NEW ISSUE — FULL BOOK-ENTRY ONLY
NO RATING
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to
certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal
income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain
corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond
Counsel, such interest is exempt from California personal income taxes. See “LEGAL MATTERS — Tax Exemption” herein.
$7,570,000
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
2014 SPECIAL TAX BONDS
Dated: Date of Delivery
Due: September 1, as shown on the inside cover page
The City of Fullerton Community Facilities District No. 2 (Amerige Heights) 2014 Special Tax Bonds (the “Bonds”) are being
issued by the City of Fullerton (the “City”) for and on behalf of its Community Facilities District No. 2 (Amerige Heights) (the
“District”) to (i) finance various public improvements needed to develop property located within the District, (ii) fund deposits to
the Reserve Fund and Administrative Expense Fund, (iii) fund capitalized interest on all of the Bonds to September 1, 2014 and
a portion of the Bonds through March 1, 2015 and September 1, 2015, and (iv) pay costs of issuance of the Bonds. See “THE
FINANCING PLAN” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.
The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections
53311 et seq. of the Government Code of the State of California), and pursuant to a Fiscal Agent Agreement, dated as of May 1,
2014 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank National Association, as fiscal agent (the “Fiscal
Agent”).
The Bonds are payable solely from proceeds of Special Taxes (as defined herein) levied on and collected from the owners
of parcels within the District subject to the Special Tax and from certain other funds pledged under the Fiscal Agent Agreement,
all as further described herein. The Special Taxes are to be levied according to the rate and method of apportionment approved
by the City Council of the City and the qualified electors within the District. See “SECURITY AND SOURCES OF PAYMENT
FOR THE BONDS — Special Taxes.” The City Council of the City is the legislative body of the District.
The Bonds are issuable in fully registered form and when issued will be registered in the name of Cede & Co., as nominee
of The Depository Trust Company, New York, New York (“DTC”). Individual purchases may be made in principal amounts of
$5,000 and integral multiples thereof in book-entry form only. Purchasers of Bonds will not receive certificates representing their
beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. Interest on the
Bonds will be payable on September 1, 2014 and semiannually thereafter on each March 1 and September 1. Principal of and
interest on the Bonds will be paid by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants who are to remit
such payments to the beneficial owners of the Bonds. See “THE BONDS — General Provisions” and APPENDIX F — “BOOKENTRY ONLY SYSTEM” herein.
Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds. The Bonds are not general or
special obligations of the City nor general obligations of the District, but are special obligations of the District payable solely from
Special Tax Revenues and amounts held under the Fiscal Agent Agreement as more fully described herein.
The Bonds are subject to optional redemption, mandatory sinking fund redemption, and special mandatory redemption from
prepaid Special Taxes. See “THE BONDS — Redemption” herein.
Certain events could affect the ability of the City to pay the principal of and interest on the Bonds when due. The
purchase of the Bonds involves significant investment risks, and the Bonds may not be suitable investments for many
investors. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of certain risk
factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality
of the Bonds.
This cover page contains certain information for general reference only. It is not intended to be a summary of the security or
terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an
informed investment decision.
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by
Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions.
Nossaman LLP, Irvine, California, is serving as Disclosure Counsel to the City with respect to the Bonds. Certain legal matters
will be passed on for the City and the District by the Law Offices of Jones & Mayer, Fullerton, California, as City Attorney. It is
anticipated that the Bonds in book-entry form will be available for delivery through the facilities of DTC in New York, New York,
on or about May 14, 2014.
Dated: April 30, 2014
MATURITY SCHEDULE
$620,000 Serial Bonds
Maturity Date
(September 1)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Principal
Amount
$ 20,000
30,000
35,000
45,000
55,000
65,000
75,000
85,000
100,000
110,000
Interest
Rate
3.00%
3.00
3.00
3.00
3.00
3.00
3.00
4.00
4.00
4.00
CUSIP
35982AAA3
35982AAB1
35982AAC9
35982AAD7
35982AAE5
35982AAF2
35982AAG0
35982AAH8
35982AAJ4
35982AAK1
Yield
0.85%
1.39
1.65
2.06
2.27
2.67
3.02
3.29
3.47
3.60C
$2,100,000 5.00% Term Bond due September 1, 2034, Yield: 4.57%C
(CUSIP® No. 35982AAL9)
$4,850,000 5.00% Term Bond due September 1, 2044, Yield: 4.87%
(CUSIP® No. 35982AAM7)
C
C
Yield to first optional call date on September 1, 2023.
Copyright 2014, American Bankers Association. CUSIP data herein are provided by Standard
& Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are
provided for convenience of reference only. Neither the City nor the Underwriter assumes any
responsibility for the accuracy of these CUSIP data.

CITY OF FULLERTON
CITY COUNCIL
Serving as the Legislative Body of
Community Facilities District No. 2 (Amerige Heights)
Doug Chaffee, Mayor
Greg Sebourn, Mayor Pro Tem
Jennifer Fitzgerald, Councilmember
Jan M. Flory, Councilmember
Bruce Whitaker, Councilmember
BOND COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
DISCLOSURE COUNSEL
Nossaman LLP
Irvine, California
CITY ATTORNEY
Law Offices of Jones & Mayer
Fullerton, California
SPECIAL TAX CONSULTANT
David Taussig & Associates, Inc.
Newport Beach, California
FISCAL AGENT
U.S. Bank National Association
Los Angeles, California
APPRAISER
Harris Realty Appraisal
Newport Beach, California
ABSORPTION CONSULTANT
RCLCO Real Estate Advisors
Santa Monica, California
This 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. No
dealer, broker, salesperson or other person has been authorized by the City, the District or the
Underwriter to give any information or to make any representations other than those contained
herein and, if given or made, such other information or representations must not be relied upon
as having been authorized by the City, the District or the Underwriter. This Official Statement
does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale
of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such
an offer, solicitation or sale.
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 representations of fact.
The information set forth herein has been obtained from the City and the District and
other sources which are believed to be reliable, but it is not guaranteed as to accuracy or
completeness. The Underwriter has provided the following sentence for inclusion in this Official
Statement. The Underwriter has reviewed the information in this Official Statement in
accordance with, and as part of, its responsibilities under 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.
The information and expressions of opinions herein are subject to change without notice
and neither delivery of this Official Statement nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no changes in the affairs of the City
since the date hereof. All summaries of the Fiscal Agent Agreement or other documents are
made subject to the provisions of such documents, respectively, and do not purport to be
complete statements of any or all of such provisions.
This 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.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND
DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC
OFFERING PRICE STATED ON THE INSIDE COVER PAGE HEREOF. THE PUBLIC
OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY 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
HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY
STATE.
The City maintains a website. However, the information presented on the website is not
a part of this Official Statement and should not be relied upon in making an investment decision
with respect to the Bonds.
City of Fullerton and Vicinity
TABLE OF CONTENTS
INTRODUCTION ........................................................................................................................1
General .................................................................................................................................1
The District............................................................................................................................2
Security and Sources of Payment for the Bonds ...................................................................3
Book-Entry System ...............................................................................................................4
Redemption...........................................................................................................................4
Tax Matters ...........................................................................................................................4
Professionals Involved in the Offering ...................................................................................5
Continuing Disclosure ...........................................................................................................5
Bond Owners’ Risks ..............................................................................................................5
Forward-Looking Statements ................................................................................................6
Other Information ..................................................................................................................6
ESTIMATED SOURCES AND USES OF FUNDS ......................................................................7
THE FINANCING PLAN .............................................................................................................7
THE BONDS...............................................................................................................................8
General Provisions................................................................................................................8
Redemption...........................................................................................................................9
No Issuance of Additional Bonds.........................................................................................12
Registration, Transfer and Exchange ..................................................................................12
DEBT SERVICE .......................................................................................................................13
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ..............................................13
General ...............................................................................................................................14
Limited Obligation ...............................................................................................................14
Special Taxes......................................................................................................................14
Covenant to Foreclose ........................................................................................................17
Special Tax Fund ................................................................................................................19
Surplus Fund.......................................................................................................................20
Bond Fund ..........................................................................................................................20
Reserve Fund......................................................................................................................21
Investment of Moneys in Funds...........................................................................................22
Estimated Debt Service Coverage from Special Taxes .......................................................22
THE DISTRICT .........................................................................................................................22
General Description of the District .......................................................................................22
Estimated Direct and Overlapping Indebtedness.................................................................23
Expected Tax Burden..........................................................................................................24
No Delinquency History.......................................................................................................26
Market Absorption Study .....................................................................................................26
Appraisal Report .................................................................................................................26
Estimated Appraised Value-to-Lien Ratios ..........................................................................27
The Developer.....................................................................................................................33
Financing Plan ....................................................................................................................34
352832_9
i
History of Standard Pacific’s Property Tax Payments; Loan Defaults; Litigation;
Bankruptcy. .........................................................................................................................35
Proposed Development.......................................................................................................36
Infrastructure Requirements and Construction Status .........................................................38
SPECIAL RISK FACTORS.......................................................................................................38
Risks of Real Estate Secured Investments Generally..........................................................38
Risks Related to Mortgage Loans........................................................................................39
Risks Related to Current Market Conditions........................................................................39
Economic Uncertainty .........................................................................................................39
Limited Obligations..............................................................................................................39
Insufficiency of Special Taxes .............................................................................................40
Exempt Properties...............................................................................................................40
Depletion of Reserve Fund..................................................................................................40
Natural Disasters.................................................................................................................41
Hazardous Substances .......................................................................................................41
Parity Taxes and Special Assessments...............................................................................42
Disclosures to Future Purchasers........................................................................................42
Special Tax Delinquencies ..................................................................................................43
Non-Cash Payments of Special Taxes ................................................................................43
Payment of the Special Tax is not a Personal Obligation of the Owners..............................44
Appraised Values ................................................................................................................44
Property Values; Value-to-Lien Ratios.................................................................................44
FDIC/Federal Government Interests in Properties...............................................................45
Bankruptcy and Foreclosure................................................................................................46
No Acceleration Provision ...................................................................................................47
Loss of Tax Exemption........................................................................................................47
Limitations on Remedies .....................................................................................................48
Limited Secondary Market...................................................................................................48
Proposition 218 ...................................................................................................................48
Ballot Initiatives ...................................................................................................................49
CONTINUING DISCLOSURE ...................................................................................................50
The District..........................................................................................................................50
Standard Pacific ..................................................................................................................50
LEGAL MATTERS ...................................................................................................................51
Legal Opinions ....................................................................................................................51
Tax Exemption ....................................................................................................................51
LITIGATION .............................................................................................................................52
NO RATING..............................................................................................................................52
UNDERWRITING......................................................................................................................52
FINANCIAL INTERESTS..........................................................................................................53
ADDITIONAL INFORMATION..................................................................................................53
ii
APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES .............. A-1
APPENDIX B DEMOGRAPHIC AND ECONOMIC INFORMATION REGARDING THE
CITY OF FULLERTON AND THE COUNTY OF ORANGE .............................. B-1
APPENDIX C SUMMARY OF FISCAL AGENT AGREEMENT............................................... C-1
APPENDIX D FORM OF OPINION OF BOND COUNSEL ..................................................... D-1
APPENDIX E BOOK-ENTRY ONLY SYSTEM ....................................................................... E-1
APPENDIX F MARKET ABSORPTION STUDY..................................................................... F-1
APPENDIX G APPRAISAL REPORT .....................................................................................G-1
APPENDIX H FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE ............... H-1
APPENDIX I FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE ........... I-1
iii
[THIS PAGE INTENTIONALLY LEFT BLANK]
$7,570,000
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
2014 SPECIAL TAX BONDS
INTRODUCTION
General
This introduction is not a summary of this Official Statement. It is only a brief description
of and guide to, and is qualified by, more complete and detailed information contained in the
entire Official Statement, including the appendices, and the documents summarized or
described herein. A full review should be made of the entire Official Statement. The sale and
delivery of Bonds (defined below) to potential investors is made only by means of the entire
Official Statement. All capitalized terms used in this Official Statement and not defined shall
have the meaning set forth in APPENDIX C — “SUMMARY OF FISCAL AGENT AGREEMENT
— Definitions” herein.
The purpose of this Official Statement, which includes the cover page, the inside cover
page, the table of contents and the attached appendices (collectively, the “Official Statement”),
is to provide certain information concerning the issuance by the City of Fullerton (the “City”) for
and on behalf of its Community Facilities District No. 2 (Amerige Heights ) (the “District”) of the
$7,570,000 City of Fullerton Community Facilities District No. 2 (Amerige Heights ) 2014 Special
Tax Bonds (the “Bonds”). The proceeds of the Bonds will primarily be used to finance various
public improvements to be owned and operated by the City and by the Fullerton School District
needed to develop property located within the District. A portion of the Bonds will be used to
fund deposits to the Reserve Fund and Administrative Expense Fund, fund capitalized interest
on all of the Bonds to September 1, 2014 and a portion of the Bonds through March 1, 2015 and
September 1, 2015, and to pay costs of issuance of the Bonds. See “THE FINANCING PLAN”
and “ESTIMATED SOURCES AND USES OF FUNDS” herein.
The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities
Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of
California) (the “Act”), and a Fiscal Agent Agreement dated as of May 1, 2014 (the “Fiscal Agent
Agreement”) by and between the City and U.S. Bank National Association, as fiscal agent (the
“Fiscal Agent”). Upon their issuance, the Bonds will be the only outstanding bonds of the
District and will be secured under the Fiscal Agent Agreement by a first pledge of the net
proceeds of the Special Taxes (as more particularly defined in the Fiscal Agent Agreement, the
“Special Tax Revenues”). The Bonds will be additionally secured by certain funds and accounts
established and held under the Fiscal Agent Agreement. See “SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS” The City will covenant in the Fiscal Agent Agreement not to
issue any other bonds or indebtedness secured by the Special Taxes (other than refunding
bonds). See “THE BONDS—No Issuance of Additional Bonds” herein.
1
The District
Formation Proceedings. The District was formed by the City in December 2011
pursuant to the Act. The Act was enacted by the California legislature to provide an alternative
method of financing certain public capital facilities and services, especially in developing areas
of the State. Any local agency (as defined in the Act) may establish a district to provide for and
finance the cost of eligible public facilities and services. Generally, the legislative body of the
local agency which forms a district acts on behalf of such district as its legislative body. Subject
to approval by two-thirds of the votes cast at an election of the property owners within such
district and compliance with the other provisions of the Act, a legislative body of a local agency
may issue bonds for a district and may levy and collect a special tax within such district to repay
such indebtedness.
Pursuant to the Act, the City Council adopted the necessary resolutions stating its intent
to establish the District, to authorize the levy of Special Taxes on taxable property within the
boundaries of the District, and to have the District incur bonded indebtedness. Following public
hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions
establishing the District and calling special elections to submit the levy of the Special Taxes and
the incurring of bonded indebtedness to the qualified voters of the District. The qualified voters
in the District at the time of its creation authorized the District to incur bonded indebtedness in
an aggregate principal amount not to exceed $11,000,000 and approved the rate and method of
apportionment of the Special Taxes for the District. Pursuant to change proceedings of the
District approved on February 19, 2013 (the “Change Proceedings”), a resolution declaring
completion of Change Proceedings was adopted by the legislative body of the District for the
purpose of amending and restating the list of facilities authorized to be financed by the District.
Pursuant to a request by the owner of the property within the District provided on June 6, 2013,
the maximum special tax rates for Developed Property within the District originally approved by
the legislative body of the District were reduced from the rates set forth in the Rate and Method
of Apportionment of Special Taxes (the “Original Rate and Method”), as evidenced by the
recording of a Second Amendment to Notice of Special Tax Lien with the County of Orange on
August 6, 2013 (the “Second Amendment to Notice”). The Original Rate and Method as
amended by the Second Amendment to Notice (collectively, the “Rate and Method”) is attached
in APPENDIX A hereto. The City Council of the City acts as the legislative body of the District.
Development Status. The District is located in the City and consists of approximately 10
acres of property, approximately 5.4 acres of which are classified as taxable property. The
development is planned for 115 residential units and is being developed by Standard Pacific
Corp., a Delaware corporation (“Standard Pacific”). As of April 15, 2014, out of the 115 singlefamily detached homes planned within the District, there were 30 completed production homes
which had been conveyed to individual homeowners, three completed model homes and three
completed production homes owned by Standard Pacific, 50 production homes in various
stages of construction of which 16 were in escrow, and 29 lots in finished condition without
building permits. See “PROPERTY OWNERSHIP AND DEVELOPMENT – Proposed
Development.”
Market Absorption Study. The City engaged RCLCO Real Estate Advisors (the “Market
Absorption Consultant”) to perform a comprehensive analysis of the product mix characteristics
as well as the macroeconomic and microeconomic factors that are expected to influence the
absorption of the forthcoming products within the District. The Market Absorption Consultant
has estimated, based on the assumptions and limiting conditions set forth in the Market
Absorption Study, an annual absorption of approximately 70 to 110 units per year (about six to
2
nine units per month), leading to a sell-out period of 10 to 16 months from the date of the Market
Absorption Study, i.e., January 2015-July 2015.
The Market Absorption Consultant identifies potential risks that could affect the
estimated absorption, including unforeseen events that cause substantial reductions in
employment and/or significantly higher mortgage rates, change in the Orange County housing
market and potential shifts in development strategies by Standard Pacific. A complete copy of
the Market Absorption Study is attached hereto as Appendix F.
Appraisal. The City has obtained an appraisal (the “Self-Contained Appraisal”) of the
property in the District, reflecting a valuation date of March 1, 2014, from Harris Realty Appraisal
(the “Appraiser”). The appraised valuation of property within the District has been estimated as
$48,500,000. The principal amount of the Bonds is $7,570,000. The aggregate appraised
value of the real property within the District is approximately 6.41 to 1 times the principal amount
of the Bonds. The Appraisal is attached hereto as Appendix G. The value of the land within the
District is a critical factor in determining the investment quality of the Bonds. If a property owner
is delinquent in the payment of the Special Tax, the City’s only remedy is to commence
foreclosure proceedings in an attempt to obtain funds to pay the Special Tax.
See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a
discussion of special factors that should be considered, in addition to the other matters set forth
herein, in evaluating the investment quality of the Bonds.
Security and Sources of Payment for the Bonds
General. The Bonds are limited obligations of the District, and the interest on and
principal of and redemption premiums, if any, on the Bonds are payable solely from Special Tax
Revenues, or, to the extent necessary, from the moneys on deposit in the Reserve Fund. As
described herein, the Special Taxes are collected along with ad valorem property taxes on the
tax bills mailed by the Treasurer-Tax Collector of the County of Orange. Although the Special
Taxes will constitute a lien on the taxable property in the District, they will not constitute a
personal indebtedness of the owners of such property. There is no assurance that such owners
will be financially able to pay the annual Special Taxes or that they will pay such taxes even if
they are financially able to do so.
Limited Obligations. Except for the Special Tax Revenues, no other taxes are
pledged to the payment of the Bonds. The Bonds are not general or special obligations
of the City nor general obligations of the District, but are special obligations of the
District payable solely from Special Tax Revenues and amounts held under the Fiscal
Agent Agreement as more fully described herein.
Special Taxes and Special Tax Revenues. As used in this Official Statement, the term
“Special Tax” is that tax which has been authorized pursuant to the Act to be levied against
certain land within the District pursuant to the Act and in accordance with the Rate and Method.
The term “Special Tax Revenues means the proceeds of the Special Taxes received by the
City, including scheduled payments, prepayments, and proceeds of foreclosure on delinquent
parcels, but excluding penalties and interest imposed upon delinquent installments. See
“SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and
APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES.” Under
the Fiscal Agent Agreement, the District will pledge to repay the Bonds from the Special Tax
3
Revenues and from amounts on deposit in the Bond Fund and the Reserve Fund, and, until
disbursed as provided therein, in the Special Tax Fund.
Foreclosure Proceeds. The City has covenanted in the Fiscal Agent Agreement to
cause foreclosure proceedings to be commenced and prosecuted against certain parcels with
delinquent installments of the Special Taxes. For a more detailed description of the foreclosure
covenant see “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant to
Foreclose.” There is no assurance that the property within the District can be sold for the
appraised values described herein, or for a price sufficient to pay the principal of and interest on
the Bonds in the event of a default in payment of Special Taxes. See “SPECIAL RISK
FACTORS — Property Values; Value-to-Lien Ratios” herein.
Book-Entry System
The Bonds will be issued and delivered as fully registered bonds, registered in the name
of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”),
and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the
denominations of $5,000 or any integral multiple thereof, under the book-entry system
maintained by DTC, only through brokers and dealers who are or act through DTC Participants
as described herein. Beneficial Owners will not be entitled to receive physical delivery of the
Bonds. In the event that the book-entry only system described herein is no longer used with
respect to the Bonds, the Bonds will be registered and transferred in accordance with the Fiscal
Agent Agreement. See APPENDIX E — “BOOK-ENTRY ONLY SYSTEM” herein.
Principal of, premium, if any, and interest on the Bonds is payable by the Fiscal Agent to
DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and
disbursement of such payments to the Beneficial Owners is the responsibility of DTC
Participants. In the event that the book-entry only system is no longer used with respect to the
Bonds, the Beneficial Owners will become the registered owners of the Bonds and will be paid
principal and interest by the Fiscal Agent, all as described herein. See APPENDIX E —
“BOOK-ENTRY ONLY SYSTEM” herein.
Redemption
The Bonds are subject to optional redemption, mandatory sinking fund redemption, and
special mandatory redemption from prepaid Special Taxes. See “THE BONDS—Redemption”
herein.
Tax Matters
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California,
Bond Counsel, subject, however to certain qualifications described herein, under existing law,
the interest on the Bonds is excluded from gross income for federal income tax purposes and
such interest is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations, although for the purpose of computing the alternative
minimum tax imposed on certain corporations, such interest is taken into account in determining
certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt
from California personal income taxes. See “LEGAL MATTERS — Tax Exemption” herein.
4
Professionals Involved in the Offering
U.S. Bank National Association will act as Fiscal Agent under the Fiscal Agent
Agreement. Stern Brothers & Co. is the Underwriter of the Bonds. Certain proceedings in
connection with the issuance and delivery of the Bonds are subject to the approval of Jones
Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel and Nossaman
LLP, Irvine, California, Disclosure Counsel. See APPENDIX D — FORM OF OPINION OF
BOND COUNSEL.” Certain legal matters will be passed upon for the City and the District by the
Law Offices of Jones & Mayer, Fullerton, California, as City Attorney. Other professional
services have been performed by David Taussig & Associates, Inc., Newport Beach, California,
as Special Tax Consultant, RCLCO Real Estate Advisors, Santa Monica, California, as Market
Absorption Consultant and Harris Realty Appraisal, Newport Beach, California, as Appraiser.
For information concerning the respects in which certain of the above-mentioned
professionals, advisors, counsel and agents may have a financial or other interest in the offering
of the Bonds, see “FINANCIAL INTERESTS” herein.
Continuing Disclosure
The City, on behalf of itself and the District, will agree to provide, or cause to be
provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access
(EMMA) system certain annual financial information and operating data. The City will further
agree to provide notice of certain listed events. These covenants will be made in order to assist
the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).
See APPENDIX H hereto for the form of City Continuing Disclosure Certificate (the “Continuing
Disclosure Certificate”) containing a description of the specific nature of the annual reports to be
filed by the City and notices of listed events to be provided by the City. Within the past five
years, the City failed to file in a timely manner certain portions of the annual reports, as required
by its existing continuing disclosure obligations. As of the date of this Official Statement, the
City has made corrective filings as a best effort to come into compliance with Rule
15c2-12(b)(5). See “CONTINUING DISCLOSURE.”
Standard Pacific will covenant in a continuing disclosure certificate, the form of which is
set forth in APPENDIX I, for the benefit of holders and beneficial owners of the Bonds, to
provide certain information relating to itself and the status of its property within the District on a
semi-annual basis, and to provide notices of the occurrence of certain enumerated events for a
certain period of time. See “CONTINUING DISCLOSURE.”
Bond Owners’ Risks
Certain events could affect the timely repayment of the principal of and interest on the
Bonds when due. See the section of this Official Statement entitled “SPECIAL RISK
FACTORS” for a discussion of certain factors which should be considered, in addition to other
matters set forth herein, in evaluating an investment in the Bonds. The purchase of the Bonds
involves significant investment risks, and the Bonds may not be suitable investments for many
investors. See “SPECIAL RISK FACTORS” herein.
5
Forward-Looking Statements
This Official Statement contains statements which, to the extent they are not recitations
of historical fact, constitute “forward-looking statements.” The achievement of certain results or
other expectations contained in such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause actual results, performance or
achievements described to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Except as provided in
the Continuing Disclosure Certificate and Developer Continuing Disclosure Certificate, neither
the City nor the District nor Standard Pacific, as applicable, plans to issue any updates or
revisions to those forward-looking statements if or when its expectations, or the events,
conditions or circumstances on which such statements are based, occur or do not occur.
Other Information
This Official Statement speaks only as of its date, and the information contained herein
is subject to change.
Brief descriptions of the Bonds and the Fiscal Agent Agreement are included in this
Official Statement. Such descriptions and information do not purport to be comprehensive or
definitive. All references herein to the Fiscal Agent Agreement, the Bonds and the constitution
and laws of the State as well as the proceedings of the City Council, acting as the legislative
body of the District, are qualified in their entirety by references to such documents, laws and
proceedings, and with respect to the Bonds, by reference to the Fiscal Agent Agreement.
Copies of the Fiscal Agent Agreement, the Continuing Disclosure Certificate and other
documents and information referred to herein are available for inspection and (upon request and
payment to the City of a charge for copying, mailing and handling) for delivery from the Fiscal
Agent at 633 West Fifth Street, 24th Floor, Los Angeles, California 90071, Attention: Corporate
Trust.
6
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the expected sources and uses of 2014 Bond proceeds:
SOURCES:
Principal Amount of Bonds
Original Issue Discount/Premium
$ 7,570,000.00
133,912.20
TOTAL SOURCES
$ 7,703,912.20
USES:
Project Fund(1)
Reserve Fund
Administrative Expense Fund
Capitalized Interest Account of Bond Fund(2)
Costs of Issuance(3)
TOTAL USES
$ 6,529,630.86
655,043.13
15,000.00
183,537.88
320,700.33
$ 7,703,912.20
_____________
(1) See “THE FINANCING PLAN” below. $5,405,596.95 will be deposited into the
City Facilities Account of the Project Fund and $1,124,033.91 will be deposited
into the School Facilities Account of the Project Fund.
(2) Represents capitalized interest on all of the Bonds through September 1, 2014,
and a portion of the Bonds through March 1, 2015 and September 1, 2015.
(3) Includes legal fees, special tax consultant fees, appraiser fees, market
absorption consultant fees, expenses and charges of Fiscal Agent, City costs,
Underwriter’s discount and other miscellaneous costs of issuing the Bonds.
THE FINANCING PLAN
The proceeds of the Bonds will be used to finance the acquisition and/or construction of
certain public facilities (the “Facilities”), which are needed to support the development
completed and proposed within the District. The Facilities authorized to be financed with
proceeds of the Bonds consist of certain park and park and recreation facilities, including park
obligations, master plan, water and sewer system facilities, including capacity in existing
facilities, and streets and street facilities, including street obligations of the City (the “City
Facilities”) and K-8 public school facilities to be owned and operated by the Fullerton School
District (the “School District Facilities”). The School District Facilities are authorized to be
financed by the District pursuant to a Joint Community Facilities Agreement, dated February 19,
2013 (the “School District JCFA”) among the City, the Fullerton School District, (the “School
District”) and Standard Pacific. Standard Pacific is constructing certain of the Facilities and
certain other mitigation projects. Standard Pacific has estimated the total costs of the Facilities
and mitigation expenses (including those not being acquired with proceeds of the Bonds) to be
approximately $13,076,296.
In connection with the Facilities to be constructed by Standard Pacific, the District, the
City and Standard Pacific have entered into an Acquisition and Funding Agreement (the
“Acquisition Agreement”) establishing the terms and conditions under which the City will apply
the proceeds of the Bonds to (a) acquire Facilities from Standard Pacific and (b) satisfy
Standard Pacific’s capital facilities fee obligations. Upon the satisfaction of the conditions set
forth in the Acquisition Agreement, the City will purchase a portion of the Facilities from
7
proceeds of the Bonds, and take title to certain Facilities. Prior to such purchase, Standard
Pacific will complete construction of such Facilities with its own funds. The levy of the Special
Tax is not conditioned upon the purchase of the Facilities. Standard Pacific expects the
Facilities it plans to construct to be completed by the third quarter of 2015.
The estimated costs of the Facilities eligible to be financed with proceeds of the Bonds
are described below:
Project
Estimated
Funding Amount
City Park Facilities
City Street Facilities
City Sewer Facilities
City Fees
City Water System Facilities
$ 2,458,488
1,191,959
397,793
954,500
1,058,117
Total City Facilities
$ 6,060,857
School District Facilities
$ 1,124,034
TOTAL FACILITIES
$ 7,184,891
________________________
Source: The City.
THE BONDS
This section provides a brief summary of the Fiscal Agent Agreement and the terms of
the Bonds. See Appendix C.
General Provisions
The Bonds will be dated their date of delivery and will bear interest at the rates per
annum set forth on the inside cover page hereof, payable semiannually on each March 1 and
September 1, commencing on September 1, 2014 (each, an “Interest Payment Date”), and will
mature in the amounts and on the dates set forth on the inside cover page of this Official
Statement. The Bonds will be issued in fully registered form in denominations of $5,000 or any
integral multiple thereof. So long as the Bonds are held in book-entry form, principal and
interest on the Bonds will be paid to DTC for subsequent disbursement to DTC Participants who
are to remit such payments to the Beneficial Owners in accordance with DTC procedures. See
APPENDIX E — “BOOK-ENTRY ONLY SYSTEM.”
Interest will be calculated on the basis of a 360-day year comprised of twelve 30-day
months. Interest on any 2014 Bond will be payable from the Interest Payment Date next
preceding the date of authentication of that 2014 Bond, unless (i) it is authenticated on an
Interest Payment Date, in which event it will bear interest from such date of authentication; or (ii)
it is authenticated prior to an Interest Payment Date and after the close of business on the
Record Date preceding such Interest Payment Date, in which event it will bear interest from
such Interest Payment Date; or (iii) it is authenticated on or before the Record Date preceding
the first Interest Payment Date, in which it shall bear interest from the Closing Date; provided,
however, that if at the time of authentication of a 2014 Bond, interest is in default thereon, such
8
2014 Bond will bear interest from the Interest Payment Date to which the interest has previously
been paid or made available for payment thereon.
Under the Fiscal Agent Agreement, the Record Date for the Bonds is defined as the 15th
day of the month next preceding the applicable Interest Payment Date, whether or not such day
is a Business Day.
Redemption
Optional Redemption. The Bonds maturing on or after September 1, 2024, are subject
to optional redemption prior to their stated maturities, on September 1, 2023, and on any date
thereafter, in whole or in part, at a redemption price equal to the principal amount of the Bonds
to be redeemed, together with accrued interest to the date fixed for redemption, without
premium.
Mandatory Sinking Fund Redemption. The 2014 Term Bonds maturing on
September 1, 2034 are subject to mandatory redemption, in part by lot, on September 1 in each
of the years as set forth in the following table, from sinking fund payments made by the City
from the Bond Fund, at a redemption price equal to the principal amount thereof to be
redeemed together with accrued interest thereon to the redemption date, without premium, in
the aggregate respective principal amounts all as set forth in the following table:
Sinking Fund
Redemption Date
(September 1)
Sinking Fund
Payments
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034 (Maturity)
$ 125,000
140,000
160,000
175,000
195,000
215,000
235,000
260,000
285,000
310,000
The 2014 Term Bonds maturing on September 1, 2044 are subject to mandatory
redemption, in part by lot, on September 1 in each of the years as set forth in the following table,
from sinking fund payments made by the City from the Bond Fund, at a redemption price equal
to the principal amount thereof to be redeemed together with accrued interest thereon to the
redemption date, without premium, in the aggregate respective principal amounts all as set forth
in the following table:
9
Sinking Fund
Redemption Date
(September 1)
Sinking Fund
Payments
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044 (Maturity)
$ 335,000
365,000
395,000
425,000
460,000
495,000
530,000
570,000
615,000
660,000
However, if some but not all the 2014 Term Bonds of a given maturity have been
redeemed through mandatory prepayment redemption (as described below) or optional
redemption (as described above), the total amount of all future sinking fund payments relating to
such maturity will be reduced by the aggregate principal amount of 2014 Term Bonds of such
maturity so redeemed, to be allocated among such sinking fund payments on a pro rata basis in
integral multiples of $5,000.
Redemption from Special Tax Prepayments. The Bonds are subject to mandatory
redemption from Special Tax Prepayments (and any corresponding transfers from the Reserve
Fund under the Fiscal Agent Agreement) on the next Interest Payment Date for which notice of
redemption can timely be given, among maturities so as to maintain substantially the same debt
service profile for the Bonds as in effect prior to such redemption and by lot within a maturity, at
the redemption prices set forth below (expressed as a percentage of the principal amount of the
Bonds to be redeemed), together with accrued interest to the date fixed for redemption:
Redemption Date
Redemption Price
Any Interest Payment Date through March 1, 2021
September 1, 2021 and March 1, 2022
September 1, 2022 and March 1, 2023
September 1, 2023 and any Interest Payment Date thereafter
103%
102
101
100
Purchase in Lieu of Redemption. In lieu of redemption, moneys in the Bond Fund or
other funds provided by the City may be used and withdrawn by the Fiscal Agent for purchase
of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting
such purchase, at public or private sale as and when, and at such prices (including brokerage
and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be
purchased at a price in excess of the principal amount thereof, plus interest accrued to the date
of purchase and any premium which would otherwise be due if such Bonds were to be
redeemed in accordance with the Fiscal Agent Agreement.
Any Bonds purchased pursuant to this provision of the Fiscal Agent Agreement will be
treated as outstanding Bonds under the Fiscal Agent Agreement, except to the extent otherwise
directed by the City.
10
Selection of Bonds for Redemption. Whenever provision is made in the Fiscal Agent
Agreement for the redemption of less than all of the Bonds of any maturity (except for
mandatory sinking fund redemption), the City will direct the Fiscal Agent regarding the Bonds to
be redeemed, and if not so directed, the Fiscal Agent will select the Bonds to be redeemed pro
rata among maturities and by lot within a single maturity. In the case of mandatory sinking fund
redemption, the Fiscal Agent will select the Bonds to be redeemed by lot within the maturity
being called for redemption.
Notice of Redemption. The Fiscal Agent will mail notice of redemption by first class
mail, postage prepaid, not less than 30 days nor more than 60 days before any redemption
date, to the respective Owners of any Bonds designated for redemption at their addresses
appearing on the registration books, and the Securities Depositories. In addition, the Fiscal
Agent will electronically file a copy of the notice of redemption with the MSRB through its
Electronic Municipal Market Access (EMMA) system, or such other services providing
information with respect to called bonds in accordance with then-current guidelines of the
Securities and Exchange Commission, and will file the notice of redemption with any such other
services the City may designate in writing to the Fiscal Agent. Notwithstanding the foregoing,
the mailing or filing of any redemption notice will not be a condition precedent to such
redemption and failure to mail or to receive any such notice, or any defect therein, will not affect
the validity of the proceedings for the redemption of such Bonds.
However, while the Bonds are subject to DTC’s book-entry system, the Fiscal Agent will
be required to give notice of redemption only to DTC as provided in the letter of representations
executed by the City and received and accepted by DTC. DTC and the Participants will have
sole responsibility for providing any such notice of redemption to the beneficial owners of the
Bonds to be redeemed. Any failure of DTC to notify any Participant, or any failure of
Participants to notify the Beneficial Owner of any Bonds to be redeemed, of a notice of
redemption or its content or effect will not affect the validity of the notice of redemption, or alter
the effect of redemption set forth in the Fiscal Agent Agreement.
Conditional Redemption Notice and Rescission of Redemption. Any notice relating
to optional redemption or redemption from Special Tax prepayments may specify that
redemption on the specified date will be subject to receipt by the City of moneys sufficient to
cause such redemption (and will specify the proposed source of such moneys), and neither the
City nor the Fiscal Agent will have any liability to the Owners or any other party as a result of its
failure to redeem the Bonds as a result of insufficient moneys. The City will have the right to
rescind any such redemption by written notice to the Fiscal Agent on or prior to the date fixed for
redemption.
Any notice of redemption will be cancelled and annulled if for any reason funds are not
available on the date fixed for redemption for the payment in full of the Bonds then called for
redemption, and such cancellation will not constitute a default under the Fiscal Agent
Agreement.
The Fiscal Agent will mail notice of rescission of redemption in the same manner that
notice of redemption was originally provided.
Effect of Redemption. From and after the date fixed for redemption, if funds available
for the payment of the principal of, and interest and any premium on, the Bonds so called for
redemption have been deposited in the Bond Fund, such Bonds so called will cease to be
entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment
11
of the redemption price, and no interest will accrue thereon on or after the redemption date
specified in the notice of redemption. All Bonds redeemed and purchased by the Fiscal Agent
will be canceled by the Fiscal Agent.
No Issuance of Additional Bonds
The City will covenant in the Fiscal Agent Agreement that it will not issue any additional
bonds or other indebtedness payable from the Special Tax Revenues (other than refunding
bonds).
Registration, Transfer and Exchange
The provisions of the Fiscal Agent Agreement regarding the exchange and transfer of
the Bonds apply only during any period in which the Bonds are not subject to DTC’s book-entry
system. While the Bonds are subject to DTC’s book-entry system, their exchange and transfer
will be effected through DTC and the Participants and will be subject to the procedures, rules
and requirements established by DTC. See “APPENDIX E– BOOK-ENTRY ONLY SYSTEM.”
The Fiscal Agent will keep, or cause to be kept, at its Principal Office sufficient books for
the registration and transfer of the Bonds, which will at all times be open to inspection by the
City during regular business hours upon reasonable notice; and, upon presentation for such
purpose, the Fiscal Agent will, under such reasonable regulations as it may prescribe, register
or transfer or cause to be registered, transferred or exchanged, on said books, the ownership of
the Bonds as provided in the Fiscal Agent Agreement.
The City and the Fiscal Agent will treat the Owner of any Bond whose name appears on
the Bond register as the absolute Owner of such Bond for any and all purposes, and the City
and the Fiscal Agent shall not be affected by any notice to the contrary. The City and the Fiscal
Agent may rely on the address of the Owner as it appears in the Bond register for any and all
purposes.
Any Bond may, in accordance with its terms, be transferred, upon the books required to
be kept under the Fiscal Agent Agreement by the person in whose name it is registered, in
person or by such person’s duly authorized attorney, upon surrender of such Bond for
cancellation, accompanied by delivery of a duly written instrument of transfer in a form
acceptable to the Fiscal Agent. Bonds may be exchanged at the Principal Office of the Fiscal
Agent solely for a like aggregate principal amount of Bonds of authorized denominations and of
the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal
Agent in connection with any such transfer or exchange shall be paid by the City. The Fiscal
Agent shall collect from the Owner requesting such transfer or exchange any tax or other
governmental charge required to be paid with respect to such transfer or exchange. Whenever
any Bond or Bonds is surrendered for transfer or exchange, the City shall execute and the
Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for a like aggregate principal
amount.
No transfers or exchanges of Bonds shall be required to be made (i) 15 days prior to the
date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to
a Bond after such Bond has been selected for redemption; or (iii) between a Record Date and
the succeeding Interest Payment Date.
12
DEBT SERVICE
The following illustrates the annual debt service for the Bonds as of September 1 of each
year.
Period Ending
(September 1)
Principal
Total
Debt Service
Interest
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
$

20,000
30,000
35,000
45,000
55,000
65,000
75,000
85,000
100,000
110,000
125,000
140,000
160,000
175,000
195,000
215,000
235,000
260,000
285,000
310,000
335,000
365,000
395,000
425,000
460,000
495,000
530,000
570,000
615,000
660,000
$ 109,689.86
369,050.00
368,450.00
367,550.00
366,500.00
365,150.00
363,500.00
361,550.00
359,300.00
355,900.00
351,900.00
347,500.00
341,250.00
334,250.00
326,250.00
317,500.00
307,750.00
297,000.00
285,250.00
272,250.00
258,000.00
242,500.00
225,750.00
207,500.00
187,750.00
166,500.00
143,500.00
118,750.00
92,250.00
63,750.00
33,000.00
$
TOTALS
$ 7,570,000
$ 8,306,789.86
$ 15,876,789.86
109,689.86
389,050.00
398,450.00
402,550.00
411,500.00
420,150.00
428,500.00
436,550.00
444,300.00
455,900.00
461,900.00
472,500.00
481,250.00
494,250.00
501,250.00
512,500.00
522,750.00
532,000.00
545,250.00
557,250.00
568,000.00
577,500.00
590,750.00
602,500.00
612,750.00
626,500.00
638,500.00
648,750.00
662,250.00
678,750.00
693,000.00
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
This section generally describes the security for the Bonds set forth in the Fiscal Agent
Agreement, which is summarized in more detail in APPENDIX C. Capitalized terms used but
not defined in the section are defined in APPENDIX C.
13
General
The Bonds are secured by a first pledge (which will be affected in the manner and to the
extent provided in the Fiscal Agent Agreement) of all of the Special Tax Revenues and all
moneys deposited in the Bond Fund (including the Special Tax Prepayments Account and the
Capitalized Interest Account) and the Reserve Fund, and, until disbursed as provided therein, in
the Special Tax Fund.
The Special Tax Revenues and all moneys deposited into such funds (except as
otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal
of, and interest and any premium on, the Bonds as provided in the Fiscal Agent Agreement and
in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities
have been set aside irrevocably for that purpose under the Fiscal Agent Agreement.
“Special Tax Revenues” are defined in the Fiscal Agent Agreement as the proceeds of
the Special Taxes received by the City, including any scheduled payments thereof and any
Special Tax Prepayments, and proceeds of the redemption or sale of property sold as a result of
foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon.
However, Special Tax Revenues do not include any interest in excess of the interest due on the
Bonds or any penalties collected in connection with any such foreclosure.
Limited Obligation
The Bonds and interest thereon are not payable from the general fund of the City.
Except with respect to the Special Tax Revenues, neither the credit nor the taxing power of the
City is pledged for the payment of the Bonds or interest thereon, and no Owner of the Bonds
may compel the exercise of the taxing power by the City or the forfeiture of any of its property.
The principal of and interest on the Bonds and premiums upon the redemption of any
thereof are not a debt of the City (except to the limited extent described in this Official
Statement), the State of California nor any of its political subdivisions, within the meaning of any
constitutional or statutory limitation or restriction. The Bonds are not a legal or equitable pledge,
charge, lien or encumbrance, upon any property or income, receipts or revenues of the City,
except the Special Tax Revenues that are, under the terms of the Fiscal Agent Agreement,
pledged for the payment of the Bonds and interest thereon. Neither the members of the City
Council nor any persons executing the Bonds are liable personally on the Bonds by reason of
their issuance.
Special Taxes
Covenant to Levy Special Taxes. The City will effect the levy of the Special Taxes
each Fiscal Year in accordance with the Ordinance by each August 1 that the Bonds are
outstanding, or otherwise such that the computation of the levy is complete before the final date
on which the County Auditor-Controller will accept the transmission of the Special Tax amounts
for the parcels within the District for inclusion on the next real property tax roll.
The City will fix and levy the amount of Special Taxes within the District required for the
payment of principal of and interest on any outstanding Bonds becoming due and payable
during the ensuing calendar year, including any necessary replenishment or expenditure of the
Reserve Fund and an amount estimated to be sufficient to pay the Administrative Expenses,
including amounts necessary to discharge any rebate obligation, during such year, taking into
14
account the balances in the applicable funds established under the Fiscal Agent Agreement and
in the Special Tax Fund.
The Special Taxes so levied may not exceed the authorized amounts as provided in the
proceedings for the formation of the District.
Manner of Collection. The Fiscal Agent Agreement provides that the Special Taxes
will be payable and be collected in the same manner and at the same time and in the same
installment as the general taxes on real property are payable, and have the same priority,
become delinquent at the same time and in the same proportionate amounts and bear the same
proportionate penalties and interest after delinquency as do the ad valorem taxes on real
property.
Because the Special Tax levy is limited to the maximum Special Tax rates set forth in
the Rate and Method, no assurance can be given that, in the event of Special Tax
delinquencies, the receipts of Special Taxes will, in fact, be collected in sufficient amounts in
any given year to pay debt service on the Bonds.
Rate and Method of Apportionment of Special Taxes. The following is a synopsis of
the provisions of the Rate and Method, which should be read in conjunction with the complete
text of the Rate and Method, including its attachments, which is attached as APPENDIX A.
Capitalized terms used but not defined in this section have the meanings as set forth in
APPENDIX A. This section provides only a summary of the Rate and Method, and is qualified
by more complete and detailed information contained in the entire Rate and Method attached as
APPENDIX A.
Special Tax Requirement. Annually, at the time of levying the Special Tax, the CFD
Administrator will determine the amount of money to be collected from Taxable Property in the
District (the “Special Tax Requirement”), which will be the amount required in any Fiscal Year to
pay the following:
(i) regularly scheduled debt service on all Outstanding Bonds to be paid from the
Special Tax levy during such Fiscal Year;
(ii) periodic costs with respect to the CFD No. 2 Bonds, including but not limited to, costs
of credit enhancement and federal rebate payments due in the calendar year commencing in
such Fiscal Year;
(iii) a proportionate share of Administrative Expenses;
(iv) any amounts required to establish or replenish any reserve funds for all Outstanding
Bonds;
(v) reasonably anticipated Special Tax delinquencies based on the delinquency rate for
the Special Tax in the previous Fiscal Year; and
(vi) directly for the acquisition or construction of Authorized Facilities, provided that the
inclusion of such amount does not cause an increase in the Special Tax levy on Undeveloped
Property and/or Developed Property not classified as Occupied Property.
15
Developed and Undeveloped Property; Exempt Property. The Rate and Method
declares that for each Fiscal Year, commencing in Fiscal Year 2012-13, all Taxable Property
within the District will be classified as Developed Property, Undeveloped Property, Taxable
Public Property, or Taxable Property Owner Association Property.
(i) “Developed Property” means, for each Fiscal Year, all Taxable Property, exclusive
of Taxable Property Owner Association Property or Taxable Public Property for which a building
permit for new construction was issued on or before May 1 of the Fiscal Year preceding the
Fiscal Year for which Special Taxes are being levied.
(ii) “Taxable Property Owner Association Property” means all Assessor’s Parcels of
Property Owner Association Property that are not exempt pursuant to Section F of the Rate and
Method.
(iii) “Taxable Public Property” means all Assessor’s Parcels of Public Property that are
not exempt pursuant to Section F of the Rate and Method.
(iv) “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not
classified as Developed Property, Taxable Property Owner Association Property or Taxable
Public Property.
Maximum Special Tax. For Fiscal Year 2014-15 the Maximum Special Tax for
Developed Property ranges from $3,733.75 to $4,039.51 per Residential Property Land Use
Class based on the Residential Floor Area of the unit. The Maximum Special Tax for Developed
Property shall increase on July 1 of each Fiscal Year, by an amount equal to two percent (2%)
of the amount in effect for the previous Fiscal Year.
Maximum Special Tax for Non-Residential Property, Taxable Property Owner
Association Property, Taxable Public Property, and Undeveloped Property. For Fiscal
Year 2014-15, the Maximum Special Tax for Non-Residential Property shall be $88,967.68 per
Acre and for Taxable Property Owner Association Property, Taxable Public Property, and
Undeveloped Property shall be $117,814.51 per Acre, and shall increase on July 1 of each
Fiscal Year, by an amount equal to two percent (2%) of the Maximum Special Tax for the
previous Fiscal Year.
One-Time Special Tax. The Rate and Method provides the need for a One-Time
Special Tax as a result of a change in development after the issuance of the first series of CFD
No. 2 Bonds, as determined pursuant to Section D of the Rate and Method. After the issuance
of the first series of CFD No. 2 Bonds, a property owner shall, as a precondition to the issuance
of a building permit for construction of any residential and/or non-residential development for a
specific Assessor’s Parcel or lot, submit a Letter of Compliance for the construction on such
Assessor’s Parcel or lot. Upon the receipt of a request for a Letter of Compliance, the CFD
Administrator shall determine if a One-Time Special Tax Requirement shall be required. See
Section D of the Rate and Method attached hereto in Appendix A for more information regarding
the levy of the One-Time Special Tax.
Method of Apportionment. The Rate and Method provides that commencing with
Fiscal Year 2012-13 and for each following Fiscal Year, the CFD Administrator shall determine
the Special Tax Requirement and shall provide for the levy of the Special Tax which shall be
levied in the District each Fiscal Year as follows:
16
First: The Special Tax shall be levied on each Assessor’s Parcel of Occupied Property in
an amount equal to 100% of the applicable Maximum Special Tax;
Second: If additional monies are needed to satisfy the Special Tax Requirement after the
first step has been completed, the Special Tax shall be levied Proportionately on each
Assessor’s Parcel of Developed Property not classified as Occupied Property at up to 100% of
the applicable Maximum Special Tax;
Third: If additional monies are needed to satisfy the Special Tax Requirement after the
first two steps have been completed, the Special Tax shall be levied Proportionately on each
Assessor’s Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for
Undeveloped Property;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the
first three steps have been completed, then the Special Tax shall be levied Proportionately on
each Assessor’s Parcel of Taxable Property Owner Association Property and Taxable Public
Property at 100% of the Maximum Special Tax for Taxable Property Owner Association
Property and Taxable Public Property, as needed to satisfy the Special Tax Requirement.
Notwithstanding the above, in any Fiscal Year the Special Taxes may be levied
Proportionately at less than 100% of the Maximum Special Tax in step one (above) when (i) it is
no longer necessary to levy a Special Tax pursuant to steps two through four above in order to
meet the Special Tax Requirement, and (ii) all authorized CFD No. 2 Bonds have already been
issued, or the Council has covenanted that it will not issue any additional CFD No. 2 Bonds
(except refunding bonds) to be supported by the Special Tax.
Further, notwithstanding the above, the Rate and Method provides that under no
circumstances will the Special Tax levied against any Assessor’s Parcel of Residential Property
for which a certificate of occupancy for private residential use has been issued be increased by
more than ten percent per Fiscal Year as a consequence of delinquency or default by the owner
of any other Assessor’s Parcel within the District. Such limitation of Residential Property shall
not apply to Non-Residential Property, which will still be subject to 100% of the applicable
Maximum Special Tax.
Covenant to Foreclose
Sale of Property for Nonpayment of Taxes. The Fiscal Agent Agreement provides
that the Special Taxes are to be collected in the same manner as ordinary ad valorem property
taxes are collected and, except as provided in the special covenant for foreclosure described
below and in the Act, is to be subject to the same penalties and the same procedure, sale and
lien priority in case of delinquency as is provided for ad valorem property taxes. Under these
procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale
by the County.
Foreclosure Under the Act. Under Section 53356.1 of the Act, if any delinquency
occurs in the payment of the Special Tax, the City may order the institution of a Superior Court
action to foreclose the lien therefor within specified time limits. In such an action, the real
property subject to the unpaid amount may be sold at judicial foreclosure sale.
17
While judicial foreclosure is not mandatory, the City has covennated in the Fiscal Agent
Agreement that on or about March 30 and July 30 of each Fiscal Year, the City will compare the
amount of Special Taxes previously levied in the District to the amount of Special Tax Revenues
received by the City, and if delinquencies have occurred, proceed as follows:
Individual Delinquencies. If the City determines that any single parcel subject to
the Special Tax in the District is delinquent in the payment of three or more installments of the
Special Taxes, then the City will, within 60 days of such determination, send or cause to be sent
a notice of delinquency (and a demand for immediate payment thereof) to the owner of each
parcel delinquent in the payment of three or more installments of the Special Taxes, and (if the
delinquency remains uncured) will commence foreclosure proceedings within 120 days of such
determination against each parcel delinquent in the payment of three or more installments of the
Special Taxes; provided, however, that the City need not commence or pursue such
proceedings with respect to any property owned by a single property owner who is delinquent in
the payment of Special Taxes in an amount less than $6,000 if both (i) the total amount of
delinquent Special Taxes for the prior Fiscal Year for the entire CFD does not exceed 5% of the
total Special Taxes due and payable for such prior Fiscal Year, and (ii) the balance on deposit in
the Reserve Fund is not less than the Reserve Requirement.
Aggregate Delinquencies. If the City, determines that (i) the total amount of
delinquent Special Tax for the prior Fiscal Year for the entire District (including the total of
individual delinquencies described above), exceeds 5% of the total Special Tax due and
payable for the prior Fiscal Year, or (ii) there are 10 or fewer owners of real property within the
District, determined by reference to the latest available secured property tax roll of the County,
the City will notify or cause to be notified all property owners who are then delinquent in the
payment of Special Taxes (and demand immediate payment of the delinquency) within 60 days
of such determination, and (if the delinquency remains uncured) will commence foreclosure
proceedings within 120 days of such determination against each parcel of land in the District
with a Special Tax delinquency.
Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitations and Delays.
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 sale will be sufficient to pay any delinquent Special Tax
installment. The Act does not require the City to purchase or otherwise acquire any lot or parcel
of property foreclosed upon if there is no other purchaser at such sale.
Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the
Act be sold for not less than the amount of judgment in the foreclosure action, plus postjudgment interest and authorized costs, unless the consent of the owners of 75% of the
outstanding Bonds is obtained. However, under Section 53356.5 of the Act, the City, as
judgment creditor, is entitled to purchase any property sold at foreclosure using a “credit bid,”
where the City could submit a bid crediting all or part of the amount required to satisfy the
judgment for the delinquent amount of the Special Taxes. If the City becomes the purchaser
under a credit bid, the City must pay the amount of its credit bid into the redemption fund
established for the Bonds, but this payment may be made up to 24 months after the date of the
foreclosure sale.
Foreclosure by court action is subject to normal litigation delays, the nature and extent of
which are largely dependent on the nature of the defense, if any, put forth by the debtor and the
Superior Court calendar. In addition, the ability of the City to foreclose the lien of delinquent
unpaid Special Taxes may be limited in certain instances and may require prior consent of the
18
property owner if the property is owned by or in receivership of the Federal Deposit Insurance
Corporation (the “FDIC”).
Special Tax Fund
Establishment and Deposits. Under the Fiscal Agent Agreement, the Special Tax
Fund is established as a separate fund to be held by the Fiscal Agent, to the credit of which the
Fiscal Agent will deposit amounts received from or on behalf of the City consisting of Special
Tax Revenues (and any amounts transferred from the Administrative Expense Fund, the
Surplus Fund and the Bond Fund). The City will promptly remit any Special Tax Revenues
received by it to the Fiscal Agent for deposit by the Fiscal Agent to the Special Tax Fund.
Notwithstanding the foregoing, the following amounts will be separately identified and
disposed of as follows:
Collections of Delinquencies. Any Special Tax Revenues constituting the collection of
delinquencies in payment of Special Taxes will be separately identified by the City and will be
disposed of by the Fiscal Agent:
first, for transfer to the Bond Fund to pay any past due debt service on the
Bonds;
second, for transfer to the Reserve Fund to the extent needed to increase the
amount then on deposit in the Reserve Fund up to the then current Reserve Requirement; and
third, to be held in the Special Tax Fund for use as described below.
Special Tax Prepayments. Any proceeds of Special Tax Prepayments will be separately
identified by the City and will be deposited by the Fiscal Agent in the Special Tax Prepayments
Account.
Disbursements. On the fifth Business Day before each Interest Payment Date, the
Fiscal Agent will withdraw from the Special Tax Fund and transfer the following amounts in the
following order of priority:
(i) the amount or portion thereof, not exceeding the Administrative Expense
Deposit each Fiscal Year (which for Fiscal Year 2014-15 is $17,850, with such amount
escalating by 2% each Fiscal Year), which an Authorized Officer directs the Fiscal Agent in
writing to deposit in the Administrative Expense Fund and which, when added to the amounts
on deposit therein, is sufficient to pay (A) Administrative Expenses that the City reasonably
expects will become due and payable during such Fiscal Year, and (B) any Administrative
Expenses that previously have been incurred and paid by the City from funds other than the
Administrative Expense Fund;
(ii) to the Bond Fund an amount, taking into account any amounts then on
deposit in the Bond Fund, and any expected transfers from the Reserve Fund, the Special Tax
Prepayments Account and the Capitalized Interest Account, such that the amount in the Bond
Fund equals the principal (including any sinking fund payments, if any), premium, if any, and
interest due on the Bonds on such Interest Payment Date and any past due principal or interest
on the Bonds not theretofore paid;
19
(iii) to the Reserve Fund an amount, taking into account amounts then on deposit
in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve
Requirement; and
(iv) to the Administrative Expense Fund the amount of Administrative Expenses
in excess of the amount previously transferred thereto pursuant to (i) above, as and to the
extent directed in writing by an Authorized Officer.
Surplus Fund
After making the transfers from the Special Tax Fund described above, as soon as
practicable after each September 1, and in any event prior to each October 1, the Fiscal Agent
will transfer all remaining amounts in the Special Tax Fund not so transferred to the Surplus
Fund, unless on or prior to such date, it has received a Certificate of an Authorized
Representative of the City directing that certain amounts be retained in the Special Tax Fund
because the City has included such amounts as being available in the Special Tax Fund in
calculating the amount of the levy of Special Taxes for such Fiscal Year.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds and
may be used by the City for any lawful purpose. If the City reasonably expects to use any
portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds, the
City will notify the Fiscal Agent in a Certificate of an Authorized Representative and the Fiscal
Agent will segregate such amount into a separate subaccount and the moneys on deposit in
such subaccount of the Surplus Fund will be invested at the written direction of the City in
Authorized Investments the interest on which is excludable from gross income under Section
103 of the Code (other than bonds the interest on which is a tax preference item for purposes of
computing the alternative minimum tax of individuals and corporations under the Code) or in
Authorized Investments at a yield not in excess of the yield on the issue of Bonds to which such
amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield
will not adversely affect the exclusion from gross income for federal income tax purposes of
interest on the Bonds.
Bond Fund
Establishment and Deposits. Under the Fiscal Agent Agreement, the Bond Fund is
established as a separate fund to be held by the Fiscal Agent to the credit of which deposits
shall be made as required by the Fiscal Agent Agreement. Moneys in the Bond Fund will be
held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, and will be
disbursed for the payment of the principal of, and interest and any premium on, the Bonds as
described below.
Within the Bond Fund the Fiscal Agent will establish the Special Tax Prepayments
Account and the Capitalized Interest Account, which will be administered in accordance with the
Fiscal Agent Agreement.
20
Disbursements. At least 10 Business Days before each Interest Payment Date, the
Fiscal Agent will notify the City in writing as to the principal and premium, if any, and interest
due on the Bonds on the next Interest Payment Date (whether as a result of scheduled principal
of and interest on the Bonds, or any redemption of Bonds). On each Interest Payment Date, the
Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the Bonds the principal
of, and interest and any premium, due and payable on such Interest Payment Date on the
Bonds.
At least 5 Business Days prior to each Interest Payment Date, the Fiscal Agent will
determine if the amounts then on deposit in the Bond Fund are sufficient to pay the debt service
due on the Bonds on the next Interest Payment Date. If amounts in the Bond Fund are
insufficient for such purpose, the Fiscal Agent promptly will notify the City of the amount of the
insufficiency.
If amounts in the Bond Fund are insufficient for the purpose set forth in the preceding
paragraph with respect to any Interest Payment Date, the Fiscal Agent will withdraw from the
Reserve Fund, to the extent of any funds or Permitted Investments therein, amounts to cover
the amount of such Bond Fund insufficiency. Amounts so withdrawn from the Reserve Fund will
be deposited in the Bond Fund.
If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the
payments described above, the Fiscal Agent will apply the available funds first to the payment of
interest on the Bonds, then to the payment of principal due on the Bonds other than by reason
of sinking payments, if any, and then to payment of principal due on the Bonds by reason of
sinking payments.
Reserve Fund
General. In order to further secure the payment of principal of and interest on the
Bonds, certain proceeds of the Bonds will be deposited into the Reserve Fund in an amount
equal to the “Reserve Requirement” for the Bonds, being the amount which will be equal to the
Reserve Requirement for the Bonds. Moneys in the Reserve Fund will be held in trust by the
Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of the
principal of, and interest and any premium on, the Bonds and will be subject to a lien in favor of
the Owners of the Bonds.
Reserve Requirement. The “Reserve Requirement” is defined in the Fiscal Agent
Agreement to mean the least of the following: (a) Maximum Annual Debt Service on the
Outstanding Bonds; (b) 125% of average Annual Debt Service on the Outstanding Bonds; and
(c) 10% of the original principal amount of the Bonds.
Disbursements. Except as otherwise provided in the Fiscal Agent Agreement, all
amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely
for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time
in the Bond Fund of the amount then required for payment of the principal of, and interest and
any premium on, the Bonds or for the purpose of redeeming Bonds from the Bond Fund.
Whenever the balance in the Reserve Fund exceeds the amount required to redeem or
pay the Outstanding Bonds, the Fiscal Agent shall, upon the written request of the City, transfer
any cash or Permitted Investments in the Reserve Fund to the Bond Fund to be applied, on the
redemption date to the payment and redemption of all of the Outstanding Bonds.
21
Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds
of such prepayment, a proportionate amount in the Reserve Fund (determined on the basis of
the principal of Bonds to be redeemed and the original principal of the Bonds, but in any event
not in excess of the amount that will leave the balance in the Reserve Fund following the
proposed redemption equal to the Reserve Requirement) shall be transferred on the Business
Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the
redemption of the Bonds.
See APPENDIX C for a complete description of the timing, purpose and manner of
disbursements from the Reserve Fund.
Investment of Moneys in Funds
Moneys in any fund or account created or established by the Fiscal Agent Agreement
and held by the Fiscal Agent will be invested by the Fiscal Agent in Permitted Investments,
which in any event by their terms mature prior to the date on which such moneys are required to
be paid out. Moneys in any fund or account created or established by the Fiscal Agent
Agreement and held by the City will be invested by the City in any Permitted Investment or in
any other lawful investment for City funds, which in any event by its terms matures prior to the
date on which such moneys are required to be paid out.
See APPENDIX C for a definition of “Permitted Investments.”
Estimated Debt Service Coverage from Special Taxes
Special Taxes will be levied each year in the District in an amount equal to the Special
Tax Requirement determined in accordance with the Rate and Method. The Special Tax
Requirement for Fiscal Year 2014-15 is projected to equal $406,900, with approximately
$17,850 of this amount budgeted to pay Administrative Expenses, and approximately $389,050
of this amount budgeted to pay debt service on the Bonds.
Based on the current development status of the Property, and the land use
classifications projected under the Rate and Method as of May 1, 2014, 100% of the Maximum
Special Tax rates are projected to be levied against Developed Property, generating Maximum
Special Tax revenues of $334,578. The remaining amount required to satisfy the projected
Fiscal Year 2014-15 Special Tax Requirement, equal to approximately $72,322, would be
funded by capitalized interest on the Bonds. The Maximum Special Taxes anticipated being
levied against Developed Property within the District and available to pay debt service on the
Bonds after the payment of Administrative Expenses in an amount equal to $17,850 would be
approximately 81% of the debt service due in the Bond Year commencing in Fiscal Year
2014-15. See “SPECIAL RISK FACTORS — Special Tax Delinquencies.”
THE DISTRICT
General Description of the District
On November 15, 2011, the City Council adopted a Resolution of Intention to form a
community facilities district under the Act and to levy a special tax and incur bonded
indebtedness for the purpose of financing certain facilities. After conducting a noticed public
hearing, on December 20, 2011, the City Council adopted the Resolution of Formation, which
established the City of Fullerton Community Facilities District No. 2 (Amerige Heights), set forth
22
the special tax formula and adopted a resolution stating the necessity to incur bonded
indebtedness in a total amount not to exceed $11,000,000, and called for an election on the
proposition of incurring the bonded indebtedness and levying a special tax.
On December 20, 2011, an election was held within the District in which the sole
landowner/qualified elector approved the proposition authorizing the proposed bonded
indebtedness, levy of the special tax and certain other related matters required by the Act. All of
the eligible votes were cast, and all of the votes cast were in favor of forming the District and
levying the special tax.
Pursuant to the Change Proceedings, on February 19, 2013, a resolution declaring
completion of Change Proceedings was adopted by the legislative body of the District for the
purpose of amending and restating the list of facilities authorized to be financed by the District to
allow the District to finance school facilities to be owned and operated by the Fullerton School
District. Pursuant to a request submitted on June 6, 2013 by the owner of the property within
the District, the maximum special tax rates for Developed Property within the District originally
approved by the legislative body of the District were reduced to their current rates as set forth in
the Rate and Method attached in APPENDIX A hereto.
Estimated Direct and Overlapping Indebtedness
The lien for the Special Taxes is co-equal to the lien for general property taxes and
would be co-equal to the lien for any future community facilities districts or assessment districts.
Currently, no other assessment liens or special taxes are currently imposed upon property
within the District by other taxing entities. Additional indebtedness could be authorized by other
public agencies at any time. Presently, land within the District is subject to approximately
$169,384 of total outstanding general obligation overlapping debt as shown in Table 1 below.
TABLE 1
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
(1)
DIRECT AND OVERLAPPING DEBT SUMMARY
FISCAL YEAR 2013-14
(as of April 1, 2014)
Overlapping District
Percent
Applicable to
District
Total Debt
Outstanding(1)
North Orange County Community
0.025%
$ 226,421,014
College District G.O. Bonds
Fullerton Joint Union High School
0.101%
$ 51,645,000
District G.O. Bonds
Fullerton School District G.O. Bonds
0.188%
$ 31,365,000
Metropolitan Water District G.O.
0.001%
$ 132,275,000
Bonds
Estimated Share of Overlapping Debt Allocable to District
Plus: The Bonds
Estimated Share of Direct and Overlapping Debt Allocable to District
Source: David Taussig & Associates, Inc.
(1) As of April 1, 2014.
23
District Share of
Total Debt
Outstanding
$
57,314
52,077
58,824
1,169
$
$
$
169,384
7,570,000
7,739,384
In addition to the bonded indebtedness set forth in Table 1, new community facilities
districts or special assessment districts may be formed which include all or a portion of the
District, and, upon approval of the registered voters or landowners in such districts, as
applicable, may issue more bonds and levy additional special taxes or other taxes and
assessments. In addition to the Special Taxes, the property owners in the District will be
required to pay the general ad valorem property taxes for their parcels.
Expected Tax Burden
Table 2 below sets forth an estimated property tax bill for selected residential unit sizes
in the District. The estimated tax rates and amounts presented herein are based on information
projected for the 2014-15 tax year. The actual amounts charged may vary and may increase in
future years. The projected total effective tax rates, assuming the Special Taxes are levied at
the full Maximum Special Tax rates, of these selected residential unit sizes range from
approximately 1.659% to 1.674% of the estimated values for such properties as identified in the
Appraisal Report.
24
TABLE 2
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
SAMPLE PROPERTY TAX BILL
PROJECTED FOR FISCAL YEAR 2014-15 FOR RESIDENTIAL PROPERTY
RESIDENTIAL
PLAN 1
DETACHED
2,031
$678,900
($7,000)
ASSUMED ASSESSED VALUATION
RESIDENTIAL LAND USE TYPE
AVERAGE UNIT SIZE
[1]
MINIMUM SALES PRICE
LESS: HOMEOWNER EXEMPTION
EQUALS: ESTIMATED NET TAXABLE
ASSESSED VALUE [2]
AD VALOREM PROPERTY TAXES [2,3]
BASE PROPERTY TAX
NORTH OC COMMUNITY COLLEGE DISTRICT
G.O. BONDS
FULLERTON JOINT UNION HIGH SCHOOL
DISTRICT G.O. BONDS
FULLERTON SCHOOL DISTRICT G.O. BONDS
METROPOLITAN WATER DISTRICT G.O.
BONDS
SUBTOTAL AD VALOREM PROPERTY TAX
RATE/TAXES
$671,900
Percent of
Total AV
RESIDENTIAL
PLAN 3
DETACHED
2,303
$692,727
($7,000)
$672,973
$685,727
Amount
Amount
Amount
1.00000%
$6,719.00
$6,729.73
$6,857.27
0.01704%
$114.49
$114.67
$116.85
0.01435%
0.02536%
$96.42
$170.39
$96.57
$170.67
$98.40
$173.90
0.00350%
$23.52
$23.55
$24.00
1.06025%
$7,123.82
$7,135.20
$7,270.42
Amount
Amount
Amount
PARCEL CHARGES, ASSESSMENTS AND
SPECIAL TAXES [4]
METROPOLITAN WATER DISTRICT WATER
STANDY CHARGE
ORANGE COUNTY VECTOR CONTROL
CHARGE
ORANGE COUNTY MOSQUITO, FIRE ANT AND DISEASE
CONTROL ASSESSMENT
ORANGE COUNTY SANITATION DISTRICT
SEWER USER FEE
CITY OF FULLERTON CFD No. 2 MAXIMUM
SPECIAL TAX [5]
RESIDENTIAL
PLAN 2
DETACHED
2,203
$679,973
($7,000)
2013
SUBTOTAL PARCEL CHARGES, ASSESSMENTS AND SPECIAL
TAXES
PROJECTED TOTAL PROPERTY TAXES
$10.70
$10.70
$10.70
$1.92
$1.92
$1.92
$5.02
$5.02
$5.02
$308.00
$308.00
$308.00
$3,811.32
$3,924.72
$3,924.72
$4,136.96
$4,250.36
$4,250.36
$11,260.78
$11,385.56
$11,520.78
PROJECTED TOTAL EFFECTIVE TAX RATE (AS % OF SALES
1.659%
1.674%
1.663%
PRICE)
[1] Based on minimum sales price for properties that have closed to individual homeowners as reported in the Appraisal.
[2] Estimated Net Taxable Assessed Value and ad valorem taxes incorporate owner-occupied AV exemption of $7,000.
[3] Based on the current fiscal year ad valorem rates for Tax Rate Area 03-003. Rates subject to change in future years.
[4] Based on the current fiscal year charges identified on the Orange County issued property tax bills. Charges subject to change in
future years.
[5] Based on the fiscal year 2014-2015 Maximum Special Tax.
Source: David Taussig & Associates, Inc., County of Orange
25
No Delinquency History
Fiscal Year 2014-15 will be the first year Special Taxes will be levied in the District.
The County has adopted a Teeter Plan for the collection and payment of taxes pursuant
to which it pays 100% of the amount levied to participating agencies without regard to the actual
amount of collections. The City does not participate in the County’s Teeter Plan and, as a
result, the City receives only the Special Taxes actually collected. Penalties and interest
received on the collection of delinquent Special Taxes are paid to the City but are not pledged
under the Fiscal Agent Agreement to repay the Bonds.
Market Absorption Study
In order to determine the projected absorption of the residential and nonresidential
property within the District, the City engaged RCLCO Real Estate Advisors (the “Market
Absorption Consultant”) to perform a comprehensive analysis of the product mix characteristics
as well as the macroeconomic and microeconomic factors that are expected to influence the
absorption of the forthcoming products within the District. In connection therewith, the Market
Absorption Consultant delivered its Market Absorption Study dated March 31, 2014 (the “Market
Absorption Study”) in which the Market Absorption Consultant has concluded based on
statistical comparison of the currently active comparable projects to the forthcoming
development in the District using their total housing prices (base price plus Special Tax liens)
and their sizes of living area, that the development in the District is competitive in the market for
single family detached homes. Based on the assumptions and limiting conditions set forth in the
Market Absorption Study, the Market Absorption Consultant has estimated an annual absorption
of approximately 70 to 110 units per year (about six to nine units per month), leading to a sellout period of 10 to 16 months from the date of the Market Absorption Study, i.e. January 2015July 2015.
The Market Absorption Consultant identifies potential risks that could affect the
estimated absorption, including unforeseen events that cause substantial reductions in
employment and/or significantly higher mortgage rates, change in the Orange County housing
market and potential shifts in development strategies by Standard Pacific. A complete copy of
the Market Absorption Study is attached hereto as Appendix F.
Appraisal Report
The estimated assessed value of the property within the District, as shown on the
County’s assessment roll for Fiscal Year 2013-2014, is approximately $23,970,000. However,
as a result of the requirements of Article XIIIA of the California Constitution, a property’s
assessed value is not necessarily indicative of its market value. In order to provide information
with respect to the value of the property within the District, the City engaged Harris Realty
Appraisal, the Appraiser, to prepare the Appraisal Report. The Appraiser has an “MAI”
designation from the Appraisal Institute and has prepared numerous appraisals for the sale of
land-secured municipal bonds. The Appraiser was selected by the City and has no material
relationships with the City, the District, or the owners of the land within the District other than the
relationship represented by the engagement to prepare the Appraisal Report. The City
instructed the Appraiser to prepare its analysis and report in conformity with District-approved
guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and
26
revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the
Appraisal Report is included as APPENDIX G to this Official Statement.
The purpose of the Appraisal Report was to estimate the aggregate market value of the
“as is” condition of the property within the District. The estimate of market value takes into
consideration and assumes the improvements and/or fees to be funded with the proceeds of the
Bonds. As a result, the value conclusions are based upon a hypothetical condition that the
improvements and/or fees have been built or paid, as the case may be. Subject to the
contingencies, assumptions and limiting conditions set forth in the Appraisal Report, the
Appraiser concluded that, as of March 1, 2014, the market value of the property within the
District was $48,500,000. The addenda section of the Appraisal Report contains a special tax
analysis table showing estimated debt service coverage on the Bonds as of the Appraisal
Report date of value. Investors should refer to Table 6 below for the actual debt service
coverage on the Bonds.
The Appraisal Report merely indicates the Appraiser’s opinion as to the market value of
the property referred to therein as of the date and under the conditions specified therein. The
Appraiser’s opinion reflects conditions prevailing in the applicable market as of the date of
value. The Appraiser’s opinion does not predict the future value of the subject property, and
there can be no assurance that market conditions will not change adversely in the future.
It is a condition precedent to the issuance of the Bonds that the Appraiser deliver to the
District a certification to the effect that, while the Appraiser has not updated the Appraisal
Report since the date of the Appraisal Report and has not undertaken any obligation to do so,
nothing has come to the attention of the Appraiser subsequent to the date of the Appraisal
Report that would cause the Appraiser to believe that the value of the property in the District is
less than the value of the District reported in the Appraisal Report. However, the Appraiser
notes that acts and events may have occurred since the date of the Appraisal Report which
could result in both positive and negative effects on market value within the District.
Estimated Appraised Value-to-Lien Ratios
Table 3 below sets forth the estimated appraised value-to-lien ratios for the Land Use
Classes shown in Table 1 of the Rate and Method, the projected development status pursuant
to the Rate and Method for Fiscal Year 2014-15 as of May 1, 2014, and the appraised value
included in the Appraisal Report. The estimated appraised value-to-lien ratio of the property
within the District based upon the principal amount of the Bonds, and the appraised value
included in the Appraisal Report is 6.41 to 1. Such estimated appraised value-to-lien ratio does
not include outstanding general obligation overlapping debt shown in Table 1 above. No
assurance can be given that any of the value-to-lien ratios in Table 3 will be maintained during
the period of time that the Bonds are outstanding. The City and the District do not have any
control over future property values or the amount of additional indebtedness that may be issued
in the future by other public agencies, the payment of which is made through the levy of a tax or
an assessment with a lien on a parity with the Special Taxes. See “SPECIAL RISK
FACTORS—Property Values; Value-to-Lien Ratios.”
Table 4 below sets forth the estimated value-to-lien ratios for taxable parcels within the
District by various value-to-lien burden ranges based upon the principal amount of the Bonds
and the appraised values included in the Appraisal Report. Such value-to-lien burden ranges do
not include outstanding general obligation overlapping debt shown in Table 1 above.
27
Table 5 below sets forth the estimated value-to-lien ratios allocated by property
ownership and development status within the District based as of the date of value of the
Appraisal Report, March 1, 2014, upon the principal amount of the Bonds and the appraised
values included in the Appraisal Report.
Table 6 below sets forth the debt service coverage on the Bonds. The addenda section
of the Appraisal Report contains a special tax analysis table showing estimated debt service
coverage on the Bonds as of the Appraisal Report date of value. Investors should refer to Table
6 below for the actual debt service coverage on the Bonds.
For purposes of this Table 6, the Maximum Special Taxes projected to be generated
from the 29 parcels in the District classified as Undeveloped Property for fiscal year 2014-15 as
of May 1, 2014, assumes such parcels will be constructed at the home sizes identified in the
development plan referenced in the Market Absorption Study. Debt service on all of the Bonds
for September 1, 2014 and a portion of the Bonds through March 1, 2015 and September 1,
2015 will be paid by capitalized interest.
28
TABLE 3
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
ESTIMATED APPRAISED VALUE-TO-LIEN RATIOS
BY LAND USE TYPE
(as of May 1, 2014)
Number of
Units/
Acres as of
[1]
05/01/14
Maximum
Fiscal Year
2014-2015
[2]
Special Tax
Projected
Fiscal Year
2014-2015
[3]
Special Tax





NA
Residential Property (Residential Floor Area - 2,200 to less than 2,400)
60
$235,483
$235,483
$4,380,948
$28,315,009
6.46
Residential Property (Residential Floor Area - 2,000 to less than 2,200)
26
99,094
99,094
1,843,559
12,094,412
6.56


0


NA
0.00

0


NA
1.54
181,304
72,323
1,345,493
8,090,579
6.01
Rate and Method Land Use Class
Pro Rata
Share of
[4]
Bonds
Estimated
Appraised
Value-to-Lien
[6]
Ratios
Appraised
[5]
Value
Developed Property
Residential Property (Residential Floor Area - 2,400 or greater)
Residential Property (Residential Floor Area - Less than 2,000)
Non-Residential Property
Undeveloped Property
TOTAL
NA
$
515,881
$
406,900
$ 7,570,000
$ 48,500,000
6.41
_________________________________________
Source: David Taussig & Associates, Inc.
[1] Based on the classification of Taxable Property pursuant to the Rate and Method for fiscal year 2014-2015.
[2] Based on the Maximum Special Tax levy against 86 parcels of Taxable Property classified as Developed Property, and the Maximum Special Tax levy against 29 parcels of Taxable Property,
comprised of approximately 1.54 acres, classified as Undeveloped Property pursuant to the Rate and Method.
[3] Based on the levy of the Special Tax required to fund priority administrative expenses and the debt service on the Bonds, exclusive of capitalized interest on the Bonds that is projected to fund the
Special Tax levy allocable to Undeveloped Property.
[4] There are currently no overlapping assessment districts and/or other community facilities districts encumbering the District. The Bonds are allocated based on a proportionate share of the
Projected Fiscal Year 2014-2015 Special Tax.
[5] Based on the Appraisal Report.
[6] Calculated by dividing the Appraised Value column by the Pro Rata Share of Bonds column.
.
29
TABLE 4
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
APPRAISED VALUE AND VALUE-TO-BURDEN RATIO
(as of May 1, 2014)
Value-to-Lien Burden
Category
Number of
Taxable
Parcels
10.00:1 and above
10
7.00:1 to 9.99:1
37
5.00:1 to 6.99:1
3.00:1 to 4.99:1
Less than 3.00:1

TOTAL
Projected
Fiscal Year
2014-2015
[1]
Special Tax
$
38,907
Percent of
Projected
Fiscal Year
2014-2015
Special Tax
9.56%
Pro Rata
Share of
[2]
Bonds
$
723,829
7,477,500
10.33
20,957,341
9.14
1,226,670
6,952,841
5.67
3,325,693
13,112,318
3.94


N/A
$ 7,570,000
$ 48,500,000
6.41
123,296
30.30
2,293,808
21
65,936
16.20
47
178,761
43.94
115

$
406,900

100.00%
Estimated
Appraised Value-to[4]
Lien Ratios
Appraised
[3]
Value
$
____________________________________
Source: David Taussig & Associates, Inc.
[1] Based on the levy of the Special Tax required to fund priority administrative expenses and the debt service on the Bonds, exclusive of capitalized interest on the Bonds that is
projected to fund the Special Tax levy allocable to Undeveloped Property.
[2] There are currently no overlapping assessment districts and/or other community facilities districts encumbering the District. The Bonds are allocated based on a proportionate
share of the Projected Fiscal Year 2014-2015 Special Tax.
[3] Based on the Appraisal Report.
[4] Calculated by dividing the Appraised Value column by the Pro Rata Share of Bonds column.
30
TABLE 5
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
ESTIMATED APPRAISED VALUE-TO-LIEN RATIOS
(as of May 1, 2014)
Number
of
Taxable
Parcels
Property Owner /
Development Status [1]
Maximum
Fiscal Year
2014-2015
Special Tax [2]
Projected
Fiscal Year
2014-2015
Special Tax [3]
Percent of
Projected
Fiscal Year
2014-2015
Special Tax
Estimated
Appraised
Value-to-Lien
Ratios [5]
Pro Rata
Share of
Bonds [4]
Appraised
Value [1]
$ 1,810,627
$ 14,300,000
7.90
Standard Pacific Corp.
[6]
Built or Under Construction
Physically Finished Lots / with
[6]
Building Permits
Physically Finished Lots /
[6]
without Building Permits
25
Subtotal
Individual Homeowners
TOTAL
$
97,324
$
97,324
23.92%
20
77,814
77,814
19.12
1,447,658
5,579,710
3.85
49
259,004
150,023
36.87
2,791,041
13,670,290
4.90
94
$434,142
$325,161
$6,049,326
$33,550,000
5.55
21
81,739
81,739
20.09
1,520,674
14,950,000
9.83
406,900
100.00%
$ 7,570,000
$ 48,500,000
6.41
115
$
515,881
$
79.91%
______________________________________
Source: David Taussig & Associates, Inc.
[1] Based on development status set forth in the Appraisal Report with a date of value as of March 1, 2014.
[2] Based on the Maximum Special Tax levy against 86 parcels of Taxable Property classified as Developed Property, and the Maximum Special Tax levy against 29 parcels of
Taxable Property, comprised of approximately 1.54 acres, classified as Undeveloped Property pursuant to the Rate and Method. Refer to footnote [6] for further details.
[3] Based on the levy of the Special Tax required to fund priority administrative expenses and the debt service on the Bonds, exclusive of capitalized interest on the Bonds that is
projected to fund the Special Tax levy allocable to Undeveloped Property.
[4] There are currently no overlapping assessment districts and/or other community facilities districts encumbering the District. The Bonds are allocated based on a proportionate
share of the Projected Fiscal Year 2014-2015 Special Tax.
[5] Calculated by dividing the Appraised Value column by the Pro Rata Share of Bonds column.
[6] Under the Rate and Method, parcels of Taxable Property are classified as Developed Property if a building permit has been obtained for such parcel by May 1 of the fiscal year
preceding the Special Tax levy. For the fiscal year 2014-2015 Special Tax levy, 86 parcels of Taxable Property are classified as Developed Property (40 parcels of which are
identified in the Appraisal as Physically Finished Lots, but for which building permits have been obtained), and 29 parcels of Taxable Property, comprised of approximately 1.54
acres, classified as Undeveloped Property.
31
TABLE 6
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
ESTIMATED DEBT SERVICE COVERAGE FROM DEVELOPED PROPERTY
Period
Ending
September 1
2015
Current
Developed
Property Special
Tax
Revenues [1]
$
Projected
Developed
Property
Special Tax
Revenues [2]
Gross
Special
Tax
Revenues
Priority
Administrative
Expense
Amount [3]
Estimated
Coverage
from
Developed
Property[5]
Debt
Service on
the Bonds
[4]
334,578
$ 113,023
$447,601
17,850
389,050
81.41%
2016
341,269
115,284
456,553
18,207
398,450
81.08
2017
348,094
117,589
465,684
18,571
402,550
81.86
2018
355,056
119,941
474,997
18,943
411,500
81.68
2019
362,157
122,340
484,497
19,321
420,150
81.60
2020
369,401
124,787
494,187
19,708
428,500
81.61
2021
376,789
127,282
504,071
20,102
436,550
81.71
2022
384,324
129,828
514,152
20,504
444,300
81.89
2023
392,011
132,425
524,435
20,914
455,900
81.40
2024
399,851
135,073
534,924
21,332
461,900
81.95
2025
407,848
137,775
545,623
21,759
472,500
81.71
2026
416,005
140,530
556,535
22,194
481,250
81.83
2027
424,325
143,341
567,666
22,638
494,250
81.27
2028
432,812
146,207
579,019
23,091
501,250
81.74
2029
441,468
149,132
590,599
23,553
512,500
81.54
2030
450,297
152,114
602,411
24,024
522,750
81.54
2031
459,303
155,156
614,460
24,504
532,000
81.73
2032
468,489
158,260
626,749
24,994
545,250
81.34
2033
477,859
161,425
639,284
25,494
557,250
81.18
2034
487,416
164,653
652,070
26,004
568,000
81.23
2035
497,165
167,946
665,111
26,524
577,500
81.50
2036
507,108
171,305
678,413
27,055
590,750
81.26
2037
517,250
174,731
691,981
27,596
602,500
81.27
2038
527,595
178,226
705,821
28,148
612,750
81.51
2039
538,147
181,791
719,937
28,711
626,500
81.31
2040
548,910
185,426
734,336
29,285
638,500
81.38
2041
559,888
189,135
749,023
29,871
648,750
81.70
2042
571,086
192,918
764,003
30,468
662,250
81.63
2043
582,508
196,776
779,283
31,077
678,750
81.24
2044
594,158
200,711
794,869
31,699
693,000
81.16
______________________
Source: David Taussig & Associates, Inc., Stern Brothers & Co.
[1] Based on the Maximum Special Tax revenues generated from 86 parcels of Taxable Property classified as Developed Property for fiscal year 2014-2015.
[2] Based on the projected Developed Property Maximum Special Tax revenues from 29 parcels of Taxable Property, comprised of approximately 1.54
acres, classified as Undeveloped Property for fiscal year 2014-15, assuming such 29 parcels of Taxable Property classified as Undeveloped Property
are constructed at the home sizes identified in the development plan submitted by Standard Pacific that was referenced in the Market Absorption Study.
[3] Based on the fiscal year 2014-2015 Priority Administrative Expense Amount of $17,850, escalating at 2% annually. For the period ending September 1,
2014 an administrative expense amount of $15,000 will be paid with a portion of the proceeds of the Bonds.
[4] For the period ending September 1, 2015, a portion of the debt service on the Bonds will be paid with capitalized interest funded with proceeds of the
Bonds.
[5] Developed Property Special Tax Revenues, less Priority Administrative Expense Amount, divided by Debt Service on the Bonds.
32
PROPERTY OWNERSHIP AND DEVELOPMENT
Representatives of Standard Pacific have provided the information in this section
regarding Standard Pacific and its actual and proposed development in the District. Neither the
Underwriter, the City, nor the District has independently confirmed or verified the information in
this section of the Official Statement nor does any such party make any representation as to
accuracy or adequacy of this information. Further, there may be material adverse changes in
this information after the date of this Official Statement.
The information in this section of the Official Statement regarding ownership of certain
taxable property in the District has been included because it is considered relevant to an
informed evaluation of the Bonds. The inclusion in this Official Statement of information related
to Standard Pacific should not be construed to suggest that the Bonds, or the Special Taxes
that will be used to pay the Bonds, are recourse obligations of Standard Pacific or any other
property owner in the District. A property owner may sell or otherwise dispose of land within the
District or a development or any interest therein at any time.
The Bonds and the Special Taxes are not personal obligations of Standard Pacific or
any other current or subsequent property owners and, in the event that Standard Pacific or any
other current or subsequent property owner defaults in the payment of the Special Taxes, the
District may proceed with judicial foreclosure but has no direct recourse to the assets of
Standard Pacific or any other current or subsequent property owner. As a result, other than as
provided in the Official Statement, no financial information is, or will be, provided about
Standard Pacific or any other current or subsequent property owner. The Bonds are secured
solely by the Special Taxes and other amounts pledged under the Fiscal Agent Agreement.
See “SECURITY AND SOURCES FOR THE BONDS” and “SPECIAL RISK FACTORS.”
The Developer
The property within the District is being developed by Standard Pacific Corp. (“Standard
Pacific”), a homebuilder incorporated in Delaware in 1991 with principal executive offices
located in Irvine, California. Standard Pacific is a publicly traded company with its stock listed
on the New York Stock Exchange under the symbol “SPF.”
Standard Pacific 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, including financial statements, with the Securities and
Exchange Commission (the “SEC”). Such filings, particularly Standard Pacific’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2013, as filed by Standard Pacific with the
SEC on February 24, 2014, set forth certain data relative to the consolidated results of
operations and financial position of Standard Pacific and its subsidiaries as of such dates. The
SEC maintains an Internet web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC, including Standard
Pacific. The address of such Internet web site is www.sec.gov. This internet address is
included for reference only and the information on the internet site is not a part of this Official
Statement and is not incorporated by reference into this Official Statement. No representation is
made in this Official Statement as to the accuracy or adequacy of the information contained on
the internet site. All documents subsequently filed by Standard Pacific pursuant to the
requirements of the Exchange Act after the date of this Official Statement will be available for
inspection in such manner as the SEC prescribes.
33
Financing Plan
To date, Standard Pacific has financed its land acquisition and various site development
and home construction costs related to its property in the District through home sales and
internally generated funds. Standard Pacific expects to use home sales, internal funding and
funding under its revolving credit facility to complete its development in the District. However,
home sales revenues for Standard Pacific’s project in the District are not segregated and set
aside for the payment of costs required to complete its project in the District. Homes sales
revenue is accumulated by Standard Pacific and used to pay costs of Standard Pacific’s
operations, to pay debt service on outstanding debt, and for other corporate purposes, and may
be diverted to pay costs other than the costs of completing the project in the District at the
discretion of Standard Pacific management. Notwithstanding the foregoing, Standard Pacific
believes that it will have sufficient funds available to complete its proposed development in the
District in accordance with the development schedule described in this Official Statement.
As of December 31, 2013, Standard Pacific was a party to a $470 million unsecured
revolving credit facility, of which $440 million matures in October 2015 and $30 million matured
in February 2014 (the “Credit Facility”). Upon maturity of tranche B of the Credit Facility on
February 28, 2014, the total aggregate commitment was reduced to $440 million. The Credit
Facility has an option which allows Standard Pacific to increase the total aggregate
commitment, subject to certain conditions including the availability of additional bank lending
commitments. The Credit Facility contains certain covenants and conditions which may limit the
amount Standard Pacific may borrow or have outstanding at any time. As of December 31,
2013, Standard Pacific satisfied the conditions that would allow it to borrow up to $470 million
under the Credit Facility and had no amounts outstanding. Standard Pacific’s ability to renew
the Credit Facility in the future is dependent upon a number of factors including the state of the
commercial lending environment, the willingness of banks to lend to homebuilders and Standard
Pacific’s financial condition and strength.
Although Standard Pacific expects to have sufficient funds available to complete its
development in the District in accordance with the development schedule described in this
Official Statement, there can be no assurance that amounts necessary to finance the remaining
development and home construction costs will be available from Standard Pacific or any other
source when needed. For example, borrowings under the Credit Facility may not be available,
and home sales revenue, which is accumulated daily for use in operations, to pay debt service
on outstanding debt, and for other corporate purposes, may be diverted to pay costs other than
the costs of completing the project in the District at the discretion of Standard Pacific
management. Neither Standard Pacific, nor its lenders, nor any of its related entities are under
any legal obligation of any kind to expend funds for the development of and construction of
homes on its property in the District. Any contributions by Standard Pacific to fund the costs of
such development and home construction are entirely voluntary.
If and to the extent that internal funding, including but not limited to home sales
revenues, and borrowings under the Credit Facility are inadequate to pay the costs to complete
the planned development by Standard Pacific within the District and other financing by Standard
Pacific is not put into place, there could be a shortfall in the funds required to complete the
proposed development by Standard Pacific in the District and the remaining portions of the
project in the District may not be developed.
34
History of Standard Pacific’s Property Tax Payments; Loan Defaults; Litigation;
Bankruptcy.
Standard Pacific has represented to the City and District as follows:
1.
Except as described in this Official Statement, there is no material
indebtedness of Standard Pacific or its Affiliates (defined below) that is secured by an interest in
the Property (defined below). Neither Standard Pacific nor, to the Actual Knowledge of
Standard Pacific (defined below), any of its Affiliates is in default on any obligation to repay
borrowed money, which default is reasonably likely to materially and adversely affect Standard
Pacific’s ability (a) to develop the Property as proposed in this Official Statement, or (b) to pay
the Special Taxes when due with respect to the Property, or (c) to perform its obligations under
the Developer Continuing Disclosure Certificate.
2.
Except as set forth in this Official Statement, no action, suit, proceeding,
inquiry or investigation at law or in equity, before or by any court, regulatory agency, public
board or body is pending against Standard Pacific (with proper service of process or proper
notice to Standard Pacific having been accomplished) or, to the Actual Knowledge of Standard
Pacific, is pending against any current Affiliate (with proper service of process to such Affiliate
having been accomplished) or to the Actual Knowledge of Standard Pacific is threatened in
writing against Standard Pacific or any such Affiliate (a) to restrain or enjoin the collection of
Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the
Bonds (e.g., the Reserve Fund established under the Fiscal Agent Agreement), (b) to restrain or
enjoin the development of the Property as proposed in this Official Statement, (c) in any way
contesting or affecting the validity of the Special Taxes, (d) which if successful, is reasonably
likely to materially and adversely affect Standard Pacific’s ability to complete its development
planned within the District as described in this Official Statement or to pay the Special Tax or ad
valorem tax obligations on its Property when due, or (e) to challenge, question the validity or
enforceability of, or restrain or enjoin the performance of the Developer Continuing Disclosure
Certificate.
3.
As a large, nation-wide developer of residential projects, Standard Pacific
cannot represent with assurance that neither it nor any Affiliate has ever been delinquent in the
payment of ad valorem property taxes; however, to the Actual Knowledge of the employees of
Standard Pacific involved in the issuance of the Bonds, neither it nor any Affiliate has been
delinquent to any material extent in the payment of any ad valorem property tax, special
assessment or special tax on property included within the boundaries of a community facilities
district or an assessment district that would have (a) caused a draw on a reserve fund relating to
such assessment district or community facilities district or (b) resulted in a foreclosure action
being commenced.
4.
To the Actual Knowledge of Standard Pacific, Standard Pacific is able to
pay its bills as they become due and no legal proceedings are pending against Standard Pacific
(with proper service of process to Standard Pacific having been accomplished) or, to the Actual
Knowledge of Standard Pacific, threatened in writing in which Standard Pacific may be
adjudicated as bankrupt or discharged from any and all of its debts or obligations, or granted an
extension of time to pay its debts or obligations, or be allowed to reorganize or readjust its
debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.
5.
To the Actual Knowledge of Standard Pacific, Affiliates of Standard
Pacific are able to pay their bills as they become due and no legal proceedings are pending
35
against any Affiliates of Standard Pacific (with proper service of process to such Affiliate having
been accomplished) or to the Actual Knowledge of Standard Pacific, threatened in writing in
which the Affiliates of Standard Pacific may be adjudicated as bankrupt or discharged from any
or all of their debts or obligations, or granted an extension of time to pay their debts or
obligations, or be allowed to reorganize or readjust their debts or obligations, or be subject to
control or supervision of the Federal Deposit Insurance Corporation.
As used in the above representations of Standard Pacific, the following defined terms
and phrases have the following meanings:
“Actual Knowledge of Standard Pacific” shall mean the knowledge of the authorized
officer of Standard Pacific signing the certificate containing the above representations (the
“Standard Pacific Letter of Representations”) as of the date of the Standard Pacific Letter of
Representations obtained from interviews with such current officers and responsible employees
of Standard Pacific and its Affiliates as the authorized officer signing the Standard Pacific Letter
of Representations has determined are likely, in the ordinary course of their respective duties, to
have knowledge of the matters set forth in the Standard Pacific Letter of Representations. The
authorized officer of Standard Pacific signing the Standard Pacific Letter of Representations has
not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as
are prudent and customary in connection with the ordinary course of Standard Pacific’s current
business and operations.
“Affiliate” means, with respect to a Person (i) any other Person directly, or indirectly
through one or more intermediaries, controlling, controlled by or under common control with
such Person, and (ii) for whom information, including financial information or operating data,
concerning such Person referenced in clause (i) is material to an evaluation of the District and
the Bonds (i.e., information relevant to Standard Pacific’s development plans with respect to its
Property and its payment of Special Taxes, or such Person’s assets or funds that would
materially affect Standard Pacific’s ability to develop its Property as described in this Official
Statement or to pay its Special Taxes).
“Person” means an individual, a corporation, a partnership, a limited liability company,
an association, a joint stock company, a trust, any unincorporated organization or a government
or political subdivision thereof.
“Control” (including the terms “controlling,” “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
“Property” means the property within the District held in the name of Standard Pacific.
Proposed Development
The District is located in the City on Hughes Drive between W. Bastanchury Road and
N. Gilbert Street. The District consists of approximately 10 acres of property of which
approximately 5.4 acres is taxable property. The property in the District was acquired by
Standard Pacific in May 2012. The development within the District (the “Development”) is
planned for 115 single family detached homes being developed by Standard Pacific in a
neighborhood known as “Standard Pacific Homes at Amerige Heights.” The Development is the
final new-home project within the master-planned community of Amerige Heights. As of April
36
15, 2014, out of the 115 single-family detached homes planned within the District, there were 30
completed production homes which had been conveyed to individual homeowners, three
completed model homes and three completed production homes owned by Standard Pacific, 50
production homes in various stages of construction, and 29 lots in finished condition without
building permits obtained. As of April 15, 2014, sixteen homes were under contract, including
two of the three completed production homes owned by Standard Pacific and 14 of the 50
homes under construction as of such date. Homes under contract may not result in closed
escrows as sales contracts are subject to cancellation by the homebuyer. The homes being
constructed by Standard Pacific within the Development are three-story homes ranging in size
from approximately 2,031 to 2,303 square feet with base sales prices ranging from
approximately $672,900 to approximately $719,900. Base home sales prices are as of April 15,
2014 and exclude Standard Pacific’s estimate of lot premiums, the sale of options and extras
and any incentives or price reduction. The first production homes were released by Standard
Pacific in July 2013 and conveyed to individual homeowners in November 2013.
All discretionary government approvals and permits required for development of
Standard Pacific’s property within the District have been secured except as otherwise described
in this Official Statement and except for approvals and permits required in the normal course of
development.
Standard Pacific’s development expectations could be altered due to changes in
economic and market conditions or other factors. No assurances can be given that home
construction will be carried out on the schedule or according to the plans described in this
Official Statement or that Standard Pacific’s construction plans will not change after the date of
this Official Statement.
A summary of Standard Pacific’s planned units in the District and the estimated sizes
and base prices is set forth below.
TABLE 7
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
SUMMARY OF STANDARD PACIFIC’S PLANNED UNITS
(As of April 15, 2014)
Completed
Standard
Pacific
Owned(1)
Plan
No.
Bedrooms
/ Bath
Approximate
Square Feet
Completed
Individual
Owned
1
2
3
3 / 3.5
3/4
3 / 3.5
2,031
2,203
2,303
10
9
11
1
3
2
N/A
30
6
Total
N/A
Vacant
Finished
Lots
Total
Units
Planned
15
14
21
7
11
11
33
37
45
26
26
34
$672,900
$695,900
$719,900
50
29
115
86
N/A
Under
Construction
Permits
Obtained
Base
Prices(2)
(1) Includes completed model homes for Plan Nos. 1, 2 and 3. Also includes completed or 95% completed
production homes.
(2) Base home sales prices shown exclude Standard Pacific’s estimate of lot premiums, the sales of options and any
incentives or price reductions. Based on base home sale prices as of April 15, 2014.
Source: Standard Pacific.
The development summary shown above is based on Standard Pacific’s current plan.
This plan may change to respond to changes in economic or market conditions. See “SPECIAL
RISK FACTORS” herein for a discussion of risk factors.
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Infrastructure Requirements and Construction Status
The backbone infrastructure requirements for the Development consist of street, sewer,
water and storm drain improvements. All master infrastructure plans and grading plans have
been approved and master streets have been completed and wet and dry utilities (outside of
tracts) are complete and stubbed to individual lots. The primary improvements remaining to be
completed by Standard Pacific include the following:
(i)
Launer Park – A 40’ wide area fronting the project on Hughes Drive and
Hydraflow Way.
(ii)
Neighborhood Park – A 1/3 acre park at the northeast corner of the project.
(iii)
Amerige Heights Park Extension – A 1.5 acre park with a 1,200 sq ft Community
Facilities Building, three tennis courts, and open park space and is located
offsite.
(iv)
Railroad Trail – A multi-use trail located adjacent to and extending along the
length of the existing railroad tracks from Malvern to Hughes Dr.
Standard Pacific expects to complete these improvements by the third quarter of 2015.
As of March 1, 2014, the remaining costs to complete the improvements are estimated to be
$4,006,924, a portion of which will be funded with the proceeds of the Bonds. See “THE
FINANCING PLAN.”
SPECIAL RISK FACTORS
The purchase of the Bonds involves significant investment risks and, therefore, the
Bonds may not be suitable investments for many investors. The following is a discussion of
certain risk factors which should be considered, in addition to other matters set forth herein, in
evaluating the investment quality of the Bonds. This discussion does not purport to be
comprehensive or definitive. The occurrence of one or more of the events discussed herein
could adversely affect the ability or willingness of property owners in the District to pay their
Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the
City to make full and punctual payments of debt service on the Bonds. In addition, the
occurrence of one or more of the events discussed herein could adversely affect the value of
the property in the District. See “SPECIAL RISK FACTORS — Property Values; Value-to-Lien
Ratios” and “— Limited Secondary Market” below.
Risks of Real Estate Secured Investments Generally
The Owners of the Bonds 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 residential
property or commercial buildings and/or sites in the event of sale or foreclosure; (ii) changes in
real estate tax rates and other operating expenses, governmental rules (including, without
limitation, zoning laws and laws relating to endangered species and hazardous materials) and
fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and
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floods), which may result in uninsured losses; (iv) adverse changes in local market conditions;
and (v) increased delinquencies due to rising mortgage costs and other factors.
Risks Related to Mortgage Loans
Although residential projects that have their homes built and occupied by homeowners
are typically viewed as providing bondholders with strong credits, some of the recent home
purchasers, may face challenges in making their mortgage and tax payments on a timely basis,
due to their initial high loan to value ratios, creative mortgage loan structures, and current
negative equity levels. Recent events in the United States and world-wide capital markets have
adversely affected the availability of mortgage loans to homeowners, including potential buyers
of homes within the District. Any such unavailability could hinder the ability of the current
homeowners to resell their homes, and adversely affect the market prices available to current
homeowners.
Risks Related to Current Market Conditions
The housing market in southern California experienced significant price appreciation and
accelerating demand from approximately 2002 to 2006 but subsequently the housing market
weakened substantially, with changes from the prior pattern of price appreciation and a
slowdown in demand for new housing and declining prices. Beginning in 2007, home
developers, appraisers and market absorption consultants have reported weak housing market
conditions due to factors including but not limited to the following: (i) lower demand for new
homes; (ii) significant increase in cancellation rates for homes under contract; (iii) the exit of
speculators from the new home market; (iv) increasing mortgage defaults and foreclosures,
(v) a growing supply of new and existing homes available for purchase; (vi) increase in
competition for new homes orders; (vii) prospective home buyers having a more difficult time
selling their existing homes in the more competitive environment; (viii) reduced sales prices
and/or higher incentives required to stimulate new home orders or to induce home buyers not to
cancel purchase contracts, (ix) more stringent credit qualification requirements by home loan
providers and (x) increased unemployment levels. To the extent any of these factors continue,
they may negatively impact home values in the District and affect the willingness or ability of
taxpayers to pay their Special Tax payment prior to delinquency.
Economic Uncertainty
The Bonds are being issued at a time of economic uncertainty and volatility.
Unemployment rates are approximately 5.9% for the City for 2013 (not seasonally adjusted) and
are approximately 7.9% (not seasonally adjusted) for the State for 2013. The District cannot
predict how long these conditions will last or whether to what extent they may affect the ability of
homeowners to pay Special Taxes or the marketability of the Bonds.
Limited Obligations
The Bonds and interest thereon are not payable from the general funds of the City.
Except with respect to the Special Taxes, neither the credit nor the taxing power of the District
or the City is pledged for the payment of the Bonds or the interest thereon, and, except as
provided in the Fiscal Agent Agreement, no Owner of the Bonds may compel the exercise of
any taxing power by the District or the City or force the forfeiture of any City or District property.
The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal
or equitable pledge, charge, lien or encumbrance upon any of the City’s or the District’s property
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or upon any of the City’s or the District’s income, receipts or revenues, except the Special Taxes
and other amounts pledged under the Fiscal Agent Agreement.
Insufficiency of Special Taxes
The Rate and Method specifies a procedure for determining the amount of the Special
Tax to be levied in order to equal the amount needed to be collected. Basically, property within
the District will be taxed up to the maximum rates applicable, until the amount levied equals the
amount needed. See APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF
SPECIAL TAXES” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS —
Special Taxes — Rate and Method of Apportionment of Special Taxes.”
Exempt Properties
The Rate and Method provides that, if any property within the District not otherwise
exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or
by gift or devise, the Special Tax may, in certain circumstances described therein, no longer
continue to be levied on and enforceable against the public entity that acquired the property. In
addition, the Act provides that, if property subject to the Special Tax is acquired by a public
entity through eminent domain proceedings, the obligation to pay the Special Tax with respect
to that property, to the extent necessary to cover outstanding debt, is to be treated as if it were a
special assessment and be paid from the eminent domain award. The constitutionality and
operation of these provisions of the Act have not been tested in the courts. If the federal
government or another non-taxable entity successfully takes the position that property owned by
it and subject to the Special Tax becomes exempt from taxation, the Special Tax will be
reallocated to the remaining taxable properties within the District, subject to the limitation of the
maximum authorized rate of levy on each parcel. This could result in the owners of such
property paying a greater amount of the Special Tax and could have an adverse impact upon
the timely payment of the Special Tax.
Moreover, if a substantial portion of land within the District became exempt from
the Special Tax because of public ownership, or otherwise, the Maximum Special Tax
which could be levied upon the remaining acreage might not be sufficient to pay the
principal and interest on the Bonds when due and a default could occur with respect to
the payment of such principal and interest.
Depletion of Reserve Fund
The Reserve Fund is maintained in an amount equal to the Reserve Requirement.
Funds in a Reserve Fund may be used to pay principal of and interest on the Bonds in the event
the proceeds of the levy and the collection of the Special Taxes against the property in the
District are not sufficient. If the Reserve Fund is depleted, the funds can be replenished from
the proceeds of the levy and collection of the Special Tax that are in excess of the amount
required to pay Administrative Expenses and principal and interest on the Bonds. However, no
replenishment of the Reserve Fund from the proceeds of the Special Taxes can occur as long
as the proceeds that are collected from the levy of the Special Taxes at the maximum tax rates,
together with available funds, remain insufficient to pay all such amounts. Thus, it is possible
that the Reserve Fund will be depleted and not replenished by the levy of the Special Taxes.
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Natural Disasters
The District, like all California communities, may be subject to unpredictable seismic
activity, fires, flood, or other natural disasters. Southern California is a seismically active area.
Seismic activity, wildfires and other natural disasters represents a potential risk for damage to
buildings, roads, bridges and property within the District. In addition, land susceptible to seismic
activity may be subject to liquefaction during the occurrence of such event.
No assurance can be given regarding the extent to which any future natural disasters
may impact property in the District.
The area encompassed by the District, like that in much of California, may be subject to
unpredictable seismic activity. The City is located within a regional network of several active
and potentially active faults. Eight faults could potentially cause damage in the City. Only one,
the 17-mile long Norwalk Fault, actually traverses the City. To date, there have been no
earthquakes along the Norwalk Fault with a Richter magnitude of greater than 5.0. Other faults
within the vicinity of the City are the Whittier/Elsinore Fault, the Newport/Inglewood Fault, the
Sierra Madre/San Fernando/Santa Susana Fault, the Palos Verdes Fault, the San Jacinto Fault
and the San Andreas Fault.
A 5.1 magnitude earthquake along the Puente Hills thrust fault and centered in the City
of La Habra, adjacent to the City, occurred on March 28, 2014. Standard Pacific is not aware of
any significant damage to the homes or property owned by Standard Pacific within the District
as a result of this earthquake. Based on the knowledge of Standard Pacific’s Vice President of
Customer Service, Standard Pacific has not received any requests for service from
homeowners in the District as a result of this earthquake.
In the event of a severe earthquake, fire, flood or other natural disaster, 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 a
natural disaster, reducing the resulting proceeds of foreclosure sales in the event of
delinquencies in the payment of the Special Taxes.
Hazardous Substances
The presence of hazardous substances on a parcel may result in a reduction in the
value of a parcel. In general, the owners and operators of a parcel may be required by law to
remedy conditions of the parcel relating to releases or threatened releases of hazardous
substances. The Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most
well-known and widely applicable of these laws, but California laws with regard to hazardous
substances are also stringent and similar. Under many of these laws, the owner or operator is
obligated to remedy a hazardous substance condition of property whether or not the owner or
operator has anything to do with creating or handling the hazardous substance. The effect,
therefore, should any of the taxed parcels be affected by a hazardous substance, is to reduce
the marketability and value of the parcel by the costs of remedying the condition, because the
purchaser, upon becoming owner, will become obligated to remedy the condition just as is the
seller.
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Further, it is possible that liabilities may arise in the future with respect to any of the
parcels resulting from the existence, currently, on the parcel 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.
Further, such liabilities may arise not simply from the existence of a hazardous substance but
from the method of handling it. All of these possibilities could significantly affect the value of a
parcel that is realizable upon a delinquency.
Parity Taxes and Special Assessments
Property within the District is subject to taxes and assessments imposed by public
agencies also having jurisdiction over the land within the District. See “THE DISTRICT —
Estimated Direct and Overlapping Indebtedness.”
The Special Taxes and any penalties thereon will constitute a lien against the lots and
parcels of land on which they will be annually imposed until they are paid. Such lien is on a
parity with all special taxes and special assessments levied by the City and other agencies and
is co-equal to and independent of the lien for general property taxes regardless of when they
are imposed upon the same property. The Special Taxes have priority over all existing and
future private liens imposed on the property except, possibly, for liens or security interests held
by the Federal Deposit Insurance Corporation. See “SPECIAL RISK FACTORS — Bankruptcy
and Foreclosure” below.
Neither the City nor the District has control over the ability of other entities and
districts to issue indebtedness secured by special taxes, ad valorem taxes or
assessments payable from all or a portion of the property within the District. In addition,
the landowners within the District may, without the consent or knowledge of the City,
petition other public agencies to issue public indebtedness secured by special taxes, ad
valorem taxes or assessments.
Any such special taxes, ad valorem taxes or
assessments may have a lien on such property on a parity with the Special Taxes and
could reduce the estimated value-to-lien ratios for property within the District described
herein.
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax, even if the
value of the parcel is sufficient, may be affected by whether or not the owner was given due
notice of the Special Tax authorization at the time the owner purchased the parcel, was
informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the
maximum tax rate and the risk of such a levy, and, at the time of such a levy, has the ability to
pay it as well as pay other expenses and obligations. The City has caused a Notice of Special
Tax lien and the amendments thereto to be recorded in the Office of the Recorder for the
County against each parcel. 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 property
within the District or lending of money thereon.
The Act requires the subdivider (or its agent or representative) of a subdivision to notify
a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos
special tax of the existence and maximum amount of such special tax using a statutorily
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prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers
other than those covered by the above requirement, the seller must at least make a good faith
effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute.
Failure by an owner of the property to comply with the above requirements, or failure by a
purchaser or lessor to consider or understand the nature and existence of the Special Tax,
could adversely affect the willingness and ability of the purchaser or lessor to pay the Special
Tax when due.
Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the
payment of principal of, and interest on, the Bonds are derived, are customarily billed to the
properties within the District on the ad valorem property tax bills sent to owners of such
properties. The Act currently provides that such Special Tax installments are due and payable,
and bear the same penalties and interest for non-payment, as do ad valorem property tax
installments.
Pursuant to Section 53321(d) of the Government Code, the Special Tax levied against
any Assessor’s parcel for which an occupancy permit for private residential use has been issued
will not be increased as a consequence of delinquency or default by the owner of any other
Assessor’s parcel within the District by more than ten percent (10%) above the amount that
would have been levied in that fiscal year had there never been any such delinquencies or
defaults.
See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant to
Foreclose,” for a discussion of the provisions which apply, and procedures which the District is
obligated to follow under the Fiscal Agent Agreement, in the event of delinquencies in the
payment of Special Taxes. See “SPECIAL RISK FACTORS — Bankruptcy and Foreclosure”
below, for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the
payment of special taxes and assessments and limitations on the City’s ability to foreclose on
the lien of the Special Taxes in certain circumstances.
Non-Cash Payments of Special Taxes
Under the Act, the City Council as the legislative body of the District may reserve to itself
the right and authority to allow the owner of any taxable parcel to tender a 2014 Bond in full or
partial payment of any installment of the Special Taxes or the interest or penalties thereon. A
2014 Bond so tendered is to be accepted at par and credit is to be given for any interest
accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary
market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the
Special Taxes applicable thereto by tendering a 2014 Bond. Such a practice would decrease
the cash flow available to the City to make payments with respect to other Bonds then
outstanding; and, unless the practice was limited by the City, the Special Taxes paid in cash
could be insufficient to pay the debt service due with respect to such other Bonds. In order to
provide some protection against the potential adverse impact on cash flows which might be
caused by the tender of Bonds in payment of Special Taxes, the Fiscal Agent Agreement
includes a covenant pursuant to which the City will not authorize owners of taxable parcels to
satisfy Special Tax obligations by the tender of Bonds unless the City shall have first obtained a
report of an Independent Financial Consultant certifying that doing so would not result in the
District having insufficient Special Tax revenues to pay the principal of and interest on all
Outstanding Bonds when due.
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Payment of the Special Tax is not a Personal Obligation of the Owners
An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather,
the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the
value of a taxable parcel is not sufficient, taking into account other liens imposed by public
agencies, to secure fully the Special Tax, the City has no recourse against the owner.
Appraised Values
The Appraisal Report summarized in Appendix G estimates the market value of the
property within the District as of March 1, 2014. This market value is merely the opinion of the
Appraiser as of the date of value set forth in the Appraisal Report, and is subject to the
assumptions and limiting conditions stated in the Appraisal Report. The District has not sought
an updated opinion of value by the Appraiser subsequent to the date of value of the Appraisal
Report, or an opinion of the value of the property within the District by any other appraiser. A
different opinion of value might be rendered by a different appraiser.
The opinion of value assumes a sale by a willing seller to a willing buyer, each having
similar information and neither being forced by other circumstances to sell or to buy.
Consequently, the opinion is of limited use in predicting the selling price at a foreclosure sale,
because the sale is forced and the buyer may not have the benefit of full information.
In addition, the opinion of value is made as of the date of value set forth in the Appraisal
Report, based upon facts and circumstances existing as of the date of value. Differing facts and
circumstances may lead to differing opinions of value. The appraised value is not evidence of
future value because future facts and circumstances may differ significantly from the facts and
circumstances at the time the Appraisal Report was prepared.
No assurance can be given that any of the property in the District could be sold for the
estimated market value contained in the Appraisal if that property should become delinquent in
the payment of Special Taxes and be foreclosed upon.
Property Values; Value-to-Lien Ratios
The value of the property within the District is a critical factor in determining the
investment quality of the Bonds. If a property owner is delinquent in the payment of Special
Taxes, the City’s only remedy is to commence foreclosure proceedings against the delinquent
parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values
due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter
land use regulations, delays in development or other events may adversely impact the security
underlying the Special Taxes.
No assurance can be given that the estimated value-to-lien ratios as set forth in this
Official Statement will be maintained over time. As discussed herein, many factors which are
beyond the control of the District could adversely affect the property values within the District.
The City does not have any control over the amount of additional indebtedness that may be
issued by other public agencies, the payment of which through the levy of a tax or an
assessment is on a parity with the Special Taxes. An increase in the indebtedness secured by
taxes and amounts with parity liens on property in the District could result in a lowering of the
value-to-lien ratio of the property in the District.
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No assurance can be given that any bid will be received for a parcel with delinquent
Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be
sufficient to pay all delinquent Special Taxes. See “SECURITY AND SOURCES OF PAYMENT
FOR THE BONDS — Covenant to Foreclose.”
FDIC/Federal Government Interests in Properties
The ability of the City to collect interest and penalties specified by the Act and to
foreclose the lien of delinquent Special Taxes may be limited in certain respects with regard to
parcels in which the FDIC, or other federal government entities such as Fannie Mae, Freddie
Mac, the Drug Enforcement Agency, the Internal Revenue Service or other federal agency, has
or obtains an interest.
In the case of FDIC, in the event that any financial institution making a loan which is
secured by parcels is taken over by the FDIC and the applicable Special Tax is not paid, the
remedies available to the District may be constrained. The FDIC’s policy statement regarding
the payment of state and local real property taxes (the “Policy Statement”) provides that taxes
other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired
an interest in a property will be paid unless the FDIC determines that abandonment of its
interests is appropriate. The Policy Statement provides that the FDIC generally will not pay
installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee
interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain
cases where the Resolution Trust Corporation had an interest in property on or prior to
December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on
which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a
taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any
penalties, fines or similar claims imposed for the non-payment of taxes.
The FDIC has taken a position similar to that expressed in the Policy Statement in legal
proceedings brought against Orange County in United States Bankruptcy Court and in Federal
District Court. The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such
claims. Orange County appealed that ruling, and the FDIC cross-appealed. On August 28,
2001, the Ninth Circuit Court of Appeals issued a ruling favorable to the FDIC except with
respect to the payment of pre-receivership liens based upon delinquent property tax.
The City is unable to predict what effect the application of the Policy Statement would
have in the event of a delinquency with respect to parcels in which the FDIC has or obtains an
interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure
sale would prevent or delay the foreclosure sale.
In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is
owned by a federal government entity or federal government sponsored entity, such as Fannie
Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned
by a federal government entity or federal government sponsored entity, such as Fannie Mae or
Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be
limited. Federal courts have held that, based on the supremacy clause of the United States
Constitution “this Constitution, and the Laws of the United States which shall be made in
Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the
United States, shall be the supreme Law of the Land; and the Judges in every State shall be
bound thereby, anything in the Constitution or Laws of any State to the contrary
notwithstanding.” In the absence of Congressional intent to the contrary, a state or local agency
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cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the
federal government interest. This means that, unless Congress has otherwise provided, if a
federal government entity owns a parcel of taxable property but does not pay taxes and
assessments levied on the parcel (including Special Taxes), the applicable state and local
governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a
mortgage interest in the parcel and the City wishes to foreclose on the parcel as a result of
delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold
for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special
Taxes and preserve the federal government’s mortgage interest. For a discussion of risks
associated with taxable parcels within the District becoming owned by the federal government,
federal government entities or federal government sponsored entities, see “— Insufficiency of
Special Taxes.”
The City’s remedies may also be limited in the case of delinquent Special Taxes with
respect to parcels in which other federal agencies (such as the Internal Revenue Service and
the Drug Enforcement Administration) have or obtain an interest.
Bankruptcy and Foreclosure
Bankruptcy, insolvency and other laws generally affecting creditors’ rights could
adversely impact the interests of Beneficial Owners of the Bonds. The payment of property
owners’ taxes and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax
pursuant to its covenant to pursue judicial foreclosure proceedings may be limited by
bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the
State relating to judicial foreclosure. See “SECURITY AND SOURCES OF PAYMENT FOR
THE Bonds — Covenant to Foreclose.” In addition, the prosecution of a foreclosure could be
delayed due to many reasons, including crowded local court calendars or lengthy procedural
delays.
Although a bankruptcy proceeding would not cause the Special Taxes to become
extinguished, the amount of any Special Tax lien could be modified if the value of the property
falls below the value of the lien. If the value of the property is less than the lien, such excess
amount could be treated as an unsecured claim by the bankruptcy court. In addition,
bankruptcy of a property owner could result in a delay in prosecuting Superior Court foreclosure
proceedings. Such delay would increase the likelihood of a delay or default in payment of
delinquent Special Tax installments and the possibility of delinquent Special Tax installments
not being paid in full.
On July 30, 1992, the United States Court of Appeals for the 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 the bankruptcy 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.
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The Bankruptcy Reform Act of 1994 (the “Bankruptcy Reform Act”) included a provision
which excepts from the Bankruptcy Code’s automatic stay provisions, “the creation of a
statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state if
such tax comes due after the filing of the petition [by a debtor in bankruptcy court].” This
amendment effectively makes the Glasply holding inoperative as it relates to ad valorem real
property taxes. However, it is possible that the original rationale of the Glasply ruling could still
result in the treatment of post-petition special taxes as “administrative expenses,” rather than as
tax liens secured by real property, at least during the pendency of bankruptcy proceedings.
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 after
the filing of a petition in bankruptcy. Glasply is controlling precedent 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 from parcels whose owners declare bankruptcy could be reduced.
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 moratorium, bankruptcy, reorganization, insolvency or other
similar laws affecting the rights of creditors generally.
Moreover, the ability of the District to commence and prosecute enforcement
proceedings may be limited by bankruptcy, insolvency and other laws generally affecting
creditors’ rights (such as the Soldiers’ and Sailors’ Relief Act of 1940) and by the laws of the
State relating to judicial foreclosure.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the
event of a payment default or other default under the Bonds or the Fiscal Agent Agreement.
Loss of Tax Exemption
As discussed under the caption “LEGAL MATTERS — Tax Exemption,” the interest on
the Bonds could become includable in gross income for federal income tax purposes retroactive
to the date of issuance of the Bonds as a result of a failure of the City to comply with certain
provisions of the Internal Revenue Code of 1986, as amended, or a change in legislation.
Should such an event of taxability occur, the Bonds are not subject to early redemption and will
remain outstanding to maturity or until redeemed under the redemption provisions of the Fiscal
Agent Agreement.
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Limitations on Remedies
Remedies available to the Beneficial Owners of the Bonds may be limited by a variety of
factors and may be inadequate to assure the timely payment of principal of and interest on the
Bonds or to preserve the tax-exempt status of the Bonds.
Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the
Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws
affecting generally the enforcement of creditors’ rights, by equitable principles and by the
exercise of judicial discretion. The lack of availability of certain remedies or the limitation of
remedies may entail risks of delay, limitation or modification of the rights of the Beneficial
Owners of the Bonds.
Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a
secondary market exists, that the Bonds can be sold at all or for any particular price. Although
the City has committed to provide certain financial and operating information on an annual
basis, there can be no assurance that such information will be available to Beneficial Owners on
a timely basis. See “CONTINUING DISCLOSURE.” The failure to provide the required annual
financial information does not give rise to monetary damages but merely an action for specific
performance. Occasionally, because of general market conditions, lack of current information,
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, prices of issues for which a market is being made will depend upon
then prevailing circumstances. Such prices could be substantially different from the original
purchase price.
Proposition 218
An initiative measure commonly referred to as the “Right to Vote on Taxes Act”
(“Proposition 218”) was approved by the voters of the State of California at the November 5,
1996 general election. Proposition 218 added Article XIIIC and Article XIIID to the California
Constitution. According to the “Title and Summary” of Proposition 218 prepared by the California
Attorney General, Proposition 218 limits “the authority of local governments to impose taxes and
property-related assessments, fees and charges.” The provisions of Proposition 218 have not
yet been fully interpreted by the courts, although there have been several court decisions
interpreting certain provisions of Proposition 218. Proposition 218 could potentially impact the
Special Taxes available to the District to pay the principal of and interest on the Bonds as
described below.
Among other things, Section 3 of Article XIII states that “. . . the initiative power shall not
be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment,
fee or charge.” The Act provides for a procedure which includes notice, hearing, protest and
voting requirements to alter the rate and method of apportionment of an existing special tax.
However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of
any special tax or terminate the levy of any special tax pledged to repay any debt incurred
pursuant to the Act unless such legislative body determines that the reduction or termination of
the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill
48
was signed into law by the Governor of the State enacting Government Code Section 5854,
which states that:
“Section 3 of Article XIIIC of the California Constitution, as adopted at the
November 5, 1996, general election, shall not be construed to mean that any owner or
beneficial owner of a municipal security, purchased before or after that date, assumes
the risk of, or in any way consents to, any action by initiative measure that constitutes an
impairment of contractual rights protected by Section 10 of Article I of the United States
Constitution.”
Accordingly, although the matter is not free from doubt, it is likely that Proposition 218
has not conferred on the voters the power to repeal or reduce the Special Taxes if such
reduction would interfere with the timely retirement of the Bonds.
It may be possible, however, for voters 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 greater than the amount
necessary for the timely retirement of the Bonds. Therefore, no assurance can be given with
respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the
maximum extent that the law permits it to do so, the City will covenant in the Fiscal Agent
Agreement that it will not initiate proceedings under the Act to reduce the maximum Special Tax
rates on parcels within the District to an amount that is less than 110% of Maximum Annual
Debt Service on the Outstanding Bonds in each future Bond Year. In connection with the
foregoing covenant, the District has made a finding and determination that any elimination or
reduction of Special Taxes below the foregoing level would interfere with the timely retirement of
the Bonds. The City also will covenant in the Fiscal Agent Agreement that, in the event an
initiative is adopted which purports to alter the Rate and Method, it will commence and pursue
legal action in order to preserve its ability to comply with the foregoing covenant. However, no
assurance can be given as to the enforceability of the foregoing covenants.
The interpretation and application of Proposition 218 with respect to the application of
Special Taxes will ultimately be determined by the courts with respect to a number of the
matters discussed above, and it is not possible at this time to predict with certainty the outcome
of such determination or the timeliness of any remedy afforded by the courts. See “SPECIAL
RISK FACTORS — Limitations on Remedies.”
Ballot Initiatives
Articles XIIIC and XIIID were adopted pursuant to measures qualified for the ballot
pursuant to California’s constitutional initiative process. On March 6, 1995, in the case of Rossi
v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit
the imposition of further such taxes and that the exemption from the referendum requirements
does not apply to initiatives. From time to time, other initiative measures could be adopted by
California voters. The adoption of any such initiative might place limitations on the ability of the
State, the City, or local districts to increase revenues or to increase appropriations.
49
CONTINUING DISCLOSURE
The District
General. Pursuant to the Continuing Disclosure Certificate, the City, on behalf of itself
and the District, will agree to provide, or cause to be provided, to the Municipal Securities
Rulemaking Board through its Electronic Municipal Market Access (EMMA) website, or other
repository authorized under Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission, certain annual financial information and operating data concerning the District.
The Annual Report to be filed by the City is to be filed not later than December 31 of each year,
beginning December 31, 2014. Audited financial statements of the City will be filed separately
from the Annual Report and will be filed by the City not later than April 1 of each year, beginning
April 1, 2015. The requirement that the City file its audited financial statements has been
included in the Continuing Disclosure Certificate solely to satisfy the provisions of Rule 15c2-12.
The inclusion of this information does not mean that the Bonds are secured by any resources or
property of the City. The Bonds are not general or special obligations of the City. See
“SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “SPECIAL RISK
FACTORS — Limited Obligations.” The full text of the Continuing Disclosure Certificate is set
forth in APPENDIX H — “FORM OF CONTINUING DISCLOSURE CERTIFICATE.”
Notwithstanding any provision of the Fiscal Agent Agreement, failure of the City to
comply with the Continuing Disclosure Certificate shall not be considered an event of default
under the Fiscal Agent Agreement. However, any holder of the Bonds may take such action as
is necessary and appropriate, including seeking mandate or a judgment for specific
performance, to cause the City to comply with its obligations with respect to the Disclosure
Certificate.
Prior Compliance with Continuing Disclosure Undertakings. Within the past five
years, the City failed to file in a timely manner certain portions of the annual reports, as required
by its existing continuing disclosure obligations. As of the date of this Official Statement, the
City has made corrective filings as a best effort to come into compliance with Rule
15c2-12(b)(5).
Standard Pacific
General. Standard Pacific will covenant in a continuing disclosure certificate, the form of
which is set forth in “APPENDIX I – Form of Developer Disclosure Certificate” (the “Developer
Continuing Disclosure Certificate”), for the benefit of holders and beneficial owners of the
Bonds, to provide certain information relating to itself and the status of its property within the
District on a semi-annual basis, and provide notices of the occurrence of certain enumerated
events as they occur. The requirement that Standard Pacific provide this information has been
included in the Developer Continuing Disclosure Certificate solely to assist the Underwriter in
complying with Rule 15c2-12. The inclusion of this information does not mean that the Bonds
are secured by any resources or property of Standard Pacific. The Bonds are not general or
special obligations of Standard Pacific. See “SECURITY AND SOURCES OF PAYMENT FOR
THE BONDS” and “SPECIAL RISK FACTORS — Limited Obligations.”
A default under the Developer Continuing Disclosure Certificate will not, in itself,
constitute an Event of Default under the Fiscal Agent Agreement, and the sole remedy under
the Developer Continuing Disclosure Certificate in the event of any failure of Standard Pacific or
the Dissemination Agent to comply will be an action to compel specific performance.
50
Termination of Reporting Obligations. Standard Pacific’s obligations under the
Developer Continuing Disclosure Certificate shall terminate upon the occurrence of certain
enumerated events, including at such time as the property owned by Standard Pacific within the
District is no longer obligated to pay 10% or more of the Special Taxes within the District.
If Standard Pacific sells property to another entity and the property transferred is
responsible for 10% or more of the special taxes to be levied in the District in the next fiscal
year, then Standard Pacific will be relieved of its obligations as to the property transferred only if
buyer entity assumes the continuing disclosure obligations under Standard Pacific’s undertaking
with respect to the property transferred; however, a buyer of property will not be required to
enter into an assumption agreement if it is already a party to a continuing disclosure certificate
in form and substance similar to Appendix I, and under which the property conveyed to it will
become subject to future Semi-Annual Reports.
Prior Compliance with Continuing Disclosure Undertakings. Standard Pacific is not
aware of any previous failures to comply in all material respects with any previous undertaking
under the Rule to provide annual reports, semi-annual reports, or notices of listed events in
Southern California in the past five years.
LEGAL MATTERS
Legal Opinions
The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco,
California, Bond Counsel, approving the validity of the Bonds will be made available to
purchasers at the time of original delivery and is attached in substantially final form as
APPENDIX D.
Nossaman LLP, Irvine, California, has served as Disclosure Counsel to the City.
Tax Exemption
Federal Tax Law. In the opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel, subject, however to certain qualifications set forth below,
under existing law, the interest on the Bonds is excluded from gross income for federal income
tax purposes, and such interest is not an item of tax preference for purposes of the federal
alternative minimum tax imposed on individuals and corporations, provided, however, that, for
the purpose of computing the alternative minimum tax imposed on corporations (as defined for
federal income tax purposes), such interest is taken into account in determining certain income
and earnings.
The opinions set forth in the preceding sentence are subject to the condition that the
District comply with all requirements of the Internal Revenue Code of 1986 (the “Tax Code”) that
must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or
continue to be, excluded from gross income for federal income tax purposes. The District has
covenanted to comply with each such requirement. Failure to comply with certain of such
requirements may cause the inclusion of such interest in gross income for federal income tax
purposes to be retroactive to the date of issuance of the Bonds.
51
If the initial offering price to the public (excluding bond houses and brokers) at which a
2014 Bond is sold is less than the amount payable at maturity thereof, then such difference
constitutes “original issue discount” for purposes of federal income taxes and State of California
personal income taxes. If the initial offering price to the public (excluding bond houses and
brokers) at which each 2014 Bond is sold is greater than the amount payable at maturity
thereof, then such difference constitutes “original issue premium” for purposes of federal income
taxes and State of California personal income taxes. De minimis original issue discount and
original issue premium is disregarded. Owners of Bonds with original issue discount or original
issue premium, including purchasers who do not purchase in the original offering, should
consult their own tax advisors with respect to federal income tax and State of California
personal income tax consequences of owning such Bonds.
State Tax Law. In the further opinion of Bond Counsel, interest on the Bonds is exempt
from California personal income taxes.
General. Owners of the Bonds should also be aware that the ownership or disposition
of, or the accrual or receipt of interest on, the Bonds may have federal or state tax
consequences other than as described above. Bond Counsel expresses no opinion regarding
any federal or state tax consequences arising with respect to the Bonds other than as expressly
described above.
LITIGATION
No litigation is pending or threatened concerning the validity of the Bonds, the pledge of
Special Taxes to repay the Bonds, the powers or authority of the City with respect to the Bonds,
or seeking to restrain or enjoin development of the land within the District and a certificate of the
City to that effect will be furnished to the Underwriter at the time of the original delivery of the
Bonds.
NO RATING
The City has not made, and does not contemplate making, application to any rating
agency for the assignment of a rating to the Bonds.
UNDERWRITING
The Bonds are being purchased by Stern Brothers & Co. (the “Underwriter”). The
Underwriter has agreed to purchase the Bonds at a price of $7,609,287.20 (being $7,570,000
aggregate principal amount thereof, less Underwriter’s discount of $94,625.00 plus net original
issue premium of $133,912.20). The purchase agreement relating to the Bonds provides that
the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make
such purchase is subject to certain terms and conditions set forth in such purchase agreement,
the approval of certain legal matters by counsel and certain other conditions.
The Underwriter may offer and sell the Bonds to certain dealers and others at prices
lower than the offering prices stated on the inside cover page hereof. The offering prices may
be changed from time to time by the Underwriter.
52
FINANCIAL INTERESTS
The fees being paid to the Underwriter, Disclosure Counsel and Bond Counsel are
contingent upon the issuance and delivery of the Bonds.
ADDITIONAL INFORMATION
The purpose of this Official Statement is to supply information to prospective buyers of
the Bonds. Quotations and summaries and explanations of the Bonds and documents
contained in this Official Statement do not purport to be complete, and reference is made to
such documents for full and complete statements and their provisions.
The execution and delivery of this Official Statement by an authorized representative of
the City have been duly authorized by the City Council acting in its capacity as the legislative
body of the District.
CITY OF FULLERTON, for and on behalf of CITY
OF FULLERTON COMMUNITY FACILITIES
DISTRICT NO. 2 (AMERIGE HEIGHTS)
By:
53
/s/ Julia James
Director of Administrative Services of the
City of Fullerton
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX A
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
A-1
[THIS PAGE INTENTIONALLY LEFT BLANK]
RATE AND METHOD OF APPORTIONMENT
FOR CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
be levied on all Assessor's Parcels of Taxable Ploperty in
City of Fullerlon Community Facilities District No. 2 ("CFD No. 2") and collected in each Fiscal
Year, in an amount determined by the City Council of the City of Fullerton, through the
application of tlie Rate and Method of Apportionment as described below. All of the real
A Special Tax hereinafter defined shall
property in CFD No. 2, unless exempted by law or by the provisions hereof, shall be taxed for
the purposes, to the extent and in the manner herein provided.
A.
DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acreage" means the land area expressed in acres of an Assessor's Parcel as shown on an
Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land
area shown on the applicable final map, parcel map, condominium plan, or other recorded
County map or the land area calculated to the reasonable satisfaction of the CFD Administrator
using the boundaries set forth on such map or plan. The square footage of an Assessor's Parcel
is equal to the Acreage of such parcel multiplied by 43,560.
rrActrr means the Mello-Roos Community Facilities Act
Division 2 of Title 5 of the California Government Code.
of
1.982,
being Chapter 2.5, Pafi I,
n'Administrative Expenses" means the following actual or reasonably estimated costs directly
related to the administration of CFD No. 2, including but not limited to: the costs of computing
the Special Taxes and preparing the annual Special Tax collection schedules (whether by the
City or designee thereof or both); the costs of collecting the Special Taxes (whether by the
County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the
Trustee (including its legal counsel) in the discharge of the duties required of it under the
Indenture; the costs to the City, CFD No. 2 or any designee thereof of complying with arbitrage
rebate requirements with respect to the Special Tax and CFD No. 2 Bonds; the costs to the City,
CFD No. 2 or any designee thereof of complying with disclosure requirements of the City, CFD
No. 2 or obligated persons associated with applicable federal and state securities laws and the
Act; the costs associated with preparing Special Tax disclosure statements and responding to
public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2, or any designee
thereof related to the reduction of the Maximum Special Tax in accordance with Section C
herein; the costs of the City, CFD No. 2 or any designee thereof related to an appeal of the
Special Tax; the costs of the City, CFD No. 2 or any designee thereof related to the One-Time
Special Tax in accordance with Section D.4 herein; the costs associated with the release of funds
from an Escrow Fund; and the City's annual administration fees and third party expenses related
to CFD No. 2 Bonds. Administrative Expenses shall also include amounts estimated by the CFD
Administrator or advanced by the City or CFD No. 2 for any other administrative purposes of
CFD No. 2, including attorney's fees and other costs related to commencing and pursuing to
completion any foreclosure of delinquent Special Taxes.
City of Fullerton
Community Facilities District No. 2 (Amerige Heights)
Page
I
November 2, 2011
"Assessor's Parcel" trteans a lot or parcel to which an assessor's parcel number is assigned
determined from an Assessor's Parcel Map or the applicable assessment roll.
Map"
means an official map
designating parcels by Assessor's Parcel number.
"Assessor's Parcel
of the County Assessor of the
as
County
"Authorized Facitities" means those facilities eligible to be funded by CFD No. 2, as defined in
the Resolution of Formation.
"Certificate of Occupancy" means a certificate issued by the City that authorizes the actual
occupancy of a residential dwelling unit for habitation by one or more residents.
"CFD Administrator" means an official of the City, or designee thereof, responsible for
determining the Special Tax Requirement and providing for the levy and collection of the
Special Taxes.
"CFD No. 2" means City of Fullerton Community Facilities District No. 2 (Amerige Heights).
"CFD No.2 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act),
whether in one or more series, issued by CFD No. 2 and secured by the Special Tax levy on
property within the boundaries of CFD No. 2 under the Act.
"City"
means City of Fullerton, California.
"Council"
means the City Council of the City acting as the legislative body of CFD No. 2.
"Counf¡r" means the County of Orange.
"Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Taxable
Public Property and Taxable Property Owner Association Property, for which a building permit
for new construction, other than the construction of a garage) parking lot, or parking structure,
was issued after January 7, 2011 and on or before May I of the Fiscal Year preceding the Fiscal
Year for which the Special Taxes are being levied. Notwithstanding the foregoing, an Assessor's
Parcel, or portion thereof, shall not be considered to constitute "Developed Property" merely by
reason of the placement thereon of one or more temporary, portable structures which are used as
part of a residential sales operation.
"Escrow Fund" means the escrow fund or other fund or account by whatever name into which
of CFD No. 2 Bonds have been deposited, which proceeds (or a portion thereof) are to
be made available to pay for Authorized Facilities upon the satisfaction of certain conditions
proceeds
(e.g., value-to-lien test or debt service coverage test) set forth in the Indenture.
"Final Subdivision" means a subdivision of property which occurred prior to January 1 of the
Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, by
recordation of a final map, parcel map, or lot line adjustment, approved by the City pursuant to
the Subdivision Map Act (Califomia Govemment Code Section 66410 et seq.) or recordation of
a condominium plan pursuant to California Civil Code 1352 that, in either case, creates
individual lots which are not expected to be further subdivided and for which building permits
City of Fullerton
Community Facilities District No. 2 (Amerige Heights)
Page 2
November 2,2011
nlay be issued without further subdivision. The term "Final Subdivision" shall not include any
Assessor's Parcel Map or subdivision map or portion thereof, whicll does not create individual
lots for which a building permit may be issued, including Assessor's Parcels that are designated
as remainder parcels.
"Fiscal Year" means the period starling July I and ending on the following June 30.
"Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other
instrument pursuant to which CFD No. 2 Bonds are issued, as modified, amended and/or
supplemented from tirne to time, and any instrument replacing or supplernenting the same.
"Land Use Class"
means any of the classes listed in Table 1 or Table 2, below.
"Master Developer" means Fullerton Hughes, LLC, or its successors-in-interest or
assigns
serving as the master developer of infrastructure for CFD No. 2.
"Maximum Special Tax" means the maximum Special Tax, determined in accordance with
Section C herein, that can be levied in any Fiscal Year on any Assessor's Parcel of Taxable
Property.
"Minimum Sale Price"
means the minimum price at which parcels of a given Land Use Class
have sold or are expected to be sold in a normal marketing environment and shall not include
prices for such parcels that are sold at a discount to expected sales prices for the purpose of
stimulating the initial sales activity with respect to such Land Use Class.
"Non-Residential Property" means all Assessor's Parcels of Developed Property for which a
building permit(s) has been issued by the City permitting the construction of one or more nonresidential structures or facilities.
"Occupied Property" means all Assessor's Parcels of Developed Property for which a
Certificate of Occupancy has been issued by the City on or before June 1 of the Fiscal Year
preceding the Fiscal Year for which the Special Taxes are being levied. Once an Assessor's
Parcel has been designated as Occupied Property, it will remain classified as Occupied Property.
"One-Time Special Tax" means a one-time Special Tax to be calculated and collected by the
CFD Administrator prior to the issuance of a building permit that is requested after the issuance
of first series of CFD No. 2 Bonds, as determined in accordance with Section D herein.
"Outstanding Bonds" means all CFD No. 2 Bonds which are outstanding under the Indenture.
"Price Point Consultant" means a consultant or firm of such consultants generally recognized
to be well qualified in the field of residential real estate evaluation in the context of land-secured
financings, appointed by the City and independent of the Master Developer.
"Price Point Study" means the study prepared by the Price Point Consultant pursuant to Section
C herein.
City of Fullerton
Community Facilities District No. 2 (Amerige Heighß)
Pøge 3
November 2,2011
"Property Owner Association Property" means, for each Fiscal Year, (i) any property within
the boundaries of CFD No. 2 for which the owner of recold, as determined from the County
Assessor's secured tax roll for the Fiscal Year in which the Special Tax is being levied, is a
ploperly owner's association, including any master or sub-association, (ii) any property located
in a Final Subdivision that was recorded as of the January 1 pleceding the Fiscal Year in which
the Special Tax is being levied and which, as detennined fi'om such Final Subdivision, is or will
be open space, a conìmon area recreation facility, or a private street, or (iii) any property which,
as of the May I preceding the Fiscal Year for which the Special Tax is being levied, has been
conveyed, irrevocably dedicated, or irrevocably offered to a propefty owner's association,
including any master or sub-association, provided such conveyance, dedication, or offer is
submitted to the CFD Administrator by May 1 preceding the Fiscal Year for which the Special
Tax is being levied.
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum Special
Tax is equal for all Assessor's Parcels of Occupied Property, and that the ratio of the actual
Special Tax levy to the Maximum Special Tax is equal for all Assessor's Parcels of Developed
Property not classified as Occupied Property, except to the extent that the Special Tax levy on
Residential Property is limited as described in Section E herein. For Undeveloped Property,
"Proportionately" means that the ratio of the actual Special Tax levy per acre to the Maximum
Special Tax per acre is equal for all Assessor's Parcels of Undeveloped Property. The term
"Proporlionately" may similarly be applied to other categories of Taxable Property as listed in
Section E herein. Notwithstanding the above, Assessor's Parcels that have been delinquent in
paying their Special Taxes may be taxed disproportionately to cover the shortfall generated by
their delinquency.
"Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No.
2that is (i) owned by, irrevocably offered or dedicated to the federal government, the State, the
County, the City, or any local government or other public agency, provided that any property
leased by a public agency to a private entity and subject to taxation under Section 53340.i of the
Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility
easement making impractical its use for any purpose other than that set forth in the easement.
"Rate and Method of Apportionment" means this Rate and Method of Apportionment for
CFD No. 2.
"Residential Floor Area" means all of the square footage of living area within the perimeter of
a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed
patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall
be made by reference to the building permit(s) issued for such Assessor's Parcel andlor to the
appropriate records kept by the Building and Safety Division of the Community Development
Department, or other applicable City department, as reasonably determined by the CFD
Administrator. Such determination shall be final following the issuance of a Certif,rcate of
Occupancy for the residential dwelling unit.
"Residential Propert¡r" means all Assessor's Parcels of Developed Properly for which a
building permit has been issued by the City permitting the construction thereon of one or more
residential dwelling units.
City of Fullerton
Community Facilities District No. 2 (Amerige Heights)
Page 4
November 2,2011
"Resolution of Formation" means the resolution establishing CFD No.
2.
"Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel
of Taxable Properly within CFD No. 2 to fund the Special Tax Requirement.
"Special Tax Requirement" means, for any Fiscal Year, that amount required, after taking into
account amounts held in the funds and accounts under the Indenture which are intended to be
used to pay debt service on Outstanding Bonds in the calendar year beginning in such Fiscal
Year, for the following items: (i) debt service on all Outstanding Bonds to be paid from the
Special Tax levy during such Fiscal Year; (ii) periodic costs with respect to the CFD No. 2
Bonds, including but not limited to, costs of credit enhancement and federal rebate payments due
in the calendar year commencing in such Fiscal Year; (iii) a proportionate share of
Administrative Expenses; (iv) any amounts required to establish or replenish any reserve funds
for all Outstanding Bonds; (v) reasonably anticipated Special Tax delinquencies based on the
delinquency rate for the Special Tax in the previous Fiscal Year; (vi) pay directly for the
acquisition or construction of Authorized Facilities, provided that the inclusion of such amount
does not cause an increase in the Special Tax levy on Undeveloped Property andlor Developed
Property not classified as Occupied Property.
"State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No.
which are not exempt from the Special Tax pursuant to applicable law or Section F herein.
"Taxable Property Owner Association Property" means all Assessor's Parcels of Property
Owner Association Property thaf are not exempt pursuant to Section F herein.
"Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt
pursuant to Section F herein.
"Total Tax Burden" means for any residential dwelling unit, the annual Special Tax, together
with ad valorem property taxes, special assessments, special taxes for any overlapping
community facilities district, and any other taxes, fees and charges which are collected by the
County on ad valorem tax bills and which are payable from and secured by the property
assuming such residential dwelling unit had been completed, sold, and subject to such levies and
impositions.
"Trustee"
means the trustee or fiscal agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as
Developed Property, Taxable Public Property or Taxable Property Owner Association Property.
Please refer to additional definitions in Section D herein relating to the One-Time Special Tax,
and to additional definitions in Section I herein relating to the Prepayment of Special Tax.
B.
ASSIGNMENT TO LAND USE CLASSES
City of Fullerton
Community Facilities District No. 2 (Amerige Heights)
Pøge 5
November 2, 2011
Each Fiscal Year, commencing with Fiscal Year 2012-2013, all Taxable Property within CFD
No. 2 shall be classified as Developed Property, Undeveloped Property, Taxable Public Property
or Taxable Property Owner Association Property, and shall be subject to Special Taxes in
accordance with this Rate and Method of Apportionment determined pursuant to Sections C and
E herein.
C.
MAXIMUM SPECIAL TAX RATE
Residential Property shall be assigned to Land Use Classes 1 through 4 as listed in Table I below
based on the Residential Floor Area for each residential dwelling unit. Non-Residential Property
shall be assigned to Land Use Class 5.
Prior to the issuance of CFD No. 2 Bonds, the Maximum Special Tax on Developed Property
(set forth in Table 1) may be reduced in accordance with, and subject to the conditions set forth
in this Section C, without the need for any proceedings to make changes as permitted under the
Act.
At Master Developer's Initiation. Any time before the issuance of the first series of CFD
No. 2 Bonds, the Master Developer may request the CFD Administrator to reduce the
Maximum Special Tax (a) applicable to each Land Use Class on a proportionate basis,
provided it still owns at least 25Yo of the area of Taxable Property within CFD No. 2 and (b)
applicable to one or more Land Use Classes without a requirement that such reduction be
proportionate among Land Use Classes, provided that such request is accompanied with the
written consent to such request of the owners of the balance of the Taxable Property within
CFD No. 2. Any such request shall be accompanied by a certificate of the Master Developer
to the effect that such a reduction is necessary in order to assure the successful development
of the property within CFD No. 2. Unless the CFD Administrator finds and determines that
the requested reduction would result in Special Tax revenues that will be insufficient to pay
Administrative Expenses as defined in Section A herein, the CFD Administrator shall grant
the request and reduce the applicable Maximum Special Taxes in accordance therewith.
Reductions permitted pursuant to this subsection shall be reflected in an amended notice of
Special Tax lien which the City shall cause to be recorded by executing a certihcate in
substantially the form attached herein as Exhibit "A".
series of CFD No. 2
Bonds, but as close thereto as reasonably practical, the CFD Administrator shall request the
Price Point Consultant to prepare a Price Point Study setting forth the Minimum Sale Price of
residential property within each Land Use Class. If based upon such Price Point Study the
CFD Administrator determines that the Total Tax Burden applicable to one or more Land Use
Classes of residential property to be constructed within CFD No. 2 will exceed 2%o of the
Minimum Sale Price of such residential property to be constructed within CFD No. 2, the
CFD Administrator shall reduce the Maximum Special Tax to the extent necessary to cause
the Total Tax Burden that will apply to residential properly within such Land Use Class(es)
not to exceed 2o/o of the Minimum Sale Price of such residential property without need for any
additional Council proceedings. Each Maximum Special Tax reduction for a Land Use Class
shall be calculated separately, as reasonably determined by the CFD Administrator, and it
shall not be required that such reduction be proportionate among Land Use Classes. The
reductions permitted pursuant to this paragraph shall be reflected in an amended notice of
At CFD Administrator's Initiation. Prior to the issuance of the first
City of Fullerton
Commanity Facilities District No.2 (Amerige Heights)
Page 6
November
2,20lI
Special Tax lien which the City shall cause to be recorded by executing a certificate irr
substantially the form attached herein as Exhibit "4".
1.
Developed Property
(a).
Maximurn Special Tax
The Maximum Special Tax that may be levied and escalated as explained further lll
Section C.l.(b) herein in any Fiscal Year for each Assessor's Parcel classified AS
Developed Property is shown below in Table 1.
TABLE 1
Maximum Special Tax for Developed Property
CFD No. 2 (Amerige Heights)
Fiscal Year 2012-2013
Land
Residential Floor Area
(square feet)
Use
Class
(b).
Description
Maximum
Special Tax
I
Residential Properly
2,400 or greater
55,115 per unit
2
Residential Property
2,200 to less than 2,400
55,494 per unit
1
Residential Property
2,000 to less than 2,200
$5,213 per unit
4
Residential Properry
Less than 2,000
$4,980 per unit
5
Non-Residential Propefty
NA
$121,583 per acre
Inclease in the Maximum Special Tax
The Fiscal Year2012-2013 Maximum Special Tax, identified in Table 1 above, as such
table may be amended and restated in full pursuant to this Rate and Method of
Apportionment, shall increase on July I of each Fiscal Year thereafter, commencing on
July 1, 2013, by an amount equal to two percent (2%) of the amount in effect for the
previous Fiscal Year.
(c).
Multiple Land Use Classes
In some instances an Assessor's Parcel of Developed Property may contain more than
one Land Use Class. The Maximum Special Tax levied on an Assessor's Parcel shall be
the sum of the Maximum Special Tax for all Land Use Classes located on that Assessor's
Parcel. The CFD Administrator's allocation to each type of property shall be final.
2.
Undeveloped Property, Taxable Public Properfy, and Taxable Property Owner
Association Property
The Fiscal Year 2012-2013 Maximum Special Tax for each Assessor's Parcel of
Undeveloped Property, Taxable Public Properly, and Taxable Property Owner
Association Property shall be $16i,005 per acre, and shall increase on July 1 of each
Fullerton
City of
Community Facitities District No. 2 (Amerige
Heights)
Page 7
November 2' 20!!
Fiscal Year thereafter, commencing on July 1,2013, by an amount equal to two perceut
(2%) of the Maximum Special Tax for the previous Fiscal Year.
D.
ONE-TIME SPECIAL TAX
All of the requirements of this Section D, which describes
the need for a One-Time Special Tax
as a result of a change in development as determined pursuant to this Section D, shall only apply
after the issuance of the first series of CFD No. 2 Bonds. Prior to the issuance of the first series
of CFD No. 2 Bonds, the terms of the One-Time Special Tax shall not apply.
The following additional definitions apply to this Section D:
"Certificate of Satisfaction of One-Time Special Tax" means a certificate from the CFD
Administrator stating that the property described in such certificate has met the One-Time
Special Tax Requirement for such property as calculated under Section D.3 herein.
"Development PIan" means the plan submitted prior to the issuance of the first series of CFD
No. 2 Bonds by the owner or owners of Undeveloped Property within CFD No. 2, as determined
by the CFD Administrator, identifying the Residential Floor Area (for each residential dwelling
unit), and, if applicable, Acreage (for each non-residential parcel) associated with each building
permit issued or prospective building permit anticipated to be issued within CFD No. 2. Upon
the receipt of the Development Plan, the CFD Administrator shall assign each building permit
issued and prospective building permit anticipated to be issued to Land Use Classes 1 through 5,
as listed in Table 2 below, based on the Residential Floor Atea, and, if applicable, Acreage (for
each non-residential parcel) identified for each such building permit.
"Letter of Compliance" means a letter from the CFD Administrator stating that the property
described in such letter, when combined with all other Land Use Classes existing or projected in
CFD No. 2, wlll generate sufficient Maximum Special Taxes if developed as identified in such
current version of Table 2.
"One-Time Special Tax Account" means the fund or account (regardless of its name)
identified in the Indenture to hold payments of the One-Time Special Tax received from property
owners within CFD No. 2.
"One-Time Special Tax Requirement" means the total amount of One-Time Special Taxes
necessary on a given date to compensate for a loss of Special Tax revenues as calculated under
this Section D.
"Update Property" means an Assessor's Parcel of Undeveloped Property for which a building
permit has been issued, but which has not yet been classified as Developed Property. For
purposes of all calculations in Section D herein, Update Property shall be taxed as if it were
already Developed Property during the current Fiscal Year.
1.
Request for Letter of Compliance
After the issuance of the first series of CFD No. 2 Bonds, a property o\trner shall, as a
precondition to the issuance of a building permit for construction of any residential and/or nonCity of Fullerton
Community Facilities District No. 2 (Amerige Heights)
Page
I
November 2, 2011
residential developntent for a specific Assessor's Parcel or lot, submit a Letter of Compliance for
the construction on such Assessor's Parcel or lot. If a Letter of Compliance for such Assessor's
Parcel or lot has not yet been issued, the property owner must first request a Letter of
Compliance from the CFD Administrator. The request from the property owrìer shall contain a
list of all building permits for which the property owner is requesting a Letter of Compliance.
The property owner shall also submit the Assessor's Parcels or tract and lot numbers on which
the construction is to take place, and the Residential Floor Area (for each resiclential dwelling
unit) or, if applicable, Acreage (for each non-residential parcel) associated with each prospective
building permit.
2.
Issuance of Letter of Compliance
Upon the receipt of a request for a Letter of Compliance, the CFD Administrator shall assign
each building permit identified in such request to Land Use Classes 1 through 5 as listed in Table
2 below based on the Residential Floor Area, and, if applicable, Acreage (for each nonresidential parcel) identified for each such building permit. If the CFD Administrator determines
(i) that the number of building permits requested for each Land Use Class, plus those building
permits previously issued for each Land Use Class, will not cause the total number of residential
dwelling units or amount of non-residential Acreage within any such Land Use Class to exceed
the number of residential dwelling units or amount of non-residential Acreage for such Land Use
Class identified in Table 2 below, as such table may be further updated from time to time in
accordance with the terms in this Section D, and (ii) that the total number of residential dwelling
units constructed and anticipated to be constructed within CFD No. 2 and the amount of nonresidential Acreage constructed and anticipated to be constructed within CFD No. 2 will not be
less than the levels identified in the Development Plan, then a Letter of Compliance shall be
submitted to the City and/or property owner by the CFD Administrator approving the issuance of
the requested building permits for the subject property. This Letter of Compliance shall be
submitted to the City and/or property owner by the CFD Administrator within 7 days of the
submittal of the request for Letter of Compliance by the property owner. However, should (i) the
building permits requested, plus those previously issued, cause the total number of residential
dwelling units or the amount of non-residential Acreage within any such Land Use Class to
exceed the number of residential dwelling units or the amount of non-residential Acreage for
such Land Use Class identified in Table 2 below, as such table may be further updated from time
to time in accordance with the terms in this Section D, or (ii) the CFD Administrator determine
that a change in development may cause a decrease in the total number of residential dwelling
units or a decrease in the amount of non-residential Acreage to below the levels identif,red in the
Development Plan, then a Letter of Compliance will not be issued and the CFD Administrator
will be directed to determine if a One-Time Special Tax Requirement shall be required. The
number of residential dwelling units and amount of non-residential Acreage, as listed in Table 2
below, shall be updated by the CFD Administrator prior to the issuance of the first series of CFD
No. 2 Bonds to reflect the submitted Development Plan for CFD No. 2.
TABLE
2
Expected Residential Units per Land Use Class
and Non-Residential Acreage
CFD No.2 (Amerige Heights)
City of Fullerton
Community Fscilities District No. 2 (Amerige Heights)
Page 9
November 2, 2011
Land
Residential Floor Area
Use
Class
3.
Description
(square feet)
Number of
Units/Acres
0
units
I
Residential Propefy
2,400 or greater
2
Residential Property
2,200 ro less than 2,400
4'7 un rts
J
Residential Property
2,000 to less than 2,200
42 units
4
Residential Property
Less than 2,000
26 units
5
Non-Residential Property
NA
0.00 acres
Calculation of One-Time Special Tax Requirement
If a One-Time Special Tax calculation is required
as determined by the CFD Adrninistrator
pursuant to paragraph 2 above, the CFD Administrator shall review the Development Plan in
consultation with the curent property owner(s) for all remaining Undeveloped Property within
CFD No. 2, and shall prepare an updated version of Table 2 identifying the revised number of
residential dwelling units or the amount of non-residential Acreage anticipated within each Land
Use Class. The CFD Administrator shall not be responsible for any delays in preparing the
updated version of Table 2 that result from a refusal on the paft of one or more cllrrent propeúy
owners of Undeveloped Property to provide information on their future development. If such a
refusal on the part of one or more current property owners persists for more than 14 days, the
CFD Administrator shall rely on the residential andlor non-residential development identified in
the Development Plan for the Undeveloped Property owned by such propefiy owner.
The CFD Administrator shall then review the updated version of Table 2 and determine the OneTime Special Tax Requirement, if any, to be applied to the property identified in the request for
Letter of Compliance to assure CFD No. 2's ability to collect Maximum Special Tax revenues
equal to the sum of (Ð 110% debt service coverage on the Outstanding Bonds, and (ii) the
Administrative Expenses as defined in Section A herein. The calculations shall be undertaken by
the CFD Administrator, based on the data in the updated version of Table 2, as follows:
Step
1.
Compute the sum of the Maximum Special Tax revenues authorized to be levied
on all Developed Property and Update Property, plus the sum of the Maximum
Special Tax revenues authorized to be levied on all future development as
identif,red in the updated version of Table 2 assuming buildout, as determined by
the CFD Administrator in consultation with the property owner(s).
Step
2.
Determine the amount of Maximum Special Tax revenues required to provide (i)
Outstanding Bonds, plus (iÐ the
in Section A herein. For purposes of this
calculation, the annual debt service shall be adjusted to reflect the future
ll0% debt service coverage on the
Administrative Expenses as defined
'
redemption of Outstanding Bonds with funds on deposit in the One-Time Special
Tax Account.
Step
3.
If the total sum computed pursuant to Step 1 is greater than or equal to the amount
computed pursuant to Step 2, then no One-Time Special Tax will be required and
a Letter of Compliance shall be submitted to the City and/or property owner by
the CFD Administrator for all of the building permits currently being requested.
City of Fullerton
Communitv Facilities District No.2
(
Page 10
November 2,2011
the total sum computed pursuant to Step I is less than the amount computed
pursuant to Step 2, determine the Maximum Special Tax shortfall by subtracting
the total sum computed pursuant to Step I from the amount computed pursuant to
Step 2. Divide this difference by the arnount computed pursuant to Step 2, then
continue to Step 4.
If
Step
4.
Multiply the quotient computed pursuant to Step 3 by the Outstanding Bonds and
round up to the nearest increment of $5,000 to compute the amount of
Outstanding Bonds to be redeemed.
Step
5.
Multiply the amount computed pursuant to Step 4 by the applicable redemption
premium, if any, on the Outstanding Bonds to be redeemed.
Step
6.
Compute.the amount needed to pay intelest on the amount computed pursuant to
Step 4 from the first boird interest and/or principal payment date following the
current Fiscal Year until the earliest possible redemption date for the Outstanding
Bonds, and subtract therefrom the estimated amount of interest earnings to be
derived from the reinvestment of the amounts computed pursuant to Step 4 and
Step 5 until such redemption.
Step
7.
The administrative fees and expenses of CFD No. 2 are as calculated by the CFD
Administrator and include the costs of computation of the One-Time Special Tax
Requirement, the costs to invest the One-Time Special Tax Requirement
proceeds, and the costs of redeeming CFD No. 2 Bonds.
Step
8.
The One-Time Special Tax requirement is equal to the sum of the amounts
computed pursuant to Steps 4, 5, 6 and 7 (the "One-Time Special Tax
Requirement").
Step
9.
The reserve fund credit shall equal the lesser of: (a) the expected reduction in the
reserve requirement (as specified in the Indenture), if any, associated with the
redemption of Outstanding Bonds with proceeds of the One-Time Special Tax, or
(b) the amount derived by subtracting the new reserve requirement (as defined in
the Indenture) in effect after the redemption of Outstanding Bonds with proceeds
of the One-Time Special Tax from the balance in the reserve fund on the
determination date of the One-Time Special Tax, but in no event shall such
amount be less than zero. No reserve fund credit shall be granted if the amount
then on deposit in the reserve fund for the Outstanding Bonds is below 100% of
the reserve requirement (as defined in the Indenture).
The One-Time Special Tax computed under Step 8 shall be billed directly to the property owner
of each Assessor's Parcel identified in the request for Letter of Compliance and shall be due
prior to the issuance of a building permit for such property; provided, however, that the CFD
Administrator may permit the tender of CFD No. 2 Bonds in payment of the One-Time Special
Tax, as authorized in the Indenture. If the One-Time Special Tax is not paid, a Letter of
Compliance will not be issued to the City and/or property owner by the CFD Administrator. If,
for whatever reason, a building permit is nonetheless issued, a delinquency penalty of 10.0
percent shall thereupon be added to the One-Time Special Tax. Additionally, a penalty of 1.5
City of Fullerton
Community Fscilities District No. 2 (Amerige Heights)
Page
II
November 2,2011
percent of the One-Time Special Tax (base an'ìount. u'ithoLtt interest or colnpounding) will be
added on the first day of each month that begins more than 5 months after the date of the
issuance of the building permit, for so long as the One-Time Special Tax, including all penalties
and interest, remains delinquent. Upon receipt of the One-Time Special Tax Requirement, the
CFD Administrator shall (i) issue a Letter of Compliance and a Cerlificate of Satisfaction of
One-Time Special Tax for the subject property, and (ii) deposit the proceeds of the One-Time
Special Tax Requirement, less the amount computed pursuant to Step 7 above which shall be
retained by CFD No. 2, into the One-Time Special Tax Account to fully or parlially redeem as
many Outstanding Bonds as possible. The reserve fund credit calculated pursuant to Step 9
above shall be credited to the property owner against the One-Time Special Tax Requirement of
each Assessor's Parcel identified in the request for Letter of Compliance once the CFD
Administrator has confirmed receipt of all Special Taxes due for such properly owner(s) in the
Fiscal Year the One-Time Special Tax Requirement was made. If the One-Time Special Tax
Requirement has been paid prior to such deterrnination by the CFD Administrator, the amount
equal to the reserve fund credit shall be reimbursed to the payee within 30 days following such
confirmation.
4.
Costs and Expenses Related to Implementation of the One-Time Special Tax
The costs of the CFD Administrator or other consultants required to review the application for
building permits and issue Letters of Compliance, as identified in Sections D.l and D.2 above,
shall be paid out of the administrative expenses account as defined in the Indenture. The
property owner of each Assessor's Parcel identified in the request for Letter of Compliance shall
pay all costs of the CFD Administrator or other consultants required to calculate the One-Time
Special Tax, issue Letters of Compliance and any other actions required under Section D.3
above. Such payments shall be included in the One-Time Special Tax Requirement and shall be
due prior to the issuance of a building permit as referenced in Section D.3 above. A deposit may
be required by the CFD Administrator prior to undertaking work related to the calculation of the
One-Time Special Tax pursuant to Section D.3 above.
E.
METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2012-2013 and for each following Fiscal Year, the CFD
Administrator shall determine the Special Tax Requirement and shall plovide for the levy of the
Special Tax each Fiscal Year as follows:
First: The Special Tax shall be levied on each Assessor's Parcel of Occupied Property in
an
amount equal to 100% of the applicable Maximum Special Tax;
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first
step has been completed, the Special Tax shall be levied Proportionately on each Assessor's
Parcel of Developed Property not classified as Occupied Property at up to I00% of the
applicable Maximum Special Tax;
are needed to satisfu the Special Tax Requirement after the first two
steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's
Third: If additional monies
Parcel of Undeveloped Property at up to I00% of the Maximum Special Tax for Undeveloped
Property;
City of Fallerton
Community Facilities District No. 2 (Amerige Heights)
Page 12
November 2, 2011
Fourth: If additional monies are
to satisfy the Special Tax Requiremeut after the f,irst
three steps have been completed, then the Special Tax sl'rall be levied Proportionately on each
Assessor's Parcel of Taxable Public Property and Taxable Property Owner Association Property
at up to 100% of the Maximum Special Tax for Taxable Public Properly and Taxable Property
needed
Owner Association properfy, as needed to satisfy the Special Tax Requirement.
Notwithstanding the above, the CFD Administrator may, in any Fiscal Year, calculate a lely
Proportionately less than I 00%o of the Maximr"rm Special Tax in step one (above), when (i) the
CFD Administrator is no longer required to provide for the levy of the Special Tax pursu¿nt to
steps two through four above in order to meet the Special Tax Requirement; and (ii) all
authorized CFD No. 2 Bonds have already been issued or the Council has covenanted that it will
not issue any additional CFD No. 2 Bonds (except refunding bonds) to be supported by the
Special Tax.
Further notwithstanding the above, under no circumstances will the Special Tax levied in any
Fiscal Year against any Assessor's Parcel of Residential Property for which a Certif,rcate of
Occupancy has been issued be increased by more than ten percènt above the amount that woúld
have been levied in that Fiscal Year had there never been any such delinquencies or defaults as a
consequence of delinquency or default by the owrler of any other Assessor's Parcel within CFD
No. 2. Such limitation of Residential Property shall not apply to Non-Residential Property,
which will still be subject to 100% of the applicable Maximum Special Tax.
F.
EXEMPTIONS
No Special Tax shall be levied on up to 4.94 acres of Public Property andlor Property Owner
Association Property in CFD No. 2. Tax-exempt status will be assigned by the CFD
Administrator in the chronological order in which propefiy in CFD No. 2 becomes Public
Property or Property Owner Association Ploperty. However, should an Assessor's Parcel no
longer be classified as Public Property ol Property Owner Association Property, it will, from that
point forward, be subject to the Special Tax.
Notwithstanding the above, an Assessor's Parcel in CFD No. 2 that is transferred to a public
agency or property owner's association prior to the issuance of the f,trst series of CFD No. 2
Bonds that causes the Acreage of Public Property and Property Owner Association Property to
exceed the 4.94 Acreage limit that can be designated by the CFD Administrator under this
Section F shall also be exempted from paying the Special Tax.
Public Property or Property Owner Association Property that is not exempt from the Special Tax
under this Section F shall be subject to the levy of the Special Tax and shall be taxed
Proportionately as part of the fourth step in Section E herein, at up to 100% of the applicable
Maximum Special Tax for Taxable Public Property and Taxable Property Owner Association
Property.
G.
MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad
valorem property taxes; provided, however, that CFD No. 2 may directly bill the Special Tax,
andlor may collect Special Taxes at a different time or in a different manner if necessary to meet
City of Fullerton
Community Fucilifies District No. 2 (Amerige Heighß)
Page 13
November 2, 2011
financial obligations, and" to the extent o1' Special Tax, may covenant to foreclose and may
actually foreclose on delinqr-rent Assessor's Parcels. The One-Time Special Tax shall be directly
billed to the property owner at the time such One-Time Special Tax is being levied; provided,
however, that the CFD Adrninistrator rnay permit the tender of CFD No. 2 Bonds in payment of
the One-Time Special Tax, as authorized in the Indenture.
H.
APPEALS AND INTERPRETATIONS
Any landowner or resident who feels that the amount of the Special Tax levied on his/her
Assessor's Parcel is in error may subrnit a written appeal to the CFD Administrator, provided
that the appellant is current in his/her payment of Special Taxes. During the pendency of an
appeal, all Special Taxes previously levied must be paid on or before the payment date
established when the levy was made. The CFD Administrator shall review the appeal, meet with
the appellant if the CFD Administlator deems necessary, and advise the appellant of its
determination. If the CFD Administrator agrees with the appellant, the amount of the Special
Tax levied shall be appropriately modified, or a refund shall be given as appropriate. If the CFD
Administrator disagrees with the appellant and the appellant is dissatisf,ied with the
determination, the appellant then has 30 days in which to submit a written appeal to the Director
of Administrative Services, provided that the appellant is current in his/her payment of Special
Taxes. The second appeal must specify the reasons for its disagreement with the CFD
Administrator's determination.
The CFD Administrator may interpret this Rate and Method of Apportionment for purposes of
clarifying any ambiguity and make determinations relative to the annual administration of the
Special Tax and any landowner or resident appeals. Any decision of the CFD Administrator
shall be subject to appeal to the Director of Administrative Services whose decision shall be final
and binding as to all persons.
I.
PREPAYMENT OF SPECIAL TAX
Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2 is
permitted to prepay the Special Tax. The obligation of the Assessor's Parcel to pay the Special
Tax may be fully or partially prepaid and permanently satisfied as described herein, provided
that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an
Assessor's Parcel of Undeveloped Property for which a building permit has been issued after
January l,20ll, and only if there are no delinquent Special Taxes with respect to such
Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to
prepay the Special Tax obligation shall provide the CFD Administrator with written notice of
intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall
notifr such owner of the prepayment amount for such Assessor's Parcel. The CFD Administrator
may charge such owner a reasonable fee for providing this service. If there are Outstanding
Bonds, prepayment must be made not less than 30 days prior to a date that notice of redemption
of CFD No. 2 Bonds from the proceeds of such prepayment may be given by the Trustee
pursuant to the Indenture that is specified in the repoft of the Special Tax Prepayment Amount
(defined below).
The following additional definitions apply to this Section I:
City of
Fullerton
Community Føcilities District No. 2 (Amerige
Page 14
Heights)
November 2, 2011
"Buildout" lÌleans, for CFD No. 2, that all expected building permits for residential dwelling
units and/or non-residential development to be constructed within CFD No. 2 have been issued,
as reasonably determined by the CFD Adrninistrator.
"CFD Public Facilities Costs" means either $8,400,000 in2011 dollars, which shall increase by
the Construction Inflation Index on July 7, 2012, and on each July 1 thereaftet, or such lower
number as (i) shall be determined by the CFD Adrninistrator as sufficient to provide funding for
the Authorized Facilities under the authorized bonding program for CFD No. 2, or (ii) shall be
determined by the Council concurrently with a covenant that it will not issue any more CFD No.
2 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and
Method of Apportionment.
"Construction Inflation Index" means the annual percentage change in the Engineering News
Record Building Cost Index for the City of Los Angeles, measured as of the month of December
in the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be
published, the Construction Inflation Index shall be another index as determined by the CFD
Administrator that is reasonably comparable to the Engineering News Record Building Cost
Index for the City of Los Angeles.
means the CFD Public Facilities Costs minus (i) costs of Authorized
previously
paid
from
the Improvement Fund, (ii) moneys cumently on deposit in the
Facilities
Improvement Fund available to pay costs of Authorized Facilities, (iii) moneys currently on
deposit in the Escrow Fund that are expected to be available to finance the costs of Authorized
Facilities, and (iv) the amount the CFD Administrator reasonably expects to derive from the
reinvestment of these funds.
"Future Facilities Costs"
"Improvement Fund" means a fund or account specif,rcally identified in the Indenture to hold
funds which are currently available for expenditure to acquire or construct Authorized Facilities.
"Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are
outstanding under the Indenture after the first interest andlor principal payment date following
the current Fiscal Year.
1.
Prepayment in Full
The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below
(capitalized terms as defined below):
Bond Redemption Amount
plus
Redemption Premium
plus
Future Facilities Amount
plus
Defeasance Amount
plus
Administrative Fees and Expenses
Reserve Fund Credit
less
Capitalized Interest Credit
less
Total: equals Special Tax Prepayment Amount
Cily of Fullerton
Community Fctcilities District No. 2 (Amerige
Pøge
Heights)
I5
November 2' 2011
As of the proposed date of prepayrnent, the Special Tax Prepayment Amount shall be calcr"rlated
according to the following paragraphs:
1.
Confirm that rro Special Tax delinquencies apply to such Assessor's Parcel.
2.
For Assessor's Parcels of Developed Propefty, compute the Maximum Special Tax for
the Assessor's Parcel to be prepaid. ForAssessor's Parcels of Undeveloped Property for
which a building pelmit has been issued after January 1,2011, compute the Maximum
Special Tax for that Assessor's Parcel as though it was already designated as Developed
Property, based upon the building permit which has already been issued for such
Assessor's Parcel.
Special Tax computed pursuant to parugraph 2 by the total
estimated Maximum Special Tax levy for CFD No. 2 based on the Developed Property
Maximum Special Tax levy which could be levied in the current Fiscal Year on all
expected development assuming Buildout of CFD No. 2, excluding any Assessor's
Parcels which have been prepaid.
3. Divide the Maximum
Multiply the quotient computed pursuant to paragraph 3 by the Previously issued Bonds
to compute the amount of Previously Issued Bonds to be redeemed (the "Bond
4.
Redemption Amount").
Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by
applicable redemption premium (e.g., the redemption price-100%), if any, on
5.
the
the
Previously Issued Bonds to be redeemed (the "Redemption Premium").
6.
Compute the current Future Facilities Costs.
computed pursuant to paragraph 3 by the amount determined
pursuant to païagraph 6 to compute the amount of Future Facilities Costs to be prepaid
(the "Future Facilities Amount").
7. Multiply the quotient
8.
Compute the amount needed to pay interest on the Bond Redemption Amount from the
first bond interest and/or principal payment date following the current Fiscal Year until
the redemption date for the Previously Issued Bonds specified in the report of the Special
Tax Prepayment Amount.
9.
Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year
which has not yet been paid.
10. Compute the minimum amount the CFD Administrator reasonably expects to derive from
the reinvestment of the Special Tax Prepayment Amount, less any interest earnings
attributed to the Future Facilities Amount, and less any interest earnings attributed to the
Administrative Fees and Expenses (defined below) from the date of prepayment until the
redemption date for the Previously Issued Bonds to be redeemed with the prepayment.
1
1.
Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount
computed pursuant to paragraph 10 (the "Defeasance Amount").
City of Fullerton
Communitv Facilities District No.2 (Amerige Heights)
Page 16
November 2,2011
12.
The adn-rinistrative fees and expenses of CFD No. 2 are as calculated by the CFD
Administrator and include the costs of computation of the prepayn'rent, the costs to invest
the prepayment proceeds, the costs of redeeming CFD No. 2 Bonds, and the costs of
recording any notices to evidence the prepayment and the redemption (the
"Administrative Fees and Expenses").
13.
The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of (a) the
expected reduction in the l'eserve requirement (as defined in the Indenture), if any,
associated with the redemption of Previously Issued Bonds as a result of the prepayment,
or (b) the amount derived by subtracting the new reserve requirement (as defined in the
Indenture) in effect after the redemption of Previously Issued Bonds as a result of the
prepayment from the balance in the reserve fund on the prepayment date, but in no event
shall such amount be less Lhan zero. No Reserve Fund Credit shall be granted if the
amount then on deposit in the reserve ftrnd for the Previously Issued Bonds is below
100% of the reserve requirement (as defined in the Indenture).
l4.If
any capitalized interest for the Previously Issued Bonds will not have been expended as
of the date immediately following the first interest andlor principal payment following
tlre current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the
quotient computed pursuant to paragraph 3 by the expected balance in the capitalized
interest fund or account under the Indenture after such first interest and/or principal
payment date (the "Capitalized Interest Credit").
15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to
paragraphs 4,5,7,11 and 12, less the amounts computed pursuant to paragraphs 13 and
l4 (the "Special Tax Prepayment Amount").
2.
Prepayment in Part
The amount of the prepayment shall be calculated as in Section
prepayment shall be calculated according to the following formula:
I.1; except that a partial
PP:[(PE-A)xF]+A
These terms have the following meaning:
: the partial prepayment.
PE : the Special Tax Prepayment Amount calculated according to Section I.1.
F: the percentage, expressed as a decimal, by which the owner of the Assessor's Parcel
is partially prepaying the Special Tax.
A : the Administrative Fees and Expenses calculated according to Section I.1.
PP
3.
General Provisions Applicable to the Prepayment of Special Tax
(a).
Use of the Special Tax Prepavment Amount
The Special Tax Prepayment Amount, less the Administrative Fees and Expenses
calculated according to Section I.1 which shall be retained by CFD No.2, and less the
City of Fullerton
Community Facilities District No. 2 (Amerige Heights)
Page 17
November 2, 201l
Facilities Amount calculated according to Section I.1 wirich shall be deposited
into the Improvement Fund, shall be deposited into specific funds established r:nder the
Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if
amounts are less than $5,000, to make debt service payments on the Outstanding Bonds.
Futr-rre
(b).
Full Prepayment of Special Tax
Upon confirmation of the payment of the current Fiscal Year's entire Special Tax
obligation, the CFD Administrator shall remove the current Fiscal Year's Special Tax
levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's
Parcel that is prepaid in accordance with Section L1, the CFD Adrninistrator shall cause a
suitable notice to be recorded in compliance with the Act, to indicate the prepayment of
the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the
obligation of such Assessor's Parcel to pay the Special Tax shall cease.
(c).
Partial Prepayment of Special Tax
With respect to any Assessor's Parcel that is partially prepaid, the CFD Administrator
shall (i) distribute or cause to be distributed the ftrnds remitted to it according to Section
I.3.(a) and (ii) indicate in the records of CFD No. 2 that there has been a pafüal
prepayment of the Special Tax and that a portion of the Special Tax with respect to such
Assessor's parcel, equal to the outstanding percentage (1.00 - F) of the remaining
Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to
Section E herein.
(d).
Debt Service Coverage
Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless
the amount of Special Tax that may be levied on Taxable Property (assuming Buildout)
within CFD No. 2 in each future Fiscal Year (after excluding Public Property and
Property Owner Association Property as set forth in Section F herein), after the proposed
prepayment, is at least equal to the sum of (i) 1 .10 times the debt service necessary to
support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the
Administrative Expenses as defined in Section A herein.
J.
TERM OF SPECIAL TAX
The Special Tax shall be levied for a period not to exceed fifty years commencing with Fiscal
Year 2072-2073, provided however that the Special Tax will cease to be levied in an earlier
Fiscal Year if the CFD Administrator has determined that all required interest and principal
payments on the CFD No. 2 Bonds have been paid.
K:\CLIENTS2\Fullerton.cty\Mello\Amerige Heights (2011)\Rate and Method\Fullerton CFD No. 2 (Amerige Heights) RMA for ROl.docx
Prinled: Novenber 2, 201 l
City of Fullerton
Community Føcilities District No. 2 (Amerige Heighß)
Pøge
I8
November 2,2011
EXHIBIT A
CERTIFICATE TO AMEND SPECIAL TAX
CITY OF FULLERTON AND CFD
1.
Pursuant
NO. 2
CERTIFICATE
to Section C of the Rate and Method of Apportionment, the City of Fullerton
("City") and City of Fullerlon Community Facilities District No. 2 ("CFD No. 2") hereby
agree to a reduction in the Maximum Special Tax for Developed Property within CFD No. 2.
The information in Table 1 relating to the Fiscal Year 2012-2013 Maximum Special Tax for
Developed Property within CFD No. 2 shall be modified as follows:
Land
Use
2.
Residential Floor Area
Maximum
(square feet)
Special Tax
Description
Class
I
Residential Propefty
2,400 or greater
2
Residential Property
2,2001o less than 2,400
J
Residential Property
2,000 to less than 2,200
4
Residential Property
Less than 2,000
5
Non-Residential Property
NA
$t_l
$t
St_l
St
$t_l
per unit
I per unit
per unit
I per unit
per acre
The Maximum Special Tax for Developed Property may only be rnodified prior to the fìrst
issuance of CFD No. 2 Bonds.
3. Upon execution of the certif,icate by the City and CFD No. 2, the City shall cause an
amended notice of Special Tax lien for CFD No. 2 to be recorded reflecting the modifications
set forth herein.
By execution hereof, the undersigned acknowledge, on behalf of the City and CFD No. 2,receipt
of this certificate and modification of the Rate and Method of Apportionment as set forth in this
certificate.
CiTY OF FULLERTON
By:
Date:
CITY OF FULLERTON COMMUNITY FACILITIES DISTRICT NO. 2
R.t'
Date:
This Document was electronically recorded by
CR North County A
RECORDIN¡G REQUESTED BY AND
AFTER RECORDATION RETURN TO:
Recorded in Official Records, Orange County
Renee Ramirez, Assistant Clerk Recorder
1
City Clerk
City of Fullerton
303 West Commonwealth
Fullerton, California 92832
ilililti|tililil
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20130001 07844 01 :25pm 02121113
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0.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00
AMENDMENT TO
NOTICE OF SPECIAL TAX LIEN
CITY OF FULLERTON
Community Facilities District No.
(Amerige Heights)
2
Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code of
California (the "Act") and the Mello-Roos Community Facilities Act of 1982, as amended, section
53311, ef. seq., of the California Government Code, the City of Fullerton (the "City") caused a
Notice of SpecialTax Lien (the "Original Notice") with respect to the City of Fullerlon Community
FacÍlities District No. 2 (Amerige Heights) (the "CFD") to be recorded in the office of the Orange
County Clerk-Recorder, State of California, on January 3, 2012, as Document No.
201 2000001294.
On February 19, 2013, the City Council completed change proceedings forthe CFD by
adopting a resolution entítled "Resolution Declaring Completion of Change Proceedings, City of
Fullerton Community Facilìties District No. 2 (Amerige Heights)." The purpose of these change
proceedings was to amend and restate the list of facilities authorized to be financed by the CFD.
Under Section 3117.5, this Amendment to Notice of Special Tax Lien amends the Original
Notice for the purpose of providing notice that the list of facilities authorized to be financed by
the CFD has been modlfied pursuant to the change proceedings. The amended and restated
list of authorized facilities is attached hereto as Exhibit A.
Reference is made to the boundary map of the CFD recorded in the Orange County
Clerk-Recorder's Office on November 22, 2011, as Document No. 2011-595041, in Book g6 of
Maps of Assessment and Community Facilities Districts at Page 17, which map is the final
boundary map of the CFD.
The names of the current owners of the parcels of property within the CFD that are not
exempt from the special tax under the Rate and Method of Apportionment of Special Tax for the
CFD, as they appear on the latest secured assessment roll as of the date of recording hereof or
as are olherwise known to the City, are as set forth in Exhibit B hereto and hereby made a part
hereof. For further information concerning the current and estimated future tax liabitity of
owners or purchasers of real property subject to this special tax lien, interested persons should
contact
Com
m
the Director of
onwealth,
Ful
lerton,
Administrative Services
Ca lifo
of the City of
rnia, 92832, telephone . (7 1 4) 7 38-631
7
Fullerton, 303
.
Dated: As of February 19,2013
City Clerk
City of Fullerton
EXHIBIT A
CITY OF FULLERTON
Community Facilities District No. 2
(Amerige Heights)
AMENDED AND RESTAÏED
DESCRIPTION OF AUTHORIZED FACILITIES
TO BE FINANCED BY THE CFD
The Facilities shown below are proposed to be financed or funded in whole or in part by the CFD
The Facilitres shall be owned and operated by the City or by another public agency, and shall
be
constructed. whether or not acquired in their completed states, pursuant to the plans and specifications
approved by the City or by another public agency.
(a)
Park facilities including the Amerige Heights Park Extension, Barrett Neighborhood Park,
Launer Park, the Railroad Trail - onsite and the Railroad Trail - Hydraflow.
(b)
Street facilities, includlng Hughes Drive, crosswalk & ADA ramp improvements on
Hughes Drive, and a railroad crossing at Hughes Drive.
(c)
Sewer & Water Facilities, including sewer infrastructure wiihin Hughes Drive, in{ract
sewer infrastructure within the public right-of-way, water infrastructure within Hughes
Drive, and in-tract water infrastruciure within the public right-of-way.
(d)
Capital facilities fees, including City Park Dwelling Fees, Orange County Sanitation
Drstrict Fees, City Water Service Fees, and a City Public Infrastructure lmprovement
Payment.
(e)
Grade K-8 permanent and interrm school facilities, administration and support facilities,
transportation facilities, furniture, equipment and other related facilities with a useful life of
five years or longer, to be owned and operated by the Fullerton School District, that are
necessary to accommodate students resulting from the development of the property
within the CFD.
The Facilities to be financed or funded shall include, wìthout limitation, the following costs:
earihwork related to the Facilities; appurtenances to and improvemenis related to the Facilities; acquiring
rights-of-way (including any right-of-way intended to be dedicated by the recording of a final map); design,
engineering and planning; any environmental review or environmental studies, traffic studies, surveys.
geotechnìcal studies, soils testing, or other studies related to the Facilities; permits, plan check and
inspection fees; insurance, legal and related overhead costs; project management, coordìnation and
supervision; and any other costs or appurtenances related to any of the foregoing.
The CFD may also finance or fund, and the special taxes may also be used, for any of the
followìng purposes:
L To pay for the purchase, construction, expansion, improvement or rehabilitation of any of the
Facilities, and to reimburse the City or any third parties for advances made to purchase, construct,
expand, improve or rehabilitate any of the Facilities.
2. To pay principal of, interest on, and any premium due with respect to, any bonds or other
indebtedness issued or entered into by the City with respect to the CFD, and to pay lease payments or
installment sale payments with respect to any of the Facilities.
3. To pay all expenses related to the issuance of bonds or other indebtedness by the City with
A-1
respect to the CFD, including without limitation underwriters discount; reserve fund; capitalized interest:
fees, expenses and prenrium associated with any letter of credit or other credit enhancement; fees and
expenses of bond counsel, disclosure counsel and issuer's counsel; fees and expenses of the City's
financìal advisors and special tax consultants, and other City consultants; and all other incidental
expenses.
4
To pay annual or periodic administrative fees of the City and the bond trustee or fiscal agent
related to the CFD and the bonds and to reimburse the City for its costs and expenses related to the
administratron of the CFD and the bonds
5.
To reimburse the City or any third parties for actual costs advanced that are related to the
formation of the CFD
A-2
EXHIBIT B
CITY OF FULLERTON
Gommunity Facilities District No.
(Amerige Heights)
2
OWNERS OF LAND NOT EXEMPT FROM THE SPECIAL TAX
County of Orange
Assessor's Parcel Numbers
Property Owner
280-31 6-03
280-3 1 6-04
2BO-441-09
STANDARD PACIFIC CORP.,
a Delaware corporation
B-1
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e I e.c-_tro n i ce
cR lle{LÇo_q¡ty
neðòrOeO in-Official RgCo1dè, Orange
RECORDING REQUESTED BY AND
AFTER RECORDATION RETURN TO:
City Clerk
City of Fullerton
303 West Commonwealth
Fullerton, California 92832
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SECOND
AMENDMENT TO
NOTICE OF SPECIAL TAX LIEN
CITY OF FULLERTON
Community Facilities District No.
(Amerige Heights)
2
Pursuant to the requirements of Section 3114.5 of the Sireets and Highways Code of
California (the "Act") and the Mello-Roos Community Facilities Act of 1982. as amended, section
53311, ef. seq., of the California Government Code, the City of Fullerton (the "City") caused a
Notice of Special Tax Lien (the "Original Notice") with respect to the City of Fullerton Community
Facilities District No. 2 (Amerige Heights) (the "CFD") to be recorded in the office of the Orange
County Clerk-Recorder, State of California, on January 3, 2012, as Document No.
2012000001294. The Original Notice was amended by an Amendment to Notice of Special Tax
Lien recorded in the office of the Orange County Clerk-Recorder, State of California, on
February 21, 2013, as Ðocument No. 20130001 A7844.
On July 25,2413, the current owner of all taxable property within the CFD submitted a
request to the City to reduce the maximum special tax rates for Developed Property within the
CFD pursuant to Section C of the Rate and Method of Apportionment of Special Taxes for the
CFD (the "Rate and Method"), accompanied by the ceñificate required by the Rate and Method
specifying the new maximum special tax rates for Developed Property within the CFD. The
certificate is attached hereto as Exhibit A, and the Rate and Method is hereby amended in
accordance with' Exhibit A.
Reference is made to the boundary map of the CFD recorded in the Orange County
Clerk-Recorder's Office on November 22, 2011, as Document No. 201 1-595041, in Book g6 of
Maps of Assessment and Community Facilities Districts at Page 17, which map is the final
boundary map of the CFD.
The names of the current owners of the parcels of property within the CFD that are not
exempt from the special tax under the Rate and Method of Apportionment of Special Tax for the
CFD, as they appear on the latest secured assessment roll as of the date of recording hereof or
as are otherwise known to the City, are as set forth in Ëxhibit B hereto and hereby made a part
hereof. For further information concerning the current and estimated future tax liability
of
owners or purchasers of real property subject to this special tax lien, interested persons should
contact the Director of Administrative Services of the City of Fullerton, 303 West
Commonwealth, Fullerton, California, 92832, telephone . (714) 738-6317
.
Dated: As of July 25,2013
ity Clerk
Ciiy of Fullerton
EXHIBIT A
CITY OF FULLERTON
Gommunity Facilities District No.
(Amerige Heíghts)
2
CERTIF¡CATE TO AMEND SPECIAL TAX
A-1
EXHTtsIT'A
CER.TTF'ECATÐ T'O AIVTEhIÐ SPECTAL
TAX
CITY OF FUX-LEIìTON ANÐ CFI) No. 2 CERTIFICATE
L Pursuant to Section C oi'the llatc and Method of Apportionrnent, the Cit¡,' o1' Fr,¡llerton
("Cii)"') ancl Citl,of Fulierton Cornnrunitl' Iracilities District No. 2 ("CIìD No. 2") herebl.'
iìgree to a leduction in the IVlarirlLrnr S¡recial 'fax fbr Developed Propertl'ri,ithin CFD No.2.
'['he informatíon in 'l'able I relating to tlle Fiscal Year 2012-2013 iVlaxinlum Special 'i'ax for
Developed Propertl, ivithin CIFD No. 2 shall be nrodifìed as lbllou,s:
Land
Use
Class
I
2
J
4
5
2.
Iìcsiden tial Floor Area
fsouare feet)
Description
2.400 or qreatef
Residential PropeÍt
Resident al Proþeltv
2.200 to less than 2.400
Resiclent al Plopert!
2.000 to less than 2.200
Resicle nt al Propertt,
Less than 2,000
NA
Non-Resideniial Propertr
Undeveìoped Property. Tarable Public Property, and
Ta.xable Propertv Orvner Association ProÞertv
Nlaximum
Snecial Tax
$3,882.65
s3.772.32
s3.663.33
$3,5 88.76
$8s,s r2.96
$
I 13,239.63
The Maximunr Special fax fol Developed Property rnal'onl¡, be niodified prior to the lirst
issuance of CFD No. 2 Bonds.
3. Upon execution o1' the certilicuìte bli the City and CIìD No. 2, the City shall cause an
alnended notjce of Special Tax lien for CFD No. 2 to be recorded reflecting the modifìcations
set forth hereirr.
By execution hereof, the undersigned acknou,ledge, on bchalf o1'the City and CFD No.2, receipt
of this ceñilicate and rnoclifìcation of the Rate and Method o1'Appofiionnlent as set l'orfh in this
certificate.
CITY
LLERTO
Dare: F,.f,,t.3
By:
I
,-'tf\
ULLERTÓN
,¡ì CON,{MUNITY FACILTTIES DISTRICT NO.
oate: ß, (', ¡3
2
EXHIBIÏ B
CITY OF FULLERTON
Community Facilities District No.
(Ameríge Heights)
2
OWNERS OF LAND NOT EXEMPT FROM THE SPECIAL TAX
County of Orange
Assessor's Parcel Numbers
Property Owner
STANDARD PACIFIC CORP.,
280-316-03
a Delaware corporation
280-316-04
28t-441-09
B-1
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX B
DEMOGRAPHIC AND ECONOMIC INFORMATION REGARDING THE CITY OF FULLERTON
AND THE COUNTY OF ORANGE
Set forth below is certain demographic information regarding the City of Fullerton (the
“City”) and the County of Orange (the “County”). This information is provided for informational
purposes only and general background. The information set forth herein has been obtained
from third party sources believed to be reliable, but such information is not guaranteed by the
City as to accuracy or completeness. Neither the delivery of this Official Statement nor any sale
thereafter of the securities offered hereby shall under any circumstances create any implication
that there has been no change in any information contained in this Appendix B since the date of
the Official Statement. The Bonds are not a debt of the City, the County, the State, or any of its
political subdivisions and none of the City, the County, the State nor any of its political
subdivisions is liable thereon. The information and data within this Appendix B is the latest data
available; however, the current state of the economy at City, County, State and national levels
may not be reflected in the data discussed below because more up-to-date publicly available
information is not available to the City.
General
The City of Fullerton (the “City”) is located in Southern California, approximately 30 miles
southeast of the City of Los Angeles, and covers approximately 22.2 square miles. The City,
founded in 1887 and incorporated in 1904, operates as a general law city, governed by a nonpartisan, five-member City Council elected to serve staggered four-year terms.
The City provides the full range of services normally associated with a municipality,
including police and fire protection, highways and streets, parks and recreation, library, planning
and zoning, building and engineering, various maintenance services and administration. Parking
and airport facilities, water, sewer, and storm drainage are also provided. The school districts in
the City are separate governmental entities which receive no funding from the City.
Population
The City’s population was 85,987 in 1970, 102,235 in 1980, 114,144 in 1990, and
138,610 in 2000 and 135,146 in 2010. The following table summarizes the population estimates
for the City, Orange County and State of California as of January 1, for the years 2001 through
2013.
B-1
TABLE B-1
CITY OF FULLERTON
2001 through 2013 Population Estimates
Calendar
Year(1)
City of
Fullerton
County of
Orange
State of
California
2001
127,227
2,871,926
34,256,789
2002
128,412
2,902,207
34,725,516
2003
130,109
2,927,118
35,163,609
2004
132,420
2,948,135
35,570,847
2005
132,913
2,956,847
35,869,173
2006
133,412
2,956,334
36,116,202
2007
133,559
2,960,659
36,399,676
2008
133,872
2,974,321
36,704,375
2009
134,199
2,990,805
36,966,713
2010
135,108
3,008,855
37,223,900
2011
135,468
3,028,846
37,427,946
2012
137,572
3,057,879
37,668,804
2013
138,251
3,081,804
37,966,471
___________________
Source: California State Department of Finance, Demographic Research Unit. March 2010
Benchmark
Largest Property Taxpayers
The ten largest secured property-taxpayers in the City for the Fiscal Year 2012/13 and
their percentage of total secured property taxes are shown in the following table:
TABLE B-2
CITY OF FULLERTON
LARGEST PROPERTY OWNERS
(As of June 30, 2013)
Assessed
Value
% of
Total(1)
$154,905,176
78,882,414
70,548,019
65,457,248
58,899,944
57,752,477
56,097,386
55,802,756
55,017,875
54,596,833
1.04%
0.53
0.47
0.44
0.39
0.39
0.38
0.37
0.37
0.36
$707,960,128
_______________
Source: City Audited financial Statements.
(1) 2012/13 Total Assessed Valuation: $14,920,353,752.
(2) Appeals pending.
4.74%
Property Taxpayer
Kimberly-Clark Worldwide(2)
RREEF America REIT II Corp.(2)
Corecare III
Kraft Foods Global Inc.(2)
SFERS Real Estate Corp. Railroad(2)
Amerige Heights Apts. LLC
Beckman Instruments Inc.
Breitburn Energy
PK I Fullerton Town Center LP(2)
CPT Parkside LP
B-2
Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax
payments, a number often referred to as “disposable” or “after-tax” income. Personal income is
the aggregate of wages and salaries, other labor-related income (such as employer
contributions to private pension funds), proprietor’s income, rental income (which includes
imputed rental income of owner-occupants of non-farm dwellings), dividends paid by
corporations, interest income from all sources, and transfer payments (such as pensions and
welfare assistance). Deducted from this total are personal taxes (federal, state and local),
nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as
“disposable personal income.”
The following table summarizes the total effective buying income for the County of
Orange, the State of California and the United States for the periods 2006 through 2008 and
2011 through 2013.
TABLE B-3
EFFECTIVE BUYING INCOME
(As of January 1)
Year
Area
2006
Orange County
California
United States
2007
2008
Total Effective
Buying Income
(000’s Omitted)
67,941,889
720,798,122
5,894.664,154
$53,099
44,681
40,529
Orange County
California
United States
71,826,783
764,120,982
6,107,093,057
55,370
46,275
41,255
Orange County
California
United States
77,614,985
814,894,453
6,300,794,846
58,727
48,203
41,792
Orange County
California
United States
75,063,557
801,393,027
6,365,020,076
57,849
47,177
41,368
2012
Orange County
California
United States
76,315,505
814,578,457
6,438,704,663
57,607
47,062
41,253
2013
Orange County
California
United States
87,256,805
864,088,827
6,737,867,730
58,184
47,307
41,358
2011
(1)
$
Median Household
Effective Buying
Income
___________________
Source: Sales & Marketing Management Survey of Buying Power 2004-2008. The Nielsen Company
2011-2013.
(1) Sales & Marketing Management Survey of Buying Power ceased publication after 2008. EBI Data for
2009 and 2010 not available.
B-3
Employment
Orange County comprises the Orange County Primary Metropolitan Statistical Area
(“PMSA”), reported on a monthly basis by the State Department of Employment Development.
The following table summarizes the labor force, employment and unemployment figures for the
City, County and State from 2008 through 2013.
TABLE B-4
LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
City of Fullerton, Orange County and the State of California
2008-2013
Area
Labor Force
Employment
Unemployment
Unemployment
Rate(1)
2008
City of Fullerton
Orange County
State of California
71,700
1,618,400
18,191,000
67,400
1,533,100
16,883,400
4,300
85,300
1,313,200
5.9%
5.3
7.2
2009
City of Fullerton
Orange County
State of California
70,800
1,589,600
18,204,200
63,700
1,448,800
16,141,500
7,000
140,700
2,086,200
9.9%
8.9
11.3
2010
City of Fullerton
Orange County
State of California
71,000
1,592,500
18,176,200
63,400
1,441,500
15,916,300
7,500
151,000
2,264,900
10.6%
9.5
12.4
2011
City of Fullerton
Orange County
State of California
71,200
1,600,100
18,172,000
64,200
1,460,100
16,185,100
7,000
140,000
2,158,300
9.8%
8.8
10.9
2012
City of Fullerton
Orange County
State of California
71,900
1,618,700
18,494,900
65,800
1,496,000
16,560,300
6,100
122,700
1,934,500
8.5%
7.6
10.5
2013
City of Fullerton
72,400
68,100
4,300
5.9%
Orange County
1,633,100
1,547,000
85,600
5.2
State of California
18,503,800
17,037,000
1,466,100
7.9
____________
Source: California State Employment Development Department and the Bureau of Labor Statistics.
(1) Unemployment rate is based on unrounded data. Data is not seasonally adjusted.
B-4
The major employers within the City and the number of persons employed by each
company are shown in the following table.
TABLE B-5
CITY OF FULLERTON
PRINCIPAL EMPLOYERS
(As of June 30, 2013)
Estimated Number of
Employees
Company
California State University, Fullerton
St. Jude Medical Group
Raytheon Systems Co.
Fullerton School District
Fullerton College
Fullerton Joint Union High School District
Alcoa Fastening Systems
City of Fullerton
Albertsons Regional Corporate
Kraft Foods
_____________
Source: City of Fullerton.
4,121
2,516
1,200
1,273
1,100
870
720
644
570
500
Construction Activity
The following table summarizes building permit valuation in the City from 2009 through
2013.
TABLE B-6
CITY OF FULLERTON
CONSTRUCTION ACTIVITY
(Numbers in Thousands)
2009
2010
2011
Dwelling Units
Single Family:
Multi-Family:
1
5
46
5
7
356
7
--
117
5
Total Units:
6
51
363
7
122
Valuation:
Total Residential
Total Nonresidential
$ 8,023
19,495
2012
2013
$11,411
30,419
$53,764
73,394
$ 5,273
14,431
$34,804
20,103
Total All Building Permit
$27,519
$41,830
Valuations:
__________________
Source: Construction Industry Research Board.
$127,158
$19,704
$54,908
B-5
Commercial Activity
The table below summarizes taxable sales for the calendar years 2007 through the third
quarter of 2012.
TABLE B-7
CITY OF FULLERTON
(1)
TAXABLE RETAIL SALES FOR 2007 THROUGH THIRD QUARTER OF 2012
(In Thousands)
Business
2007
2008
2009
2010
2011
2012
Retail Stores/Food Services Total
All Other Outlets
$ 1,257,672
408,741
$ 1,216,888
407,759
$ 1,074,628
354,813
$1,127,983
342,811
$1,202,906
383,073
$935,539
281,830
TOTAL ALL OUTLETS
__________________
$ 1,666,413
$1,624,647
$ 1,429,441
$1,470,794
$1,585,979
$1,217,369
Source: California State Board of Equalization.
(1) Data for fourth quarter of 2012 and 2013 not available at this time.
Educational Facilities
Fullerton is a major center of higher education in Orange County. A state university
campus and a community college are located within the City, as well as three private
colleges/universities.
Transportation
The City is bounded by Interstate 5 and State Highways 57 and 91. The Fullerton
Municipal Airport handles nearly 70,000 to 80,000 flight operations per year. John Wayne
Airport is located 15 miles south of the City.
Originally developed in the 1970s, the Fullerton Transportation Center (FTC) is centrally
located in the City’s historic downtown core. The FTC ranks No. 1 in boardings on the Orange
County line, and No. 3 on the five-county Metrolink commuter rail system. The City has recently
completed a new parking structure near the FTC with an additional 1,200 new spaces.
B-6
APPENDIX C
SUMMARY OF FISCAL AGENT AGREEMENT
The following is a brief summary of certain provisions of the Fiscal Agent Agreement, as
well as definitions of certain terms used therein and in this Official Statement. This summary is
not intended to be definitive, and reference is made to the complete Fiscal Agent Agreement, a
copy of which is available from the Fiscal Agent.
CERTAIN DEFINITIONS
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being
sections 53311 et seq. of the California Government Code.
“Administrative Expenses” means costs directly related to the administration of the CFD
consisting of: the actual costs of computing the Special Taxes and preparing the annual Special
Tax collection schedules (whether by a City employee or consultant or both) and the actual
costs of collecting the Special Taxes (whether by the County or otherwise); the actual costs of
remitting the Special Taxes to the Fiscal Agent; actual costs of the Fiscal Agent (including its
legal counsel) in the discharge of its duties under this Agreement; the actual costs of the City or
its designee of complying with the disclosure provisions of the Act and this Agreement, including
those related to public inquiries regarding the Special Tax and disclosures to Owners of the
Bonds and the Original Purchaser; the actual costs of the City or its designee related to an
appeal of the Special Tax; any amounts required to be rebated to the federal government; an
allocable share of the salaries of the City staff directly related to the foregoing and a
proportionate amount of City general administrative overhead related thereto. Administrative
Expenses shall also include amounts advanced by the City for any administrative purpose of the
CFD, including costs related to prepayments of Special Taxes, recordings related to such
prepayments and satisfaction of Special Taxes, amounts advanced to ensure maintenance of
tax exemption, and the costs of prosecuting foreclosure of delinquent Special Taxes, which
amounts advanced are subject to reimbursement from other sources, including proceeds of
foreclosure.
“Administrative Expense Deposit” means, for Fiscal Year 2014-15, $17,850, and
thereafter shall escalate by 2% each Fiscal Year.
“Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the
Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as
scheduled, and (ii) the principal amount of the Outstanding Bonds due in such Bond Year
(including any mandatory sinking payment due in such Bond Year).
“Auditor” means the auditor/controller of the County, or such other official at the County
who is responsible for preparing property tax bills.
“Authorized Officer” means the Mayor, City Manager, Director of Administrative
Services, or any other officer or employee authorized by the City Council or by an Authorized
Officer to undertake the action referenced in this Agreement as required to be undertaken by an
Authorized Officer.
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“Bond Counsel” means Jones Hall, A Professional Law Corporation or any other
attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in
rendering opinions as to the legality and tax-exempt status of securities issued by public
entities.
“Bond Fund” means the fund established and administered under the Fiscal Agent
Agreement.
“Bond Year” means the one-year period beginning on September 2nd in each year and
ending on September 1 in the following year, except that the first Bond Year shall begin on the
Closing Date and shall end on September 1, 2014.
“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on
which banking institutions in the state in which the Fiscal Agent has its Principal Office are
authorized or obligated by law or executive order to be closed.
“Capitalized Interest Account” means the account within the Bond Fund established and
administered under the Fiscal Agent Agreement.
“CFD” means the “City of Fullerton Community Facilities District No. 2” formed under the
Resolution of Formation.
“City” means the City of Fullerton.
“City Attorney” means any attorney or firm of attorneys employed by the City in the
capacity of City attorney.
“City Council” means the City Council of the City, as its legislative body and as
legislative body of the CFD.
“Closing Date” means May 14, 2014, the date upon which there is a physical delivery of
the Bonds in exchange for the amount representing the purchase price of the Bonds by the
Original Purchaser.
“Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate
executed by the City and dated the date of issuance and delivery of the Bonds, as originally
executed and as it may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance” means items of expense payable or reimbursable directly or
indirectly by the City and related to the authorization, sale, delivery and issuance of the Bonds,
which shall include, without limitation: printing costs; costs of reproducing and binding
documents; charges for execution, authentication, transportation and safekeeping of the Bonds;
closing costs; filing and recording fees; fees and expenses of bond counsel, disclosure counsel,
the City Attorney, and any other counsel engaged by the City in connection with the issuance of
the Bonds; fees and expenses of any special tax consultant, district administrator, financial
advisor, market or absorption consultant, appraiser, or any other consultant engaged by the City
in connection with the issuance of the Bonds; initial fees and charges of the Fiscal Agent,
including its first annual administration fees and its legal fees and charges (including the
allocated costs of in-house attorneys); underwriter’s discount or compensation; fees of rating
agencies; bond insurance premium; and any other expenses incurred by the City in connection
with the issuance of the Bonds.
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“County” means the County of Orange, California.
“Debt Service” means the scheduled amount of interest and amortization of principal
payable on the Bonds under the Fiscal Agent Agreement during the period of computation, in
each case excluding amounts scheduled during such period which relate to principal which has
been retired before the beginning of such period.
“Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as
Depository for book-entry under the Fiscal Agent Agreement.
“Director of Administrative Services” means the official of the City, or such official’s
designee, who acts in the capacity as the chief financial officer of the City.
“DTC” means The Depository Trust Company, New York, New York, and its successors
and assigns.
“Facilities” means the facilities authorized to be financed by the CFD under the
Resolution of Formation.
“Fair Market Value” means with respect to the Bonds the price at which a willing buyer
would purchase the investment from a willing seller in a bona fide, arm’s length transaction
(determined as of the date the contract to purchase or sell the investment becomes binding) if
the investment is traded on an established securities market (within the meaning of section
1273 of the Tax Code) and, otherwise, the term “Fair Market Value” means the acquisition price
in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate
of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the
investment is an agreement with specifically negotiated withdrawal or reinvestment provisions
and a specifically negotiated interest rate (for example, a guaranteed investment contract, a
forward supply contract or other investment agreement) that is acquired in accordance with
applicable regulations under the Tax Code, (iii) the investment is a United States Treasury
Security—State and Local Government Series that is acquired in accordance with applicable
regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund
in which the City and related parties do not own more than a 10% beneficial interest if the return
paid by such fund is without regard to the source of the investment.
“Federal Securities” means: (a) any direct general obligations of the United States of
America (including obligations issued or held in book entry form on the books of the Department
of the Treasury of the United States of America), the payment of principal of and interest on
which are unconditionally and fully guaranteed by the United States of America; and (b) any
obligations the principal of and interest on which are unconditionally guaranteed by the United
States of America.
“Fiscal Agent” means U.S. Bank National Association, the Fiscal Agent appointed by the
City and acting as an independent fiscal agent with the duties and powers provided in the Fiscal
Agent Agreement, its successors and assigns, and any other corporation or association which
may at any time be substituted in its place, as provided in the Fiscal Agent Agreement.
“Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to
June 30 of the succeeding year, both dates inclusive.
C-3
“Independent Financial Consultant” means any consultant or firm of consultants
appointed by the City and who, or each of whom: (i) is judged by the Director of Administrative
Services to have experience in matters relating to the issuance and/or administration of bonds
under the Act; (ii) is in fact independent and not under the domination of the City; (iii) does not
have any substantial interest, direct or indirect, with or in the City, or any owner of real property
in the CFD, or any real property in the CFD; and (iv) is not connected with the City as an officer
or employee of the City, but who may be regularly retained to make reports to the City.
“Interest Payment Date” means each March 1 and September 1 of every calendar year,
commencing with September 1, 2014.
“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond
Year after the calculation is made through the final maturity date of any Outstanding Bonds.
“Moody’s” means Moody’s Investors Service, Inc., and its successors.
“Officer’s Certificate” means a written certificate of the City signed by an Authorized
Officer of the City.
“Ordinance” means any ordinance or resolution of the City Council levying the Special
Taxes, including without limitation Ordinance No. 3176 adopted by the City Council on January
17, 2012.
“Original Purchaser” means Stern Brothers & Co., the first purchaser of the Bonds from
the City.
“Outstanding,” when used as of any particular time with reference to Bonds, means
(subject to the provisions of the Fiscal Agent Agreement regarding disqualified bonds) all Bonds
except (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for
cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the provisions
of Fiscal Agent Agreement regarding defeasance; and (iii) Bonds in lieu of or in substitution for
which other Bonds are authorized, executed, issued and delivered by the City under the Fiscal
Agent Agreement or any Supplemental Agreement.
“Owner” or “Bondowner” means any person who shall be the registered owner of any
Outstanding Bond.
“Participating Underwriter” has the meaning given in the Continuing Disclosure
Certificate.
“Permitted Investments” means the following, but only to the extent that the same are
acquired at Fair Market Value:
(a)
Federal Securities.
(b) any of the following direct or indirect obligations of the following agencies of
the United States of America:
(i) direct obligations of the Export-Import Bank;
C-4
(ii) certificates of beneficial ownership issued by the Farmers Home
Administration;
(iii) participation
Administration;
certificates
issued
by
the
General
Services
(iv) mortgage-backed bonds or pass-through obligations issued and
guaranteed by the Government National Mortgage Association, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation or
the Federal Housing Administration;
(v) project notes issued by the United States Department of Housing and
Urban Development; and
(vi) public housing notes and bonds guaranteed by the United States of
America;
(c) interest-bearing demand or time deposits (including certificates of deposit) or
deposit accounts in federal or state chartered savings and loan associations or in federal
or State of California banks (including the Fiscal Agent, its parent, if any, and affiliates),
provided that (i) the unsecured short-term obligations of such commercial bank or
savings and loan association shall be rated in the highest short-term rating category by
any Rating Agency, or (ii) such demand or time deposits shall be fully insured by the
Federal Deposit Insurance Corporation;
(d) commercial paper rated in the highest short-term rating category by any
Rating Agency, issued by corporations which are organized and operating within the
United States of America, and which matures not more than 180 days following the date
of investment therein;
(e) bankers acceptances, consisting of bills of exchange or time drafts drawn on
and accepted by a commercial bank, including its parent (if any), affiliates and
subsidiaries, whose short-term obligations are rated in the highest short-term rating
category by any Rating Agency, or whose long-term obligations are rated A or better by
any Rating Agency, which mature not more than 270 days following the date of
investment therein;
(f) obligations the interest on which is excludable from gross income pursuant
to Section 103 of the Tax Code and which are either (a) rated A or better by any Rating
Agency, or (b) fully secured as to the payment of principal and interest by Federal
Securities;
(g) money market funds (including money market funds for which the Fiscal
Agent, its affiliates or subsidiaries provide investment advisory or other management
services) which invest in Federal Securities or which are rated in the highest short-term
rating category by any Rating Agency; and
(h) any investment agreement representing general unsecured obligations of a
financial institution rated A or better by any Rating Agency, by the terms of which the
Fiscal Agent is permitted to withdraw all amounts invested therein in the event any such
rating falls below A.
C-5
(i) the Local Agency Investment Fund established pursuant to Section 16429.1
of the Government Code of the State of California, provided, however, that the Fiscal
Agent shall be permitted to make investments and withdrawals in its own name and the
Fiscal Agent may restrict investments in the such fund if necessary to keep moneys
available for the purposes of this Fiscal Agent Agreement.
(j)
the California Asset Management Program.
“Principal Office” means such corporate trust office of the Fiscal Agent as may be
designated from time to time by written notice from the Fiscal Agent to the City, initially being at
the address set forth in the Fiscal Agent Agreement, or such other office designated by the
Fiscal Agent from time to time; except that with respect to presentation of Bonds for payment or
for registration of transfer and exchange such term shall mean the office or agency of the Fiscal
Agent at which, at any particular time, its corporate trust agency business is conducted.
“Project Costs” means the costs of the Facilities payable from the Project Fund.
“Project Fund” means the fund established and administered under the Fiscal Agent
Agreement.
“Record Date” means the 15th day of the month next preceding the applicable Interest
Payment Date, whether or not such day is a Business Day.
““Regulations” means temporary and permanent regulations promulgated under the Tax
Code.
“Reserve Requirement” means, as of the date of any calculation, an amount equal to the
least of (i) Maximum Annual Debt Service on the Outstanding Bonds, (ii) 125% of average
Annual Debt Service on the Outstanding Bonds and (iii) 10% of the original principal amount of
the Bonds.
“Resolution of Formation” means Resolution No. 2011-86 adopted by the City Council on
December 20, 2011, forming the CFD.
“Resolution of Intention” means Resolution No. 2011-69, adopted by the City Council on
November 15, 2011, indicating the intention of the City to form the CFD.
“Resolution of Issuance” means the resolution adopted by the City Council on April 15,
2014, authorizing the issuance of the Bonds.
“S&P” means Standard & Poor’s Ratings Service, a division of McGraw-Hill, and its
successors and assigns.
“Securities Depositories” means DTC and, in accordance with then current guidelines of
the Securities and Exchange Commission, such other securities depositories as the City may
designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Special Tax Prepayments” means the proceeds of any Special Tax prepayments
received by the City, as calculated pursuant to the Rate and Method of Apportionment of the
C-6
Special Taxes for the CFD, less any administrative fees or penalties collected as part of any
such prepayment.
“Special Tax Prepayments Account” means the account within the Bond Fund
established and administered under the Fiscal Agent Agreement.
“Special Tax Revenues” means the proceeds of the Special Taxes received by the City,
including any scheduled payments thereof and any Special Tax Prepayments, and proceeds of
the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes
to the amount of said lien and interest thereon, but shall not include any interest in excess of the
interest due on the Bonds or any penalties collected in connection with any such foreclosure.
“Special Taxes” means the special taxes levied within the CFD under the Act, the
Ordinance and the Fiscal Agent Agreement.
“State” means the State of California.
“Supplemental Agreement” means an agreement the execution of which is authorized by
a resolution which has been duly adopted by the City under the Act and which agreement is
amendatory of or supplemental to this Agreement, but only if and to the extent that such
agreement is specifically authorized hereunder.
“Surplus Fund” means the fund established and administered under the Fiscal Agent
Agreement.
“Tax Code” means the Internal Revenue Code of 1986 as in effect on the date of
issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to
apply to obligations issued on the date of issuance of the Bonds, together with applicable
temporary and final regulations promulgated, and applicable official public guidance published,
under the Tax Code.
THE BONDS AND SECURITY FOR THE BONDS
Bond Terms
See the section in the main body of this Official Statement entitled “THE BONDS –
General Provisions.”
Redemption
See the section in the main body of this Official Statement entitled “THE BONDS –
Redemption.”
No Acceleration
The principal of the Bonds shall not be subject to acceleration under the Fiscal Agent
Agreement. Nothing in the Fiscal Agent Agreement in any way prohibits the redemption of
Bonds or the defeasance of the Bonds and discharge of the Fiscal Agent Agreement, all as set
forth in the Fiscal Agent Agreement.
C-7
Deposits of Bond Proceeds
The proceeds of the Bonds received from the Original Purchaser (net of all discounts)
will be paid to the Fiscal Agent, which will deposit the proceeds on the Closing Date in the funds
and accounts, and in the amounts, set forth in each Fiscal Agent Agreement. The Fiscal Agent,
in its discretion, may establish such temporary funds or accounts as reasonably necessary to
complete the foregoing deposits.
Costs of Issuance Fund
Establishment of Costs of Issuance Fund. The Costs of Issuance Fund is established
under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, to the
credit of which the Fiscal Agent shall deposit a portion of the proceeds of the Bonds under the
Fiscal Agent Agreement. Moneys in the Costs of Issuance Fund shall be held by the Fiscal
Agent for the benefit of the City and shall be disbursed as provided below for the payment or
reimbursement of Costs of Issuance.
Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to
time to pay Costs of Issuance, as set forth in a requisition substantially in the form of and exhibit
to the Fiscal Agent Agreement, executed by the Director of Administrative Services, containing
respective amounts to be paid to the designated payees and delivered to the Fiscal Agent.
Each such requisition shall be sufficient evidence to the Fiscal Agent of the facts stated therein
and the Fiscal Agent shall have no duty to confirm the accuracy of such facts.
Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited by
the Fiscal Agent in accordance with the Fiscal Agent Agreement. Interest earnings and profits
resulting from such investment shall be retained by the Fiscal Agent in the Costs of Issuance
Fund to be used for the purposes of such fund.
Closing of Fund. The Fiscal Agent shall maintain the Costs of Issuance Fund for a
period of 90 days after the Closing Date and then the Fiscal Agent shall transfer any moneys
remaining therein, including any investment earnings thereon, to the Project Fund or, if the
Project Fund has been closed, to the Bond Fund to pay interest on the Bonds on the next
Interest Payment Date, and the Costs of Issuance Fund shall be closed.
Project Fund
Establishment of Project Fund. The Project Fund is established under the Fiscal
Agent Agreement as a separate fund to be held by the Fiscal Agent, within which the Fiscal
Agent shall establish separate accounts known as the City Facilities Account and the School
Facilities Account, to the creidt of which the Fiscal Agent shall deposit a portion of the procceds
of the Bonds and any funds that may be transferred from the Costs of Issuance Fund.
Disbursement. Amounts in the accounts within the Project Fund shall be disbursed from
time to time to pay Project Costs, as set forth in a requisition substantially in the form of an
exhibit to the Fiscal Agent Agreement, executed by the Director of Administrative Services,
containing respective amounts to be paid to the designated payees and delivered to the Fiscal
Agent. Each such requisition shall be sufficient evidence to the Fiscal Agent of the facts stated
therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts.
C-8
Investment. Moneys in the Project Fund shall be invested and deposited by the Fiscal
Agent under the Fiscal Agent Agreement. Interest earnings and profits resulting from such
investment shall be retained by the Fiscal Agent in the Project Fund to be used for the purposes
of such fund.
Closing of Fund. Upon the filing of written direction of an Authorized Officer stating that
all costs of the Facilities have been paid, or that any such costs are not required to be paid from
either account of the Project Fund, the Fiscal Agent shall transfer the amount, if any, remaining
in the Project Fund to the Bond Fund to be used to pay Debt Service on the Bonds on the next
Interest Payment Date. Upon such transfer, the Project Fund and the accounts therein shall be
closed.
Special Tax Fund
See the section in the main body of this Official Statement entitled “SECURITY AND
SOURCES OF PAYMENT FOR THE BONDS – Special Tax Fund.”
Surplus Fund
See the section in the main body of this Official Statement entitled “SECURITY AND
SOURCES OF PAYMENT FOR THE BONDS – Surplus Fund.”
Bond Fund
See the section in the main body of this Official Statement entitled “SECURITY AND
SOURCES OF PAYMENT FOR THE BONDS – Bond Fund.”
Reserve Fund
Establishment and Use of Fund. See the section in the main body of this Official
Statement entitled “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Reserve
Fund.”
Transfer of Excess of Reserve Requirement. Whenever, on or before any Interest
Payment Date, or on any other date at the request of the Director of Administrative Services the
amount in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent shall provide
written notice to the Director of Administrative Services of the amount of the excess and shall
transfer an amount equal to the excess from the Reserve Fund to the Bond Fund, to be used to
pay interest on the Bonds on the next Interest Payment Date.
Transfer for Rebate Purposes. Amounts in the Reserve Fund shall be withdrawn for
purposes of making payment to the federal government to comply with the provisions of the
Fiscal Agent Agreement regarding rebate, upon receipt by the Fiscal Agent of an Officer’s
Certificate specifying the amount to be withdrawn and to the effect that such amount is needed
for rebate purposes; provided, however, that no amounts in the Reserve Fund shall be used for
rebate unless the amount in the Reserve Fund following such withdrawal equals the Reserve
Requirement.
Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the
Reserve Fund 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
C-9
redemption, the Fiscal Agent shall, upon the written request of the Director of Administrative
Services, transfer any cash or Permitted Investments in the Reserve Fund to the Bond Fund to
be applied, on the redemption date to the payment and redemption of all of the Outstanding
Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund
exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the
Reserve Fund shall be transferred to the City to be used by the City for any lawful purpose.
Notwithstanding the provisions of the foregoing paragraph, no amounts shall be
transferred from the Reserve Fund until after: (i) the calculation of any amounts due to the
federal government for purposes of rebate and withdrawal of any such amount for purposes of
making such payment to the federal government; and (ii) payment of any fees and expenses
due to the Fiscal Agent.
Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and
Bonds are to be redeemed with the proceeds of such prepayment pursuant to the Fiscal Agent
Agreement, a proportionate amount in the Reserve Fund (determined on the basis of the
principal of Bonds to be redeemed and the original principal of the Bonds, but in any event not
in excess of the amount that will leave the balance in the Reserve Fund following the proposed
redemption equal to the Reserve Requirement) shall be transferred on the Business Day prior to
the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the
Bonds pursuant to the Fiscal Agent Agreement. The Director of Administrative Services shall
deliver to the Fiscal Agent an Officer’s Certificate specifying any amount to be so transferred,
and the Fiscal Agent may rely on any such Officer’s Certificate.
Investment. Moneys in the Reserve Fund shall be invested in Permitted Investments in
accordance with the Fiscal Agent Agreement.
Administrative Expense Fund
Establishment of Administrative Expense Fund. The Administrative Expense Fund is
established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal
Agent. Within the Administrative Expense Fund, the Fiscal Agent shall create a Bond Proceeds
Account, to the credit of which the Fiscal Agent shall deposit a portion of the proceeds of the
Bonds. Thereafter, the Fiscal Agent shall credit to the Administrative Expense Fund any
amounts transferred from the Special Tax Fund and the Surplus Fund.
Moneys in the Administrative Expense Fund shall be held by the Fiscal Agent for the
benefit of the City, and shall be disbursed as provided below.
Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the
Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer’s
Certificate stating the amount to be withdrawn, that such amount is to be used to pay an
Administrative Expense or a Cost of Issuance and the nature of such Administrative Expense or
such Cost of Issuance. The Fiscal Agent shall make all such withdrawals first from the Bond
Proceeds Account until all amounts therein have been withdrawn, whereupon the Bond
Proceeds Account shall be closed.
Annually, on the last day of each Fiscal Year, the Fiscal Agent shall withdraw from the
Administrative Expense Fund and transfer to the Special Tax Fund any amount in excess of that
which is needed to pay any Administrative Expenses incurred but not yet paid, and which are
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not otherwise encumbered, as identified by the Director of Administrative Services in an
Officer’s Certificate.
Investment. Moneys in the Administrative Expense Fund shall be invested by the Fiscal
Agent in Permitted Investments under the Fiscal Agent Agreement. Interest earnings and
profits resulting from such investment shall be retained by the Fiscal Agent in the Administrative
Expense Fund to be used for the purposes of such fund.
COVENANTS
Collection of Special Tax Revenues.
The City will comply with all requirements of the Act so as to assure the timely collection
of Special Tax Revenues, including without limitation, the enforcement of delinquent Special
Taxes.
Processing. On or within 5 Business Days of each June 1, the Fiscal Agent shall
provide the Director of Administrative Services with a notice stating the amount then on deposit
in the Bond Fund and the Reserve Fund, and informing the City that the Special Taxes need to
be levied under the Ordinance as necessary to provide for Annual Debt Service and
Administrative Expenses and replenishment (if necessary) of the Reserve Fund so that the
balance therein equal the Reserve Requirement. The receipt of or failure to receive such notice
by the Director of Administrative Services shall in no way affect the obligations of the Director of
Administrative Services under the this Section and the Fiscal Agent shall not be liable for failure
to provide such notices to the Director of Administrative Services. Upon receipt of such notice,
the Director of Administrative Services shall communicate with the Auditor to ascertain the
relevant parcels on which the Special Taxes are to be levied, taking into account any parcel
splits or combinations during the preceding and then current year.
Levy. The Director of Administrative Services shall effect the levy of the Special Taxes
each Fiscal Year in accordance with the Ordinance by each August 1 that the Bonds are
outstanding, or otherwise such that the computation of the levy is complete before the final date
on which Auditor will accept the transmission of the Special Tax amounts for the parcels within
the CFD for inclusion on the next real property tax roll. Upon the completion of the computation
of the amounts of the levy, the Director of Administrative Services shall prepare or cause to be
prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy
of the Special Taxes on the next real property tax roll.
Computation. The Director of Administrative Services shall fix and levy the amount of
Special Taxes within the CFD required for the payment of principal of and interest on any
outstanding Bonds of the CFD becoming due and payable during the ensuing calendar year,
including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and
an amount estimated to be sufficient to pay the Administrative Expenses, including amounts
necessary to discharge any rebate obligation, during such year, taking into account the
balances in the applicable funds established under the Fiscal Agent Agreement and in the
Special Tax Fund. The Special Taxes so levied shall not exceed the authorized amounts as
provided in the proceedings under the Resolution of Formation.
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Collection. Except as set forth in the Ordinance, Special Taxes shall be payable and be
collected in the same manner and at the same time and in the same installment as the general
taxes on real property are payable, and have the same priority, become delinquent at the same
time and in the same proportionate amounts and bear the same proportionate penalties and
interest after delinquency as do the ad valorem taxes on real property.
Enforcement of Delinquencies
See the section in the main body of this Official Statement entitled “SECURITY AND
SOURCES OF PAYMENT FOR THE BONDS – Covenant to Foreclose.”
Punctual Payment
The City will punctually pay or cause to be paid the principal of, and interest and any
premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent
Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the
conditions covenants and requirements of the Fiscal Agent Agreement and all Supplemental
Agreements and of the Bonds.
Extension of Time for Payment
In order to prevent any accumulation of claims for interest after maturity, the City shall
not, directly or indirectly, extend or consent to the extension of the time for the payment of any
claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the
approval of any such arrangement by purchasing or funding said claims for interest or in any
other manner.
If any such claim for interest is extended or funded, whether or not with the consent of
the City, such claim for interest so extended or funded shall not be entitled, in case of default
hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the
principal of all of the Bonds then Outstanding and of all claims for interest which have not been
so extended or funded.
Against Encumbrances
The City will not encumber, pledge or place any charge or lien upon any of the Special
Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge
and lien created in the Fiscal Agent Agreement for the benefit of the Bonds, or their Owners,
except as permitted by the Fiscal Agent Agreement.
Books and Records
City. The City will keep, or cause to be kept, proper books of record and accounts,
separate from all other records and accounts of the City, in which accurate entries shall be
made of all transactions relating to the Special Tax Revenues. Such books of record and
accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent
(who shall have no duty to inspect), and the Owners of not less than 10% of the principal
amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
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Fiscal Agent. The Fiscal Agent will keep, or cause to be kept, proper books of record
and accounts, separate from all other records and accounts of the Fiscal Agent, in which
accurate entries shall be made of all transactions made by it relating to the expenditure of
amounts disbursed from the funds, and, if any, accounts in such funds held by the Fiscal Agent
hereunder. Such books of record and accounts shall at all times during business hours be
subject to the inspection of the City and the Owners of not less than 10% of the principal
amount of the Bonds then Outstanding, or their representatives duly authorized in writing upon
reasonable prior notice.
Protection of Security and Rights of Owners
The City will preserve and protect the security of the Bonds and the rights of the Owners,
and will warrant and defend their rights against all claims and demands of all persons. From
and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the
City.
Further Assurances
The City will adopt, make, execute and deliver any and all such further resolutions,
instruments and assurances as may be reasonably necessary or proper to carry out the
intention or to facilitate the performance of the Fiscal Agent Agreement, and for the better
assuring and confirming unto the Owners of the rights and benefits provided in the Fiscal Agent
Agreement.
Private Activity Bond Limitation
The City shall assure that the proceeds of the Bonds are not so used as to cause the
Bonds to satisfy the private business tests of section 141(b) of the Tax Code or the private loan
financing test of section 141(c) of the Code.
Federal Guarantee Prohibition
The City shall not take any action or permit or suffer any action to be taken if the result of
the same would be to cause the Bonds to be “federally guaranteed” within the meaning of
Section 149(b) of the Tax Code.
Rebate Requirement
The City shall take any and all actions necessary to assure compliance with section
148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the
federal government, to the extent that such section is applicable to the Bonds. The Director of
Administrative Services shall take note of any investment of monies hereunder in excess of the
yield on the Bonds, and shall take such actions as are necessary to ensure compliance with the
Fiscal Agent Agreement, such as increasing the portion of the Special Tax levy for
Administration Expenses as appropriate to have funds available in the Administrative Expense
Fund to satisfy any rebate liability under this provision of the Fiscal Agent Agreement. If
necessary to satisfy its obligations under this provision of the Fiscal Agent Agreement, the City
may use:
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(A)
Earnings on the Reserve Fund if the amount on deposit in the Reserve
Fund, following the proposed transfer, is equal to the Reserve
Requirement;
(B)
Amounts on deposit in the Administrative Expense Fund; and
(C)
Any other funds available to the CFD, including amounts advanced by the
City, in its sole discretion, to be repaid by the CFD as soon as practicable
from amounts described in the preceding clauses (A) and (B).
No Arbitrage
The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise,
any action with respect to the proceeds of the Bonds which, if such action had been reasonably
expected to have been taken, or had been deliberately and intentionally taken, on the date of
issuance of the Bonds would have caused the Bonds to be “arbitrage bonds” within the meaning
of section 148 of the Tax Code.
Yield of the Bonds
In determining the yield of the Bonds to comply with the foregoing provisions of the
Fiscal Agent Agreement regarding rebate and arbitrage, the City will take into account
redemption (including premium, if any) in advance of maturity based on the reasonable
expectations of the City, as of the Closing Date, regarding prepayments of Special Taxes and
use of prepayments for redemption of the Bonds, without regard to whether or not prepayments
are received or Bonds redeemed.
Maintenance of Tax-Exemption
The City shall take all actions necessary to assure the exclusion of interest on the Bonds
from the gross income of the Owners of the Bonds to the same extent as such interest is
permitted to be excluded from gross income under the Tax Code as in effect on the date of
issuance of the Bonds.
Continuing Disclosure
The City covenants and agrees that it will comply with and carry out all of the provisions
of the Continuing Disclosure Certificate. Notwithstanding any other provision of the Fiscal Agent
Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be
considered an event of default for the purposes of the Fiscal Agent Agreement. However, any
Owner or Beneficial Owner of the Bonds may, take such actions as may be necessary and
appropriate to compel performance, including seeking mandate or specific performance by court
order.
Limits on Special Tax Waivers and Bond Tenders.
The City covenants not to exercise its rights under the Act to waive delinquency and
redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty
program if to do so would materially and adversely affect the interests of the Owners of the
Bonds.
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The City further covenants not to permit the tender of Bonds in payment of any Special
Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept
such tender will not result in the City having insufficient Special Tax Revenues to pay the
principal of and interest on the Bonds remaining Outstanding following such tender.
City Bid at Foreclosure Sale
The City will not bid at a foreclosure sale of property in respect of delinquent Special
Taxes, unless it expressly agrees to take the property subject to the lien for Special Taxes
imposed by the City and that the Special Taxes levied on the property are payable while the City
owns the property.
No Issuance of Future Bonds.
The City shall not issue any additional bonds or other indebtedness payable from the
Special Tax Revenues (other than Refunding Bonds).
Amendment of Rate and Method.
The City shall not initiate proceedings under the Act to modify the Rate and Method if
such modification would adversely affect the security for the Bonds. If an initiative is adopted
that purports to modify the Rate and Method in a manner that would adversely affect the
security for the Bonds, the City shall, to the extent permitted by law, commence and pursue
reasonable legal actions to prevent the modification of the Rate and Method in a manner that
would adversely affect the security for the Bonds.
INVESTMENTS; LIABILITY OF THE CITY
Deposit and Investment of Moneys in Funds
Funds Held by the Fiscal Agent. Moneys in any fund or account created or established
by the Fiscal Agent Agreement and held by the Fiscal Agent shall be invested by the Fiscal
Agent in Permitted Investments, which in any event by their terms mature prior to the date on
which such moneys are required to be paid out under the Fiscal Agent Agreement, as directed
pursuant to an Officer’s Certificate filed with the Fiscal Agent at least 2 Business Days in
advance of the making of such investments.
In the absence of any such Officer’s Certificate, the Fiscal Agent shall invest any such
moneys in Permitted Investments described in paragraph (g) of the definition thereof which by
their terms mature prior to the date on which such moneys are required to be paid out
hereunder to the extent reasonably practicable, and if such investments can not be made shall
hold such funds uninvested.
The Director of Administrative Services shall make note of any investment of funds
hereunder in excess of the yield on the Bonds so that appropriate actions can be taken to
assure compliance with the provisions of the Fiscal Agent Agreement regarding rebate.
Funds Held by the City. Moneys in any fund or account created or established by the
Fiscal Agent Agreement and held by the Director of Administrative Services shall be invested by
the Director of Administrative Services in any Permitted Investment or in any other lawful
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investment for City funds, which in any event by its terms matures prior to the date on which
such moneys are required to be paid out under the Fiscal Agent Agreement. Obligations
purchased as an investment of moneys in any fund shall be deemed to be part of such fund or
account, subject, however, to the requirements of the Fiscal Agent Agreement for transfer of
interest earnings and profits resulting from investment of amounts in funds and accounts.
Whenever in the Fiscal Agent Agreement any moneys are required to be transferred by the City
to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of
Permitted Investments.
Actions of Officials. The Fiscal Agent and its affiliates or the Director of Administrative
Services may act as sponsor, advisor, depository, principal or agent in the acquisition or
disposition of any investment. Neither the Fiscal Agent nor the Director of Administrative
Services shall incur any liability for losses arising from any investments made pursuant to this
provision of the Fiscal Agent Agreement. The Fiscal Agent shall not be required to determine
the legality of any investments.
Valuation of Investments. Except as otherwise provided in the next sentence, all
investments of amounts deposited in any fund or account created by or pursuant to the Fiscal
Agent Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of
section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that
valuation is required by the Fiscal Agent Agreement or the Tax Code) at Fair Market Value.
Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under
the applicable provisions of the Tax Code and (unless valuation is undertaken at least annually)
investments in the Reserve Fund shall be valued at their present value (within the meaning of
section 148 of the Tax Code). The Fiscal Agent shall not be liable for verification of the
application of such sections of the Tax Code or for any determination of Fair Market Value or
present value and may conclusively rely upon an Officer’s Certificate as to such valuations.
Commingled Money. Investments in any and all funds and accounts may be
commingled in a separate fund or funds for purposes of making, holding and disposing of
investments, notwithstanding provisions herein for transfer to or holding in or to the credit of
particular funds or accounts of amounts received or held by the Fiscal Agent or the Director of
Administrative Services under the Fiscal Agent Agreement, provided that the Fiscal Agent or the
Director of Administrative Services, as applicable, shall at all times account for such
investments strictly in accordance with the funds and accounts to which they are credited and
otherwise as provided in the Fiscal Agent Agreement.
Confirmations Waiver. The City acknowledges that to the extent regulations of the
Comptroller of the Currency or other applicable regulatory entity grant the City the right to
receive brokerage confirmations of security transactions as they occur, the City specifically
waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent will
furnish the City periodic cash transaction statements which include detail for all investment
transactions made by the Fiscal Agent under the Fiscal Agent Agreement.
Sale of Investments. The Fiscal Agent or the Director of Administrative Services, as
applicable, shall sell at Fair Market Value, or present for redemption, any investment security
whenever it shall be necessary to provide moneys to meet any required payment, transfer,
withdrawal or disbursement from the fund or account to which such investment security is
credited and neither the Fiscal Agent nor the Director of Administrative Services shall be liable
or responsible for any loss resulting from the acquisition or disposition of such investment
security in accordance with the Fiscal Agent Agreement.
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Liability of City
General. The City shall not incur any responsibility in respect of the Bonds or the Fiscal
Agent Agreement other than in connection with the duties or obligations explicitly herein or in
the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the
performance of its duties under the Fiscal Agent Agreement, except for its own negligence or
willful default. The City shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent or of
any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the
existence of a default or event of default thereunder.
Reliance. In the absence of bad faith, the City, including the Director of Administrative
Services, may conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the City by the Fiscal
Agent or an Independent Financial Consultant and conforming to the requirements of the Fiscal
Agent Agreement. The City, including the Director of Administrative Services, shall not be liable
for any error of judgment made in good faith unless it shall be proved that it was negligent in
ascertaining the pertinent facts. The City may rely and shall be protected in acting or refraining
from acting upon any notice, resolution, request, consent, order, certificate, report, warrant,
bond or other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or proper parties. The City may consult with counsel, who may be
the City Attorney, with regard to legal questions, and the opinion of such counsel shall be full
and complete authorization and protection in respect of any action taken or suffered by it
hereunder in good faith and in accordance therewith.
No General Liability. No provision of the Fiscal Agent Agreement shall require the City
to expend or risk its own general funds or otherwise incur any financial liability (other than with
respect to the Special Tax Revenues) in the performance of any of its obligations thereunder, or
in the exercise of any of its rights or powers, if it has reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
Owner of Bonds. The City shall not be bound to recognize any person as the Owner of
a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto
satisfactorily established, if disputed.
Employment of Agents by City
In order to perform its duties and obligations under the Fiscal Agent Agreement, the City
may employ such persons or entities as it deems necessary or advisable. The City shall not be
liable for any of the acts or omissions of such persons or entities employed by it in good faith
thereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the
opinions, calculations, determinations and directions of such persons or entities.
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MODIFICATION OR AMENDMENT
Amendments Permitted
With Consent. The Fiscal Agent Agreement and the rights and obligations of the City
and of the Owners of the Bonds may be modified or amended at any time by a Supplemental
Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent
without a meeting, of the Owners of at least 60% in aggregate principal amount of the Bonds
then Outstanding, exclusive of Bonds disqualified as provided in the Fiscal Agent Agreement.
No such modification or amendment shall (i) extend the maturity of any Bond or reduce
the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the
principal of, and the interest and any premium on, any Bond, without the express consent of the
Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special
Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds
(except as otherwise permitted by the Act, the laws of the State of California or the Fiscal Agent
Agreement), or reduce the percentage of Bonds required for the amendment thereof.
Without Consent. The Fiscal Agent Agreement and the rights and obligations of the
City and of the Owners may also be modified or amended at any time by a Supplemental
Agreement, without the consent of any Owners, only to the extent permitted by law and only for
any one or more of the following purposes:
(i)
to add to the covenants and agreements of the City in the Fiscal Agent
Agreement, other covenants and agreements thereafter to be observed, or to limit or
surrender any right or power herein reserved to or conferred upon the City;
(ii)
to make modifications not adversely affecting any Outstanding Bonds in
any material respect including, but not limited to, amending the Rate and Method, so
long as the amendment does not result in coverage less than that set forth in the Fiscal
Agent Agreement;
(iii)
to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in the Fiscal Agent
Agreement, or in regard to questions arising under the Fiscal Agent Agreement, as the
City and the Fiscal Agent may deem necessary or desirable and not inconsistent with
the Fiscal Agent Agreement, and which shall not adversely affect the rights of the
Owners of the Bonds;
(iv)
to make such additions, deletions or modifications as may be necessary
or desirable to assure exclusion from gross income for federal income tax purposes of
interest on the Bonds.
Fiscal Agent’s Consent. Any amendment of the Fiscal Agent Agreement may not
modify any of the rights or obligations of the Fiscal Agent without its written consent. The Fiscal
Agent shall be furnished an opinion of counsel that any such Supplemental Agreement entered
into by the City and the Fiscal Agent complies with the provisions of this provision of the Fiscal
Agent Agreement and the Fiscal Agent may conclusively rely on such opinion and shall be
absolutely protected in so relying.
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Owners’ Meetings.
The City may at any time call a meeting of the Owners. In such event the City is
authorized to fix the time and place of said meeting and to provide for the giving of notice
thereof and to fix and adopt rules and regulations for the conduct of said meeting.
Procedure for Amendment with Written Consent of Owners.
The City and the Fiscal Agent may at any time adopt a Supplemental Agreement
amending the provisions of the Bonds or of the Fiscal Agent Agreement or any Supplemental
Agreement, to the extent that such amendment is permitted by the Fiscal Agent Agreement, to
take effect when and as provided in this provision of the Fiscal Agent Agreement. A copy of
such Supplemental Agreement, together with a request to Owners for their consent thereto,
shall be mailed by first class mail, by the Fiscal Agent, at the expense of the City), to each
Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and
request shall not affect the validity of the Supplemental Agreement when assented to as
provided in this provision of the Fiscal Agent Agreement.
Such Supplemental Agreement shall not become effective unless there is filed with the
Fiscal Agent the written consents of the Owners of at least 60% in aggregate principal amount
of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in the Fiscal Agent
Agreement) and a notice has been mailed as hereinafter provided. Each such consent shall be
effective only if accompanied by proof of ownership of the Bonds for which such consent is
given, which proof shall be such as is permitted by the Fiscal Agent Agreement. Any such
consent shall be binding upon the Owner of the Bonds giving such consent and on any
subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such
consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing
such revocation with the Fiscal Agent prior to the date when the notice hereinafter provided for
has been mailed.
After the Owners of the required percentage of Bonds have filed their consents to the
Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore
provided for the mailing of the Supplemental Agreement, stating in substance that the
Supplemental Agreement has been consented to by the Owners of the required percentage of
Bonds and will be effective as provided in this provision of the Fiscal Agent Agreement (but
failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or
consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A
record, consisting of the papers required by this provision of the Fiscal Agent Agreement to be
filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is
proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal
Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed
conclusively binding (except as otherwise hereinabove specifically provided in this provision of
the Fiscal Agent Agreement) upon the City and the Owners of all Bonds at the expiration of 60
days after such filing, except in the event of a final decree of a court of competent jurisdiction
setting aside such consent in a legal action or equitable proceeding for such purpose
commenced within such 60-day period.
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Disqualified Bonds.
Bonds owned or held for the account of the City, excepting any pension or retirement
fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or
any calculation of Outstanding Bonds provided for in this provision of the Fiscal Agent
Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided
for therein. Upon request of the Fiscal Agent, the City shall specify in a certificate to the Fiscal
Agent those Bonds disqualified pursuant to this provision of the Fiscal Agent Agreement and the
Fiscal Agent may conclusively rely on such certificate.
Effect of Supplemental Agreement
From and after the time any Supplemental Agreement becomes effective under this
provision of the Fiscal Agent Agreement, the Fiscal Agent Agreement shall be deemed to be
modified and amended in accordance therewith, the respective rights, duties and obligations
under the Fiscal Agent Agreement of the City, the Fiscal Agent and all Owners of Bonds
Outstanding shall thereafter be determined, exercised and enforced thereunder subject in all
respects to such modifications and amendments, and all the terms and conditions of any such
Supplemental Agreement shall be deemed to be part of the terms and conditions of the Fiscal
Agent Agreement for any and all purposes.
Endorsement or Replacement of Bonds Issued After Amendments.
The City may determine that Bonds issued and delivered after the effective date of any
action taken as provided in this provision of the Fiscal Agent Agreement shall bear a notation,
by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon
demand of the Owner of any Bond Outstanding at such effective date and upon presentation of
his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the
City may select and designate for that purpose, a suitable notation shall be made on such Bond.
The City may determine that new Bonds, so modified as in the opinion of the City is necessary
to conform to such Owners’ action, shall be prepared, executed and delivered. In that case,
upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be
exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for Bonds then
Outstanding, upon surrender of such Bonds.
Amendatory Endorsement of Bonds.
These provisions of the Fiscal Agent Agreement shall not prevent any Owner from
accepting any amendment as to the particular Bonds held by him, provided that due notation
thereof is made on such Bonds.
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DISCHARGE OF AGREEMENT
If the City pays and discharges the entire indebtedness on all Bonds Outstanding in any
one or more of the following ways:
(A)
by paying or causing to be paid the principal of, and interest and
any premium on, all Bonds Outstanding, as and when the same become due and
payable;
(B)
by depositing with the Fiscal Agent, in trust, at or before maturity,
money which, together with the amounts then on deposit in the funds and
accounts provided for in the Bond Fund and the Reserve Fund, is fully sufficient
to pay all Bonds Outstanding, including all principal, interest and redemption
premiums; or
(C)
by irrevocably depositing with the Fiscal Agent, in trust, cash
and/or Federal Securities in such amount as the City determines, as confirmed
by an independent certified public accountant, will, together with the interest to
accrue thereon and moneys then on deposit in the fund and accounts provided
for in the Bond Fund and the Reserve Fund (to the extent invested in Federal
Securities), be fully sufficient to pay and discharge the indebtedness on all Bonds
(including all principal, interest and redemption premiums) at or before their
respective maturity dates.
and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption
has been given as provided in the Fiscal Agent Agreement or provision satisfactory to the Fiscal
Agent has been made for the giving of such notice, then, at the election of the City, and
notwithstanding that any Bonds have not been surrendered for payment, the pledge of the
Special Taxes and other funds provided for in the Fiscal Agent Agreement and all other
obligations of the City under the Fiscal Agent Agreement with respect to such Bonds
Outstanding shall cease and terminate. Notice of such election shall be filed with the Fiscal
Agent.
Notwithstanding the foregoing, the following obligations and pledges of the City shall
continue in any event: (i) the obligation of the City to pay or cause to be paid to the Owners of
the Bonds not so surrendered and paid all sums due thereon, (ii) the obligation of the City to pay
amounts owing to the Fiscal Agent pursuant to the Fiscal Agent Agreement, and (iii) the
obligation of the City to assure that no action is taken or failed to be taken if such action or
failure adversely affects the exclusion of interest on the Bonds from gross income for federal
income tax purposes.
Upon compliance by the City with the foregoing with respect to all Bonds Outstanding,
any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent,
which are not required for the purposes of the preceding paragraph, shall be paid over to the
City and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal
Agent but shall be retained by the City to be used for any purpose permitted under the Act and
the Resolution of Formation.
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
City of Fullerton
303 West Commonwealth Avenue
Fullerton, CA 92832
OPINION:
$7,570,000 City of Fullerton Community Facilities District No. 2
(Amerige Heights)
2014 Special Tax Bonds
Members of the City Council:
We have acted as bond counsel to City of Fullerton (the “City”) in connection with the
issuance by the City, for and on behalf of the City of Fullerton Community Facilities District
No. 2 (Amerige Heights), of the special tax bonds captioned above, dated the date hereof (the
"Bonds"). In such capacity, we have examined such law and such certified proceedings,
certifications and other documents as we have deemed necessary to render this opinion.
The Bonds are issued pursuant to the Mello-Roos Community Facilities Act of 1982, as
amended, being sections 53311 et seq. of the California Government Code (the “Act”), a
resolution of the City Council adopted on April 15, 2014 (the “Resolution”) and a Fiscal Agent
Agreement dated as of May 1, 2014 (the “Fiscal Agent Agreement”), between the City and U.S.
Bank National Association, as Fiscal Agent (the “Fiscal Agent”). Under the Fiscal Agent
Agreement, the City has pledged certain revenues (“Special Tax Revenues”) for the payment of
principal, premium (if any) and interest on the Bonds when due.
Regarding questions of fact material to our opinion, we have relied on representations of
the City contained in the Resolution and in the Fiscal Agent Agreement, and in the certified
proceedings and other certifications of public officials furnished to us, without undertaking to
verify the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law:
1.
The City is a general law city organized and existing under and by virtue
of the Constitution and laws of the State of California with the power to adopt the Resolution,
enter into the Fiscal Agent Agreement and perform the agreements on its part contained
therein, and issue the Bonds.
2.
The Fiscal Agent Agreement has been duly authorized, executed and
delivered by the City, and constitutes a valid and binding obligation of the City, enforceable
against the City.
3.
The Fiscal Agent Agreement creates a valid lien on the Special Tax
Revenues and other funds pledged by the Fiscal Agent Agreement for the security of the Bonds.
D-1
4.
The Bonds have been duly authorized and executed by the City, and are
valid and binding limited obligations of the City, payable solely from the Special Tax Revenues
and other funds provided therefor in the Fiscal Agent Agreement.
5.
Interest on the Bonds is excludable from gross income for federal income
tax purposes and is not an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations; it should be noted, however, that for the
purpose of computing the alternative minimum tax imposed on corporations (as defined for
federal income tax purposes), such interest is taken into account in determining certain income
and earnings. The opinions set forth in the preceding sentence are subject to the condition that
the City comply with all requirements of the Internal Revenue Code of 1986 that must be
satisfied subsequent to the delivery of the Bonds in order that such interest be, or continue to
be, excluded from gross income for federal income tax purposes. The City has covenanted to
comply with each such requirement. Failure to comply with certain of such requirements may
cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to
be retroactive to the date of issuance of the Bonds. We express no opinion regarding other
federal tax consequences arising with respect to the Bonds.
6.
Interest on the Bonds is exempt from personal income taxation imposed
by the State of California.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal
Agent Agreement are limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally, and by equitable principles, whether considered
at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or
supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention, or any changes in law that may hereafter occur. Our engagement with respect to this
matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
D-2
APPENDIX E
BOOK ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC’s book-entry only system has
been obtained from sources that the City believes to be reliable, but the City takes no
responsibility for the completeness or accuracy thereof. The following description of the
procedures and record keeping with respect to beneficial ownership interests in the Bonds,
payment of principal, premium, if any, accreted value and interest on the Bonds to DTC
Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in
the Bonds and other related transactions by and between DTC, the DTC Participants and the
Beneficial Owners is based solely on information provided by DTC. Reference made to
www.dttc.com is presented as a link for additional information regarding DTC and is not a part of
this Official Statement.
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository
for the Bonds (the “Bonds”). The Bonds will be issued as fully-registered securities registered in
the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be
requested by an authorized representative of DTC. One fully-registered certificate will be issued
for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will
be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500
million, one certificate will be issued with respect to each $500 million of principal amount, and
an additional certificate will be issued with respect to any remaining principal of such issue.
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 Uniform Commercial Code, and a “clearing agency” registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments from over 100 countries
that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the posttrade 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 for physical 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 a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its
Participants are on file with the Securities and Exchange Commission. More information about
DTC can be found at www.dtcc.com.
E-1
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 Beneficial Owner 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 Beneficial
Owners. Beneficial Owners will not receive certificates representing their ownership interests in
Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC
are registered in the name of DTC’s 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 Direct and Indirect
Participants will remain responsible for keeping 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 will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of 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 agreed to obtain and transmit notices to
Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of notices be provided directly to them.
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 maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City 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 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 City or the Paying 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
E-2
name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the
Paying Agent, or the City, 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 Paying Agent, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at
any time by giving reasonable notice to the City or the Paying Agent. Under such
circumstances, in the event that a successor depository is not obtained, physical Bonds are
required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through
DTC (or a successor securities depository). In that event, physical Bond certificates will be
printed and delivered.
The information in this section concerning DTC and DTC’s book-entry system has been
obtained from sources that the City believes to be reliable, but the City takes no responsibility
for the accuracy thereof.
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APPENDIX F
MARKET ABSORPTION STUDY
F-1
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Market Absorption Analysis
Proposed City of Fullerton CFD No. 2 (Amerige Heights)
Fullerton, California
City of Fullerton | March 31, 2014
CITY OF FULLERTON
TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................................................................................................................................................... 1
Background and Objectives ............................................................................................................................1
Methodology ...................................................................................................................................................2
Key Conclusions .............................................................................................................................................2
Achievable Pricing ....................................................................................................................................3
Market Depth and Absorption Potential ....................................................................................................4
LOCAL AREA ANALYSIS ............................................................................................................................................................ 6
Site Assessment .............................................................................................................................................6
Socioeconomic Context ..................................................................................................................................7
Regional Employment ...............................................................................................................................7
Demographic Factors ................................................................................................................................8
RESIDENTIAL MARKET ANALYSIS ......................................................................................................................................... 10
Housing Market Trends.................................................................................................................................10
Competitive Projects .....................................................................................................................................10
Planned and Proposed Development ...........................................................................................................11
Demand Outlook ...........................................................................................................................................11
Achievable Pricing ........................................................................................................................................12
CRITICAL ASSUMPTIONS ......................................................................................................................................................... 14
GENERAL LIMITING CONDITIONS ........................................................................................................................................... 15
APPENDIX: SUPPORTING EXHIBITS
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EXECUTIVE SUMMARY
Background and Objectives
The City of Fullerton retained RCLCO (“Robert Charles Lesser & Co., LLC”) to provide a third-party pricing and absorption evaluation of Standard Pacific
Homes’ (“StanPac”) residential development program in the existing master-planned community known as Amerige Heights.

The StanPac development plan comprises 115 single-family detached housing units located at the southeastern edge of Amerige Heights, along
Hughes Drive and adjacent to Bastanchury Park. Unit sizes range from 2,031 to 2,303 square feet; lots sizes are generally 2,000 square feet in
size.

The three-story homes include a first floor optional game room or guest suite with kitchenette (half floor below entry to house), a second floor
kitchen and living area (some also have a den/study on the second floor), and bedrooms on the third floor.

Sales at the Amerige Heights development began last summer (July 2013). As of March 9, 2014, 23 have sold and closed and an additional 16
are in escrow. The remaining units are priced between $699,900 and $735,900 for base units (no upgrades). Typical upgrades average about
$20,000.
At issue is the preparation of the market analysis of the Amerige Heights residential development to underpin the issuance of a CFD bond (City of
Fullerton Community Facilities District No. 2) funding a variety of eligible improvements. Bond proceeds will enable the construction of several public
improvements including parks, streets, and sewer and water facilities. The market analysis will be included in the bond offering statement and provide
input to the work undertaken by an appraiser.
Against this background, RCLCO conducted the market absorption analysis of the proposed residential development. Specific analytical objectives which
we addressed include:

Market – potential market demand for new single-family homes at Amerige Heights derived from the synthesis of demand/market demographics
and historical single-family sales trends.

Financial – projection of achievable pricing and absorption for the proposed units.
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Methodology
Specific analytical tasks leading to the fulfillment of the above objectives consisted of the following:

Evaluated the location merits of the Amerige Heights master-planned community, focusing on the subject’s execution, location, access and
visibility, quality of surrounding development, and proximity to key amenities/places.

Described short-term economic development trends for Orange County as a whole, i.e., economic recovery outlook and job growth, underpinning
the economic development context and setting for the proposed new homes in Fullerton.

Examined and evaluated the competitive environment, looking at recent resales of small lot homes within Amerige Heights and actively-selling
single-family home communities in the Primary Market Area (“PMA,” refer to Page 8 of this report and Exhibit II-1 for definition) that could inform
potential pricing at the subject site. Planned and proposed developments in the PMA were also examined.

Analyzed market demand/depth for new single-family homes at the subject location, utilizing the demographic makeup (age, income, tenure, and
turnover) of the PMA as the basis for local demand.

Translated the market research findings into development conclusions addressing market depth available for capture by prospective residential
development at the subject site and achievable pricing (constant 2014 dollars) informed by the preceding demand analysis, Amerige Heights’
resales, the local market comparables, and our understanding from the City of Fullerton that the total property tax rate for Amerige Heights’ homes
would be 1.67% (the proposed tax rate for the proposed Community Facilities District would be 0.62%).1
Key Conclusions
Our overriding conclusion is that market depth is more than sufficient to absorb the remaining units at Amerige Heights in a little over a year (monthly
absorption of six to nine units per month), due in large part to the following: 1) Amerige Heights is an established, well-executed master-planned
community located in the more affluent area of northwest Fullerton; 2) the absence of new home product given that the City of Fullerton is built out, with
only infill parcels providing the opportunity for contemporary development; 3) the modest home size range (2,031 to 2,303 square feet) on small lots
1
CFD rates at Amerige Heights will escalate by 2% per year
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CITY OF FULLERTON
contribute to projected pricing that appeals to a large buyer pool; and 4) the high performance achieved by the local public schools is a major draw to
households with school-age children. At this pace, the remaining 84 units could sell out in 10 to 16 months.
Achievable Pricing
Achievable Pricing, Amerige Heights
Figure 1
The project-wide average price would be $728,000 or $332 per
RCLCO RECOMMENDED
square foot (Figure 1 right and Exhibit I-1). Proposed housing at
PRICING
Amerige Heights should be priced above comparable new home
PLAN
TOTAL
PER SQ FT
products in Brea due to the favorable location within an existing
Plan 1
$702,050
$346/SF
master-planned community that is extremely well-executed with
Plan 2
$730,450
$332/SF
walkable access to schools, parks, and retail. Further, new homes at
Plan 3
$746,650
$324/SF
Amerige Heights should also achieve higher prices than current
TOTAL/AVG:
$728,000
$332/SF
resales of similar-sized small lot homes in Amerige Heights given
that resale homes are 10 years of age and new housing will
SOURCE: RCLCO
represent contemporary styling and appointments. Recommended
pricing is slightly higher than currently offered base prices, which include pre-plots (downstairs kitchenette, conduits for
washer/dryer, and other builder chosen features).
(in constant 2014 dollars)
DEVELOPER PRICING MARCH 2014
TOTAL
PER SQ FT
$699,900
$345/SF
$715,900
$325/SF
$735,900
$320/SF
$719,000
$328/SF
televisions, recessed lighting,
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Market Depth and Absorption Potential
With home prices at the proposed levels, we measure
depth of market in accordance with household income
and other demographic characteristics of the PMA.
One key indication is the number of local area
households earning between $150,000 and $200,000
annually, the approximate income range which qualifies
prospective buyers to purchase homes at the subject site
at the current recommended pricing.
Demand Methodology
Figure 2
Primary Market Area
SecondDemand
453
18,700
16,000
14,912
Local
Demand
1,812
Low
Capture,
68
High
Capture,
113
453

1,812
Based on current estimates, the PMA has
1,058
Income
Ages
25-64
Owner
HHs
Demand
f
rom
Total
Local
Total Housing
Fullerton
Site Capture
approximately 18,700 households earning
Qualif ied
Turnover
Demand
Demand
Capture
between $150,000 and $200,000 annually. This
SOURCE: RCLCO
PMA figure reduces to about 1,100 households
per year after adjustments that consider age,
home ownership, and annual turnover. The addition of new households in the relevant income ranges and potential buyers from outside the PMA
or outside our screening qualifications raises the annual demand to approximately 2,300.

Reflecting historical resale activity of single-family homes in Fullerton and the PMA (Exhibit III-2), our expectation is that Fullerton would capture
roughly 20% of the PMA housing demand. We then estimate that the subject site could capture 15% to 25% of the Fullerton demand for homes
priced between $680,000 and $925,000, equating to an annual demand potential ranging from approximately 70 to 110 units, or six to nine units
per month (Exhibit III-1). A 25% capture rate reflects the site’s “fair share” capture based on total units at the site as a percentage of annual
Fullerton homes sales in the relevant price range. We also included a conservative estimate of 15% to account for the likelihood that the threestory small-lot product may not appeal to some buyers.
This projected rate of sales appears to be above that observed to date. As of March 2014, the project has sold 31 homes (18 closed, 13 in
escrow), equating to a sales pace of about four units per month. We believe that Amerige Heights has the potential to achieve the projected sales
pace stated above given the site’s favorable location, the availability of high income households who can afford the product, and the lack of new
product in the City. Moreover, the development began selling in July of 2013 which may not have allowed sufficient time for families with children
to secure a home before the start of the school year. It is likely that sales could pick up in the spring and summer of this year as families prepare
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for the 2014-2015 school year. Lastly, special attention to floorplan layouts and designs reflecting the preferences of the Asian target market
should be taken into consideration to promote buyer appeal.
*
*
*
*
*
The balance of this report provides our findings and more detailed analytical support. The sections that follow are:



Local Area Analysis
Residential Market Analysis
Technical Appendix – Exhibits
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LOCAL AREA ANALYSIS
Site Assessment
Site Location
Figure 3
Amerige Heights, Fullerton, CA
StanPac’s Amerige Heights housing program is located
along Hughes Drive near Bastanchury Road in the Amerige
Heights master-planned community in Northwest Fullerton.
Amerige Heights is a well-executed planned community with
walkable streets, nearby dining and retail, neighborhood
parks and playgrounds, recreational facilities, and highperforming public schools.
Key location characteristics of the subject site are:
 Walking distance to Fisler Elementary School and Sunny
Hills High School. Fisler is a combined elementary and
middle school available exclusively to the residents of
Amerige Heights. Both Fisler and Sunny Hills are high
achieving schools (API rank of 10, Exhibit V-1) which
outperform schools in Orange County and California (Exhibit
V-2 and V-3).
 Nearby grocery and retail located at the Amerige Heights
Town Center, at Gilbert Street and Malvern Avenue. The
Town Center features a variety of shopping options,
including Albertsons grocery store, Target, Old Navy, Ross, Barnes & Noble, and various restaurants.

An employment concentration consisting of approximately 5,900 employees and 1,000 businesses within one mile of the subject site, including
Hydraflow, located directly south of the site, and Raytheon, located directly north of the site across Hughes Drive.

Convenient access to the Buena Park Metrolink commuter rail station at 8400 Lakeknoll Drive, approximately 1.7 miles from Amerige Heights.
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Socioeconomic Context
Regional Employment
Reflective of national economic conditions, Orange County has made great strides since emerging from the recent Great Recession, when the collapse of
several local mortgage lending giants caused the County to be hit harder by the recession than other parts of Southern California.2 Although this caused
the County’s recovery to lag behind that of the nation, the County is now poised for accelerated growth, led by high tech industries and tourism. Beginning
in 2011, Orange County added 76,000 jobs—14,000 jobs (1.1%) in 2011, 22,000 (1.6%) in 2012, and another 40,000 jobs (2.9%) in 2013 (Exhibit II-5).
When compared to California and the U.S over the 2010 to 2013 period, job gains in Orange County rose at a cumulative 5.6%, slightly exceeding
California’s 5.5% and the nation’s 4.6%. In 2012 and 2013, the rate of job growth in Orange County has approached levels last seen in the County during
the pre-recession years of the last decade.
Employment growth in Orange County centers on the health services, tech, tourism, and manufacturing industries. These sectors have added 40,000 jobs
since 2011, accounting for more than half of the job growth during that time period. Employment growth is projected to continue in 2014 and 2015 with
growth rates expected to be in the 2% to 3% range. Three reputable sources that prepare Orange County economic forecasts generally anticipate an
economic recovery that should reach previous peak employment by sometime in 2016. The economic picture provided by these forecasts suggests that
residential home sales at Amerige Heights in 2014 and if necessary 2015, should continue to occur in a rapidly recovering economy. We have summarized
these forecasts as follows (see Exhibit II-6 for details):
2

Economy.com forecasts recovery return to peak employment for Orange County in 2016, with a gain of 29,000 jobs during the year. Until then, the
region is forecasted to add an additional 32,700 jobs (2.3%) in 2014 and 32,800 jobs (2.2%) in 2015.

The Los Angeles County Economic Development Corporation (LAEDC)’s 2014-2015 Mid-Year Economic Forecast and Industry Outlook from
February 2014 projects employment growth in Orange County of 2.1% in 2014, followed by an additional 2.0% in 2015, leading to a two-year
employment increase of 70,000 net new jobs. The unemployment rate is expected to drop from 6.1% in 2013 to 5.2% in 2014, then decline to
4.6% in 2015.
According to the National Bureau of Economic Research, the Great Recession lasted 18 months, from December 2007 to June 2009. Nationally, the 2007 to 2009 recession was the deepest
on record since the Great Depression, at least in terms of job losses.
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
The California Department of Transportation (CADOT) forecasts stronger growth rates than Economy.com and LAEDC for 2014 and 2015 at 3.0%
and 2.4%, respectively. CADOT forecasts 1.8% in 2016. At the pace anticipated by the CADOT, Orange County employment would return to prerecession peak job levels by 2015.
Demographic Factors
In 2013, the City of Fullerton’s population stood at approximately 137,100, with an average household size of 2.99 persons per household. Of the 45,900
households in the city, 24,300 households (53%) are owners, and 14,300 (31%) have incomes over $100,000 (Exhibit II-2 and II-3A).
By comparison, Northwest Fullerton (bordered by Malvern Avenue to the south and Harbor Boulevard to the east), where Amerige Heights is located is a
relatively more affluent area of the City.

2013 median household income in Northwest Fullerton was 30% higher than the city as a whole, 28% higher than the Primary Market Area, and
18% higher than Orange County.

Sale prices of single-family homes in Northwest Fullerton are also higher. The average sale price of homes sold in the past year in Northwest
Fullerton was 12% higher than the average sale price of all homes sold in the city (Exhibit II-2).
The Primary Market Area includes the cities of Fullerton, Brea, Buena Park, La Habra, Placentia, Yorba Linda, La Mirada, and Anaheim (Exhibit II-1) and
is derived in large part from our field surveys of competitive for-sale housing developments. The PMA had a population of 830,200 in 2013; Fullerton’s
population represents approximately 15% of the PMA population.

Average household size in the PMA is 3.22, slightly higher than the City of Fullerton.

Of the 257,500 PMA households, 145,100 (56%) are owners, and 79,900 (31%) have annual incomes over $100,000 (Exhibit II-2 and II-3B). PMA
households are more affluent than the City of Fullerton as a whole, but less affluent than households in Northwest Fullerton. The PMA has a
higher percentage of owner-occupied housing than Fullerton, which is likely due to the higher rental propensities of students attending California
State University, Fullerton.
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
The projected household growth rate (2013-2018) for the PMA is approximately 2,100 households or 0.8% per year. The low population growth
rate reflects the built-out nature of this market, i.e., population growth in the future will emerge from densification and not the conversion of
undeveloped land to urban uses.
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RESIDENTIAL MARKET ANALYSIS
Housing Market Trends
The residential real estate market for Orange County is improving, with sales rising by approximately 600 from 2012 to 2013. Foreclosure data reveals that
the number of new notices of default is only 1.0% of the total number of owner-occupied households in the County and the City of Fullerton.
For homes in the City of Fullerton, the average sale price of single-family homes sold in the past three months was $647,500 for a 2,100-square foot
home. Homes in Northwest Fullerton sold at higher prices, averaging $736,300 for a 2,500-square foot home during the same period. This figure is slightly
higher than the average price of $718,000 for resales of small lot homes (homes with home size-to-lot size ratio of 70% or greater) reported at Amerige
Heights (Exhibit I-3A).
Competitive Projects
RCLCO characterized the market supply pertinent to StanPac’s small-lot Amerige Heights program by examining resales of small lot homes in Amerige
Heights and surveying three actively-selling new home communities in the PMA including: Sorano at Blackstone, and two subdivisions (Avenida and
Paseo) in the La Floresta community of Brea (Standard Pacific Homes is the home builder in all three).

Resale prices of existing homes at Amerige Heights were generally consistent with the prices of new, similarly-sized products at Sorano at
Blackstone. Pricing at Avenida at La Floresta in Brea, where homes and lots are larger than the subject site, is significantly higher. In contrast, at
Paseo, a development of townhomes, prices are much lower given the smaller home and lot sizes. The average resale prices of recently sold
small lot homes in the Amerige Heights community as a whole was $718,100, or $303 per square foot, for an average home size of 2,372 square
feet (Exhibit I-3A).

Avenida at La Floresta in Brea homes average 2,564 square feet with an average price is $843,900, or $329 per square foot (Exhibit I-3B). Since
sales started this past November, 25 homes have been sold at this community, an average of about seven sales per month.

Paseo at La Floresta in Brea has an average size of 1,671 square feet and an average price of $552,200 or $330 per square foot
(Exhibit I-3C). Sales started in March of last year, and 63 homes have been sold so far for an average of approximately 5.6 sales per month.
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
The average home size at Sorano at Blackstone in Brea is 1,851 square feet priced at $700,200, or $378 per square foot (Exhibit I-3D). Sorano at
Blackstone has sold 126 units since opening in March of 2011, averaging roughly 3.6 units per month.
Planned and Proposed Development
Minimal new single-family development is currently underway in the City of Fullerton. Liberty Walk, a small community consisting of 44 homes is the only
development currently available. The project opened on January 11th of this year and has released 18 homes and sold nine. No other projects are in the
planning pipeline.
Housing permit information from the U.S. Department of Housing and Urban Development reveals a significant comeback in single-family permits during
the past three years for Orange County. Single-family permits for the County rose 25% from 2011 to 2012 and another 61% from 2012 to 2013, resulting in
the highest levels since 2006. Total permit activity in the County (both single- and multifamily) in 2013 achieved its highest levels since 2004 when 9,250
permits were issued. The City of Fullerton has not seen any substantial permit activity since 2003; single-family permits over the last seven years have
averaged slightly under 40 units per year. Fullerton and its surrounding cities are relatively mature communities with few possibilities for the construction of
new homes outside of infill development.
Demand Outlook
We have projected annual demand for ownership residential development at Amerige Heights derived largely on the demographic characteristics of the
Primary Market Area. Our demographic demand model based on income qualified households and numerous other factors (age, tenure, and annual
turnover) reveals an annual absorption potential at Amerige Heights ranging from 70 to 110 units, equivalent to a monthly absorption of about six to nine
units. A summary of this demand model forecast methodology follows (See Exhibit III-1 for details):

Households in the Primary Market Area were age-qualified (ages 25 to 64 years old) and income-qualified as buyers. Appropriate household
income qualifications for the subject site was determined to range between $150,000 and $200,000 based on the following assumptions: current
StanPac Amerige Housing pricing, minimum 20% downpayment, 30-year fixed mortgage with a 5.0% interest rate, property taxes at 1.67% per
year (0.62% provides repayment of the proposed CFD bonds), HOA dues averaging $260 per month, and total housing costs (mortgage, HOA
fees, and property tax) comprising 35% of household income.
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
Household projections for the PMA provided short-term demand potential from household growth. After applying the same age and income range
qualifications, we estimate that an average of about 1,800 households would be in the market for ownership single-family housing annually over
the next five years.

Secondary demand encompasses households originating outside the PMA. From discussions with sales agents at nearby actively-selling projects,
most of these households originate from other areas of Orange County and cities to the north of the PMA such as Walnut and Diamond Bar in Los
Angeles County. Accordingly, we estimate that 20% of total demand for Amerige Heights would continue to originate from outside the PMA.
Consequently, the total demand pool for single-family homes is just under 2,300 households between the ages of 25 and 64 and earning between
$150,000 and $200,000 annually.
Considering historical resales of single-family homes in Fullerton as a percentage of resales in the PMA, we estimate that Fullerton should capture
20% of the total PMA housing demand which is consistent with recent sales trends.

At the recommended pricing (see below under Achievable Pricing), we estimate that the subject site should capture 15% to 25% of the Fullerton
demand for households earning $150,000 to $200,000 per year and homes priced between $680,000 and $925,000. The resultant demand is
about 70 to 110 units per year at Amerige Heights, or six to nine units per month. At this pace, the remaining 84 units could sell out in 10 to 16
months.
Achievable Pricing
Recently sold small lot homes in Amerige Heights and relevant actively-selling new home communities in the PMA provided comparable price points from
which we established the achievable pricing for homes at Amerige Heights. The pricing methodology which we employed was as follows:

Using each market comparable’s price to size relationship and our industry experience to arrive at a price slope, we made price adjustments of
Amerige Heights resales and competitive developments to reflect envisioned unit sizes at Amerige Heights.

A location adjustment of 15% was added to all comparable communities to account for the desirability of the Amerige Heights development and
the price premium for the opportunity to live in this already established, well-executed community with exceptional schools.
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
We accounted for the home purchasing power implications of proposed higher property tax rates at Amerige Heights (total property tax rate of
1.67%) versus the lower property taxes at the competitive communities (total property tax rate of 1.25% for Avenida and Sorano, and 1.13% for
Paseo). Given that buyers with the same income would be able to afford higher priced homes in a community with lower taxes, we adjusted
downward the Amerige Heights home prices in relation to the competition to reflect the property tax differential.

Based on the U.S. Bureau of Economic Analysis’ estimated depreciation rate of 0.0114% per year for single-family homes, we added an upwards
adjustment of 13% to the older Amerige Heights resales.
The resulting achievable prices for the homes at Amerige Heights are shown below (Exhibit I-1). RCLCO’s prices are slightly above those currently
offered, confirming the reasonableness of these prices and indicating the upside pricing potential.
RCLCO RECOMMENDED PRICING
DEVELOPER PRICING - MARCH 2014
PLAN
TOTAL
PER SQ FT
TOTAL
PER SQ FT
Plan 1
$702,050
$346/SF
$699,900
$345/SF
Plan 2
$730,450
$332/SF
$715,900
$325/SF
Plan 3
$746,650
$324/SF
$735,900
$320/SF
TOTAL/AVG:
$728,000
$332/SF
$719,000
$328/SF
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CITY OF FULLERTON
CRITICAL ASSUMPTIONS
Our conclusions are based on our analysis of the information available from our own sources and from the client as of the date of this report. We assume
that the information is correct, complete, and reliable.
We made certain assumptions about the future performance of the global, national, and local economy and real estate market, and on other factors
similarly outside either our control or that of the client. We analyzed trends and the information available to us in drawing these conclusions. However,
given the fluid and dynamic nature of the economy and real estate markets, as well as the uncertainty surrounding particularly the near-term future, it is
critical to monitor the economy and markets continuously and to revisit the aforementioned conclusions periodically to ensure that they are reflective of
changing market conditions.
We assume that the economy and real estate markets will grow at a stable and moderate rate to 2020 and beyond. However, stable and moderate growth
patterns are historically not sustainable over extended periods of time, the economy is cyclical, and real estate markets are typically highly sensitive to
business cycles. Further, it is very difficult to predict when an economic and real estate upturn will end.
With the above in mind, we assume that the long term average absorption rates and price changes will be as projected, realizing that most of the time
performance will be either above or below said average rates.
Our analysis does not consider the potential impact of future economic shocks on the national and/or local economy, and does not consider the potential
benefits from major "booms” that may occur. Similarly, the analysis does not reflect the residual impact on the real estate market and the competitive
environment of such a shock or boom. Also, it is important to note that it is difficult to predict changing consumer and market psychology.
As such, we recommend the close monitoring of the economy and the marketplace, and updating this analysis as appropriate.
Further, the project and investment economics should be “stress tested” to ensure that potential fluctuations in revenue and cost assumptions resulting
from alternative scenarios regarding the economy and real estate market conditions will not cause failure.
In addition, we assume that the following will occur in accordance with current expectations:







Economic, employment, and household growth.
Other forecasts of trends and demographic and economic patterns, including consumer confidence levels.
The cost of development and construction.
Tax laws (i.e., property and income tax rates, deductibility of mortgage interest, and so forth).
Availability and cost of capital and mortgage financing for real estate developers, owners and buyers.
Competitive projects will be developed as planned (active and future) and that a reasonable stream of supply offerings will satisfy real estate
demand.
Major public works projects occur and are completed as planned.
Should any of the above change, this analysis should be updated, with the conclusions reviewed accordingly (and possibly revised).
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CITY OF FULLERTON
GENERAL LIMITING CONDITIONS
Reasonable efforts have been made to ensure that the data contained in this study reflect accurate and timely information and are believed to be reliable.
This study is based on estimates, assumptions, and other information developed by RCLCO from its independent research effort, general knowledge of
the industry, and consultations with the client and its representatives. No responsibility is assumed for inaccuracies in reporting by the client, its agent, and
representatives or in any other data source used in preparing or presenting this study. This report is based on information that to our knowledge was
current as of the date of this report, and RCLCO has not undertaken any update of its research effort since such date.
Our report may contain prospective financial information, estimates, or opinions that represent our view of reasonable expectations at a particular time, but
such information, estimates, or opinions are not offered as predictions or assurances that a particular level of income or profit will be achieved, that
particular events will occur, or that a particular price will be offered or accepted. Actual results achieved during the period covered by our prospective
financial analysis may vary from those described in our report, and the variations may be material. Therefore, no warranty or representation is made by
RCLCO that any of the projected values or results contained in this study will be achieved.
Possession of this study does not carry with it the right of publication thereof or to use the name of "Robert Charles Lesser & Co., LLC" or "RCLCO" in any
manner without first obtaining the prior written consent of RCLCO. No abstracting, excerpting, or summarization of this study may be made without first
obtaining the prior written consent of RCLCO. This report is not to be used in conjunction with any public or private offering of securities or other similar
purpose where it may be relied upon to any degree by any person other than the client without first obtaining the prior written consent of RCLCO. This
study may not be used for any purpose other than that for which it is prepared or for which prior written consent has first been obtained from RCLCO.
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CITY OF FULLERTON
LIST OF EXHIBITS
I.
CONCLUSIONS AND RECOMMENDATIONS
Exhibit I-1
Summary of Conclusions and Recommendations; Amerige Heights; Fullerton, CA; February 2014
Exhibit I-2
Base Unit Pricing, Amerige Heights; Based on Adjustments to Selected Comparables; February 2014
Exhibit I-3A
Base Unit Pricing; Amerige Heights; Based on Adjustments to Selected Resales at Amerige Heights;
February 2014
Exhibit I-3B
Base Unit Pricing; Amerige Heights; Based on Adjustments to Avenida at La Floresta; February 2014
Exhibit I-3C
Base Unit Pricing; Amerige Heights; Based on Adjustments to Paseo at La Floresta; February 2014
Exhibit I-3D
Base Unit Pricing; Amerige Heights; Based on Adjustments to Sorano at Blackstone; February 2014
II.
ECONOMICS AND DEMOGRAPHICS
Exhibit II-1
Map of Primary Market Area; Fullerton and Surrounding Areas
Exhibit II-2
Comparative Socioeconomic Characteristics; Fullerton, Orange County, and California; 2010-2018
Exhibit II-3A Households by Age and Income; Fullerton, CA; 2013
Exhibit II-3B Households by Age and Income; Primary Market Area; 2013
Exhibit II-3C Households by Age and Income; Orange County, CA; 2013
Exhibit II-4
Historical Non-Agricultural Employment Growth; Orange County, California, and United States;
1990-2018 (in thousands)
Exhibit II-5
Historical and Projected Annual Employment Growth; Orange County; 1991-2018
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Exhibit II-6
Employment Projections; Orange County; 2005-2018
Exhibit II-7A Historical Single-Family and Multifamily Permits; Orange County; 1990-2013
Exhibit II-7B Historical Single-Family and Multifamily Permits; Fullerton, CA; 1990-2013
Exhibit II-8
III.
Mortgage Holders Receiving Default Notices; City of Fullerton, Primary Market Area, Orange County, and
California; February 2013-February 2014
DEMAND
Exhibit III-1
Annual New Home Demand Potential; Primary Market Area; 2013-2018
Exhibit III-2
Historical Resale Activity – Single-Family Homes; Fullerton and Primary Market Area; 2006-2014
IV. COMPETITIVE MARKET
Exhibit IV-1
Map of Selected Comparable New Home Developments; Brea, CA; February 2014
Exhibit IV-2
Summary of Selected Comparable New Home Developments; Brea, CA; February 2014
V.
SCHOOLS
Exhibit V-1
Map of Schools by API Rank; Subject Site and Surrounding Area; 2013
Exhibit V-2
Elementary School Comparison; Fisler Elementary, Orange County, and California; 2012-2013
Exhibit V-3
High School Comparison; Sunny Hills High School, Orange County, and California; 2013-2013
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CITY OF FULLERTON
I.
CONCLUSIONS AND RECOMMENDATIONS
CITY OF FULLERTON
Exhibit I-1
SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS
AMERIGE HEIGHTS
FULLERTON, CA
FEBRUARY 2014
LOCATION:
Amerige Heights is an established, well-executed master-planned community in Northwest Fullerton, an affluent and
desirable neighborhood in the City of Fullerton. Compared to the City as a whole, median household income in
Northwest Fullerton is 30% higher, and the average sale price of single-family homes in the past year was 12%
higher. Amerige Heights benefits greatly from the development success of the Amerige Heights planned community
and the recognized quality of the Northwest Fullerton neighborhood.
TARGET
MARKET:
Target Market consists of households preferring new, generally small units on small lots in an existing well-executed
community with high-achieving schools. Most buyers will likely be families--couples with young school-age children.
ABSORPTION
POTENTIAL:
Approximately 80% of the demand for new homes at Amerige Heights would originate from the local market, defined
as the cities of Fullerton, Brea, Buena Park, Placentia, La Habra, Anaheim, La Mirada and Yorba Linda (mostly
northern Orange County). At Amerige Heights, we project an annual absorption of approximately 70 to 110 units per
year (about six to nine units per month), leading to a sell-out period of 13 to 14 months.
ACHIEVABLE BASE PRICING ($ 2014):
PLAN
Plan 1
Plan 2
Plan 3
TOTAL/AVG:
AVG. UNIT
SIZE
UNIT
COUNT
MIX
SALES
PRICE
PRICE
PER SQ FT
2,031 SF
2,203 SF
2,303 SF
2,192 SF
33
38
44
115
29%
33%
38%
100%
$702,050
$730,450
$746,650
$728,000
$346/SF
$332/SF
$324/SF
$332/SF
SOURCE: RCLCO
Exhibit I-1
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CITY OF FULLERTON
Exhibit I-2
BASE UNIT PRICING, AMERIGE HEIGHTS
BASED ON ADJUSTMENTS TO SELECTED COMPARABLES
FEBRUARY 2014
HOME
SIZE (SF)
2,031 SF
2,203 SF
2,303 SF
AMERIGE HEIGHTS (RESALES)
PRICE
$/SF
$687,000
$714,000
$729,000
$338
$324
$317
60%
HOME
SIZE (SF)
2,031 SF
2,203 SF
2,303 SF
15%
$748,000
$776,000
$793,000
$368
$352
$344
15%
SORANO AT BLACKSTONE
PRICE
$/SF
$727,000
$759,000
$778,000
AVENIDA AT LA FLORESTA
PRICE
$/SF
$358
$345
$338
PASEO AT LA FLORESTA
PRICE
$/SF
$686,000
$718,000
$736,000
$338
$326
$320
10%
AMERIGE HEIGHTS
PRICE
$/SF
$702,050
$730,450
$746,650
$346
$332
$324
100%
NOTE: Supporting documentation as follows:
Amerige Heights, from Exhibit I-3A
Avenida at La Floresta, from Exhibit I-3B
Paseo at La Floresta, from Exhibit I-3C
Sorano at Blackstone, from Exhibit I-3D
SOURCE: RCLCO
Exhibit I-2
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CITY OF FULLERTON
Exhibit I-3A
BASE UNIT PRICING, AMERIGE HEIGHTS
BASED ON ADJUSTMENTS TO SELECTED RESALES AT AMERIGE HEIGHTS
FEBRUARY 2014
SALE
LOCATION/ PROJECT
Amerige Heights (Resales)
2050 NORTHAM Dr
2172 HETEBRINK St
1330 BECKMAN Ct
1333 NICOLAS Way
1279 HOPPING St
2049 HESSEN St
2137 LAWTON St
AVERAGE
DATE
11/7/2013
11/14/2013
12/2/2013
1/6/2014
1/21/2014
10/22/2013
12/24/2013
LOT
UNIT
SIZE (SF) SIZE (SF)
AGE
PRODUCT
PRICE
$/SF
ADJUSTMENT1
TYPE2
PRICE
$/SF
13%
13%
13%
13%
13%
13%
13%
-10%
-10%
-10%
-10%
-10%
-10%
-10%
$860,000
$700,000
$627,000
$860,000
$713,000
$711,000
$706,000
$323
$302
$344
$314
$301
$300
$304
$740,000
$312
ADJUSTED
PRICE
$/SF
$687,000
$714,000
$729,000
$338
$324
$317
SALE
4,308
3,559
2,544
5,144
3,324
3,219
3,912
2,663
2,319
1,825
2,743
2,368
2,368
2,319
$835,000
$680,000
$609,000
$835,000
$692,500
$690,000
$685,000
$314
$293
$334
$304
$292
$291
$295
3,716
2,372
$718,100
$303
ADJUSTMENT FOR UNIT SIZE
UNIT
SIZE
SIZE
DIFF. (SF)
2,031 SF
2,203 SF
2,303 SF
(341)
(169)
(69)
ADJ. BASE PRICE
3
SIZE
ADJUSTMENT
+ ($53,210)
+ ($26,382)
+ ($10,785)
1
Based on an annual rate of depreciation of 0.0114%. Source: US Bureau of Economic Analysis, "Fixed Assets and Consumer Durable Goods in the United States, 1925-97,"
September 2003.
2
Product type adjustment reflects the smaller lots and three-story configuration of the subject site.
3
Price for various unit sizes reflects the market relationship between the change in the price per square foot and the change in unit size for selected market comparable projects.
SOURCE: RCLCO
Exhibit I-3A
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CITY OF FULLERTON
Exhibit I-3B
BASE UNIT PRICING, AMERIGE HEIGHTS
BASED ON ADJUSTMENTS TO AVENIDA AT LA FLORESTA
FEBRUARY 2014
UNIT
SALE
LOCATION
TAX
PRODUCT
LOCATION/ PROJECT
SIZE (SF)
PRICE
$/SF
ADJUSTMENT1
ADJUSTMENT2
TYPE3
PRICE
$/SF
Avenida at La Floresta
Brea, CA
2,402
2,615
2,675
$817,900
$865,900
$847,900
$341
$331
$317
15%
15%
15%
-6%
-6%
-6%
-10%
-10%
-10%
$810,000
$857,000
$839,000
$337
$328
$314
AVERAGE
2,564
$843,900
$329
$835,000
$326
ADJUSTED
PRICE
$/SF
$748,000
$776,000
$793,000
$368
$352
$344
ADJUSTMENT FOR UNIT SIZE 4
UNIT
SIZE
SIZE
DIFF. (SF)
2,031 SF
2,203 SF
2,303 SF
(533)
(361)
(261)
SIZE
ADJUSTMENT
+ ($86,789)
+ ($58,782)
+ ($42,499)
ADJ. BASE PRICE
1
Location premium reflects the desirability of the Northwest Fullerton area and the Amerige Heights community and the opportunity to live in an established, wellexecuted master-planned community with high-performing schools. Median incomes in Northwest Fullerton are 12% higher than Brea, and average sale prices of
single-family homes in the past year were 18% higher in Northwest Fullerton than in Brea (see Exhibit II-2).
2
Tax adjustment reflects the difference in property tax rates between the comparable community (1.25%) and the subject site (1.67%). Buyers with the same income
will be able to afford higher priced homes in a community with lower tax rates.
3
Product type adjustment reflects the smaller lots and three-story configuration of the subject site.
4
Price for various unit sizes reflects the market relationship between the change in the price per square foot and the change in unit size for selected market
comparable projects.
SOURCE: RCLCO
Exhibit I-3B
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CITY OF FULLERTON
Exhibit I-3C
BASE UNIT PRICING, AMERIGE HEIGHTS
BASED ON ADJUSTMENTS TO PASEO AT LA FLORESTA
FEBRUARY 2014
UNIT
SALE
LOCATION
TAX
PRODUCT
SIZE (SF)
PRICE
$/SF
ADJUSTMENT1
ADJUSTMENT2
TYPE3
PRICE
$/SF
Paseo at La Floresta
Brea, CA
1,518
1,628
1,867
$522,900
$534,900
$598,900
$344
$329
$321
15%
15%
15%
-8%
-8%
-8%
5%
5%
5%
$586,000
$599,000
$671,000
$386
$368
$359
AVERAGE
1,671
$552,200
$330
$619,000
$370
ADJUSTED
PRICE
$/SF
$686,000
$718,000
$736,000
$338
$326
$320
LOCATION/ PROJECT
ADJUSTMENT FOR UNIT SIZE 4
UNIT
SIZE
SIZE
DIFF. (SF)
2,031 SF
2,203 SF
2,303 SF
360
532
632
SIZE
ADJUSTMENT
+ $66,679
+ $98,536
+ $117,058
ADJ. BASE PRICE
1
Location premium reflects the desirability of the Northwest Fullerton area and the Amerige Heights community and the opportunity to live in an established, wellexecuted master-planned community with high-performing local schools. Median incomes in Northwest Fullerton are 12% higher than Brea and average sale prices of
single-family homes in the past year were 18% higher in Northwest Fullerton than in Brea (see Exhibit II-2).
2
Tax adjustment reflects the difference in property tax rates between the comparable community (1.13%) and the subject site (1.67%). Buyers with the same income
will be able to afford higher priced homes in a community with lower tax rates.
3
Product type adjustment accounts for the price difference between single-family detached homes and attached townhomes. Based on RCLCO experience.
4
Price for various unit sizes reflects the market relationship between the change in the price per square foot and the change in unit size for selected market
comparable projects.
SOURCE: RCLCO
Exhibit I-3C
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CITY OF FULLERTON
Exhibit I-3D
BASE UNIT PRICING, AMERIGE HEIGHTS
BASED ON ADJUSTMENTS TO SORANO AT BLACKSTONE
FEBRUARY 2014
UNIT
SALE
LOCATION
TAX
PRODUCT
LOCATION/ PROJECT
SIZE (SF)
PRICE
$/SF
ADJUSTMENT1
ADJUSTMENT2
TYPE3
PRICE
$/SF
Sorano at Blackstone
Brea, CA
1,739
1,814
2,001
$663,900
$713,900
$722,900
$382
$394
$361
15%
15%
15%
-6%
-6%
-6%
-10%
-10%
-10%
$657,000
$707,000
$716,000
$378
$390
$358
AVERAGE
1,851
$700,200
$378
$693,000
$374
ADJUSTED
PRICE
$/SF
$727,000
$759,000
$778,000
$358
$345
$338
ADJUSTMENT FOR UNIT SIZE
UNIT
SIZE
SIZE
DIFF. (SF)
2,031 SF
2,203 SF
2,303 SF
180
352
452
ADJ. BASE PRICE
4
SIZE
ADJUSTMENT
+ $33,627
+ $65,819
+ $84,535
1
Location premium reflects the desirability of the Northwest Fullerton area and the Amerige Heights community and the opportunity to live in an established, wellexecuted master-planned community. Median incomes in Northwest Fullerton are 12% higher than Brea and average sale prices of single-family homes in the past
year were 18% higher in Northwest Fullerton than in Brea (see Exhibit II-2).
2
Tax adjustment reflects the difference in property tax rates between the comparable community (1.25%) and the subject site (1.67%). Buyers with the same income
will be able to afford higher priced homes in a community with lower tax rates.
3
Product type adjustment reflects the smaller lots and three-story configuration of the subject site.
4
Price for various unit sizes reflects the market relationship between the change in the price per square foot and the change in unit size for selected market
comparable projects.
SOURCE: RCLCO
Exhibit I-3D
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CITY OF FULLERTON
II. ECONOMICS AND DEMOGRAPHICS
CITY OF FULLERTON
Exhibit II-1
MAP OF PRIMARY MARKET AREA
FULLERTON AND SURROUNDING AREAS
NOTE: The Primary Market Area includes the following cities: Fullerton, Brea, Buena Park, La Habra, Anaheim, Yorba Linda, La Mirada, and Placentia.
SOURCE: ESRI Business Analyst; RCLCO
Exhibit II-1
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CITY OF FULLERTON
Exhibit II-2
COMPARATIVE SOCIOECONOMIC CHARACTERISTICS
FULLERTON, ORANGE COUNTY, AND CALIFORNIA
2010-2018
CHARACTERISTIC
NW FULLERTON 1
FULLERTON
BREA
PRIMARY
MARKET AREA
ORANGE
COUNTY
CALIFORNIA
30,126
30,435
31,385
135,161
137,113
142,141
39,282
40,800
43,256
814,771
830,198
864,444
3,010,232
3,065,100
3,193,015
37,253,956
37,905,036
39,399,456
0.3%
0.6%
0.5%
0.7%
1.3%
1.2%
0.6%
0.8%
0.6%
0.8%
0.6%
0.8%
10,201
10,287
10,606
45,391
45,892
47,546
14,266
14,707
15,514
253,236
257,473
268,054
992,781
1,009,989
1,053,035
12,577,498
12,770,627
13,267,173
0.3%
0.6%
0.4%
0.7%
1.0%
1.1%
0.6%
0.8%
0.6%
0.8%
0.5%
0.8%
2010 Population
2013 Population
2018 Population
Pop. Growth Rate, 2010-2013
Pop. Growth Rate, 2013-2018
2010 Households
2013 Housholds
2018 Households
Household Growth Rate, 2010-2013
Household Growth Rate, 2013-2018
2013 Household Size
2.96
2.99
2.77
3.22
3.03
2.97
2013 Per Capita Income
2013 Median Household Income
% Difference from NW Fullerton
2013 Average Household Income
$40,565
$90,634
-$119,976
$30,149
$63,057
-30%
$88,547
$36,382
$79,467
-12%
$100,598
$27,726
$65,250
-28%
$88,561
$33,302
$73,975
-18%
$100,209
$28,796
$58,881
-35%
$84,086
Avg. Sale Price - Single-Family Homes 2
% Difference from NW Fullerton
Avg. Sale $/SF - Single-Family Homes 2
% Difference from NW Fullerton
$736,318
-$295
--
$647,499
-12%
$309
5%
$605,355
-18%
$306
4%
Average Household Growth Rates, 2000-2018
1.1%
1.0%
0.6%
0.3%
0.6%
0.4%
0.6%
0.5%
2000-2010
NW Fullerton
0.8%
0.7%
0.8%
0.8%
2010-2015
Fullerton
Brea
PMA
Orange County
California
NOTE: The Primary Market Area includes the following cities: Fullerton, Brea, Buena Park, La Habra, Anaheim, Yorba Linda, La Mirada and Placentia.
Northwest Fullerton is bordered by Malvern Avenue to the south and Harbor Boulevard to the east and represents a more affluent and desirable area within the City of Fullerton.
2
Sales from the past three months. Source: Redfin.
1
SOURCE: ESRI Business Analyst; RCLCO
Exhibit II-2
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-3A
HOUSEHOLDS BY AGE AND INCOME
FULLERTON, CA
2013
INCOME RANGE
UNDER 25
TOTAL PCT.
PROFESSIONALS
25-34
35-44
TOTAL PCT.
TOTAL PCT.
EMPTY NESTERS
45-54
55-64
TOTAL PCT.
TOTAL PCT.
RETIREES
65-74
75 AND OVER
TOTAL PCT.
TOTAL PCT.
TOTAL
TOTAL
PCT.
Less than $25,000
$25,000 - $34,999
$35,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 and above
1,165
403
446
452
147
127
12
12
42%
15%
16%
16%
5%
5%
0%
0%
1,331
862
1,096
1,471
976
1,119
291
187
18%
12%
15%
20%
13%
15%
4%
3%
1,054
790
970
1,452
1,095
1,691
704
602
13%
9%
12%
17%
13%
20%
8%
7%
1,182
732
990
1,601
1,226
2,012
971
1,010
12%
8%
10%
16%
13%
21%
10%
10%
1,060
565
804
1,259
1,035
1,578
811
829
13%
7%
10%
16%
13%
20%
10%
10%
732
477
566
1,030
599
680
394
344
15%
10%
12%
21%
12%
14%
8%
7%
1,570
604
651
720
502
512
207
188
32%
12%
13%
15%
10%
10%
4%
4%
8,093
4,433
5,523
7,984
5,580
7,718
3,390
3,172
18%
10%
12%
17%
12%
17%
7%
7%
TOTAL
Percent of Total
2,764
6%
100%
7,332
16%
100%
8,357
18%
100%
9,723
21%
100%
7,940
17%
100%
4,822
11%
100%
4,954
11%
100%
45,892
100%
100%
HOUSEHOLDS BY INCOME
HOUSEHOLDS BY AGE
27%
21%
18%
17%
$35,000$49,999
17%
12%
12%
Less than
$35,000
17%
16%
$50,000$74,999
$75,000$99,999
$100,000$149,999
7%
7%
6%
$150,000$199,999
$200,000 and
above
Under 25
25-34
35-44
45-54
55-64
11%
11%
65-74
75 and over
SOURCE: ESRI Business Analyst; RCLCO
Exhibit II-3A
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-3B
HOUSEHOLDS BY AGE AND INCOME
PRIMARY MARKET AREA
2013
INCOME RANGE
UNDER 25
TOTAL PCT.
PROFESSIONALS
25-34
35-44
TOTAL PCT.
TOTAL PCT.
EMPTY NESTERS
45-54
55-64
TOTAL PCT.
TOTAL PCT.
RETIREES
65-74
75 AND OVER
TOTAL PCT.
TOTAL PCT.
TOTAL
TOTAL
PCT.
Less than $25,000
$25,000 - $34,999
$35,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 and above
2,961
1,256
1,613
1,650
646
467
70
32
34%
14%
19%
19%
7%
5%
1%
0%
5,837
4,159
5,763
7,948
5,835
6,124
1,593
851
15%
11%
15%
21%
15%
16%
4%
2%
5,884
4,564
6,254
8,826
7,385
10,093
4,039
3,097
12%
9%
12%
18%
15%
20%
8%
6%
6,471
4,173
6,380
9,729
8,038
11,922
5,592
5,356
11%
7%
11%
17%
14%
21%
10%
9%
5,949
3,379
5,276
8,051
6,795
9,754
4,722
4,462
12%
7%
11%
17%
14%
20%
10%
9%
4,311
2,998
3,837
6,024
3,760
4,270
1,974
1,770
15%
10%
13%
21%
13%
15%
7%
6%
8,658
3,348
4,086
3,306
2,434
2,427
729
548
34%
13%
16%
13%
10%
10%
3%
2%
40,071
23,877
33,209
45,534
34,893
45,057
18,719
16,116
16%
9%
13%
18%
14%
17%
7%
6%
TOTAL
Percent of Total
8,695
3%
100%
38,110
15%
100%
50,141
19%
100%
57,660
22%
100%
48,387
19%
100%
28,944
11%
100%
25,536
10%
100%
257,473
100%
100%
HOUSEHOLDS BY AGE
HOUSEHOLDS BY INCOME
22%
25%
19%
18%
17%
19%
15%
14%
13%
11%
7%
10%
6%
3%
Less than
$35,000
$35,000$49,999
$50,000$74,999
$75,000$99,999
$100,000$149,999
$150,000$199,999
$200,000 and
above
Under 25
25-34
35-44
45-54
55-64
65-74
75 and over
SOURCE: ESRI Business Analyst; RCLCO
Exhibit II-3B
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-3C
HOUSEHOLDS BY AGE AND INCOME
ORANGE COUNTY, CA
2013
INCOME RANGE
UNDER 25
TOTAL PCT.
PROFESSIONALS
25-34
35-44
TOTAL PCT.
TOTAL PCT.
EMPTY NESTERS
45-54
55-64
TOTAL PCT.
TOTAL PCT.
RETIREES
65-74
75 AND OVER
TOTAL PCT.
TOTAL PCT.
TOTAL
TOTAL
PCT.
Less than $25,000
$25,000 - $34,999
$35,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 and above
10,100
3,886
5,781
6,450
2,735
2,284
435
286
32%
12%
18%
20%
9%
7%
1%
1%
18,883
12,168
19,518
29,711
22,481
26,005
8,129
5,386
13%
9%
14%
21%
16%
18%
6%
4%
19,229
13,263
21,612
32,192
27,705
42,006
19,247
18,167
10%
7%
11%
17%
14%
22%
10%
9%
21,437
12,390
22,115
35,274
29,783
48,314
26,553
31,020
9%
5%
10%
16%
13%
21%
12%
14%
20,918
10,727
18,925
29,127
25,220
39,189
21,995
24,708
11%
6%
10%
15%
13%
21%
12%
13%
17,695
10,979
15,185
22,677
14,923
18,235
8,955
10,802
15%
9%
13%
19%
12%
15%
7%
9%
36,078
13,508
16,036
14,103
8,270
10,135
3,488
3,556
34%
13%
15%
13%
8%
10%
3%
3%
144,341
76,922
119,173
169,536
131,118
186,169
88,803
93,926
14%
8%
12%
17%
13%
18%
9%
9%
TOTAL
Percent of Total
31,957
3%
100%
142,283
14%
100%
193,423
19%
100%
226,887
22%
100%
190,811
19%
100%
119,452
12%
100%
105,175
10%
100%
1,009,989
100%
100%
HOUSEHOLDS BY INCOME
HOUSEHOLDS BY AGE
22%
22%
19%
18%
19%
17%
14%
13%
12%
12%
9%
9%
10%
3%
Less than
$35,000
$35,000$49,999
$50,000$74,999
$75,000$99,999
$100,000$149,999
$150,000$199,999
$200,000 and
above
Under 25
25-34
35-44
45-54
55-64
65-74
75 and over
SOURCE: ESRI Business Analyst; RCLCO
Exhibit II-3C
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-4
HISTORICAL NON-AGRICULTURAL EMPLOYMENT GROWTH
ORANGE COUNTY, CALIFORNIA, AND UNITED STATES
1990-2018
(in thousands)
TOTAL
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013 (f)
2014 (f)
2015 (f)
2016 (f)
2017 (f)
2018 (f)
1,172
1,144
1,126
1,115
1,127
1,152
1,184
1,234
1,299
1,345
1,389
1,414
1,404
1,429
1,457
1,491
1,519
1,516
1,482
1,372
1,354
1,368
1,390
1,430
1,463
1,495
1,524
1,540
1,544
--28.7
-17.7
-10.6
11.4
24.9
32.6
49.5
65.3
46.1
43.7
24.8
-10.0
25.3
27.7
34.3
27.9
-3.4
-33.9
-109.5
-18.4
14.4
22.3
39.6
32.6
32.8
29.0
15.2
4.3
Ann. Employment
Change
YEAR
ORANGE COUNTY
ANNUAL
CHANGE
PERCENT
CHANGE
--2.4%
-1.5%
-0.9%
1.0%
2.2%
2.8%
4.2%
5.3%
3.5%
3.2%
1.8%
-0.7%
1.8%
1.9%
2.4%
1.9%
-0.2%
-2.2%
-7.4%
-1.3%
1.1%
1.6%
2.8%
2.3%
2.2%
1.9%
1.0%
0.3%
TOTAL
CALIFORNIA
ANNUAL
CHANGE
PERCENT
CHANGE
12,500
12,359
12,154
12,045
12,160
12,422
12,743
13,130
13,596
13,992
14,488
14,602
14,458
14,393
14,533
14,801
15,060
15,174
14,981
14,087
13,936
14,099
14,409
14,707
15,043
15,385
15,721
16,056
--140.9
-205.4
-108.1
114.1
262.5
321.4
386.3
466.4
395.7
496.4
113.8
-144.2
-65.0
139.8
268.7
259.0
113.2
-192.1
-894.1
-151.2
162.8
310.6
297.6
335.9
341.6
336.6
335.1
--1.1%
-1.7%
-0.9%
0.9%
2.2%
2.6%
3.0%
3.6%
2.9%
3.5%
0.8%
-1.0%
-0.4%
1.0%
1.8%
1.7%
0.8%
-1.3%
-6.0%
-1.1%
1.2%
2.2%
2.1%
2.3%
2.3%
2.2%
2.1%
TOTAL
UNITED STATES
ANNUAL
CHANGE
PERCENT
CHANGE
109,487
108,377
108,745
110,876
114,333
117,336
119,757
122,853
126,033
129,098
131,881
131,919
130,450
130,100
131,509
133,747
136,125
137,645
136,852
130,859
129,911
131,500
133,737
135,915
138,087
140,540
143,198
145,498
--1,110
368
2,131
3,457
3,003
2,421
3,096
3,180
3,065
2,783
38
-1,469
-350
1,409
2,238
2,378
1,520
-793
-5,993
-948
1,589
2,237
2,178
3,262
3,314
3,373
3,437
--1.0%
0.3%
2.0%
3.1%
2.6%
2.1%
2.6%
2.6%
2.4%
2.2%
0.0%
-1.1%
-0.3%
1.1%
1.7%
1.8%
1.1%
-0.6%
-4.4%
-0.7%
1.2%
1.7%
1.6%
2.4%
2.4%
2.4%
2.4%
8%
4%
0%
-4%
-8%
-12%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(f)
(f)
(f)
(f)
(f)
(f)
ORANGE COUNTY
CALIFORNIA
UNITED STATES
California Department of transportation
NOTE: (f) denotes a forecasted figure.
SOURCE: U.S. Bureau of Labor Statistics; Moody's Economy.com; Los Angeles County Economic Development Corporation (LAEDC), "2013-2014 Economic
Forecast and Industry Outlook"; RCLCO
Exhibit II-4
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-5
HISTORICAL AND PROJECTED ANNUAL EMPLOYMENT GROWTH
ORANGE COUNTY
1991-2018
Annual Employment Growth
(000s)
65
50
25
62
46
44
33
40
28
25
25
14
11
(18)
33
33
22
29
15
4
(3)
(10)
(11)
(18)
(29)
(34)
3983.9
3992.2
3992 2
4034.3
4078.8
2004
2005
2006 (f)
14392
14536
14801
15054
133300
135833
2018 (f)
2017 (f)
2016 (f)
2015 (f)
2014 (f)
2012
2011
2010
2009
2008
2007
2013 (f)
Year
2006
2005
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
(110)
NOTE: (f) denotes a forecasted figure.
SOURCE: Los Angeles County Economic Development Corporation (LAEDC), "2013-2014 Economic Forecast and Industry Outlook"
Exhibit II-5
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-6
EMPLOYMENT PROJECTIONS
ORANGE COUNTY
2005-2018
TOTAL EMPLOYMENT (000s)1
UNEMPLOYMENT RATE 1
2005
1,491
3.8%
2006
1,519
3.4%
2007
1,516
3.9%
2008
1,482
5.3%
2009
1,372
8.9%
2010
1,354
9.5%
2011
1,368
8.8%
2012
1,390
7.6%
2013
1,430
2014
2015
2016
2017
2018
Economy.com 2
Annual % Change
Total Employment
1,491
1,519
1,516
1,482
1,372
1,354
1,368
1,390
2.8%
1,430
2.3%
1463
2.2%
1495
1.9%
1524
1.0%
1540
0.3%
1544
1,491
1,519
1,516
1,482
1,372
1,354
1,368
1,390
2.8%
1,430
2.1%
1,460
2.0%
1,489
---
---
---
1,491
1,519
1,516
1,482
1,372
1,354
1,368
1,390
2.8%
1,430
3.0%
1,473
2.4%
1,509
1.8%
1,536
1.4%
1,558
1.1%
1,575
3
LAEDC
Annual % Change
Total Employment
4
CADOT
Annual % Change
Total Employment
Total Employmentt (000s)
1,600
1,550
1,500
1,450
1,400
1,350
1,300
2005
2006
2007
2008
2009
Economy.com
1
2
3
4
2010
2011
LAEDC
2012
CA DOT
2013
2014
2015
2016
2017
2018
U.S. Census Historical
Nonfarm employment. Source: Bureau of Labor Statistics
Moody's Economy.com data for the Orange County Metropolitan Division.
Los Angeles Economic Development Corporation, "2013-2014 Economic Forecast and Industry Outlook, July 2013"
California Department of Transportation Economic Analysis Branch, "Orange County Economic Forecast, 2013"
Exhibit II-6
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-7A
HISTORICAL SINGLE-FAMILY AND MULTIFAMILY PERMITS
ORANGE COUNTY, CA
1990-2013
4,055
4,882
3,197
7,605
4,560
5,706
3,040
3,574
5,595
4,559
5,093
2,247
8,206
5,948
3,587
4,428
1,903
7,758
4,378
3,140
2,601
2,245
2,968
5,002
2,419
6,976
7,285
3,811
7,679
6,814
6,010
6,794
2,530
6,108
4,828
4,441
4,103
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Single-Family
LAND USE
1990
1991
1992
RESIDENTIAL-BUILDING PERMITS
Single-Family
4,378 3,587 3,574
Multifamily
7,605 2,968 2,247
TOTAL
11,983 6,555 5,821
Annual Change
MF as % of Total
-63%
-5,428
45%
-734
39%
1993
1994
4,441 7,758
1,903 4,882
6,344 12,640
523
30%
6,296
39%
1995
1996
1997
5,948 6,976 8,206
2,245 3,197 4,055
8,193 10,173 12,261
-4,447
27%
1,980
31%
2,088
33%
1998
1999
2,535
37%
2004
2005
2006
2007
1,330
1,341
1,624
1,822
2,271
2008
2009
2010
2011
2012
2013
Multifamily
2000
7,285 7,679 6,814
2,419 4,560 5,706
9,704 12,239 12,520
-2,557
25%
2003
3,654
802
2,279
1990
1,510
1,905
3,744
281
46%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
6,010 6,794
2,601 5,002
8,611 11,796
6,108
3,140
9,248
4,828
4,428
9,256
4,103
3,040
7,143
3,744
4,559
8,303
2,279
5,093
7,372
1,330
1,905
3,235
1,341
802
2,143
1,624
1,510
3,134
1,822
2,530
4,352
2,271
3,811
6,082
3,654
5,595
9,249
-2,548
34%
8
48%
-2,113
43%
1,160
55%
-931
69%
-4,137
59%
-1,092
37%
991
48%
1,218
58%
1,730
63%
3,167
60%
-3,909
30%
3,185
42%
SOURCE: U.S. Department of Housing and Urban Development; RCLCO
Exhibit II-7A
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-7B
HISTORICAL SINGLE-FAMILY AND MULTIFAMILY PERMITS
FULLERTON, CA
1990-2013
305
52
664
11
185
52
107
23
1990
20
20
1991
25
13
1992
63
31
1993
89
1994
162
1995
31
92
3
68
13
78
199
1996
1997
1998
1999
1990
1991
RESIDENTIAL-BUILDING PERMITS
Single-Family
23
20
Multifamily
107
20
TOTAL
130
40
Annual Change
MF as % of Total
-82%
-90
50%
42
58
64
108
91
2
35
2004
2005
2006
2007
248
137
2000
2001
2002
Single-Family
LAND USE
698
2003
139
31
2008
2
4
2009
11
48
2010
6
7
2011
8
127
6
2012
2013
Multifamily
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
13
25
38
31
63
94
89
0
89
162
52
214
92
31
123
68
3
71
78
13
91
199
0
199
248
11
259
137
185
322
664
305
969
698
52
750
64
0
64
108
42
150
91
58
149
35
2
37
31
139
170
4
2
6
48
11
59
7
6
13
6
0
6
127
8
135
-2
66%
56
67%
-5
0%
125
24%
-91
25%
-52
4%
20
14%
108
0%
60
4%
63
57%
647
31%
-219
7%
-686
0%
86
28%
-1
39%
-112
5%
133
82%
-164
33%
53
19%
-46
46%
-7
0%
129
6%
SOURCE: U.S. Department of Housing and Urban Development; RCLCO
Exhibit II-7B
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit II-8
MORTGAGE HOLDERS RECEIVING DEFAULT NOTICES
CITY OF FULLERTON, PRIMARY MARKET AREA, ORANGE COUNTY, AND CALIFORNIA
FEBRUARY 2013-FEBRUARY 2014
AREA
City of Fullerton
NEW NOTICES
OF DEFAULT 1
OWNER-OCCUPIED
HOUSEHOLDS
NEW DEFAULTS AS PERCENT
OF OWNER-OCCUPIED HOUSEHOLDS
233
24,345
1.0%
1,439
145,075
1.0%
Orange County
5,583
95,646
581,774
6,932,950
1.0%
California
Primary Market Area
1.4%
1.4%
1.0%
1.0%
1.0%
City of Fullerton
Primary Market Area
Orange County
California
1
Represents annual data for new notices of default from February 1st 2013 through February 5th 2014.
SOURCE: Foreclosure Radar; ESRI Business Analyst
Exhibit II-8
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
III. DEMAND
CITY OF FULLERTON
Exhibit III-1
ANNUAL NEW HOME DEMAND POTENTIAL
PRIMARY MARKET AREA
2013-2018
ANNUAL
INCOME RANGE
Less than $75,000
$75,000 - $100,000
$100,000 - $150,000
$150,000 - $200,000
$200,000 +
HOME PRICE RANGE1
PERCENT
PMA HHs2
PMA HHs
BY INCOME
RANGE2
PERCENT HHs
AGE 25-642
HHs
AGE 25-64
PERCENT
OWNERS3
OWNER HHs
ANNUAL
TURNOVER4
DEMAND
FROM
TURNOVER
ANNUAL NEW
PMA HHs
AGE 25-64
PERCENT
OWNERS3
NEW OWNER
HHs
$0 - $310,000
$330,000 - $435,000
$435,000 - $680,000
$680,000 - $925,000
$925,000 +
55%
14%
17%
7%
6%
142,689
34,894
45,054
18,714
16,115
69%
80%
84%
85%
85%
98,643
28,053
37,893
15,946
13,766
37%
59%
80%
94%
87%
36,348
16,549
30,364
14,912
11,965
7%
7%
7%
7%
7%
2,579
1,174
2,155
1,058
849
-2,920
1,078
1,194
806
443
37%
59%
80%
94%
87%
-1,076
636
957
754
385
100%
257,466
194,301
57%
110,138
7%
7,815
601
57%
1,656
HOME PRICE
RANGE1
TOTAL
PMA
DEMAND
PMA % OF
TOTAL
DEMAND5
TOTAL DEMAND
(PRIMARY &
SECONDARY)
$0 - $310,000
$330,000 - $435,000
$435,000 - $680,000
$680,000 - $925,000
$925,000 +
1,503
1,810
3,112
1,812
1,234
80%
80%
80%
80%
80%
1,879
2,263
3,890
2,265
1,543
20%
20%
20%
20%
20%
376
453
778
453
309
9,471
80%
11,839
20%
2,368
TOTAL/WTD AVERAGE:
ANNUAL
INCOME RANGE
Less than $75,000
$75,000 - $100,000
$100,000 - $150,000
$150,000 - $200,000
$200,000 +
TOTAL/WTD AVERAGE:
FULLERTON CAPTURE6
PCT.
TOTAL
SITE CAPTURE -- LOW 7
PCT.
TOTAL
---15%
--
---68
-68
SITE CAPTURE -- HIGH 7
PCT.
TOTAL
---25%
--
---113
-113
NOTE: Primary Market Area ("PMA") is defined as the cities of Fullerton, Brea, La Habra, Placentia, Buena Park, Anaheim, La Mirada, and Yorba Linda.
1 Assumes 20% downpayment, 30-year fixed mortgage with a 5.0% interest rate, property taxes at 2.0% per year (0.9% provides repayment of the proposed CFD), HOA dues averaging $245 a month, and a total housing cost
(mortgage and property tax) comprising 35% of household income.
2
ESRI Business Analyst
3
American Community Survey
4
Based on American Community Survey and annual single-family resales as a percentage of owner-occupied housing.
5
Based on interviews with sales agents at actively selling communities in the PMA.
6
Based on historical single-family resales in Fullerton as a percentage of single-family resales in the PMA.
7
RCLCO estimate based on planned units at the subject site and historical Fullerton resales.
Exhibit III-1
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit III-2
HISTORICAL RESALE ACTIVITY - SINGLE-FAMILY HOMES
FULLERTON AND PRIMARY MARKET AREA
2006-2014
AREA
2014 YTD
2013
2012
2011
2010
2009
2008
2007
2006
Fullerton
< $350,000
$350,000 - $500,000
$500,000 - $750,000
$750,000 +
TOTAL
1
2
8
6
17
76
336
350
184
946
237
246
298
108
889
224
226
215
71
736
195
293
244
106
838
282
213
251
100
846
135
205
195
109
644
14
70
211
175
470
13
36
237
207
493
PMA
< $350,000
$350,000 - $500,000
$500,000 - $750,000
$750,000 +
TOTAL
10
54
43
22
129
605
2,176
1,860
948
5,589
1,478
1,945
1,332
506
5,261
1,420
1,535
983
415
4,353
1,283
1,878
1,238
504
4,903
1,645
1,686
1,138
442
4,911
1,043
1,694
1,019
471
4,227
53
444
1,145
694
2,336
36
276
1,325
869
2,506
10%
4%
19%
27%
13%
13%
15%
19%
19%
17%
16%
13%
22%
21%
17%
16%
15%
22%
17%
17%
15%
16%
20%
21%
17%
17%
13%
22%
23%
17%
13%
12%
19%
23%
15%
26%
16%
18%
25%
20%
36%
13%
18%
24%
20%
Fullerton Sales as % of PMA Sales
< $350,000
$350,000 - $500,000
$500,000 - $750,000
$750,000 +
TOTAL
NOTE: YTD 2014 through February 12th 2014.
SOURCE: CoreLogic; RCLCO
Exhibit III-2
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
IV. COMPETITIVE MARKET
CITY OF FULLERTON
Exhibit IV-1
MAP OF SELECTED COMPARABLE NEW HOME DEVELOPMENTS
BREA, CA
FEBRUARY 2014
MAP
KEY
PROJECT
PRICE PER SF
MIN - MAX
SUBJECT SITE, Amerige Heights, Fullerton
3
1
2
1
Avenida at La Floresta
$317 - $341
2
Paseo at La Floresta
$321 - $344
3
Sorano at Blackstone
$361 - $400
SOURCE: Google; RCLCO
Exhibit IV-1
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit IV-2
SUMMARY OF SELECTED COMPARABLE NEW HOME DEVELOPMENTS
BREA, CA
FEBRUARY 2014
MAP
KEY PROJECT
Subject Site
CITY
BUILDER
TOTAL
UNITS
SALES
START
UNITS
SOLD
MO.
ABS.
MIN. LOT
SIZE (SF)
SIZE (SF)
MIN - MAX
PRICE
MIN - MAX
PRICE PER SF
MIN - MAX
Fullerton
Standard Pacific
150
Jul-13
38
5.1
1,862
2,031
2,031
2,203
2,303
-
2,303
2,031
2,203
2,303
$699,900
$699,900
$715,900
$735,900
-
$735,900
$699,900
$715,900
$735,900
$320
$345
$325
$320
-
$345
$345
$325
$320
1
Avenida at La Floresta
Brea
Standard Pacific
77
Nov-13
25
7.0
3,900
2,402
2,402
2,615
2,675
-
2,675
2,402
2,615
2,675
$817,900
$817,900
$865,900
$847,900
-
$865,900
$819,900
$865,900
$861,900
$317
$341
$331
$317
-
$341
$341
$331
$322
2
Paseo at La Floresta
Brea
Standard Pacific
118
Mar-13
63
56
5.6
1 633
1,633
1,518
1
518
1,518
1,628
1,867
-
1 867
1,867
1,518
1,689
1,867
$522,900
$522
900
$522,900
$534,900
$598,900
-
$607 900
$607,900
$522,900
$534,900
$607,900
$321
$344
$329
$321
-
$344
$344
$317
$326
3
Sorano at Blackstone
Brea
Standard Pacific
150
Mar-11
126
3.6
2,600
1,739
1,739
1,814
2,001
-
2,001
1,739
1,814
2,001
$663,900
$663,900
$713,900
$722,900
-
$724,900
$664,900
$724,900
$722,900
$361
$382
$394
$361
-
$400
$382
$400
$361
SOURCE: RCLCO
Exhibit IV-2
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
V. SCHOOLS
CITY OF FULLERTON
Exhibit V-1
MAP OF SCHOOLS BY API RANK
SUBJECT SITE AND SURROUNDING AREA
2013
Robert C. Fisler
Elementary
Sunny Hills
High School
Subject Site
SOURCE: Schoolperformancemaps.com; RCLCO
Exhibit V-1
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit V-2
ELEMENTARY SCHOOL COMPARISON
FISLER ELEMENTARY, ORANGE COUNTY, AND CALIFORNIA
2012-2013
SECOND
THIRD
FOURTH
GRADE
FIFTH
SIXTH
SEVENTH
EIGHTH
1
415.2
365.4
357.3
407.1
355.7
345.7
437.4
386.7
374.2
422.1
375.3
365.2
417.7
376.1
363.0
434.9
378.5
363.5
422.2
375.5
361.3
FISLER ELEMENTARY1
ORANGE COUNTY
CALIFORNIA
446.3
394.1
379.9
487.5
415.3
399.0
492.5
412.8
394.9
502.4
411.8
393.2
460.2
386.4
366.5
437.3
373.2
357.9
374.8
341.2
322.9
----
----
----
445.3
384.6
366.9
----
----
471.1
422.4
390.9
SUBJECT/
SCHOOLS
LANGUAGE ARTS
FISLER ELEMENTARY
ORANGE COUNTY
CALIFORNIA
MATHEMATICS
SCIENCE
FISLER ELEMENTARY1
ORANGE COUNTY
CALIFORNIA
Language Arts
Mathematics
Science
450
500
500
400
450
450
400
400
350
350
350
300
300
300
250
250
250
200
200
2nd
3rd
FISLER ELEMENTARY
4th
5th
6th
ORANGE COUNTY
7th
8th
CALIFORNIA
200
2nd
3rd
FISLER ELEMENTARY
4th
5th
6th
ORANGE COUNTY
7th
8th
CALIFORNIA
5th
8th
FISLER ELEMENTARY
ORANGE COUNTY
NOTE: Elementary and Middle School assessments based on California's Standardized Testing and Reporting (STAR) program. Mathematics scores for eighth grade based
on General Mathematics scores. Scores for California Standard Tests range from 150 (low) to 600 (high).
1
Fisler Elementary is the designated elementary and middle school for the Amerige Heights neighborhood.
SOURCE: California Department of Education; RCLCO
Exhibit V-2
E1-08660.04
Printed: 3/31/2014
CITY OF FULLERTON
Exhibit V-3
HIGH SCHOOL COMPARISON
SUNNY HILLS HIGH SCHOOL, ORANGE COUNTY, AND CALIFORNIA
2012-2013
SUBJECT/
SCHOOLS
NINTH
GRADE
TENTH
ELEVENTH
396.9
379.3
363.9
385.5
365.4
352.4
388.0
359.8
344.8
-481.3
449.1
433.0
425.4
399.2
395.5
377.0
351.5
----
398.3
377.8
360.4
----
LANGUAGE ARTS
1
SUNNY HILLS HS
ORANGE COUNTY
CALIFORNIA
MATHEMATICS
SUNNY HILLS HS1
ORANGE COUNTY
CALIFORNIA
SCIENCE
SUNNY HILLS HS1
ORANGE COUNTY
CALIFORNIA
Language Arts
420
Mathematics
440
420
420
400
400
400
380
380
380
360
360
360
340
340
340
320
320
300
300
9th
SUNNY HILLS HS
10th
ORANGE COUNTY
11th
CALIFORNIA
Science
320
300
9th
SUNNY HILLS HS
CALIFORNIA
10th
ORANGE COUNTY
9th
SUNNY HILLS HS
CALIFORNIA
ORANGE COUNTY
NOTE: Mathematics scores for ninth through eleventh grades based on Summative High school
Mathematics tests. Scores for California Standard Tests range from 150 (low) to 600 (high).
1
Sunny Hills High School is the designated high school for the Amerige Heights neighborhood.
SOURCE: California Department of Education; RCLCO
Exhibit V-3
E1-08660.04
Printed: 3/31/2014
APPENDIX G
APPRAISAL REPORT
G-1
Neighborhood Map
0 mi
1
2
Copyright © and (P) 1988–2012 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/streets/
Certain mapping and direction data © 2012 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: ©
Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2012 Tele Atlas North America, Inc. All rights
reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc. © 2012 by Applied Geographic Solutions. All rights reserved. Portions © Copyright 2012 by Woodall
Publications Corp. All rights reserved.
3
Neighborhood Map
0 mi
0.2
0.4
0.6
0.8
Copyright © and (P) 1988–2012 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/streets/
Certain mapping and direction data © 2012 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: ©
Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2012 Tele Atlas North America, Inc. All rights
reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc. © 2012 by Applied Geographic Solutions. All rights reserved. Portions © Copyright 2012 by Woodall
Publications Corp. All rights reserved.
1
APPENDIX H
FORM OF CITY CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate dated as of May 14, 2014 (the “Disclosure
Certificate”) is executed and delivered by the City of Fullerton for and on behalf of its
Community Facilities District No. 2 (Amerige Heights) (the “Issuer”) in connection with the
issuance and delivery by the Issuer of the $7,570,000 City of Fullerton Community Facilities
District No. 2 (Amerige Heights) 2014 Special Tax Bonds (the “Bonds”). The Bonds are being
issued pursuant to a Fiscal Agent Agreement, dated as of May 1, 2014 by and between the
Issuer and U.S. Bank National Association as Fiscal Agent (the “Fiscal Agent Agreement”).
The Issuer covenants as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the Issuer, for the benefit of the Owners and Beneficial Owners of
the Bonds and in order to assist the Participating Underwriter in complying with the Rule (as
defined below).
SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent
Agreement, which apply to any capitalized term used in this Disclosure Certificate unless
otherwise defined in this Section, the following capitalized terms shall have the following
meanings:
“Annual Report” shall mean any Annual Report provided by the Issuer pursuant to, and
as described in, Sections 3 and 4 of this Disclosure Certificate.
“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the
owner of any Bonds for federal income purposes.
“Disclosure Representative” shall mean the Director of Administrative Services or the
City Manager of the City of Fullerton, or their designees, or such other officer or employee as
the Issuer shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean, initially, David Taussig & Associates, Inc., or any
successor Dissemination Agent designated in writing by the Issuer which has filed with the then
current Dissemination Agent a written acceptance of such designation.
“District” shall mean the City of Fullerton Community Facilities District No. 2 (Amerige
Heights).
“EMMA” shall mean the Electronic Municipal Market Access system of the MSRB.
“Issuer” shall mean the City of Fullerton for and on behalf of its Community Facilities
District No. 2 (Amerige Heights).
“Listed Events” shall mean any of the events listed in Section 5(a) and (b) of this
Disclosure Certificate.
H-1
“MSRB” shall mean the Municipal Securities Rulemaking Board and any successor
entity designated under the Rule as the repository for filings made pursuant to the Rule.
“Official Statement” means the Official Statement for the Bonds dated April 30, 2014.
“Participating Underwriter” shall mean Stern Brothers & Co.
“Rate and Method of Apportionment” means together, the Rate and Method of
Apportionment of Special Taxes for the District, as amended from time to time.
“Repository” shall mean the MSRB or any other entity designated or authorized by the
Securities and Exchange Commission to receive reports pursuant to the Rule. Unless
otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the
MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the
MSRB, currently located at http://emma.msrb.org.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from
time to time.
SECTION 3. Provision of Annual Reports.
(a)
The Issuer shall, or shall cause the Dissemination Agent by written direction to
such Dissemination Agent to, not later than the December 31 after the end of the Issuer’s fiscal
year (which currently ends on June 30), commencing December 31, 2014, with the report for the
fiscal year ending June 30, 2014, provide to the Repository an Annual Report which is
consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report
may be submitted as a single document or as separate documents comprising a package, and
may include by reference other information as provided in Section 4 of this Disclosure
Certificate; provided that the audited financial statements of the Issuer shall be provided to the
Repository no later than April 1 after the end of the Issuer’s fiscal year, commencing April 1,
2015. However, the audited financial statements of the Issuer may be submitted after the April 1
due date if they are not available by such date.
An Annual Report shall be provided at least annually notwithstanding any fiscal year
longer than 12 calendar months. The Issuer’s fiscal year is currently effective from July 1 to the
immediately succeeding June 30 of the following year. The Issuer will promptly notify the
Repository of a change in the fiscal year dates.
(b)
In the event that the Dissemination Agent is an entity other than the Issuer, then
the provisions of this Section 3(b) shall apply. Not later than fifteen (15) Business Days prior to
the date specified in subsection (a) for providing the Annual Report, the Issuer shall provide the
Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to the due date
for an Annual Report the Dissemination Agent has not received a copy of the Annual Report,
the Dissemination Agent shall contact the Issuer to determine if the Issuer will be filing the
Annual Report in compliance with subsection (a). The Issuer shall provide a written certification
with each Annual Report furnished to the Dissemination Agent to the effect that such Annual
Report constitutes the Annual Report required to be furnished by it hereunder. The
Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have
no duty or obligation to review such Annual Report.
H-2
(c)
If the Dissemination Agent is other than the Issuer and if the Dissemination Agent
is unable to verify that an Annual Report has been provided to the Repository by the date
required in subsection (a), the Dissemination Agent shall send a notice to the Repository, in the
form required by the Repository.
(d)
If the Dissemination Agent is other than the Issuer, the Dissemination Agent
shall:
(i)
determine each year prior to the date for providing the Annual Report the
name and address of the Repository if other than the MSRB; and
(ii)
promptly after receipt of the Annual Report, file a report with the Issuer
certifying that the Annual Report has been provided to the Repository and the date it was
provided.
(e)
Notwithstanding any other provision of this Disclosure Certificate, all filings shall
be made in accordance with the MSRB’s EMMA system or in another manner approved under
the Rule.
SECTION 4. Content of Annual Reports.
(a)
Financial Statements. The audited financial statements of the Issuer for the most
recent fiscal year then ended shall be provided as provided in Section 3(a), together with the
following statement: THE CITY’S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY
TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF’S
INTERPRETATION OF RULE 15c2-12. NO FUNDS OR ASSETS OF THE DISTRICT OR THE
CITY, OTHER THAN SPECIAL TAXES, ARE REQUIRED TO BE USED TO PAY DEBT
SERVICE ON THE BONDS, AND NEITHER THE DISTRICT NOR THE CITY IS OBLIGATED
TO ADVANCE AVAILABLE FUNDS TO COVER ANY DELINQUENCIES. INVESTORS
SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE DISTRICT OR THE CITY IN
EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS. If the audited financial
statements are not available by April 1, any unaudited financial statements of the Issuer in a
format similar to the financial statements, and the audited financial statements shall be filed in
the same manner as the Annual Report when they become available. Audited financial
statements of the Issuer shall be audited by such auditor as shall then be required or permitted
by State law and shall be prepared in accordance with generally accepted accounting principles
as prescribed for governmental units by the Governmental Accounting Standards Board;
provided, however, that the Issuer may from time to time, if required by federal or state legal
requirements, modify the basis upon which its financial statements are prepared. In the event
that the Issuer shall modify the basis upon which its financial statements are prepared, the
Issuer shall provide the information referenced in Section 8(d) below.
(b)
Financial and Operating Data. In addition to the financial statements, the Annual
Report shall contain or incorporate by reference the following information:
(i)
the principal amount of Bonds outstanding as of the September 2
preceding the filing of the Annual Report;
(ii)
the balance in each fund under the Fiscal Agent Agreement and a
statement of the Reserve Requirement as of the September 2 preceding the filing of the Annual
Report;
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(iii)
any changes to the Rate and Method of Apportionment of the Special
Taxes approved or submitted to the qualified electors for approval prior to the filing of the
Annual Report and a summary of the facts related to the collection of any Backup Special Tax
and a description of any parcels for which the Special Taxes have been prepaid, including the
amount prepaid, since the date of the last Annual Report;
(iv)
a list of all taxpayers which own property within the Issuer’s boundaries
upon which 5% or more of the total Special Taxes for the current fiscal year have been levied,
and a statement as to whether any of such taxpayers is delinquent in the payment of Special
Taxes;
(v)
an update to Tables 3, 4, and 5 of the Official Statement based upon the
most recent Special Tax levy preceding the date of the Annual Report;
(vi)
an update to the debt service table under the heading “DEBT SERVICE”
based upon the outstanding principal of and interest due on the Bonds as of the September 2
preceding the filing of the Annual Report; and
(vi)
any information not already included under (i) through (vi) above that the
Issuer is required to file in its annual report to the California Debt and Investment Advisory
Commission pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as
amended.
(c)
Any or all of the items listed in (a) or (b) above may be included by specific
reference to other documents, including official statements of debt issues of the Issuer or
related public entities, which have been submitted to the Repository. If the document included
by reference is a final official statement, it must be available from the Municipal Securities
Rulemaking Board. The Issuer shall clearly identify each such other document so included by
reference.
SECTION 5. Reporting of Significant Events.
(a)
Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the
Dissemination Agent to give, notice of the occurrence of any of the following events with respect
to the Bonds in a timely manner not more than ten (10) business days after the event:
1.
principal and interest payment delinquencies;
2.
unscheduled draws on debt service reserves reflecting financial
difficulties;
3.
unscheduled
difficulties;
4.
substitution of credit or liquidity providers, or their failure to perform;
5.
adverse tax opinions or the issuance by the Internal Revenue Service of
proposed or final determinations of taxability or of a Notice of Proposed
Issue (IRS Form 5701-TEB);
6.
tender offers;
draws
on
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credit
enhancements
reflecting
financial
7.
defeasances;
8.
ratings changes; and
9.
bankruptcy, insolvency, receivership or similar proceedings.
Note: for the purposes of the event identified in subparagraph (9), the event is
considered to occur when any of the following occur: the appointment of a
receiver, fiscal agent or similar officer for an obligated person in a proceeding
under the U.S. Bankruptcy Code or in any other proceeding under state or
federal law in which a court or governmental authority has assumed jurisdiction
over substantially all of the assets or business of the obligated person, or if such
jurisdiction has been assumed by leaving the existing governmental body and
officials or officers in possession but subject to the supervision and orders of a
court or governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement or liquidation by a court or governmental authority
having supervision or jurisdiction over substantially all of the assets or business
of the obligated person.
(b)
Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be
given, notice of the occurrence of any of the following events with respect to the Bonds, if
material:
1.
unless described in paragraph 5(a)(5) above, notices or determinations
by the Internal Revenue Service with respect to the tax status of the
Bonds or other material events affecting the tax status of the Bonds;
2.
the consummation of a merger, consolidation or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the
obligated person, other than in the ordinary course of business, the entry
into a definitive agreement to undertake such an action or the termination
of a definitive agreement relating to any such actions, other than pursuant
to its terms;
3.
appointment of a successor or additional trustee or the change of the
name of a trustee;
4.
nonpayment related defaults;
5.
modifications to the rights of Owners of the Bonds;
6.
notices of redemption; and
7.
release, substitution or sale of property securing repayment of the Bonds.
(c)
Whenever the Issuer obtains knowledge of the occurrence of a Listed Event
under Section 5(b) above, the Issuer shall as soon as possible determine if such event would be
material under applicable federal securities laws.
(d)
If the Issuer determines that knowledge of the occurrence of a Listed Event
under Section 5(b) would be material under applicable federal securities laws, the Issuer shall
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file a notice of such occurrence with the Repository in a timely manner not more than 10
business days after the event.
(e)
The Issuer hereby agrees that the undertaking set forth in this Disclosure
Agreement is the responsibility of the Issuer and that the Dissemination Agent shall not be
responsible for determining whether the Issuer’s instructions to the Dissemination Agent under
this Section 5 comply with the requirements of the Rule.
SECTION 6. Termination of Reporting Obligation. The obligations of the Issuer and
the Dissemination Agent under this Disclosure Certificate shall terminate upon the legal
defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs
prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the
same manner as for a Listed Event under Section 5.
SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Certificate, and may discharge any such Dissemination Agent, with or without appointing a
successor Dissemination Agent. The initial Dissemination Agent shall be David Taussig &
Associates, Inc. The Dissemination Agent may resign by providing (i) thirty days written notice
to the Issuer, and (ii) upon appointment of a new Dissemination Agent hereunder.
SECTION 8. Amendment.
(a)
This Disclosure Certificate may be amended, by written agreement of the parties,
without the consent of the Owners, if all of the following conditions are satisfied: (i) such
amendment is made in connection with a change in circumstances that arises from a change in
legal (including regulatory) requirements, a change in law, or a change in the identity, nature or
status of the Issuer or the type of business conducted thereby; (ii) this Disclosure Certificate as
so amended would have complied with the requirements of the Rule as of the date of this
Disclosure Certificate, after taking into account any amendments or interpretations of the Rule,
as well as any change in circumstances; (iii) the Issuer shall have delivered to the
Dissemination Agent an opinion of a nationally recognized bond counsel or counsel expert in
federal securities laws, addressed to the Issuer, to the same effect as set forth in clause (ii)
above; (iv) the Issuer shall have delivered to the Dissemination Agent an opinion of nationally
recognized bond counsel or counsel expert in federal securities laws, addressed to the Issuer,
to the effect that the amendment does not materially impair the interests of the Owners or
Beneficial Owners; and (v) the Issuer shall have delivered copies of such opinion and
amendment to the Repository.
(b)
This Disclosure Certificate also may be amended by written agreement of the
parties upon obtaining consent of Owners in the same manner as provided in the Fiscal Agent
Agreement for amendments to the Fiscal Agent Agreement with the consent of the Owners of
the Bonds; provided that the conditions set forth in Section 8(a)(i), (ii), (iii) and (v) have been
satisfied.
(c)
To the extent any amendment to this Disclosure Certificate results in a change in
the type of financial information or operating data provided pursuant to this Disclosure
Certificate, the first Annual Report provided thereafter shall include a narrative explanation of
the reasons for the amendment and the impact of the change in the type of operating data or
financial information being provided.
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(d)
If an amendment is made to the basis on which financial statements are
prepared, the Annual Report for the year in which the change is made shall present a
comparison between the financial statements or information prepared on the basis of the new
accounting principles and those prepared on the basis of the former accounting principles.
Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative
discussion of the differences in the accounting principles and the impact of the change in the
accounting principles on the presentation of the financial information.
SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be
deemed to prevent the Issuer from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to
include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have
no obligation under this Certificate to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination Agent
to comply with any provision of this Disclosure Certificate, any Owner or Beneficial Owner of the
Bonds may take such actions as may be necessary and appropriate, including seeking mandate
or specific performance by court order, to cause the Issuer and/or the Dissemination Agent to
comply with their respective obligations under this Disclosure Certificate. A default under this
Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent
Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of
the Issuer or the Dissemination Agent to comply with this Disclosure Certificate shall be an
action to compel performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. Where an
entity other than the Issuer is acting as the Dissemination Agent, the Dissemination Agent shall
have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer
agrees to indemnify and save the Dissemination Agent and its officers, directors, employees
and agents, harmless against any loss, expense and liabilities which they may incur arising out
of or in the exercise or performance of their powers and duties hereunder, including the costs
and expenses (including attorneys fees) of defending against any claim of liability, but excluding
liabilities due to the Dissemination Agent’s negligence or willful misconduct. Any Dissemination
Agent other than the Issuer shall be paid (i) compensation by the Issuer for its services provided
hereunder in accordance with a schedule of fees to be mutually agreed to; and (ii) all expenses,
legal fees and advances made or incurred by the Dissemination Agent in the performance of its
duties hereunder. The Dissemination Agent shall have no duty or obligation to review any
information provided to it by the Issuer pursuant to this Disclosure Certificate. The obligations of
the Issuer under this Section shall survive resignation or removal of the Dissemination Agent
and payment of the Bonds. No person shall have any right to commence any action against the
Dissemination Agent seeking any remedy other than to compel specific performance of this
Disclosure Certificate. The Dissemination Agent shall not be liable under any circumstances for
monetary damages to any person for any breach under this Disclosure Certificate.
SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit
of the Issuer, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial
Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
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SECTION 13. Notices. Notices with respect to this Disclosure Certificate should be sent
in writing to:
Disclosure Representative:
City of Fullerton
303 W. Commonwealth
Fullerton, California 92832
Attention: Director of Administrative Services
Dissemination Agent:
David Taussig & Associates, Inc.
5000 Birch Street, Suite 6000
Newport Beach, CA 92660
Attention: Shayne M. Morgan
IN WITNESS WHEREOF, this Certificate is executed as of the date and year first set
forth above.
CITY OF FULLERTON for and on behalf of CITY
OF FULLERTON COMMUNITY FACILITIES
DISTRICT NO. 2 (AMERIGE HEIGHTS)
By:
Disclosure Representative
ACCEPTED AND AGREED:
DAVID TAUSSIG & ASSOCIATES, INC.,
as Dissemination Agent
By:
Authorized Representative
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EXHIBIT A
NOTICE OF MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:
City of Fullerton for and on behalf of City of Fullerton Community
Facilities District No. 2 (Amerige Heights)
Name of Issue:
City of Fullerton Community Facilities District No. 2 (Amerige
Heights) 2014 Special Tax Bonds
Date of Issuance:
May 14, 2014
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with
respect to the above-named Bonds as required by the Continuing Disclosure Certificate. The
City anticipates that the Annual Report will be filed by _________________________.
Dated: _____________________
DAVID TAUSSIG & ASSOCIATES, INC., as
Dissemination Agent
By:
cc:
City
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Authorized Officer
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX I
FORM OF DEVELOPER DISCLOSURE CERTIFICATE
CONTINUING DISCLOSURE CERTIFICATE
(Developer)
$7,570,000
CITY OF FULLERTON
COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
2014 SPECIAL TAX BONDS
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and
delivered by Standard Pacific Corp., a Delaware corporation (the “Developer”), in connection
with the issuance of the City of Fullerton Community Facilities District No. 2 (Amerige Heights)
2014 Special Tax Bonds. The Bonds are being issued pursuant to a Fiscal Agent Agreement,
dated as of May 1, 2014 (the “Fiscal Agent Agreement”), by and between the City of Fullerton
(the “City”), on behalf of itself and the City of Fullerton Community Facilities District No. 2
(Amerige Heights) (the “District”) and U.S. Bank National Association, as fiscal agent (the
“Fiscal Agent”). The Developer covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the Developer for the benefit of the holders and beneficial owners of
the Bonds.
Section 2. Definitions. In addition to the definitions set forth above and in the Fiscal
Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless
otherwise defined in this Section, the following capitalized terms shall have the following
meanings:
“Affiliate” of another Person means (a) a Person directly or indirectly owning, controlling,
or holding with power to vote, 5% or more of the outstanding voting securities of such other
Person, (b) any Person, 5% or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote, by such other Person, and (c) any
Person directly or indirectly controlling, controlled by, or under common control with, such other
Person. For purposes hereof, control means the power to exercise a controlling influence over
the management or policies of a Person, unless such power is solely the result of an official
position with such Person.
“Assumption Agreement” means an undertaking of a Major Owner, for the benefit of the
holders and beneficial owners of the Bonds, containing terms substantially similar to this
Disclosure Certificate (as modified for such Major Owner’s development and financing plans
with respect to the District), whereby such Major Owner agrees to provide semi-annual reports
and notices of significant events, setting forth the information described in sections 4 and 5
hereof, respectively, with respect to the portion of the property in the District owned by such
Major Owner and, at the option of the Developer or such Major Owner, agrees to indemnify the
Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 12
hereof.
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“Dissemination Agent” means David Taussig & Associates, Inc., or any successor
Dissemination Agent designated in writing by the Developer, with the written consent of the
District, and which has filed with the Developer, the District and the Fiscal Agent a written
acceptance of such designation, and which is experienced in providing dissemination agent
services such as those required under this Disclosure Certificate.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure
Certificate.
“Major Owner” means, as of any Report Date, an owner of land in the District
responsible in the aggregate for 10% or more of the Special Taxes actually levied at any time
during the then-current fiscal year.
“MSRB” means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule.
“Official Statement” means the final official statement, dated April 30, 2014, executed by
the City in connection with the issuance of the Bonds.
“Participating Underwriter” means Stern Brothers & Co., the original underwriter of the
Bonds required to comply with the Rule in connection with offering of the Bonds.
“Person” means an individual, a corporation, a partnership, a limited liability company,
an association, a joint stock company, a trust, any unincorporated organization or a government
or political subdivision thereof.
“Property” means (i) the property owned by the Developer in the District as of the Report
Date, and (ii) the property that was formerly owned by the Developer but is still subject to the
undertakings of this Disclosure Certificate.
“Report Date” means (a) September 30 of each year, and (b) March 31 of each year.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“Semi-Annual Report” means any Semi-Annual Report provided by the Developer
pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Special Taxes” means the special taxes levied on the Property.
Section 3. Provision of Semi-Annual Reports.
(a)
The Developer shall, or, upon written direction of the Developer, the
Dissemination Agent shall, not later than the Report Date, commencing September 30, 2014,
provide to the MSRB, in an electronic format as prescribed by the MSRB, a Semi-Annual Report
that is consistent with the requirements of Section 4 of this Disclosure Certificate with a copy to
the Fiscal Agent (if different from the Dissemination Agent), the Participating Underwriter and
the City. Not later than 15 calendar days prior to the Report Date, the Developer shall provide
the Semi-Annual Report to the Dissemination Agent (if different from the Developer). The
Developer shall provide a written certification with (or included as a part of) each Semi-Annual
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Report furnished to the Dissemination Agent (if different from the Developer), the Fiscal Agent
(if different from the Dissemination Agent), the Participating Underwriter and the City to the
effect that such Semi-Annual Report constitutes the Semi-Annual Report required to be
furnished by it under this Disclosure Certificate. The Dissemination Agent, the Fiscal Agent, the
Participating Underwriter and the City may conclusively rely upon such certification of the
Developer and shall have no duty or obligation to review the Semi-Annual Report. The SemiAnnual Report may be submitted as a single document or as separate documents comprising a
package, and may incorporate by reference other information as provided in Section 4 of this
Disclosure Certificate.
(b)
If the Dissemination Agent does not receive a Semi-Annual Report by 15
calendar days prior to the Report Date, the Dissemination Agent shall send a reminder notice to
the Developer that the Semi-Annual Report has not been provided as required under Section
3(a) above. The reminder notice shall instruct the Developer to determine whether its
obligations under this Disclosure Certificate have terminated (pursuant to Section 7 below) and,
if so, to provide the Dissemination Agent with a notice of such termination in the same manner
as for a Listed Event (pursuant to Section 5 below). If the Developer does not provide, or cause
the Dissemination Agent to provide, a Semi-Annual Report to the MSRB by the Report Date as
required in subsection (a) above, the Dissemination Agent shall provide to the MSRB, in an
electronic format as prescribed by the MSRB, a notice in substantially the form attached as
Exhibit A, with a copy to the Fiscal Agent (if other than the Dissemination Agent), the City and
the Participating Underwriter.
(c)
The Dissemination Agent shall:
(i)
determine prior to each Report Date the then-applicable rules and
electronic format prescribed by the MSRB for the filing of continuing disclosure
reports; and;
(ii)
to the extent the Semi-Annual Report has been furnished to it, file
a report with the Developer (if the Dissemination Agent is other than the
Developer), the City and the Participating Underwriter certifying that the SemiAnnual Report has been provided pursuant to this Disclosure Certificate, and
stating the date it was provided.
Section 4. Content of Semi-Annual Reports. The Developer’s Semi-Annual Report shall
contain or incorporate by reference the information set forth in Exhibit B, any or all of which may
be included by specific reference to other documents, including official statements of debt
issues of the Developer or related public entities, which are available to the public on the
MSRB’s Internet web site or filed with the Securities and Exchange Commission. The Developer
shall clearly identify each such other document so included by reference.
In addition to any of the information expressly required to be provided in Exhibit B, each
Semi-Annual Report shall include such further information, if any, as may be necessary to make
the specifically required statements, in the light of the circumstances under which they are
made, not misleading.
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Section 5. Reporting of Significant Events.
(a)
The Developer shall give, or cause to be given, notice of the occurrence of any of
the following Listed Events with respect to itself or the Property, if material:
(i)
bankruptcy or insolvency proceedings commenced by or against the
Developer and, if known, any bankruptcy or insolvency proceedings commenced by or
against any Affiliate of the Developer that owns property in the District that in the
reasonable judgment of the Developer could have a material adverse impact on the
Developer’s ability to pay Special Taxes prior to delinquency or to sell or develop the
Property as proposed in the Official Statement or most recent Semi-Annual Report;
(ii)
failure to pay any taxes, special taxes (including the Special Taxes) or
assessments due with respect to the Property prior to the delinquency date;
(iii)
filing of a lawsuit against the Developer or, if known, an Affiliate of the
Developer, seeking damages which, if successful, could have a material and adverse
impact on the Developer’s ability to pay Special Taxes prior to delinquency or to sell or
develop the Property;
(iv)
material damage to or destruction of any of the improvements on the
Property; and
(v)
any payment default or other material default by the Developer on any
loan with respect to the construction of improvements on the Property that would have a
material adverse effect on the Developer’s most recently disclosed development plan or
financing with respect to the Property, or the ability of the Developer to pay its Special
Taxes when due.
(b)
Whenever the Developer obtains knowledge of the occurrence of a Listed Event,
the Developer shall as soon as possible determine if such event would be material under
applicable Federal securities law.
(c)
If the Developer determines that knowledge of the occurrence of a Listed Event
would be material under applicable Federal securities law, the Developer shall, or shall cause
the Dissemination Agent to, promptly file a notice of such occurrence with the MSRB, in an
electronic format as prescribed by the MSRB, with a copy to the Fiscal Agent, the District and
the Participating Underwriter.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to
the MSRB under the Disclosure Certificate shall be accompanied by identifying information as
prescribed by the MSRB.
Section 7. Duration of Reporting Obligation.
(a)
All of the Developer’s obligations hereunder shall commence on the date
hereof and shall terminate (except as provided in Section 12) on the earliest to occur of
the following:
(i) upon the legal defeasance, prior redemption or payment in full of all the
Bonds, or
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(ii) at such time as the Property is no longer responsible for payment of
10% or more of the Special Taxes, or
(iii) the date on which the Developer prepays in full all of the Special
Taxes attributable to the Property.
The Developer shall give notice of the termination of its obligations under this
Disclosure Certificate in the same manner as for a Listed Event under Section 5.
(b)
If a portion of the Property is conveyed to a person or entity that, upon
such conveyance, will be a Major Owner, the obligations of the Developer hereunder
with respect to the property conveyed to such Major Owner may be assumed by such
Major Owner, and the Developer’s obligations hereunder will be terminated. In order to
effect such assumption, such Major Owner shall enter into an Assumption Agreement in
form and substance reasonably satisfactory to the City and Participating Underwriter.
Section 8. Dissemination Agent. The Developer may, from time to time, with the written
consent of the City, appoint or engage a Dissemination Agent to assist the Developer in carrying
out its obligations under this Disclosure Certificate, and may discharge any such Dissemination
Agent, with the written consent of the City, with or without appointing a successor Dissemination
Agent. The initial Dissemination Agent shall be David Taussig & Associates, Inc. The
Dissemination Agent may resign by providing thirty days’ written notice to the City, the
Developer and the Fiscal Agent.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the Developer may amend this Disclosure Certificate, and any provision of this
Disclosure Certificate may be waived, provided that the following conditions are satisfied
(provided, however, that the Dissemination Agent shall not be obligated under any such
amendment that modifies or increases its duties or obligations hereunder without its written
consent thereto):
(a)
if the amendment or waiver relates to the provisions of sections 3(a), 4 or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in
legal requirements, change in law, or change in the identity, nature, or status of an obligated
person with respect to the Bonds, or type of business conducted;
(b)
the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule
at the time of the primary offering of the Bonds, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances; and
(c)
the proposed amendment or waiver either (i) is approved by holders of the Bonds
in the manner provided in the Fiscal Agent Agreement with the consent of holders, or (ii) does
not, in the opinion of nationally recognized bond counsel, materially impair the interests of the
holders or beneficial owners of the Bonds.
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be
deemed to prevent the Developer from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Semi-Annual Report or notice of occurrence of a Listed
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Event, in addition to that which is required by this Disclosure Certificate. If the Developer
chooses to include any information in any Semi-Annual Report or notice of occurrence of a
Listed Event in addition to that which is specifically required by this Disclosure Certificate, the
Developer shall have no obligation under this Disclosure Certificate to update such information
or include it in any future Semi-Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the Developer to comply with any
provision of this Disclosure Certificate, the Fiscal Agent shall (upon written direction and only to
the extent indemnified to its satisfaction from any liability, cost or expense, including fees and
expenses of its attorneys), and the Participating Underwriter and any holder or beneficial owner
of the Bonds may, take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the Developer to comply with its
obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not
be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under
this Disclosure Certificate in the event of any failure of the Developer to comply with this
Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent.
The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Certificate, and the Developer agrees to indemnify and save the Dissemination Agent, its
officers, directors, employees and agents, harmless against any loss, expense and liabilities
which it may incur arising out of or in the exercise or performance of its powers and duties
hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending
against any claim of liability, but excluding any loss, expense and liabilities due to the
Dissemination Agent’s negligence or willful misconduct or failure to perform its duties
hereunder. The Dissemination Agent shall be paid compensation for its services provided
hereunder from the Administrative Expense Fund established under the Fiscal Agent
Agreement in accordance with the Dissemination Agent’s schedule of fees as amended from
time to time, which schedule, as amended, shall be reasonably acceptable, and all reasonable
expenses, reasonable legal fees and advances made or incurred by the Dissemination Agent in
the performance of its duties hereunder. The Dissemination Agent shall have no duty or
obligation to review any information provided to it hereunder and shall not be deemed to be
acting in any fiduciary capacity for the City, the Developer, the Fiscal Agent, the Bond owners,
or any other party. The obligations of the Developer under this Section shall survive resignation
or removal of the Dissemination Agent and payment of the Bonds.
Section 13. Notices. Any notice or communications to be among any of the parties to
this Disclosure Certificate may be given as follows:
To the Issuer:
City of Fullerton
303 W. Commonwealth
Fullerton, California 92832
Attention: Director of Administrative Services
To the Fiscal Agent
550 South Hope Street, Suite 500
Los Angeles, California 90071
Attention: Corporate Trust Department
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To the Participating Underwriter:
Stern Brothers & Co.
14724 Ventura Boulevard, Suite 809
Sherman Oaks, California 91403
Attention: Managing Director
To the Dissemination Agent:
David Taussig & Associates, Inc.
5000 Birch Street, Suite 6000
Newport Beach, CA 92660
Attention: Shayne M. Morgan
To the Developer:
Standard Pacific Homes
Southern California Coastal
15360 Barranca Parkway
Irvine, California 92618
Attention: Crystal Burckle
and to:
O’Neil LLP
19900 MacArthur Blvd., Suite 1050
Irvine, California 92612
Attention: Sandra Galle
Any person may, by written notice to the other persons listed above, designate a
different address or telephone number(s) to which subsequent notices or communications
should be sent.
Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the City, the Developer (its successors and assigns), the Fiscal Agent, the Dissemination Agent,
the Participating Underwriter and holders and beneficial owners from time to time of the Bonds,
and shall create no rights in any other person or entity. All obligations of the Developer
hereunder shall be assumed by any legal successor to the obligations of the Developer as a
result of a sale, merger, consolidation or other reorganization.
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Section 15.
Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be regarded as an original, and all of which shall constitute
one and the same instrument.
Date: May 14, 2014
STANDARD PACIFIC CORP., a Delaware
corporation
By:
Authorized Representative
AGREED AND ACCEPTED:
DAVID TAUSSIG & ASSOCIATES, INC.,
as Dissemination Agent
By:
Title:
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EXHIBIT A
NOTICE OF FAILURE TO FILE SEMI-ANNUAL REPORT
Name of Issuer:
City of Fullerton, for and on behalf of Community Facilities
District No. 2 (Amerige Heights)
Name of Bond Issue:
City of Fullerton Community Facilities District No. 2 (Amerige
Heights) 2014 Special Tax Bonds
Date of Issuance:
May 14, 2014
NOTICE IS HEREBY GIVEN that ____________ (the “Major Owner”) has not provided a
Semi-Annual Report with respect to the above-named bonds as required by that certain
Continuing Disclosure Certificate (Developer), dated May 14, 2014. The Major Owner
anticipates that the Semi-Annual Report will be filed by _____________.
Dated:
DISSEMINATION AGENT:
David Taussig & Associates, Inc.
By:
Its:
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EXHIBIT B
SEMI-ANNUAL REPORT
CITY OF FULLERTON COMMUNITY FACILITIES DISTRICT NO. 2
(AMERIGE HEIGHTS)
2014 SPECIAL TAX BONDS
This Semi-Annual Report is hereby submitted under Section 4 of the Continuing
Disclosure Certificate (the “Disclosure Certificate”) dated May 14, 2014 executed by the
undersigned (the “Developer”) in connection with the issuance of the above-captioned bonds by
the City of Fullerton (the “City”) for and on behalf itself and the City of Fullerton Community
Facilities District No. 2 (the “District”).
Capitalized terms used in this Semi-Annual Report but not otherwise defined have the
meanings given to them in the Disclosure Certificate.
I.
Property Ownership and Development
The information in this section is provided as of ____________________ (this date must
be not more than 60 days before the date of this Semi-Annual Report).
A.
Description of the Property currently owned by the Developer in the District (the
“Property”) in substance and form similar to such information in the Official Statement for the
Bonds.
______________________________________________________________________
______________________________________________________________________
B.
Updated information regarding land development and home construction
activities described in the Official Statement for the Bonds or the Semi-Annual Report last filed
in accordance with the Disclosure Certificate:
______________________________________________________________________
______________________________________________________________________
C.
Status of building permits and any material changes to the description of land
use or development entitlements described in the Official Statement for the Bonds or the SemiAnnual Report last filed in accordance with the Disclosure Certificate:
______________________________________________________________________
______________________________________________________________________
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D.
Status of any land purchase contracts with regard to the Property, whether
acquisition of land in the District by the Developer or sales of land to other developers (other
than individual homeowners).
______________________________________________________________________
______________________________________________________________________
II.
Legal and Financial Status of Developer
Unless such information has previously been included or incorporated by reference in a
Semi-Annual Report, describe any material change in the legal structure of the Developer or the
financial condition and financing plan of the Developer that would materially and adversely
interfere with its ability to complete its development plan described in the Official Statement.
______________________________________________________________________
______________________________________________________________________
III.
Change in Development or Financing Plans
Unless such information has previously been included or incorporated by reference in a
Semi-Annual Report, describe any development plans or financing plans relating to the Property
that are materially different from the proposed development and financing plan described in the
Official Statement.
______________________________________________________________________
______________________________________________________________________
IV.
Official Statement Updates
Unless such information has previously been included or incorporated by reference in a
Semi-Annual Report, describe any other significant changes in the information relating to the
Developer or the Property contained in the Official Statement under the heading “PROPERTY
OWNERSHIP AND DEVELOPMENT” that would materially and adversely interfere with the
Developer’s ability to develop and sell the Property as described in the Official Statement.
______________________________________________________________________
______________________________________________________________________
V.
Other Material Information
In addition to any of the information expressly required above, provide such further
information, if any, as may be necessary to make the specifically required statements, in the
light of the circumstances under which they are made, not misleading.
______________________________________________________________________
______________________________________________________________________
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Certification
The undersigned Developer hereby certifies that this Semi-Annual Report constitutes the
Semi-Annual Report required to be furnished by the Developer under the Disclosure Certificate.
ANY OTHER STATEMENTS REGARDING THE DEVELOPER, THE DEVELOPMENT
OF THE PROPERTY, THE DEVELOPER’S FINANCING PLAN OR FINANCIAL CONDITION,
OR THE BONDS, OTHER THAN STATEMENTS MADE BY THE DEVELOPER IN AN
OFFICIAL RELEASE, OR FILED WITH THE MUNICIPAL SECURITIES RULEMAKING
BOARD, ARE NOT AUTHORIZED BY THE DEVELOPER. THE DEVELOPER IS NOT
RESPONSIBLE FOR THE ACCURACY, COMPLETENESS OR FAIRNESS OF ANY SUCH
UNAUTHORIZED STATEMENTS.
THE DEVELOPER HAS NO OBLIGATION TO UPDATE THIS SEMI-ANNUAL REPORT
OTHER THAN AS EXPRESSLY PROVIDED IN THE DISCLOSURE CERTIFICATE.
Dated:
________________________________,
a _______________________
By:
Title:
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