$35,000,000 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) LIMITED TAX GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS SERIES 2006A

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1 NEW ISSUE Ratings: Series 2006A Bonds Series 2006B Bonds BOOK ENTRY ONLY Standard & Poor s: AA NOT RATED Moody s: Aa3 NOT RATED In the opinion of Brownstein Hyatt & Farber, P.C., Bond Counsel, under existing law and assuming continuous compliance with certain covenants described herein, interest on the Bonds payable to the registered holders thereof is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax, pursuant to the Internal Revenue Code of 1986, as amended (the Tax Code ). Interest on the Bonds is not included in Colorado taxable income or Colorado alternative minimum taxable income under present Colorado income tax laws as described herein. See, however, TAX MATTERS regarding certain other tax considerations. $35,000,000 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) LIMITED TAX GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS SERIES 2006A $5,000,000 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) LIMITED TAX GENERAL OBLIGATION SUBORDINATE REFUNDING BONDS SERIES 2006B Dated: Date of Original Issuance Due: December 1, 2040 The limited tax general obligation bonds, identified above (the Bonds ) are issued under a Trust Indenture (the Indenture ) dated as of August 1, 2006, by and between Vista Ridge Metropolitan District (the District ) and American National Bank, Denver, Colorado (the Trustee ) as fully registered bonds in denominations of (a) $5,000, or integral multiples of $5,000 in excess thereof in respect of the Series 2006A Bonds; and (b) $500,000, or integral multiples of $5,000 in excess thereof in respect of the Series 2006B Bonds. The Bonds initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), securities depository for the Bonds. Purchases of the Bonds are to be made in book-entry form only. Purchasers will not receive certificates representing their beneficial ownership interest in the Bonds. See THE BONDS Book-Entry Only System. The Bonds bear interest at the rates set forth below, payable on December 1, 2006, and semiannually thereafter on June 1 and December 1 of each year, to and including the maturity dates shown below, unless the Bonds are redeemed earlier, by check or draft mailed to the registered owner of the Bonds, initially Cede & Co. The principal of, and premium, if any, on the Bonds will be payable upon presentation and surrender at the corporate trust office of the Trustee, or its successor, as the paying agent for the Bonds. See THE BONDS. The Bonds are subject to redemption prior to maturity at the option of the District and are also subject to mandatory sinking fund redemption as described in THE BONDS Prior Redemption. Proceeds of the Bonds will be used for the purposes of (i) refunding the District s outstanding Limited Tax General Obligation Bonds, Series 2001, originally issued in the aggregate principal amount of $26,920,000 and now outstanding in the aggregate principal amount of $26,285,000; the District s Limited Tax General Obligation Subordinate Bonds, Series 2004 in the original and currently outstanding aggregate principal amount of $6,600,405 and a portion of the Limited Tax General Obligation Subordinate Bonds, Series 2006, in the aggregate principal amount of $2,935,483; (ii) financing a portion of the costs of the design, acquisition, installation, construction, equipping, planning, permitting and any environmental remediation required in connection therewith of water improvements, street improvements, park and recreation improvements and sanitary sewer improvements for the master-planned residential community known as Vista Ridge located in the Town of Erie and Weld County, Colorado, and served by the District; (iii) funding a Reserve Fund; (iv) funding the initial deposit to the Non-Property Tax Account; and (v) paying costs of the issuance of the Bonds. See SOURCES AND USES OF FUNDS. This cover page contains certain information for quick reference only. It is not a summary of the issue. Prospective purchasers of the Bonds should read this Offering Memorandum in its entirety, giving particular attention to the matters referred to under RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS, in order to obtain information essential to the making of an informed investment decision. The Bonds are limited tax general obligations of the District, payable solely from and to the extent of the revenues generated by the District s limited mill levy, certain development fees, the District s revenues from the Colorado specific ownership tax, and certain other pledged revenues. The District s mill levy to be imposed with respect to the Bonds is limited to a cap in the present amount of mills, subject to certain adjustments as described herein. See SECURITY FOR THE BONDS and FINANCIAL INFORMATION CONCERNING THE DISTRICT. The Series 2006B Bonds are being offered and will be issued solely to financial institutions or institutional investors, as discussed under LIMITED OFFERING. Payment of principal of and interest on the Series 2006A Bonds will be insured in accordance with the terms of a financial guaranty insurance policy to be issued simultaneously with the delivery of the Series 2006A Bonds by Radian Asset Assurance Inc. The Bonds are offered when, as, and if issued by the District and accepted by the Underwriter, subject to the approval of legality of the Bonds by Brownstein Hyatt & Farber, P.C., Denver, Colorado, Bond Counsel, and the satisfaction of certain other conditions. Certain legal matters will be passed upon for the Underwriter by its counsel, Kline Alvarado Veio, P.C., Denver, Colorado. Certain legal matters will be passed upon for the District by its general counsel, McGeady Sisneros PC, Denver, Colorado. Certain legal matters will be passed upon for the Developer by its counsel, Sherman & Howard L.L.C., Denver, Colorado. It is expected that the Bonds will be available for book-entry delivery through the facilities of DTC on or about August 30, PRAGER, SEALY & CO., LLC Dated: August 23, 2006

2 MATURITY SCHEDULE $35,000,000 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) LIMITED TAX GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS SERIES 2006A $5,960,000 Serial Series 2006A Bonds Maturity (December 1) Principal Amount Interest Rate Yield Price CUSIP No $560, % 3.930% E AB , E AC , E AD , E AE , E AF , E AG , E AH , E AJ , E AK0 $1,675, % Term Bonds due December 1, 2021, Yield: 4.470%, Price: , CUSIP No E AM6 $4,980, % Term Bonds due December 1, 2026, Yield: 4.560%, Price: , CUSIP No E AN4 $3,625, % Term Bonds due December 1, 2029, Yield: 4.620%, Price: , CUSIP No E AT1 $2,720, % Term Bonds due December 1, 2031, Yield: 4.720%, Price: , CUSIP No E AP9 $8,030, % Term Bonds due December 1, 2036, Yield: 4.680%, Price: , CUSIP No E AQ7 $8,010, % Term Bonds due December 1, 2040, Yield: 4.730%, Price: , CUSIP No E AR5 $5,000,000 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) LIMITED TAX GENERAL OBLIGATION SUBORDINATE REFUNDING BONDS SERIES 2006B $5,000, % Term Bonds due December 1, 2040, Yield: 6.625%, Price: , CUSIP No E AS3 Copyright 2002, American Bankers Association. Standard & Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc.

3 USE OF INFORMATION IN THIS OFFERING MEMORANDUM The Offering Memorandum, which includes the cover page and the Appendices, does not constitute an offer to sell or the solicitation of an offer to buy any of the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation, or sale. No dealer, salesperson, or other person has been authorized to give any information or to make any representations other than those contained in this Offering Memorandum in connection with the offering of the Bonds, and if given or made, such information or representations must not be relied upon as having been authorized by the District or the Underwriter. The information set forth in this Offering Memorandum has been obtained from the District, from the sources referenced throughout this Offering Memorandum and from other sources believed to be reliable. No representation or warranty is made, however, as to the accuracy or completeness of information from parties other than the District or the Underwriter, and nothing contained herein is or shall be relied upon as a guarantee of the District or the Underwriter. This Offering Memorandum contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions, or that they will be realized. The information, estimates, and expressions of opinion contained in this Offering Memorandum are subject to change without notice, and neither the delivery of this Offering Memorandum nor any sale of the Bonds shall, under any circumstance, create any implication that there has been no change in the affairs of the District, or in the information, estimates, or opinions set forth herein, since the date of this Offering Memorandum. This Offering Memorandum has been prepared only in connection with the original offering of the Bonds and may not be reproduced or used in whole or in part for any other purpose. THE PRICES AT WHICH THE BONDS ARE OFFERED TO THE PUBLIC BY THE UNDERWRITER (AND THE YIELDS RESULTING THEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES OR YIELDS APPEARING ON THE COVER PAGE HEREOF. IN ADDITION, THE UNDERWRITER MAY ALLOW CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS. IN ORDER TO FACILITATE DISTRIBUTION OF THE BONDS, THE UNDERWRITER MAY ENGAGE IN TRANSACTIONS INTENDED TO STABILIZE THE PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. OTHER THAN WITH RESPECT TO INFORMATION CONCERNING RADIAN ASSET ASSURANCE INC. CONTAINED UNDER THE CAPTION "FINANCIAL GUARANTY INSURANCE" HEREIN AND IN APPENDIX G HERETO, NONE OF THE INFORMATION IN THIS OFFERING MEMORANDUM HAS BEEN SUPPLIED OR VERIFIED BY RADIAN ASSET ASSURANCE INC., AND RADIAN ASSET ASSURANCE INC. MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO: (i) THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION; (ii) THE VALIDITY OF THE SERIES 2006A BONDS; OR (iii) THE TAX STATUS OF THE INTEREST ON THE SERIES 2006A BONDS.

4 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) Board of Directors President: Treasurer: Assistant Secretary: Assistant Secretary: Assistant Secretary: James Spehalski Lisa Jacoby Andrew L. Chaikovsky Daniel Kane Norman Stuard Trustee, Registrar and Paying Agent American National Bank Denver, Colorado General Counsel McGeady Sisneros P.C. Denver, Colorado Bond Counsel Brownstein Hyatt & Farber, P.C. Denver, Colorado Underwriter Prager, Sealy & Co., LLC Orlando, Florida Underwriter's Counsel Kline Alvarado Veio, P.C. Denver, Colorado District Accountant Clifton Gunderson LLP Greenwood Village, Colorado Developer Vista Ridge Development Corporation Englewood, Colorado Developer's Counsel Sherman & Howard L.L.C. Denver, Colorado

5 TABLE OF CONTENTS PAGE INTRODUCTION...1 General...1 Issuer...1 Security...2 Bond Insurance with Respect to the Series 2006A Bonds...3 Purpose; Additional Bonds...3 Authority for Issuance...4 The Bonds; Prior Redemption...4 Tax Matters...4 Continuing Disclosure Undertaking...4 Agents and Advisors...5 Changes from the Preliminary Offering Memorandum...5 Additional Information...5 RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS...6 General...6 Ad Valorem Tax Collections...7 Forecasted Surplus Cash Balances and Cash Receipts and Disbursements...7 Delinquency of Payments...7 Assessed Value and Market Value Risk and Projections...8 Limited Secondary Market and No Rating for the Series 2006B Bonds...9 Legal Constraints on District Operations...9 Limitations on Remedies...10 Potential Conflicts of Interest...10 Forward-Looking Statements...11 SOURCES AND USES OF PROCEEDS...11 PLAN OF FINANCE...11 THE BONDS...12 Description...12 Authorization...13 Payment of Principal and Interest; Record Date...13 Prior Redemption...14 Conversion of Series 2006B Bonds to Priority Lien Status...18 Book-Entry Only System...18 SECURITY FOR THE BONDS...19 General Ad Valorem Property Tax Pledge...19 Specific Ownership Taxes...20 Reserve Fund...20 Non-Property Tax Account...21 Surplus Fund...22 Flow of Funds...22 FINANCIAL GUARANTY INSURANCE...23 Financial Guaranty Insurance Policy A Bond Insurer...24 DEBT SERVICE REQUIREMENTS...27 THE DISTRICT...28 Description and Formation...28 District Powers...28 Inclusions, Exclusions, Consolidations and Dissolutions...29 Principal Officials...30 Conflicts of Interest...30 Management...31 Services Provided by Other Entities...31 PAGE FINANCIAL INFORMATION CONCERNING THE DISTRICT Financial Statements and District Funds The District's Budgetary Process Ad Valorem Property Taxes Ad Valorem Property Tax Data Estimated Overlapping General Obligation Debt Mill Levies Affecting the District Property Owners Required Elections Debt and Other Financial Obligations Debt-to-Assessed Ratio Other District Revenues Constitutional Amendment Limiting Taxes and Spending MATERIAL CONTRACTS Restructure Agreement Annexation Agreement District Management Agreement Facilities Acquisition Agreement Amended and Restated Facilities Acquisition Agreement Operations Funding Agreement Restated Operations Funding Agreement Construction Management Agreement THE DEVELOPER AND THE DEVELOPMENT The Developer Management of the Developer The Development ECONOMIC AND DEMOGRAPHIC INFORMATION Population and Age Distribution Housing Stock Income Employment Retail Sales Building Permit Activity Foreclosure Activity LEGAL MATTERS Litigation Opinion of Bond Counsel Other Legal Counsel No Litigation Certificate TAX MATTERS RATINGS ON THE SERIES 2006A BONDS LIMITED OFFERING UNDERWRITING ADDITIONAL INFORMATION APPENDIX A THE INDENTURE APPENDIX B FORECASTED SURPLUS CASH BALANCES AND CASH RECEIPTS AND DISBURSEMENTS APPENDIX C AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED DECEMBER 31, 2005 APPENDIX D BOOK-ENTRY ONLY SYSTEM APPENDIX E CONTINUING DISCLOSURE UNDERTAKING APPENDIX F FORM OF BOND COUNSEL OPINION APPENDIX G SPECIMEN 2006A BOND INSURANCE POLICY i

6 MAP OF DISTRICT LOCATION * District location indicated by green square. ii

7 MAP OF DISTRICT iii

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9 PRELIMINARY OFFERING MEMORANDUM $35,000,000 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) LIMITED TAX GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS SERIES 2006A $5,000,000 VISTA RIDGE METROPOLITAN DISTRICT (WELD COUNTY, COLORADO) LIMITED TAX GENERAL OBLIGATION SUBORDINATE REFUNDING BONDS SERIES 2006B INTRODUCTION General This Offering Memorandum, including the cover page and the Appendices, is furnished by the Vista Ridge Metropolitan District (the "District"), a political subdivision of the State of Colorado (the "State"), to provide information about the District and its $35,000,000 Limited Tax General Obligation Improvement and Refunding Bonds, Series 2006A (the "Series 2006A Bonds") and its $5,000,000 Limited Tax General Obligation Subordinate Refunding Bonds, Series 2006B (the "Series 2006B Bonds" and together with the Series 2006A Bonds, the "Bonds"). The Bonds will be issued pursuant to a Trust Indenture (the "Indenture") dated as of August 1, 2006, by and between the District and American National Bank, as trustee (the "Trustee"). The offering of the Bonds is made only by way of this Offering Memorandum, which supersedes any other information or materials used in connection with the offer or sale of the Bonds. The following introductory material is only a brief description of and is qualified by the more complete information contained throughout this Offering Memorandum. A full review should be made of the entire Offering Memorandum and the documents summarized or described herein, particularly the section entitled "RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS." Detachment or other use of this "INTRODUCTION" without the entire Offering Memorandum, including the cover page and appendices, is unauthorized. Issuer The District is a quasi-municipal corporation and political subdivision of the State organized on January 8, 2001 pursuant to Article 1, Title 32, Colorado Revised Statutes (the "Act"). The District is located in the County of Weld, Colorado ("Weld County") and in the Town of Erie (the "Town"), directly north of the City and County of Broomfield, approximately six miles south of the City of Longmont, approximately three miles north of the City of Louisville, approximately one and a half miles northeast of the City of Lafayette and 13 miles east of the City of Boulder. The District currently contains approximately 923 acres. The 2005 certified assessed aggregate value of property within the District was $26,846,240. See "FINANCIAL INFORMATION CONCERNING THE DISTRICT Property Taxation Procedures" which describes the assessment cycle to which all taxable property is subject. The District has facilitated the financing, construction and operation of basic public infrastructure serving a mixed-use planned community with single and multi-family residences, 1

10 open space, commercial uses, public uses, and a golf course (the "Development" or "Vista Ridge"). Approximately 493 acres in the District are zoned for residential development, 103 acres in the District are zoned for commercial and retail development and 232 acres are zoned as open space for the Development's golf course. Vista Ridge Development Corporation is the Developer (the "Developer"), whose affairs are managed by the personnel of Marathon Land Company. The shareholders of the Developer are Barry Talley, Andy Chaikovsky and Russ Pitto. See "THE DEVELOPER AND THE DEVELOPMENT." The Developer has not guaranteed the payment of the Bonds. The District is organized primarily to finance the design, acquisition, installation and construction of water improvements, street improvements, public park and recreation/open space improvements and sanitary sewer improvements for the Development. The District has dedicated or will dedicate the park and trails, recreation and open space improvements to the Town and the maintenance of these facilities will be as agreed upon by the District and the Town. The Town owns, operates and maintains or will own, operate and maintain the sanitary sewer, storm drainage and water facilities, and the Town, Weld County and the State of Colorado own, operate and maintain or will own, operate and maintain the various street and safety improvements. Security Limited Tax General Obligations. The Bonds are limited tax general obligations of the District payable from, among other sources, general ad valorem taxes imposed upon all taxable property in the District in an amount sufficient to pay the principal of and interest on the Bonds as the same come due; provided, however, that the rate of levy for ad valorem taxes for such purposes may not exceed a mill levy cap, subject to certain adjustments resulting from an assessment ratio change. At the time of issuance of the Bonds, the rate of levy will be mills. See "SECURITY FOR THE BONDS General Ad Valorem Property Tax Pledge." At elections held on November 7, 2000 and November 6, 2001 (the "Elections"), the qualified electors of the District approved the issuance of general obligation refunding bonds in an amount not to exceed $40,000,000, with a maximum aggregate repayment cost not to exceed $230,949,550 and a maximum aggregate annual tax increase of $33,963,914. Without further voter authorization, the District may not exceed these limitations for any reason. The regularly scheduled debt service payments on the Bonds will not exceed these limitations. See "SECURITY FOR THE BONDS General Ad Valorem Property Tax Pledge," "CONSTITUTIONAL LIMITATIONS" and "RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS." Development Fees. Pursuant to a resolution duly adopted by the District's Board of Directors, the District has authorized the imposition and collection of system development fees for each net developable acre within the District. Pursuant to Pre-Paid System Development Fee Agreements (the "Development Fee Agreements"), certain home builders in the Development (the "Builders") have agreed to prepay and have prepaid system development fees to the District in accordance with a payment schedule (the "System Development Fees"), and liens against property of the Builders located within the boundaries of the District have been created and, in 2

11 regards to one of the Development Fee Agreements, a letter of credit has been provided, in order to secure the respective payment obligations of the Builders. The District is required to credit all Development Fee Agreements to, and to deposit all System Development Fees in the Bond Fund. See "SECURITY FOR THE BONDS System Development Fees." In addition the Developer anticipates receiving other system development fees (the "Additional System Development Fees") in connection with the issuance of building permits in respect to the development of the commercial property and certain custom home lots. Other Revenues. Specific Ownership Taxes (as defined in "FINANCIAL INFORMATION CONCERNING THE DISTRICT Other District Revenues") are also anticipated to be available to the District to pay debt service on the Bonds and to pay construction and operating expenses. Any general ad valorem taxes, System Development Fees, Additional System Development Fees and Specific Ownership Taxes in excess of debt service on the Bonds in any year will be deposited to the Surplus Fund created under the Indenture. See "SECURITY FOR THE BONDS Specific Ownership Taxes" and "-Surplus Fund." Bond Insurance with Respect to the Series 2006A Bonds Payment of principal of and interest on the Series 2006A Bonds will be insured in accordance with a financial guaranty insurance policy (the "2006A Bond Insurance Policy") to be issued simultaneously with the delivery of the Series 2006A Bonds by Radian Asset Assurance Inc., a New York corporation (the "2006A Bond Insurer"). For a further description of such insurance policy and the 2006A Bond Insurer, see "FINANCIAL GUARANTY INSURANCE." See APPENDIX G for a specimen of the 2006A Bond Insurance Policy. The Series 2006B Bonds will not be insured. Purpose; Additional Bonds The Bonds are being issued to (i) refund the District's outstanding Limited Tax General Obligation Bonds, Series 2001, originally issued in the aggregate principal amount of $26,920,000 and now outstanding in the aggregate principal amount of $26,285,000; (the "Series 2001 Bonds") the Limited Tax General Obligation Subordinate Bonds, Series 2004 in the original and currently outstanding aggregate principal amount of $6,600,405, (the "Series 2004 Bonds" and together with the Series 2001 Bonds, the "Prior Bonds") and a portion of the Limited Tax General Obligation Subordinate Bonds, Series 2006, in the aggregate principal amount of $2,935,483 (the "2006 Subordinate Bonds"), (ii) finance a portion of the costs of the design, acquisition, installation, construction, equipping, planning, permitting and any environmental remediation required in connection therewith (the "Construction") of water improvements, street improvements, park and recreation improvements and sanitary sewer improvements for the District (the "Facilities"), all as more specifically described in the ballot questions relating to the Election; (iii) fund a Reserve Fund; (iv) fund the initial deposit to the Non-Property Tax Account, and (v) to pay costs incidental to the issuance of the Bonds. See "SOURCES AND USES OF PROCEEDS" and "PLAN OF FINANCE." See "RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS" and "SECURITY FOR THE BONDS." The Indenture provides that the District will not incur any additional indebtedness having a lien which is superior to the lien status of the Series 2006A Bonds and the Series 2006B Bonds. The District may issue Additional Bonds, which are secured by a lien on the Trust Estate (as defined in the 3

12 Indenture) that is on parity with the lien on the Trust Estate securing the Series 2006C Bonds (as hereinafter defined) and the Series 2006D Bonds(as hereinafter defined), if certain conditions set forth in the Indenture are met. See "PLAN OF FINANCE." The District's ability to issue additional bonds beyond certain limits is subject to additional voter approval, and the District is subject to additional statutory limits on its ability to issue additional bonds. See "RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS Additional Debt of the District." Authority for Issuance The Bonds are issued in full conformity with the Constitution and laws of the State of Colorado, particularly the Act and Title 11, Article 59, Sections 201 et seq., of the Colorado Revised Statutes, as amended (the "Supplemental Securities Act"), and pursuant to an authorizing resolution (the "Bond Resolution") adopted by the District's Board of Directors (the "Board") and pursuant to the Election. The Bonds; Prior Redemption The Series 2006A Bonds are issued solely as fully registered certificates in the denomination of $5,000, or integral multiples of $5,000 in excess thereof and the Series 2006B Bonds are issued solely as fully registered certificates in the denomination of $500,000, or integral multiples of $5,000 in excess thereof. The Bonds initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), the securities depository for the Bonds. See "THE BONDS Book-Entry Only System." The Bonds mature and bear interest (calculated based on a 360-day year consisting of twelve 30-day months) as set forth on the cover page hereof. Principal and interest on the Bonds is payable as described in "THE BONDS Payment of Principal and Interest; Record Date." The Bonds are subject to redemption prior to maturity at the option of the District and also are subject to mandatory sinking fund redemption as described in "THE BONDS Prior Redemption." Tax Matters In the opinion of Brownstein Hyatt & Farber, P.C., Bond Counsel, under existing law and assuming continuous compliance with certain covenants described herein, interest on the Bonds payable to the registered holders thereof is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax, pursuant to the Internal Revenue Code of 1986, as amended (the "Tax Code"). Interest on the Bonds is not included in Colorado taxable income or Colorado alternative minimum taxable income under present Colorado income tax laws as described herein. See, however, "TAX MATTERS" regarding certain other tax considerations. Continuing Disclosure Undertaking The District and the Developer will enter into a continuing disclosure undertaking (the "Disclosure Undertaking") at the time of the closing for the Bonds. The Disclosure Undertaking will be executed for the benefit of the beneficial owners of the Bonds and the District will 4

13 covenant in the Indenture to comply with its terms. The Disclosure Undertaking will provide that so long as the Bonds remain outstanding, the District will annually provide certain financial information and operating data to each nationally recognized municipal securities information repository ("NRMSIR") approved in accordance with Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule"), and will provide notice of certain material events to the Municipal Securities Rulemaking Board, in compliance with the Disclosure Undertaking. The Disclosure Undertaking also provides that, during certain development periods, the Developer will provide certain development information to each NRMSIR. The form of the Disclosure Undertaking is attached hereto as Appendix E. The District has not failed to materially comply with any prior undertaking entered into pursuant to the Rule. Agents and Advisors Brownstein Hyatt & Farber, P.C. has acted as Bond Counsel in connection with issuance of the Bonds. Certain legal matters have been passed upon by Kline Alvarado Veio, P.C., as counsel to the Underwriter, McGeady Sisneros, P.C., as counsel to the District and Sherman & Howard L.L.C., Denver, Colorado, as corporate counsel to the Developer. Kutak Rock LLP, Denver, Colorado, has acted as special counsel to the Developer in connection with the issuance of the Bonds. American National Bank, Denver, Colorado will serve as Trustee for the registered owners of the Bonds. Changes from the Preliminary Offering Memorandum This Offering Memorandum contains terms that represent changes made to the Preliminary Offering Memorandum dated August 11, 2006, relating to the Bonds. These changes reflect modifications to the provisions of the Bonds and related documents described or summarized herein, or include certain information, including without limitation information dependent on the pricing of the Bonds, that was not available at the date of the Preliminary Offering Memorandum. Investors and potential investors in the Bonds should read this Offering Memorandum, including the form of the Indenture included in Appendix A hereto, in its entirety, and should not rely solely on the Preliminary Offering Memorandum. Additional Information This Introduction is only a brief summary of the provisions of the Bonds and the Indenture; a full review of the entire Offering Memorandum should be made by potential investors. A copy of the Indenture is attached as Appendix A hereto. Summary descriptions of the Bonds and the Indenture and other documents are qualified by reference to such documents. This Offering Memorandum speaks only as of its date and the information contained herein is subject to change. The information under "THE DEVELOPER AND THE DEVELOPMENT" has been included herein, and summarized in this Introduction, without independent investigation by the District, and the District makes no representation or warranty concerning the accuracy or completeness of such information. The Developer makes no representation or warranty as to the completeness of information contained herein which has been furnished by any other party to the transactions contemplated hereby. Additional information is available from the following sources: 5

14 Vista Ridge Metropolitan District c/o Special District Management 141 Union Boulevard, Suite 150 Lakewood, Colorado (303) Further information may be obtained from the Underwriter during the offering period of the Bonds from: Prager, Sealy & Co., LLC 9907 Georgetown Pike, Suite 203 Great Falls, Virginia (703) RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS Prospective purchasers of the Bonds should consider carefully, along with other matters referred to herein, the following risks of investment. The ability of the District to meet the debt service requirements of the Bonds is subject to various risks and uncertainties which are discussed throughout this Offering Memorandum. Certain of such investment considerations are set forth below. This section of this Offering Memorandum does not purport to summarize all of the risks. Investors should read this Offering Memorandum in its entirety. The Series 2006B Bonds are offered only to financial institutions and institutional investors in minimum denominations of $500,000, will not receive a credit rating from any source, and are not suitable investments for all investors. Each prospective purchaser is responsible for assessing the merits and risks of an investment in the Series 2006B Bonds and must be able to bear the economic risk of such investment in the Series 2006B Bonds. By purchasing the Series 2006B Bonds, each purchaser represents that it is a financial institution or an institutional investor with sufficient knowledge and experience in financial and business matters, including the purchase and ownership of tax-exempt obligations, to evaluate the merits and risks of an investment in the Series 2006B Bonds. General The sources of payment for debt service on the Bonds when due will be (i) the District's revenues generated by collections of the ad valorem taxes on the taxable property within the District required by the Indenture and the Service Plan, (ii) the District's revenues generated by the collection of the System Development Fees, and (iii) the District's revenues generated by the allocation of the Specific Ownership Taxes to the District. However, the ability of the District to meet the debt service requirements of the Bonds from such sources of payment is subject to various risks and uncertainties. Certain of such investment considerations are set forth below. This section does not purport to be a comprehensive discussion of all of the risks of investing in the Bonds. Investors should read this Offering Memorandum in its entirety. The purchase of the Bonds (or beneficial ownership interests therein) involves certain investment risks, and certain material investment risks are discussed in this Offering Memorandum. Each prospective investor in such Bonds should make an independent evaluation 6

15 of all information presented herein in order to make an informed investment decision. The Bonds should be purchased only by investors who can bear the continuing risk of an investment in such Bonds, and perhaps a loss of all or a portion of such investment. Particular attention should be given to the matters described below, which, among others, could affect the security for, and full and timely payment of, the principal of and interest on the Bonds. Ad Valorem Tax Collections The Indenture requires the Board of the District annually to determine, fix and certify a rate of levy for ad valorem taxes to the Board of County Commissioners of Weld County, Colorado, which when levied on all of the taxable property in the District, in each of the years that the Bonds are Outstanding, will raise ad valorem tax revenues sufficient, together with other legally available funds of the District (other than amounts on deposit in the Surplus Fund established under the Indenture), to pay promptly in full the interest on, principal of and any redemption premium with respect to the Bonds and any other Senior Bonds Outstanding under the Indenture. Pursuant to the Indenture, the maximum mill levy to be imposed by the District is mills (the "Maximum Mill Levy"), as adjusted, by and to the extent of an Assessment Ratio Change (as such term is defined in the Indenture). The District's ability to retire the indebtedness created by the issuance of the Bonds therefore is dependent on continued growth in development within the District and then maintenance of an adequate tax base from which the District can collect sufficient property tax revenues from the mill levy. There is no assurance that the taxable property in the District will ever be valued for tax purposes at a sufficient level so that the tax levy will generate sufficient revenue to pay the debt service requirements of the Bonds as they become due. See Appendix B "FORECAST" herein. Forecasted Surplus Cash Balances and Cash Receipts and Disbursements The District's accountant, Clifton Gunderson LLP, Greenwood Village, Colorado (the "Clifton Gunderson"), has prepared the Forecasted Surplus Cash Balances and Cash Receipts and Disbursements (the "Forecast") included as Appendix B to this Offering Memorandum. In the Forecast, Clifton Gunderson has compiled forecasted cash receipts and disbursements of the District based upon certain assumptions, including, without limitation, assumptions provided by the Developer as to the rate of build-out of the Development and assumptions derived from information provided by Weld County concerning its tax assessment and collection practices. An understanding of the Forecast is essential for evaluating an investment in the Bonds, and it should be read in its entirety. The expectations contained in the Forecast are not guarantees of actual results. See "FORWARD-LOOKING STATEMENTS" herein. Delinquency of Payments Delinquency in the payment of ad valorem property taxes by property owners within the District would impair the District's ability to meet its debt service requirements on the Bonds in a timely manner. Property taxes do not constitute personal obligations of a property owner. While the current year's taxes constitute a lien upon assessed property and the county treasurer of Weld County is required by statute to offer for sale delinquent property to satisfy the District's tax lien for the year in which the taxes are in default, this remedy can be time-consuming. Furthermore, any such tax sale would be only for the amount of taxes due and unpaid for the particular tax 7

16 year in question, and no assurance can be given that such remedial enforcement would produce proceeds that, together with other available funds, would be sufficient to provide for the full or timely payment of the principal of and interest on the Bonds. Furthermore, any such tax lien sale would only be for the amount of taxes due and unpaid for the particular tax year(s) in question. In addition, when a tax lien is to be sold for taxes, there is always the possibility that no bids will be received. If no bids are received on property at a tax sale, the County acquires title to the property, and the property is removed from the tax rolls. In the event property is removed from the tax rolls, the District would need to certify a proportionately higher mill levy on remaining property, but its authority to do so would be constrained by the Elections, the Service Plan and applicable law. Similarly, delinquency in the payment of the System Development Fees by property owners may materially adversely affect the payment of debt service on the Bonds when due. Furthermore, if the District seeks to enforce the payment of the System Development Fees against a property owner, no assurance can be given that such remedial enforcement would produce proceeds that, together with other available funds, would be sufficient to provide for the full or timely payment of the principal of or interest on the Bonds. The obligation of a property owner to pay the System Development Fees does not constitute a personal obligation of the property owner. While the System Development Fees Resolution states that (i) the System Development Fees is a charge imposed for the provision of services and facilities to the subject property, (ii) any unpaid System Development Fees constitutes a perpetual lien against the property upon which it is imposed, as provided in (1)(j), Colorado Revised Statutes, and (iii) such lien is senior in priority to all other liens on the subject property, subject only to a parity lien securing payment of taxes, assessments and other governmental charges, with respect to the same property, realization of moneys on such lien would require a foreclosure against the subject property in the same manner as a mechanic's lien may be foreclosed under Colorado law. Such foreclosure could materially delay payment of debt service on the Bonds, and foreclosure proceeds necessary for such payment may vary materially based on the market value of the subject property. Additionally, the District's receipts of Property Taxes, Specific Ownership Taxes and the System Development Fees anticipated to be available to it from payments by property owners will be dependent upon the volume and timing of sales of property and homes in the District by the Developer or such other home builders, as to which no assurance or guaranty can be given. Assessed Value and Market Value Risk and Projections The assessed value of taxable property in the District for ad valorem property tax purposes is determined according to a procedure described under "FINANCIAL INFORMATION Ad Valorem Property Taxes." The security for the payment of the Bonds is primarily reliant on ad valorem taxes, and such security is dependent on the growth of assessed valuation of property within the District so as to create a tax base sufficient to permit the District to levy ad valorem taxes on property sufficient in amount and at times to provide for the payment of debt service on the Bonds when due. Assessed valuations may be affected by a number of factors beyond the control of the District. 8

17 No assurances can be given concerning the assessed valuation of properties within the District, as assessed valuation may be affected by various factors beyond the District's control. Under certain circumstances, for example, Colorado statutes permit subdivision developers who own vacant residential property to apply to the County Assessor for discounted valuation of such property for ad valorem property tax purposes, which would typically cause a substantial reduction in assessed value. No assurance can be given that subsequent owners of property in the District will not seek to do so. The market values of finished lots and homes may be reduced if market prices decline due to economic factors, among others. Further, lots or homes could be sold to organizations exempt from property taxation. Should the actions of property owners result in lower assessed valuations of property in the District or in an exemption from property taxation, the security for the Bonds would be diminished, increasing the risk of default. In addition, no assurances can be given that market values of homes or lots in the District would be sufficient to generate sufficient foreclosure proceeds for the payment of the principal of and interest on the Bonds if foreclosure remedies are pursued following non-payment of the Property Taxes, Specific Ownership Taxes and the System Development Fees necessary for the payment of debt service on the Bonds. Similarly, regardless of the level at which property is assessed for tax purposes, the District's ability to enforce and collect the Property Taxes, Specific Ownership Taxes and the System Development Fees is dependent upon the property in the District having sufficient fair market value to support the taxes which are imposed. Limited Secondary Market and No Rating for the Series 2006B Bonds While Prager, Sealy & Co, LLC, as the Underwriter for the Series 2006B Bonds, expects, insofar as possible, to maintain a secondary market in the Series 2006B Bonds, no assurance can be given concerning the future existence of a secondary market for the sale of Series 2006B Bonds, and prospective purchasers of the Series 2006B Bonds should therefore be prepared, if necessary, to hold their Series 2006B Bonds to maturity or prior redemption, if any. The District has not submitted an application to any securities rating agency with respect to the Series 2006B Bonds. The Series 2006B Bonds are offered only to financial institutions and institutional investors in initial minimum denominations of $500,000. Because the Series 2006B Bonds are not rated and are issued in large denominations, the secondary market for the Series 2006B Bonds, if any, will be limited. Legal Constraints on District Operations The District is created by statute and exercises only limited powers. Various State laws and constitutional provisions govern the assessment and collection of general ad valorem property taxes, limit revenues and spending of the State and local governments and limit rates, fees and charges imposed by such entities, including the District. There can be no assurance that the application of such provisions will not have a material adverse effect on the affairs of the District, or that there will not be any change in, interpretation of, or addition to such laws and provisions which would have a material effect, directly or indirectly, on the affairs of the District or the Developer. 9

18 Limitations on Remedies No Acceleration. There is no provision for acceleration of maturity of the principal of the Bonds if the District defaults on its obligation to pay principal of or interest on the Bonds when due or upon the occurrence of any other Event of Default under the Indenture. Under the Indenture, remedies while an Event of Default exists include the following: (i) subject to certain conditions, a mandamus action, or other suit, action or proceeding at law or in equity, to enforce all rights of the Owners of the Bonds, and to seek specific enforcement of duties and agreements of the District, including the enforcement of liens or foreclosures on any property subject to such liens; (ii) a suit upon the Bonds; (iii) an action or suit in equity to require the District to account as if it were the trustee of an express trust for the owners of the applicable bonds; or (iv) an action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Owners of the Bonds. Remedies available to the Trustee or the Owners of the Bonds may have to be enforced from year to year. Bankruptcy Limitations. The enforceability of the rights and remedies of the Owners of the Bonds and the obligations incurred by the District or the Developer in connection with the agreements to which it is a party in connection with the Bonds may be subject to the federal bankruptcy code, and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings (if available) or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the Bonds and/or the Trustee to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights. Potential Conflicts of Interest All of the members of the Board are consultants or business associates of the Developer or its shareholders. The issuance of the Bonds and the application of the proceeds therefrom, as well as other activities of the District, may involve conflicts of interest. By statute, a director must disqualify himself or herself from voting on any issue in which he or she has a conflict of interest unless he or she has disclosed such conflict of interest in a certificate filed with the Secretary of State and the Board at least 72 hours in advance of any meeting in which such conflict may arise. However, compliance with such statute does not provide absolute certainty that contracts between the District and persons related to its Directors, such as the Developer, will not be subject to defenses or challenge on the basis of alleged conflicts. It is expected that the interested members of the Board will comply with the statute by making advance disclosure of their conflicts, and that they will not disqualify themselves from voting. 10

19 Forward-Looking Statements This Offering Memorandum, and particularly the information contained under this caption "RISK FACTORS AND INVESTMENT CONSIDERATIONS," and in APPENDICES D and G, contains statements relating to future results that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of When used in this Offering Memorandum, the words "estimate," "forecast," "intend," "expect" and similar expressions identify forward-looking statements. Such statements are based upon multiple assumptions more particularly described in the Forecast, attached hereto as Appendix B. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. For a discussion of certain of such risks and possible variations in results, see "RISK FACTORS AND INVESTMENT CONSIDERATIONS" herein. SOURCES AND USES OF PROCEEDS The proceeds from the sale of the Bonds are expected to be applied in the following manner: Sources of Proceeds Amount Proceeds of the Series 2006A Bonds (1) $35,798, Proceeds of the Series 2006B Bonds... 5,000, Total... $40,798, Uses of the Proceeds Deposit to Escrow Account for Payment of Series 2001 Bonds... $28,537, Refund Series 2004 Bonds... 7,163, Refund Portion of 2006 Subordinate Bonds... 86, Deposit to Facility Fund... 1,500, Deposit to Non-Property Tax Account... 1,000, Deposit to Reserve Fund , Costs of Issuance (2)... 2,010, Total... $40,798, (1) Includes net premium of $798, (2) Includes Underwriter's discount and 2006A Bond Insurance Policy premium. Source: The Underwriter. PLAN OF FINANCE The District has previously issued its (i) Limited Tax General Obligation Bonds, Series 2001, originally issued in the aggregate principal amount of $26,920,000 and now outstanding in the aggregate principal amount of $26,285,000 (the "Series 2001 Bonds"); (ii) Limited Tax 11