$26,330,000 CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO.

2004-3 (TERRA LAGO) SPECIAL TAX BONDS, SERIES 2005 (IMPROVEMENT AREA NO. 1) CLOSING MEMORANDUM September 15, 2005 This memorandum sets forth the actions taken in connection with the issuance, sale and delivery of the City of Indio Community Facilities District No. 2004-3 (Terra Lago) Special Tax Bonds, Series 2005 (Improvement Area No. 1) (the "Bonds") in the aggregate principal amount of $26,330,000. Southwest Securities, Inc. (the "Underwriter") has agreed to purchase the Bonds for $25,824,283.00, which sum equals the principal amount thereof, less an Underwriter's discount of $434,445.00, and less net original issue discount of $71,272.00. The Underwriter made a public offering of the Bonds. The Pre-Closing A Pre-Closing was held commencing at 1:00 p.m. on September 14, 2005 at the offices of Fulbright & Jaworski L.L.P., 555 South Flower Street, 41st Floor, Los Angeles, California 90071, at which Pre-Closing all documents listed on the attached Closing List (the "Closing Documents") were examined, readied and packaged for the Closing. The Closing Documents were held in escrow by Fulbright & Jaworski L.L.P. pending the Closing. The Closing The actions described herein which were taken as part of the closing (the "Closing"), were taken as a simultaneous transaction, and no delivery of documents, payment of money or other action was considered to have been completed until all such deliveries, payments or other actions had been made or taken. The issuance, sale and delivery of the Bonds took place at the Closing, which commenced at 8:00 a.m. on September 15, 2005 at the offices of Fulbright & Jaworski L.L.P. At the Closing, all the Closing Documents were delivered and all payments evidenced by the Closing Documents were made. Simultaneously, the Bonds were delivered to the Underwriter through the facilities of The Depository Trust Company.

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The Parties City of Indio ("City") City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "District") Kotkin & Associates, APLC, City Attorney ("City Attorney") Harrell & Company Advisors, LLC, Financial Advisor ("FA") Southwest Securities, Inc. ("Underwriter") Jones Hall, A Professional Corporation, Underwriter's Counsel ("UC") Fulbright & Jaworski L.L.P., Bond Counsel and Disclosure Counsel ("FJ") Union Bank of California, N.A. ("Fiscal Agent") Albert A. Webb Associates ("Special Tax Consultant") First American Commercial Real Estate Services (the "Appraiser") Market Profiles, Inc. (the "Absorption Consultant")

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$26,330,000 CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO) SPECIAL TAX BONDS, SERIES 2005 (IMPROVEMENT AREA NO. 1) CLOSING LIST

DISTRICT FORMATION DOCUMENTS 1. Petition (Including Consent and Waiver) Requesting the Establishment of a Community Facility District. [City] 2. Resolution No. 8956 (Resolution of Intention to Establish Community Facility District) adopted May 18, 2005. [City] 3. Resolution No. 8957 (Resolution of Intention to Incur Bonded Indebtedness) adopted May 18, 2005. [City] 4. Resolution No. 9024 (Resolution Approving Joint Community Facilities Agreements) adopted July 20, 2005. [City] 5. [City] 6. Resolution No. 9026 (Resolution Calling a Special Election) adopted July 20, 2005 along with 125 Days Concurrence Certificate. [City] 7. Resolution No. 9027 (Resolution Canvassing Results of Special Election) adopted July 20, 2005. [City] 8. A Copy of the Notice of Special Tax Lien filed with the County Recorder Office. [Special Tax Consultant] 9. Ordinance No. 1442 (Ordinance Authorizing the Levy of Special Tax) adopted August 3, 2005. [City] BASIC DOCUMENTS 10. Resolution No. 9037 (Approving Resolution) adopted August 3, 2005, as certified by the City Clerk of the City. [City] 11. Executed copy of the Fiscal Agent Agreement, dated as of September 1, 2005, by and between the District and the Fiscal Agent. [FJ] Resolution No. 9025 (Resolution of Formation) adopted July 20, 2005.

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12. Executed copy of the Continuing Disclosure Agreement (City of Indio Community Facility District No. 2004-3 (Terra Lago)), dated as of September 1, 2005, by and between the District and the Fiscal Agent, as Dissemination Agent. [FJ] 13. Executed copies of the Developer Continuing Disclosure Agreements, each dated as of September 1, 2005, by and between the respective property owner and the Fiscal Agent, as Dissemination Agent. [FJ] 14. 15. 16. 17. Bonds. [FJ] 18. Direction of the City as to Application of Moneys at Closing; Costs of Issuance Fund Requisition No. 1; and Acquisition and Construction Fund Requisition No. 1. [FJ] 19. 20. 21. SALE DOCUMENTS 22. Preliminary Official Statement, dated August 19, 2005. [FA] Tax Certificate as to Arbitrage. [FJ] IRS Form 8038-G. [FJ] Certified copy of Specimen Bond. [FJ] Certificate of the City as to Signature and Incumbency. [FJ] Officer's Certificate of the City. [FJ] Certificate of the City relating to the Official Statement. [FJ] Direction of the City to the Fiscal Agent to Authenticate and Deliver the

23. 15c2-12 Certificate of the City, dated August 19, 2005, as to the Finality of the Preliminary Official Statement. [FJ] 24. Executed copy of the Purchase Contract, dated September 7, 2005, by and between the District and the Underwriter. [FJ] 25. Executed copy of the Official Statement, dated September 7, 2005. [FA]

FISCAL AGENT DOCUMENTS 26. 27. Certificate as to Signature and Incumbency. [Fiscal Agent] Certificate of Authorized Representative of the Fiscal Agent. [FJ]

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UNDERWRITER'S DOCUMENTS 28. 29. LEGAL OPINIONS 30. 31. 32. 33. 34. Final Opinion of Bond Counsel. [FJ] Supplemental Opinion of Bond Counsel. [FJ] Opinion of Disclosure Counsel. [FJ] Opinion of Counsel to the District. [City Attorney] Opinion of Counsel to the Fiscal Agent. [Fiscal Agent] Issue Price Certificate. [FJ] Receipt for the Bonds. [FJ]

MISCELLANEOUS DOCUMENTS 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. [City] 46. No. 2004-3. [City] Agreement for Formation of Mello-Roos Community Facilities District Certificate of Appraiser along with copy of the Appraisal Report. Certificate of Absorption Consultant along with copy of Absorption Study. Certificate of Special Tax Consultant. Certificate of Financial Advisor. Certificates of Developers. CDIAC Report of Proposed Debt Issuance. [FJ] CDIAC Report of Final Sale. [FJ] Blanket Letter of Representations to the Depository Trust Company. [FJ] Funding, Construction and Acquisition Agreement. [FJ] Joint Community Facilities Agreement (Valley Sanitary District). [City] Joint Community Facilities Agreement (Imperial Irrigation District).

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)

TO: FROM:

CITY COUNCIL OF THE CITY OF INDIO INDIO LAND VENTURES, LLC

PETITION (INCLUDING CONSENT AND WAIVER) REQUESTING THE ESTABLISHMENT OF A COMMUNITY SERVICES DISTRICT

The undersigned landowner does hereby certify under penalty of perjury that the following statements are all true and correct: 1. The undersigned is authorized to represent the landowner identified below and is its designated representative to petition the City Council (the "Council") of the City of Indio (the "City") and to give the consent and waiver contained herein with respect to a Community Facilities District to be established over the properties included within this petition (the "CFD") to be formed under the provisions of the Mello-Roos Community Facilities Act of 1982 (the "Act"), being Chapter 2.5 of Part 1 of Division 2 of title 5 (commencing with Section 53311) of the California Government Code. The undersigned hereby certify that as of the date indicated opposite his signature, 2. the landowner listed herein is the owner of the property within the proposed boundary of the CFD described in Exhibit "A" hereto (the "Property"). The undersigned, pursuant to Section 53318 of the Act, hereby requests that 3. proceedings be commenced (i) to establish the CFD for the purpose of financing streetscape, landscape, traffic controls, storm drain, water and sewer facilities, dry utilities, other City fees and facilities, other Valley Sanitary District fees and facilities, other Imperial Irrigation District fees and facilities, and related costs including designs, inspections, professional fees, connection fees and acquisition costs in connection with a master planned community project known as "Terra Lago", (ii) to designate improvement areas within the CFD, (iii) to authorize the issuance of bonds for each improvement area of the CFD and (iv) to establish an appropriations limit for each improvement area of the CFD. 4. In accordance with the provisions of the Act, and specifically Sections 53326(a) and 53327(b) thereof allowing certain time and conduct requirements relative to a special landowner election to be waived with the unanimous consent of all the landowners to be included in a community facilities district and concurrence of the election official conducting the election, the undersigned (i) expressly consents to the conduct of the special election at the earliest possible time following the adoption by the Council of a Resolution of Formation Establishing the CFD and (ii) expressly waives any requirement to have the special election

45576535.1

conducted within the time periods specified in Section 53326 of the Act or in the California Elections Code. 5. The undersigned waives any requirement for the mailing of the ballot for the special election and expressly agree that said election may be conducted by mailed or handdelivered ballot to be returned as quickly as possible to the designated election official, being the office of the City Clerk and the undersigned request that the results of said election be canvassed and reported to the Council at the same meeting of the Council as the public hearing on the formation of the CFD or the next available meeting. 6. The undersigned expressly waives all applicable waiting periods for the election and waives the requirement for analysis and arguments relating to the special election, as set forth in Section 53327 of the Act, and consents to not having such materials provided to the landowner in the ballot packet, and expressly waives any requirements as to the form of the ballot. 7. The undersigned expressly waives all notice requirements relating to hearings and special elections, whether by posting, publishing or mailing, and whether such requirements are found in the California Elections Code, the California Government Code or other laws or procedures, including but limited to any notice provided for by compliance with the provisions of Section 4101 of the California Elections Code. IN WITNESS WHEREOF, I hereunto set my hand this day of March, 2005.

INDIO LAND VENTURES, LLC, a California limited liability company

Gary C. Williams Vice President SunCal Companies

FILED IN THE OFFICE OF THE CITY CLERK OF THE CITY OF INDIO THIS DAY OF , 2005.

City Clerk

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EXHIBIT A

PROPOSED BOUNDARY OF THE CFD

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RESOLUTION NO. 8956 RESOLUTION OF INTENTION OF THE CITY COUNCIL OF TICE CITY OF INDIO TO ESTABLISH CITY OF INDIO COMMUNITY rAcarnEs DISTRICT NO. 2004-3 (TERRA LAG()); AND DESIGNATING IMPROVEMENT AREAS WITHIN SAID COMMUNITY FACILITIES DISTRICT WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has received a petition (the "Petition") requesting the institution of proceedings for (i) formation of a community facilities district (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"), (.i) designation of improvement areas within the CFD, (iii) authorization of issuance of bonds for each improvement area within the CFD, and (iv) establishment of an appropriations limit for each improvement area within the CFI); and WHEREAS, the Council has determined that the Petition complies with the requirements of Government Code Section 533180 and now intends to initiate such proceedings; and WHEREAS, it is the intention of the Council to finance the acquisition and construction of the Facilities (as defined below) or any combination thereof through the formation of the (-1.13, subject to the authorization of bonds and the levy of a special tax to pay lease payments, installment purchase payments or other payments, or principal and interest on bonds, being approved at an election to be held within the boundaries of each improvement area within the CFD; and WHEREAS, pursuant to Section 53350 of the Act, the Council may designate a portion or portions of the CFD as one or inore improvement areas for purposes of financing of, or contributing to the financing of, specified public facilities; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: The Council hereby determines to institute proceedings for the formation Section of a community facilities district under the terms of the Act. The exterior boundaries of the CFD are hereby specified and described to be as shown on that certain map now on file in the office of the Clerk entitled "Community Facilities District No. 2004-3 (Terra Lago)," which map indicates by a boundary line the extent of the territory included in each improvement area within the CFD and shall govern for all details as to the extent of each improvement area within the CFD. On the original and one copy of the map on file in the City Clerk's office, the City Clerk shall endorse the certificate evidencing the date and adoption of this resolution. The City Clerk shall file the original of such map in her office and, within fifteen (15) days after the adoption of this Resolution, the City Clerk shall file a copy of such map so endorsed in the records of the County Recorder, County of Riverside, State of California. The name of the proposed CFD shall be "City of Indio Community Section 2_ Facilities District No. 2004-3 (Terra Lago)."
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Section 3. The Council hereby designates the portions of the CFD as described in Exhibit A attached hereto, as Improvement Area 1 and Improvement Area 2, respectively, of City of Indio Community Facilities District No. 2004-3 (Terra Lego). Section 4. The facilities proposed to be financed by each improvement area of the CFD are public infrastructure facilities and other governmental facilities with an estimated useful life of five years or longer, which tho Cull is authorized by law to construct, own or operate and that are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD, including but not limited to streetscape, landscape, traffic controls, storm drain, water and sewer facilities, dry utilities, other . City fees and facilities, other Valley Sanitary District fees and facilities, other Imperial Irrigation District fees and facilities, and related costs including designs, inspections, professional fees, connection fees and acquisition costs (the "Facilities"). Such Facilities need not be physically located within the CFD. Section 5_ Except where funds are otherwise available, it is the intention of the Council to levy annually in accordance with procedures contained, in the Act a special tax (the "Special Tax") sufficient to pay for the costs of financing the acquisition and/or construction of the Facilities, including the principal of and interest on the bonds proposed to be issued to finance the Facilities and other periodic costs, the establishment and replenishment of reserve funds, the remarketing, credit enhancement and liquidity fees, the costs of administering the levy and collection of the Special Tax and all other costs of the levy of the Special Tax and issuance of the bonds, including any foreclosure proceedings, architectural, engineering, inspection, legal, fiscal, and financial consultant fees, discount fees, interest on bonds due and payable prior to the expiration of one year from the date of completion of facilities (but not to exceed two years), election costs and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, disclosure counsel, financing consultants and printing costs, and all other administrative costs of the tax levy and bond issue, • The Special Tax will be secured by recordation of a continuing lien against all non-exempt real property in the CFD. In the first year in which such a Special Tax is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the CFD pursuant to Section 53314 of the Act and interest thereon. The schedule of the rate and method of apportionment and manner of collection of the Special Tax is described in detail in. Exhibit B atta.ched hereto and by this reference incorporated herein. The Special Tax is based upon the cost of financing the Facilities in the CFD, the demand that each parcel will place on the Facilities and the benefit (direct and/or indirect) received by each parcel from the Facilities. The Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. In the event that a portion of the property within an improvement area of the CFD shall become for any reason exempt, wholly or partially, from the levy of the Special Tax, the Council shall, on behalf of the CFD, increase the levy to the extent necessary upon the remaining property within the same improvement area of the CFD which is not delinquent or exempt in order to yield the required payments, subject to the maximum tax. Under no circumstances, however, shall the Special Tax levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner of any other parcel or parcels within the same improvement area of the CFD by more than 10 percent.

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Furthermore, the maximum special tax authorized to be levied against any parcel used for private residential purposes shall not be increased over time in excess of 2 percent per year, Section 6. The Council hereby finds that the proposed Facilities are necessary to meet increased demands put upon the City as a result of the new development or rehabilitation within the proposed CFD, Section 7. A public hearing (the "Hearing") on the establishment of the CFD and the proposed rate and method of apportionment of the Special Tax shall be held on July 6, 2005, at 6:00 o'clock p.m., or as soon thereafter as practicable, at the chambers of the City Council of the City of Indio, 150 Civic Center Mall Indio, California 92202, Section 8. At the time and place set forth above for the hearing, any interested person, including all persons owning lands or registered to vote within the proposed CFD, may appear and be heard. Section 9. Each City officer who is or will be responsible for the Facilities to be financed by the CFD, if it is established, is hereby directed to study the proposed CFD and, at or before the time of the above-mentioned Hearing, file a report with the Council, and which is to be made a part of the record of the Hearing, containing a brief description of the Facilities by type which will in his or her opinion be required to adequately meet the needs of the CFD and his or her estimate of the cost of providing the Facilities. The City Manager is directed to estimate the fair and reasonable cost of all incidental expenses, including the cost of planning and designing the Facilities to b financed pursuant to the Act, including the cost of environmental evaluations of such facilities, all costs associated with the creation of the CFD, issuance of bonds, determination of the amount of any special taxes, collection of any special taxes, or costs otherwise incurred in order to carry out the authorized purposes of the City with respect to the CFD, and any other expenses incidental to the construction, completion and inspection of the authorized work to De paid through the proposed financing. Section 10. The City may accept advances of funds from any sources, including private persons or private entities, and is authorized and directed to use such funds for any authorized purpose, including any cost incurred by the City in creating the Cifi). The City may enter into an agreement to repay all, of such funds as are not expended or committed for any authorized purpose at the time of the election on the levy of the Special Tax, if the proposal to levy such tax should fail, and to repay all of such funds advanced if the levy of the Special Tax shall be approved by the qualified electors of the CFD. Section 11 The City Clerk is hereby directed to publish a notice ("Notice") of the Hearing pursuant to Section 6061 of the Government Code in a newspaper of general circulation published in the area of the proposed CFA. Such Notice shall contain information set forth in Section 53322 of the Act. Such publication shall be completed at least 7 days prior to the date of the Hearing . Section 12. The Clerk may send a copy of the Notice by first-class mail, postage prepaid, to each registered voter and to each landowner within proposed CFD as shown on the

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last equalized assessment roll. Said mailing shall be completed not less than fifteen (15) days prior to the date of the Hearing. ection 13. Pursuant to Section 53344.1 of the Act, the Council hereby reserves to itself, in its sole discretion, the right and authority by subsequent resolution to allow any owner of property within the CFD, subject to the provisions of Section 53344.1 of the Act and those conditions as it may impose, and any applicable prepayment penalties as prescribed in the bond indenture or comparable instrument or document, to tender to the CFD treasurer in full payment or part payment of any installment of the special taxes or the interest or penalties thereon which may be due or delinquent, but for which a bill has been received, any bond or other obligation secured thereby, the bond or other obligation to be taken at par and credit to be given for the accrued interest shown thereby computed to the date of tender. Section14. The voting procedure with respect to the establishment of the CFD and the imposition of the special tax shall be by hand delivered or mailed ballot election. PASSED, APPROVED and ADOPTED this 18th day of May, 2005 by the following vote: AYES: Gilbert, Godfrey, Ramos Watson, Wilson, Fesmire NOES: None MELANIE FESMERE, YOR

C*TRIA ECERNANDEZ, CMCcrry CLERK

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EXHIBIT A IIKPROVEMENT AREA DESIGNATION

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EXHIBIT B RATE AND 11IETROD OF .APPORTIONMENT OF SPECIAL TAX

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Min AND METHOD OP ArrownorimENT OF SPECEAI TAM49i C01111WEINITY PAC:Minn DISTFICTNO 2A04-3. ' . (TERRA LAGO) crry OF II O, CALIFORNIA ' A Special Tax (all capitalized leans are defined in SectiOn.A.,' Definitions heloWY shall be • • applicable to' each Parcel of Taxable Property located within the boundaries of COnnnunity. Paeliitie,s District No. 2004.3 (TERRA LAC30). The amount of Special Tax to be levied in each Improvement Area in each Fiscal Year, commencing in Fiscal Year 2005-2006 on a Parcel shall be determined by the City Council of The City of Indio, acting in its capacity as the legislative body of the CFD by applying the appropriate Special Tax for Developed Property, Undeveloped Property and Public Property andicr Property Owner's Association Property that is not Exempt Property as set forth in Sections B., C., and D., below. All of the teal property within the CFD, • ,unless exempted by law or by the provisions laergefin Section E., sluall be taxed for the put-poses, .• -to the extent and in the manner herein. provide& • 'A. toRF/241TIO74S The terms hereinafter set firth have tht•Trilleraitartiktnings:•: . • •. . , . • • .• . • • "Aere OrAnniagininearia the acreage of a Reuel it:indicated and* finest recent A,sae.sisof's -.Parcel .M* or If the land area is not shown on the'AsseasoiMin; the laid area 'shown on •the7:2pplicable Thiel ltEep,:,.;pareel map.; condonthititti'plen;'..or other::aitniltr. '

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CITY MANAGER OFFICE 7603426597 06/13/2005 09:44 • libtakttp Spectra Itir means ihe Special Tex Of thatmanteiesuribedirSeationE below. a!Boads" means any 'bonds or ottarleititissess es defined in %the Aal) issued lasprovem,art Areinof the .4227) :and seenrixl, by the levy s Spethisenotei -Improvement Aree.. • •
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means alrrialx.sitertifinglihelnedatirrateurtwittihrtrre: hanandepof CM_ _ :2004-3 identified oh EXHIBIT'"A" " • • • "PD" means Community Facitilles.ThArict No. 20011-A (tBititat !Apt?) of the • ttisu'lut established-pursuant to the Act.
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Received 06/13/2005 09:44AM in 08:56 on line [5] for DK09720 * Pg 10/24 CITY MANAGER OFFICE 7603426597 06/13/2005 09:44 "indetiture" mums ..the bond indenture, fiscal :agentxgroement, irustmgreeroent !resChition or other instrument isnrsuant •14 -stithich Bonds ere issued, as -modified, amended xricVor supplemented fromitime to tmeiatid any instillment replacingorstippluffiecting the same44 •1210 dt

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Ilse'CatigorP7LOBlis any c f tbe categories listed'it tables 7,,1.3; 41wadt. ,, . ..„ ulidasinnue Special Tax":meaassi 'Section C. which:cantle:levied in. any Fiscal Year many Parcel. . .,

ulMitltlfasaily Residential Property". means any Parcel 'of Developed t'roperty dint cars of a building or buildings comprised of attaithed resiciential wilts available for re4tal 4:40 general Public, or for sale to an end user, laid may be under common management....
AolionTResidetnial PiroPerty" means all Part:ehi of Dev4irptiti Vrellieitriatioti4 permit was issued for any type of ncto-rissitiertialuse, • "Pereeikr 'moms !or parcel shown 'tat ma fiaineest*Is PatOci 4...es‘Vgded parcel number valid•ttt the tintrtite•Special Taxes enrolled iithirPiMili•Yestf Special Taxis beingieiriethG!PrOperty theiges Assothilinn Ornj;ers?'.,;:niesinS -boulA1151, CFD, which, at the time the. SPechil Tax is enrolled fot.the Fiscal:Yee* ;vehich:gi.e Tax is being levied has been cerfveyed, dedicaredtn, 404tivrastaibly .ti4t 'lielttetl, ercreit cUnier4Ssociatitutiorcindingiuty•master-or . •, ,• " - , , • Tafin Of iiitc•nOtnal-Speeitir.bct levy to the Assigoact.Speciiel: Tex:is the sane for all!Pareoli•cif Davaltipod:Propettviaiiiti tilndaveicpati Property,Public'Property.andicrProperty' , -LOWner's'/440Pciatioat PioPettY not Exempt Property pursuant to-Section T..,; ottbe•actual SpecisiTittlrii*at, sore to the Maximum Special Tax Per aureis the-smite forall.sulCh Parcels, '
• • • •

tints. •. Property" melon any Parcel withintliebnwmoery of. he CfD Special TeX is torched for the Fiscal Year firr which the •Special. Tax is. heing le'viexi, ii, fired for :rights-of-way or any other puipese and it owaed..kry; dedicated ithienr.inrevocal:dy differed • Cotiptyt,•City;•or any for dedication` to the Federal 43civerosneat; the -Stine :of relifentii4 .'huir,propetry laasoftyf Oblipitgedi t a Other local jurisdimiaa,proridati, howaver;lhat. • pijiiiate 'entity, and subject ktotxcatiotfvundei classified inceiding to •itinse. • • . • .• "Realdential Flour . ..Area!" .rnetins. 411.4f :di's:square .footege •Of living area of a rinldecttial etiolettlid patio .or . structure, not innintling •any carport, -;walicenlyi.. gnige, ovithangpatio,, similar area 'or parcel. The deterraMatirm of Residential LFloor Area 'Shall be :made by. reference to the building pennit(s) fares .Ptriei'vrttinulattrfficial clocumeOt meatirselected by the Administrator.. Onee.incluileterminefioli. • fixed in ell future Fiscal Years. , . • • . • opertY. . Mesiderithil •P•rapintr 'means 411•Par-els...of Detteloped2r City Kindle
CummtmiTy Flittifiestilscititgo. 20044trerre. 5410

.. •

• Ittei•,l0, 2005 .-Pagi.2. • '

Received 06/13/2005 09:44AM in 08:56 on line [5] for DK09720 * Pg 11/24

06/13/2005 09:44

7603426597

CITY MANAGER OFFICE one or mots resittentatilAw.clling.units..

PAGE 11/24

"Single &sniffy Prepartpmeans.411-ieroda44tesidenthil'Prnnarty; zither ties% Residential Thopc.0.1,,for *hi& haVateei issued for...dazzled .Ler snarled .residential units. • • ffSpeeed Tax(es).!:_tmettissthe Speciataxto be is:Medi:I' eatii4lacitiKeia.:an aach PeriCa.Of Taxable Property.... • . • • . . "Spatial Tax Requirreemst(6)41 means that amount .requiret Fist:4.1'Year to, ply for Special Tax Requirement fot improvement Area .1; Zone..A ..nr.le,oae, Speoial Tax Requirement for Improvement Area 2, Zone A or Zane B: " '"Special Tax ReqUiramasit for.laaproveniestt Area .1" ineini *that ;amount:74611*d in .131y, Fiscal Year. within Improvement Area 1 of the CFD .to pay: • (I) .annutil debt serlitie outstandin Bonds due in the .calendar yew which .commeaces its. such 'Fiscal Wen pstiodie =nits on the Bonds, including butonat limited %to, eredlt enhauCeTIMM and rebate payments on the Bends; Administrasive.'llqmaes; (iV) Ain amount .equal any wholesaled shortfall due to Special Tax delinquency in the prior:Fiscal Year; and .(v)?nr.lY 4MOunts required to establish or Sepienish .any reserve funds for the.ouistanding Bonds; ans. 011, cmdit for Avcii TO404) lit** TOPc401Y-14 tle'!"1:0ined POralt. . 4PF'Cial; . , . 4iipeelei :Tax kteqiiiiiniesit .fOr Ott 4.rest .2'!. Meeks aniount. resniiretlim. eny Fiscal Year. within Improvement Aree.2-, of be :CFD'SO 4111311inial debi,411107iCe.C4 Ali Outstanding -Zonis 'due :calendar' year *Phich •commeaces ea& :Fisted !Yeeri . periodic -,costri.:0,en the Benda; inoluding: but n*ihtiitettin, Credit' ..enhanoeinent and,rtinste i4tYloontg', IfOnds;. (iii):.;:thairl*raii*:!ExPeOt*..-(Iv)?ta.!-1zmotalf*Fakr in anticipated shortfall.. due to Speciat Tax delinvency :the ,priat:$1iud:Yet • and (v)*y flIP:Yillit8 required .to establish. or replenish any ream flit& ftliASOeststicritigBonds0eas (4) a credit for lends. asitilableto ledueirie..aunnaltpecial : tithe ledentare.. .; '. , . . , h i4e. not,PreFeid . "Taisiblel4aPerly" thewsall Parbels in lei' Ininte4,4tment. Area vAddh prettier tet..Section Ate n4!cii.caiitififieruttiepetial Tex putaieette law or Section E.0 Wow:

-ra*vitaopitti rootretrmuctip all Taxable P4artyndt...eigasified as Dett*oped ktoperty„ 1,133ilic`cipecty andise *amity tivinees 24essaciatioh Pry party dust is not 1,, ,teropt Iropeety purniant tti the provisions of Section..

city ofinilio • Coornuriti•Eze8iti es DistrietNo. 2E044 errs X..ago)

Ma y'10;2005 ' •

Received 06/13/2005 09:44AM in 08:56 on line [5] for DK09720 * Pg 12/24 CITY MANAGER OFFICE 7603426597 06/13/2005 09:44

PAGE 12/24

A. ASSIGNMENT TO LAND USE CATEGORY Each Fiscal Year, commencing with the 2.)115-201:16 'Fiscal Year, ell 'Parcels-of Pocige Property within the CFD shall be categorized into the .applicable Improvement Ates :and olassified as either Developed Property, tridavoloped Property, Public..Property.inarid/or: -Property -Owner's Asia:Wed= Property that is not .Pateropt Properly ,pumoantlto provisions .Section., arid shall be subject to the levy of Special TS= in aneordanoe With this Rate and Method of ApportiOnlient as determined .pursuant to Sections below, Parcels. of DeVeloped Prepany shall &they be classified as Residential I%ropertY or Non Residential ProPmrtY• A 1"ereel of Residential Property, shall bather be ,ciassitied a Single . Family Property or Multiferaik7 Residential Single Family Pzciperty ?that , be tither categorized based on. the tesidential Flocsfor such Parcel . ' 10:7)71.MU1V1 =CUL

1. Davelepati4irOtitiV.
• The MaXiajgd: TaiLlfat,Leatthjlereel pf '#itlee::',17eittitY ..kr zctierlit-44314 "41311 cable :1XPrt veglint Ogat gelaPkgritittisli )640M SPOdi 1Will6liotdbet Table 1 2,'3,or The llioarniiiir lifsecirg. tilt tor each Parcel af Ntaitraiwildissiik 7POOgy wit* *or arolisble Inoprovement *ea iihtElibie 'the Asti:pod Spada] Thx;:dito*.44474iiiii 2, rmit.
'7 Aci ji a. L.L. : 111241 7:

AAA-mime iiiviiii*OcAraitiiinkt

*ax-

ie taiii"priat,.14 06,41140. (0144-liodka '411 , 'Et 4 " '

City of Indio C =miry

aisaietNo.„20043(TzerelLag6)

144wit2005'..

:!OmIcs.

Received 06/13/2005 09:44AM in 08:56 on line [5] for DK09720 * Pg 13/24 CITY MANAGER OFFICE 7603426597 06/13/2005 09:44

PAGE 13/24

TABLE
Assigned Special rues for Property witino &eel Zone A

Stele Faa11y Property
Single Family Property IMEl'aau y Property Single:.f• Property 'Single Family Property SingleTiargy Property Single ructuly Property Sigle Flually Property Single Fratillyproperty Single Family Prtgerty e Fenn P • Single Fandly Property Single Family Property Multi Fetidly ProEserty Non Resitlectial Property

Leas friml.,501 'SF 1,501 SF to 1,625 SF DU 1.626 SF.to 1,750 SF

DV

,S1,021.07

DU 1,751 SF•to 1:900 SF DU 1;901'SFia 1.950',SF DU 1,951 SF te2,100 SP DU 2,1'01 SF to 2;150' SF DU 2,151 SF•to 2,250 SP DU 4,251 SP 713 2,300 SF DU 2,301 SF to 2,400 SF D 2.401 SFto0 VAAF 501 SF so 2,510 SP 2.5.51 SF to 2,600 SF DU 2,601 SF to 2,050 SF DU Ow 2,850 SP' . • • .N1A.
N/A •

S21 .020.55 32,228.22 1146723 52,547.70 $24605.98 S2,601.53 S2;1132.63 . ,, S2,90/1.19 • ' $3;059.29 : 53,10246 031.7526 03,24925 S3;616.22 , . $4,056.57 .320,460.00 S20,460.00

On es& July 1,, comnien4ing .duly .1, 2007.: fcr.,•tt. :petite .'off fore .(5). ytO, =titJuly i,2012. the Aisigned :Spatial Ta ll bras:hose tone pereint.(1.i0DS:Otthe amount in effect in the prior.Fisoil Year.

City of Indio Commit, nuclides District No. 2004-3 (Tarn Lap)

N4y10,200$
Page

Received 06/13/2005 09:44AM in 08:56 on tine [5] for DK09720 * Pg 14/24

06/13/2005 09:44

7603426597

CITY MANAGER OFFICE

PAGE 14/24

TABLE 2 A-19ipiled Special Taxes for Property within

aVerunillyitolke* Single FamilyProrrty Single Tani* ItejacmY Single hen* harry • SininFaisek:Property linalborroperty Panay Proper Y Sia41,15 Pandly Finnerty SinglellevailyPronerty Side Neatly iliopertY MulerFensityProperty • • Non Residential Prwarty '

'DU A 14016F ' . rse • 1.4orupt31152,533r • DU .1,625 SPlo 1;7501F DU . 1,751 SF-to1;900SF ' DU '1$01-SFlo 4936SP Du _1_,9 . 51 SF to 2,700 SF 41.01'.EfPtd.27150 SF • .D1)._.. DU Z'151 SF-to 2.250SF . DU 7451 SFID 2,300 SF DT3 : Over 2400 SF . , Acre • N/A Acre ' NIA

12;5112:61 27M.31 41; .312;91,8 :91 S3 _,1.5.11-59 '=g23S46 33,37229 33;469A3 . S3;523-39 • ' S37/71.64 154965.91 320$0Cr00 . 324,450;00

ADn each Say 1, ocinmesing on July 1, zwii, lErlase-Aidiefuiel(5) 'rims, 7uky I, 2012, the Assigned Special Tax -sb4 be increatedior one Amami;•Q.91r39 Of the =mat ill effect ictl3P12riernacia Year. •

vPnc3ee • r, 587 • ' 127==IIIIMI DU 1,S01 SF to 7,000 SF' El l!--1 1111 DU 2,001 SF in 2,500 .SF , ETI " MU=,111111 ,:.0 Ili. DU Over 2,500 SF Acre N/A IM=t= ''' ' *:+.. Non Residential , N/A •

$1 . 7 S,2,411.70

53,162.90 . 53.90147 $22;304.00 • S22,304.00

On each July 1, crinaneneing on July 3., 201/7, for it.;period Svc (5) yeses, .,until .July 1, 20.12, the Assigned Special Tsx alla11 be irk:Teased by onegereent (1,0034) df the amount in effect in the prier Year.
:City of Indict ' Cozienunity-PriellilicaOstriTIsio,aiwv*Li'goj
RV -1f, 2005

Page I

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06/13/2005 09:44

7603426597

CITY MANAGER OFFICE

PAGE 15/24

1„1,33LE 4 Assigned Special 7'axestor Property within • aniteart Area Zona B
"."

Simile homily Property Ste Fag* Property Single. FamulyProperty Multi. Family Property Nee Residential Pro4w, D,

Dt1 2,001 SF t;2,500 SF ' DU 24501 SF to 3,000 SF DU CKFCT 3.000 SF Acr N/A Acre N/A

_ . 53905.47 54,640.04 $4,665.31 =304,00 =2,304.09

On each July 1, connnencing on July :. 2007, .fora period offrve.±t53 years. until July 1, 2012, the Assigned Special Tax shall be hi:reused hy. one percent, (h0T17/9).t.ttliC amount in effect in the prior Fiscal Year, •

L Undeveloped:Property The Maximum ,Special Tax each Perm] of Lindeneloped Property • withht each Improvement Arnett shovOinValileiSelcrei.

Undeveloped Property Machnum Special TeX Rate

On :mach July 1, commencing an Tilly 1, 2.0117, fora, *lot ,of .five .(5).:years, until July 1, 2012, the lefashatun Special Tax shall be increased byone percent (1:00%) of, the acimmt tffect inthe prior Fiscal Year. 2. Pdblie Property andior Property Gernees Association Propertyithat 4s not itsearlie Property pursuant toilie provisionsvT Section E. The Maximum Special Tax foneach. Parcel of PubDc Property arid/or _Property Ovieers
City of Indio Community Factiitins DiurictNa, 2004,3 antra tagto) May to, 200$ • Page

Received 06/13/2005 09:44AM in 08:56 on line [5] for DK09720 * Pg 16/24 CITY MANAGER OFFICE 7603426597 06/13/2005 09:44 Association Property that is not Exempt Property pursuant to tbe provisions of Section E., within each Improvement Area shall be the applicable Undeveloped "Property Maximinn Special Tax rate per Acre in Table S. D. METHOD OF APPORTIONMENT

PAGE 16/24

or THE SlRE I CIAL TAX

Commencing with Fiscal Year 2005-2006 acd for each following Pbca1 Yea; the Cotmcil shall levy the Special Tax • On all" Taxable Property-in-each linprovetnEht:Area-iiritil Amount of Special Taxes equals the smlicable Special `Tax ,Requirement Imprevemeast Area in accordance with the following steps: •

1. Improvement Area 1 Brat: The Special Tax shall be levied oiS. canti:Parttel of DiveloPeci Propartii att lista .106% of the applicable Assigned Special The rata as ateedeitosatisfy :die Special Taxlizeptirctrient for Impnavernent Area 1, Zone A. and Zone B. . • . ,Second If additional moneys arts needed .to satisfy Ilse 'Specie! Tax' ReqUireristate far Improvement Area 1, Zone A and Zone B, afhe. the fort at .bas been 'completed, the Special Tax all be levied. Proportionately on tea Parcel .,of 'Undeveloped' •Property. Within Improvement Area 1, Zone A .and Zone B at asp to 100% of the Maximum special Tax for Undeveloped Property; 21131: If additional moneys are needed to satsfy.tite"Special Tax ReqUinemerit after the,Srct two steps leave been cornPletelliqhati etich 'Assessor0i. .1 3atiel .of Develapsd PrOperte vihase Assigned Special Tax :45. The:Satkup Special TeX 'shell .be inereaaet:Propottiatletely •' • from the Assigned Special :reit :up 1001:114.cf the. Sacktp"SpeCitillax. the Special Tax Requirement. 2.. Insprovemeat Area 160% The Special Tax shall be letried on each Parcel of Developeeillnoperty si:up of the applicable Assigned Special 'Tax .rate at needed to stitisfyilit*adal Tat Itigninetiertf for improvement Area 2, Zone A and Zone $:. • • . Second: If additional moneys are .needed to Satisfy :the' Spacial :Tara erit .fot: haprovetheatt Area 2, Zona A ansi zonea,lasrlittsfast =pints beeueimtPleted, the Special Tax shall be levier]; Propordortatefy en. each Pared of Ilodmidoped Property Within Tak :for Impiovement Area 2, "Zone A and Zone 13 .at Up to 100% of the Maximum" Undeveloped Property; Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then for mush Assessor's Parcel of Developed Property whose Assigned Special Tax iS .theIlaciorg. 4=41 Tax shall be isicreased Itoportionately from the Assigned Special Tax up ID '100% of the Backup Special Tax as iseeded.to satisfy • the Special Tax Requirement_
City eirindio Comrnunity Facilifies DiscrictNe- 2004-3 astra.Lagp..) . 10, 2005 ?age 9..

* Pg 17/24 Received 06/13/2005 09:44AM in 08:56 on line [5) for DK09720 CY ITMANAGER OFFICE 06/13/2005 09:44 7603426597 zvecuu t axes ievicd'spinet any Parcel of Residential Property within son Imre:moment Area be increased by more .than ten

PAGE

17/24

percent (10%) per Fiscal Year as a consequence of delinquency nr default by tbe.owner of any other Parcel within an hnTrrovement Area of the CFD.

lr g3ILEEESJA:1, TAXES
Each Fiscal Year, each Assessor's Parcel g Devaloped Property .classified 'as-Residential Property shall be subject to a Backup Specie Tax. In each Fiscal Year,"the Backup Special Tax rate fot Developed Property classified is Residential Property within a Final Map shall be the rate per Lot calculated according to the following formula: 1.xA ft • •• • L 1115eterma....ibiiisfe hive the.fdlowirirrneatangs: 3. = Backup Amoial 'Dix* Lotin eachfiseal Yeaf R = Maximinn 'Sped* Tim: rate per how for Undeveloped Proper:4 for the applicable Fiscal Tzar A = Acreage OfDairelopeti,propertyniartiffied or to be iflassified as ReSidential • Property. in:atiOh Final Map L = Lets in the. Finally* Which Ere clasaibed or to• be .elsissified as ikesidential Property Netwithitianding the ftiregOing; all bra.* porlionofthe Final Map(s) desFeibed4h the preeedin.gparagricph is subsecTuardy changed ortoOdified,thon theSackUpSiOpitial Taxfot.aanh Assessor's Parcel of Developed Propetily elatitifrettisr to te.classified as tnaiciamiial.PioPerVin such Final Map Area that is changed or modifiectsliall•be a. rite per square footle Aiteage calculated as follawit 1. Determine the total BeolitupSpeciai Tax enticipated.to epPlyto the Chanzaci-or =tilted
Final Maps . • ' • -


2. The result of paragraph I &aic shall betvided by the AcreageOf Developed Pmpertoy olabsif ad or to be classifiedas kesidential.Property vitdchis ulthiately expected to exist in such changed or modified.Pitud Map Aisa,.ss reasonably detertninedbyihe • 3. The result of paragraph 2 above shall be divided by 43,560. The result is the Baclaip Special Tax per square foot-of Acreage which shall be applicable to Assessor's Parcels of Developed Property classified as Residential Property in such changed or modified final Map Area for all'rernaizti:ng Fiscal Years it which the Special. Tax may be levied: • F. Eumprioys City ofindio • Cornmtinity Facilities Diestietilq. 211tt4-1•.(Tetrs (.40) May 10, 20D5
Page 10

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PAGE 18/24

The Council shall not levy Special Taxes on Public Property, Property Owner's .Association Property or Golf Course Property within each Improvement Area or Riverside County Assessor Parcel Numbers 601-150-024 and 601-270-038 located within Improvement Area 2 of the CFD. Exempt Property status will .be assigned .by, the• Administrator the chronological order in which property becomes Public Property, Property Owner's Association Property Or Golf Course PropFty;

G. IVIANNER OF COLLECTION
'The Special Tax shat] he collected in the sauce manner and at the same time as ordinary ad, valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the Administrator may directly bill the Special Tax, mr! collect Special Taxes 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 Parcels ha-,7ing delinquent Special 'Taxes as permitted by the Act if neoessary to meet the financial obligations of the CFO, APPEAL. Any taxpayer may file A written. appeal of the Speoinl..Tax on .hisfher Parcel(s). vdth the Admioistrator, provided that the appellant iS curt-nth his/her payments, of Special Taxes. During pendency of anappeal,. all Special TaxespreVicassly levied -must be paid cavorbefore appeal the payment date established when the levy*as specify the reasons. why the appellant claims the Sp rzial 'Tax la in error: 'The Acinlinistrator shall -.the appeal, meet with the appellant k the Administrator .deems necessary, and adVise lire appellant of its determination:, If the .Administrator agrees with the appeLlant; -the Administrator shall grant . a credit to •eliminate or reduce .futuie Special Taxes on the appellant's Painal(s):. Norefurtd.s ,Ofpreviontlypaid Special Takes shh3111 be tnitiat. . The Administrator shalt :interpret .:this Rate .and, Method of AppOitioninent. and make • determinations relative io the animal levy .an edi*IS 4. 663411 of the-SpeCial :Tax. and any taxpayer who . appeals, as herein specified.

X. PAYMENT OF SPECLIILL TAX
The folloWing definitions apply to Section PI: "Outstanding Bands" means all previously issued bonds issued and secured by thelevy.of Special Taxes, which will remain =stranding after the first. interest and/or principal 'payment date following the currtnt Fiscal Year, excluding bonds to .be redeemed at a later' date with the proceeds of prior prrpayments of Maximum Special Taxes: 1. Prepayment. in Full

The Maximum Special Tax obligation may only be prepaid and petmanently satisfied by a Parcel of Developed Property, anti/or Undeveloped Property for which a building permit has been issued, and Public Property anclior Property Owner's Association Property that is not Exempt Property pursuant to Section E. The Maximum Special Tax obligation applicable to
City of Indio Community Facilities District No. 2004-3 (Trra Limo) May 10, 2005 Page

Received 06/13/2005 09:44AM in 08:56 on line [5] for DK09720 * Pg 19/24 CITY MANAGER OFFICE 7603426597 06/13/2005 09:44 p cw.-keL LV piety WIC opeCIBJ .1 permanently satisfied as described. herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such. Pam) at the time eflImPaYlmmtAn owner of a Parcel intending to prepay the Ivlaximum Specie) Tax ohligetion shall provide the Administrator with written notice of intent to prepay, and within 5 bosiziega days of receipt of such notice, the Adntinistratnr shall notify such 'owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the alp in calculating the proper areount of a prepayment Within 15' days of receipt of such TAoit2 refundable deposit, the Administrator shall notify such owner of the prepayment amount of such Parcel. Prepayment must be made not less than 60 days prier to any redemption tine for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount (defined below) sihall be calculated as sus (capitalized terms as defined below):. Bonditedemption Amount plus • . Redemption Premium. Defense:see Amount' P/111 plus Administrative Fees :and Expenses less Reserve Fund Credit Total: equals Prepayment Amount As of the proposiaddicte 6fpreketneatt•*4helse.yinent Ainammt (',damned belowIStualse ealauletedas 'follows: • ad below

PAGE 19/24

1. 1.

Confirm that ne Special Tex delinquencies-Apply to such Parcel. • For Part:02 ,tif Developed PrtiSest3, ,Ocattptzte thelclautimamSpecialTloc-for theParcel . • to be prepaid. • For Parcels of Undaveloped :Property to bepropuidi, caMpuria-ribe Maximum Special Tax. fur that :Parcel as 'though it was already aesiSnal441 . as Developed Property, based upon the building permit stlreetly :been laped for that Paired.. Fat Parcels of Public. Property' and/or Property Owner's AB.00t4tiOlt Property to be prepaid, comPtite the lvtascirratre•SeTadal Tax for that P24'olDivide the Much:mut Special Tat.computed ptirsuant•te parigraph..2 itY the total estimated -Maximum Special :Taxes based- on•!•the .13evelapel.P Special ..Tex which could ba.cittaped,Aess.may:ParCela whit% have beenprepeid. . •. . MultiPly•lbe quetient.nornputed.Plnimint to paragraph 3' by the thestandinitimtla to compute the MMOUIn of OMetanding Bonds to be refitted and 'prepaid (the "Bond Aederrrptiorr Amount."). Multiply the Bond Redemption Mpcunt computed pursuant to paragraph 4 by the applicable .rederaption• premium, if any, on the Outstanding Bonds -to be- redeemed (the "Rstierttotiott Prerrnlart")... Compute the amount-needed to pay, interest -on the Bond Redemption Asnotutt from May 30, 2005 Page 12

3.

4.

5.

6.

City of Indio Community Facilities District No.200473 (l'artataeo)

Received 06/13/2005 09:44AM in 08:56 on line [5] for DK09720 * Pg 20/24 CITY MANAGER OFFICE 7603426597 06/13/2005 09:44

PAGE

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the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date far the Outstanding Bonds. 7. Determine the Special Taxes ;levied on the Parcel in the • amen Fiscal Year which have not yet been Compute the amount the Adtteadstrator . ream:a:ably expects to derive from' the reinvestment of the Prepayinent Airaceint less the Albriinistrative Fees and Expenses firma the data of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment . • . . Add the =omits computed patsuant paragraphs 6 and 7 and subtract the amount computed pursuant to paragraph 8 (the "Defentariee Arnounr).• • •

9.

10. Verify the adininistradve fees and expenses, including the cons of computation of the 'prepayment, The costs to invest the prepayment proceeds, The costs of redeeming the Outstanding Bonds, and ' the costs of recording any . notices to evidence the prepayment and the redemption (the "Administrative Fees and Avenser). 11.. The reserve fund credit (the "Reserve Fund Credit") sbell equal the lesser of: (a) the expeoted reduction in the reserve requirement (as defined in the Indenture), if any, associated with the rederriptior of Outstanding Bonds as a result of the prepayment, or (b) the amount derived 'by subleaming the new reserve requirement (as defined le the Indenture) in effeetafter the redemption of Outstanding 'Bonds as a result of the prepayment from the balance in the'ruserve faun on the prepayinent date, but in no event shall such amount be less than zeate , 12: The Maximum Special Tax prepayment is equal to the sezniof the Arnaud:reel:imputed pursuant to perepaphs 4, .5, 9 and '10, less. the "amaisnt CoMpilleditesstant pateleraph 11 (the "Prepaymernebeetter). 13. .Peon the Prepayment Amount, the amounts et4npUtedpurseimi to esragraphi and 11 shall* deposited into the appropriate 'Mid as established under the Indeeeire and be used to retire Outstanding Bonesor make debt service peyments. The amount computed pursuant to paragraph 10 shell be retained by the CFA The Prepayment.Amount may be stdiScieut to redeem either then a....85,000 !MI:enema:of Bonds. In such cases, the increment above 85,000 of' .' integral nadtiple thereof will be retained in the appropriate fend established under the Indenture le be used with the next ' prepayment of bonds or to make debt service payments.. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 7 (above), the Administrator shall remove the current Fiscal 'Year's Special Tax levy for such Parcel from the County tax rolls, With respect to any Parcel that is prepaidethe Board shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release ref the Special Tax lien on ouch: Parcel, and the obligation of such Parcel to pay the Special Tax shall cease. City of Indio -Community Facilities District No. 20044.7mm Lago) idayi 0, 2005 Pep 13

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C4-1 UALICliti MS

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amount of Maximum Special faxes that may be levied on Taxable Property both prior to and after the proposed PrePsYlneht is at least 1.1 times the maximum annual debt service on all °attending Bonds, Tenders of Bonds in prepayment of Maxim/ma Special Tam .nay be accepted upon the
terms and conditions established by the Board pleasant to the Act. However,. the use of

Bond tenders shall only be allowed-En a cese-by=ca..e bails as specibcelly approved by the Board.

2.

Prepayment in Part

The Maximuni Special Tax on a Parcel of Developed Property or Undeveloped Property for which a building permit has been issued may be partially prepaid in increments of 52,000. The "mom of the prepayment shall be calculated as in Section HI; except that a partial prepayment shall be calculated accord= to the following formula: PPV =PEA! These terms have the following to eaningl. PP = the partial prepayment. Pa= the Prepayment Ain otmt calculated according to. Section H.a F -the percent by which the Ovatizofthe Part61(a) is perlially prepaying ate Maximum Special Tax. • • The owuer of a Parcel Who desires to pettali prepay the Maxi/rune *chi], Tex shall notify the Administrator of (i) such owner's intent to pertially prepay the Maximum Special Tax, (u) the amount of partial prepayment V expressed in incremeala of S2,060, and (HI) the company or agency tiler will braining as the escrow agent, if applica ble and Within 5 days of receipt of such notice, the Administrator shell notify such property owner of the =mut of the non-refundable deposit dna:mined to carver the cost to be incurred by the CFD in calculating the proper amount of a partial prepayment. Within 15 business days of receipt of such non-refundable deposit, the Actminismator shall notify such owner of .the partial Repayment amount of such Parcel. Partial prepayment must be made not less tban 60 -days prior to any.redemption date for any Bonds to. be redeemed With the proceeds of suchirrepaid Special Taxes. With respect to any Parcel that is partially prepaid, the Administrator shill (I) distribute the fends remitted to it according to Paragraph 13 of Section H.1, and (ii) 'indicate in the records of the CET) that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Parcel pursuant to Section D.

City of Indio Conuineity Faciiitieanistrlot

2004-3.crerre Lego)

May ID, 2005 '.Page 14.

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iyac.ivivii"atzat'ECIALTAX
For each year that any Bonds are outstanding the Special Tax shall belevied an all Parcels subject to the .Special Tax. If any delinquenrSpecial Taxes remain uncollected prior to or after all Bonds are retired, the Special Tax may be levied to the extent necessary to reimburse the CFD for uncollected Special Taxes associated with.theleyy of such Special Tsurca,,but mat later than the Fiscal Year.

City of Indio Community Facalities VistriotTlo. 20043 Thi Lago) .

May 10,2005 Pap 1.5

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RESOLUTION NO. 8957 RESOLUTION OF INTENTION OF TEE CITY COUNCIL OF THE CITY OF INDIO TO INCUR BONDED INDEBTEDNESS IN THE AMOUNT NOT TO EXCEED $30,000,000 AND $30,000,000 WITHIN IMPROVEMENT AREA NO. 1 AND IMPROVEMENT AREA NO. 2, RESPECTIVELY, OF THE PROPOSED CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA. LA GO) WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has heretofore adopted Resolution No. 8956, stating the Council's intention to form Community Facilities District No. 2004-3 (Terra Lago) (the "CFD"), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, (the "Act"), to finance the purchase, construction, expansion or rehabilitation of certain real and other tangible property with an estimated useful life of five years or longer, including public infrastructure facilities and other governmental facilities, which are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD (the "Facilities"); and WHEREAS, the Council has heretofore adopted Resolution No. 8957 designating portions of the CFD as Improvement Area No. I and Improvement Area No. 2 (each an "Improvement Area" and collectively, the "Improvement Areas"); and WHEREAS, in order to finance the Facilities it is necessary to incur bonded indebtedness in the amounts not to exceed $30,030,000 and $30,000,000 for Improvement Area No. 1 and Improvement Area No. 2, respectively, the repayment of which is to be secured by special taxes levied in accordance with Section 52340 et seq. of the Act on all property within the respective Improvement Areas, other than those properties exempted from taxation as provided in the respective rate and method of apportionment attached as Exhibit B to Resolution No. 8956. NOW, THEREFORE, THE CITY COUNCIL OF • THE CITY OF INDIO DOES HEREBY RESOLVE, DETERMINE .AND ORDER AS FOLLOWS: Section 1, The above reci:als are true and correct.

Section 2. It is necessary to incur bonded indebtedness within each Improvement Area No. 1 and Improvement Area No. 2 of the CFD in the amounts not to exceed $30,000,000 and $30,000,000, respectively, to finance the costs of the Facilities for each Improvement Area. Section 3. The indebtedness will be incurred for the purpose of financing the costs of designing, constructing and acquiring the Facilities, the acquisition of necessary equipment and property therefor and fulfilling contractual commitments and carrying out the powers and purposes of the CFD, including, but not limited to, the financing of the costs associated with the issuance of the bonds and all other costs necessary to finance the Facilities which are permitted to be financed pursuant to the Act. Sectisatul _Eachamprovement.Area shall pay_for_its_bonded indebtedness

4557019.2

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It is the intent of the Council to authorize the sale of bonds in one or more Section. 5, series, in the maximum aggregate principal amount not to exceed $30,000,000 and $30,000,000 for Improvement Area No. 1 and Improvement Area No. 2, respectively, at a maximum interest rate not in excess of 12 percent per annum or such rate not in excess of the maximum rate permitted by law at the time the bonds are issued. The term of the bonds shall be determined pursuant to a resolution of the Council, authorizing the issuance of the bonds, but such term shall in no event exceed 40 years or such longer term as is then permitted by law. Section 6, A public hearing (the "Hearing") on the proposed debt issue shall be held on July 6, 2005 at 6:00 o'clock p.m., or as soon thereafter as practicable, at the chambers of the City Council of the City of Indio, 150 Civic Center Mall, Indio, California 92202. Section 7. At the Hearing at the time and place set forth above, any interested persons, including all persons owning land within the proposed CFD, may appear and be heard at the Hearing. ,Section 8. The proposition to incur bonded indebtedness in the maximum- aggregate principal amount not to exceed $30,000,000 and $30,000,000 for Improvement Area No. 1 and Improvement Area No. 2, respectively, shall be submitted to the qualified electors of the respective Improvement Area. A special community facilities district election shall be conducted on July 6, 2005. The special election shall be conducted by hand delivered or mailed ballot election. The ballots shall be returned to the office of the election officer no later than 11:00 o'clock p.m. on July 6, 2005 . Section 9. The Clerk is hereby directed to publish a copy of this resolution, which shall serve as notice ("Notice") of the Hearing and the special bond election, pursuant to Section 6061 of the Government Code in a newspaper of general circulation in the proposed CFD. Section LO. The Clerk may send a copy of the Notice of the Hearing by first-class mail, postage prepaid, to each registered voter and to each landowner within the proposed CFD as shown on the last equalized assessment roll. PASSED, APPROVED and ADOPTED this 18th day of May, 2005 by the following vote: AYES: Gilbert, Godfrey, Ramos Watson, Wilson, Fesmire NOES: None

MELANIE FESMIRE, MAYOR ATTEST:

HERNANDEZ, CIVIC CITY CLERK

2

4

RESOLUTION NO. 9024 RESOLUTION OF • THE CITY COUNCIL OF THE CITY OF INDIO, CALIFORNIA, APPROVING JOINT COMMUNITY FACILITIES AGREEMENTS WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has heretofore adopted Resolution No. 8956 ("Resolution of Intention") stating its intention to form City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"); and WHEREAS, Section 53316.2 of the Act states that a community facilities district may finance facilities to be owned or operated by an entity other than the agency that created the district only pursuant to a joint community facilities agreement or a joint exercise of powers agreement; and WHEREAS, certain facilities and capital fees to be financed by the CFD include those facilities and capital fees to be owned or operated by the Valley Sanitary District and Imperial Irrigation District. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The City Council hereby approves the Joint Community Facilities Agreements in substantially the forms presented to the City Council at this meeting. The Mayor, the City Manager and the Finance Director are hereby authorized to execute the Joint Community Facilities Agreements with such revisions, amendments and completions as shall be approved by the officer executing the same, such approval to be conclusively evidenced by the execution and delivery thereof. Section 2. adoption. vote: AYES: Gilbert, Godfrey, Ramos Watson, Wilson, Fesmire NOES: None This Resolution shall take effect from and after the date of its passage and

PASSED, APPROVED and ADOPTED this 20th day of July, 2005 by the following

MELANIE FESMIRE, MAYOR ATTEST:

C r THIA HERNANDEZ, CMC CITY CLERK, CMC

1

RESOLUTION NO. 9025 RESOLUTION OF FORMATION OF TILE CITY COUNCIL OF THE CITY OF INDIO DETERMINING THE VALIDITY OF PRIOR PROCEEDINGS AND ESTABLISHING CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO) WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has heretofore adopted Resolution No. 8956 ("Resolution of Intention") stating its intention to form City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"), and designating portions of the CFD as Improvement Area No. 1 and Improvement Area No. 2; and WHEREAS, a copy of the Resolution of Intention is on file with the City Clerk and incorporated herein by reference; and WHEREAS, pursuant to the Act and in accordance with applicable laws, this Council held a public hearing on the formation of the CFD, the proposed rate and method of apportionment of the special taxes (the "Special Taxes") and the incurring of bonded indebtedness by the CFD for Improvement Area No. 1 and Improvement Area No. 2; and WHEREAS, at said hearing all persons not exempt from the Special Tax desiring to be heard on all matters pertaining to the formation of the CFD, the proposed rate and method of apportionment of the Special Taxes and the incurring of bonded indebtedness by the CFD for Improvement Area No. 1 and Improvement Area No. 2 were heard and a full and fair hearing was held; and WHEREAS, at said hearing evidence was presented to the Council on said matters before it, and this Council at the conclusion of said hearing is fully advised in the premises. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Pursuant to Section 53325.1(b) of the Government Code, the Council finds and determines that the proceedings prior hereto were valid and in conformity with the requirements of the Act. Section 2. A community facilities district to be designated "City of Indio Community Facilities District No. 2004-3 (Terra Lago)" is hereby established pursuant to the Act. Section 3. The description and map of the boundaries of the CFD on file in the Clerk's office and as described in the Resolution of Intention and incorporated herein by reference, as amended to exclude a portion thereof as identified at the public hearing, shall be the boundaries of the CFD. The map of the proposed boundaries of the CFD has been recorded in the Office of the County Recorder of Riverside County, California (Book 62 of Maps of Assessment and Community Facilities District at page 88 and as Instrument No. 2005-0437065).
45625228.1

The facilities proposed to be financed by each improvement area of the Section 4. CFD are public infrastructure facilities and other governmental facilities with an estimated useful life of five years or longer, which the CFD is authorized by law to construct, own, operate or finance and that are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD, including but not limited to site preparation, construction, purchase, modification, expansion, improvement or rehabilitation of roadway improvements, dry utilities, storm drain improvements, landscape improvements, traffic control devices, fire station, and water and sewer facilities including the acquisition of capacity in the City's water system and sewer capacity in the Valley Sanitation District sewer system, and related costs including designs, inspections, professional fees, annexation fees, connection fees and acquisition costs (the "Facilities"). Such Facilities need not be physically located within the CFD. Except where funds are otherwise available, it is the intention of the Section 5. Council to levy annually in accordance with procedures contained in the Act a special tax (the "Special Tax") sufficient to pay for the costs of financing the acquisition and/or construction of the Facilities, including the principal of and interest on the bonds proposed to be issued to finance the Facilities and other periodic costs, the establishment and replenishment of reserve funds, the remarketing, credit enhancement and liquidity fees, the costs of administering the levy and collection of the Special Tax and all other costs of the levy of the Special Tax and issuance of the bonds, including any foreclosure proceedings, architectural, engineering, inspection, legal, fiscal, and financial consultant fees, discount fees, interest on bonds due and payable prior to the expiration of one year from the date of completion of facilities (but not to exceed two years), election costs and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, disclosure counsel, financing consultants and printing costs, and all other administrative costs of the tax levy and bond issue. The Special Tax will be secured by recordation of a continuing lien against all non-exempt real property in the CFD. In the first year in which such a Special Tax is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the CFD pursuant to Section 53314 of the Act and interest thereon. The schedule of the rate and method of apportionment and manner of collection of the Special Tax is described in detail in Exhibit A attached hereto and by this reference incorporated herein. The Special Tax is based upon the cost of financing the Facilities in the CFD, the demand that each parcel will place on the Facilities and the benefit (direct and/or indirect) received by each parcel from the Facilities. The Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. In the event that a portion of the property within an improvement area of the CFD shall become for any reason exempt, wholly or partially, from the levy of the Special Tax, the Council shall, on behalf of the CFD, increase the levy to the extent necessary upon the remaining property within the same improvement area of the CFD which is not delinquent or exempt in order to yield the required payments, subject to the maximum tax. Under no circumstances, however, shall the Special Tax levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner of any other parcel or parcels within the same improvement area of the CFD by more than 10 percent. Furthermore, the maximum special tax authorized to be levied against any parcel used for private residential purposes shall not be increased over time in excess of 2 percent per year.
45625228.1

Upon recordation of a Notice of Special Tax Lien pursuant to Section Section 6. 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the Special Tax shall attach to all nonexempt real property in the CFD, and this lien shall continue in force and effect until the Special Tax obligation is prepaid or otherwise permanently satisfied and the lien canceled in accordance with law or until collection of the Special Tax by the CFD ceases. The proposed Special Tax to be levied in each improvement area of the Section 7. CFD has not been precluded by protests by owners of one-half or more of the land in the territory included in the same improvement area of the CFD pursuant to Government Code Section 53324. Section 8. Pursuant to and in compliance with the provisions of Government Code Section 50075.1, the Council hereby establishes the following accountability measures pertaining to the levy by the CFD of the Special Tax: A. Such Special Tax shall be levied for the specific purposes set forth herein.

B. The proceeds of the levy of such Special Tax shall be applied only to the specific purposes set forth herein. C. The CFD shall establish an account or accounts into which the proceeds of such Special Tax shall be deposited. D. The City Manager, or his or here designee, acting for and on behalf of the CFD, shall annually file a report with the Council as required pursuant to Government Code Section 50075.3. Section 9. The City Manager, or his designee, is designated to be responsible for preparing or causing to be prepared annually a current roll of Special Tax levy obligations by assessor's parcel number and for estimating future Special Tax levies pursuant to Section 53340.1 of the Government Code. Section 10. The voting procedure with respect to the imposition of the Special Tax, incurring bonded indebtedness and establishing an appropriations limit with respect to each improvement area of the CFD shall be by hand delivered or mailed ballot election. Section 11. The City Clerk is directed to certify and attest to this Resolution and to take any and all necessary acts to call, hold, canvass and certify an election or elections on the incurring bonded indebtedness, the levy of the Special Tax, and the establishment of the appropriation limit.

45625228.1

PASSED, APPROVED and ADOPTED this 20th day of July, 2005 by the following vote: AYES: Gilbert, Godfrey, Ramos Watson, Wilson, Fesmire NOES: None MELANIE FESMIRE, MAYOR ATTEST:

THIA HERNANDEZ CITY CLERK, CMC

45625228.1

6

RESOLUTION NO. 9026 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF INDIO TO INCUR BONDED INDEBTEDNESS IN THE AMOUNTS NOT TO EXCEED $30,000,000 AND $30,000,000 WITHIN IMPROVEMENT AREA NO. 1 AND IMPROVEMENT AREA NO. 2, RESPECTIVELY, OF THE CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO) AND CALLING A SPECIAL ELECTION WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has heretofore adopted Resolution No. 9023 (the "Resolution of Formation"), which formed the City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "CFD"), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, (the "Act"), to finance the purchase, construction, expansion or rehabilitation of certain real and other tangible property with an estimated useful life of five years or longer, including public infrastructure facilities and other governmental facilities, which the City is authorized by law to construct, own or operate (the "Facilities"); and WHEREAS, a copy of the Resolution of Formation is on file with the City Clerk and incorporated herein by reference; and WHEREAS, the Council has heretofore designated portions of the CFD as Improvement Area No. 1 and Improvement Area No. 2 (each an "Improvement Area," and collectively, the "Improvement Areas"); and WHEREAS, in order to finance the Facilities it is necessary to incur bonded indebtedness in the amounts not to exceed $30,000,000 and $30,000,000 for Improvement Area No. 1 and Improvement Area No. 2, respectively, the repayment of which is to be secured by special taxes levied in accordance with Section 53340 et seq. of the Act on certain properties within the respective Improvement Areas. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The above recitals are true and correct.

Section 2. It is necessary to incur bonded indebtedness in amounts not to exceed $30,000,000 and $30,000,000 for Improvement Area No. 1 and Improvement Area No. 2, respectively, to finance the costs of the Facilities for the respective Improvement Areas. Section 3. The indebtedness will be incurred for the purpose of financing the costs of acquiring the Facilities, the financing of the costs associated with the issuance of the bonds and all other costs necessary to finance the Facilities which are permitted to be financed pursuant to the Act. Section 4. Improvement Area. Each Improvement Area will pay for the bonded indebtedness for such

The bonds shall be issued in one or more series at a maximum interest rate Section 5. not to exceed 12 percent per annum or such rate not in excess of the maximum rate permitted by law at the time the bonds are issued, and payable annually or semiannually as determined by the Council. The term of the bonds shall be determined pursuant to a resolution of the Council authorizing the issuance of the bonds, but such term shall in no event exceed 40 years or such longer term as is then permitted by law. Pursuant to and in compliance with the provisions of Article 1.5 Section 6. (commencing with Section 53410) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code, the Council hereby establishes the following accountability measures pertaining to any bonded indebtedness incurred by or on behalf of the City: (a) Such bonded indebtedness shall be incurred for the specific purposes set forth in Section 3 above. (b) The proceeds of any such bonded indebtedness shall be applied only to the specific purposes identified in Section 3 above. (c) The document or documents establishing the terms and conditions for the issuance of any such bonded indebtedness shall provide for the creation of an account or accounts into which the proceeds of such bonded indebtedness shall be deposited. (d) The City Manager, or his or her designee, acting for and on behalf of the City, shall annually file a report with the Council as required by Government Code Section 53411. Section 7. Pursuant to Government Code Section 53353.5, the Council hereby determines to submit to the qualified electors of each Improvement Area a combined proposition (the "Proposition") to: (1) levy special taxes on property within each Improvement Area in accordance with the applicable rate and method of apportionment of special tax specified in the Resolution of Formation; (2) incur bonded indebtedness in the amounts not to exceed $30,000,000 or $30,000,000; and (3) establish an appropriations limit as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, for each Improvement Area. Said appropriations limit shall equal the maximum amount of bonded indebtedness authorized to be incurred for the respective Improvement Area. The form of the Proposition is attached as Exhibit "A." Section 8. A special election is hereby called for each Improvement Area on the Proposition set forth in Section 7 above. Section 9. The time for notice having been waived by the qualified electors, the date of the special election for each Improvement Area on the Proposition shall be on the 20th day of July, 2005. There being no registered voters residing within the territory of the CFD at the time of the protest hearing and ninety (90) days prior thereto, and the requirements of Section 53326 of the Government Code having been waived by the landowners, the ballots for the special election shall be hand delivered to the landowners within the CFD. The voter ballots shall be returned to the City Clerk at 100 Civic Center Mall, Indio, California 92201, no later than 11:00

o'clock p.m. on July 20, 2005. However, the election may be closed within the concurrence of the City Clerk, as soon as the ballot is returned. Section 10. Notice of said election and written argument for or against the measure have been waived by the landowners. Section 11. Each Improvement Area shall constitute a single election precinct for the purpose of holding said special election. Section 12. The Council hereby directs that the special election be conducted by the City Clerk, as the elections official. Section 13. adoption. vote: AYES: Gilbert, Godfrey, Ramos Watson, Wilson, Fesmire NOES: None
3

This Resolution shall take effect from and after the date of its passage and

PASSED, APPROVED and ADOPTED this 20th day of July, 2005 by the following

MELANIE FESMIRE, MAYOR ATTEST:

THIA HERNANDEZ, CMC CITY CLERK

CONCURRENCE ON HOLDING SPECIAL ELECTION LESS THAN 125 DAYS FOLLOWING THE ADOPTION OF RESOLUTION OF FORMATION As the elections official of the special election (the "Election") called for by Resolution No. 9026 (Resolution Calling a Special Election), I hereby concur on holding the Election less than 125 days following the adoption of Resolution No. 9025 (Resolution of Formation).
, I

Dated: July 20, 2005

By:

p !Iv

City Clerk of the City of Indio

45655340.1

RESOLUTION NO. 9027 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF INDIO, CALIFORNIA, CANVASSING THE RESULTS OF THE ELECTION HELD WITHIN IMPROVEMENT AREA NO. 1 AND IMPROVEMENT AREA NO. 2 OF THE CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO) WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has previously conducted proceedings pertaining to the formation of the City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "CFD"), the authorization of indebtedness in the amounts not to exceed $30,000,000 and $30,000,000 within Improvement Area No. 1 and Improvement Area No. 2, respectively, of the CFD, the rate and method of apportionment for the levy and collection of special taxes (the "Special Tax") to pay the principal and interest on bonds issued or other debt, and the establishment of an appropriations limit, and the calling of an election in regard to the foregoing; and WHEREAS, on July 20, 2005, an election was held within Improvement Area No. 1 and Improvement Area No. 2 of the CFD relative to the authorization of not to exceed $30,000,000 and $30,000,000 of indebtedness within Improvement Area No. 1 and Improvement Area No. 2, respectively, of the CFD, the rate and method of apportionment of the Special Tax, and the establishment of an appropriations limit; and WHEREAS, at such election the proposal for incurring the bonded indebtedness, the rate and method of apportionment and manner of collection of the Special Tax and establishing an appropriations limit for each Improvement Area No. 1 and Improvement Area No. 2 of the CFD was approved by the requisite 2/3 of the votes cast by qualified electors of Improvement Area No. 1 or Improvement Area No. 2 of the CFD, as applicable. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. It is hereby determined that the election conducted within each Improvement Area No. 1 and Improvement Are No. 2 of the CFD was duly and validly conducted. Section 2. The Council, acting as the legislative body of the CFD, is authorized to levy the Special Tax on behalf of the CFD, as specified in Ordinance No. 1441, (the "Resolution of Formation") adopted by the Council on July 20, 2005. Section 3. The Council is authorized to incur indebtedness on behalf of the CFD for Improvement Area No. 1 and Improvement Area No. 2 of the CFD, in the maximum amounts of $30,000,000 and $30,000,000, respectively. Section 4. The City is authorized to establish an appropriations limit for Improvement Area No. 1 and Improvement Area No. 2 of the CFD.

Section 5. The City Clerk is hereby directed and authorized to record notice of the special tax of the CFD by recording a Notice of Special Tax Lien of the CFD pursuant to Section 3117.5 of the California Streets and Highways Code. PASSED, APPROVED and ADOPTED this 20th day of July, 2005 by the following vote: AYES: Gilbert, Godfrey, Ramos Watson, Wilson, Fesmire NOES: None

FESMIRE, MAYOR ATTEST:

HERNANDEZ, CMC CUT CLERK

8

RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:

DOC ti 2005-0603064
07/28/2005

Conformed Copy

City of Indio 100 Civic Center Mall Indio, California 92201 Attention: Cynthia Hernandez

Has not been compared with original

Larry W Ward
County o Riverside Assessor, County Clerk & Recorder

NOTICE OF SPECIAL TAX LIEN

Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code and Section 53328.3 of the Government Code, the undersigned clerk of the legislative body of the City of Indio (the "City"), State of California, hereby gives notice that a lien to secure payment of special taxes is hereby imposed by the City Council of the City. The special taxes secured by this lien are authorized to be levied for the purpose of financing public infrastructure facilities and other governmental facilities with an estimated useful like of five years or longer including, but not limited to, streetscape, landscape, traffic controls, storm drain, water and sewer facilities, dry utilities, other City fees and facilities, other Valley Sanitary District fees and facilities, other Imperial Irrigation District fees and facilities, and related costs including designs, inspections, professional fees, connection fees and acquisition costs, and for the purpose of paying principal and interest on bonds issued with respect to each improvement area. The special taxes are authorized to be levied within the improvement areas of the City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "District") which has now been officially formed and the lien of the special taxes are a continuing lien which shall secure each annual levy of the special taxes and which shall continue in force and effect until the special taxes cease to be levied and a notice of cessation of special taxes is recorded in accordance with Section 53330.5 of the Government Code. The rate and method of apportionment, and manner of collection of authorized special tax, for each improvement area is as set forth in Exhibit "A" attached hereto and hereby made a part hereof. Conditions under which the obligation to pay the special taxes may be prepaid and permanently satisfied and the lien of the special taxes canceled are as set forth in Exhibit "A" attached hereto. Notice is further given that upon the recording of this notice in the office of the county recorder, the obligation to pay the special tax levies shall become a lien upon all nonexempt real property within the respective improvement areas of the District in accordance with Section 3115.5 of the Streets and Highways Code. The name of the owner(s) and the assessor's tax parcel number(s) of the real property included within the respective improvement areas of the District and not exempt from the special tax are as set forth in Exhibit "B" attached hereto.

45638539.1

1

Reference is made to the boundary map of the District recorded at Book 62 of Maps of Assessment and Community Facilities Districts at Page 88, in the office of the County Recorder for the County of Riverside, California which map is now and final boundary map of the District. For further information concerning the current and estimated future tax liability of owners or purchasers of real property subject to this special tax lien, interested persons should contact the Finance Director of the City of Indio, 100 Civic Center Mall, Indio, California 92201, (760) 342-6560.

Dated:

i-a4 Aens-

Y CLERK OF THE CITY OF JO

45638539.1

2

STATE OF CALIFORNIA ) ss. COUNTY OF RIVERSIDE

GLORIA CONNMY Commission * 1493273 Nolan , Public • CaMomio Weald* County My Comm. Expires Jun 1,

On7:4../ f, 2A,20,u before me,4Ayikt j (here insert name and title o the officer), personally appeared (41-4(;t_ id1/0(0 , personally , -46 known to me eati-proverrto to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon which the person acted, executed the instrument.
WITNESS my hand and official seal.

Signature

(SEAL)

45638539.1

EXHIBIT A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO) CITY OF INDIO, CALIFORNIA A Special Tax (all capitalized terms are defined in Section A., Definitions below) shall be applicable to each Parcel of Taxable Property located within the boundaries of Community Facilities District No. 2004-3 (TERRA LAGO). The amount of Special Tax to be levied in each Improvement Area in each Fiscal Year, commencing in Fiscal Year 2005-2006 on a Parcel shall be determined by the City Council of The City of Indio, acting in its capacity as the legislative body of the CFD by applying the appropriate Special Tax for Developed Property, Undeveloped Property and Public Property and/or Property Owner's Association Property that is not Exempt Property as set forth in Sections B., C., and D., below. All of the real property within the CFD, unless exempted by law or by the provisions hereof in Section E., shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the acreage of a Parcel as indicated on the most recent Assessor's Parcel Map, or if the land area is not shown on the Assessor's Parcel Map, the land area shown on the applicable Final Map, parcel map, condominium plan, or other similar instrument. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1 of Division 2 of Title 5 of the California Government Code of the State of California. "Administrative Expenses" means all actual or reasonably estimated costs and expenses of the District that are chargeable or allocable to the applicable Improvement Area to carry out its duties as the administrator of the CFD as allowed by the Act, which shall include without limitation, all costs and expenses arising out of or resulting from the annual levy and collection of the Special Tax, trustee fees, rebate compliance calculation fees, and legal issues, or actual, potential or threatened litigation involving the CFD, continuing disclosure undertakings of the District as imposed by applicable laws and regulations, communication with bondholders and normal administrative expenses. "Administrator" means an official of the District, or designee thereof, responsible for determining the levy and collection of the Special Taxes. "Assessor's Parcel Map" means an official map of the Assessor of the County of Riverside designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Category of Developed Property, as determined in accordance with Section C.1.a., below.
City of Indio Community Facilities District No. 2004-3 (Terra Lago) July 27, 2005 Page 1

"Backup Special Tax" means the Special Tax of that name described in Section E below. "Bonds" means any bonds or other indebtedness (as defined in the Act) issued by an Improvement Area of the CFD and secured by the levy of Special Taxes within such Improvement Area. "Boundary Map" means a map showing the territory area within the boundaries of CFD 2004-3 identified on EXHIBIT "A" "CFD" means Community Facilities District No. 2004-3 (TERRA LAGO) of the District established pursuant to the Act. "Council" means The City of Indio City Council "County" means the County of Riverside. "Developed Property" means all Parcels of Taxable Property, not classified as Undeveloped Property, Public Property and/or Property Owner's Association Property that are not Exempt Property pursuant to the provisions of Section E. below: (i) that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax is being levied and (ii) a building permit for new construction has been issued prior to April 1st preceding the Fiscal Year in which the Special Tax is being levied. "Exempt Property" means any Parcel, which is exempt from Special Taxes pursuant to Section E., below. "Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which building permits may be issued without further subdivision. "Fiscal Year" means the period starting on July 1 and ending on the following June 30. "Improvement Area(s)" means Improvement Area 1, Zone A or Zone B or Improvement Area 2, Zone A or Zone B as geographically identified on EXHIBIT "B". "Improvement Area 1, Zone A" means the specific area identified on EXHIBIT "B" as Improvement Area 1, Zone A of the CFD. "Improvement Area 1, Zone B" means the specific area identified on EXHIBIT "B" as Improvement Area 1, Zone B of the CFD. "Improvement Area 2, Zone A" means the specific area identified on EXHIBIT "B" as Improvement Area 2, Zone A of the CFD. "Improvement Area 2, Zone B" means the specific area identified on EXHIBIT "B" as Improvement Area 2, Zone B of the CFD.
City of Indio Community Facilities District No. 2004-3 (Terra Lago) July 26, 2005 Page 2

BOUNDARY MAP
COMMUNITY FACILITIES DISTRICT NO. 2004-3
( TERRA LAGO CITY OF INDIO, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA
687 *46 'OB"E 353 33 •
TO,T 6S2

SHEE

TI

OF I SHEET

EXHIBIT A
RELTA.EO THIS DAY OF 2005 AT TIE HOLP OF _O OCK _Al IN BOOK PAGES OF MAPS OF ASSESSAENT AND COMMUNITY F AC IL IT IES DISTRICTS. IN RE OFF ICE OF TIE COUNTY RECORDER IN TIE COUNTY OF RIVERSIDE. STATE OF CAL IFOMIA FEE LARRY W. WAlE, RIVERSIDE COUNTY ASSESSOR-CLERK -RECORDER

B

4.17'01'37 R=829.93' L-246.64'

..24•15.30" R.029.93' L-351.3B•

4=17'05'57" IR-829.93 L-247 68'

BY
DEPUTY

80

17, 6

E

689 '53 '06 -E 335 04'

I HEREBY CERTIFY THAT TIE WITHIN MAP SHOVING PROPOSED BOIAIJARIES OF COMKNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAOS) CITY OF IACIO. CO(GIT Y OF RIVERSIDE. STATE OF CALIFORNIA. WAS APPROVED BY TIE CITY COLACIL OF TIE CITY OF I14210 AT A REGIGAR MEETING THMEOF. BELO ON IKE DAY OF . 2005 BY ITS RESOLUTION NO

CITY 4=08'48'05" R-1557.40' L-239.23'

CLERK OF TIE CITY OF I1010. STATE OF CAL IFORNIA

FILED IN THE OFFICE OF TIE CITY CLERK OF TIE CITY OF INDIO STATE LT CALIFORNIA. THIS DAY OF . 2005

CITY CLEM OF THE CITY OF ACID STATE OF CALIFORNIA

4-21'12'30" 8E1557.40 L-576 AB' 4S. 2j 2%0 N33 '4958"E 259.22' N89 '36 '07'E 1389 35 689'37 19•E 1338 62 NO0 '02 '35 t 114.63' 1 , MOO '02 '40•5 42.02' N89'59 '29 453.65' N55 '013 '51'W 332.88' 4-29'43'00' 8=1079 93' L-560.11'

684 '52 '07'w 794 28'

4-51'18'15" R.352 46 ' L-315.60'

689'33'53-E 1350 73

4-13 '15 30* 0=754 93' L=174.69'

T60,
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NO0 '02 40 -E 58.66' 4-06'01'18' 8-1232.40' L-129.52' 4-16'3252" 051582 39' L-457.01'

VICINITY MAP
NTS

N89 •35 '38"E 1346 23

ALE1 E R T

A. THIS BOUNDARY MAP CORRECIL Y SHOWS EACH SEPARATE LOT

WEBB
0101111113.0 CON1101,T.M1

OR PARCEL OF LAM INCLUDED WITHIN TIE BOLICARIES OF THE ASSESSMENT DISTRICT. FOR DETAILS COACERNIAG TIE LOSES AM DIMENSIONS OF LOTS OR PARCELS REFER TO TIE ASSOCIATES COUNTY ASSESSORS MAPS FOR FISCAL YEAR 2004-2005

NOT TO SCALE

N50 '12 43'W 352.69' 4=33'36'18" 8-422 96 • L=248.07 W.O. 05-0023

IMPROVEAMT AREA NO. 2

C0* 4.

PAPROVEMENT AREAS FACLMES DISTRICT NO. 2004-3
( TERRA LAGO )

SNEET 1 IN 1 SlEET

EXHIBIT B

CITY OF P4D10, COUNTY OF RIVERS= STATE OF CALFORMA

"MOVEMENT AFEA I IMPROVEMENT AREA NO. 2 ( ZONE A )
GOLF CURSE LOTS ( ZONE B LAKE LOTS ( ZONE B )

I
IMPROVEMENT AREA NO. 2 ( ZONE B)

1

BASE

RESIDENTIAL

LOTS ( ZONE A

DPROIEMEPIT AREA 2

[-

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GOLF

COWSE LOTS ( ZONE B

f
IMPROVEMENT AREA NO. 1 ( ZONE A ) IMPROVEMENT AREA NO. 2 (ZONE A )

BASE FESIVENTIAL LOTS ( ZOPE A

111111111111

IMPROVEMENT AREA NO. 1 (ZONE B ) IMPROVEMENT AREA NO. 2 ( ZONE A)

IMPROVEMENT AREA NO. 1 ( ZONE B )

IMPROVEMENT AREA NO. 1 ( ZONE A)

NOT TO SCALE

IMPROVEMENT AREA NO. 1

IMPROVEMENT AREA NO. 2

ALBERT

A.

WEBB
ASSOCIATES
COMOLIUMII

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M.O. 05-0023

"Indenture" means the bond indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Category" means any of the categories listed in Tables 1, 2, 3, 4 and 5. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C., which can be levied in any Fiscal Year on any Parcel. "Multifamily Residential Property" means any Parcel of Developed Property that consists of a building or buildings comprised of attached residential units available for rental by the general public, or for sale to an end user, and may be under common management. "Non-Residential Property" means all Parcels of Developed Property for which a building permit was issued for any type of non-residential use. "Parcel(s)" means a lot or parcel shown on an Assessor's Parcel Map with an assigned parcel number valid at the time the Special Tax is enrolled for the Fiscal Year for which the Special Tax is being levied. "Property Owner's Association Property" means any Parcel within the boundary of the CFD, which, at the time the Special Tax is enrolled for the Fiscal Year for which the Special Tax is being levied has been conveyed, dedicated to, or irrevocably dedicated to a property owner association, including any master or sub-association. "Proportionately" means for (i) Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax is the same for all Parcels of Developed Property, and Undeveloped Property, Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to Section E., that the ratio of the actual Special Tax levy per acre to the Maximum Special Tax per acre is the same for all such Parcels. "Public Property" means any Parcel within the boundary of the CFD which, at the time the Special Tax is enrolled for the Fiscal Year for which the Special Tax is being levied, is used for rights-of-way or any other purpose and is owned by, dedicated to, or irrevocably offered for dedication to the Federal Government, the State of California, the County, City or any other local jurisdiction, provided, however, 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. "Residential Floor Area" means all of the square footage of living area of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio or similar area on a Parcel. The determination of Residential Floor Area shall be made by reference to the building permit(s) for the Parcel or similar official document means selected by the Administrator. Once such determination has been made for a Parcel, it shall remain fixed in all future Fiscal Years. "Residential Property" means all Parcels of Developed Property for which a building
City of Indio Community Facilities District No. 2004-3 (Terra Lago) July 26, 2005 Page 3

permit has been issued for purposes of constructing one or more residential dwelling units. "Single Family Property" means all Parcels of Residential Property, other than Multifamily Residential Property, for which building permits have been issued for detached or attached residential units. "Special Tax(es)" means the special tax to be levied in each Fiscal Year on each Parcel of Taxable Property. "Special Tax Requirement(s)" means that amount required in any Fiscal Year to pay for Special Tax Requirement for Improvement Area 1, Zone A or Zone B, or for Special Tax Requirement for Improvement Area 2, Zone A or Zone B. "Special Tax Requirement for Improvement Area 1" means that amount required in any Fiscal Year within Improvement Area 1 of the CFD to pay: (i) annual debt service on all outstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii) periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) Administrative Expenses; (iv) an amount equal to any anticipated shortfall due to Special Tax delinquency in the prior Fiscal Year; and (v) any amounts required to establish or replenish any reserve funds for the outstanding Bonds; less (vi) a credit for funds available to reduce the annual Special Tax levy as determined pursuant to the Indenture. "Special Tax Requirement for Improvement Area 2" means that amount required in any Fiscal Year within Improvement Area 2 of the CFD to pay: (i) annual debt service on all outstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii) periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) Administrative Expenses; (iv) an amount equal to any anticipated shortfall due to Special Tax delinquency in the prior Fiscal Year; and (v) any amounts required to establish or replenish any reserve funds for the outstanding Bonds; less (vi) a credit for funds available to reduce the annual Special Tax levy as determined pursuant to the Indenture. "Taxable Property" means all Parcels in an Improvement Area which have not prepaid pursuant to Section H., or are not exempt from the Special Tax pursuant to law or Section E., below. "Undeveloped Property" means all Taxable Property not classified as Developed Property, Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section E.

City of Indio Community Facilities District No. 2004-3 (Terra Lago)

July 26, 2005 Page 4

A. ASSIGNMENT TO LAND USE CATEGORY Each Fiscal Year, commencing with the 2005-2006 Fiscal Year, all Parcels of Taxable Property within the CFD shall be categorized into the applicable Improvement Area and classified as either Developed Property, Undeveloped Property, Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions in Section E., and shall be subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment as determined pursuant to Sections C., and D., below. Parcels of Developed Property shall further be classified as Residential Property or NonResidential Property. A Parcel of Residential Property shall further be classified as Single Family Property or Multifamily Residential Property. Single Family Property shall be further categorized based on the Residential Floor Area for such Parcel. C. MAXIMUM SPECIAL TAX RATE 1. Developed Property The Maximum Special Tax for each Parcel of Single Family Property within its applicable Improvement Area shall be the applicable Assigned Special Tax described in Table 1, 2, 3, or 4. The Maximum Special Tax for each Parcel of Non-Residential Property within its applicable Improvement Area shall be the Assigned Special Tax described in Table 1, 2, 3 or 4. a. Assigned Special Tax The Assigned Special Tax for each Parcel of Developed Property within its applicable Improvement Area is shown in Table 1, 2, 3, or 4.

City of Indio Community Facilities District No. 2004-3 (Terra Lago)

July 26, 2005 Page 5

TABLE 1 Assigned Special Taxes for Property within Improvement Area 1, Zone A ...,, .. _ Sin:le Famil Pro erty Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro • erty Sin:le Family Pro • erty Sin:le Family Pro • erty Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro erty Multi Family Pro • erty Non Residential Pro.ert DU DU DU DU DU DU DU DU DU DU DU DU DU DU DU Acre Acre ., .... Less than 1,501 SF 1,501 SF to 1,625 SF 1,626 SF to 1,750 SF 1,751 SF to 1,900 SF 1,901 SF to 1,950 SF 1,951 SF to 2,100 SF 2,101 SF to 2,150 SF 2,151 SF to 2,250 SF 2,251 SF to 2,300 SF 2,301 SF to 2,400 SF 2,401 SF to 2,500 SF 2,501 SF to 2,550 SF 2,551 SF to 2,600 SF 2,601 SF to 2,850 SF Over 2,850 SF N/A N/A $1,828.87 $2,028.55 $2,228.22 $2,467.83 $2,547.70 $2,605.98 $2,681.53 $2,832.63 $2,908.19 $3,059.29 $3,102.46 $3,175.86 $3,249.25 $3,616.22 $4,056.57 $20,460.00 $20,460.00

On each July 1, commencing on July 1, 2007, for a period of five (5) years, until July 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of the amount in effect in the prior Fiscal Year.

City of Indio Community Facilities District No. 2004-3 (Terra Lago)

July 26, 2005 Page 6

TABLE 2 Assigned Special Taxes for Property within Improvement Area 1, Zone B
. .. .. ,

`It

'eW

d

' Zr4

Z.;

. "Litg

''•*'

406 / 4 1..0106...

1r

milli

Illgirj

.

Sin le Famil Pro.ert Sin le Famil Pro.ert Sin le Famil Pro.ert Single Family Propert Single Famil Property Sin le Famil Pro.ert Sin le Famil Pro.ert Sin le Famil Pro.ert Sin le Famil Pro.ert Sin le Famil Pro.ert Multi Famil Pro.ert Non Residential Pro pert

DU DU DU DU DU DU DU DU DU DU Acre Acre

Less than 1,501 SF 1,501 SF to 1,625 SF 1,626 SF to 1,750 SF 1,751 SF to 1,900 SF 1,901 SF to 1,950 SF 1,951 SF to 2,100 SF 2,101 SF to 2,150 SF 2,151 SF to 2,250 SF 2,251 SF to 2,300 SF Over 2,300 SF N/A N/A

$2,519.63 $2,719.31 $2,918.98 $3,158.59 $3,238.46 $3,372.29 $3,469.43 $3,523.39 $3,771.64 $3,965.91 $20,460.00 $20,460.00

On each July 1, commencing on July 1, 2007, for a period of five (5) years, until July 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of the amount in effect in the prior Fiscal Year.

u

'h4

TABLE 3 Assigned Special Taxes for Property within Improvement Area 2, Zone A .t, r * %-

vei• .,. . .....0.64. Sin le Famil Pro.ert Sin le Famil Pro.ert Sin g le Famil Pro ert Sin le Famil Pro.ert Multi Family Pro Deily Non Residential Pro I ert DU DU DU DU Acre Acre Less than 1,501 SF 1,501 SF to 2,000 SF 2,001 SF to 2,500 SF Over 2,500 SF N/A N/A $1,677.77 $2,411.70 $3,162.90 $3,905.47 $22,304.00 $22,304.00

On each July 1, commencing on July 1, 2007, for a period of five (5) years, until July 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of the amount in effect in the prior Fiscal Year.

City of Indio Community Facilities District No. 2004-3 (Terra Lago)

July 26, 2005 Page 7

TABLE 4 Assigned Special Taxes for Property within Improvement Area 2, Zone B
.. ,-.. t "

.

l.

Sin:le Famil Pro.ert Sin:le Famil Pro.ert Sin:le Famil Pro.ert Single Family Pro serty Multi Family Proserty Non Residential Pro.ert

DU DU DU DU Acre Acre

Less than 2,001 SF 2,001 SF to 2,500 SF 2,501 SF to 3,000 SF Over 3,000 SF N/A N/A

$3,154.27 $3,905.47 $4,648.04 $4,665.31 $22,304.00 $22,304.00

On each July 1, commencing on July 1, 2007, for a period of five (5) years, until July 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of the amount in effect in the prior Fiscal Year.

1. Undeveloped Property The Maximum Special Tax for each Parcel of Undeveloped Property within each Improvement Area is shown in Table 5 below.

TABLE 5 Undeveloped Property Maximum Special Tax Rate

1 - Undeveloped Property 2 - Undeveloped Property

Acre Acre

$20,460.00 $22,304.00

On each July 1, commencing on July 1, 2007, for a period of five (5) years, until July 1, 2012, the Maximum Special Tax shall be increased by one percent (1.00%) of the amount in effect in the prior Fiscal Year.

2. Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section E. The Maximum Special Tax for each Parcel of Public Property and/or Property Owners
City of Indio Community Facilities District No. 2004-3 (Terra Lago) July 26, 2005 Page 8

Association Property that is not Exempt Property pursuant to the provisions of Section E., within each Improvement Area shall be the applicable Undeveloped Property Maximum Special Tax rate per Acre in Table 5. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2005-2006 and for each following Fiscal Year, the Council shall levy the Special Tax on all Taxable Property in each Improvement Area until the amount of Special Taxes equals the applicable Special Tax Requirement for each Improvement Area in accordance with the following steps:

1. Improvement Area 1 First: The Special Tax shall be levied on each Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax rate as needed to satisfy the Special Tax Requirement for Improvement Area 1, Zone A and Zone B. Second: If additional moneys are needed to satisfy the Special Tax Requirement for Improvement Area 1, Zone A and Zone B, after the first step has been completed, the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property within Improvement Area 1, Zone A and Zone B at up to 100% of the Maximum Special Tax for Undeveloped Property; Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then for each Assessor's Parcel of Developed Property whose Assigned Special Tax is the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special Tax Requirement. 2. Improvement Area 2 First: The Special Tax shall be levied on each Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax rate as needed to satisfy the Special Tax Requirement for Improvement Area 2, Zone A and Zone B. Second: If additional moneys are needed to satisfy the Special Tax Requirement for Improvement Area 2, Zone A and Zone B, after the first step has been completed, the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property within Improvement Area 2, Zone A and Zone B at up to 100% of the Maximum Special Tax for Undeveloped Property; Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then for each Assessor's Parcel of Developed Property whose Assigned Special Tax is the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special Tax Requirement.
City of Indio Community Facilities District No. 2004-3 (Terra Lago) July 26, 2005 Page 9

Notwithstanding the above, under no circumstances will the Special Taxes levied against any Parcel of Residential Property within an Improvement Area be increased by more than ten percent (10%) per Fiscal Year as a consequence of delinquency or default by the owner of any other Parcel within an Improvement Area of the CFD. E. BACKUP SPECIAL TAXES Each Fiscal Year, each Assessor's Parcel of Developed Property classified as Residential Property shall be subject to a Backup Special Tax. In each Fiscal Year, the Backup Special Tax rate for Developed Property classified as Residential Property within a Final Map shall be the rate per Lot calculated according to the following formula: RxA B= L The terms above have the following meanings: B = Backup Special Tax per Lot in each Fiscal Year R = Maximum Special Tax rate per Acre for Undeveloped Property for the applicable Fiscal Year A = Acreage of Developed Property classified or to be classified as Residential Property in such Final Map L = Lots in the Final Map which are classified or to be classified as Residential Property

Notwithstanding the foregoing, if all or any portion of the Final Map(s) described in the preceding paragraph is subsequently changed or modified, then the Backup Special Tax for each Assessor's Parcel of Developed Property classified or to be classified as Residential Property in such Final Map Area that is changed or modified shall be a rate per square foot of Acreage calculated as follows: 1. Determine the total Backup Special Tax anticipated to apply to the changed or modified Final Maps 2. The result of paragraph 1 above shall be divided by the Acreage of Developed Property classified or to be classified as Residential Property which is ultimately expected to exist in such changed or modified Final Map Area, as reasonably determined by the City. 3. The result of paragraph 2 above shall be divided by 43,560. The result is the Backup Special Tax per square foot of Acreage which shall be applicable to Assessor's Parcels of Developed Property classified as Residential Property in such changed or modified Final Map Area for all remaining Fiscal Years in which the Special Tax may be levied. F. EXEMPTIONS
City of Indio Community Facilities District No. 2004-3 (Terra Lago) July 26, 2005 Page 10

The Council shall not levy Special Taxes on Public Property, Property Owner's Association Property or Golf Course Property within each Improvement Area or Riverside County Assessor Parcel Numbers 601-150-024 and 601-270-018 located within Improvement Area 2 of the CFD. Exempt Property status will be assigned by the Administrator in the chronological order in which property becomes Public Property, Property Owner's Association Property or Golf Course Property. G. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the Administrator may directly bill the Special Tax, may collect Special Taxes 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 Parcels having delinquent Special Taxes as permitted by the Act if necessary to meet the financial obligations of the CFD. H. APPEALS Any taxpayer may file a written appeal of the Special Tax on his/her Parcel(s) with the Administrator, provided that the appellant is current in his/her payments of Special Taxes. During 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 Administrator shall review the appeal, meet with the appellant if the Administrator deems necessary, and advise the appellant of its determination. If the Administrator agrees with the appellant, the Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant's Parcel(s). No refunds of previously paid Special Taxes shall be made. The Administrator shall interpret this Rate and Method of Apportionment and make determinations relative to the annual levy and administration of the Special Tax and any taxpayer who appeals, as herein specified. I. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section H: "Outstanding Bonds" means all previously issued bonds issued and secured by the levy of Special Taxes, which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Special Taxes. 1. Prepayment in Full

The Maximum Special Tax obligation may only be prepaid and permanently satisfied by a Parcel of Developed Property, and/or Undeveloped Property for which a building permit has been issued, and Public Property and/or Property Owner's Association Property that is not Exempt Property pursuant to Section E. The Maximum Special Tax obligation applicable to
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such Parcel may be fully prepaid and the obligation of the Parcel to pay the Special Tax permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Parcel at the time of prepayment. An owner of a Parcel intending to prepay the Maximum Special Tax obligation shall provide the Administrator with written notice of intent to prepay, and within 5 business days of receipt of such notice, the Administrator shall notify such owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the proper amount of a prepayment. Within 15 days of receipt of such nonrefundable deposit, the Administrator shall notify such owner of the prepayment amount of such Parcel. Prepayment must be made not less than 60 days prior to any redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows:

1. 2.

Confirm that no Special Tax delinquencies apply to such Parcel. For Parcels of Developed Property, compute the Maximum Special Tax for the Parcel to be prepaid. For Parcels of Undeveloped Property to be prepaid, compute the Maximum Special Tax for that Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Parcel. For Parcels of Public Property and/or Property Owner's Association Property to be prepaid, compute the Maximum Special Tax for that Parcel. Divide the Maximum Special Tax computed pursuant to paragraph 2 by the total estimated Maximum Special Taxes based on the Developed Property Special Tax which could be charged, less any Parcels which have been prepaid. Multiply the quotient computed pursuant to paragraph 3 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium"). Compute the amount needed to pay interest on the Bond Redemption Amount from
July 26, 2005 Page 12

3.

4.

5.

6.

City of Indio Community Facilities District No. 2004-3 (Terra Lago)

the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 7. Determine the Special Taxes levied on the Parcel in the current Fiscal Year which have not yet been paid. Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. Add the amounts computed pursuant to paragraphs 6 and 7 and subtract the amount computed pursuant to paragraph 8 (the "Defeasance Amount").

8.

9.

10. Verify the administrative fees and expenses, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming the Outstanding Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 11. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 12. The Maximum Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 9 and 10, less the amount computed pursuant to paragraph 11 (the "Prepayment Amount"). 13. From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 9, and 11 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 10 shall be retained by the CFD. The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 7 (above), the Administrator shall remove the current Fiscal Year's Special Tax levy for such Parcel from the County tax rolls. With respect to any Parcel that is prepaid, the Board shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Parcel, and the obligation of such Parcel to pay the Special Tax shall cease.
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Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Special Taxes that may be levied on Taxable Property both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. Tenders of Bonds in prepayment of Maximum Special Taxes may be accepted upon the terms and conditions established by the Board pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Board.

2.

Prepayment in Part

The Maximum Special Tax on a Parcel of Developed Property or Undeveloped Property for which a building permit has been issued may be partially prepaid in increments of $2,000. 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 xF These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.1 F = the percent by which the owner of the Parcel(s) is partially prepaying the Maximum Special Tax. The owner of a Parcel who desires to partially prepay the Maximum Special Tax shall notify the Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax, (ii) the amount of partial prepayment expressed in increments of $2,000, and (iii) the company or agency that will be acting as the escrow agent, if applicable and within 5 days of receipt of such notice, the Administrator shall notify such property owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the proper amount of a partial prepayment. Within 15 business days of receipt of such non-refundable deposit, the Administrator shall notify such owner of the partial prepayment amount of such Parcel. Partial prepayment must be made not less than 60 days prior to any redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes. With respect to any Parcel that is partially prepaid, the Administrator shall (i) distribute the funds remitted to it according to Paragraph 13 of Section H.1, and (ii) indicate in the records of the CFD that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Parcel pursuant to Section D.

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J. TERM OF THE SPECIAL TAX For each year that any Bonds are outstanding the Special Tax shall be levied on all Parcels subject to the Special Tax. If any delinquent Special Taxes remain uncollected prior to or after all Bonds are retired, the Special Tax may be levied to the extent necessary to reimburse the CFD for uncollected Special Taxes associated with the levy of such Special Taxes, but not later than the Fiscal Year.

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EXHIBIT B

NAMES OF PROPERTY OWNERS Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Indio Land Ventures Woodside Portofino Inc. Woodside Portofino Inc. MW Housing Managers III/Lennar Corp The Ryland Group Inc. Ashbrook WHP Terra Lago 133 A California Limited Partnership

ASSESSOR PARCEL NUMBERS 601-150-025-0 601-270-011-8 601-270-012-9 601-270-014-1 601-270-019-6 601-300-012-1 601-310-001-2 601-310-012-2 601-310-015-5 601-310-016-6 601-390-032-8 601-270-013-0 601-270-015-2 601-290-003-3 601-290-008-8 601-270-006-4

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ORDINANCE NO. 1442 ORDINANCE OF THE CITY COUNCIL OF THE CITY OF INDIO AUTHORIZING THE LEVY OF A SPECIAL TAX, COMMUNITY FACILITIES DISTRICT NO. 2004-03 TERRA LAGO WHEREAS, on May 18, 2005, the City Council (the "Council") of the City of Indio (the "City") adopted Resolution No. 8956 stating its intention to form the City of Indio Community Facilities District No. 2004-3 (Terra Lego) (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"), to finance the purchase, construction, expansion or rehabilitation of certain real and other tangible property with an estimated useful life of five years or longer, including public infrastructure facilities and other governmental facilities, which the City is authorized by law to construct, own or operate (the "Facilities"), and designating portions of the CFD as Improvement Area No. 1 and Improvement Area No. 2; and WHEREAS, on May 18, 2005, the Council also adopted Resolution No. 8957 stating its intention and the necessity to incur bonded indebtedness in the amount of not to exceed $30,000,000 and $30,000,000 for Improvement Area No. 1 and Improvement Area No. 2, respectively, to be issued for the purpose of financing the purchase, construction, expansion or rehabilitation of the Facilities; and WHEREAS, notice was published as required by law relative to the intention of the Council to form the CFD and to incur bonded indebtedness in the amount not to exceed $30,000,000 and $30,000,000 within the boundaries of Improvement Area No. 1 and Improvement Area No. 2, respectively, of the CFD; and WHEREAS, on July 6, 2005 and July 20, 2005, this Council held a noticed public hearing as required by law relative to the determination to proceed with the formation of the CFD, the rate and method of apportion and manner of collection of the special tax to be levied within each Improvement Area No. 1 and Improvement Area No. 2 of the CFD to pay the . principal and interest on the proposed bonded indebtedness of Improvement Area No. 1 and Improvement Area No. 2 of the CFD, and relative to the necessity for authorizing the bonds, the purpose for which the bonds are to be issued, the amount of the proposed debt, the maximum term of the bonds and the maximum annual rate of interest to be paid; and WHEREAS, at said hearing all persons desiring to be heard on all matters pertaining to the formation of the CFD and the incurring of bonded indebtedness by each Improvement Area No. 1 and Improvement Area No. 2 of the CFD were heard and a full and fair hearing was held; and WHEREAS, the Council subsequent to said hearing adopted Resolution No. 9025 ("Resolution of Formation") determining the validity of prior proceedings and established the CFD; and WHEREAS, the Council subsequent to said hearing adopted Resolution No. 9026 which called an election within the CFD for July 20, 2005 on the proposition of incurring bonded indebtedness, levying a special tax and setting an appropriations limit; and

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WHEREAS, on July 20, 2005, an election was held within each Improvement Area No, 1 and Improvement Area No. 2 of the CFD in which the eligible electors approved by more than two-thirds vote the proposition of incurring bonded indebtedness, levying a special tax, and setting an appropriations limit. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOES HEREBY ORDAIN AS FOLLOWS:

Section 1. A special tax (the "Special Tax") is levied within the boundaries of each Improvement Area No. 1 and Improvement Area No. 2 of the CFD pursuant to the formulas set forth in Exhibit "A" attached hereto and incorporated by reference in an amount necessary to pay all of the costs of providing the Facilities, periodic costs, and costs of the tax levy and collection; and all other costs including amounts payable with respect to the bonded indebtedness.
Section 3. This legislative body is hereby further authorized each year, by resolution adopted as provided in section 53340 of the Act, to determine the specific special tax rate and amount to be levied for the then current or future tax years, except that the special tax rate to be levied shall not exceed the maximum rate set forth in Exhibit "A". Section. 3. All of the collections of the Special Tax shall be used as provided for in the Act and the Resolution of Formation. Section 4 The above authorized Public Special Tax shall be collected in the same manner as ordinary ad valorem taxes are collected and shall be subject to the same penalties and the same procedure and sale in cases of delinquency and provided for ad valorem taxes; provided, however, the CFD may collect the Special Tax at a different time or in a different manner if necessary to meet its financial obligations. Section 5. The Mayor shall sign this ordinance and the City Clerk shall attest to such signature. The City Clerk is directed to cause the title and summary or text of the this ordinance, together with the vote thereon, to be published within fifteen (15) days after its passage at least once in a newspaper of general circulation published and circulated within the territorial jurisdiction of the City, and to post at the main office of the City a certified copy of the full text of the adopted ordinance along with the names of the Council Members voting for and against the ordinance. Section 6. This ordinance relating to the levy of the Special Tax takes effect and shall be in force from and after 30 days from the date of final passage. A copy of this ordinance shall be transmitted to the Clerk of the Board of Supervisors of Riverside County, the Assessor and the Treasurer-Tax Collector of Riverside County.

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PASSED, APPROVED and ADOPTED this 3rd day of August, 2005 by the following vote: AYES: Gilbert, Godfrey, Ramos Watson, Wilson, Fesmire NOES: None

ATTEST: