As shown in Table 2, the sewer component of the Maximum Annual Special Tax B shall be $2,379.42 per Gross Acre.
The drainage component of Special Tax B shall not exceed the maximum amount per Gross Acre shown in Table 2. This maximum amount was computed by (i) dividing the number of Gross Acres within Sub Area 6 as shown in Table 1 by the total number of Gross Acres in the Drainage District, and (ii) multiplying by an estimate of Annual Drainage Debt Service, and (iii} dividing by the number of Gross Acres within Sub Area 6 as shown in Table 1. As shown in Table 2, the drainage component of the Maximum Annual Special Tax B shall be $881.37 per Gross Acre, which shall only be imposed and collected after bonds or other obligations for the drainage facilities are authorized forissuance and sale by the Board.
As shown in Table 2, the Maximum Annual Special Tax B shall be $3,260.79 per Gross Acre.
3. Special Tax C.
Special Tax C applies to each Assessor's Parcel of Taxable Property within Sub Areas 1, 2, 3 and 4, and covers these Sub Areas' share of (i) sewer facilities constructed by CFO No. 1, including Line G sewer facilities, (ii) drainage facilities constructed by CFO No. 1 , and (iii) bridge facilities constructed by CFO No. 1. Developed property which constitutes a Single Family Detached unit shall be taxed as one (1.0) EDU. Developed Property which constitutes a Condominiumrrownhouse unit shall be taxed as eight-tenths of one (0.8) EDU. The Clubhouse shall be taxed as twenty-eight (28.0) EDUs. Undeveloped Property within Sub Areas 1, 3 and 4 shall be taxed at the rate shown in Table 2 based on the difference between the EDUs shown in Table 1 and the total EDUs associated with Developed Property in each such Sub Area. Drainage components of the Special Taxes are spread on a per Gross Acre basis for Sub Areas 1, 2, 3 and 4. Bridge components of the Special Taxes are spread on a per Gross Acre basis for Sub Areas 1, 2, 3 and 4.
The sewer component of Special Tax C shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by adding the sum of (i) an estimate of Annual Sewer Debt Service divided by the Total EDUs shown in Table 1, and (ii) an estimate of Annual Sewer Debt Service - Line G divided by the sum of EDUs assigned to Sub Areas 1, 2, 3 and 4, as shown in Table 1. As shown in Table 2, the sewer component of the Maximum Annual Special Tax C shall be $942.24 per EDU.
The drainage component of Special Tax C shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by (i) dividing the total number of Gross Acres within each Sub Area 1, 2, 3 and 4, as shown in Table 1 by the total number of Gross Acres in the Drainage District, (ii) multiplying by an estimate of Annual Drainage Debt Service, and (iii) dividing by the number of assigned EDUs within each Sub Area 1, 2, 3 and 4, respectively, as shown in Table 1. As shown in Table 2, the drainage component of the Maximum Annual Special Tax C shall be $1,304.86 per EDU, which shall only be imposed and collected after bonds or other obligations fo r the drainage facilities are authorized for issuance and sale by the Board.
- 6 - The bridge component of Special Tax C shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by (i) dividing the total number of Gross Acres within each Sub Area 1, 2, 3 and 4, respectively, as shown in Table 1 by the total number of Gross Acres in the Bridge District, (ii) multiplying by an estimate of Annual Bridge Debt Service, and (iii) dividing by the number of assigned EDUs within each Sub Area 1, 2, 3 and 4, respectively, as shown in Table 1. As shown in Table 2, the bridge component of the Maximum Annual Special Tax C shall be $1,023.87 per EDU, which shall only be imposed and collected after bonds or other obligations for the bridge facilities are authorized fo r issuance and sale by the Board.
As shown in Table 2, the Maximum Annual Special Tax C shall be $3,270.97 per EDU.
4. Special Tax D.
Special Tax D applies to each Assessor's Parcel of Taxable Property within Sub Area 7, and covers Sub Area 7's share of sewer facilities constructed by CFD No. 1, excluding Line G sewer facilities. Special Tax D shall be imposed and collected in a one-time, lump sum amount of $48,934.00, as shown in Table 2, prior to the issuance of bonds for sewer facilities by CFD No. 1. Upon the one-time payment of Special Tax D, the Board shall direct that a Notice of Cessation of Special Tax be recorded for each Assessor's Parcel within Sub Area 7, in accordance with Section 53330.5 of the Government Code.
5. Special Tax E.
Special Tax E applies to Sub Areas 1, 2, 3 and 4 and other residential developments for which Special Tax Rates have been established or allocated on an EDU basis. The purpose of this tax is to collect moneys sufficient to offset the reduction in future special taxes resulting from an actual reduction in residential density from estimated residential density. This Special Tax E is applied to residential developments only in the event that the actual number of Equivalent Dwelling Units {EDUs) constructed or to be constructed is less than the number of EDUs used in the determination or allocation of the Maximum Special Tax Rates to the subject development.
This Special Tax E shall be applied in the manner hereinafterdescribed, and shall be used to pay Debt Service and other expenses of CFD No. 1 arising from bonds for sewer facilities that were issued based on an assigned number of Total EDU's shown in Table 1. If applicable, Special Tax E shall be paid (i) by the landowner as a condition for recording a final subdivision or tract map containing residential development within Sub Areas 1, 2, 3 and 4; and (Ii) on a one-time, lump sum basis, prior to recording such final map. The amount of Special Tax E per EDU shall not exceed the maximum one-time amount of $33,645.80 per EDU shown in Table 2.
Payment of Special Tax E shall be required if the residential lots and units within the boundaries of a final subdivision or tract map ("The Subject Area") result in a number of EDU's ("Map EDU's") which is less than (i) the number of assigned EDU's ("Assigned EDUs") within the corresponding Sub Area 1, 2, 3 or 4 containing such map, as shown in Table 1; or (ii) a prorata share of Assigned EDUs within the corresponding portion of approved Tentative Tract Map No. 4227, 4397, or other applicable approved tentative map containing such final map, if the Gross Acres included within said final map area are less than the Gross Acres within the corresponding Sub Area, as shown in Table 1.
-7- The amount of Special Tax E per EDU actually imposed in any Fiscal Year and for any final subdivision or tract map in Sub Areas 1, 2, 3 and 4, shall be the lesser of the maximum one-time amount of $33,645.80 per EDU shown in Table 2, or the amount computed as follows: (i) add Annual Sewer Debt Service and Annual Sewer Debt Service - Line G; (ii) subtract therefrom the sum of (a) total Annual Special Tax imposed on all Assessor's Parcels within Sub Area 5 and (b) the sewer component of total Annual Special Tax imposed on all Assessor's Parcels within Sub Area 6; (iii) subtract therefrom the sewer component of total Annual Special Tax imposed on all Developed Property within Sub Areas 1, 2, 3 and 4; (iv) subtract therefrom the sewer component of total Annual Special Tax imposed on the Map EDUs within the Subject Area; (v) multiply by the number of years or fraction thereof to the next maturity or call date of the bonds; (vi) compute the present value thereof based on the current investment rate of full faith and credit obligations of the United States government as certified and verified by an independent fi nancial consultant and approved by bond counsel; and (vii) divide the result thereof by the difference between Map EDUs and Assigned EDUs within the Subject Area.
6. Special Tax F.
Special Tax 'F' applies to each Assessor's Parcel of Taxable Property within Sub Area 8, and covers this Sub Area's share of (i) sewer facilities , excluding Line G sewer facilities, and (ii) bridge facilities to be constructed by CFD No. 1. Developed property which constitutes a Single Family Detached unit shall be taxed as one (1.0) EDU. Developed Property which constitutes an attached Condominium!Townhouse unit shall be taxed as eight-tenths of one (0.8) EDU. The Clubhouse shall be taxed as ten (10.0) EDUs. Undeveloped Property within Sub Area 8 shall be taxed at the rate shown in Table 2 based on the difference between the EDUs shown in Table 1 and the total EDUs associated with Developed Property in Sub Area 8. As shown in Table 2, the sewer component of the Maximum Annual Special Tax F shall be $679.29 per EDU.
The bridge component of Special Tax F shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by (i) dividing the total number of Gross Acres within Sub Area 8, as shown in Table 1 by the total number of Gross Acres in the Bridge District, (ii) multiplying by an estimate of Annual Bridge Debt Service, and (iii) dividing by the number of assigned EDUs within Sub Area 8 as shown in Table 1. As shown in Table 2, the bridge component of the Maximum Annual Special Tax F shall be $650.07 per EDU, which shall only be imposed and collected after bonds or other obligations for the drainage facilities are authorized forissuanc e and sale by the Board.
As shown in Table 2, the Maximum Annual Special Tax F shall be $1,329.36 per EDU.
7. Special Tax G.
Special Tax G applies to each Assessor's Parcel of Taxable Property within Sub Area 9, and covers Sub Area 9's share of (i) sewer facilities constructed by CFD No. 1, excluding Line G sewer facilities, and (ii) drainage facilities to be constructed by CFD No. 1.
The sewer component of the Special Tax G shall not exceed the maximum amount per Gross Acre shown in Table 2. This maximum amount was computed by (i) dividing the number of EDUs within Sub Area 9 by the number of Total EDUs shown in Table 1, and (ii) multiplying by an estimate of Annual Sewer Debt Service, and (iii) dividing by the number of Gross Acres in Sub
- 8- Area 9 as shown in Table 1. As shown in Table 2, the sewer component of the Maximum Annual Special Tax G shall be $3,701 .40 per Gross Acre.
The drainage component of Special Tax G shall not exceed the maximum amount per Gross Acre shown in Table 2. This maximum amount was computed by (i) dividing the number of Gross Acres within Sub Area 9 as shown in Table 1 by the total number of Gross Acres in the Drainage District, and (ii) multiplying by an estimate of Annual Drainage Debt Service, and {iii) dividing by the number of Gross Acres within Sub Area 9 as shown in Table 1. As shown in Table 2, the drainage component of the Maximum Annual Special Tax G shall be $881 .37 per Gross Acre, which shall only be imposed and collected after bonds or other obligations for the drainage facilities are authorized for issuance and sale by the Board.
As shown in Table 2, the Maximum Annual Special Tax G shall be $4,582.77 per Gross Acre.
8. Special Tax H.
Special Tax H applies to each Assessor's Parcel of Taxable Property within Sub Area 10 and covers Sub Area 1 O's share of {i) sewer facilities constructed by CFD No. 1, excluding Line G sewer facilities, {ii) drainage facilities constructed by CFD No. 1, and {iii) bridge fa cilities constructed by CFD No. 1. Developed property which constitutes a Single Family Detached unit shall be taxed as one {1.0) EDU. Developed Property which constitutes a Condominium!Townhouse unit shall be taxed as eight-tenths of one {0.8) EDU. Undeveloped Property within Sub Area 9 shall be taxed at the rate shown in Table 2 based on the difference between the EDUs shown in Table 1 and the total EDUs associated with Developed Property in each such Sub Area.
The sewer component of Special Tax H shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by adding the sum of (i) an estimate of Annual Sewer Debt Service divided by the Total EDUs shown in Table 1. As shown in Table 2, the sewer component of the Maximum Annual Special Tax H shall be $679.29 per EDU.
The drainage component of Special Tax H shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by {i) dividing the total number of Gross Acres within Sub Area 9, as shown in Table 1, by the total number of Gross Acres in the Drainage District, (ii) multiplying by an estimate of Annual Drainage Debt Service, and {iii) dividing by the number of assigned EDUs within Sub Area 10, as shown in Table 1. As shown in Table 2, the drainage component of the Maximum Annual Special Tax H shall be $1,290.01 per EDU, which shall only be imposed and collected afterbonds or other obligations for the drainage facilities are authorized for issuance and sale by the Board.
The bridge component of Special Tax H shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by (i) dividing the total number of Gross Acres within Sub Area 9, as shown in Table 1 by the total number of Gross Acres in the Bridge District, (ii) multiplying by an estimate of Annual Bridge Debt Service, and (iii) dividing by the number of assigned EDUs within Sub Area 9, as shown in Table 1. As shown in Table 2, the bridge component of the Maximum Annual Special Tax H shall be $1,162.13 per EDU, which shall only be imposed and collected after bonds or other obligations for the bridge facilities are authorized for issuance and sale by the Board.
- 9 - As shown in Table 2, the Maximum Annual Special Tax C shall be $3,131 .43 per EDU.
9. Special Tax I.
Special Tax I applies to each Assessor's Parcel of Taxable Property within Sub Area 11 and covers Sub Area 11's share of (i) sewer facilities constructed by CFD No. 1, excluding Line G sewer facilities, (ii) drainage facilities constructed by CFD No. 1, and (iii) bridge facilities constructed by CFD No. 1.
The sewer component of the Special Tax I shall not exceed the maximum amount per Gross Acre shown in Table 2. This maximum amount was computed by (i) dividing the number of EDUs within Sub Area 9 by the number of Total EDUs shown in Table 1, and (ii) multiplying by an estimate of Annual Sewer Debt Service, and (iii) dividing by the number of Gross Acres in Sub Area 9 as shown in Table 1. As shown in Table 2, the sewer component of the Maximum Annual Special Tax I shall be $3,701 .40 per Gross Acre.
The drainage component of Special Tax I shall not exceed the maximum amount per Gross Acre shown in Table 2. This maximum amount was computed by (i) dividing the number of Gross Acres within Sub Area 11 as shown in Table 1 by the total number of Gross Acres in the Drainage District, and (ii) multiplying by an estimate of Annual Drainage Debt Service, and (iii) dividing by the number of Gross Acres within Sub Area 11 as shown in Table 1. As shown in Table 2, the drainage component of the Maximum Annual Special Tax I shall be $881.37 per Gross Acre, which shall only be imposed and collected after bonds or other obligations for the drainage facilities are authorized for issuance and sale by the Board.
The bridge component of Special Tax F shall not exceed the maximum amount per EDU shown in Table 2. This maximum amount was computed by (i) dividing the total number of Gross Acres within Sub Area 11, as shown in Table 1 by the total number of Gross Acres in the Bridge District, (ii) multiplying by an estimate of Annual Bridge Debt Service, and (iii) dividing by the number of Gross Acres within Sub Area 11 as shown in Table 1. As shown in Table 2, the bridge component of the Maximum Annual Special Tax F shall be $794.00 per Gross Acre, which shall only be imposed and collected after bonds or other obligations for the drainage facilities are authorized for issuance and sale by the Board.
As shown in Table 2, the Maximum Annual Special Tax I shall be $5,376.77 per Gross Acre.
SECTION D -- METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Starting in Fiscal Year 1990-91 and fo r each of the following Fiscal Years, the Board shall determine the amount of money to be collected from Taxable Property in CFD No. 1 in that Fiscal Year. Such amount shall include the sums determined by CFD No. 1 to be necessary to pay for current and future debt service on bonded indebtedness (including redemption of bonds prior to maturity) of CFD No. 1, to create or replenish reserve funds determined necessary by CFD No. 1, and to pay for all administrative, maintenance and construction expenses and any other services paid from Special Tax proceeds.
- 10 - Beginning in Fiscal Year 2002-03, the Board shall impose the special taxes as follows until the amount of the special taxes equals the amount to be collected:
First: Special Tax E shall be imposed on Undeveloped Property in Sub Areas 1, 2, 3, and 4 at a rate equal to the lesser of the maximum one-time amount of $33,645.80 per EDU shown in Table 2, or the amount computed as provided in Section C above. That portion of Special Tax E attributable to future debt service years shall be invested and used for future debt service and to call bonds.
Second: Special Taxes A, B, C, F, G, H and I shall be imposed in equal percentages on each Assessor's Parcel of Taxable Property, exclusive of property exempt from Special Tax pursuant to Section E below, at up to 91 percent of the Maximum Annual Special Tax Rates shown in Table 2 as provided in Section C.
Special Tax A shall be imposed and collected with respect to each Assessor's Parcel within Sub Area 5 each Fiscal Year as provided in Section C.
Special Tax B shall be imposed and collected with respect to each Assessor's Parcel within Sub Area 6 each Fiscal Year as provided in Section C.
Special Tax C shall be imposed and collected with respect to each Assessor's Parcel within Sub Areas 1, 2, 3 and 4 each Fiscal Year as provided in Section C.
Special Tax F shall be imposed and collected with respect to each Assessor's Parcel within Sub Area 8 each Fiscal Year as provided in Section C.
Special Tax G shall be imposed and collected with respect to each Assessor's Parcel within Sub Area 9 each Fiscal Year as provided in Section C.
Special Tax H shall be imposed and collected with respect to each Assessor's Parcel within Sub Area 10 each Fiscal Year as provided in Section C.
Special Tax I shall be imposed and collected with respect to each Assessor's Parcel within Sub Area 11 each Fiscal Year as provided in Section C.
Third: If additional revenues are needed after the first two steps have been completed, Special Taxes A, B, C, F, G, H and I shall be increased in equal percentages above the rates levied pursuant to the Second Step above, up to 100 percent of the Maximum Annual Special Tax Rates shown in Table 2 as provided in Section C.
Prior to imposing Special Taxes A, B, C, E, F, G, Hor I, and prior to the issuance of bonds forthe sewer facilities, Special Tax D shall be imposed on each Assessor's Parcel within Sub Area 7 as provided in Section C. Special Tax D shall be collected from the landowner of said Assessor's Parcels as a one-time prepayment of said tax.
- 11 - SECTION E •• LIMITATIONS
The Board shall not levy a Special Tax on propertiesor entities of the state, federal or other local governments except as otherwise provided in Section 53317.3 of the Government Code, pursuant to Section 53340 of the Government Code. This may include the property which is an unmanned utility property, public schools, public parks, or other property owned by a pu blic agency.
SECTION F -- PREPAYMENT OF SPECIAL TAXES
The Board has established a method for landowners and residents to prepay in its entirety the Special Tax levied and which is expected to be levied on their parcel. For any portion of the parcel's special tax obligation for which bonds are outstanding, the prepayment amount includes a parcel's pro rata share of:
a) the present value of future debt service due during any bond call protection period,
b) bond principal outstanding subsequent to any bond-call protection period,
c) a Reserve Fund Credit,
d) all applicable redemption premiums and bond call fees,
e) investment loss (negative arbitrage) incurred during any call-protection period, and
f) administrative and incidental costs incurred by CFO No. 1 with respect to the prepayment and the removal of the lien on such parcel.
For any portion of the parcel's special tax obligation for which bonds have not been issued, the prepayment amount will be based upon the City's most recent estimates regarding the timing and cost of current or future fa cilities construction or the current Maximum Special Tax Rates.
SECTION G -- ANNEXATIONS INTO CFD No. 1
The Special Tax Rates shown in Table 2 are maximums and shall not be increased. The Board hereby declares its policy and intent that in the event of future annexations, if any, of properties not previously included within the boundaries of CFO No. 1, including area designated for future annexation, the Maximum Annual Special Taxes for the sewer component in each Fiscal Year following such annexations shall be reduced by apportionment below the levels shown in Table 2. Said reductions may occur and take effect without the need for a public hearing or election
- 12 - provided the Board approves any and all applicable bond covenants regarding the reduction of Maximum Annual Special Taxes.
SECTION H -· MANNER OF COLLECTION
The Special Taxes forCFO No. 1 shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, except as provided herein, provided however, that CFO No. 1 may collect Special Taxes at a diffe rent time or in a different manner if necessary to meet its financial obligations. The Special Tax shall be subject to the same penalties and procedures, sale and lien priority in case of delinquency as is provided for ad valorem taxes. In the event of a delinquency, CFO No. 1 will pursue foreclosure in a timely manner. SECTION I ·· REVIEW/APPEAL COUNCIL
The Board shall establish as part of the proceedings and administration of CFO No. 1 a three member Review/Appeal Council. Any landowners or residents who desire to protest the accuracy of the amount of the Special Tax imposed on their parcel may file a notice with the Review/Appeal Council, appealing the amount of the Special Tax assigned to such parcel. The Review/Appeal Council shall make determinations relative to the annual administration of the Special Tax pursuant to this Rate and Method of Apportionment of the Special Tax and of any landowner or resident appeals hereunder, as herein specified.
SECTION J -- ISSUANCE OF SERIES OF BONDS
The Board intends to issue its first series of bonds for construction of the sewer facilities only. Future series of bonds may be authorized forissuance and sale at such time as determined by the Board for the purpose of construction of the drainage and bridge facilities as future development and annexations occur. The drainage and bridge components of the Annual Special Tax shall only be imposed after a contract for construction or acquisition agreement for such facilities has been entered into or after bonds or obligations are authorized forissuance and sale by the Board.
SECTION K •• REDUCTION OF MAXIMUM SPECIAL TAX RATES
In the event the Board determines to only reduce all or a portion of the Maximum Special Tax Rates on a pro rata basis due to reduced cost of the Facilities, the Board shall conduct proceedings in accordance with Government Code Section 53330 et seq., provided an election shall not be required to make such reductions. The Board may also reduce all or a portion of the maximum Special tax rates forthe sewer component due to annexations as provided in Section G.
- 13 - (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX B
THE CITY OF CAMARILLO
Setfo rth below is certain information with respect to the City. Such information was prepared by the City except as otherwise indicated. This information is presented solely to provide general economic and demographic information relating to the City. Th e Bonds are secured byand payable solel y from the Sp ecial Tax Revenues as described in the Offi cial Statement accompanying this Appendix.
General Description
Camarillo, with a population as of January 2004 of approximately 61, 700, is located in the center of Ventura County whose population is over 800,000. The City has an area of 19.29 square miles and is situated in the Pleasant Valley area of the vast agricultural Oxnard Plain. Geographically, Camarillo is midway between Los Angeles and Santa Barbara on Highway 101, nine miles inland from PointMugu Naval Air Station and the PacificOcean. It is 45 miles northwest of Los Angeles and 379 miles south of San Francisco. The City was incorporatedas a general law city on October 22, 1964.
Municipal Government
The City provides general government services either with its own employees or through contracts. The City has a Council Manager formof municipal government. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments. The City Council is composed of five members elected biannually at large to four-year staggered terms. The Mayor is selected by the Council fromamong its members. As of June 30, 2004, the City had a staffof 134 employees. The current members of the City Council, term expiration and their principal occupations are as follows:
City Council Term Expires Occupation Charlotte Craven, Mayor November 2006 Homemaker Don Waunch, Vice-Mayor November 2004 Retired Kevin B. Kildee, Council Member November 2004 Small Business Owner Jeanette L. McDonald, CouncilMember November 2006 Accountant Michael D. Morgan, Council Member November 2006 Retired
Current City management staffincludes the following:
Mr. Jerry Bankston serves as the City Manager and was appointed to the position in 1999. He previously worked for the City from 1976-86 as a Management Assistant and Assistant to the City Manager. Mr. Bankston was hired as the City Manager of Paso Robles in 1986, and also served in the same capacity forthe cities of Seal Beach and La Habra beforereturning Camarilloto .
Ms. Anita Lawrence has served the City as Director of Finance since March, 1990. She has worked in municipal finance for twenty-eight years. Ms. Lawrence has held the positions of Finance Director/Treasurer for the City of Del Mar, California, for four and a half years, and Director of Financial Management for Rainbow Municipal Water District in Fallbrook, California, forthe previous two years. She spent the prior nine years with the Cities of Vista and San Jose, California. She holds a Bachelor of Arts Degree in Management and a Masters in Public Administration Degree. She is the current President of the California Society of Municipal Finance Officers and the Second Vice-President of the Fiscal
B-1 Officers Division of the League of California Cities. In 2000, Ms. Lawrence authored, "Management of Public Funds: Reserve Policies in California Cities" which is sold through the League of California Cities. She has been a speaker on the topic of reserves at a number of State and National conferences.
Ms. Deborah A. Harrington serves as the City Clerk of the City. Ms. Harrington became City Clerk in September 1997 after working over 22 years with four other municipalities. In 1995, 1999 and 2000, she received the California City Clerks Association President's Award of Distinction. She is currently the First Vice President of the City Clerks Association of Californiaand First Vice President of the City Clerks Division of the League of California Cities. Ms. Harrington attended the University of San Francisco, where she maj ored in Human Relations and Organizational Behavior.
Municipal Services
The City of Camarillo provides water distribution, sewer collection and treatment, trash collection, street sweeping, streetmaintena nce, building inspection and planning services. As a "contract city," Camarillo purchases certain public services through contracts with other agencies and private companies. Contracting for services enables the City to accomplish the essential administrative and operational functions of a municipalitywith a relatively small workforce and payroll, and a minimum of facilities and equipment. The primary example of the contract arrangement is the Camarillo Police Department, whose 57 sworn and civilian personnel are provided by the Ventura County Sheriff's Department. They and an additional 26 sheriffs deputies and civilians who serve other parts of Ventura County are based at the Camarillo police station, located at 3701 East Las Posas Road. Fire protection is provided by the Ventura County Fire Protection District. Building & Safety services are also provided contractually, by Charles Abbott & Associates of Torrance. Seven employees working at Camarillo City Hall handle inspection and plan check services for the City. Other regularly contracted services include refuse and recycling collection, street sweeping, landscaping, installation of handicap ramps, asphalt paving assistance, public transit services and traffic signal maintenance. All contracted services are annually reviewed and renewed on a performance/cost basis.
Education
The City is served by 12 elementary schools, 3 junior high schools, 2 high schools and 7 private or parochial schools. The Ventura County Community Colleges with campuses in Moorpark, Oxnard and Ventura are all within a 20 mile radius of the City. The newly opened California State University Channel Islands is located on a 670-acre site in the City, on the site of the former Camarillo State Hospital. The University opened in the Fall of 2002 with approximately 1,320 full-time transferstudents enrolled for the first year, and 2,366 students enrolled in Fall 2003 . When the first four-year class graduates in 2007, total enrollment is projected to be more than 4,000. At its full capacity, targeted for 2025, CSUCI will serve more than 15,000 full-time equivalent students. The University of California at Los Angeles and Santa Barbara and California State University at Northridge are within a 50-mile radius of the City.
Population
The City had a population of 61,700 (January, 2004, State Department of Finance), growingat an annual overall rate of approximately 2% per year in the past five(5) years. The City added approximately 7 ,600 people to its population within the last ten years.
B-2 TABLE 1 CITY, COUNTY, STATE POPULATION DATA
City of Ventura State of Year Camarillo County California 1995 54,100 702,800 31,617,000 1996 54,000 707,800 31,837,000 1997 54,300 716,100 32,207,000 1998 55,000 725,400 32,657,000 1999 55,700 736,000 33,140,000 2000 56,900 750,500 33,753,000 2001 58,100 765,200 34,818,000 2002 59,500 780,100 35,037,000 2003 60,500 791,600 35,612,000 2004 61,700 802,400 36,144,000
Source: State of CaliforniaDepar tment of Finance.
Effective BuyingIncome
"Effective buying income" ("EBI") is a classification developed exclusively by Sales & Marketing Ma nagement magazine to distinguish it from other sources reporting income statistics. EBI is defined as "money income" less personal tax and nontax payments - a number often referred to as "disposable" or "after-tax" income. Money income is the aggregate of wages and salaries, net farmand nonfarmself -employment income, interest, dividends, net rental and royalty income, Social Security and railroad retirement income, other retirement and disability income, public assistance income, unemployment compensation, Veterans Administration payments, alimony and child support, military family allotments, net winnings from gambling and other periodic income. Money income does not include money received from the sale of property (unless the recipient is engaged in the business of selling property); the value of "in-kind" income such as food stamps, public housing subsidies, medical care, employer contributions for persons, etc.; withdrawal of bank deposits; money borrowed; tax refunds; exchange of money between relatives living in the same household; gifts and lump-sum inheritances, insurance payments, and other types of lump-sum receipts. EBI is computed by deducting from money income all personal income taxes (federal, state and local), personal contributions to social insurance (Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness real estate.
The total effective buying income for the City in 2002 (the most recent year for which data is available), as reported by Sales & Ma rketing Ma nagement magazine in its annual Survey of Buying Power, was $1,406,183,000 and the median household effective buying income was $52,406. This compares to 2002 median household effective buying incomes of $38,035 for the State of California,and $42,484 for the United States.
The following table presents the latest available total effective buying income and median household effective buying income for the City, the State and the nation for the calendar years 1998 through 2002.
B-3 TABLE 2 CITY OF CAMARILLO EFFECTIVE BUYING INCOME Calendar Years 1998-20oi<1> Total Effective Median Household Buying Income Effective Year and Area ($ in OOO's) Buying Income 1998 City $ 1,182,457 $50,456 State 551,999,317 37,091 United States 4,621,491,738 35,377 1999 City $ 1,305,822 $53,321 State 590,376,663 39,492 United States 4,877,786,658 37,233 2000 City $ 1,3 16,129 $57,752 State 652, 190,282 44,464 United States 5,230,824,904 39,129 2001 City $ 1,358,536 $53,427 State 650,52 1,407 43,532 United States 5,303,481,498 38,365 2002 City $ 1,406,183 $52,406 State 64 7 ,879 ,427 42,484 United States 5,340,682,8 18 38,035
O) Most recent yearsfor whi ch data is available. So urce: Sales & Ma rketing Management, Survey of Buying Power.
Employment and Industry
According to the California Employment Development Department, in December 2003 there were an estimated 31,530 members of the civilian labor force in the City. Major employers in the community include Technicolor, Harbor Freight, 3M and WellPoint.
B-4 TABLE 3 CITY AND COUNTY LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT RATES Yearly Average forYears 1999 to 2003
1999 2000 2001 2002 2003 Ventura County Employment 378,400 394,600 400,900 402,100 407,700 Unemployment 19,000 18,700 18,900 23,600 22,700 Civilian Labor Force 397,400 413,300 419,800 425,700 430,400 City of Camarillo Employment 28,060 29,250 29,720 29,810 30,220 Unemployment 1,100 1,080 1,100 1,370 1,310 Civilian Labor Force 29,160 30,330 30,820 31, 180 31,530
Source: State of CaliforniaEm ployment Development Department.
The following table sets forth the annual average employment by industry within Ventura County forthe fiscal years 1999 through 2003. TABLE 4 VENTURA COUNTY METROPOLITAN STATISTICAL AREA Employment By Industry (Annual Averages)
INDUSTRY 1999 2000 2001 2002 2003
Agriculture 17,500 19,300 19,100 19,200 20,400 Nonagricultural Industries 263,600 275,000 279,900 281,800 283,600 Mining 1,000 800 800 700 600 Construction 14,700 15,500 16,100 15,700 16,600 Manufacturing 39,300 41,400 40,500 38,000 37,100 Wholesale Trade 9,400 10,300 11,000 11,700 11,900 Retail Trade 32,100 33,800 33,800 34,200 34,400 Transportation, Public Utilities 5,400 5,600 5,900 5,800 5,600 Information 8,200 7,900 8,400 8,100 7,100 Financial Activities 16,100 16,700 19,700 22,200 23,400 Professional & Business Serv. 36,600 39,600 37,200 36,600 36,600 Educational & Health 24,000 24,200 25,300 26,300 27,900 Leisure & Hospitality 23,500 25,200 26,600 27,200 27,500 Other Services 9,500 9,700 9,600 10,200 10,500 Government 43,900 44,300 45,100 45,300 44,600 Total All Industries 281 ,000 294,300 299,000 301,000 304,000
Source: Labor Market InformationDivision of the CaliforniaState Employment Development Department.
The following table sets forth the principal employers in the City as of June 1, 2004.
B-5 TABLE S CITY OF CAMARILLO PRINCIPAL EMPLOYERS As of June 1, 2004
Name of Company Employees Technicolor 1700 WellPoint 1600 Harbor Freight 945 Vitesse Semiconductor 600 Shell Solar Industries 488 California Amplifier 400 3M (Imation) 361 Pinkerton Security 275 Data Exchange Corp. 250 Verizon 200 G&H Technology 200 Power One 200 Harris Dracon 150
Source: City of Camarillo/Camarillo Chamber of Commerce.
Transportation
There is a general aviation airport within the City (operated by the County) and commuter airline service available in Oxnard. Los Angeles International Airport and Burbank Airport are an hour's drive from the City. Bus service is provided by a City bus system, including Dial-a-Ride, which interconnects with the County bus system, Greyhound and a Los Angeles International Airport line. Local passenger service is available on Amtrak, while commuter-rail transportation via the Metrolink Train to downtown Los Angeles and beyond is available from the Camarillo station next to U.S. Highway 101. Southern Pacific Railroad offers commercial freight service. The Port of Hueneme, a U.S. port of entry is situated 12 miles fromthe City and is the only deep water port between Los Angeles and San Francisco.
CommunitySer vices
The community is served by ten community shopping centers. The City is also served by Camarillo Premium Outlets, a 365,000 square foot complex offering over 90 merchandisers and the Camarillo Town Center which contains specialty stores, restaurants and several "big box" retailers, such as Target and Oshman's Sporting Goods. Regional shopping centers are in the adjacent cities of Thousand Oaks and Oxnard. Some of the highest sales tax revenue sources are Home Depot, Imation, Harbor Freight and Tool, Vons Grocery, Siemens Solar Industries and Target stores.
A community hospital with 180 beds of acute extended emergency and intensive care is located within the City. There are over 75 physicians-surgeons and dentists practicing in the City. There are 16 savings and loans and 11 banks. This City is served by one local daily and one local weekly newspaper. There are 46 churches and a 16,500 square foot library. Recreational facilities include 6 public golf courses and 9 private courses within 20 miles, 5 community parks and 16 neighborhood parks, one indoor and one outdoor public swimming pool, a skate board park, 2 movie theater complexes, along with a Boys and Girls club, YMCA, community theater and performing arts pavilion. There is also a variety of restaurants.
B-6 Housing
The City Council adopted an ordinance in response to a ballot initiative that limits the number of new housing allotments to 400 units per year. Development of new housing has averaged 360 new units each year since 1992 , and there were 171 units under construction with 1,402 accumulated development allotments as of June 2004. As of June 2004, there were 22,915 housing units in Camarillo, nearly 80% of which were comprised of single familyhomes less than 20 years old, with values ranging from the high $400,000s to over $1 million. Rents range from $900 to $1800 per month for one- and two-bedroom apartments,with condominium and townhome rentals ranging slightly higher.
Construction
Between January 1999 and June 2003 , the City issued 6,170 residential building permits valued at more than $414,479,000. During the same period, 918 building permits were issued for commercial and industrial construction projects valued at $1 53,099,000. The Camarillo Town Center project is now complete, along with a new Home Depot, which added an additional 135,000 square feet to the Town Center's 400,000 square feet of total building area. Future development within the City includes the Village at the Park, a mixed-use development providing a wide variety of residential, commercial and quasi-public uses on a 329-acre site in the southeastern portion of the City. The Village at the Park development plans call forover 1,060 residential units approximately 70% of which are low-density use, 350,000 sq. ft.of commercial space, a 55-acre public sports park, an elementary school site, a church site, a YMCA building site and other greenbeltperimeter areas.
TABLE 6 CITY OF CAMARILLO BUILDING PERMIT VALUATIONS Fiscal Years 1999-2003
Residential Industrial/Commercial All Others Fiscal Number Valuation Number Valuation Number Valuation Year of Permits {$000's} of Permits {$000's} of Permits {$000's} 1999 1,328 $145,433 165 $38,468 103 $3,342 2000 955 82,410 164 24,133 136 2,342 2001 1,056 72,345 203 49,578 150 4,462 2002 1,431 48,787 183 19,760 162 3,581 2003 1,400 59,334 203 21,160 162 2,794
So urce: Camarillo Department of Building & Safe ty.
Commercial Activity
The sales and use tax rate within the City is 7.25%. As of March 31, 2003, there were 2,163 businesses reporting taxable sales in the City. The following table provides information with respect to taxable transactions in the City forthe five year period from1999 through 2003.
B-7 TABLE ? CITY OF CAMARILLO TAXABLE TRANSACTIONS
Retail Retail Total Total Year Permits Transactions Permits Transactions 1999 596 $446,697 1,996 $678,080 2000 662 523,417 2,054 753,296 2001 694 552,265 2,082 789,748 2002 681 574,452 2,098 805,534 2003(!) 705 136,435 2,163 191,816
(]) First Quarter Only Source: State Board of Equalization (by Calendar Year).
Utilities
Gas is provided by Southern California Gas Company. Southern California Edison Company provides electric power. Telephone service is provided by General Telephone.
Water service is provided by the City Water Department, Camrosa County Water District and by three small mutual water companies. These purveyors purchase approximately 70% of their water from the Calleguas Municipal Water District, which is a member agency of the Metropolitan Water District.
Sewer service is supplied by the Camarillo Sanitary District (the City Council serves as its board) and Camrosa Water District.
Financial Statements
The audited combined :financial statements of the City are available through links obtained at the City's website at www.ci.camarillo.ca.us/govt/finance.html or at the website of Digital Assurance Certification at www.dac-ey.com. The audited combined financial statements of the City are also available upon request. Such request should be directed to the City Clerk's Office, 60I Carmen Drive, P.O. Box 248, Camarillo, California93 011-0248.
Investment Policy
The City has adopted policies and procedures for the management of the investment of unexpended funds for the City itself and for other entities of the City, including the District, for which City personnel provide financial management services. The three basic obj ectives of the policies and procedures are: safety ofinve sted funds, maintenance of sufficient liquidity to meet cash flow needs and attainment of the maximum yield possible consistent with the firsttwo objectives.
The policies and procedures require the Director of Finance to prepare a monthly investment report which includes a succinct management summary providing a clear picture of the status of the current investmentport folio and all security transactions made over the past month. This report must be presented to the City Council within 30 days of the end of the month. The report is also reviewed by an Investment Committee consisting of the City Council finance committee and two citizens having experience in accounting, banking or financial investments. The City Manager, Director of Finance and the Assistant Director of Finance serve as staff liaison to this committee. The Investment Committee
B-8 meets monthly to discuss the monthly investment reports, investment strategy, investment and banking procedures, and significant investment-related activities being undertaken.
Miscellaneous Statistics
TABLE S CITY OF CAMARILLO MISCELLANEOUS STATISTICS June 30, 2003 Date of Incorporation October 22, 1964 Form of Government Council (5)/ Manager Number of Employees (Excluding Police and Fire): Classified 96 Exempt 35 Area in SquareMiles 19.86 City of Camarillo Facilities and Services Miles of Streets 253 Number of Streets 968 Culture and Recreation Community Centers 1 Parks 28 Park Acreage 202 Golf Courses 3 Tennis Courts 21 Swimming Pools 2 Fire Protection Number of Stations 4 Number of Fire Personnel 52 Police Protection Number of Stations 1 Number of Police Personnel 50 Number of PatrolUnits 17 Number of Law Violations Physical Arrests 2,607 TrafficViolations 10,518 Parking Violations 1,641 Sewerage System: Miles of Sanitary Sewers 170 Number of Treatment Plans 1 Number of Service Connections 12,343 Daily Average Treatment in Gallons 3,800,000 Maximum Daily Capacity of Plant in Gallons 6,750,000 Water System: Miles of Water Mains 193 Number of Service Connections 11,312 Number of Fire Hydrants 1,442 Daily Average Consumption in Gallons 8,200,000 Maximum Daily Capacity of Plant in Gallons 29,000,000 Other Facilities and Services: Education: Number of Elementary Schools 20 Number of Elem. Schools Instructors 409 Number of SecondarySchools 3 Number of Secondary School Instructors 132 Hospitals: Number of Hospitals 1 Number of Patient Beds 81
Source: Cityof Camarillo.
B-9 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX C
SUMMARY OF BOND INDENTURE
The fo llowing is a summary of certain provisions of the Bond Indenture, together with the First and Second Supplemental Indentures (collectively, the "Bond Indenture';, not otherwise summarized in the text of th is Offi cial Statement. Th is summary is not intended to be definitive, and reference is made to the complete text of each ofsuch documents fo r the complete terms thereof
DEFINITIONS
Except as otherwise defined in this summary, the terms previously de.fined in th is Offi cial Statement have the respective meanings ascribed to such terms in the bodyof this Offi cialSta tement.
In addition to the preceding definitions, the fo llowing terms de.fined in the Bond Indenture have, except where sp ecifiedotherwise, the fo llowing meanings.
"Accreted Value" means, with respect to any Capital Appreciation Bonds, as of any date of calculation, the sum of the initial amount thereof and the interest accrued and compounded thereon, as determined in accordance with the provisions of the Supplemental Indenture authorizing issuance of such Bonds, to such date of calculation.
"Act" means the "Mello-Roos Community Facilities Act of 1982," as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the GovernmentCode of the State of California.
"Additional Bonds" means bonds of the District secured by and payable from an irrevocable first lien on the Special Tax Revenues and on the monies in the funds and accounts established in the Indenture (including the investment earnings thereon) with the exception of the Rebate Fund and the Administrative Expense Fund. Such lien shall be on a parity with the lien forthe Bonds established by the Indenture.
"Administrative Expense Fund" means the fund by that name established pursuant to the Indenture.
"Administrative Expenses" means the ordinary and necessary fees and expenses for the levy and administration of the Special Tax, the servicing of the Bonds and the provision of continuing disclosure pertaining to the Bonds, and/or the District as required by Rule 15c2-12 of the Securities and Exchange Commission and any applicable continuing disclosure agreement pertaining to the Bonds. Such fees and expenses shall include, but not be limited to, any or all of the following: the fees and expenses of the Trustee (including any feesor expenses of its counsel) and the expenses of the District in carrying out its duties hereunder which expenses include, but are not limited to, calculating the rebate obligation, if any, for the Bonds; undertaking of any annual audits of the Bonds, the Special Taxes or the District, computing, levying and collecting the Special Tax, and undertaking any annual or event continuing disclosure requirement. In addition to the costs of consultants and attorneys incurred in undertaking such duties, the expenses of the District shall also include an allocable share of the salaries of staffdirectly related thereto and a proportionate amount of general administrative overhead related thereto, any rebate obligation due and owing the United States government and all other costs and expenses of the District or the Trustee incurred in connection with the discharge of their respective duties hereunder and in the case of the District, in any way related to the administration of the District. Administrative Expenses shall also include Delinquency Collection Expenses.
C-1 "Administrative Expense Requirement" means an annual amount equal to $30,000 to be allocated forthe payment of Administrative Expenses.
"Annual Debt Service" means, for each Bond Year, the sum of (1) the interest falling due on all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds, if any, are redeemed from the mandatory sinking fund payments, as may be scheduled (except to the extent that such interest is to be paid fromthe proceeds of sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be paid or called and redeemed in such Bond Year.
With respect to Capital Appreciation Bonds, the Accreted Value payment shall be deemed due on the scheduled redemption or payment date of such Capital Appreciation Bonds.
"Annual Debt Service" shall not include (a) interest on Bonds which is to be paid from amounts constituting capitalized interest or (b) principal and interest allocable to that portion of the proceeds of any Bonds required to remain unexpended and to be held in escrow pursuant to the terms of a Supplemental Indenture, provided that (i) projected interest earnings on such amounts, if any, deposited by the District in the Interest Account, are sufficient to pay the interest due on such portion of the Bonds so long as it is required to be held in escrow and (ii) the conditions for the release of such proceeds from escrow, insofar as they relate to Special Tax coverage and satisfaction of the Reserve Account Requirement, are substantially the same as those forthe issuance of Additional Bonds.
"Authorized Representative" of the District means the City Manager or Finance Director, acting on behalf of the District, or any other person designated by the City Council and authorized to act on behalf of the District under or with respect to the Indenture and all other agreements related thereto.
"Average Annual Debt Service"means the average annual debt service during the term of the Bonds and anyAdditional Bonds.
1 "Bond Counsel" means an attorneyor fi m of attorneys, selected by the District, of nationally recognized standing in matters pertaining to the tax treatment of interest on bonds issued by states and their political subdivisions, duly admitted to the practice of law beforethe highest court of the State.
"Bondowner" or "Owner", or any similar term, means any person who shall be the registered owner or his duly authorized attorney,trustee, representativeor assign of any Outstanding Bond which shall at the time be registered.
"Bonds" shall mean the bonds authorized by and at any time Outstanding pursuant to the Indenture.
"Bond Service Fund" means the fundcreated and established pursuant to the Indenture.
"Bond Year" means (i) with respect to the initial Bond Year, the period extending from the date the 1999 Bonds are originally delivered to September 1, 1999 or the period extending from the date the Series 2004 Bonds are originally delivered to September 1, 2005, as applicable, and (ii) thereafter, each successive twelve month period ending on September 2.
"Business Day" means a day which is not a Saturday or a Sunday or a day of the year on which banks in New Yorlc, New York and Los Angeles, California, or where the Principal Corporate Trust Office is located, are not required or authorized to remain open.
C-2 "Capital Appreciation Bonds" means any Additional Bonds described as such when issued.
"City" means the City of Camarillo, California.
"Code" means the InternalRevenue Code of 1986, as amended.
"Costs of Issuance" means all of the costs of issuing the Bonds, including but not limited to, all printing and document preparation expenses in connection with the Indenture, the Bonds, and the official statement pertaining to the Bonds and any and all other agreements, instruments, certificates or other documents issued in connection therewith; legal fees and expenses of bond counsel and the city attorney with respect to the issuance of the Bonds and the defeasance and refundingof the Prior Bonds; the costs of the premium for theInsurance Policy and the Reserve Policy and the any computer and other expenses incurred in connection with the Bonds; the initial fees and expenses of the Trustee (including without limitation, acceptance fees and first annual fees payable in advance); the cost of the calculation of the rebate obligation, if any, for the Prior Bonds or the defeasance and refunding of the Prior Bonds; and other fees and expenses incurred in connection with the issuance of the Bonds, to the extent such fees and expenses are approved by the District.
"Costs of Issuance Fund" means the fund by that name established pursuant to the Indenture. "Comptroller of the Currency" shall mean the Comptroller of the Currency of the United States.
"Delinquency Collection Expenses" means those fees and expenses of the District incurred by or on behalf of the District in or related to the collection of delinquent Special Taxes.
"Delinquency Proceeds" means the amounts collected from the redemption of delinquent Special Taxes including the penalties and interest thereon and fromthe sale of property sold as a result of the foreclosure of the lien of the Special Tax resulting from the delinquency in the payment of Special Taxes due and payable on such property.
"Delivery Date" means the date on which the Bonds are issued and delivered to the initial purchaser thereof.
"Developed Property" means, forpur poses of the Indenture, all parcels of Developed Property (as defined in the Special Tax RMA) in the District for which a certificate of occupancy has been issued by the City.
"District" means West Camarillo Community Facilities District No. 1.
"Final Compounded Amount" means the Accreted Value of a Capital Appreciation Bond at maturity.
"Finance Director" means the Finance Director of the City, acting forand on behalf of the District.
"Fiscal Year'' means the 12 month period beginning July 1 of each year and terminatingon June 30 of the following year, or any other annual accounting period hereinafter selected and designatedby the District as its fiscalyear in accordance with applicable law.
"Government Obligations" means obligations described in Paragraph (a) of the definition of Permitted Investments.
"Gross Proceeds" has the meaning ascribed to such term in Section 148(0(6) of the Code.
C-3 "Independent Accountant" means any certified public accountant or form of such certified public accountants appointed and paid by the District, and who, or each of whom -
1. is in fact independent and not under domination of the District or the City;
2. does not have any substantial interest, direct or indirect, in the District or the City; and
3. is not an officer or employee of the District or the City, but who may be regularly retained to make annual or other audits of the books of or reports to the City or the District.
"Independent Financial Consultant" means any financial consultant or firm of such consultants experienced in the area for which the consultant is being retained by the District, and who, or each of whom:
1. is in factindependent and not under domination of the District or the City;
2. does not have any substantial interest, direct or indirect, in the District or the City; and
3. is not an officer or employee of the District or the City, but who may be regularly retained to make annual or other audits of the books of or reports to the City or the District.
"Insurer" means with respect to the 1999 Bonds, Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof, and with respect to the Series 2004 Bonds, Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance company.
"Insurance Policy'' means the insurance policy issued by the Insurer guaranteeing the scheduled payment of principal of and interest on the 1999 Bonds or the Series 2004 Bonds when due.
"Interest Payment Date" means each March 1 and September 1 on which interest on any Series of Bonds is scheduled to be paid, commencing September 1, 1999 with respect to the 1999 Bonds and commencing March 1, 2005 with respect to the Series 2004 Bonds.
"Investment Agreement" means any investment satisfying the requirements of subparagraph (f) of the definitionof Permitted Investments.
"Legislative Body" means the City Council of the City, acting as the legislative body of the District.
"Maximum Annual Debt Service" means, as of the date of any calculation, the largest Annual Debt Service during the currentor any futureBond Year.
"Moody's" means Moody's Investors Service, its successors and assigns. "Outstanding" means as to the Bonds, all of the Bonds, except:
1. Bonds theretofore canceled or surrendered for cancellation in accordance with the provision of the Indenture;
2. Bonds for the payment or redemption of which monies shall have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such bonds), provided that, if such Bonds are to be redeemed prior to the maturity thereof,
C-4 notice of such redemption shall have been given as provided in the Indenture or any applicable Supplemental Indenture.
"1999 Bonds" means the West Camarillo Community Facilities District No. 1, Special Tax Refunding Bonds, Series 1999.
"Permitted Investments" means any of the following which at the time of investment are legal investments under the laws of the State forthe moneys proposed to be invested therein (the Trustee shall be entitled to rely upon any written investment direction from an Authorized Representative of the District as a certificationto the Trustee that such investment constitutes a Permitted Investment):
(a) (i) United States Treasury notes, bonds, bills or certificates ofindeb tedness or obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest, including United States Treasury (book entry) certificates, notes and bonds, and state and local government series ("Federal Securities") and (ii) any money market fundwhi ch purchases and holds exclusively Federal Securities.
(b) The following obligations provided that such obligations are secured by a pledge of the full faithand credit of the United States governmentor are unconditionally guaranteed by the United States government:
(i) obligations issued by federal land banks, federal home loan banks, the Federal Home Loan Bank Board, the Tennessee Valley Authority;
(ii) obligations, participations, or other instruments of or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association; or (iii) obligations, participations, or other instruments of or issued by a federal agency.
(c) Nonnegotiable certificates of deposit issued by a nationally chartered bank, a bank chartered by the State of California authorized pursuant to Section 1756 of the California Financial Code to transact business in the State of Californiaby accepting deposits, or a State of California or federal savings and loan association, provided that such certificates of deposit are fully collateralized in the manner required for collateralization of trust funds, and provided that such certificates of deposit shall 'be limited to those issued by financial institutions whose long-term unsecured general obligations are rated Aa or better by Moody's Investors Serviceand AA or better by Standard and Poor's.
(d) Deposits of any bank or savings and loan association (including the Trustee), provided such deposits are fully insuredby the Federal Deposit Insurance Corporation.
( e) The Local Agency Investment Fund (LAIF).
(f) Investment agreements with a domestic bank or corporation (other than a life or property casualty insurance company) the long-term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least "AA" by S&P and "Aa" by Moody's; provided that, by the terms of the investment agreement:
C-5 (i) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days' prior notice; the District and the Trustee hereby agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid;
(ii) the investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof; or, in the case of a bank, that the obligation of the bank to make payments under the agreement ranks pari passu with the obligations of the bank to its other depositors and its other unsecured and unsubordinated creditors;
(iii) the District and the Trustee receives the opinion of counsel to the provider of such investment agreement that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms;
(iv) the investment agreement shall provide that if during its term
(A) the provider's rating by either S&P or Moody's falls below "AA-" or "Aa3", respectively, the provider shall, at its option, within 10 days of receipt of publication of such downgrade, either (a) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider's books) to the District, the Trustee or a third party acting solely as agent therefor (the "Holder of the Collateral") collateral free and clear of any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to S & P and Moody's to maintain an "A" rating in an "A" rated structured financing (with a market value approach); or (b) repay the principal of and accrued but unpaid interest on the investment, and
(B) the provider's rating by either S&P or Moody's is withdrawn or suspended or fallsbelow "A-" or "A3", respectively, the provider must, at the direction of the District or the Trustee, within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the District or Trustee; and
(v) The investment agreement shall state and an opm1on of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement, at the time such collateral is delivered, that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession);
(vi) the investment agreementmust provide that if during its term
(A) the provider shall default in its payment obligations, the provider's obligations under the investment agreement shall, at the direction of the District or the Trustee, be accelerated and amounts invested and
C-6 accrued but unpaid interest thereon shall be repaid to the District or Trustee, as appropriate, and
(B) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("Event of Insolvency"), the provider's obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the District or Trustee, as appropriate.
"Policy Costs" means the repayment of draws on the Reserve Policy and payment of expenses and accrued interest on such draws.
"Principal Corporate Trust Office" means the office of the Trustee at 550 South Hope Street, 5th Floor, Los Angeles, California 90071; provided, however for transfer, registration, exchange, payment and surrender of Bonds means care of the corporate trust officeof U.S. Bank Trust National Association in St. Paul, Minnesota or such other address specifiedby the Trustee to the District in writing.
"Prior Bonds" means the outstanding West Camarillo Community Facilities District No. 1 Series 1990 Special Tax Bonds.
"Project Costs" means all expenses of and incidental to the construction, acquisition, or both, of the Project.
"Project Fund" means the fundby that name established pursuant to the provisions of the Indenture.
"Rebate Fund" means the fund bythat name established pursuant to the provisions of the Indenture.
"Rebate Instructions" means the Rebate Instructions attached to the Indenture.
"Record Date" shall mean the fifteenth (15th) calendar day of the month immediately preceding an Interest Payment Date.
"Redemption Fund" means the fundby that name established pursuantto the provisions of the Indenture.
"Regulations" means the regulations promulgated under the Internal Revenue Code of 1986, as amended.
"Reserve Fund" means the fundby that name established pursuant to the provisions of the Indenture.
"Reserve Policy" means that municipal bond debt servicereserve insurance policy issued by the Insurer.
"Reserve Requirement" means as of any date of calculation, an amount equal to the lesser of (i) Maximum Annual Debt Service for the Bonds and any Additional Bonds, (ii) one hundred twenty-five percent (125%) of Average Annual Debt Service for the Bonds and any Additional Bonds, or (iii) ten percent (10%) of the original principal amount of the Bonds and any Additional Bonds less original issue discount, if any, plus original issue premium, if any.
"Special Tax" means the Special Tax authorized to be levied in the District pursuant to the Act and the Special Tax RMA.
"Special Tax Fund" means the fund by that name established pursuant to the provisions of the Indenture.
C-7 "Special Tax Revenues" means (a) the proceeds of the Special Tax levied and received by the District less the Administrative Expense Requirement annually retained by the District fromthe proceeds of the Special Tax received by the District, and (b) the Delinquency Proceeds.
"Special Tax RMA" means the rate and method of apportionment of the Special Tax originally approved by the qualified electors at the special election held in the District on March 21, 1990 and subsequently amended pursuant to the provisions thereof on July 12, 1995 , in August 1998, and again in 2000 and 2002 , and as may be amended from time to time.
"Serial Bonds" means Bonds forwhich no mandatory sinking account payments are provided.
"Series," when used with reference to the Bonds, means all of the Bonds authenticated and delivered on original issuance and identified pursuant to the Indenture or a Supplemental Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafterauthe nticated and delivered in lieu of or in substitution forsuch Bonds pursuant to the Indenture.
"Series 2004 Bonds" means the West Camarillo CommunityFac ilities District No. 1, Special Tax Bonds, Series 2004.
"Standard & Poor's" or "S&P" means Standard & Poor's Rating Services, its successors and assigns. "State" means the State of California.
"Supplemental Indenture" means any bond indenture then in full force and effect which has been duly approved by resolution of the Legislative Body under and pursuant to the Act at a meeting of the Legislative Body duly convened and held, at which a quorum was present and acted thereon, amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
"Tax Exempt" means, with reference to a Permitted Investment, a Permitted Investment the interest earnings on which are excludable from gross income forfederal income tax purposes pursuant to Section 103(a) of the Code, other than one described in section 57(a)(5)(C) of the Code.
"Tax Certificate" means the Tax Certificate (or similar instrument), dated the Delivery Date of a particular series of Bonds, relating to the requirements of certain provisions of the Code, as each such certificate may from time to time be modified or supplemented in accordance with the terms of the Indenture.
"Term Bonds" means Bonds which are payable on or before their specified maturity dates from mandatory sinking account payments established forthat purpose and calculatedto retire such Bonds on or beforetheir specified maturitydates.
"Total Maturity Amount" means with respect to any Outstanding Bond other than a Capital Appreciation Bond, the aggregate principal amount thereof and, with respect to any Outstanding Capital Appreciation Bond, the Final Compounded Amount thereof.
"Treasurer" means the Treasurer of the City acting forand on behalf of the District.
"Trustee" means U.S. BanlcTrust National Association, and any successor thereto.
"Yield" foreach series of Bonds, has the meaning assignedto such term forpurp oses of Section 148(f)of the Code.
C-8 Funds and Accounts; Flow of Funds
Special Tax Fund
(a) The Treasurer shall, no later than the tenth (10th) Business Day after which Special Tax Revenues have been received by the District on behalf of the District and in any event not later than February 15th and August 15th of each year, transfer such Special Tax Revenues to the Trustee fordeposit in the Special Tax Fund.
(b) The Special Tax Revenues deposited in the Special Tax Fund shall be held in trust and deposited into the followingfunds and/or transferred to the District on the dates and in the amounts set forth in the following paragraphs, in the followingorder of priority, to :
(1) The InterestAccount of the Bond Service Fund, on each Interest Payment Date and date for redemption of the Bonds, an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest due or becoming due and payable on such Interest Payment Date on all Outstanding Bonds or to be paid on the Bonds being redeemed on such date.
(2) The Principal Account of the Bond Service Fund, on each Interest Payment Date and redemption date on which the principal of the Bonds shall be payable, an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of, and premium (if any) on, the Bonds coming due and payable on such Interest Payment Date, or required to be redeemed on such date pursuant to the Indenture.
(3) The Reserve Fund an amount required to first,pay any Policy Costs due and payable to the Insurer and second, after the payment of all Policy Costs, replenish the monies on deposit in the Reserve Fund so that the amount of such monies, together with the coverage under the Reserve Policy, shall be equal to the Reserve Requirement.
(4) On or after September 2 of each year after making the transfers required under (1) through (3 ) above, upon receipt of written instructions from an Authorized Representative, the Trustee shall transfer from the Special Tax Fund to the Rebate Fund the amount specified in such request.
( 5) On or after September 2 of each year after making the transfers required under (1) through (4) above, upon receipt of a written request of an Authorized Representative, the Trustee shall transfer from the Special Tax Fund to the District for deposit into the Administrative Expense Fund the amounts specified in such request to pay those Administrative Expenses which the District reasonably expects (a) wil1 become due and payable during such Fiscal Year or the costs of which Administrative Expenses have previously been incurred and paid by the District from funds other than the Administrative Expense Fund and (b) the cost of which Administrative Expenses will be in excess of the Administrative Expense Requirement forsuch Fiscal Year.
(6) If, on or after September 2 of each year, after making the transfers required under (I) through (5) above, monies remain in the Special Tax Fund, such monies shall remain on deposit in the Special Tax Fund and shall be subsequently deposited or transferred pursuant to the provisions of (I) through (5) above.
C-9 ( c) When there are no longer any Bonds Outstanding, any amounts then remaining on deposit in the Special Tax Fund shall be transferred to the District and used for any lawful purpose under the Act.
Costs of Issuance Fund
The Trustee shall, upon the written reqms1tton executed by an Authorized Representative, disburse money fromthe Costs of Issuance Fund, if any, on such dates and in such amounts as specified in such requisition. Any amounts remaining on deposit in the Costs of Issuance Fund on the earlier of the date on which all Costs of Issuance have been paid as stated in writing by an Authorized Representative delivered to the Trustee or six months after the Delivery Date shall be transferred to the Special Tax Fund.
Bond Service Fund
(a) Interest Account. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accruedintere st on any Bonds redeemed prior to maturity).
(b) Principal Account. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the principal of the Bonds at the maturity thereof, (ii) paying the principal of the Term Bonds upon the mandatory sinking fund redemption thereof pursuant to the Indenture, or (iii) paying the principal of and premium (if any) on any Bonds upon the optional or extraordinary mandatory redemption thereof pursuant to the Indenture.
Reserve Fund
Moneys on deposit in and coverage under the Reserve Policy credited to the Reserve Fund shall be used solely forthe purpose of paying the principal of and interest on the Bonds as such amounts shall become due and payable in the event that the moneys in the Special Tax Fund and the Bond ServiceFund for such purpose are insufficient therefor or redeeming Bonds as described below. The Trustee shall, when and to the extent necessary, withdraw money from the Reserve Fund and/or make a claim under the Reserve Policy and transfer such money and/or the proceeds of any such claim to the Bond Service Fund or the Redemption Fund forsuch purpose.
On the seventh (7th) Business Day prior to any Interest Payment Date, the Trustee shall determine if there are sufficientfunds on deposit in the Special Tax Fund and the Bond Service Fund and available to pay the principal of and interest on the Bonds which shall become due and payable on such Interest Payment Date. If there are not sufficientfunds on deposit in the Special Tax Fund and the Bond Service Fund and available to make such payment on such Interest Payment Date, the Trustee shall determine if the monies and investments then on deposit in the Reserve Fund will be sufficient to make up such deficiency. If such monies and investments will not be sufficient to make up such deficiency, the Trustee shall, at least five ( 5) Business Days prior to such Interest Payment Date, give notice to the Insurer in accordance with the terms of the Reserve Policy of a claim upon the Reserve Policy. The Trustee shall, on or before such Interest Payment Date, transfer an amount equal to such deficiencyfrom the Reserve Fund to the Debt Service Fund. All monies and investments of such monies then on deposit in the Reserve Fund shall be transferred to the Debt Service Fund before any draw may be made on the Reserve Policy.
On any date after the transfers fromthe Special Tax Fund to the Bond Service Fund required by the Indenture have been made for anyBond Year, if the amount on deposit in the Reserve Fund is less
C-10 than the Reserve Requirement, the Trustee shall transfer to the Reserve Fund from the first available monies in the Special Tax Fund an amount necessary to first pay any Policy Costs due and payable to the Insurer and, upon the payment of all Policy Costs, then to increase monies on deposit in the Reserve Fund so that the balance of the monies therein together with the coverage under the Reserve Policy is equal to the Reserve Requirement.
If on September I after the scheduled payment of the principal of and interest on the Bonds due and payable on such date has been made, or the first Business Day thereafter if September I is not a Business Day and after such payment has been made, of each year, the monies then on deposit in the Reserve Fund are, when combined with the coverage under the Reserve Policy, in excess of the Reserve Requirement, the Trustee shall transfer monies in an amount equal to such excess from the Reserve Fund to the Bond Service Fund.
Upon receipt of written instructions from an Authorized Representative instructing the Trustee to transfer certain moneys representing a Reserve Fund credit for the prepayment of a Special Tax obligation, the Trustee shall transfer the amount specified in such instructions solely from the monies on deposit in the Reserve Fund to the Redemption Fund for the purpose of redeeming Bonds pursuant to such instructions.
Whenever the balance in the Reserve Fund (excluding the Reserve Policy) exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee shall transfer the money in the Reserve Fund to the Redemption Fund to be applied, on the next succeeding interest payment date, to the payment and redemption, of all of the Outstanding Bonds. In the event that the money so transferred from the Reserve Fund to the Redemption Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance of the money (excluding the Reserve Policy) in the Reserve Fund shall be transferred to the District to be used forany lawfulpur pose of the District as set forthin the Act.
Rebate Fund
The District shall calculate Excess Investment Earningsas defined in, and in accordance with, the Rebate Instructions, and shall, in writing, direct the Trustee to transfer funds to the Rebate Fund from fundsfurnished by the District as provided forin the Indenture and the Rebate Instructions.
Notwithstanding the foregoing, the Rebate Instructions, including the method of computing Excess Earnings (as defined in the Rebate Instructions) may be modified, in whole or in part, without the consent of the Owners of the Bonds, upon receipt by the District of an opinion of Bond Counsel to the effect that such modificationshall not adversely affect the exclusion from gross income of interest on the Bonds then Outstanding forfederal income tax purposes.
The Trustee shall not be responsible for calculating rebate amounts or for the adequacy or correctness of any rebate report or rebate calculations The Trustee shallbe deemed conclusively to have complied with the provisions of the Indenture regarding calculation and payment of rebate if it followsthe directions of the District and it shall have no independent duty to review such calculations or enforce the compliance by the District with such rebate requirements.
Redemption Fund
Monies may be deposited by the District into the Redemption Fund and shall be set aside and used solely for the purpose of redeeming Bonds in accordance with the provisions of the Indenture.
C-11 Following the redemption of any Bonds, if any surplus remains in the Redemption Fund, such surplus shall be transferredto the Special Tax Fund.
Project Fund
(a) The District shall, from time to time, disburse monies from the Project Fund to pay the Project Costs.
(b) Project Costs shall be paid directly to the person, corporation or entity or the assignee thereof entitled to payment hereunder.
(c) Notwithstanding anything in the Indenture to the contrary, if on September 1, 2007, any funds remain on deposit in the Project Fund, the District immediately shall restrict the Yield on such amounts such that the Yield earnedon the investmentof such amounts is not in excess of the Yield on the Bonds, unless in the opinion of Bond Counsel such restriction is not necessary to prevent an impairment of the exclusion of interest on the Bonds from gross income for federal income tax purposes.
(d) Afterthe final payment or reimbursement of all Project Costs, the District shall transfer excess monies, if any, on deposit in, or subsequently deposited in, the Project Fund to the Trustee for deposit in the Special Tax Fund.
Administrative Expense Fund
The District shall annually deposit proceeds of the levy of the Special Taxes in an amount equal to the Administrative Expense Requirement and shall deposit from time to time the amounts authorized to be transferred fromthe Trustee for deposit in such fund. The moneys in the Administrative Expense Fund shall be used to pay Administrative Expenses from time to time.
Investment of Funds
Unless otherwise specified in the Indenture, monies in the Special Tax Fund, Bond Service Fund and the Reserve Fund shall, at the written direction of an Authorized Representative given at least two (2) days prior, be invested and reinvested in Permitted Investments (including investments with the Trustee or an affiliate of the Trustee or investments for which the Trustee or an affiliate of the Trustee acts as investment advisor or provides other services so long as the investments are Permitted Investments). Monies in the Redemption Fund and the Rebate Fund shall, at the written direction of an Authorized Representative, be invested in Government Obligations. Notwithstanding anything in the Indenture to the contrary, in the absence of written investment instructions, the Trustee shall invest solely in Government Obligations.
Unless otherwise specified in the Indenture, monies on deposit in the Project Fund and the Administrative Expense Fund shall be invested and reinvested by the District in Permitted Investments.
As to investments of funds held by the Trustee, the District acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grantthe Districtthe right to receive brokerage confirmations of security transactions as they occur, the District specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnishthe District periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.
C-12 Obligations purchased as investments of monies in any fund or account shall be deemed at all times to be a part of such fund or account. Any income realized on or losses resulting from investments in any fundor account shall be credited or charged to such fund or account. Subject to the restrictions set forth in the Indenture and/or any written investment instructions received by Trustee pursuant to the Indenture, monies in said funds and accounts may be from time to time invested by the Trustee or the District, as applicable, in any manner so long as:
(1) Monies in the Project Fund, Administrative Expense Fund and Rebate Fund shall be invested in obligations which will by their terms mature as close as practicable to the date the District estimates the monies represented by the particular investment will be needed for withdrawal fromsuch Fund; and
(2) Monies in the Special Tax Fund, the Bond Service Fund or the Reserve Fund shall be invested only in obligations which will by their terms mature on such dates so as to ensure the payment of principal and interest on the Bonds as the same become due; provided, however, investments of monies on deposit in the Reserve Fund shall have an average aggregate weighted tenn not greater than five( 5) years.
The Trustee or District, as applicable, shall sell or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide monies to meet any payment or transfer for such fundsand accounts or fromsuch funds and accounts. The Trustee shall not be liable for any loss from any investments made or sold by it in accordance with the provisions of the Indenture.
Transfer or Exchange of Bonds
Exchange of Bonds
Bonds may be exchanged at the Principal Corporate Trust Office, for a like aggregate principal amount of Bonds of authorized denominations, interest rate and maturity, subject to the terms and conditions of the Indenture, including the payment of certain charges, if any, upon surrender and cancellation of a Bond. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same maturity and for the same aggregate principal amount will be issued to the transferee in exchange therefor.
Transfer of Bonds
The transfer of any Bond may be registered only upon such books of registration upon surrender thereof to the Trustee, together with an assignment duly executed by the Owner or his attorney or legal representative, in satisfactory form. Upon any such registration of transfer, a new Bond or Bonds shall be authenticated and delivered in exchange for such Bond, in the name of the transferee, of any denomination or denominations authorized by the Indenture, and in an aggregate principal amount equal to the principal amount of such Bond or Bonds so surrendered. In all cases in which Bonds shall be exchanged or transferred, the Trustee shall authenticate the Bonds in accordance with the provisions of the Indenture. The Trustee may make a charge for every such exchange or registration of transfer of Bonds sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration or transfer.
C-13 Mutilated, Destroyed, Stolen or Lost Bonds
In case any Bond shall become mutilated or be destroyed, stolen or lost, the District shall cause to be executed and authenticated a new Bond of like date and tenor and principal or maturity amount in exchange and substitution for and upon the cancellation of such mutilated Bond or in lieu of and in substitution for such Bond mutilated, destroyed, stolen or lost, upon the Owner's paying the reasonable expenses and charges in connection therewith, and, in the case of a Bond destroyed, stolen or lost, his filingwith the Trustee and District of evidence satisfactoryto them that such Bond was destroyed, stolen or lost, and of his ownership thereof, and furnishing the Trustee and District with indemnity satisfactory to them.
Covenants
As long as the Bonds are Outstanding and unpaid, the District shall (through its proper members, officers, agents or employees) faithfully perform and abide by all of the covenants and agreements set forth in the Indenture; provided, however, that, except for (c) below, such covenants do not require the District to expend any funds other than the Sp ecial Tax Revenues.
(a) Foreclosure. The District will review the public records of the County of Ventura, California, in connection with the collection of the Special Tax not later than July 1st of each Fiscal Year to determine the amount of Special Tax collected in the prior Fiscal Year. With respect to individual delinquencies, if the District determines that any single parcel subject to the Special Tax is delinquent in the payment of Special Taxes in the aggregate of $5,000 or more, the District shall, not later than August 15'h of such Fiscal Year, send or cause to be sent a notice of delinquency (and a demand forimmediate payment thereof) to the property owner. With respect to aggregate delinquencies throughout the District, if the District determines that it has collected less than 95% of the Special Taxes levied in the prior Fiscal Year, then the District shall, not later than August l 5'h of such Fiscal Year, send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the owner of each delinquent parcel (regardless of the amount of such delinquency). The District will cause judicial foreclosure proceedings to be filedin the Superior Court not later than November 15 ,h of such Fiscal Year against any property which is subj ect to the this notice of delinquency requirement and for which the Special Taxes remain delinquent.
(b) Preservation of Securitv forBonds. The District shall preserve and protect the security of the Bonds and the rights of the Bondowners and defend their rights against all claims and demands of all persons. Until such time as an amount has been set aside sufficient to pay Outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture or in any Bond issued hereunder.
(c) Limitation on Bonds Secured by Superior Liens. The District will not issue any other obligations payable, principal or interest, fromthe Special Taxes which have, or purportto have, any lien upon the Special Taxes superior to the lien of the Bonds authorized in the Indenture. Nothing in the Indenture shall prevent the District from issuing and selling, pursuant to law, Additional Bonds pursuant to the provisions of the Indenture or refunding bonds or other refunding obligations payable from and having a first lien upon the Special Taxes on a parity with the Outstanding Bonds.
(d) Punctual Payment. The District will duly and punctually pay or cause to be paid the principal of and interest on each of the Bonds issued hereunder on the date, at the place and in the manner
C-14 provided in said Bonds, solely from the Special Taxes and other funds as may be provided in the Indenture.
(e) Special Tax Covenants. Subject to the covenants contained in the Indenture, the Legislative Body will each year levy the Special Tax to the extent necessary and permitted by the Act and the Special Tax RMA in an amount sufficientto meet all of the District's obligations under the Indenture.
The Legislative Body covenants not to apply any contributions towards the payment of debt service on the Bonds to reduce the levy of Special Taxes in any Fiscal Year unless the amount of such contribution shall be on deposit with the Trustee and held forapplication under the terms of the Indenture or otherwise secured to the satisfaction of the Insurer prior to the approval of the levy of the Special Taxes forsuch Fiscal Year.
The District covenants not to amend the Gross Acreage and Sewer EDU's assignedto each Sub Area of the District without the prior written consent of the Insurer.
The Legislative Body covenants not to reduce the maximum Annual Special Tax Rates (as defined in the Special Tax RMA) unless an Independent Financial Consultant shall, prior to the approval by the Legislative Body of any such reduction, certify to the Legislative Body and the Insurer in writing that followingthe proposed reduction in the maximum Annual Special Tax Rates:
(I) the maximum Special Taxes which may be levied against Developed Property within the District will equal at least one hundred and three percent (103 %) of the estimated annual Administrative Expenses and Maximum AnnualDebt Service; and
(2 ) the maximum Special Taxes which may be levied against all property within the District which is not exempt from the levy of Special Taxes pursuant to the Special Tax RMA will equal at least one hundred fifty three percent (1 53%) of Maximum Annual Debt Service.
In addition to the foregoing certification, the Legislative Body covenants not to reduce the maximum Annual Special Tax Rates as a result of an annexation to the District unless an Independent Financial Consultant shall, prior to the approval by the Legislative Body of any such reduction, certify to the Legislative Body and the Insurer in writing that following the annexation and proposed reduction in the maximum Annual Special Tax Rates the level of Special Tax base concentration will not be significantly greater than the level of Special Tax base concentration existing prior to such annexation and such reduction.
(f) Books and Accounts. The District will at all times keep, or cause to be kept, proper and current books and accounts (separate fromall other records and accounts) in which complete and accurate entries shall be made of all transactions relating to the Special Tax Revenues and other funds provided for in the Indenture.
(g) Use of Proceeds. The District will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the District or take or omit to take any action that would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code, or obligations which are "federally guaranteed" within the meaning of Section l 49(b) of the Code. The District will not allow five percent( 5%) or more of the proceeds of the Bonds to be used in the trade or business of any non-governmental units and will not loan fivepercent (5%) or more of the proceeds of the Bonds to any non-governmental units.
C-15 (h) Preservation of Tax Exemption. The Districtcovenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103 of the Code. The District will not i d rectly or indirectly use or permit the use of any proceeds of the Bonds or any other fundsof the District, or take or omit to take any action, that would cause the Bonds to be "arbitrage bonds"within the meaning of Section 148(a) of the Code. To that end, the District will comply with all requirements of Section 148 of the Code to the extent applicable to the Bonds. In the event that at any time the District is of the opinion that for purposes of this covenant it is necessary to restrictor limit the yield on the investment of any monies held under the Indenture or otherwise the District shall so instruct the Treasurer in writing, and the Treasurer shall take such action as may be necessary in accordancewith such instructions.
Without limiting the generality of the foregoing, the District agreesthat there shall be paid from time to time all amounts required to be rebated to the United States of America pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds fromtime to time. This covenant shall survive payment in fullor defeasance of the Bonds.
Notwithstanding any provision of this covenant, if the District shall obtain an opinion of Bond Counsel to the effect that any action required under this covenant is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the Treasurer may rely conclusively on such opinion in complying with the provisions hereof, and the covenant hereunder shall be deemed to be modified to that extent.
(i) Extension of Maturity. The District shall not directly or indirectly extend the maturity dates of the Bonds or the time of payment of interest with respect thereto.
Modificationsand Amendments of the Indenture
The Legislative Body may, by adoption of a resolution from time to time, and at any time but without notice to or consent of any of the Bondholders, approve a Supplemental Indenture to the Indenture for any of the following purposes:
(a) to cure any ambiguity, to correct or supplement any provision in the Indenture which may be inconsistent with any other provision therein, or to make any other provision with respect to matters or questions arising under the Indenture or in any Supplemental Indenture, provided that such action shall not adversely affect the interests of the Bondowners;
(b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in the Indenture, other covenants, agreements, limitations and restrictions to be observedby the District which are not contrary to or inconsistent with the Indentureas theretoforein effect; or
(c) to modify, alter, amend or supplement the Indenture in any other respect which is not materially adverse to the interests of the Bon downers; and
(d) to amend any provision of the Indenture relating to the Code as may be necessary or appropriate to assure compliance with the Code and the exclusion from gross income of interest on the Bonds.
C-16 Exclusive of the Supplemental Indentures provided for in the first paragraph above, the Owners of not less than 60% in aggregate principal amount of the Bonds then Outstanding shall have the right to consent to and approve the adoption by the District of such Supplemental Indentures as shall be deemed necessary or desirable by the District forthe purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Indenture; provided, however, that nothing in the Indenture shall permit, or be construed as permitting, (a) an extension of the maturity date of the principal of, or the payment date of interest on, any Bond, or (b) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest thereon without the consent of the affected Bondowner(s), or permit, or be construed as permitting, (x) a preference or priority of any Bond or Bonds over any other Bond or Bonds, (y) a reduction in the aggregate principal amount of the Bonds the Owners of which are requiredto consent to such Supplemental Indenture, or (z) creating of a pledge of or lien or charge upon the Special Tax Revenues superior to the pledge provided for in the Indenture, without the consent of the Owners of all Bonds then Outstanding.
If at any time the District shall desire to approve a Supplemental Indenture, which shall require the consent of the Bondowners, the District shall so notify the Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Districtshall, at the expense of the District, cause notice of thepr oposed Supplemental Indenture to be mailed, postage prepaid, to all Bondowners at their addresses as they appear in the bond register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on fileat the principal office of the Districtfor inspection by all Bondowners. The failure of any Bondowner to receive such notice shall not affect the validity of such Supplemental Indenture when consented to and approved. Whenever at any time within one year after the date of the first mailing of such notice, the District shall receive an instrument or instruments purporting to be executed by the Owners of not less than 60% in aggregate principal amount of the Bonds then Outstanding, which instrument or instruments shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent to the approval thereof by the Legislative Body substantially in the form of the copy thereof referred to in such Notice as on filewith the District, such proposed Supplemental Indenture, when duly approved by the Legislative Body, shall thereafter become a part of the proceedings for the issuance of the Bonds. In determining whether the Owners of 60% of the aggregate principal amount of the Bonds have consented to the approval of any Supplemental Indenture, Bonds which are owned by the District or by any person directly or indirectly controlling or controlled by or under the direct or indirect common control with the District, shall be disregarded and shall be treated as though they were not outstanding forthe purposeof any such determination.
Upon the approval of any Supplemental Indenture and the receipt of consent to any such Supplemental Indenture from the Owners of the appropriate aggregate principal amount of Bonds in instances where such consent is required, the Indenture shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under the Indenture of the District and all Owners of Bonds then Outstanding shall thereafter be determined, exercised and enforced under the Indenture, subject in all respects to such modifications and amendments. Notwithstanding anything in the Indenture to the contrary, no Supplemental Indenture shall be entered into which would modifythe duties of the Trustee under the Indenture, without the prior written consent of the Trustee.
Notwithstanding the foregoing, no Supplemental Indenture shall become effective except upon receipt by the Trustee of the prior written consent of the Insurer.
C-17 Events of Default; Remedies
Events of DefaultDefined
The followingevents shall be Events of Defaultunder the Indenture.
(a) Default in the due and punctual payment of the principal of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings forredempt ion, by declaration or otherwise.
(b) Default in the due and punctual payment of interest on any Bond when and as such interest shall become due and payable.
( c) Default by the District in the observance of any of the other covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, if such default shall have continued for a period of thirty (30} days after written notice thereof, specifying such defaultand requiring the same to be remedied, shall have been given to the District by the Trustee or to the District and the Trustee by the Owners of not less than twenty five percent (25%) in aggregate principal amount of the Bonds at the time Outstanding; provided that such default (other than a default arising fromnonp ayment of the Trustee's feesand expenses, which must be cured within such 30-day period unless waived by the Trustee) shall not constitute an Event of Default under the Indenture if the District shall commence to cure such default withinsaid thirty (30) day period and thereafterdilig ently and in good faith shall cure such defaultwithin a reasonable period of time; or
( d) The filing by the District of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the District, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the District or of the whole or any substantial part of its property.
Remedies
If an Event of Defaultshall happen, then, and in each and every such case during the continuance of such Event of Default, the Trustee may, only with the prior consent of or at the prior direction of the Insurer, exercise any and all remedies available pursuant to law or granted pursuant to the Indenture.
Institution of Legal Proceedings
If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Owners of a maj ority in principal amount of the Bonds then Outstanding, and upon being indemnifiedto its satisfactiontherefor, shall, proceed to protect or enforce it rights or the rights of the Owners by a suit in equity or action at law, either forthe specificperf ormance of any covenant or agreement contained in the Indenture, or in aid of the execution of any power therein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder.
C-18 Remedies Not Exclusive
No remedy in the Indenture conferred upon or reserved to the Trustee or to the Owners is exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise.
Power of Trustee to Control Proceedings: Rightsof the Insurer
In the event that the Trustee, upon the happening of an Event of Defaultand the Trustee having first received the prior written consent of or direction from the Insurer, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interest of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default,discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at thetime there has been filed with it a written request signedby the Owners of at least a majority in principal amount of the Outstanding Bonds under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
Limitation on Bond Owner's Right to Sue
No Owner of any Bond executed hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers granted in the Indenture or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in everycase, to be conditions precedent to the exercise by any Owner of any remedy hereunder. No one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under the Indenture, except in the manner provided for in the Indenture and forthe equal benefitof all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment as the same becomes due, or to institute suit for the enforcement of such payment, shall. not be impaired or affected without the consent of such Owner, notwithstanding the provisions of the Indenture.
Application of Revenues and Other Funds afterDefault
If a default in the payment of the Bonds or any Additional Bonds shall occur and be continuing, all revenues and any other funds then held or thereafter received under any of the provisions of the Indenture shall be applied as followsand in the followingorder:
C-19 A. To the payment of any expenses necessary in the opinion of the District to protect the interest of the owners of the Bonds and payment of reasonable charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under the Indenture;
B. To the payment of the principal of and interest then due with respect to the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of the Indenture, as follows:
First: To the payment to the persons entitled thereto of all installments of interest thendue in the order of the maturity of such installments, and, if the amount available shall not be sufficientto pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discriminationor preference;and
Second: To the paymentto the persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by call for redemption, with interest on theoverdue principal at the rate borne by the respective Bondson the date of maturityof redemption, and if the amount available shall not be sufficient to pay in fullall the Bonds, together with such interest, then to thepayment thereof ratably, according to theamounts of principal due on such date to the persons entitled thereto, without discrimination or preference.
Defeasance
If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond the interest due thereon andthe principal thereof, at the times andin the mannerstipulated in the Indenture, then the Owner of such Bond shall cease to be entitled to the pledge of the Special Tax Revenues, and, other than as set forthbelow, all covenants, agreements and other obligations of the District to the Owner of such Bond under the Indenture shall thereupon cease, terminate and become void and discharged and satisfied. In the event of the defeasance of all Outstanding Bonds, the Trustee shall pay over or deliver to the District all money or securities held by it pursuant to the Indenture which are not required forthe payment of the principal of, premium, if any, and interest due on such Bonds.
Any Outstanding Bond shall be deemed to have been paid within the meaning expressed in the preceding paragraph if such Bond is paid in any one or more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable;
(b) by depositing with the Trustee, in trust, at or beforema turity, money which, together with the amounts then on deposit in the funds established pursuantto the Indenture ( exclusive of the Rebate Fund) and available forsuch purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; or
(c) by depositing with an escrow bank appointed by the District, in trust, noncallable Federal Securities, in such amount as an Independent Accountant shall determine (as set forthin a verification report from such Independent Accountant) will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the funds established under
C-20 the Indenture ( exclusive of the Rebate Fund) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; then, at the election of the District, and notwithstanding that any Outstanding Bonds shall not have been surrendered for payment, all obligations of the District under the Indenture with respect to such Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond not so surrendered and paid, all sums due thereon and except forthe covenants of the District to preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Notice of such election shall be filed with the Trustee not less than ten (10) days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Trustee. In connection with a defeasance under (b) or ( c) above, there shall be provided to the Trustee a certificate of a certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank, together with the interest to accrue thereon and moneys then on deposit in the funds established under the Indenture ( exclusive of the Rebate Fund) and available for such purpose, together with the interest to accrue thereon to pay and discharge the principal of, premium, if any, and interest on all such Bonds to be defeased in accordance with the Indenture as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the Independent Accountant) to the effect that the Bonds being defeased have been legally defeasedin accordance with the Indenture.
To accomplish such defeasance, the District shall cause to be delivered (i) a report of the Independent Accountant verifying the determination made pursuant to paragraph (c) above (the "Verification Report") and (ii) an opinion of Bond Counsel to the effect that the Bonds are no longer Outstanding. The Verification Report and opinion of Bond Counsel shall be acceptable in form and substance, and addressed to the District, the Insurer and the Trustee.
C-21 (TIDS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D
FORM OF BOND COUNSEL OPINION
September _, 2004
West Camarillo Community Facilities DistrictNo. I of theCity of Camarillo 60 I Carmen Drive Camarillo, California 93010
$8,200,000 West Camarillo Community Facilities District No. 1 of the City of Camarillo Special Tax Bonds, Series 2004
Members of the City Council:
We have acted as bond counsel to the West Camarillo Community Facilities District No. 1 of the City of Camarillo (the "District") in connection with the issuance by the District of $8,200,000 aggregate principal amount of West Camarillo Community Facilities District No. 1 of the City of Camarillo Special Tax Bonds, Series 2004, dated the date hereof (the "Bonds"), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the "Act"), andpursuant to the provisions of Chapter 3 of Part 1 of Division 2 of Title 5, commencing with section 53580, of the California Government Code and pursuant to a Bond Indenture, dated as of February I, 1999 (the "Master Indenture"), as amended and supplemented by a First Supplemental Indenture, dated as of May 1, 200 I (the "First Supplemental Indenture") and further amended and supplemented by a Second Supplemental Indenture, dated as of September 1, 2004 (the "Second Supplemental Indenture") (the Master Indenture, the First Supplemental Indenture and the Second Supplemental Indenture is herein referred to as to the "Indenture"), each by and between the District and U.S. Bank National Association, as trustee (the "Trustee"). We have examined the Act and such certified proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the District contained in the Indenture and in the certifiedproceedings and certifications of public officials and others furnishedto us, without undertaking to verify the same by independent investigation.
Based upon the foregoing we are of the opinion, under existing law, as follows:
1. The District is a community facilities district duly organized and validly existing under the laws of the State of California with the full power to enter into the Indenture and the Second Supplemental Indenture, to performthe agreements on its part contained therein and to issue the Bonds.
2. The Second Supplemental Indenture has been duly approved by the District and constitutes the valid and binding obligation of the District enforceable against the District in accordance with its terms.
3. The Indenture, including the Second Supplemental Indenture, creates a valid lien on the funds pledged by the Indenture forthe security of the Bonds, subject to no prior lien granted under the Act.
D-1 4. The Bonds have been duly authorized, executed and delivered by the District and are valid and binding special obligations of the District, payable solely from the sources provided therefor in the Indenture.
5. The Internal Revenue Code of 1986, as amended (the "Code") sets forth certain requirements that must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded from the gross income of the owners thereof for federal income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issue of the Bonds. The District has covenanted in the Indenture to maintain the exclusion of interest on the Bonds from the gross income of the owners thereof for federal income tax purposes.
In our opinion, under existing law, interest on the Bonds is exempt frompersonal income taxation of the State of California and, assuming compliance with the aforementioned covenant, interest on the Bonds is excluded pursuant to section 103(a) of the Code fromthe gross income of the owners thereof for federal income tax purposes. We are further of the opinion that under existing statutes, regulations, rulings and court decisions, the Bonds are not "specified private activity bonds" within the meaning of section 57(a)(5) of the Code and, therefore,the interest on the Bonds will not be treated as an item of tax preference forpurposes of computing the alternative minimum tax imposed by section 55 of the Code. The receipt or accrual of interest on Bonds owned by a corporation may affect the computation of the alternativeminimum taxable income, upon which the alternative minimum tax is imposed, to the extent that such interest is taken into account in determining the adjusted current earnings of that corporation (75 percent of the excess, if any, of such adjusted current earnings over the alternative minimum taxable income being an adjustment to alternative minimum taxable income (determined without regard to such adjustment or to the alternativetax net operating loss deduction)).
Except as stated in the preceding two paragraphs, we express no opinion as to any federal or state tax consequences of the ownership or disposition of theBonds. Furthermore, we express no opinion as to any federal, state or local tax law consequences with respect to the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of other bond counsel.
No opinion is expressed herein on the accuracy, completeness or sufficiency of the Official Statement or other offering materials relating to the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.
Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above.
Respectfullysubmitt ed,
D-2 APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of September 1, 2004, is executed and delivered by the West Camarillo Community Facilities District No. 1 of the City of Camarillo (the "Issuer") and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the "Disclosure Dissemination Agent" or "DAC'') for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the "Rule").
SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the OfficialStatement (hereinafterdefined). The capitalized terms shall have the followingmean ings:
"Annual Report" means an Annual Report described in and consistent with Section 3 of this Disclosure Agreement.
"Annual Filing Date" means the date, set in Sections 2(a) and 2(f),by which the Annual Report is to be filedwith the Repositories.
"Annual Financial Information" means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specifiedin Section 3(a) of this DisclosureAgreement.
"Audited Financial Statements" means the financial statements (if any) of the Issuer forthe prior fiscalyear, certifiedby an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specifiedin Section 3(b) of this Disclosure Agreement. "Bonds" means the bonds as listed on the attached Exhibit A, with the 9-digit CUSIP numbers relating thereto.
"Certification" means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice required to be submitted to the Repositories under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Issuer and include the full name of the Bonds and the 9-digit CUSIPnumbers forall Bonds to which the document applies.
"Disclosure Representative"means the Director of Finance of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent.
"Disclosure Dissemination Agent" means Digital Assurance Certification, L.L.C., acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the Issuer pursuant to Section 9 hereof
"Holder" means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
E-1 nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes.
"Information"means the Annual Financial Information,the Audited Financial Statements (if any) the Notice Event notices, and the Voluntary Reports.
"Notice Event" means an event listed in Sections 4(a) of this Disclosure Agreement.
"MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(l) of the Securities Exchange Act of 1934.
"National Repository" means any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The list of National Repositories maintained by the United States Securities and Exchange Commission shall be conclusive for purposes of determining National Repositories. Currently, the following are National Repositories:
1. DPC Data Inc. One Executive Drive Fort Lee, New Jersey 07024 (20 1) 346-0701 (phone) (201 ) 947-0107 (fax) Email: [email protected]
2. Interactive Data Attn: Repository 100 Williams Street New York, New York 1003 8 (212) 771-6999 (phone) (212) 771-7390 (faxfor secondary market information) (2 12) 771-7391 ( fax forprimary market information) Email: [email protected]
3. Bloomberg Municipal Repositories P.O. Box 840 Princeton, New Jersey 08542-0840 (609) 279-3225 (phone) (609) 279-5962 (fax) Email: [email protected]
4. Standard & Poor's J.J. Kenny Repository 55 Water Street, 45th Floor New York, New York 1004 1 (2 12) 438-4595 (phone) (2 12) 438-3975 (fax) Email: nrmsir_rep [email protected]
"OfficialStatement" means that OfficialStatement prepared by the Issuer in connection with the Bonds, as listed on Appendix A.
"Repository" means the MSRB, each National Repository and the State Depository (if any).
E-2 "State Depository" means any public or private depository or entity designated by the State of California as a state information depository (if any) for the purpose of the Rule. The list of state information depositories maintained by the United States Securities and Exchange Commission shall be conclusive as to the existence of a State Depository. Currently, the followingdepositori es are listed by the Securities and Exchange Commission as available State Depositories:
1. Municipal Advisory Council of Michigan 1445 First National Building Detroit, Michigan 48226-3517 (313) 963-0420 (phone) (3 13) 963-0943 (fax)
2. Municipal Advisory Council ofTexas 600 W. Eighth Street PO Box 2177 Austin, TX 78701 (512) 476-6947 (phone) (512) 476-6403 (fax)
3. Ohio Municipal Advisory Council 9321 Ravenna Road, Unit K Twinsburg, OH 44087-2445 (330) 963-7444 (phone) (800) 969-0MAC (6622) (phone) (330) 963-7553 (fax)
"Trustee" means the institution identified as such in the document under which the Bonds were issued.
"Voluntary Report" means the information provided to the Disclosure Dissemination Agent by the Issuer pursuant to Section 7.
SECTION 2. Provision of Annual Reports.
(a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later than 30 days prior to the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to each National Repository and the State Depository (if any) not later than February 1 followingthe end of each fiscal year of the Issuer, commencing with February 1, 2005. Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement.
(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification) no later than two (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be able to file the Annual Report within the time required under this
E-3 Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent that a Notice Event as described in Section 4(a)(12) has occurred and to immediately send a notice to each National Repository or the MSRB and the State Depository (if any) in substantially the formatt ached as Exhibit B.
( c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 12:00 noon on the first business day following the Annual Filing Date for the Annual Report, a Notice Event described in Section 4(a)(12) shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a notice to each National Repository or the MSRB and the State Depository (if any) in substantially the form attached as Exhibit B.
( d) If Audited Financial Statements of the Issuer are prepared but not available prior to the Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in a timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, together with a copy for the Trustee, forfiling with each National Repository and the State Depository (if any).
(e) The Disclosure Dissemination Agent shall:
(i) determine the name and address of each Repository each year prior to the Annual Filing Date;
(ii) upon receipt, promptly fileeach Annual Report received under Section 2(a) with each National Repository, and the State Depository, (if any);
(iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) with each National Repository, and the State Depository (if any);
(iv) upon receipt, promptly file the text of each disclosure to be made with each National Repository or the MSRB and the State Depository (if any) together with a completed copy of the MSRB Material Event Notice Cover Sheet in the form attached as Exhibit C, describing the event by checking the box indicated below when filingpursuant to the Section of this Disclosure Agreement indicated:
(1) "Principal and interest payment delinquencies," pursuant to Sections 4(c) and 4(a)(l);
(2) "Non-Payment related defaults," pursuant to Sections 4(c) and 4(a)(2);
(3) "Unscheduled draws on debt service reserves reflecting financial difficulties,"pursuant to Sections 4(c) and 4(a)(3);
(4) "Unscheduled draws on credit enhancements reflecting financial difficulties,"pursu ant to Sections 4(c) and 4(a)(4);
( 5) "Substitution of credit or liquidity providers, or their failureto perform," pursuant to Sections 4(c) and 4(a)(5);
(6) "Adverse tax opinions or events affecting the tax-exempt status of the security," pursuant to Sections 4(c) and 4(a)(6);
(7) "Modifications to rights of securities holders," pursuant to Sections 4(c) and 4(a)(7);
E-4 (8) "Bond calls," pursuant to Sections 4(c) and 4(a)(8);
(9) "Defeasances,"pursuant to Sections 4(c) and 4(a)(9);
(10) "Release, substitution, or sale of property securing repayment of the securities," pursuant to Sections 4(c) and 4(a}(l0);
(11) "Ratings changes," pursuant to Sections 4(c) and 4(a)(l l);
(12) "Failure to provide annual financialinformati on as required," pursuant to Section 2(b)(ii) or Section 2(c), together with a completed copy of Exhibit B to this Disclosure Agreement.
(v) provide the Issuer evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement.
(f) The Issuer may adjust the Annual Filing Date upon change of its fiscal yearby providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Trustee (if any) and the Repositories, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year.
SECTION 3. Content of Annual Reports.
(a) Each Annual Report shall contain the following information:
(i) The principal amount of the Bonds Outstanding as of September 30 next preceding the Annual Filing Date.
(ii) The balance in the Project Fund as of the September 30 next preceding the Annual Filing Date.
(iii) The balance in the Reserve Fund, and a statement of the Reserve Requirement as of the September 30 next preceding the Annual Filing Date.
(iv) The total assessed value of all parcels within the District on which the Special Taxes are levied, as shown on the assessment roll of the Ventura County Assessor last equalized prior to September 30 next preceding the Annual Report Date, and a statement of assessed value-to-lien ratios therefor by individual parcel.
(v) The Special Tax delinquency rate for all parcels within the Districton which the Special Taxes are levied, as shown on the assessment roll of the Ventura County Assessor last equalized prior to September 30 next preceding the Annual Report Date, the number of parcels within the District on which the Special Taxes are levied and which are delinquent in payment of Special Taxes, as shown on the assessment roll of the Ventura County Assessor last equalized prior to September 30 next preceding the Annual Filing Date, the amount of each delinquency, the length of time delinquent and the date on which foreclosure was commenced, or similar information pertaining to delinquencies deemed appropriate by the District; provided that parcels with aggregate delinquencies of $2,000 or less (excluding penalties and interest) may be grouped together and such information may be provided by category.
E-5 (vi) The status of foreclosure proceedings forany parcels within the District on which the Special Taxes are levied and a summary of the results of any foreclosure sales as of the September 30 next preceding the Annual Filing Date.
(vii) The identity of any property owner presenting more than fivepercent (5 % ) of the annual Special Tax levy who is delinquent in payment of such Special taxes, as shown on the assessment roll of the Ventura County Assessor last equalized prior to September 30 next preceding the Annual Filing Date.
(viii) A land ownership summary listing property owners responsible formore than ten percent (10%) of the annual Special Taxlevy as shown on the assessment roll of the Ventura CountyAssessor last equalized prior to September30 next preceding the Annual Filing Date.
(ix) An update of the levy breakdown by land use as found in Table 5 of the Official Statement.
(b) Audited Financial Statements prepared in accordance with generally accepted accounting principles ("GAAP") as described in the Official Statement will be included in the Annual Report. Audited Financial Statements (if any) will be provided pursuant to Section 2(d).
(c) Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined by the Rule), which have been previously filed with each of the National Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Issuer will clearly identify each such document so incorporated by reference.
SECTION 4. Reporting of Notice Events.
(a) The occurrence of any of the following events, if material, with respect to the Bonds constitutes a Notice Event:
(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults;
(iii) Unscheduled draws on debt service reserves reflecting financialdif ficulties;
(iv) Unscheduled draws on credit enhancements relating to the Bonds reflecting financialdif ficulties;
(v) Substitution of credit or liquidity providers, or their failure to perform;
(vi) Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
(vii) Modificationsto rights of Bond holders;
(viii) Bond calls;
(ix) Defeasances;
(x) Release, substitution, or sale of propertysecuring repayment of the Bonds;
E-6 (xi) Rating changes on the Bonds; and
(xii) Failure to provide annual financial information as required.
The Issuer shall promptly notifythe Disclosure Dissemination Agent in writing upon the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection ( c ). Such notice shall be accompanied with the text of the disclosure that the Issuer desires to make, the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information.
(b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the
Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within five business days of receipt of such notice, instruct the Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred andthe Disclosure Dissemination Agent is to report the occurrence pursuant to subsection ( c ), together with the text of the disclosure that the Issuer desires to make, the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information.
( c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with the State Depository (if any) and (i) each National Repository, or (ii) the MSRB.
SECTION 5. CUSIP Numbers. Whenever providing information to the Disclosure
Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, notices of Notice Events, and Voluntary Reports filedpursuant to Section 7(a), the Issuer shall indicate the full name of the Bonds and the 9-digit CUSIP numbers for theBonds as to which the provided informationrela tes.
SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule lOb-5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the failure of the Disclosure Dissemination Agent to so advise the Issuer shall not constitute a breach by the Disclosure Dissemination Agent of any of its duties and responsibilities under this Disclosure Agreement. The Issuer acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement.
SECTION 7. Voluntary Rt.morts.
(a) The Issuer may instructthe Disclosure Dissemination Agent to file informationwith the Repositories, from time to time pursuant to a Certification of the Disclosure Representative accompanying such information (a "Voluntary Report").
(b) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information through the Disclosme Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice, in addition to that required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report,
E-7 Annual Financial Statement, Voluntary Report or Notice Event notice in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice.
SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, priorredempti on or payment in full of all of the Bonds , when the Issuer is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of nationally recognized bond counsel to the effectthat continuing disclosure is no longer required.
SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The Issuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services as
Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit ofthe Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable until payment in fullfor any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days' prior written notice to the Issuer.
SECTION 10. Remedies in Event of Default. In the event of a failure of the Issuer or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders' rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties' obligation under this
Disclosure Agreement. Any failure by a partyto perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rightsand rem�dies shall be limited to those expressly stated herein.
SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent.
(a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent's obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Issuer has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information or any other information, disclosures or notices provided to it by the Issuer and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility forthe Issuer's failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the Issuer has complied with this Disclosure
Agreement. The Disclosure Dissemination Agent may conclusively rely upon certifications of the Issuer at all times.
THE ISSUER AGREESTO INDEMNIFYAND SAVE THE DISCLOSURE DISSEMINATION AGENT AND ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, HARMLESS AGAINST ANY LOSS, EXPENSE AND LIABILITIES WHICH THEY MAY INCUR
E-8 ARISING OUT OF OR IN THE EXERCISE OR PERFORMANCE OF THEIR POWERS AND DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES (INCLUDING ATTORNEYS FEES) OF DEFENDINGAGAINST ANY CLAIM OF LIABILITY, BUT EXCLUDING LIABILITIES DUE TO THE DISCLOSURE DISSEMINATION AGENT'S NEGLIGENCE OR WILLFUL MISCONDUCT.
The obligations of the Issuer under this Section shall survive resignation or removal of the DisclosureDi ssemination Agent and defeasance, redemption or payment of the Bonds.
(b) The Disclosure Dissemination Agent may, from timeto time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the constructionof any of the provisions hereof or its respective duties hereunder, and neither of them shall incur any liability and shall be fullyprotected in acting in good faith upon the advice of such legal counsel. The feesand expenses of such counsel shall be payable by the Issuer.
SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Issuer and the DisclosureDisse mination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the Issuer or the Disclosure Dissemination Agent shall be obligated to agreeto any amendment modifyingtheir respective duties or obligations without their consent thereto.
Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreementnecessa ry to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission fromtime to time by giving not less than 20 days written notice of the intent to do so together with a copy of the proposedamendment to the Issuer. No such amendment shall become effective if the Issuer shall, within 10 days followingthe giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Trustee of the Bonds, the Disclosure Dissemination Agent, the underwriter, and the Holders fromtime to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 14. Governing Law. This Disclosure Agreementshall be governed by the laws of the State of California( other than with respect to conflictsof laws).
SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
E-9 The Disclosure Dissemination Agent and the Issuer have caused this Continuing Disclosure Agreementto be executed, on the date firstwritten above, by their respective officers duly authorized.
DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent
By: ______
WEST CAMARILLO COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF CAMARILLO, as Issuer
By: ______Name: ------� Title:------
E-10 EXHIBIT A
NAME AND CUSIP NUMBERS OF BONDS
Name oflssuer West Camarillo Community Facilities District No. 1 of the City of Camarillo Obligated Person(s) West Camarillo Community Facilities District No. 1 of the City of Camarillo Name of Bond Issues: $8,200,000 West Camarillo Community Facilities District No. 1 of the City of Camarillo, Special Tax Bonds Series 2004 Date of Issuance: September 29, 2004 Date of OfficialStatement: September 13, 2004
CUSIP Number: ------� CUSIPNumber: CUSIPNumber: ------� CUSIPNumber: CUSIP Number: ______CUSIPNumber: CUSIPNumber: ------CUSIPNumber: CUSIPNumber: ------CUSIP Number: CUSIPNumber: ------CUSIPNumber : CUSIPNumber: ------CUSIPNumber: CUSIP Number: ------CU SIP Number: CUSIP Number: ------� CU SIP Number: CUSIP Number: ------� CUSIPNumber: CUSIPNumber: ------� CUSIP Number: CUSIPNumber: ------� CUSIPNumber: CUSIPNumber: ------� CUSIPNumber:
E-1 1 EXHIBIT B
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Person: West Camarillo Community Facilities District No. 1 of the City of Camarillo Name of Issue: $8,200,000 West Camarillo Community Facilities District No. 1 of the City of Camarillo, Special Tax Bonds Series 2004 Date of Issuance: September 29, 2004
NOTICE IS HEREBY GIVEN that the Commission has not provided an Annual Reportwith respect to the above-named Bonds as required by the Continuing Disclosure Agreement executed by the Commission on the date of issuance of the Bonds. [The Commission anticipates that the Annual Report will be filed by ______. Dated: ------Digital Assurance Certification,L. L.C., on behalf of the West Camarillo CommunityFacilities District No. 1 of the City of Camarillo
By:
E-12 APPENDIX F
FORM OF FINANCIAL GUARANTYINSURANCE POLICY
F-1 (THISPAGE INTENTIONALLYLEFT BLANK) Ambac Assurance Corporation Alnbac One State Street Plaza, 15th Floor New Yo rk, New York 10004 Financial Guaranty Insurance Policy Te lephone: (212) 668-0340
Obligor: Policy Number:
Obligations: Premium:
Ambac Assurance Corporation {Ambac), a Wisconsin stock insurance corporation, in consideration of the pa premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New Yo rk, as trustee, or its "Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above-describe o igations (the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment b e Obligo Ambac will make such payments to the Insurance Trustee within one (1) business day following wri en ti · tio I\. Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpai gati uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will d' u to the d principal and interest which is then Due for Payment but is unpaid. Upon such disburse mbac 1 b the surrendered Obligations and/or coupons and shall be fully subrogated to all of th Ho er righ t In cases where the Obligations are issued in registered form, the Insurance Trustee er only upon presentation and surrender to the Insurance Tr ustee of the unpaid Obligation, unca v claim, together with an instrument of assignment, in form satisfactory to Ambac and t .....,. ,,----J the Holder or such Holder's duly authorized representative, so as to permit ownership of s h re iste d i e name of Ambac or its nominee. The Insurance Trustee shall disburse interest to a er o a Ii t n o y upon presentation to the Insurance Trustee of proof that the claimant is the person entitle to �ile•Jfi..pf'i.(ltl�r\!.st o e Obligation and delivery to the Insurance Trustee of an instrument of assignment, in form satisfac nsurance Trustee, duly executed by the Holder or such Holder's duly authorized representa · t Am c 11 ri under such Obligation to receive the interest in respect of which the insurance disbu subrogated to all of the Holders' rights to payment on registered Obligations to the extent o made.
o er than (i) the Obligor or (ii) any person whose obligations constitute the �L ·-.,,L'" gations who, at the time of Nonpayment, is the owner of an Obligation or of ein, "Due for Payment", when referring to the principal of Obligations, is when e mandato clemption date for the application of a required sinking fund installment has been any earlier date on which payment is due by reason of call for redemption (other than by application of r q red sinking fu stallments), acceleration or other advancement of maturity; and, when referring to interest on the ,-=�·,he h uled date for payment of interest has been reached. As used herein, "Nonpayment" means the fa ilure .ve ro · d sufficient funds to the trustee or paying agent for payment in full of all principal of and interest ch are Due for Payment. ="·"'".Illol'"C elable. The premium on this Policy is not refundable for any reason, including payment of the Obligations prior to m · . This Policy does not insure against loss of any prepayment or other acceleration payment which at any time may become due in respectof any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment. In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the countersignature of its duly authorized representative. f4j �· President Secretary
Effective Date: Authorized Representative
THE BANK OF NEW YORK acknowledges that it has agreed to perform the duties of Insurance Trustee under this Policy. Form No.: 2B-0012 (1/0 1) A- (THISPAGE INTENTIONALLYLEFT BLANK) APPENDIX G
BOOK-ENTRY ONLY SYSTEM
Th e information in this section concerningDT C; and DTC 's book-entrysystem has been obtained from sources that Issuer believes to be reliable, but Is suer takes no responsibility fo r the accuracy thereof
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository forthe Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificatewill be issued for the each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC.
DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York UniformCommercial Code, and a "clearing agency" registered pursuant to die provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing forover 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need forphys ical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be foundat www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC 's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the BeneficialOwner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of BeneficialOwners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system forthe Bonds is discontinued.
G-1 To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTCs partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds: DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The District and Indirect Participants will remain responsible forkeeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners well be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. BeneficialOwners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreedto obtain and transmitnotices to BeneficialOwners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrarand request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
The District may decide to discontinue use of the system of book-entry transfers throughDTC (or a successor securities depository). In that event, Bond certificateswill be printed and delivered.
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