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HomeMy WebLinkAbout2018-44 - (1) Authorizing the California Statewide Communities Development Authority ("Authority") to Form a Community Facilities District Within the Territorial Limits of the City of Newport Beach to Finance Certain Public Improvements; (2) Embodying a JRESOLUTION NO. 2018-44 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA: (1) AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ("AUTHORITY") TO FORM A COMMUNITY FACILITIES DISTRICT WITHIN THE TERRITORIAL LIMITS OF THE CITY OF NEWPORT BEACH TO FINANCE CERTAIN PUBLIC IMPROVEMENTS; (2) EMBODYING A JOINT COMMUNITY FACILITIES AGREEMENT SETTING FORTH THE TERMS AND CONDITIONS OF THE COMMUNITY FACILITIES DISTRICT FINANCING; (3) APPROVING AN ACQUISITION AGREEMENT AMONG THE AUTHORITY, THE CITY AND THE DEVELOPER; AND (4) AUTHORIZING STAFF TO COOPERATE WITH THE AUTHORITY AND ITS CONSULTANTS IN CONNECTION THEREWITH WHEREAS, the City of Newport Beach ("City") is a municipal corporation and charter city duly organized and existing under and by virtue of the laws of the State of California (the "State"); WHEREAS, the California Statewide Communities Development Authority (the "Authority") is a California joint -exercise of powers authority lawfully formed and operating within the State pursuant to an agreement (the "Joint Powers Agreement') entered into as of June 1, 1988 under the authority of Title 1, Division 7, Chapter 5 (commencing with Section 6500) of the California Government Code; WHEREAS, the City is a party to the Joint Powers Agreement and by virtue thereof a member (a "Program Participant') of the Authority; WHEREAS, the Joint Powers Agreement was entered into to establish the Authority as an agency authorized to issue bonds to finance projects within the territorial limits of its Program Participants; WHEREAS, the Joint Powers Agreement authorizes the Authority to undertake financing programs under any applicable provisions of State law to promote economic development, the stimulation of economic activity, and the increase of the tax base within the jurisdictional boundaries of its Program Participants; WHEREAS, the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State (the "Act') is an applicable provision of State law available to, among other things, finance public improvements necessary to meet increased demands placed upon local agencies as a result of development; WHEREAS, there is a development project known as "Uptown Newport" (the "Development Project") in the City owned by TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") and the Developer has requested the City to consider formation of a community facilities district for the Development Project under the Act; Resolution No. 2018-44 Page 2 of 8 WHEREAS, the City does not desire to allocate City resources and City staff time to the formation and administration of a community facilities district and to the issuance of bonds; WHEREAS, the Development Project will promote economic development, the stimulation of economic activity, and the increase of the tax base within the City; WHEREAS, both the Authority and the City are "local agencies" under the Act; WHEREAS, the Act permits two or more local agencies to enter into a joint community facilities agreement to exercise any power authorized by the Act; WHEREAS, the City desires to enter into such an agreement with the Authority to authorize the Authority to form a community facilities district within the territorial limits of the City to finance certain public improvements required of the Development Project; WHEREAS, a form of Acquisition Agreement (the "Acquisition Agreement") among the Authority, the City and the Developer has been presented to the City Council and is on file with the City Clerk, WHEREAS, nothing herein constitutes the City's approval of any applications, Development Project entitlements and/or permits, and such, to the extent required in the future, are subject to and contingent upon City Council approval following, to the extent applicable, environmental review in compliance with the California Environmental Quality Act; WHEREAS, nothing herein affects, without limitation, requirements for and/or compliance with any and all applicable and/or necessary improvement standards, land use requirements or subdivision requirements relating to the Development Project or any portion thereof, which obligations are and shall remain independent and subsisting; WHEREAS, all significant environmental effects for the development of the Uptown Newport Planned Community have been adequately addressed in the previously certified Environmental Impact Report No. ER2012-001 (SCH No. 2010051094) ("EIR"), which included a mitigation, monitoring and reporting program and statement of overriding considerations, and the City of Newport Beach intends to use said document for the approval of the creation of a Community Facilities District (CFD) to finance public improvements associated with the Uptown Newport Planned and its implementation. Copies of the previously prepared environmental document are available for public review and inspection at the Planning Division or at the City of Newport Beach website at www.newportbeachca.gov/ceqadocuments; WHEREAS, none of the conditions described in Section 15162 of the CEQA Guidelines calling for preparation of a subsequent or supplemental EIR have occurred, and the CFD and its implementation do not require changes or additions to the EIR pursuant to Section 15164 of the CEQA Guidelines; WHEREAS, no new effects would occur, nor would a substantial increase in the severity of previously identified significant effects occur as the result of this CFD, and this CFD identifies the same previously approved project with refined detailed drawings, no increase in intensity, and no changes to the development standards; Resolution No. 2018-44 Page 3 of 8 WHEREAS, there are no additional reasonable alternatives or mitigation measures that should be considered in conjunction with the CFD or its implementation, WHEREAS, the City Council finds that judicial challenges to the City's CEQA determinations and approvals of land use projects are costly and time consuming, and project opponents often seek an award of attorneys' fees in such challenges; WHEREAS, project applicants are the primary beneficiaries of such approvals, it is appropriate that such applicants should bear the expense of defending against any such judicial challenge, and bear the responsibility for any costs, attorneys' fees and damages which may be awarded to a successful challenger; and WHEREAS, the City Council is fully advised in this matter. NOW THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1. The City hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to municipal affairs of the City and the statements, findings and determinations of the City set forth in the recitals above and in the preambles of the documents approved herein are true and correct. Section 2. This resolution shall constitute full "local approval," under Section 9 of the Joint Powers Agreement, and under the Authority's Local Goals and Policies (see below), for the Authority to undertake and conduct proceedings in accordance herewith and under the Act to form a community facilities district (the "Community Facilities District") with boundaries substantially as shown on Exhibit A, attached hereto, to designate separate improvement areas within the Community Facilities District (each, an "Improvement Area"), to authorize a special tax within each Improvement Area and to issue bonds, in one or more series on a taxable or tax exempt basis, for each Improvement Area secured by the special taxes. Section 3. The Joint Powers Agreement, together with the terms and provisions of this resolution, shall together constitute a joint community facilities agreement between the City and the Authority under the Act. As, without this resolution, the Authority has no power to conduct proceedings under the Act to form the Community Facilities District, adoption by the Commission of the Authority of the Resolution of Intention to form the Community Facilities District under the Act shall constitute acceptance of the terms hereof by the Authority. Section 4. This resolution and the agreement it embodies are determined to be beneficial to and are in the best interests of the future residents of the area within the Community Facilities District. Section 5. The City acknowledges that the Authority has adopted Local Goals and Policies as required by Section 53312.7 of the Act. The City approves the use of those Local Goals and Policies in connection with the Community Facilities District, provided that the terms of any series of bonds issued for the Community Facilities District shall not exceed the parameters listed on Exhibit D. Resolution No. 2018-44 Page 4 of 8 Section 6. Pursuant to the Act and this resolution, the Authority may conduct proceedings under the Act to form the Community Facilities District and to have it authorize the financing of the facilities set forth on Exhibit B, attached hereto. All of the facilities are facilities that have an expected useful life of five years or longer and are facilities that the City or other local public agencies, as the case may be, are authorized by law to construct, own or operate, or to which they may contribute revenue. The facilities are referred to herein as the "Improvements," and the Improvements to be owned by the City are referred to as the "City Improvements." Section 7. The City Council certifies to the Commission of the Authority that all of the City Improvements are necessary to meet increased demands placed upon the City as a result of development occurring or expected to occur within the Community Facilities District. Joint community facilities agreements with each other local agency owning Improvements (any such local agency referred to herein as an "Other Local Agency") shall each contain a certification with respect to the Improvements to be owned by the Other Local Agency equivalent to that made by the City in this paragraph. Section 8. Prior to issuance of bonds, the Authority will apply the special tax collections within each Improvement Area to fund City Improvements as provided in the Acquisition Agreement, either for the acquisition of City Improvements or for the construction of City Improvements by the City. Following the issuance of bonds of an Improvement Area, the Authority will apply the special tax collections within the Improvement Area initially as required by the documents under which any bonds are issued; and thereafter, to the extent not provided in the bond documents, to the Authority's reasonable administrative costs incurred in the administration of the Community Facilities District. The Authority will remit any special tax revenues for any Improvement Area remaining after the final retirement of all bonds for such Improvement Area to the City and to each Other Local Agency in the proportions specified in the Authority's proceedings. The City will apply any such special tax revenues it receives for authorized City Improvements and its own administrative costs only as permitted by the Act. The joint community facilities agreements with each Other Local Agency must require such Other Local Agency to apply the special tax revenues they receive for their authorized Improvements under the Community Facilities District and for their own related administrative costs only as permitted by the Act. Section 9. The Authority will administer the Community Facilities District, including employing and paying all consultants, annually levying the special tax and all aspects of paying and administering the bonds, and complying with all State and Federal requirements appertaining to the proceedings, including the requirements of the United States Internal Revenue Code. The City will cooperate fully with the Authority in respect of the requirements of the Internal Revenue Code and to the extent information is required of the City to enable the Authority to perform its disclosure and continuing disclosure obligations with respect to the bonds, although the City will not participate in nor be considered to be a participant in the proceedings respecting the Community Facilities District (other than as a party to the agreement embodied by this resolution) nor will the City be or be considered to be an issuer of the bonds or an obligated person for purposes of Rule 15c2-12. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Resolution No. 2018-44 Page 5 of 8 Section 10. Upon the first levy of special tax within the Community Facilities District or any Improvement Area prior to the issuance of bonds for an Improvement Area, the Authority shall establish and maintain a special fund (which may be established with a bond trustee under an indenture or trust agreement) to be known as the "Uptown Newport Project Community Facilities District, Improvement Area No. _ Acquisition and Construction Fund." Special taxes collected within the applicable Improvement Area prior to the issuance of bonds shall be deposited in a separate account of the Acquisition and Construction Fund for such Improvement Area. If the Authority issues bonds for the Improvement Area and bond proceeds become available to finance the Improvements, the Authority shall deposit the portion of bond proceeds which is intended to be utilized to finance the Improvements in a separate account of the Acquisition and Construction Fund for such Improvement Area. The Acquisition and Construction Fund will be available both for City Improvements and for the Improvements pertaining to each Other Local Agency. Amounts in the Acquisition and Construction Fund shall be disbursed in accordance with the provisions of the indenture or other similar document governing the bonds issued for the applicable Improvement Area, the Acquisition Agreement and/or the relevant joint community facilities agreement or acquisition agreement for any Other Local Agency. Section 11. As respects the Authority and the Other Local Agencies, the City agrees to fully administer, and to take full governmental responsibility for, the construction or acquisition of the City Improvements including but not limited to environmental review, approval of plans and specifications, bid requirements, performance and payment bond requirements, insurance requirements, contract and construction administration, staking, inspection, acquisition of necessary property interests in real or personal property, the holding back and administration of retention payments, punch list administration, and the Authority and the Other Local Agencies shall have no responsibility in that regard. The City reserves the right, as respects the Developer, to require the Developer to contract with the City to assume any portion or all of this responsibility. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Section 12. The City agrees to require the Developer to indemnify and to hold the Authority, its other members, and its other members' officers, agents and employees, and the Other Local Agencies and their officers, agents and employees (collectively, the "Indemnified Parties") harmless from any and all claims, suits and damages (including costs and reasonable attorneys' fees) arising out of the design, engineering, construction and installation of the City Improvements. The Authority shall obtain a provision equivalent to this paragraph in each joint community facilities agreement with each Other Local Agency naming the City and its officers, agents and employees as Indemnified Parties with respect to such Other Local Agency's Improvements. Section 13. As respects the Authority and each Other Local Agency, the City agrees — once the City Improvements are constructed according to the approved plans and specifications — to accept ownership of the City Improvements, to take maintenance responsibility for the City Improvements. Resolution No. 2018-44 Page 6 of 8 Section 14. The City acknowledges the requirement of the Act that if the City Improvements are not completed prior to the adoption, by the Commission of the Authority, of the Resolution of Formation of the Community Facilities District, the City Improvements must be constructed as if they had been constructed under the direction and supervision, or under the authority of, the City. The City acknowledges that this means all City Improvements must be constructed under contracts that require the payment of prevailing wages as required by Section 1720 and following of the Labor Code of the State of California. The Authority makes no representation that this requirement is the only applicable legal requirement in this regard. The City reserves the right, as respects the Developer, to assign appropriate responsibility for compliance with this paragraph to the Developer. Section 15. The form of the Acquisition Agreement attached hereto as Exhibit C is hereby approved, and each of the City Manager, Assistant City Manager, or such person as the City Manager or Assistant City Manager shall designate (each, an "Authorized Officer") is authorized to execute, and deliver to the Developer, the Acquisition Agreement on behalf of the City in substantially that form, with such changes as shall be approved by the Authorized Officer after consultation with the City Attorney and the Authority's bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof. Section 16. For City Improvements to be financed on an acquisition basis (that is, constructed by or on behalf of the Developer), after completion of the City Improvements and appropriate arrangements for the maintenance of the City Improvements, or any discrete portion thereof as provided in Section 53313.51 of the Act and in the Acquisition Agreement, to the satisfaction of the City, and in conjunction with the City's acceptance thereof, acquisition of the City Improvements shall be undertaken as provided in the Acquisition Agreement. For City Improvements to be financed on a construction basis (that is, constructed by the City or under contract with the City), the City may request disbursement from the special tax collections for reimbursement of the City or direct payment of costs in accordance with applicable law. Section 17. The City hereby consents to the formation of the Community Facilities District in accordance with this resolution and consents to the assumption of jurisdiction by the Authority for the proceedings respecting the Community Facilities District with the understanding that the Authority will hereafter take each and every step required for or suitable for consummation of the proceedings, the levy, collection and enforcement of the special tax, and the issuance, sale, delivery and administration of the bonds, all at no cost to the City and without binding or obligating the City's general fund or taxing authority. Section 18. The terms of the Agreement embodied by this resolution may be amended by a writing duly authorized, executed and delivered by the City and the Authority, except that no amendment may be made after the issuance of the bonds by the Authority that would be detrimental to the interests of the bondholders without complying with all of the bondholder consent provisions for the amendment of the bond resolutions, bond indentures or like instruments governing the issuance, delivery and administration of all outstanding bonds. Resolution No. 2018-44 Page 7 of 8 Section 19. Except to the extent of the City's agreement to take responsibility for and ownership of the City Improvements, no person or entity, including the Developer, shall be deemed to be a third party beneficiary of this resolution, and nothing in this resolution (either express or implied) is intended to confer upon any person or entity other than the Authority and the City (and their respective successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this resolution. Section 20. The City shall be identified as a third -party beneficiary of all joint community facilities agreements between the Authority and the other local agencies to the extent of the provisions whereby the Other Local Agency agree to take responsibility for and ownership of their Improvements. Section 21. This resolution shall remain in force until all bonds have been retired and the authority to levy the special tax conferred by the Community Facilities District proceedings has ended or is otherwise terminated. Section 22. The City Council hereby authorizes and directs each Authorized Officer and other appropriate City staff to cooperate with the Authority and its consultants and to do all things necessary and appropriate to carry out the intent of this resolution and the Community Facilities District financing, and to execute any and all certificates and documents in connection with the bond issuance as shall be approved by an Authorized Officer after consultation with the City Attorney and the Authority's bond counsel. Section 23. The City Council hereby approves delivery of a certified copy of this resolution to the Authority's Bond Counsel, Orrick, Herrington & Sutcliffe LLP. Section 24. The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 25. If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 26. The requirement for environmental review under the California Environmental Quality Act ("CEQA") is satisfied by the City Council's previous certification of the Uptown Newport Planned Community final EIR (SCH No. 2010051094) (Resolution No. 2013-21). The finding of this Resolution is incorporated here by reference. Section 27. This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 26th day of June, 2018. ATTEST:d&- ), YUr I� Lei ani 1. Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFIC Aaron C. Harp City Attorney Resolution No. 2018-44 Page 8of8 Marshall " " Duffield Mayor Attachments: Exhibit A — Community Facilities District Boundaries Exhibit B —Authorized Improvements Exhibit C — Form of Acquisition Agreement Exhibit D — Project Description and Bond Parameters EXHIBIT A COMMUNITY FACILITIES DISTRICT BOUNDARIES MI 4—j L CLCD— O > i Cl i z U L a% N }� CL 3 > ZD z 0 AUTHORIZED IMPROVEMENTS 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights-of-way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT C FORM OF ACQUISITION AGREEMENT ACQUISITION AGREEMENT BY AND AMONG CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, CITY OF NEWPORT BEACH /-10417 TSG — PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC Dated as of , 20 ACQUISITION AGREEMENT Recitals A. The parties to this Acquisition Agreement (the "Agreement') are the California Statewide Communities Development Authority (the "Authority"), City of Newport Beach, a California municipal corporation and charter city ("City"), Uptown Newport Jamboree, LLC, a Delaware limited partnership and TSG — Parcel 1, LLC, a Delaware limited liability company (collectively, the "Developer"). B. The effective date of this Agreement is , 20 C. The Developer has applied for the financing of certain public capital improvements (each, as more particularly described on Exhibit A, an "Acquisition Improvement' and collectively, the "Acquisition Improvements") through the Authority. The Acquisition Improvements are to be owned and operated by the City, and the financing is to be accomplished through a Community Facilities District which will be established and administered by the Authority under and pursuant to the Mello -Roos Community Facilities Act of 1982 — California Government Code Sections 53311 and following (the "Act'). On [ 1, 20, the City adopted Resolution No. [ authorizing the Authority to form a community facilities district (the "Community Facilities District') within the territorial limits of the City and designate improvement areas within the Community Facilities District (each, an "Improvement Area") to finance the Acquisition Improvements. On [ 1, 20, the Authority formed the Community Facilities District and, on the same date, a landowner election was conducted for each Improvement Area in which all of the votes were cast unanimously in favor of conferring the Community Facilities District authority on the Authority Commission. D. The Authority intends to levy special taxes for facilities and issue bonds for each Improvement Area, in one or more series, to fund, among other things, all or a portion of the Acquisition Improvements. The portion of the proceeds of such special taxes (including prepayments) and bonds allocable to the cost of the Acquisition Improvements, together with interest earned thereon, is referred to herein as the "Available Amount". E. The Community Facilities District will provide financing for the acquisition by the City of the Acquisition Improvements and the payment of the Acquisition Price (as defined herein) of the Acquisition Improvements from the Available Amount. Attached hereto as Exhibit A is a description of the Acquisition Improvements, which includes authorized discrete and usable portions, if any, of the Acquisition Improvements, pursuant to Section 53313.51 of the Act, to be acquired from the Developer. F. The parties anticipate that, upon completion of the Acquisition Improvements and subject to the terms and conditions of this Agreement, the City will acquire the completed Acquisition Improvements. G. Any and all monetary obligations of the City arising out of this Agreement are the special and limited obligations of the City payable only from the Available Amount, and no other funds whatsoever of the City shall be obligated therefor under any circumstances. H. Attached to this Agreement are Exhibit A (Description of the Acquisition Improvements and the Eligible Portions thereof), Exhibit B (Disbursement Request Form for -Acquisition Improvements) and Exhibit C (Bidding, Contracting and Construction Requirements for Acquisition Improvements), all of which are incorporated into this Agreement for all purposes. Agreement ARTICLE I DEFINITIONS; COMMUNITY FACILITIES DISTRICT FORMATION AND FINANCING PLAN Section 1.01. Definitions. As used herein, the following capitalized terms shall have the meanings ascribed to them below: "Acceptable Title" means title (whether a fee interest, easement or other acceptable title or property rights) free and clear of all monetary liens, encumbrances, assessments, whether any such item is recorded or unrecorded, and taxes, except (i) those items which are reasonably determined by the City Engineer not to interfere with the intended use and therefore are not required to be cleared from the title, and (ii) the lien of the Community Facilities District or any other community facilities district or assessment district provided that the property owned by the City is exempt from such taxation or assessment. "Acquisition and Construction Fund" means each "Uptown Newport Community Facilities District Acquisition and Construction Fund" established by the Authority pursuant to the Resolution and Section 1.03 hereof for the purpose of paying the Acquisition Price of the Acquisition Improvements. "Acquisition Improvement" means a public capital improvement described in Exhibit A hereto. "Acquisition Price" means the total amount eligible to be paid to the Developer upon acquisition of an Acquisition Improvement as provided in Section 2.03, not to exceed the Actual Cost of the Acquisition Improvement. "Actual Cost" means the total cost of an Acquisition Improvement, as documented by the Developer to the satisfaction of the City and as certified by the City Engineer in an Actual Cost Certificate including, without limitation, (a) the Developer's cost of constructing such Acquisition Improvement including grading, labor, material and equipment costs, (b) the Developer's cost of designing and engineering the Acquisition Improvement, preparing the plans and specifications and bid documents for such Acquisition Improvement, and the costs of inspection, materials testing and construction staking for such Acquisition Improvement, (c) the Developer's cost of any performance, payment and maintenance bonds and insurance, including title insurance, required hereby for such Acquisition Improvement, (d) the Developer's cost of any real property or interest therein that is either necessary for the construction of such Acquisition Improvement (e.g., temporary construction easements, haul roads, etc.), or is required to be conveyed with such Acquisition Improvement in order to convey Acceptable Title thereto to the City or its designee, (e) the Developer's cost of environmental evaluation or mitigation required for such Acquisition Improvement, (f) the amount of any fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals and reviews for such Acquisition Improvement, (g) the Developer's cost for construction and project management, administration and supervision services for such Acquisition Improvement, and (h) the Developer's cost for professional services related to such Acquisition Improvement, including engineering, accounting, legal, financial, appraisal and similar professional services. "Actual Cost Certificate" means a certificate prepared by the Developer detailing the Actual Cost of an Acquisition Improvement, or an Eligible Portion thereof, to be acquired hereunder, as may be revised by the City Engineer pursuant to Section 2.03. h101 "Agreement" means this Acquisition Agreement, dated as of "Authority" means the California Statewide Communities Development Authority. "Authority Trust Agreement" means a Trust Agreement entered into by the Authority and an Authority Trustee in connection with the issuance of bonds. "Authority Trustee" means the financial institution identified as trustee in an Authority Trust Agreement. "Available Amount" shall have the meaning assigned to the term in Recital D. "Bonds" means bonds or other indebtedness issued by the Authority that is to be repaid with Special Taxes. "City" means the City of Newport Beach, California. "City Engineer" means the Engineer of the City or his/her designee who will be responsible for administering the acquisition of the Acquisition Improvements hereunder. "Code" means the Government Code of the State of California. "Community Facilities District" shall have the meaning assigned to the term in Recital C. "Developer" means, collectively or severally, as appropriate, TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company, and their respective successors and assigns. "Disbursement Request Form" means a requisition for payment of funds from an Acquisition and Construction Fund for an Acquisition Improvement, or an Eligible Portion thereof in substantially the form contained in Exhibit B hereto. "Eligible Portion" shall have the meaning ascribed to it in Section 2.03 below. "Improvement Area" means an improvement area of the Community Facilities District designated as such by the Authority in accordance with the Act. 'Installment Payment' means an amount equal to ninety percent (90%) of the Actual Cost of an Eligible Portion. "Project" means the development of the property in the Community Facilities District, including the design and construction of the Acquisition Improvements and the other public and private improvements to be constructed by the Developer within the Community Facilities District. "Resolution" means City of Newport Beach Resolution No. r , adopted �, 20_ authorizing the execution and delivery of this Agreement. "Special Taxes" means annual special taxes for facilities, and prepayments thereof, authorized by the Community Facilities District to be levied by the Commission of the Authority within each Improvement Area. "Title Documents" means, for each Acquisition Improvement acquired hereunder, a grant deed or similar instrument necessary to transfer title to any real property or interests therein (including easements or rights of way), or an irrevocable offer of dedication of such real property with interests therein necessary to the operation, maintenance, rehabilitation and improvement by the City of the Acquisition Improvement (including, if necessary, easements for ingress and egress) and a bill of sale or similar instrument evidencing transfer of title to the Acquisition Improvement (other than said real property interests) to the City, where applicable. Section 1.02. Establishment of Community Facilities District. Developer has requested the City to permit the Authority to provide for financing of the Acquisition Improvements and collection of special tax through the establishment and authorization of the Community Facilities District and the City agreed by its adoption of the Resolution. The Community Facilities District was established by the Authority on [ j, 20_, and through the successful landowner election held that same day with respect to each Improvement Area of the Community Facilities District, the Commission of the Authority is authorized to levy the Special Taxes and to issue the Bonds to finance the Acquisition Improvements. Developer and the City agree to reasonably cooperate with one another and with the Authority in the completion of the financing through the issuance of the Bonds in one or more series for each Improvement Area. Section 1.03. Deposit and Use of Available Amount. (a) Prior to the issuance of Bonds for each Improvement Area, Special Taxes collected by the Authority (including from prepayments of Special Taxes) shall be deposited in the Acquisition and Construction Fund established by the Authority pursuant to the terms of the Resolution, and may be disbursed to pay the Acquisition Price of Acquisition Improvements in accordance with Article II of this Agreement. All funds in the Acquisition and Construction Fund shall be considered a portion of the Available Amount, and upon the issuance of the Bonds the Acquisition and Construction Fund shall be transferred to the Authority Trustee to be held in accordance with the Authority Trust Agreement. (b) If not already established pursuant to the Resolution, upon the issuance of the Bonds of an Improvement Area, the Authority will cause the Authority Trustee to establish and maintain the Acquisition and Construction Fund for the purpose of holding all funds for the Acquisition Improvements to be financed by such Improvement Area. All earnings on amounts in the Acquisition and Construction Fund shall remain in the Acquisition and Construction Fund for use as provided herein and pursuant to the Authority Trust Agreement. Money in such Acquisition and Construction Fund shall be available to respond to delivery of a Disbursement Request Form and to be paid to the Developer or its designee to pay the Acquisition Price of the Acquisition Improvements, as specified in Article II hereof. Upon completion of all of the Acquisition Improvements and the payment of all costs thereof, any remaining funds in the Acquisition and Construction Fund (less any amount determined by the City as necessary to reserve for claims against the account) (i) shall be applied to pay the costs of any additional Acquisition Improvements eligible for acquisition with respect to the Project, as approved by the Authority and, to the extent not so used, (ii) shall be applied by the Authority to call Bonds for such Improvement Area or to reduce Special Taxes for such Improvement Area as the Authority shall determine. Section 1.04. No City Liability: City Discretion; No Effect on Other Agreements. In no event shall any actual or alleged act by the City or any actual or alleged omission or failure to act by the City with respect to the Authority subject the City to monetary liability therefor. Further, nothing in this Agreement shall be construed as affecting the Developer's or the City's duty to perform their respective obligations under any other agreements, public improvement standards, land use regulations or subdivision requirements related to the Project, which obligations are and shall remain independent of the Developer's and the City's rights and obligations under this Agreement. ARTICLE II DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS Section 2.01. Letting and Administering Design Contracts. The Developer has awarded and administered, or will award and administer, engineering design contracts for the Acquisition Improvements to be acquired from Developer. All eligible expenditures of the Developer for design engineering and related costs in connection with the Acquisition Improvements (whether as an advance to the City or directly to the design consultant) shall be reimbursed at the time of acquisition of the Acquisition Improvements. The Developer shall be entitled to reimbursement for any design costs of the Acquisition Improvements only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to any payment for design costs independent of the acquisition of Acquisition Improvements. Section 2.02. Letting and Administration of Construction Contracts; Indemnification. State law requires that all Acquisition Improvements not completed prior to the formation of the Community Facilities District shall be constructed as if they were constructed under the direction and supervision, or under the authority, of the City. In order to assure compliance with those provisions, except for any contracts entered into prior to the date hereof, Developer agrees to comply with the requirements set forth in Exhibit C hereto with respect to the bidding and contracting for the construction of the Acquisition Improvements. The Developer agrees that all the contracts shall call for payment of prevailing wages as required by the Labor Code of the State of California. The Developer's indemnification obligation set forth in Section 3.01 of this Agreement shall also apply to any alleged failure to comply with the requirements of this Section, and/or applicable State laws regarding public contracting and prevailing wages. Section 2.03. Sale of Acquisition Improvements. The Developer agrees to sell to the City each Acquisition Improvement to be constructed by or on behalf of the Developer (including any rights-of-way or other easements necessary for the Acquisition Improvements, to the extent not already publicly owned), when the Acquisition Improvement is completed to the satisfaction of the City for an amount not to exceed the lesser of (i) the Available Amount from time to time or (ii) the Actual Cost of the Acquisition Improvement. Exhibit A, attached hereto and incorporated herein, contains a list of the Acquisition Improvements. Portions of an Acquisition Improvement eligible for Installment Payments prior to completion of the entire Acquisition Improvement are described as eligible, discrete and usable portions in Exhibit A (each, an "Eligible Portion"). At the time of completion of each Acquisition Improvement, or Eligible Portion thereof, the Developer shall deliver to the City Engineer a written request for acquisition, accompanied by an Actual Cost Certificate, and by executed Title Documents for the transfer of the Acquisition Improvement where necessary. In the event that the City Engineer finds that the supporting paperwork submitted by the Developer fails to demonstrate the required relationship between the subject Actual Cost and eligible work, the City Engineer shall advise the Developer that the determination of the Actual Cost (or the ineligible portion thereof) has been disallowed and shall request further documentation from the Developer. If the further documentation is still not adequate, the City Engineer may revise the Actual Cost Certificate to delete any disallowed items and the determination shall be final and conclusive. Certain soft costs for the Acquisition Improvements, such as civil engineering, may have been incurred pursuant to single contracts that include work relating also to the private portions of the Project. In those instances, the total costs under such contracts will be allocated to each Acquisition Improvement as approved by the City Engineer. Where a specific contract has been awarded for design or engineering work relating solely to an Acquisition Improvement, one hundred percent (100%) of the costs under the contract will be allocated to that Acquisition Improvement. Amounts allocated to an Acquisition Improvement will be further allocated among the Eligible Portions of that Acquisition Improvement, if any, in the same proportion as the amount to be reimbursed for hard costs for each Eligible Portion bears to the amount to be reimbursed for hard costs for the entire Acquisition Improvement. Costs will be allocated to each Acquisition Improvement as approved by the City Engineer. The costs of certain environmental mitigation required to mitigate impacts of the public and private portions of the Project will be allocated to each Acquisition Improvement as approved by the City Engineer. Section 2.04. Conditions Precedent to Payment of Acquisition Price. Payment to the Developer or its designee of the Acquisition Price for an Acquisition Improvement from the Acquisition and Construction Fund shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Acquisition Improvement satisfies all City regulations and ordinances and is otherwise complete and ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that none of the property (including any rights-of-way or other easements necessary for the operation and maintenance of the Acquisition Improvement, to the extent not already publicly owned) comprising the Acquisition Improvement is not subject to any prospective mechanics lien claim respecting the Acquisition Improvements. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. Property shall be exempt from the special tax of the Community Facilities District upon conveyance to the City or the Developer shall prepay the special tax on the property so conveyed. (c) The Developer shall certify that it is not in default with respect to any loan secured by any interest in the Project. (d) The Developer shall have provided the City with Title Documents needed to provide the City with Acceptable Title to the site, right-of-way, or easement upon which the subject Acquisition Improvement is situated. All such Title Documents shall be in a form acceptable to the City and shall convey Acceptable Title. The Developer shall provide a policy of title insurance as of the date of transfer in a form acceptable to the City Engineer and the City Attorney insuring the City as to the interests acquired in connection with the acquisition of any interest for which such a policy of title insurance is not required by another agreement between the City and the Developer. Each title insurance policy required hereunder shall be in the amount equal to the Acquisition Price. The amount paid to the Developer or its designee upon satisfaction of the foregoing conditions precedent shall be the Acquisition Price less all Installment Payments paid previously with respect to the Acquisition Improvement. Section 2.05. Payment for Eligible Portions. The Developer may submit an Actual Cost Certificate to the City Engineer with respect to any Eligible Portion. Payment to the Developer or its designee from the Acquisition and Construction Fund of an Installment Payment with respect to such Eligible Portion shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Eligible Portion has been completed in accordance with the applicable plans and specifications and that the Eligible Portion satisfies all City regulations and ordinances and is otherwise complete and, where appropriate, is ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that the property (including any rights-of-way or other easements necessary for the operation and maintenance of the Eligible Portion, to the extent not already owned by the City) comprising the Eligible Portion is not subject to any prospective mechanics lien claim respecting the Eligible Portion. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. (c) The Developer shall have provided the City with Title Documents needed to provide the City with title to the site, right-of-way, or easement upon which the subject Eligible Portion is situated. All such Title Documents shall be in a form acceptable to the City Engineer and shall be sufficient, upon completion of the Acquisition Improvement of which the Eligible Portion is a part, to convey Acceptable Title. (d) Payment and performance bonds, from a bonding company with an A.M. Best rating of at least "A-" or its equivalent, applying to plans and specifications for the Acquisition Improvement approved by the City, shall be in place to secure completion of the Acquisition Improvement of which the Eligible Portion is a part. Section 2.06. Disbursement Request Form. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement pursuant to Section 2.04 or to pay an Installment Payment for an Eligible Portion pursuant to Section 2.05, the City Engineer shall cause a Disbursement Request Form substantially in the form attached hereto as Exhibit B-1 to be submitted to the Authority and Authority Trustee, and the Authority or Authority Trustee shall make payment directly to the Developer or its designee of the amount requested from the applicable Acquisition and Construction Fund. The City and the Developer acknowledge and agree that the Authority or Authority Trustee shall make payment strictly in accordance with the Disbursement Request Form and shall not be required to determine whether or not the Acquisition Improvement or Eligible Portion has been completed or what the Actual Costs may be with respect to the Acquisition Improvement or Eligible Portion. The Authority or Authority Trustee shall be entitled to rely on the executed Disbursement Request Form on its face without any further duty of investigation. In the event that the Actual Cost of an Acquisition Improvement or the Installment Payment for an Eligible Portion is in excess of the Available Amount, the Authority or Authority Trustee shall withdraw all funds remaining in the Acquisition and Construction Fund and shall transfer those amounts to the Developer or its designee. The unpaid portion of the Actual Cost shall be paid from funds that may subsequently be deposited in the Acquisition and Construction Fund from a subsequent issuance of Bonds, from prepayments of Special Taxes to be used for financing Acquisition Improvements, or from Special Tax revenues, if any of those occurs. Section 2.07. Limitation on Obligations. In no event shall the City be required to pay the Developer or its designee more than the amounts held in the Acquisition and Construction Fund. Section 2.08. Under -grounding of Utilities. In addition to financing the acquisition of the Acquisition Improvements, proceeds of bonds for the Community Facilities District are expected to finance the undergrounding of certain utilities owned or to be owned by Southern California Edison. Notwithstanding anything to the contrary herein, the City shall be entitled to directly request payment to the City (or to reimburse the Developer) pursuant to a Request to the Authority Trustee to (i) reimburse amounts the City has paid Southern California Edison or a contractor for the amount in such request, or (ii) to pay directly to Southern California Edison or a contractor for the amount in such request. To the extent authorized by law, the City agrees to first reimburse amounts previously deposited by the Developer pursuant to the Deposit Agreement between the City of Newport Beach and TSG — Parcel 1, LLC, dated January 5, 2015, for the costs of the undergrounding of utilities, including design and planning, from proceeds of bonds or the Special Tax pursuant to this Section. ARTICLE III MISCELLANEOUS Section 3.01. Indemnification and Hold Harmless. The Developer hereby assumes the defense of, and indemnifies and saves harmless the City, the Authority and their respective officers, directors, employees and agents, including the Authority Trustee, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from or alleged to have resulted from the acts or omissions of the Developer or its agents and employees arising out of any contract for the design, engineering and construction of the Acquisition Improvements entered into by the Developer or arising out of any alleged misstatements of fact or alleged omission of a material fact made by the Developer, its officers, directors, employees or agents to the Authority's underwriter, financial advisor, appraiser, district engineer or bond counsel or regarding the Developer, its proposed developments, its property ownership and its contractual arrangements contained in the official statement relating to the Authority financing (provided that the Developer shall have been furnished a copy of the official statement and shall not have objected thereto); and provided, further, that nothing in this Section 3.01 shall limit in any manner the City's rights against any of the Developer's architects, engineers, contractors or other consultants. Except as set forth in this Section 3.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer, its agents and employees. Nothing in this Section 3.01 shall be understood or construed to mean that the Developer agrees to indemnify the City, the Authority or any of their respective officers, directors, employees or agents, for any wrongful acts or omissions to act of the Authority or its officers, employees, agents or any consultants or contractors, including the Authority Trustee, and for any wrongful acts, willful misconduct, active negligence or omissions to act of the City, or its officers, employees, agents or any consultants or contractors, including the Authority Trustee. Section 3.02. Audit. The City shall have the right, during normal business hours and upon the giving of ten days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer (for which the Developer seeks reimbursement pursuant to this Agreement) in constructing the Acquisition Improvements. Section 3.03. Cooperation. The City and the Developer agree to cooperate with respect to the completion of the financing of the Acquisition Improvements by the Authority through the levy of the Community Facilities District Special Taxes and issuance of Bonds. The City and the Developer agree to meet in good faith to resolve any differences on future matters which are not specifically covered by this Agreement. Section 3.04. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. Section 3.05. Third Party Beneficiaries. The Authority and its officers, employees, agents or any consultants or contractors are expressly deemed third party beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is expressly agreed that, except for the Authority with respect to the provisions of Section 3.01, there are no third party beneficiaries of this Agreement, including without limitation any owners of bonds, any of the City's or the Developer's contractors for the Acquisition Improvements and any of the City's, the Authority's or the Developer's agents and employees. Section 3.06. Conflict with Other Agreements. Nothing contained herein shall be construed as releasing the Developer or the City from any condition of development or requirement imposed by any other agreement between the City and the Developer, and, in the event of a conflicting provision, the other agreement shall prevail unless the conflicting provision is specifically waived or modified in writing by the City and the Developer. Section 3.07. Notices. All invoices for payment, reports, other communication and notices relating to this Agreement shall be mailed to: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention: City Manager If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. Either party may change its address by giving notice in writing to the other party. Section 3.08. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. Section 3.09. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. Section 3.10. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement. Section 3.11. Singular and Plural; Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine. Section 3.12. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 3.13. Successors and Assigns. This Agreement is binding upon the heirs, assigns and successors -in -interest of the parties hereto. The Developer may not assign its rights or obligations hereunder, except to successors -in -interest to the property within the Community Facilities District, without the prior written consent of the City. Section 3.14. Remedies in General. It is acknowledged by the parties that the City would not have entered into this Agreement if it were to be liable in damages under or with respect to this Agreement or the application thereof, other than for the payment to the Developer of any (i) moneys owing to the Developer hereunder, or (ii) moneys paid by the Developer pursuant to the provisions hereof which are misappropriated or improperly obtained, withheld or applied by the City. Section 3.15. Non -Liability of Authority. The Authority shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement, except only to the extent amounts are received for the payment thereof from the Special Tax. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that the City shall not be liable in damages to the Developer, or to any assignee or transferee of the Developer other than for the payments to the Developer specified Section 3.14. Subject to the foregoing, the Developer covenants not to sue for or claim any damages for any alleged breach of, or dispute which arises out of, this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. ATTEST: 0 Leilani I. Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By: Aaron C. Harp City Attorney CITY OF NEWPORT BEACH [Authorized Officer] UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited partnership By: _ Name Title TSG — PARCEL 1, LLC, a Delaware limited liability company By: _ Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A Authorized Signatory EXHIBIT A TO THE ACQUISITION AGREEMENT DESCRIPTION OF ACQUISITION IMPROVEMENTS, ELIGIBLE PORTIONS IONIMPROVEMENTS Park improvements, including playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT B TO THE ACQUISITION AGREEMENT DISBURSEMENT REQUEST FORM (Acquisition Improvement or Eligible Portion) To: [Authority Trustee] Attention: Fax: Phone: Re: CSCDA Community Facilities District No. Improvement Area 01 NJ The undersigned, a duly authorized officer of the CITY OF NEWPORT BEACH hereby requests a withdrawal from the Uptown Newport Project Community Facilities District Acquisition and Construction Fund, as follows: Request Date: Name of Developer: Withdrawal Amount: Acquisition Improvements Payment Instructions: [Insert Date of Request] [Insert Acquisition Price/Installment Payment] [Insert Description of Acquisition Improvement(s)/Eligible Portion(s) from Exhibit A] [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The Withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement and the Withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Acquisition and Construction Fund, the Authority Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").] CITY OF NEWPORT BEACH M Title: EXHIBIT C TO THE ACQUISITION AGREEMENT BIDDING, CONTRACTING AND CONSTRUCTION REQUIREMENTS FOR ACQUISITION IMPROVEMENTS With respect to construction contracts awarded after approval of the Agreement, bids for construction shall be solicited from at least three (3) qualified contractors, provided at least three (3) qualified contractors are reasonably available. The Developer may also directly solicit bids. The bid package may consist of preliminary plans and specifications. The bidding response time shall be not less than ten (10) working days. An authorized representative of the City shall be provided a copy of the tabulation of bid results upon request. Contract(s) for the construction of the public Acquisition Improvements shall be awarded to the qualified contractor(s) submitting the lowest responsible bid(s), as determined by the Developer. The contractor to whom a contract is awarded shall be required to pay not less than the prevailing rates of wages pursuant to Labor Code Sections 1770, 1773 and 1773.1. A current copy of applicable wage rates shall be on file in the Office of the City Clerk, as required by Labor Code Section 1773.2. The Developer shall provide the City with certified payrolls EXHIBIT D PROJECT DESCRIPTION AND BOND PARAMETERS Project Description A. Specific Project(s) for which the Debt is Being Incurred • Park Improvements • 66 -kV Undergrounding B. Not to exceed Authorized Par Amount • $8,800,000 C. Not to exceed Term of the Bonds, which will be no greater than the useful life of the project • 30 years from date of issuance D. Not to exceed true interest cost • 5.75% E. Not to exceed maximum annual debt service • $900,000 F. Call provisions, including specifically identifying any deviation from a par call • Optional Call in 10 —Years at 100% of Par • Extraordinary redemption from prepayment of special taxes with not to exceed 3% premium through 10 years and then par call thereafter. G. Not to exceed underwriter's discount • 1.50% of Par Amount inclusive of underwriter's counsel fees H. List of Consultants Hired for the Issuance • Orrick — Bond Counsel & Disclosure Counsel • RBC Capital Markets, LLC - Underwriter • David Taussig & Associates, Inc. - Special Tax Consultant STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; the foregoing resolution, being Resolution No. 2018-44 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 26th day of June, 2018; and the same was so passed and adopted by the following vote, to wit: AYES: Council Member Herdman, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Brad Avery, Mayor Duffy Duffield NAYS: None RECUSED: Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 27th day of June, 2018. Leilani I. Brown City Clerk Newport Beach, California PO 4 -i January 11, 2019 RETURN RECEIPT REQUESTED City Clerk City of Newport Beach P.O. Box 1768 Newport Beach, CA 92658 RECEIVED 2019 JAN 16 AM 10: 3 1 OFFICE OF T /1HE CITY UERK C' Orrick Orrick, Herrington & Sutcliffe LLP The Orrick Building 405 Howard Street San Francisco, CA 94105-2669 +1 415 773 5700 orrick.com Jaileez Campos E jaileezcampos@orrick.com D +1 415 773 5788 F +1 415 773 5759 Re: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach County of Orange State of California To whom it may concern: Pursuant to Section 53315.6 of the Community Facilities District Act of 1982 (the "Act'), when any proceeding is initiated under the Act by a legislative body other than that of a city or county, a copy of the resolution of intention to form a community facilities district shall be transmitted to the legislative body of the city if the land to be assessed lies within the corporate limits of such city. Accordingly, transmitted herewith is a copy of a resolution adopted by the Commission of the California Statewide Communities Development Authority on November 15, 2018, stating its intention to form a community facilities district proposed to be named "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Community Facilities District'). The land to be assessed in the Community Facilities District lies within the corporate limits of the City of Newport Beach. If you have any questions, please do not hesitate to call the undersigned. Sincerely, 7T I Jaileez C mpos Practice Assistant Enclosure 4145-8582-9913 RESOLUTION NO. 18SCIP-110 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A RESOLUTION APPROVING A JOINT COMMUNITY FACILITIES AGREEMENT A: DECLARING INTENTION TO ESTABLISH CALIFORNIA STATEWIDE COMMUNIT] DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE CALIFORNIA, AND TO LEVY A SPECIAL TAX THEREIN TO FINANCE T ACQUISITION AND CONSTRUCTION OF CERTAIN PUBLIC CAPITAL IMPROVEMEIN AND CERTAIN UTILITY UNDERGROUNDING WHEREAS, the Commission (the "Commission") of the California Statewi� Communities Development Authority (the "Authority") has duly considered the advisability ai necessity of establishing a community facilities district within the jurisdictional boundaries of tl City of Newport Beach (the "Local Agency") to be designated and known as "California Statewi( Communities Development Authority Community Facilities District No. 2018-03 (Upton Newport) City of Newport Beach, `County of Orange, State of California" (the "Communi Facilities District"), and levying a special tax therein to finance the acquisition and constructi< of certain public capital improvements (the "Improvements") and certain utility undergroundii (the "Undergrounding"), under and pursuant to the terms and provisions of the "Mello -Rol Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning wi Section 53311) of the Government Code of the State of California (the "Act"); and WHEREAS, the Improvements and Undergrounding will assist in mitigating t impact on the need for public facilities occasioned by new development that has occurred or expected to occur within the boundaries of the Community Facilities District and in mitigati: visual blight; and WHEREAS, the Commission has reviewed the resolution of the Local Agency "Local Agency Resolution") attached hereto as Exhibit A and incorporated herein by refere and WHEREAS, the Local Agency Resolution describes the project within proposed Community Facilities District and approves a joint community facilities agreement u the authority of Section 53316.2 of the Act and the form of such joint community facil agreement is embodied in such Local Agency Resolution; and WHEREAS, the Local Agency Resolution embodies a joint community facilities agreement and further provides that the adoption of a Resolution of Intention for the Community Facilities District by the Commission will act as an acceptance, by the Authority, of the terms of the joint community facilities agreement embodied in the Local Agency Resolution; and WHEREAS, there has been filed with the Commission a map entitled "Proposed Boundaries of California Statewide Communities Development Authority Community Facilities 4159-3584-7960.2 District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Boundary Map"); and WHEREAS, the Commission has determined that the establishment of the Community Facilities District is consistent with and follows the local goals and policies concerning the use of the Act that have been adopted by the Commission and are now in effect; and WHEREAS, Section 53314.9 of the Act further provides that the legislative body may enter into an agreement, by resolution, with the person or entity advancing the funds, to repay all or a portion of the funds advanced, as determined by the legislative body, with or without interest, under all the following conditions: (a) the proposal to repay the funds is included in both the resolution of intention to establish a community facilities district adopted pursuant to Section 53321 of the Act and in the resolution of formation to establish a community facilities district pursuant to Section 53325.1 of the Act, (b) any proposed special tax is approved by the qualified electors of the community facilities district pursuant to the Act, and (c) any agreement shall specify that if the qualified electors of the community facilities district do not approve the proposed special tax, the local agency shall return any funds which have not been committed for any authorized purpose by the time of the election to the person or entity advancing the funds; and WHEREAS, the Authority, TSG -Parcel 1, LLC and Uptown Newport Jamboree, LLC (together with TSG -Parcel 1, LLC, the "Developers") of the property within the proposed Community Facilities District, entered into a Deposit and Reimbursement Agreement, dated August 29, 2017 (the "Deposit Agreement"), that provides for the advancement of funds by the Developers to be used to pay costs incurred in connection with the establishment of the Community Facilities District and the issuance of special tax bonds thereby, and provides for the reimbursement to the Developers of such funds advanced, without interest, from the proceeds of any such bonds issued by the Community Facilities District; and WHEREAS, the Commission desires to include in this Resolution, in accordance with Section 53314.9 of the Act, the proposal to repay funds pursuant to the Deposit Agreement; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. It is the intention of the Commission, and the Commission hereby proposes, to establish the Community Facilities District. By adopting this Resolution of Intention, the Commission hereby accepts and agrees to the joint community facilities agreement embodied in the Local Agency Resolution. The Commission finds and determines that this resolution and the agreement it embodies is beneficial to the residents of the Local Agency and are in the best interests of the residents and customers of the Local Agency and of the future residents of the area within the Community Facilities District. 2 4159-3584-7960.2 Section 3. The boundaries of the territory proposed for inclusion in the Community Facilities District are more particularly described and shown on the Boundary Map now on file in the office of the Secretary, which map is hereby approved by the Commission. A reduced copy of the Boundary Map is marked Exhibit B and is attached hereto, and by this reference is incorporated herein and made a part of this Resolution. The Commission finds that the Boundary Map is in the form and contains the matters prescribed by Section 3110 of the California Streets and Highways Code and directs the Secretary or the Assistant to the Secretary to certify the adoption of this Resolution on the face of the Boundary Map. The Authority's special tax consultant is hereby authorized and directed to record a copy of the Boundary Map with the County Recorder of Orange County in accordance with the provisions of Section 3111 of the California Streets and Highways Code, Section 4. It is the intention of the Commission to finance the Improvements and Undergrounding described in the Local Agency Resolution and more particularly described in Exhibit C. All of the Improvements and the Undergrounding have an estimated useful life of five (5) years or longer. They are public facilities that the Local Agency or another governmental entity is authorized by law to construct, own or operate, or to which they may contribute revenue, and that are necessary to meet increased demands placed upon the Local Agency or upon other local government agencies as a result of development occurring and anticipated to occur within the Community Facilities District. The Improvements and Undergrounding need not be physically located within the Community Facilities District. Section 5. The cost of financing the Improvements and the Undergrounding includes incidental expenses comprising the costs of engineering, planning, design, construction staking, materials testing and coordination of the Improvements and the Undergrounding, together with the costs of environmental evaluations thereof, and all costs associated with the creation of the Community Facilities District, the issuance of any bonds, the determination of the amount of any special taxes or the collection or payment of any special taxes and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, together with any other expenses incidental to the Improvements and Undergrounding. A representative list of incidental expenses proposed to be incurred are set forth on Exhibit D attached hereto, which by this reference is incorporated herein and made a part of this Resolution. Section 7. It is the intention of the Commission that, except where funds are otherwise available, a special tax shall be annually levied within the Community Facilities District sufficient to finance the Improvements and Undergrounding, including but not limited to the payment of interest on and principal of any bonds to be issued to finance the Improvements and Undergrounding; the repayment of funds advanced by the Local Agency or the Developers for the Community Facilities District and including the repayment under any acquisition, deposit or other agreement (which shall not constitute a debt or liability of the Authority) of advances of funds or reimbursement for the lesser of the value or cost or work in-kind provided by any person for the Community Facilities District. Section 8. Upon recordation of a Notice of Special Tax Lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property within the Community Facilities District, and this lien shall continue in force and effect until the special tax obligation is prepaid 4159-3584-7960.2 and permanently satisfied and the lien is cancelled in accordance with law, or until levy of the special tax by the Authority ceases. Section 9. It is the intention of the Commission that the proposed special tax will be collected through the regular Orange County secured property tax bills, and will be subject to the same enforcement mechanism, and the same penalties and interest for late payment, as regular ad valorem property taxes; however, the Commission reserves the right to utilize any other lawful means of billing, collecting and enforcing the special tax, including direct billing, supplemental billing, and, when lawfully available, judicial foreclosure of the special tax lien. Section 10. The rate and method of apportionment of the special tax (the "RMA"), including the maximum annual special tax for the Community Facilities District, is set forth in Exhibit E, attached hereto, which by this reference is incorporated herein and made a part of this Resolution. The RMA provides sufficient detail to allow each landowner or resident within the Community Facilities District to estimate the maximum amount that such person will have to pay, and specifies the conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied. As required by the Act: (1) the maximum authorized special tax for financing the acquisition and construction of the Improvements and the financing of the Undergrounding that may be levied against any parcel of land used for private residential purposes (which use commences no later than the date on which an occupancy permit for private residential use is issued) is specified as a dollar amount and shall not increase by more than two percent (2%) per year; (2) the special tax shall not be levied for Improvements and Undergrounding against such property after the time stated in Exhibit E; and (3) under no circumstances shall the special tax be increased on private residential property, as a consequence of delinquency or default by the owners of any other parcel or parcels of land within the Community Facilities District, by more than ten per cent (10%) above the level that would have been levied had there been no delinquencies. Section 11. Should any property subject to the special tax be acquired by a public agency and then leased for private purposes, it is the intention of the Commission, pursuant to Section 53340.1 of the California Government Code, to levy the special tax on the leasehold or possessory interests in property owned by a public agency (which property is otherwise exempt from the special tax), to be payable by the owner of the leasehold or possessory interests in such property. Section 12. It is the intention of the Commission, pursuant to Section 53325.7 of the California Government Code, to establish the initial appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, for the Community Facilities District in the amount of $850,000. Section 13. Notice is given that Thursday, the 201h day of December, 2018, at the hour of 2:00 o'clock P.M., at the offices of the California State Association of Counties, at 1100 K Street, Sacramento, California 95814, has been fixed by the Commission as the date, time and place for a public hearing to be held by the Commission to consider the establishment of the Community. Facilities District, the proposed rate, method of apportionment and manner of collection of the special tax and all other matters as set forth in this Resolution. At the public hearing, any persons interested, including all taxpayers, property owners and registered voters within the Community Facilities District, may appear and be heard, and the testimony of all 4 4159-3584-7960.2 interested persons or taxpayers for or against the establishment of the Community Facilities District and the levy of the special tax, the extent of the Community Facilities District, the financing of the Improvements or Undergrounding, the establishment of the appropriations limits, or on any other matters set forth herein, will be heard and considered. Section 14. Any protests to the proposals in this Resolution may be made orally or in writing by any interested persons or taxpayers, except that any protests pertaining to the regularity or sufficiency of these proceedings shall be in writing and shall clearly set forth the irregularities and defects to which objection is made. The Commission may waive any irregularities in the form or content of any written protest and at the public hearing may correct minor defects in the proceedings. All written protests not presented in person by the protester at the public hearing must be filed with the Commission at or before the time fixed for the public hearing in order to be received and considered. Any written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Section 15. Written protests by a majority of the registered voters residing and registered within the Community Facilities District (if at least six such voters so protest), or by the owners of a majority of the land area within the Community Facilities District not exempt from the proposed special tax will require suspension of these proceedings for at least one year. If such protests are directed only against certain elements of the proposed Improvements or Undergrounding, or the special tax of the Community Facilities District or the other proposals contained in this Resolution, only those elements need be excluded from the proceedings. Section 16. The public hearing may be continued from time to time, but shall be completed within thirty (30) days from the date of the initial date set for such public hearing, except that if the Commission finds that the complexity of the Community Facilities District or the need for public participation requires additional time, the public hearing may be continued from time to time for a period not to exceed six (6) months from the date of the initial date set for such public hearing. Section 17. The Commission may at the public hearing modify this Resolution by eliminating any element of the Improvements or Undergrounding, or by changing the method of apportionment of the special tax for the Community Facilities District so as to reduce the maximum special tax for all or a portion of the owners of property within the Community Facilities District or by removing any territory from the Community Facilities District; except that if the Commission proposes to modify this Resolution in a way that will increase the probable (as distinct from the maximum, which may not be increased) special tax to be paid by the owner of any lot or parcel of land in the Community Facilities District, the Commission shall direct that a report be prepared that includes a brief analysis of the impact of the proposed modifications on the probable special tax to be paid by the owners of such lots or parcels of land in the Community Facilities District, and the Commission shall receive and consider the report before approving any such modifications or any resolution forming the Community Facilities District which includes such modifications. Section 18. At the conclusion of the public hearing, the Commission may abandon these proceedings or may, after passing upon all protests, determine to proceed with establishing the Community Facilities District. If the Commission determines at the conclusion 4159-3584-7960.2 of the public hearing to proceed with the establishment of the Community Facilities District, it expects that the proposed voting procedure will be by landowners of the Community Facilities District voting in accordance with the Act, as the Commission is informed that during the 90 days prior to the date set for the hearing, there have been zero registered voters residing within the . Community Facilities District. The Commission will require this information to be confirmed before ordering the election. Section 19. The Authority's special tax consultant, David Taussig & Associates, in consultation with and on behalf of the County, is hereby requested to study the Community Facilities District and, at or before the time of the public hearing, to cause to be prepared and filed with the Commission a report which shall contain a brief description of the facilities by type which in its opinion will be required to adequately meet the needs of the new development which has occurred and/or is expected to occur within the Community Facilities District, together with estimates of the cost of financing the Improvements and Undergrounding and the incidental expenses related thereto. The report shall, upon its presentation, be submitted to the Commission for review, shall be available for inspection by the public, and shall be made a part of the record of the public hearing. Section 20. To the extent the Improvements will not be constructed by the Local Agency, in the opinion of the Commission, the public interest will not be served by allowing the property owners in the Community Facilities District to intervene in a public bidding process pursuant to Section 53329.5(a) of the Act. Section 21. Notice of the time and place of the public hearing shall be given by Bond Counsel in the following manner: (a) A Notice of Public Hearing in the form provided by the Act shall be published once in a newspaper of general circulation published in the area of the Community Facilities District, pursuant to Section 6061 of the Government Code of the State of California and shall be. completed at least seven (7) days prior to the date set for such public hearing; and (b) A Notice of Public Hearing in the form provided by the Act shall be mailed, first class postage prepaid, to each owner of land, and to each registered voter residing, within the boundaries of the Community Facilities District (to property owners at their addresses as shown on the last equalized assessment roll, or as otherwise known to Bond Counsel). The mailing shall be completed at least fifteen (15) days prior to the date set for the public hearing. Section 22. The Developers have heretofore advanced certain funds, and may advance additional funds, which have been or may be used to pay costs incurred in connection with the establishment of the Community Facilities District and the issuance of special tax bonds thereby. The Commission proposes to repay all or a portion of such funds expended for such purpose, solely from the proceeds of such bonds, pursuant to the Deposit Agreement. The Deposit Agreement is hereby incorporated herein as though set forth in full herein. Section 23. This Resolution shall take effect immediately upon its adoption. 6 4159-3584-7960.2 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 15th day of November, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with law on November 15, 2018. By: ed Signatory California Statewide Communities Development Authority 7 4159-3584-7960.2 EXHIBIT A LOCAL AGENCY RESOLUTION 4159-3584-7960.2 RESOLUTION NO. 2018-44 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA: (1) AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ("AUTHORITY") TO FORM A COMMUNITY FACILITIES DISTRICT WITHIN THE TERRITORIAL LIMITS OF THE CITY OF NEWPORT BEACH TO FINANCE CERTAIN PUBLIC IMPROVEMENTS; (2) EMBODYING A JOINT COMMUNITY FACILITIES AGREEMENT SETTING FORTH THE TERMS AND CONDITIONS OF THE COMMUNITY FACILITIES DISTRICT FINANCING; (3) APPROVING AN ACQUISITION AGREEMENT AMONG THE AUTHORITY, THE CITY AND THE DEVELOPER; AND (4) AUTHORIZING STAFF TO COOPERATE WITH THE AUTHORITY AND ITS CONSULTANTS IN CONNECTION THEREWITH WHEREAS, the City of Newport Beach ("City") is a municipal corporation and charter city duly organized and existing under and by virtue of the laws of the State of California (the "State"); WHEREAS, the California Statewide Communities Development Authority (the "Authority") is a California joint -exercise of powers authority lawfully formed and operating within the State pursuant to an agreement (the "Joint Powers Agreement") entered into as of June 1, 1988 under the authority of Title 1, Division 7, Chapter 5 (commencing with Section 6500) of the California Government Code; WHEREAS, the City is a party to the Joint Powers Agreement and by virtue thereof a member (a "Program Participant") of the Authority; WHEREAS, the Joint Powers Agreement was entered into to establish the Authority as an agency authorized to issue bonds to finance projects within the territorial limits of its Program Participants; WHEREAS, the Joint Powers Agreement authorizes the Authority to undertake financing programs under any applicable provisions of State law to promote economic development, the stimulation of economic activity, and the increase of the tax base within the jurisdictional boundaries of its Program Participants; WHEREAS, the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State (the "Act") is an applicable provision of State law available to, among other things, finance public improvements necessary to meet increased demands placed upon local agencies as a result of development; WHEREAS, there is a development project known as "Uptown Newport" (the "Development Project") in the City owned by TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") and the Developer has requested the City to consider formation of a community facilities district for the Development Project under the Act; Resolution No. 2018-44 Page 2 of 8 WHEREAS, the City does not desire to allocate City resources and City staff time to the formation and administration of a community facilities district and to the issuance of bonds; WHEREAS, the Development Project will promote economic development, the stimulation of economic activity, and the increase of the tax base within the City; WHEREAS, both the Authority and the City are "local agencies" under the Act; WHEREAS, the Act permits two or more local agencies to enter into a joint community facilities agreement to exercise any power authorized by the Act; WHEREAS, the City desires to enter into such an agreement with the Authority to authorize the Authority to form a community facilities district within the territorial limits of the City to finance certain public improvements required of the Development Project; WHEREAS, a form of Acquisition Agreement (the "Acquisition Agreement") among the Authority, the City and the Developer has been presented to the City Council and is on file with the City Clerk; WHEREAS, nothing herein constitutes the City's approval of any applications, Development Project entitlements and/or permits, and such, to the extent required in the future, are subject to and contingent upon City Council approval following, to the extent applicable, environmental review in compliance with the California Environmental Quality Act; WHEREAS, nothing herein affects, without limitation, requirements for and/or compliance with any and all applicable and/or necessary improvement standards, land use requirements or subdivision requirements relating to the Development Project or any portion thereof, which obligations are and shall remain independent and subsisting; WHEREAS, all significant environmental effects for the development of the Uptown Newport Planned Community have been adequately addressed in the previously certified Environmental Impact Report No. ER2012-001 (SCH No. 2010051094) ("EIR"), which included a mitigation, monitoring and reporting program and statement of overriding considerations, and the City of Newport Beach intends to use said document for the approval of the creation of a Community Facilities District (CFD) to finance public improvements associated with the Uptown Newport Planned and its implementation. Copies of the previously prepared environmental document are available for public review and inspection at the Planning Division or at the City of Newport Beach website at www.newportbeachca-gov/ceqadocuments; WHEREAS, none of the conditions described in Section 15162 of the CEQA Guidelines calling for preparation of a subsequent or supplemental EIR have occurred, and the CFD and its implementation do not require changes or additions to the EIR pursuant to Section 15164 of the CEQA Guidelines; WHEREAS, no new effects would occur, nor would a substantial increase in the severity of previously identified significant effects occur as the result of this CFD, and this CFD identifies the same previously approved project with refined detailed drawings, no increase in intensity, and no changes to the development standards; Resolution No. 2018-44 Page 3 of 8 WHEREAS, there are no additional reasonable alternatives or mitigation measures that should be considered in conjunction with the CFD or its implementation; WHEREAS, the City Council finds that judicial challenges to the City's CEQA determinations and approvals of land use projects are costly and time consuming, and project opponents often seek an award of attorneys' fees in such challenges; WHEREAS, project applicants are the primary beneficiaries of such approvals, it is appropriate that such applicants should bear the expense of defending against any such judicial challenge, and bear the responsibility for any costs, attorneys' fees and damages which may be awarded to a successful challenger; and WHEREAS, the City Council is fully advised in this matter. NOW THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1. The City hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to municipal affairs of the City and the statements, findings and determinations of the City set forth in the recitals above and in the preambles of the documents approved herein are true and correct. Section 2. This resolution shall constitute full "local approval," under Section 9 of the Joint Powers Agreement, and under the Authority's Local Goals and Policies (see below), for the Authority to undertake and conduct proceedings in accordance herewith and under the Act to form a community facilities district (the "Community Facilities District") with boundaries substantially as shown on Exhibit A, attached hereto, to designate separate improvement areas within the Community Facilities District (each, an "Improvement Area"), to authorize a special tax within each Improvement Area and to issue bonds, in one or more series on a taxable or tax exempt basis, for each Improvement Area secured by the special taxes. Section 3. The Joint Powers Agreement, together with the terms and provisions of this resolution, shall together constitute a joint community facilities agreement between the City and the Authority under the Act. As, without this resolution, the Authority has no power to conduct proceedings under the Act to form the Community Facilities District, adoption by the Commission of the Authority of the Resolution of Intention to form the Community Facilities District under the Act shall constitute acceptance of the terms hereof by the Authority. Section 4. This resolution and the agreement it embodies are determined to be beneficial to and are in the best interests of the future residents of the area within the Community Facilities District. Section 5. The City acknowledges that the Authority has adopted Local Goals and Policies as required by Section 53312.7 of the Act. The City approves the use of those Local Goals and Policies in connection with the Community Facilities District; provided that the terms of any series of bonds issued for the Community Facilities District shall not exceed the parameters listed on Exhibit D. Resolution No. 2018-44 Page 4 of 8 Section 6. Pursuant to the Act and this resolution, the Authority may conduct proceedings under the Act to form the Community Facilities District and to have it authorize the financing of the facilities set forth on Exhibit B, attached hereto. All of the facilities are facilities that have an expected useful life of five years or longer and are facilities that the City or other local public agencies, as the case may be, are authorized by law to construct, own or operate, or to which they may contribute revenue. The facilities are referred to herein as the "Improvements," and the Improvements to be owned by the City are referred to as the "City Improvements." Section 7. The City Council certifies to the Commission of the Authority that all of the City Improvements are necessary to meet increased demands placed upon the City as a result of development occurring or expected to occur within the Community Facilities District. Joint community facilities agreements with each other local agency owning Improvements (any such local agency referred to herein as an "Other Local Agency") shall each contain a certification with respect to the Improvements to be owned by the Other Local Agency equivalent to that made by the City in this paragraph. Section 8. Prior to issuance of bonds, the Authority will apply the special tax collections within each Improvement Area to fund City Improvements as provided in the Acquisition Agreement, either for the acquisition of City Improvements or for the construction of City Improvements by the City. Following the issuance of bonds of an Improvement Area, the Authority will apply the special tax collections within the Improvement Area initially as required by the documents under which any bonds are issued; and thereafter, to the extent not provided in the bond documents, to the Authority's reasonable administrative costs incurred in the administration of the Community Facilities District. The Authority will remit any special tax revenues for any Improvement Area remaining after the final retirement of all bonds for such Improvement Area to the City and to each Other Local Agency in the proportions specified in the Authority's proceedings. The City will apply any such special tax revenues it receives for authorized City Improvements and its own administrative costs only as permitted by the Act. The joint community facilities agreements with each Other Local Agency must require such Other Local Agency to apply the special tax revenues they receive for their authorized Improvements under the Community Facilities District and for their own related administrative costs only as permitted by the Act. Section 9. The Authority will administer the Community Facilities District, including employing and paying all consultants, annually levying the special tax and all aspects of paying and administering the bonds, and complying with all State and Federal requirements appertaining to the proceedings, including the requirements of the United States Internal Revenue Code, The City will cooperate fully with the Authority in respect of the requirements of the Internal Revenue Code and to the extent information is required of the City to enable the Authority to perform its disclosure and continuing disclosure obligations with respect to the bonds, although the City will not participate in nor be considered to be a participant in the proceedings respecting the Community Facilities District (other than as a party to the agreement embodied by this resolution) nor will the City be or be considered to be an issuer of the bonds or an obligated person for purposes of Rule 15c2-12. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Resolution No. 2018-44 Page 5 of 8 Section 10. Upon the first levy of special tax within the Community Facilities District or any Improvement Area prior to the issuance of bonds for an Improvement Area, the Authority shall establish and maintain a special fund (which may be established with a bond trustee under an indenture or trust agreement) to be known as the "Uptown Newport Project Community Facilities District, Improvement Area No._ Acquisition and Construction Fund." Special taxes collected within the applicable Improvement Area prior to the issuance of bonds shall be deposited in a separate account of the Acquisition and Construction Fund for such Improvement Area. If the Authority issues bonds for the Improvement Area and bond proceeds become available to finance the Improvements, the Authority shall deposit the portion of bond proceeds which is intended to be utilized to finance the Improvements in a separate account of the Acquisition and Construction Fund for such Improvement Area. The Acquisition and Construction Fund will be available both for City Improvements and for the Improvements pertaining to each Other Local Agency. Amounts in the Acquisition and Construction Fund shall be disbursed in accordance with the provisions of the indenture or other similar document governing the bonds issued for the applicable Improvement Area, the Acquisition Agreement and/or the relevant joint community facilities agreement or acquisition agreement for any Other Local Agency. Section 11. As respects the Authority and the Other Local Agencies, the City agrees to fully administer, and to take full governmental responsibility for, the construction or acquisition of the City Improvements including but not limited to environmental review, approval of plans and specifications, bid requirements, performance and payment bond requirements, insurance requirements, contract and construction administration, staking, inspection, acquisition of necessary property interests in real or personal property, the holding back and administration of retention payments, punch list administration, and the Authority and the Other Local Agencies shall have no responsibility in that regard. The City reserves the right, as respects the Developer, to require the Developer to contract with the City to assume any portion or all of this responsibility. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Section 12. The City agrees to require the Developer to indemnify and to hold the Authority, its other members, and its other members' officers, agents and employees, and the Other Local Agencies and their officers, agents and employees (collectively, the "Indemnified Parties") harmless from any and all claims, suits and damages (including costs and reasonable attorneys' fees) arising out of the design, engineering, construction and installation of the City Improvements. The Authority shall obtain a provision equivalent to this paragraph in each joint community facilities agreement with each Other Local Agency naming the City and its officers, agents and employees as Indemnified Parties with respect to such Other Local Agency's Improvements. Section 13. As respects the Authority and each Other Local Agency, the City agrees — once the City Improvements are constructed according to the approved plans and specifications — to accept ownership of the City Improvements, to take maintenance responsibility for the City Improvements. Resolution No. 2018-44 Page 6 of 8 Section 14. The City acknowledges the requirement of the Act that if the City Improvements are not completed prior to the adoption, by the Commission of the Authority, of the Resolution of Formation of the Community Facilities District, the City Improvements must be constructed as if they had been constructed under the direction and supervision, or under the authority of, the City. The City acknowledges that this means all City Improvements must be constructed under contracts that require the payment of prevailing wages as required by Section 1720 and following of the Labor Code of the State of California. The Authority makes no representation that this requirement is the only applicable legal requirement in this regard. The City reserves the right, as respects the Developer, to assign appropriate responsibility for compliance with this paragraph to the Developer. Section 15. The form of the Acquisition Agreement attached hereto as Exhibit C is hereby approved, and each of the City Manager, Assistant City Manager, or such person as the City Manager or Assistant City Manager shall designate (each, an "Authorized Officer") is authorized to execute, and deliver to the Developer, the Acquisition Agreement on behalf of the City in substantially that form, with such changes as shall be approved by the Authorized Officer after consultation with the City Attorney and the Authority's bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof. Section 16. For City Improvements to be financed on an acquisition basis (that is, constructed by or on behalf of the Developer), after completion of the City Improvements and appropriate arrangements for the maintenance of the City Improvements, or any discrete portion thereof as provided in Section 53313.51 of the Act and in the Acquisition Agreement, to the satisfaction of the City, and in conjunction with the City's acceptance thereof, acquisition of the City Improvements shall be undertaken as provided in the Acquisition Agreement. For City Improvements to be financed on a construction basis (that is, constructed by the City or under contract with the City), the City may request disbursement from the special tax collections for reimbursement of the City or direct payment of costs in accordance with applicable law. Section 17. The City hereby consents to the formation of the Community Facilities District in accordance with this resolution and consents to the assumption of jurisdiction by the Authority for the proceedings respecting the Community Facilities District with the understanding that the Authority will hereafter take each and every step required for or suitable for consummation of the proceedings, the levy, collection and enforcement of the special tax, and the issuance, sale, delivery and administration of the bonds, all at no cost to the City and without binding or obligating the City's general fund or taxing authority, Section 18. The terms of the Agreement embodied by this resolution may be amended by a writing duly authorized, executed and delivered by the City and the Authority, except that no amendment may be made after the issuance of the bonds by the Authority that would be detrimental to the interests of the bondholders without complying with all of the bondholder consent provisions for the amendment of the bond resolutions, bond indentures or like instruments governing the issuance, delivery and administration of all outstanding bonds. Resolution No. 2018-44 Page 7 of 8 Section 19. Except to the extent of the City's agreement to take responsibility for and ownership of the City Improvements, no person or entity, including the Developer, shall be deemed to be a third party beneficiary of this resolution, and nothing in this resolution (either express or implied) is intended to confer upon any person or entity other than the Authority and the City (and their respective successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this resolution. Section 20. The City shall be identified as a third -party beneficiary of all joint community facilities agreements between the Authority and the other local agencies to the extent of the provisions whereby the Other Local Agency agree to take responsibility for and ownership of their Improvements. Section 21. This resolution shall remain in force until all bonds have been retired and the authority to levy the special tax conferred by the Community Facilities District proceedings has ended or is otherwise terminated. Section 22. The City Council hereby authorizes and directs each Authorized Officer and other appropriate City staff to cooperate with the Authority and its consultants and to do all things necessary and appropriate to carry out the intent of this resolution and the Community Facilities District financing, and to execute any and all certificates and documents in connection with the bond issuance as shall be approved by an Authorized Officer after consultation with the City Attorney and the Authority's bond counsel. Section 23. The City Council hereby approves delivery of a certified copy of this resolution to the Authority's Bond Counsel, Orrick, Herrington & Sutcliffe LLP. Section 24. The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 25. If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 26. The requirement for environmental review under the California Environmental Quality Act ("CEQA") is satisfied by the City Council's previous certification of the Uptown Newport Planned Community final EIR (SCH No. 2010051094) (Resolution No. 2013-21). The finding of this Resolution is incorporated here by reference. Section 27. This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 26th day of June, 2018. ATTEST: bgy�'- Leifa-ni 1. Brown City Clerk APPROVED AS TO FORM: CITY ATT'ORNEY'S OFFI Aaron C. Harp City Attorney Resolution No. 2018-44 Page 8 of 8 Marshall "90y" Duffield Mayor Attachments: Exhibit A — Community Facilities District Boundaries Exhibit B — Authorized Improvements Exhibit C — Form of Acquisition Agreement Exhibit D — Project Description and Bond Parameters EXHIBIT A COMMUNITY FACILITIES DISTRICT BOUNDARIES EXHIBIT B AUTHORIZED IMPROVEMENTS 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights-of-way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT C FORM OF ACQUISITION AGREEMENT ACQUISITION AGREEMENT BY AND AMONG CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, CITY OF NEWPORT BEACH TSG — PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC Dated as of , 20 ACQUISITION AGREEMENT Recitals A. The parties to this Acquisition Agreement (the "Agreement") are the California Statewide Communities Development Authority (the "Authority"), City of Newport Beach, a California municipal corporation and charter city ("City"), Uptown Newport Jamboree, LLC, a Delaware limited partnership and TSG – Parcel 1, LLC, a Delaware limited liability company (collectively, the "Developer"). B. The effective date of this Agreement is , 20_ C. The Developer has applied for the financing of certain public capital improvements (each, as more particularly described on Exhibit A, an "Acquisition Improvement' and collectively, the "Acquisition Improvements") through the Authority. The Acquisition Improvements are to be owned and operated by the City, and the financing is to be accomplished through a Community Facilities District which will be established and administered by the Authority under and pursuant to the Mello -Roos Community Facilities Act of 1982 – California Government Code Sections 53311 and following (the "Act'). On ( J, 20_, the City adopted Resolution No. L_—] authorizing the Authority to form a community facilities district (the "Community Facilities District') within the territorial limits of the City and designate improvement areas within the Community Facilities District (each, an "Improvement Area") to finance the Acquisition Improvements. On [ 120—, the Authority formed the Community Facilities District and, on the same date, a landowner election was conducted for each Improvement Area in which all of the votes were cast unanimously in favor of conferring the Community Facilities District authority on the Authority Commission. D. The Authority intends to levy special taxes for facilities and issue bonds for each Improvement Area, in one or more series, to fund, among other things, all or a portion of the Acquisition Improvements. The portion of the proceeds of such special taxes (including prepayments) and bonds allocable to the cost of the Acquisition Improvements, together with interest earned thereon, is referred to herein as the "Available Amount". E. The Community Facilities District will provide financing for the acquisition by the City of the Acquisition Improvements and the payment of the Acquisition Price (as defined herein) of the Acquisition Improvements from the Available Amount. Attached hereto as Exhibit A is a description of the Acquisition Improvements, which includes authorized discrete and usable portions, if any, of the Acquisition Improvements, pursuant to Section 53313.51 of the Act, to be acquired from the Developer. F. The parties anticipate that, upon completion of the Acquisition Improvements and subject to the terms and conditions of this Agreement, the City will acquire the completed Acquisition Improvements. G. Any and all monetary obligations of the City arising out of this Agreement are the special and limited obligations of the City payable only from the Available Amount, and no other funds whatsoever of the City shall be obligated therefor under any circumstances. H. Attached to this Agreement are Exhibit A (Description of the Acquisition Improvements and the Eligible Portions thereof), Exhibit B (Disbursement Request Form for Acquisition Improvements) and Exhibit C (Bidding, Contracting and Construction Requirements for Acquisition Improvements), all of which are incorporated into this Agreement for all purposes. Agreement ARTICLE I DEFINITIONS; COMMUNITY FACILITIES DISTRICT FORMATION AND FINANCING PLAN Section 1.01. Definitions. As used herein, the following capitalized terms shall have the meanings ascribed to them below: "Acceptable Title" means title (whether a fee interest, easement or other acceptable title or property rights) free and clear of all monetary liens, encumbrances, assessments, whether any such item is recorded or unrecorded, and taxes, except (i) those items which are reasonably determined by the City Engineer not to interfere with the intended use and therefore are not required to be cleared from the title, and (ii) the lien of the Community Facilities District or any other community facilities district or assessment district provided that the property owned by the City is exempt from such taxation or assessment. "Acquisition and Construction Fund" means each "Uptown Newport Community Facilities District Acquisition and Construction Fund" established by the Authority pursuant to the Resolution and Section 1.03 hereof for the purpose of paying the Acquisition Price of the Acquisition Improvements. "Acquisition Improvement" means a public capital improvement described in Exhibit A hereto. "Acquisition Price" means the total amount eligible to be paid to the Developer upon acquisition of an Acquisition Improvement as provided in Section 2.03, not to exceed the Actual Cost of the Acquisition Improvement. "Actual Cost" means the total cost of an Acquisition Improvement, as documented by the Developer to the satisfaction of the City and as certified by the City Engineer in an Actual Cost Certificate including, without limitation, (a) the Developer's cost of constructing such Acquisition Improvement including grading, labor, material and equipment costs, (b) the Developer's cost of designing and engineering the Acquisition Improvement, preparing the plans and specifications and bid documents for such Acquisition Improvement, and the costs of inspection, materials testing and construction staking for such Acquisition Improvement, (c) the Developer's cost of any performance, payment and maintenance bonds and insurance, including title insurance, required hereby for such Acquisition Improvement, (d) the Developer's cost of any real property or interest therein that is either necessary for the construction of such Acquisition Improvement (e.g., temporary construction easements, haul roads, etc.), or is required to be conveyed with such Acquisition Improvement in order to convey Acceptable Title thereto to the City or its designee, (e) the Developer's cost of environmental evaluation or mitigation required for such Acquisition Improvement, (f) the amount of any fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals and reviews for such Acquisition Improvement, (g) the Developer's cost for construction and project management, administration and supervision services for such Acquisition Improvement, and (h) the Developer's cost for professional services related to such Acquisition Improvement, including engineering, accounting, legal, financial, appraisal and similar professional services. "Actual Cost Certificate" means a certificate prepared by the Developer detailing the Actual Cost of an Acquisition Improvement, or an Eligible Portion thereof, to be acquired hereunder, as may be revised by the City Engineer pursuant to Section 2.03. 20 "Agreement" means this Acquisition Agreement, dated as of "Authority" means the California Statewide Communities Development Authority. "Authority Trust Agreement" means a Trust Agreement entered into by the Authority and an Authority Trustee in connection with the issuance of bonds. "Authority Trustee" means the financial institution identified as trustee in an Authority Trust Agreement. "Available Amount" shall have the meaning assigned to the term in Recital D. "Bonds" means bonds or other indebtedness issued by the Authority that is to be repaid with Special Taxes. "City" means the City of Newport Beach, California. "City Engineer" means the Engineer of the City or his/her designee who will be responsible for administering the acquisition of the Acquisition Improvements hereunder. "Code" means the Government Code of the State of California. "Community Facilities District" shall have the meaning assigned to the term in Recital C. "Developer" means, collectively or severally, as appropriate, TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company, and their respective successors and assigns. "Disbursement Request Form" means a requisition for payment of funds from an Acquisition and Construction Fund for an Acquisition Improvement, or an Eligible Portion thereof in substantially the form contained in Exhibit B hereto. "Eligible Portion" shall have the meaning ascribed to it in Section 2.03 below. "Improvement Area" means an improvement area of the Community Facilities District designated as such by the Authority in accordance with the Act. "Installment Payment" means an amount equal to ninety percent (90%) of the Actual Cost of an Eligible Portion. "Project" means the development of the property in the Community Facilities District, including the design and construction of the Acquisition Improvements and the other public and private improvements to be constructed by the Developer within the Community Facilities District. "Resolution" means City of Newport Beach Resolution No. [, adopted _1, 20_ authorizing the execution and delivery of this Agreement. "Special Taxes" means annual special taxes for facilities, and prepayments thereof, authorized by the Community Facilities District to be levied by the Commission of the Authority within each Improvement Area. "Title Documents" means, for each Acquisition Improvement acquired hereunder, a grant deed or similar instrument necessary to transfer title to any real property or interests therein (including easements or rights of way), or an irrevocable offer of dedication of such real property with interests therein necessary to the operation, maintenance, rehabilitation and improvement by the City of the Acquisition Improvement (including, if necessary, easements for ingress and egress) and a bill of sale or similar instrument evidencing transfer of title to the Acquisition Improvement (other than said real property interests) to the City, where applicable. Section 1.02. Establishment of Community Facilities District. Developer has requested the City to permit the Authority to provide for financing of the Acquisition Improvements and collection of special tax through the establishment and authorization of the Community Facilities District and the City agreed by its adoption of the Resolution. The Community Facilities District was established by the Authority on f 1, 20_, and through the successful landowner election held that same day with respect to each Improvement Area of the Community Facilities District, the Commission of the Authority is authorized to levy the Special Taxes and to issue the Bonds to finance the Acquisition Improvements. Developer and the City agree to reasonably cooperate with one another and with the Authority in the completion of the financing through the issuance of the Bonds in one or more series for each Improvement Area. Section 1.03. Deposit and Use of Available Amount. (a) Prior to the issuance of Bonds for each Improvement Area, Special Taxes collected by the Authority (including from prepayments of Special Taxes) shall be deposited in the Acquisition and Construction Fund established by the Authority pursuant to the terms of the Resolution, and may be disbursed to pay the Acquisition Price of Acquisition Improvements in accordance with Article II of this Agreement. All funds in the Acquisition and Construction Fund shall be considered a portion of the Available Amount, and upon the issuance of the Bonds the Acquisition and Construction Fund shall be transferred to the Authority Trustee to be held in accordance with the Authority Trust Agreement. (b) If not already established pursuant to the Resolution, upon the issuance of the Bonds of an Improvement Area, the Authority will cause the Authority Trustee to establish and maintain the Acquisition and Construction Fund for the purpose of holding all funds for the Acquisition Improvements to be financed by such Improvement Area. All earnings on amounts in the Acquisition and Construction Fund shall remain in the Acquisition and Construction Fund for use as provided herein and pursuant to the Authority Trust Agreement. Money in such Acquisition and Construction Fund shall be available to respond to delivery of a Disbursement Request Form and to be paid to the Developer or its designee to pay the Acquisition Price of the Acquisition Improvements, as specified in Article II hereof. Upon completion of all of the Acquisition Improvements and the payment of all costs thereof, any remaining funds in the Acquisition and Construction Fund (less any amount determined by the City as necessary to reserve for claims against the account) (i) shall be applied to pay the costs of any additional Acquisition Improvements eligible for acquisition with respect to the Project, as approved by the Authority and, to the extent not so used, (ii) shall be applied by the Authority to call Bonds for such Improvement Area or to reduce Special Taxes for such Improvement Area as the Authority shall determine. Section 1.04, No City Liability: City Discretion: No Effect on Other Agreements. In no event shall any actual or alleged act by the City or any actual or alleged omission or failure to act by the City with respect to the Authority subject the City to monetary liability therefor. Further, nothing in this Agreement shall be construed as affecting the Developer's or the City's duty to perform their respective obligations under any other agreements, public improvement standards, land use regulations or subdivision requirements related to the Project, which obligations are and shall remain independent of the Developer's and the City's rights and obligations under this Agreement. ARTICLE II DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS Section 2.01. Letting and Administering Design Contracts. The Developer has awarded and administered, or will award and administer, engineering design contracts for the Acquisition Improvements to be acquired from Developer. All eligible expenditures of the Developer for design engineering and related costs in connection with the Acquisition Improvements (whether as an advance to the City or directly to the design consultant) shall be reimbursed at the time of acquisition of the Acquisition Improvements. The Developer shall be entitled to reimbursement for any design costs of the Acquisition Improvements only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to any payment for design costs independent of the acquisition of Acquisition Improvements. Section 2.02. Letting and Administration of Construction Contracts; Indemnification. State law requires that all Acquisition Improvements not completed prior to the formation of the Community Facilities District shall be constructed as if they were constructed under the direction and supervision, or under the authority, of the City. In order to assure compliance with those provisions, except for any contracts entered into prior to the date hereof, Developer agrees to comply with the requirements set forth in Exhibit C hereto with respect to the bidding and contracting for the construction of the Acquisition Improvements. The Developer agrees that all the contracts shall call for payment of prevailing wages as required by the Labor Code of the State of California. The Developer's indemnification obligation set forth in Section 3.01 of this Agreement shall also apply to any alleged failure to comply with the requirements of this Section, and/or applicable State laws regarding public contracting and prevailing wages. Section 2.03. Sale of Acquisition Improvements. The Developer agrees to sell to the City each Acquisition Improvement to be constructed by or on behalf of the Developer (including any rights-of-way or other easements necessary for the Acquisition Improvements, to the extent not already publicly owned), when the Acquisition Improvement is completed to the satisfaction of the City for an amount not to exceed the lesser of (i) the Available Amount from time to time or (ii) the Actual Cost of the Acquisition Improvement. Exhibit A, attached hereto and incorporated herein, contains a list of the Acquisition Improvements. Portions of an Acquisition Improvement eligible for Installment Payments prior to completion of the entire Acquisition Improvement are described as eligible, discrete and usable portions in Exhibit A (each, an "Eligible Portion"). At the time of completion of each Acquisition Improvement, or Eligible Portion thereof, the Developer shall deliver to the City Engineer a written request for acquisition, accompanied by an Actual Cost Certificate, and by executed Title Documents for the transfer of the Acquisition Improvement where necessary. In the event that the City Engineer finds that the supporting paperwork submitted by the Developer fails to demonstrate the required relationship between the subject Actual Cost and eligible work, the City Engineer shall advise the Developer that the determination of the Actual Cost (or the ineligible portion thereof) has been disallowed and shall request further documentation from the Developer. If the further documentation is still not adequate, the City Engineer may revise the Actual Cost Certificate to delete any disallowed items and the determination shall be final and conclusive. Certain soft costs for the Acquisition Improvements, such as civil engineering, may have been incurred pursuant to single contracts that include work relating also to the private portions of the Project. In those instances, the total costs under such contracts will be allocated to each Acquisition Improvement as approved by the City Engineer. Where a specific contract has been awarded for design or engineering work relating solely to an Acquisition Improvement, one hundred percent (100%) of the costs under the contract will be allocated to that Acquisition Improvement. Amounts allocated to an Acquisition Improvement will be further allocated among the Eligible Portions of that Acquisition Improvement, if any, in the same proportion as the amount to be reimbursed for hard costs for each Eligible Portion bears to the amount to be reimbursed for hard costs for the entire Acquisition Improvement. Costs will be allocated to each Acquisition Improvement as approved by the City Engineer. The costs of certain environmental mitigation required to mitigate impacts of the public and private portions of the Project will be allocated to each Acquisition Improvement as approved by the City Engineer. Section 2.04. Conditions Precedent to Payment of Acquisition Price. Payment to the Developer or its designee of the Acquisition Price for an Acquisition Improvement from the Acquisition and Construction Fund shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Acquisition Improvement satisfies all City regulations and ordinances and is otherwise complete and ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that none of the property (including any rights-of-way or other easements necessary for the operation and maintenance of the Acquisition Improvement, to the extent not already publicly owned) comprising the Acquisition Improvement is not subject to any prospective mechanics lien claim respecting the Acquisition Improvements. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. Property shall be exempt from the special tax of the Community Facilities District upon conveyance to the City or the Developer shall prepay the special tax on the property so conveyed. (c) The Developer shall certify that it is not in default with respect to any loan secured by any interest in the Project. (d) The Developer shall have provided the City with Title Documents needed to provide the City with Acceptable Title to the site, right-of-way, or easement upon which the subject Acquisition Improvement is situated. All such Title Documents shall be in a form acceptable to the City and shall convey Acceptable Title, The Developer shall provide a policy of title insurance as of the date of transfer in a form acceptable to the City Engineer and the City Attorney insuring the City as to the interests acquired in connection with the acquisition of any interest for which such a policy of title insurance is not required by another agreement between the City and the Developer. Each title insurance policy required hereunder shall be in the amount equal to the Acquisition Price. The amount paid to the Developer or its designee upon satisfaction of the foregoing conditions precedent shall be the Acquisition Price less all Installment Payments paid previously with respect to the Acquisition Improvement. Section 2.05. Payment for Eligible Portions. The Developer may submit an Actual Cost Certificate to the City Engineer with respect to any Eligible Portion. Payment to the Developer or its designee from the Acquisition and Construction Fund of an Installment Payment with respect to such Eligible Portion shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Eligible Portion has been completed in accordance with the applicable plans and specifications and that the Eligible Portion satisfies all City regulations and ordinances and is otherwise complete and, where appropriate, is ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that the property (including any rights-of-way or other easements necessary for the operation and maintenance of the Eligible Portion, to the extent not already owned by the City) comprising the Eligible Portion is not subject to any prospective mechanics lien claim respecting the Eligible Portion. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. (c) The Developer shall have provided the City with Title Documents needed to provide the City with title to the site, right-of-way, or easement upon which the subject Eligible Portion is situated. All such Title Documents shall be in a form acceptable to the City Engineer and shall be sufficient, upon completion of the Acquisition Improvement of which the Eligible Portion is a part, to convey Acceptable Title. (d) Payment and performance bonds, from a bonding company with an A.M. Best rating of at least "A-" or its equivalent, applying to plans and specifications for the Acquisition Improvement approved by the City, shall be in place to secure completion of the Acquisition Improvement of which the Eligible Portion is a part. Section 2.06. Disbursement Request Form. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement pursuant to Section 2.04 or to pay an Installment Payment for an Eligible Portion pursuant to Section 2.05, the City Engineer shall cause a Disbursement Request Form substantially in the form attached hereto as Exhibit B-1 to be submitted to the Authority and Authority Trustee, and the Authority or Authority Trustee shall make payment directly to the Developer or its designee of the amount requested from the applicable Acquisition and Construction Fund. The City and the Developer acknowledge and agree that the Authority or Authority Trustee shall make payment strictly in accordance with the Disbursement Request Form and shall not be required to determine whether or not the Acquisition Improvement or Eligible Portion has been completed or what the Actual Costs may be with respect to the Acquisition Improvement or Eligible Portion. The Authority or Authority Trustee shall be entitled to rely on the executed Disbursement Request Form on its face without any further duty of investigation. In the event that the Actual Cost of an Acquisition Improvement or the Installment Payment for an Eligible Portion is in excess of the Available Amount, the Authority or Authority Trustee shall withdraw all funds remaining in the Acquisition and Construction Fund and shall transfer those amounts to the Developer or its designee. The unpaid portion of the Actual Cost shall be paid from funds that may subsequently be deposited in the Acquisition and Construction Fund from a subsequent issuance of Bonds, from prepayments of Special Taxes to be used for financing Acquisition Improvements, or from Special Tax revenues, if any of those occurs. Section 2.07. Limitation on Obligations. In no event shall the City be required to pay the Developer or its designee more than the amounts held in the Acquisition and Construction Fund. Section 2.08. Undergrounding of Utilities. In addition to financing the acquisition of the Acquisition Improvements, proceeds of bonds for the Community Facilities District are expected to finance the undergrounding of certain utilities owned or to be owned by Southern California Edison. Notwithstanding anything to the contrary herein, the City shall be entitled to directly request payment to the City (or to reimburse the Developer) pursuant to a Request to the Authority Trustee to (i) reimburse amounts the City has paid Southern California Edison or a contractor for the amount in such request, or (ii) to pay directly to Southern California Edison or a contractor for the amount in such request. To the extent authorized by law, the City agrees to first reimburse amounts previously deposited by the Developer pursuant to the Deposit Agreement between the City of Newport Beach and TSG — Parcel 1, LLC, dated January 5, 2015, for the costs of the undergrounding of utilities, including design and planning, from proceeds of bonds or the Special Tax pursuant to this Section. ARTICLE III MISCELLANEOUS Section 3.01. Indemnification and Hold Harmless. The Developer hereby assumes the defense of, and indemnifies and saves harmless the City, the Authority and their respective officers, directors, employees and agents, including the Authority Trustee, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from or alleged to have resulted from the acts or omissions of the Developer or its agents and employees arising out of any contract for the design, engineering and construction of the Acquisition Improvements entered into by the Developer or arising out of any alleged misstatements of fact or alleged omission of a material fact made by the Developer, its officers, directors, employees or agents to the Authority's underwriter, financial advisor, appraiser, district engineer or bond counsel or regarding the Developer, its proposed developments, its property ownership and its contractual arrangements contained in the official statement relating to the Authority financing (provided that the Developer shall have been furnished a copy of the official statement and shall not have objected thereto); and provided, further, that nothing in this Section 3.01 shall limit in any manner the City's rights against any of the Developer's architects, engineers, contractors or other consultants. Except as set forth in this Section 3.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer, its agents and employees. Nothing in this Section 3.01 shall be understood or construed to mean that the Developer agrees to indemnify the City, the Authority or any of their respective officers, directors, employees or agents, for any wrongful acts or omissions to act of the Authority or its officers, employees, agents or any consultants or contractors, including the Authority Trustee, and for any wrongful acts, willful misconduct, active negligence or omissions to act of the City, or its officers, employees, agents or any consultants or contractors, including the Authority Trustee. Section 3.02. Audit. The City shall have the right, during normal business hours and upon the giving of ten days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer (for which the Developer seeks reimbursement pursuant to this Agreement) in constructing the Acquisition Improvements. Section 3.03. Cooperation. The City and the Developer agree to cooperate with respect to the completion of the financing of the Acquisition Improvements by the Authority through the levy of the Community Facilities District Special Taxes and issuance of Bonds. The City and the Developer agree to meet in good faith to resolve any differences on future matters which are not specifically covered by this Agreement. Section 3.04. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. Section 3.05. Third Party Beneficiaries. The Authority and its officers, employees, agents or any consultants or contractors are expressly deemed third party beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is expressly agreed that, except for the Authority with respect to the provisions of Section 3.01, there are no third party beneficiaries of this Agreement, including without limitation any owners of bonds, any of the City's or the Developer's contractors for the Acquisition Improvements and any of the City's, the Authority's or the Developer's agents and employees. Section 3.06. Conflict with Other Agreements. Nothing contained herein shall be construed as releasing the Developer or the City from any condition of development or requirement imposed by any other agreement between the City and the Developer, and, in the event of a conflicting provision, the other agreement shall prevail unless the conflicting provision is specifically waived or modified in writing by the City and the Developer. Section 3.07. Notices. All invoices for payment, reports, other communication and notices relating to this Agreement shall be mailed to: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 - Attention: City Manager If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. Either party may change its address by giving notice in writing to the other party. Section 3.08. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. Section 3.09. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. Section 3.10. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement. Section 3.11. Singular and Plural; Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine, Section 3.12, Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 3.13. Successors and Assigns. This Agreement is binding upon the heirs, assigns and successors -in -interest of the parties hereto. The Developer may not assign its rights or obligations hereunder, except to successors -in -interest to the property within the Community Facilities District, without the prior written consent of the City. Section 3.14. Remedies in General. It is acknowledged by the parties that the City would not have entered into this Agreement if it were to be liable in damages under or with respect to this Agreement or the application thereof, other than for the payment to the Developer of any (i) moneys owing to the Developer hereunder, or (ii) moneys paid by the Developer pursuant to the provisions hereof which are misappropriated or improperly obtained, withheld or applied by the City. Section 3,15. Non -Liability of Authority. The Authority shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement, except only to the extent amounts are received for the payment thereof from the Special Tax. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that the City shall not be liable in damages to the Developer, or to any assignee or transferee of the Developer other than for the payments to the Developer specified Section 3.14. Subject to the foregoing, the Developer covenants not to sue for or claim any damages for any alleged breach of, or dispute which arises out of, this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH ATTEST: By: By: Leilani I. Brown [Authorized Officer] City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Aaron C. Harp City Attorney UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited partnership By: _ Name Title TSG — PARCEL 1, LLC, a Delaware limited liability company By: _ Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Authorized Signatory EXHIBIT A TO THE ACQUISITION AGREEMENT DESCRIPTION OF ACQUISITION IMPROVEMENTS, ELIGIBLE PORTIONS ACQUISITION IMPROVEMENTS Park improvements, including playground infrastructure, irrigation, landscaping, utilities, drainage and grading, EXHIBIT B TO THE ACQUISITION AGREEMENT DISBURSEMENT REQUEST FORM (Acquisition Improvement or Eligible Portion) To: [Authority Trustee] Attention: Fax: Phone: Re: CSCDA Community Facilities District No. , Improvement Area No. The undersigned, a duly authorized officer of the CITY OF NEWPORT BEACH hereby requests a withdrawal from the Uptown Newport Project Community Facilities District Acquisition and Construction Fund, as follows: Request Date: Name of Developer: Withdrawal Amount: Acquisition Improvements: Payment Instructions: [Insert Date of Request] [Insert Acquisition Price/Installment Payment] [Insert Description of Acquisition Improvements)/Eligible Portion(s) from Exhibit A] [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The Withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement and the Withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Acquisition and Construction Fund, the Authority Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").j CITY OF NEWPORT BEACH Title: EXHIBIT C TO THE ACQUISITION AGREEMENT BIDDING, CONTRACTING AND CONSTRUCTION REQUIREMENTS FOR ACQUISITION IMPROVEMENTS With respect to construction contracts awarded after approval of the Agreement, bids for construction shall be solicited from at least three (3) qualified contractors, provided at least three (3) qualified contractors are reasonably available. The Developer may also directly solicit bids. The bid package may consist of preliminary plans and specifications. The bidding response time shall be not less than ten (10) working days. An authorized representative of the City shall be provided a copy of the tabulation of bid results upon request. Contract(s) for the construction of the public Acquisition Improvements shall be awarded to the qualified contractor(s) submitting the lowest responsible bid(s), as determined by the Developer. The contractor to whom a contract is awarded shall be required to pay not less than the prevailing rates of wages pursuant to Labor Code Sections 1770, 1773 and 1773.1. A current copy of applicable wage rates shall be on file in the Office of the City Clerk, as required by Labor Code Section 1773.2. The Developer shall provide the City with certified payrolls. EXHIBIT D PROJECT DESCRIPTION AND BOND PARAMETERS Project Description A. Specific Project(s) for which the Debt is Being Incurred • Park Improvements • 66 -kV Undergrounding B. Not to exceed Authorized Par Amount • $8,800,000 C. Not to exceed Term of the Bonds, which will be no greater than the useful life of the project • 30 years from date of issuance D. Not to exceed true interest cost • 5.75% E. Not to exceed maximum annual debt service • $900,000 F. Call provisions, including specifically identifying any deviation from a par call • Optional Call in 10 —Years at 100% of Par • Extraordinary redemption from prepayment of special taxes with not to exceed 3% premium through 10 years and then par call thereafter. G. Not to exceed underwriter's discount • 1.50% of Par Amount inclusive of underwriter's counsel fees H. List of Consultants Hired for the Issuance • Orrick — Bond Counsel & Disclosure Counsel • RBC Capital Markets, LLC - Underwriter • David Taussig & Associates, Inc. - Special Tax Consultant STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; the foregoing resolution, being Resolution No. 2018-44 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 261h day of June, 2018; and the same was so passed and adopted by the following vote, to wit; AYES: Council Member Herdman, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Brad Avery, Mayor Duffy Duffield NAYS: None RECUSED: Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 271h day of June, 2018. /A � - 4 ov* w Leilani . Brown City Clerk Newport Beach, California W POR EXHIBIT B BOUNDARY MAP 4159-3584-7960.2 SHEET 1 OF 1 I N� o Z PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA / (1) Filed in the office of the Secretary of California Statewide Cummumnes Development Authority this —day of , 2018. s / Secretary, California Stalevride Communities Development Authority Forparticulars of Nnos and dmrensiom. reference Is mode to alto parcels mops of the Orange County Assessor. Cahlmnie, and to Tract map No. 17763 recorded on Jure 19. 2015 as Instrument No. 201600320061 at Pages 17 thromh 23 In Book 937 of maps in the office of the County Recorder of Orange County. California. Proposed Boundaries of"' rrmrrr StntewklaCommumBesDevebpntenl Authority Communhy Facilities District No. 201843 (Uptown Newport), City of Newport Beach, County of C(wM CaSfomia Parcel Line © Tax Zonel ® Tax Zone 2 44S•13n-rm Assessor Parcel Number (2) 1 hereby carlify that the within map shovring proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018.03 (Uptown Newport), City of Newport Beach, County of Orange, State of Califomla, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof, held on this day of , 2018, by Its resolution No. Secretory, California Statewide Communities Development Authority (3) Filed this day of , 2018, at the hour of _ o'dock m., in Book of Maps of Assessment and Community Facilities Districts at page and as Instrument No. to the office of the County Recorder of Orange County, State of California, Hugh Nguyen Clerk -Recorder, County of Orange By Deputy, Fee EXHIBIT C AUTHORIZED IMPROVEMENTS AND UTILITY UNDERGROUNDING 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights-of-way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. 4159-3584-7960.2 EXHIBIT D CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA REPRESENTATIVE LISTING OF INCIDENTAL EXPENSES AND BOND ISSUANCE COSTS It is anticipated that the following incidental expenses may be incurred in the proposed legal proceedings for formation of the Community Facilities District, construction and environmental remediation and related bond financing and will be payable from proceeds of the Bonds or directly from the proceeds of the Special Tax within the Community Facilities District: • Special tax consultant services • Authority, County staff review, oversight and administrative services • Bond Counsel and Disclosure Counsel services • Financial advisor services • Special tax administrator services • Appraiser/Market absorption consultant services • Initial bond transfer agent, fiscal agent, registrar and paying agent services, and rebate calculation service set up charge • Bond printing and Preliminary Official mailing • Publishing, mailing and posting of notices • Recording fees • Underwriter's discount • Bond reserve fund Statement and Official Statement printing and • Capitalized interest • Governmental notification and filing fees • Credit enhancement costs • Rating agency fees • Continuing disclosure services • Arbitrage rebate services • Other post -issuance tax compliance services The expenses of certain recurring services pertaining to the Community Facilities District may be included in each annual special tax levy, and these expenses are described in the definition of the term "Administrative Expenses" as set forth in the Rate and Method of Apportionment for the Community Facilities District attached hereafter as Exhibit E. The foregoing enumeration shall not be regarded as exclusive and shall be deemed to include any other incidental expenses of a like nature which may be incurred from time to time with respect to the Community Facilities District. 4159-3584-7960.2 EXHIBIT E RATE AND METHOD OF APPORTIONMENT 4159-3584-7960.2 RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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. The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies 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 CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such _determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG -Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apartment Units on Apartment Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown: Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (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 53340.1 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. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.88 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "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 as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development A uthority November.8, 2018 CFD No. 2018-03 (Uptown Newport) Page S "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apartment Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "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, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special_Tax and Backub Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the -Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apartment Property, within all Tax Zones, in an amount equal to 100°/% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. 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 on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: I£ additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological. order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown: Newport) Page 11 Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments 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 appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act. H. PREPAYMENT OF SPECL4,L TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, 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 CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be detem-iined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 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 CSCDA Program Manager that is reasonably comparable to the Engineering News Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically 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 and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) page 13 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 less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup 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. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development A uthority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 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 earliest redemption date for the Previously Issued Bonds. 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 CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, 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. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 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 reserve 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 than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of SRecial Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager 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 to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prepayment of Snecial Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum, SpecialTax, shall continue to be levied on such Assessor's Parcel pursuant to Section D 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. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E 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. The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ( COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH I COUNTY OF ORANGE STATE OF CALIFORNIA h (1) Fibd In the office of the Secretary of California Statewide Commurtitiea Development Authority this —day of , 2018. Secretary, California Statewide Communities Development Authority , Y i .l�. fR`0Fi QOPO For paniculors of Goes and dmonsions. reference la made b the parcels maps of the Orange County Assessor, California, and to Tract map No. 17763 recorded on June 19. 2016 ac Instrument No. 20150032OD61 at Pages 17through 231n Book 937 of maps in the air" of the County Recorder of Orange County, California. Prnrneed Boundaries of Call ifan , Statewide Communities Development uuu Autherffy Community FxB(gos Dislrkl No. 2018-031Uptown Newport), City or Newport Beach. County of Orange, California Parcel Line © Tax Zone I ,r Tax Zone 445.13r"n Assessor Parcel Number (2) 1 hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newpod), City of Newport Beach, County of Orange. Slate of California, was approved by the Commission of Ilse California Statewide Communities Development Authority at a regular meeting thereof, held on this day of , 2018, by Its resolution No. Secretary, California Statewide Communities Development Authority (3) Flied this day of , 2018, at the hour of _ o'clock _ m., in Book of Maps of Assessment and Community Facilities Districts at page and as Instrument No. m z office of the County Recorder of Orange County, State of California. Hugh Nguyen Clerk -Recorder, County of Orange By Deputy Fee