*FINANCE COMMITTEE MEETING AGENDA*

Transcription

1 *FINANCE COMMITTEE MEETING AGENDA* WESTERN MUNICIPAL WATER DISTRICT Meridian Parkway, Riverside, CA Committee Members Director Brenda Dennstedt Director S.R. Al Lopez December 14, :30 a.m. to 11:00 a.m. This Board Committee meeting is also noticed as a special meeting of the Board because a quorum of the Board may be present and/or non-committee members may be present and wish to participate. If a quorum of the Board is present, and/or non-committee members are present and wish to participate, the meeting will continue as a Committee Of The Whole. Directors who are not members of the Board Committee may attend and participate in the meeting as a Committee Of The Whole. Actions taken pursuant to the agenda, whether taken by the Board Committee or the Committee Of The Whole, shall be deemed to be recommendations for Board consideration and possible action at a subsequent meeting of the Board ORAL COMMUNICATIONS Any person may address the Committee upon any subject within Western's jurisdiction, which is not on the agenda, at this time. However, any nonagenda matter that requires action will be referred to staff for a report and action at a subsequent Board meeting. Any person may also address the Committee on any agenda matter at the time that matter is discussed, prior to Board Action. 2. CONSENT CALENDAR: Consent Calendar items are expected to be routine and non-controversial and are to be acted upon by the Committee at one time without discussion. If any Committee member, staff member or interested person requests that an item be removed from the Consent Calendar, it will be moved to the first item on the Action Agenda. A. Approve Minutes from October 19, 2015 Finance Committee Meeting 3. DISCUSSION/INFORMATIONAL ITEMS: A. Consider Approval of a Joint Community Facilities Agreement with Murrieta Valley Unified School District and Cardinal Investment Properties Murrieta 18, LP B. Consider a Joint Community Facilities Agreement with Riverside Unified School District and Lennar Homes of California, Inc. C. Report Requirement for SB 1760 Water and Sewer Capacity Charges D. Consider Authorizing the Use of Water Supply Penalty Revenue previously earned to offset Purchased Retail Water Costs in Calendar Year 2016 E. Presentation of Annual Reports on the Community Facilities District (CFD) No. 88-1, Improvement Area No. 2 of CFD No and CFD No to Comply with the Local Agency Special Tax Bond and Accountability Act.

2 4. UPCOMING BOARD ITEMS/RECOMMENDATIONS TO BE MADE TO THE FULL BOARD: A. Consider approval to allocate revenue from the Water Reliability Charge to fund certain Capital Projects 5. REPORTS The following agenda items are reports. They are placed on the Agenda to provide information to the Committee and the public. There is no action called for in these items. A. CFO Report B Revenue Bond Refunding 2. Distribution of the Comprehensive Annual Finance Report (CAFR) for the Fiscal Year Ended June 30, Headquarters Building Loan Refinance & Meter Replacement Program Funding 4. Investment Manager Selection Process Timeline 5. El Nino Preparation B. GM Report 6. ADJOURNMENT Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities, as required by Section 202 of the Americans with Disabilities Act of Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to Jean Perry at (951) at least 48 hours before the meeting, if possible. Pursuant to Government Code Section , any writing that (a) is a public record; (2) relates to an agenda item for an open session of a regular meeting of the Finance Committee; (3) is distributed less than 72 hours prior to that meeting, will be made available for public inspection at the time the writing is distributed to the Committee. Any such writing will be available for public Inspection at the District offices located at Meridian Parkway, Riverside, CA In addition, such writing may also be posted on the District's website.

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4 WESTERN MUNICIPAL WATER DISTRICT Meridian Parkway, Riverside, CA FINANCE COMMITTEE Committee Members Director Brenda Dennstedt Vice President S.R. Al Lopez MINUTES 9:30 a.m. October 19, 2015 COMMITTEE MEMBERS PRESENT: Director Brenda Dennstedt, Vice President S.R. Al Lopez STAFF/OTHERS PRESENT: John Rossi (General Manager), Craig Miller (Deputy General Manager), Rod LeMond (Assistant GM/Chief Financial Officer), Greg Duecker (Director of Administration), Veronica Zheng (Accounting Manager), Stew Dillingham (Internal Auditor), Tresa Huffman (Customer Service Supervisor), Janell Gilbert (Financial Analyst II), Anna Briones (Sr. Accountant), Lisa Dougherty (Sr. Accountant), Robert Perez (Box Springs Mutual Water Company) Director Lopez called Western Municipal Water District s Finance Committee to order at 9:37 a.m. 1. ORAL COMMUNICATIONS: Robert Perez of Box Springs Mutual Water Company was present as a visitor. Mr. Perez commented that visiting Western s various meetings has provided him with valuable information. 2. CONSENT CALENDAR: A. Minutes from September 14, 2015 Finance Committee Meeting were approved. 3. DISCUSSION/INFORMATIONAL ITEMS: A. Financial System Upgrade (Lawson Version 10) Rod LeMond introduced Greg Duecker. Greg commented that Lawson Version 9.x has been a good product; however, the version is going out of support soon and the platform on which it runs is no longer supported. This item will be pulled from the next Board meeting as noted on the upcoming Board agenda because the cost of the project has been reduced from $223,247 to $210,000. Stew Dillingham commented that the financial software is Lawson and provides for numerous modules. B. Reserve Policy and Reserves Update (Presentation) Rod LeMond introduced Kevin Mascaro, who presented a powerpoint on the District and Reserve Policy. Kevin noted that the Cash Reserve Policy was adopted by the full Board in March of The presentation included a brief background, benefits of a reserve policy, categories of reserves, policy for each reserve type, target levels, and reserve 1 P a g e

5 balances. Kevin noted that the numbers in the powerpoint were different from the agenda packet due to updated numbers from audit workpapers. 4. UPCOMING BOARD ITEMS/RECOMMENDATIONS TO BE MADE TO THE FULL BOARD: A. Write-Off of Accounts Receivable Deemed Uncollectible Rod LeMond presented this topic and commented that the District has a very good write off history. Tresa Huffman commented that this customer, in particular, has two bills and a final bill. The property has been liened. The customer has a well and they are not getting water from Western. The meter is read every month, so staff does check this on a monthly basis. Kevin Mascaro commented that out of approximately $40 million in revenue in water, we only write off, on average, $50,000 a year. The committee had no questions and it was recommended that the item be moved forward to the full Board. B. Authorize the Transfer of Unclaimed Monies to the District s General Fund and to Community Facilities District (CFD) No s Special Tax Fund 5. REPORTS: Rod LeMond introduced Lisa Dougherty who commented regarding the transfer of unclaimed monies. The District handles transfer of unclaimed monies on an annual basis. Staff does extensive followup to attempt to return the funds to the appropriate individuals and the individual accounts are also advertised in the newspaper. Rod commented that the accounts listed reflect 2011 outstanding checks. The committee had no questions and it was recommended that the item be moved forward to the full Board. A. CFO Report B Revenue Bond Restructuring Rod LeMond commented that this is a standard agenda item. In November, staff will be pursuing rating agencies. Interest rates have not been rising. 2. Santa Rosa Joint Powers Authority Formation Update Rod LeMond reported that staff spoke with attorneys via phone last Thursday regarding PERS issues. Option A is to treat the JPA the same as WRCRWA. Option B is to grandfather in the JPA after application. Attorney Isabel Safie was present during the call and indicated that asking for an advanced opinion is not the best option. Isabel suggested moving forward with Option A and seeking an opinion from the IRS that Rancho is the common law employer. This item is on the next full Board agenda, but will be pulled pending further information. 3. Budget vs. Actual FY 2015 Financial Highlights Rod LeMond commented regarding the budget versus actuals for Fiscal Year The District ended the year with a budget surplus of over $600,000. The actuals also show a positive variance of $6,000,000. Staff will present a powerpoint at the next Board meeting. Anna Briones commented that the audit will be presented to the Committee members in December. 2 P a g e

6 6. ADJOURNMENT: There being no further business for review, Director Lopez adjourned the meeting at 11:11 a.m. 3 P a g e

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8 December 14, 2015 TO THE FINANCE COMMITTEE: Director S.R. Al Lopez Director Brenda Dennstedt FROM: Rod LeMond, Assistant General Manager/CFO CONSIDER APPROVAL OF A JOINT COMMUNITY FACILITIES AGREEMENT WITH MURRIETA VALLEY UNIFIED SCHOOL DISTRICT AND CARDINAL INVESTMENT PROPERTIES MURRIETA 18, LP RECOMMENDATION: The following item is being presented to the Board of Directors for approval at the December 16, 2015 regular Board Meeting: 1. Authorize the General Manager to approve and execute the Joint Community Facilities Agreement Between Murrieta Valley Unified School District, Western Municipal Water District and Cardinal Investment Properties Murrieta 18, LP. BUDGET IMPACT: Development of this project will generate $570,689 in added facility charges to be paid to Western Municipal Water District (Western). The fees are part of the cost of the development whether or not Western participates in the Joint Community Facilities Agreement. BUSINESS PLAN REFERENCE: No Business Plan reference; this action is part of Western s routine business activities. EXECUTIVE SUMMARY: Western has been asked by representatives of Cardinal Investment Properties Murrieta 18, LP, a property owner proposing to build 85 homes in the City of Murrieta, to approve and participate with the Murrieta Valley Unified School District (MVUSD) in the agreement entitled Joint Community Facilities Agreement Between Murrieta Valley Unified School District, Western Municipal Water District and Cardinal

9 Finance Committee December 14, 2015 Page 2 of 3 Investment Properties Murrieta 18, LP. This Joint Facilities Community Agreement (JFCA) proposes to provide public financing for MVUSD and Western s costs associated with the development of 85 homes. MVUSD, at the request of Cardinal Investment Properties Murrieta 18, LP, is the acting lead agency in the formation of the Murrieta Valley Unified School District Community Facilities District (CFD) No , a planned $1,820,000 bond issuance. DETAIL: Cardinal Investment Properties Murrieta 18, LP, proposes constructing 85 homes in the City of Murrieta. The MVUSD, at the request of Cardinal Investment Properties Murrieta 18, LP, is the acting lead agency in the formation of CFD No The total bond issuance is proposed at $1,820,000, with $1,523,938 shared between the MVUSD and Western (see attachment 3). Of the $1,523,938, Western would receive $277,439 in water connection fees and $293,250 for Western improvements to be constructed by the developer. The difference between the total bond issuance of $1,820,000 and actual proceeds available for payment of MVUSD and Western fees, of $1,523,938, is $296,062 and is comprised of the following: Reserve Fund $ 108,459 Underwriter Discount $ 36,400 Cost of Issuance $ 151,203 Total $ 296,062 The bond reserve fund amount is maintained by a trustee to 1) provide sufficient funds for debt service payments in the event future homeowner(s) fail to make their property tax payments, and 2) provide the final debt service payment at the end of the 30-year bond term. The underwriter s discount plus the cost of issuance equals about 10 percent of the proposed bond issuance principal amount. If the Board of Directors approve the JCFA and participate in the proposed CFD No , Western would collect the out-of-pocket water connection fees directly from the developer, should the developer be ready to obtain water service prior to the proceeds of the bonds being available. Western has participated in JCFAs and CFDs in the past. In this instance, there is a pre-existing assessment on the land for bonds sold by the former Murrieta County

10 Finance Committee December 14, 2015 Page 3 of 3 Water District (MCWD) to fund improvements pursuant to MCWD CFD Should the developer proceed with the project, Western s fees would be paid whether or not Western participates in the JCFA. The existing total tax rate on the property is 1.37%, and would increase to 1.60% with the proposed MVUSD CFD. ROD LeMOND Assistant General Manager/CFO RL:DK:TP:jg Attachments: 1. Map 2. Draft Joint Community Facilities Agreement 3. Draft CFD Tax Rate Analysis

11 Attachment 1 Murrieta 18, LP MVUSD CFD Murrieta 18, LP Selected Parcels Locator Map ,000 Feet 1 inch = 1,000 feet Date: 10/13/2015 Document Path: G:\Projects\Board\BoardMap_ID11147\MXD\Murrieta18LP.mxd The land base and facility information on this map is for display purposes only and should not be relied upon without independent verification as to its accuracy. Western Municipal Water District will not be held responsible for any claims, losses or damages resulting from the use of this map.

12 Attachment 2 JOINT COMMUNITY FACILITIES AGREEMENT THIS JOINT COMMUNITY FACILITIES AGREEMENT (the Agreement ) is entered into effective as of the day of, 2015, by and among MURRIETA VALLEY UNIFIED SCHOOL DISTRICT, a California School District ( District ), the WESTERN MUNICIPAL WATER DISTRICT, a public agency organized and existing pursuant to Division 20 of the California Water Code ( WMWD ), and CARDINAL INVESTMENT PROPERTIES - MURRIETA 18, LP, a California limited partnership ("Property Owner"). This Agreement relates to the proposed formation by District of a community facilities district to be known as Murrieta Valley Unified School District Community Facilities District No (the CFD ) for the purpose of financing certain facilities to be owned, operated or maintained by District or WMWD from proceeds of bonds issued by the proposed CFD. Capitalized terms used in the Agreement that are not defined in this preamble and in the Recitals shall have the meanings given such terms in Section 2 of this Agreement. R E C I T A L S: A. The property depicted in Exhibit A hereto, which is located in the County of Riverside, State of California, is proposed to constitute the land within the boundaries of the CFD (the Property ). The Property is described in Exhibit B hereto. B. Property Owner intends to develop the Property into 85 single family detached residential units ( Project ). C. The Property Owner petitioned the District to form the CFD for the purpose of financing, among other things, the acquisition and/or construction of various public facilities to be owned and operated by WMWD as described in Exhibit "C" hereto, which facilities will benefit the Project in whole or in part, including (i) certain public facilities to be constructed by or on behalf of Property Owner and ultimately owned and operated by WMWD (the "Acquisition Facilities") and (ii) certain public water facilities to be constructed and owned and operated by WMWD (the WMWD Fee Facilities ) in satisfaction of the payment of WMWD Fees (defined herein). Upon the construction of the Acquisition Facilities by or on behalf of Property Owner and the inspection and acceptance thereof by WMWD as described herein, the Acquisition Facilities shall become part of the WMWD system. The Acquisition Facilities and WMWD Fee Facilities are collectively referred to herein as the "WMWD Facilities". D. WMWD and Property Owner agree that any Acquisition Facilities to be constructed by Property Owner shall be eligible for acquisition by WMWD and the costs thereof shall be eligible for reimbursement from the CFD Proceeds pursuant to this Agreement. E. In conjunction with the issuance of building permits for the construction of homes on the Property and/or receipt of water meters for such homes, the Property Owner, or its successors or assigns, may elect to advance WMWD Fee Facilities costs in satisfaction of -1-

13 payment of WMWD Fees (the Advances ) before CFD Proceeds are available in sufficient amounts to pay for WMWD Fee Facilities. In such case, the Property Owner (i) shall be entitled to reimbursement of such Advances and (ii) shall be deemed to have satisfied WMWD Fees which would otherwise be due to WMWD equal to the amount of CFD Proceeds disbursed to WMWD for WMWD Fee Facilities, all as further described herein. F. The District will have sole discretion and responsibility for the formation and administration of the CFD. G. The District is authorized by Section of the Act to assist in the financing of the acquisition and/or construction of the WMWD Facilities. This Agreement constitutes a joint community facilities agreement, within the meaning of Section of the Act, by and among WMWD, the District and the Property Owner, pursuant to which the CFD, when and if formed, will be authorized to finance the acquisition and/or construction of all or a portion of the WMWD Facilities. As authorized by Section of the Act, responsibility for constructing, providing for and operating the WMWD Facilities is delegated to WMWD. H. The parties hereto find and determine that the residents residing within the boundaries of WMWD, the District and the CFD will be benefited by the construction and/or acquisition of the WMWD Facilities and that this Agreement is beneficial to the interests of such residents. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto agree as follows: 1. Recitals. Each of the above recitals is incorporated herein and is true and correct. 2. Definitions. Unless the context clearly otherwise requires, the terms defined in this Section shall, for all purposes of this Agreement, have the meanings herein specified. a. Act means the Mello-Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code. b. "Acquisition Facility" or "Acquisition Facilities" means those water facilities on Exhibit "C" hereto, which are to be constructed by the Property Owner, acquired by WMWD and paid for with CFD Proceeds. c. "Acquisition Price" means the amount to be paid out of CFD Proceeds for an Acquisition Facility. -2-

14 d. "Actual Costs" with respect to an Acquisition Facility includes: (i) the actual hard construction costs including labor, materials and equipment costs; (ii) the costs incurred in design, engineering and preparation of plans and specifications; (iii) the fees paid to consultants and government agencies in connection with and for obtaining permits, licenses or other required governmental approvals; (iv) construction management fee of 5% of the costs described in clause (i) above; (v) professional costs such as engineering, legal, accounting, inspection, construction staking, materials testing and similar professional services; (vi) costs of payment, performance of maintenance bonds, and insurance costs (including the costs of any title insurance); and (vii) the value of any real property or interests therein that (1) are required for the construction of the Acquisition Facility such as temporary construction easements, haul roads, etc. and (2) are required to be conveyed with such Acquisition Facility in an amount equal to the fair market value of such real property or interests therein. e. Advances means an amount paid by Property Owner for WMWD Fee Facilities in satisfaction of payment of WMWD Fees prior to the availability of sufficient CFD Proceeds. f. "Agreed-Upon Allocation" shall have the meaning given such term in Section 7(d) herein. g. "Agreement" means this Joint Community Facilities Agreement, dated, 2015, by and among WMWD, the District, and the Property Owner. h. Bond Proceeds shall mean those net funds generated by the sale of the Bonds and investment earnings thereon. i. Bond Resolution means that Resolution, Resolution Supplement, Fiscal Agent Agreement, Indenture of Trust or other equivalent document(s) providing for the issuance of the Bonds. j. Bonds shall mean those bonds, or other securities, issued by, or on behalf of the CFD in one or more series, as authorized by the qualified electors within the CFD. k. "CFD Proceeds" shall mean one or more of the following sources of funds: (i) Bond Proceeds; (ii) special taxes levied in the CFD for the direct payment of WMWD Facilities; and (iii) any prepayments of special taxes in the CFD that are to be applied to authorized facilities of the CFD, including WMWD Facilities, pursuant to the Rate and Method. l. "Contractors" shall have the meaning given such term in Section 7(a)(ii) herein. m. Disbursement Request means a request for payment relating to WMWD Facilities in the form attached hereto as Exhibit D. n. "District" means Murrieta Valley Unified School District, a California school district. -3-

15 o. Other Facilities Accounts of the Improvement Fund means the funds, accounts or sub-accounts of the CFD (regardless of their designation within the Bond Resolution or otherwise) into which the CFD Proceeds may be deposited in accordance with the Bond Resolution to finance WMWD Facilities. Agreement. p. Party or Parties shall mean anyone or all of the parties to this q. "Project" means the development by the Property Owner of approximately 343 single-family homes on the Property. r. "Property" means the property owned by the Property Owner that is contemplated to be in the CFD, as depicted in Exhibit "A" attached hereto and described in Exhibit "B" attached hereto. s. "Property Owner" means Cardinal Investment Properties - Murrieta 18, LP, and its successors and assigns. t. "WMWD Facilities Allocation" shall have the meaning given such term in Section 7(d) herein. u. Rate and Method means the Rate and Method of Apportionment of the Special Tax authorizing the levy and collection of Special Taxes within pursuant to proceedings undertaken for the formation of the CFD pursuant to the Act. v. Special Taxes means the special taxes authorized to be levied and collected within the CFD pursuant to the Rate and Method. w. State means the State of California. x. Substantially Complete" or "Substantial Completion" with respect to an Acquisition Facility means that such Acquisition Facility is substantially complete in accordance with its Plans and Specifications and is available for use by the public for its intended purpose, notwithstanding any final "punch list" items still required to be completed, unless such items are required for the safe operation of such Acquisition Facility, and shall be based upon approval of WMWD's inspectors, which shall not be unreasonably withheld. y. "WMWD" means the Western Municipal Water District, a public agency organized and existing pursuant to Division 20 of the California Water Code. Fee Facilities. z. "WMWD Facilities" means the Acquisition Facilities and the WMWD aa. "WMWD Facilities Allocation" shall have the meaning given such term in Section 7(d) herein. -4-

16 bb. WMWD Fee Facilities means those water facilities listed on Exhibit C hereto, which are necessary for the provision of water service to the Property and paid for with CFD Proceeds in satisfaction of the payment of WMWD Fees. cc. WMWD Fees means water added facility charge, drop-in meter fees, MWD water annexation fees and all components thereof imposed by WMWD upon the Property to finance WMWD Fee Facilities. designee. dd. WMWD Representative means the WMWD Engineer or his ee. "WMWD Rules and Regulations" means the rules and regulations of WMWD governing the construction of Acquisition Facilities. 3. Proposed Formation of the CFD. District will undertake to analyze the appropriateness of forming the CFD to finance the WMWD Facilities and other facilities. District will retain, at the expense of the Property Owner, the necessary consultants to analyze the proposed formation of the CFD. 4. Use of CFD Proceeds. The District and the Property Owner shall, from time to time as CFD Proceeds become available, determine the amount of CFD Proceeds to be deposited in the Other Facilities Accounts of the Improvement Fund and each subaccount thereof. 5. Disbursements for WMWD Fee Facilities. a. Upon the funding of the Other Facilities Accounts of the Improvement Fund, the District shall notify WMWD of the amount of CFD Proceeds to be reserved to fund WMWD Fee Facilities and WMWD may execute and submit a Disbursement Request for payment to the District requesting disbursement of such amount from the Other Facilities Accounts of the Improvement Fund to the extent such funds are available in the Other Facilities Accounts of the Improvement Fund. Upon WMWD's receipt of funds pursuant to such Disbursement Request, Property Owner shall receive reimbursement of the Advances from WMWD to the extent of the amount of CFD Proceeds received for WMWD Fee Facilities. Upon such notice and WMWD's receipt of such disbursement relating to WMWD Fee Facilities, Property Owner shall be deemed to have satisfied the applicable WMWD Fees with respect to the number of dwelling units or lots for which the WMWD Fees would otherwise have been required in an amount equal to such disbursement. b. From time to time following the funding of the Other Facilities Accounts of the Improvement Fund from additional CFD Proceeds, the Property Owner may notify WMWD in writing and WMWD may request a further disbursement from the Other Facilities Accounts of the Improvement Fund to fund WMWD Fee Facilities by executing and submitting an executed Disbursement Request to the CFD. Upon receipt of such Disbursement Request completed in accordance with the terms of this Agreement, the CFD shall wire transfer or otherwise pay to WMWD such requested funds to the extent that CFD Proceeds are available in the Other Facilities Accounts of the Improvement Fund for such purpose. Upon such notice and WMWD's receipt of such disbursement relating to WMWD Fee Facilities, Property Owner -5-

17 shall be deemed to have satisfied the applicable WMWD Fees with respect to the number of dwelling units or lots for which the WMWD Fees would otherwise have been required in an amount equal to such disbursement. c. WMWD agrees that prior to submitting a Disbursement Request requesting payment from the CFD it shall review and approve all costs included in its request and will have already paid or incurred such costs of WMWD Fee Facilities from its own funds subsequent to the date of this Agreement, or will disburse such amounts to pay the costs of WMWD Fee Facilities following receipt of funds from the CFD. In the event that WMWD does not disburse any CFD Proceeds received by it to third parties within five banking days of receipt, it will trace and report to the CFD all earnings, if any, earned by WMWD, from the date of receipt of such CFD Proceeds by WMWD to the date of expenditure by WMWD for capital costs of the WMWD Fee Facilities. Such report shall be delivered at least semiannually until all CFD Proceeds are expended by WMWD. WMWD agrees that in processing the above disbursements it will comply with all legal requirements for the expenditure of CFD Proceeds under the Internal Revenue Code of 1986 and any amendments thereto. d. WMWD agrees to maintain adequate internal controls over its payment function and to maintain accounting records in accordance with generally accepted accounting procedures. WMWD will, upon request, provide District and/or Property Owner with access to WMWD's records related to the WMWD Fee Facilities and will provide to District its annual financial report certified by an independent certified public accountant for purposes of assisting District in calculating the arbitrage rebate obligation of the CFD, if any. e. District or the CFD agrees to maintain full and accurate records of all amounts, and investment earnings, if any, expended from the Other Facilities Accounts of the Improvement Fund. District or the CFD will, upon request, provide WMWD and/or Property Owner with access to District's or the CFD's records related to the Other Facilities Accounts of the Improvement Fund. f. Nothing herein shall supersede the obligation of an owner of the Property to make an Advance or pay WMWD Fees to WMWD when due. The purpose of this Agreement is to provide a mechanism by which the CFD may issue the Bonds to provide a source of funds to finance WMWD Fee Facilities in satisfaction of the payment of WMWD Fees. In the event that CFD Proceeds, including investment earnings thereon, are not available or sufficient to satisfy the obligation, then the Property Owner shall remain obligated to make an Advance or pay WMWD Fees to WMWD as a condition of receiving water service to the Property. 6. Ownership of WMWD Fee Facilities. At all times, the WMWD Fee Facilities shall be and remain the property of WMWD. 7. Acquisition Facilities. The Parties acknowledge that WMWD may require the Property Owner, pursuant to the WMWD Rules and Regulations, to design, construct and dedicate to WMWD the Acquisition Facilities as a condition to providing water service to the Property. The following provisions of this Section 7 shall apply solely with respect to those -6-

18 Acquisition Facilities to be constructed by Property Owner and acquired by WMWD with CFD Proceeds. a. Construction of Acquisition Facilities. i) The Property Owner will complete the Plans and Specifications for such Acquisition Facilities. The Plans and Specifications shall include WMWD's standard specifications and shall be subject to WMWD approval, which shall not be unreasonably withheld. WMWD agrees to process any Plans and Specifications for approval with reasonable diligence and in a timely manner. The Property Owner may proceed with the construction of any such Acquisition Facilities in accordance with the provisions of Section 7(b) hereof. ii) The cost of all surveying, compaction testing and report costs associated with such Acquisition Facilities furnished and constructed by any contractors or sub-contractors (collectively, "Contractors") shall be included among the Actual Costs which are eligible to be paid from the Other Facilities Accounts of the Improvement Fund iii) WMWD shall not be responsible for conducting any environmental, archaeological, biological, or cultural studies or any mitigation requirements related to the Acquisition Facilities to be constructed by Property Owner that may be requested by appropriate Federal, State, and/or local agencies. Any such work shall be paid for and such work shall be conducted by, or on behalf of Property Owner and the Actual Costs of such work shall be eligible to be paid from the Other Facilities Accounts of the Improvement Fund b. Public Works Requirements. In order to insure that the Acquisition Facilities to be constructed by the Property Owner and acquired with CFD Proceeds will be constructed as if they had been constructed under the direction and supervision, or under the authority of, WMWD, so that they may be acquired by WMWD pursuant to Government Code Section , the Property Owner shall comply with all of the following requirements i) The Property Owner shall solicit a minimum of three (3) bids from firms reasonably determined to be qualified to construct the Acquisition Facilities in conformance with the Plans and Specifications. ii) The contract or contracts for the construction of such Acquisition Facilities shall be awarded to the responsible bidder(s) submitting the lowest responsive bid(s) for the construction of such Acquisition Facilities. iii) The Property Owner shall require, and the specifications and bid and contract documents shall require all such Contractors to pay prevailing wages and to otherwise comply with applicable provisions of the Labor Code, Government Code and Public Contract Code relating to public works projects to the extent expressly applicable to a nongovernmental entity constructing infrastructure to be acquired by a public entity. iv) Said Contractors shall be required to furnish labor and material payment bonds and contract performance bonds in an amount equal to 100 percent of the contract price naming the Property Owner and WMWD as obligees and issued by insurance or surety companies reasonably approved by WMWD. All such bonds shall be in a form approved by the -7-

19 WMWD Representative. Rather than requiring its Contractors to provide such bonds, the Property Owner may elect to provide the same for the benefit of its Contractors. v) All such Contractors shall be required to provide proof of insurance coverage throughout the term of the construction of such Acquisition Facilities which they will construct in conformance with the approved Plans and Specifications. vi) The Property Owner and all such Contractors shall comply with such other requirements relating to the construction of such Acquisition Facilities which WMWD may impose by written notification delivered to the Property Owner and each such Contractor at any time either prior to the receipt of bids by the Property Owner for the construction of such Acquisition Facilities or, to the extent required as a result of changes in applicable laws, during the progress of construction thereof. In accordance with this Section 7(b), the Property Owner shall be deemed the awarding body and shall be solely responsible for compliance and enforcement of the provisions of the Labor Code, Government Code, and Public Contract Code to the extent expressly applicable to a non-governmental entity constructing infrastructure to be acquired by a public entity. c. Inspection; Completion of Construction. i) WMWD shall have primary responsibility for providing inspection of the construction of the Acquisition Facilities constructed by the Property Owner to insure that the construction is accomplished in accordance with the Plans and Specifications. WMWD's personnel shall have access to the site of the work at all reasonable times for the purpose of accomplishing such inspection. Upon Substantial Completion of the construction of such Acquisition Facilities by Property Owner, the Property Owner shall notify WMWD in writing that the construction of such Acquisition Facilities has been Substantially Completed. ii) Upon receiving such written notification from the Property Owner. and upon receipt of written notification from its inspectors that construction of any of the Acquisition Facilities by Property Owner has been Substantially Completed, WMWD shall within 15 days notify the Property Owner in writing that the construction of such Acquisition Facilities has been satisfactorily completed. Upon receiving such notification, the Property Owner shall forthwith file with the County Recorder of the County of Riverside a Notice of Completion pursuant to the provisions of Section 3093 of the Civil Code. The Property Owner shall furnish to WMWD a duplicate copy of each such Notice of Completion showing thereon the date of filing with the County Recorder. Any actual costs reasonably incurred by WMWD in inspecting and approving the construction of any Acquisition Facilities by Property Owner not previously paid by the Property Owner shall be an Actual Cost eligible to be reimbursed from the Other Facilities Accounts of the Improvement Fund or paid directly by Property Owner. d. Allocation of Costs. If Property Owner incurs costs that (1) apply to more than one Acquisition Facility (e.g., soft costs) or (2) apply to both Acquisition Facilities and improvements other than the Acquisition Facilities (e.g., grading), Property Owner shall allocate, or cause the contractor to reasonably allocate, such costs between the Acquisition Facilities (in the case of clause (1)) or between the Acquisition Facilities and the improvements other than the Acquisition Facilities (in the case of clause (2)) (the WMWD Facilities -8-

20 Allocation ). The WMWD Facilities Allocation shall be presumed to be reasonable and shall be accepted for all purposes of this Agreement unless WMWD notifies Property Owner of its good-faith reasonable disapproval of the allocation within five (5) days of submittal of the payment request. If WMWD has properly disapproved the WMWD Facilities Allocation, then WMWD and Property Owner shall promptly allocate such costs, on a reasonable basis, between the Acquisition Facilities (in the case of clause (1)) or between the Acquisition Facilities and the improvements other than the Acquisition Facilities (in the case of clause (2)) (the Agreed-Upon Allocation ). Based on the WMWD Facilities Allocation or the Agreed- Upon Allocation, as applicable, WMWD shall include the costs allocated to a specific Acquisition Facility as part of the Actual Costs of such Acquisition Facility when such Acquisition Facility is subject to a payment request. e. Liens. i) Upon the expiration of the time for the recording of claim of liens as prescribed by Sections 3115 and 3116 of the Civil Code, the Property Owner shall provide to WMWD such evidence or proof as WMWD shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment on behalf of Property Owner for the construction of any Acquisition Facilities have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation. f. Acquisition, Acquisition Price; Source of Funds. i) Provided the Property Owner has complied with the requirements of this Agreement, WMWD agrees to acquire the Acquisition Facilities from the Property Owner. Notwithstanding the above, nothing herein shall be construed as requiring Property Owner to construct and deliver any Acquisition Facility. The price to be paid by the CFD for the acquisition of such Acquisition Facilities by WMWD (the "Acquisition Price") shall be the lesser of (i) the value of the Acquisition Facilities or (ii) the total of the Actual Costs of the Acquisition Facilities. The Property Owner shall transfer ownership of the Acquisition Facilities to WMWD by grant deed, bill of sale or such other documentation as WMWD may require. Upon the transfer of ownership of the Acquisition Facilities or any portion thereof from the Property Owner to WMWD, WMWD shall be responsible for the maintenance of the Acquisition Facilities or the portion transferred. ii) For purposes of determining the Acquisition Price to be paid by the CFD for the acquisition of the Acquisition Facilities by WMWD, the value of such improvements shall be presumed to be the amount determined by the WMWD Engineer to be the value of the Acquisition Facilities based on the Actual Costs submitted by the Property Owner, as hereinbefore specified; provided, however, that if the WMWD Engineer determines that such Actual Costs, or any of them, are excessive and that the value of the Acquisition Facilities is less than the total amount of such Actual Costs, the Acquisition Price to be paid by the CFD for the acquisition of the Acquisition Facilities shall be the value thereof as determined by the WMWD Engineer. iii) Upon completion of the construction of any Acquisition Facilities by Property Owner, the Property Owner shall deliver to WMWD copies of the -9-

21 contract(s) with the Contractor(s) who have constructed the Acquisition Facilities or other relevant documentation with regard to the payments made to such Contractor(s) and each of them for the construction of such Acquisition Facilities, and shall also provide to WMWD copies of all invoices and purchase orders with respect to all supplies and materials purchased for the construction of such Acquisition Facilities. WMWD shall require the WMWD Engineer to complete its determination of the value of the Acquisition Facilities as promptly as is reasonably possible. iv) To the extent funds are available therein, the Acquisition Price of any Acquisition Facilities may be determined and paid out of the Other Facilities Accounts of the Improvement Fund prior to transfer of ownership of the Acquisition Facilities to WMWD upon a determination of Substantial Completion of such Acquisition Facility. Property Owner shall submit a payment request form to the District or the CFD which must also contain therewith approval of WMWD, which approval shall not be unreasonably withheld v) Notwithstanding the preceding provisions of this section, the sole source of funds for the acquisition by WMWD of the Acquisition Facilities or any portion thereof shall be the CFD Proceeds made available by the CFD pursuant to Section 4 above. If for any reason beyond WMWD's control, the proceedings for the formation of the CFD are not completed or the Bonds are not sold, WMWD shall not be required to acquire any Acquisition Facilities from the Property Owner. In such event, the Property Owner shall complete the design and construction and offer to the WMWD ownership of such portions of Acquisition Facilities as are required to be constructed by the Property Owner as a condition to recordation of subdivision maps for the Property or any other agreement between Property Owner and WMWD, but need not construct any portion of the Acquisition Facilities which it is not so required to construct g. Easements. The Property Owner shall, at the time WMWD acquires the Acquisition Facilities as provided in Section 7(e) hereof, grant to WMWD, by appropriate instruments prescribed by WMWD, all easements on private property which may be reasonably necessary for the proper operation and maintenance of such Acquisition Facilities, or any part thereof. h. Maintenance. i) Prior to the transfer of ownership of an Acquisition Facility by the Property Owner to WMWD, as provided in Section 7(e) hereof, the Property Owner shall be responsible for the maintenance thereof and shall maintain and transfer such Acquisition Facility to WMWD in as good condition as the Acquisition Facility was in at the time the Property Owner notified the WMWD that construction of same had been completed in accordance with the Plans and Specifications. ii) After WMWD has accepted an Acquisition Facility, and to the extent that the Property Owner has any post-acceptance obligations to maintain the Acquisition Facility, the terms maintain and maintenance mean the repair, replacement, or correction of any defects in the Acquisition Facility, and shall not mean the day-to-day upkeep or -10-

22 correction of normal wear and tear of the Acquisition Facility (such as watering or weeding for landscape improvements, painting, graffiti removal, etc.). i. Responsibility for Acquisition Facilities. The Parties acknowledge and agree that all responsibility and obligation for the design, construction and dedication of such Acquisition Facilities to WMWD, in accordance with all applicable statutes and the WMWD Rules and Regulations, shall be and remain the responsibility of the Property Owner. The Parties acknowledge and agree that all responsibility and obligation for the design, construction and dedication of such Acquisition Facilities to WMWD, in accordance with all applicable statutes and the WMWD Rules and Regulations, shall be and remain the responsibility of the Property Owner. 8. Indemnification. a. Indemnification by District. District shall assume the defense of, indemnify and save harmless, WMWD, its respective officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of District with respect to this Agreement and the issuance of the Bonds; provided, however, that District shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees. b. Indemnification by WMWD. WMWD shall assume the defense of, indemnify and save harmless, District and the CFD, their respective officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of WMWD with respect to this Agreement, and the design, engineering and construction of the WMWD Facilities constructed by WMWD; provided, however, that WMWD shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees. Further, WMWD will not be liable for any defect or failure of any water facilities which have been constructed by Property Owner or its successors and assigns. 9. Expectations of the Parties. The Parties understand and agree that (i) Property Owner will be constructing Acquisition Facilities and making Advances prior to the availability of CFD Proceeds that will be used to pay for such Acquisition Facilities and WMWD Fee Facilities, (ii) WMWD may be inspecting such Acquisition Facilities and processing and completing payment requests for the payment on such Acquisition Facilities and WMWD Fee Facilities with knowledge that there may be insufficient CFD Proceeds available at such time, (iii) the Acquisition Facilities may be conveyed to and accepted by WMWD when there are insufficient CFD Proceeds to pay the Acquisition Prices of such Acquisition Facilities, and (iv) in any such case, the payment of any approved payment requests for the Acquisition Prices of such Acquisition Facilities and any WMWD Fee Facilities will be deferred until there are sufficient CFD Proceeds available to pay the Acquisition Prices of such Acquisition Facilities and the WMWD Fee Facilities, at which time -11-

23 the CFD will make such payments in accordance with this Agreement. At all times, Property Owner will be constructing such Acquisition Facilities with the expectation that the Acquisition Prices for such Acquisition Facilities will be paid from the CFD Proceeds. The conveyance of Acquisition Facilities to WMWD prior to receipt of the Acquisition Prices for such Acquisition Facilities shall not be construed as a dedication or gift, or a waiver of the payment of the Acquisition Prices, or any part thereof, for such Acquisition Facilities. Likewise, the Property Owner will be making Advances with the expectation that such Advances will be returned to the Property when there are sufficient CFD Proceeds to finance WMWD Fee Facilities. The payment of Advances prior to the availability of CFD Proceeds shall not be construed as a dedication or gift of the Advances, or a waiver of the return of the Advances, it being the intention that the WMWD Fee Facilities be paid by the CFD Proceeds to the extent of the CFD Proceeds. 10. Amendment and Assignment. This Agreement may be amended at any time but only in writing signed by each Party hereto. This Agreement may be assigned, in whole or in part, by the Property Owner to the purchaser of any parcel of land within the Property, provided, however, such assignment shall not be effective unless and until WMWD and District have been notified, in writing, of such assignment. 11. Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the Parties with respect to the subject matter of this Agreement. 12. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either Party shall be deemed to have received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: District: WMWD: Developer: Murrieta Valley Unified School District McAlby Court Murrieta, California Attention: Assistant Superintendent, Facilities Services Western Municipal Water District Meridian Parkway Riverside, California Attention: General Manager Cardinal Investment Properties - Murrieta 18, LP 353 East Angeleno Avenue; Suite A Burbank, CA Attention: Matthew Livingston Each Party may change its address for delivery of notice by delivering written notice of such change of address to the other Party hereto. -12-

24 13. Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference. 14. Attorney s Fees. In the event of the bringing of any action or suit by any Party against any other Party arising out of this Agreement, the Party in whose favor final judgment shall be entered shall be entitled to recover from the losing Party all costs and expenses of suit, including reasonable attorneys fees. 15. Severability. If any part of this Agreement is held to be illegal or unenforceable by court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 16. Governing Law. This Agreement and any dispute arising hereunder shall be governed by interpreted in accordance with the laws of the State of California. 17. Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party hereto, or the failure by a Party to exercise its rights upon the default of another Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by such other Party with the terms of this Agreement thereafter. 18. No Third Party Beneficiaries. No person or entity other than the CFD, when and if formed, shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than WMWD, District, the CFD, and Property Owner (and their respective successors and assigns, exclusive of individual homebuyers), any rights, remedies, obligations or liabilities under or by reason of this Agreement. 19. Singular and Plural; Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine. 20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. -13-

25 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written above. MURRIETA VALLEY UNIFIED SCHOOL DISTRICT Superintendent ATTEST: By: Clerk of the Board WESTERN MUNICIPAL WATER DISTRICT John V. Rossi, General Manager ATTEST: By: Thomas P. Evans, Secretary of the Board of Directors [Signatures Continue on Next Page] -14-

26 PROPERTY OWNER CARDINAL INVESTMENT PROPERTIES - MURRIETA 18, LP, a California limited partnership By: Name: Title: -15-

27 EXHIBIT A DEPICTION OF PROPERTY -16-

28 EXHIBIT B DESCRIPTION OF PROPERTY THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF MURRIETA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND INCLUDES THE FOLLOWING PARCELS: Assessor Parcel Numbers

29 EXHIBIT C WMWD FACILITIES DESCRIPTION Acquisition Facilities. The type of Acquisition Facilities eligible to be financed by the CFD under the Act are as follows: "Acquisition Facilities" means those facilities constructed by or on behalf of Property Owner and needed by WMWD in order to provide services to the Property and also includes any of the following: WMWD intract and offsite water transmission lines, reclaimed water transmission lines, water pump stations, water reservoirs, including all costs of site acquisition, planning, design, engineering legal services, materials testing, coordination, surveying, construction, staking, construction inspection and any and all appurtenant facilities relating to the foregoing. The Acquisition Facilities listed above are representative of the types of facilities eligible to be financed by the CFD. Detailed scope and limits of specific projects will be determined as appropriate, consistent with the standards of WMWD. WMWD Fee Facilities. The type of WMWD Fee Facilities eligible to be financed by the CFD under the Act are as follows: Those water facilities included in WMWD s water capacity and connection fee programs used to finance expansion projects, including annexation fees, exclusive of in-tract facilities constructed by Developer. WMWD Fee Facilities include, but are not limited to the following: water transmission pipelines, pumping plants, water reservoirs, including all costs of site acquisition, planning, design, engineering, legal services, materials testing, coordination, surveying, construction staking, construction, inspection and any and all appurtenant facilities and appurtenant work relating to the foregoing. -18-

30 EXHIBIT D DISBURSEMENT REQUEST FORM (WMWD Facilities) 1. Murrieta Valley Unified School District Community Facilities District No ("CFD") is hereby requested to pay from the CFD Proceeds to Western Municipal Water District ("WMWD"), as Payee, the sum set forth in 3 below. 2. [FOR WMWD FEE FACILITIES] The undersigned certifies that the amount requested for WMWD Fee Facilities has not formed the basis of prior request or payment, and is being made with respect to the connection of the property described below to the WMWD system. [FOR ACQUISITION FACILITIES] The undersigned certifies that the amount requested for Acquisition Facilities has not formed the basis of prior request or payment, and is being made with respect to the Acquisition Facilities described below: (insert description). 3. Amount requested: For WMWD Fee Facilities: $ For Tract/Lot Nos: For Acquisition Facilities $ 4. The amount set forth in 3 above is authorized and payable pursuant to the terms of the Joint Community Facilities Agreement by and among the Murrieta Valley Unified School District, WMWD, and Cardinal Investment Properties - Murrieta 18, LP, dated (the "Agreement"). Capitalized terms not defined herein shall have the meaning set forth in the Agreement. By requisitioning CFD Proceeds as described above, WMWD is not passing upon, determining or assuming the tax-exempt status of the Bonds for federal or California income tax purposes. CARDINAL INVESTMENT PROPERTIES - MURRIETA 18, LP, a California limited partnership By: Name: Title: Date: -19-

31 [Signatures Continue on Next Page] -20-

32 WESTERN MUNICIPAL WATER DISTRICT By: Name: Title: Date: -21-

33 Attachment 3 EXHIBIT B Cardinal Investment Properties - Murrieta 18, LP (Tract 36848) Proposed Murrieta Valley Unified School District CFD Preliminary List of CFD Eligible Facilities September 18, 2015 Description: Per Unit Total Units 85 Murrieta Valley Unified School District Wtd Average Home Sq. Ft. 2, ,700 Level I School Fee ($3.36 Per Sq Ft) $ 9,752 $ 828,912 School Fee Premium (15%) 1, ,337 Current School Mitigation Amount (a) $ 11,215 $ 953,249 WMWD Fees Water Connection Fee (b) $ 1,932 $ 164,220 Meter Drop-In Fee (3/4" meter) (b) ,300 Annexation Fees (18.5 $4,374 per Acre) (c) ,919 Water Facilities (Estimate) 3, ,000 Design, Planning, & Engineering (15%) ,250 WMWD Total $ 6,714 $ 570,689 Total CFD Eligible Facilities $ 17,929 $ 1,523,938 Footnotes: (a) Represents the proposed School Mitigation Fee paid to MVUSD. (b) Per Western Municipal Water District fee sheet. (c) Per Developer Budget.

34 Exhibit C Cardinal Investment Properties - Murrieta 18, LP (Tract 36848) Proposed Murrieta Valley Unified School District CFD CFD Total Tax Rate Analysis & Bond Sizing September 18, 2015 Assumptions Weighted Average Property Tax Rate 1.60% Weighted Average Coupon Rate 4.25% Priority Administrative Expense $ 15,000 Debt Service Coverage 110% Total CFD Revenues $ 134,305 Special Tax Revenues for Bonding $ 108,459 Estimated Sources & Uses of Funds Allocation of Improvement Fund Sources Par Bond Amount $ 1,820,000 Agency Per Unit Total School Facilities $ 11,215 $ 953,249 Uses (h) Water Faclities 6, ,689 Reserve Fund $ 108,459 Total Funding $ 17,929 1,523,938 Underwriter Discount (2.00%) 36,400 Cost of Issuance (Estimate) 151,203 Improvement Fund 1,523,938 Total Uses $ 1,820,000 CFD Special Tax Rates & Total Property Tax Rates Plan Number Wtd Avg Square Footage Category 2,101-2,350 2,851-3,100 3,101-3,350 3,351 Estimated Home Size (a) 2,200 2,900 3,200 3,500 2,902 Estimated Home Price (a) $ 399,900 $ 431,600 $ 448,050 $ 468,650 $ 435,151 Ad Valorem Tax Rate ( %) (b) 4,481 4,836 5,020 5,251 4,876 MWD Standby Charge (c) Murrieta Parks & Rec. (c) Murrieta Community Services District (c) Murrieta Fire Protection Charge (c) CSA Murrieta Storm Water (c) WMWD Sewer Stdby Charge (c) WMWD Water Stdby Charge (c) Flood Control Stormwater/Cleanwater (c) WMWD CFD 88-1 (d) Proposed Murrieta USD CFD Special Tax (f) 1,412 1,563 1,642 1,740 1,580 Total Annual Property Taxes $ 6,388 $ 6,895 $ 7,158 $ 7,487 $ 6,952 Total Property Tax Rates % 1.60% 1.60% 1.60% 1.60% 1.60% CFD Special Tax Revenues Annual CFD Special Tax $ 1,412 $ 1,563 $ 1,642 $ 1,740 Unit Mix Total Annual - CFD Tax Collections $ 39,533 $ 25,010 $ 26,265 $ 43,496 $ 134,305 Footnotes: (a) Product, Pricing, and Unit Mix provided by Developer. (b) Based on Ad Valorem rate shown on property tax bill for FY ( %). (c) Tax bill line items based on adjacent SFD development for FY (d) Property located with CFD 88-1 per Notice of Special Tax Lien recorded 9/27/2011. (e) Represents estimated Landscaping and Lighting Maintenance District charge. (f) Represents the proposed MVUSD CFD special tax to fund school fees. (g) The portion of the special tax required to fund WMWD facilities is $233 per unit (i.e., $18,033 / 85 * 1.1 (debt service coverage)). (h) The incremental CFD financing cost applicable to the WMWD facilities is between 1% and 3%, which excludes the Cost of Issuance that will be incurred with or without WMWD participation. Overall, the cost to use CFD financing is between 10% and 16% of the entire issuance, depending on how much, if any, of the reserve fund is used during the term of the debt.

35 3B

36 December 14, 2015 TO THE FINANCE COMMITTEE: Director S.R. Al Lopez Director Brenda Dennstedt FROM: Rod LeMond, Assistant General Manager/CFO CONSIDER A JOINT COMMUNITY FACILITIES AGREEMENT WITH RIVERSIDE UNIFIED SCHOOL DISTRICT AND LENNAR HOMES OF CALIFORNIA, INC. RECOMMENDATION: The following item is being presented to the Board of Directors for approval at the December 16, 2015 regular Board Meeting: 1. Authorize the General Manager to execute the agreement entitled Joint Community Facilities Agreement between Riverside Unified School District, Western Municipal Water District and Lennar Homes of California, Inc. BUDGET IMPACT: Development of this project will generate $2,705,584 in fees to be paid to Western Municipal Water District (Western). The fees are part of the cost of the development whether or not Western participates in the Joint Community Facilities Agreement. BUSINESS PLAN REFERENCE: No Business Plan reference; this action is part of Western s routine business activities. EXECUTIVE SUMMARY: Western has been asked by representatives of Lennar Homes of California, Inc. (Lennar), a property owner proposing to build 343 homes in the County of Riverside, to approve and participate with the Riverside Unified School District (RUSD) in the agreement entitled Joint Community Facilities Agreement Between Riverside Unified

37 Finance Committee December 14, 2015 Page 2 of 3 School District, Western Municipal Water District, and Lennar Homes of California, Inc. This Joint Facilities Community Agreement (JFCA) proposes to provide public financing for RUSD, Western s, and Lennar s costs associated with the development of 343 homes. RUSD, at the request of Lennar, is the acting lead agency in the formation of the Riverside Unified School District Community Facilities District (CFD) No. 32, a planned $21,025,000 bond issuance. DETAIL: Lennar, proposes constructing 343 homes in the County of Riverside. RUSD, at the request of Lennar, is the acting lead agency in the formation of CFD No. 32. The total bond issuance is proposed at $21,025,000, with $5,781,426 in Western fees and improvements (see Exhibit). Of the $5,781,426, Western would receive $2,705,584 for water and sewer connection fees and meter fees and $3,075,842 would fund Western s improvements constructed by the developer. The difference between the total bond issuance of $21,025,000 and actual proceeds available for payment of RUSD, Western, and County fees and improvements of $18,960,975 is $2,064,025 and is comprised of the following: Reserve Fund $ 1,246,745 Underwriter Discount $ 420,500 Cost of Issuance $ 396,780 Total $ 2,064,025 The bond reserve fund amount is maintained by a trustee to 1) provide sufficient funds for debt service payments in the event future homeowner(s) fail to make their property tax payments, and 2) provide the final debt service payment at the end of the 30-year bond term. The underwriter s discount plus the cost of issuance equals about 4 percent of the proposed bond issuance principal amount. The JCFA is expense neutral for Western and the proposed fees are consistent with Western s fee structure. The proposed terms of the CFD call for a 30-year term at a 4.25 percent interest rate. The existing tax rate for the property is 1.07 percent and with the proposed CFD tax increment for bond repayment, the total tax would be 1.77 percent. Western would collect the out-of-pocket water and sewer connection fees, should the developer be ready to obtain water and sewer service prior to the proceeds of the bonds being available.

38 Finance Committee December 14, 2015 Page 3 of 3 Western has participated in JCFA s and CFD s in the past. Should the developer proceed with the project, Western s fees would be paid whether or not Western participates in the JCFA. ROD LeMOND Assistant General Manager/CFO RL:DK:TP:jg Attachments: 1. Map 2. Joint Community Facilities Agreement 3. Exhibit

39 Attachment 1 Tr Citrus Heights RUSD CFD No. 32 Tr Citrus Heights Selected Parcels Date: 10/28/2015 Document Path: G:\Projects\Board\BoardMap_ID11148\MXD\RUSD_CFD32.mxd Locator Map ,100 2,200 Feet 1 inch = 1,500 feet The land base and facility information on this map is for display purposes only and should not be relied upon without independent verification as to its accuracy. Western Municipal Water District will not be held responsible for any claims, losses or damages resulting from the use of this map.

40 Attachment 2 JOINT COMMUNITY FACILITIES AGREEMENT THIS JOINT COMMUNITY FACILITIES AGREEMENT (the Agreement ) is entered into effective as of the day of, 2015, by and among RIVERSIDE UNIFIED SCHOOL DISTRICT, a California School District ( District ), the WESTERN MUNICIPAL WATER DISTRICT, a public agency organized and existing pursuant to Division 20 of the California Water Code ( WMWD ), and LENNAR HOMES OF CALIFORNIA, INC., a California corporation ("Property Owner"). This Agreement relates to the proposed formation by District of a community facilities district to be known as Riverside Unified School District Community Facilities District No. 32 (the CFD ) for the purpose of financing certain facilities to be owned, operated or maintained by District or WMWD from proceeds of bonds issued by the proposed CFD. Capitalized terms used in the Agreement that are not defined in this preamble and in the Recitals shall have the meanings given such terms in Section 2 of this Agreement. R E C I T A L S: A. The property depicted in Exhibit A hereto, which is located in the County of Riverside, State of California, is owned by the Property Owner (the Property ) and is proposed to constitute the land within the boundaries of the CFD. The Property is described in Exhibit B hereto. B. Property Owner intends to develop the Property into 343 single family detached residential units ( Project ). C. The Property Owner petitioned the District to form the CFD for the purpose of financing, among other things, the acquisition and/or construction of various public facilities to be owned and operated by WMWD as described in Exhibit "C" hereto, which facilities will benefit the Project in whole or in part, including (i) certain public facilities to be constructed by or on behalf of Property Owner and ultimately owned and operated by WMWD (the "Acquisition Facilities") and (ii) certain public water and sewer facilities to be constructed and owned and operated by WMWD (the WMWD Fee Facilities ) in satisfaction of the payment of WMWD Fees (defined herein). Upon the construction of the Acquisition Facilities by or on behalf of Property Owner and the inspection and acceptance thereof by WMWD as described herein, the Acquisition Facilities shall become part of the WMWD system. The Acquisition Facilities and WMWD Fee Facilities are collectively referred to herein as the "WMWD Facilities". D. WMWD and Property Owner agree that any Acquisition Facilities to be constructed by Property Owner shall be eligible for acquisition by WMWD and the costs thereof shall be eligible for reimbursement from the CFD Proceeds pursuant to this Agreement. E. In conjunction with the issuance of building permits for the construction of homes on the Property and/or receipt of water meters for such homes, the Property Owner, or -1-

41 its successors or assigns, may elect to advance WMWD Fee Facilities costs in satisfaction of payment of WMWD Fees (the Advances ) before CFD Proceeds are available in sufficient amounts to pay for WMWD Fee Facilities. In such case, the Property Owner (i) shall be entitled to reimbursement of such Advances and (ii) shall be deemed to have satisfied WMWD Fees which would otherwise be due to WMWD equal to the amount of CFD Proceeds disbursed to WMWD for WMWD Fee Facilities, all as further described herein. F. The District will have sole discretion and responsibility for the formation and administration of the CFD. G. The District is authorized by Section of the Act to assist in the financing of the acquisition and/or construction of the WMWD Facilities. This Agreement constitutes a joint community facilities agreement, within the meaning of Section of the Act, by and among WMWD, the District and the Property Owner, pursuant to which the CFD, when and if formed, will be authorized to finance the acquisition and/or construction of all or a portion of the WMWD Facilities. As authorized by Section of the Act, responsibility for constructing, providing for and operating the WMWD Facilities is delegated to WMWD. H. The parties hereto find and determine that the residents residing within the boundaries of WMWD, the District and the CFD will be benefited by the construction and/or acquisition of the WMWD Facilities and that this Agreement is beneficial to the interests of such residents. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto agree as follows: 1. Recitals. Each of the above recitals is incorporated herein and is true and correct. 2. Definitions. Unless the context clearly otherwise requires, the terms defined in this Section shall, for all purposes of this Agreement, have the meanings herein specified. a. Act means the Mello-Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code. b. "Acquisition Facility" or "Acquisition Facilities" means those sewer and water facilities listed on Exhibit "C" hereto, which are eligible to be constructed by the Property Owner, acquired by WMWD and paid for with CFD Proceeds. c. "Acquisition Price" means the amount to be paid out of CFD Proceeds for an Acquisition Facility. -2-

42 d. "Actual Costs" with respect to an Acquisition Facility includes: (i) the actual hard construction costs including labor, materials and equipment costs; (ii) the costs incurred in design, engineering and preparation of plans and specifications; (iii) the fees paid to consultants and government agencies in connection with and for obtaining permits, licenses or other required governmental approvals; (iv) construction management fee of 5% of the costs described in clause (i) above; (v) professional costs such as engineering, legal, accounting, inspection, construction staking, materials testing and similar professional services; (vi) costs of payment, performance of maintenance bonds, and insurance costs (including the costs of any title insurance); and (vii) the value of any real property or interests therein that (1) are required for the construction of the Acquisition Facility such as temporary construction easements, haul roads, etc. and (2) are required to be conveyed with such Acquisition Facility in an amount equal to the fair market value of such real property or interests therein. e. Advances means an amount paid by Property Owner for WMWD Fee Facilities in satisfaction of payment of WMWD Fees prior to the availability of sufficient CFD Proceeds. f. "Agreed-Upon Allocation" shall have the meaning given such term in Section 7(d) herein. g. "Agreement" means this Joint Community Facilities Agreement, dated, 2015, by and among WMWD, the District, and the Property Owner. h. Bond Proceeds shall mean those net funds generated by the sale of the Bonds and investment earnings thereon. i. Bond Resolution means that Resolution, Resolution Supplement, Fiscal Agent Agreement, Indenture of Trust or other equivalent document(s) providing for the issuance of the Bonds. j. Bonds shall mean those bonds, or other securities, issued by, or on behalf of the CFD in one or more series, as authorized by the qualified electors within the CFD. k. "CFD Proceeds" shall mean one or more of the following sources of funds: (i) Bond Proceeds; (ii) special taxes levied in the CFD for the direct payment of WMWD Facilities; and (iii) any prepayments of special taxes in the CFD that are to be applied to authorized facilities of the CFD, including WMWD Facilities, pursuant to the Rate and Method. l. "Contractors" shall have the meaning given such term in Section 7(a)(ii) herein. m. Disbursement Request means a request for payment relating to WMWD Facilities in the form attached hereto as Exhibit D. -3-

43 n. "District" means Riverside Unified School District, a California school district. o. Other Facilities Accounts of the Improvement Fund means the funds, accounts or sub-accounts of the CFD (regardless of their designation within the Bond Resolution or otherwise) into which the CFD Proceeds may be deposited in accordance with the Bond Resolution to finance WMWD Facilities. Agreement. p. Party or Parties shall mean anyone or all of the parties to this q. "Project" means the development by the Property Owner of approximately 343 single-family homes on the Property. r. "Property" means the property owned by the Property Owner that is contemplated to be in the CFD, as depicted in Exhibit "A" attached hereto and described in Exhibit "B" attached hereto. s. "Property Owner" means Lennar Homes of California, Inc., and its successors and assigns. t. "WMWD Facilities Allocation" shall have the meaning given such term in Section 7(d) herein. u. Rate and Method means the Rate and Method of Apportionment of the Special Tax authorizing the levy and collection of Special Taxes within pursuant to proceedings undertaken for the formation of the CFD pursuant to the Act. v. Special Taxes means the special taxes authorized to be levied and collected within the CFD pursuant to the Rate and Method. w. State means the State of California. x. Substantially Complete" or "Substantial Completion" with respect to an Acquisition Facility means that such Acquisition Facility is substantially complete in accordance with its Plans and Specifications and is available for use by the public for its intended purpose, notwithstanding any final "punch list" items still required to be completed, unless such items are required for the safe operation of such Acquisition Facility, and shall be based upon approval of WMWD's inspectors, which shall not be unreasonably withheld. y. "WMWD" means the Western Municipal Water District, a public agency organized and existing pursuant to Division 20 of the California Water Code. z. "WMWD Facilities" means the Acquisition Facilities and the WMWD Fee Facilities. aa. "WMWD Facilities Allocation" shall have the meaning given such term in Section 7(d) herein. -4-

44 bb. WMWD Fee Facilities means those water facilities listed on Exhibit C hereto, which are necessary for the provision of water service to the Property and paid for with CFD Proceeds in satisfaction of the payment of WMWD Fees. cc. WMWD Fees means water added facility charge, drop-in meter fees, MWD water annexation fees and all components thereof imposed by WMWD upon the Property to finance WMWD Fee Facilities. designee. dd. WMWD Representative means the WMWD Engineer or his ee. "WMWD Rules and Regulations" means the rules and regulations of WMWD governing the construction of Acquisition Facilities. 3. Proposed Formation of the CFD. District will undertake to analyze the appropriateness of forming the CFD to finance the WMWD Facilities and other facilities. District will retain, at the expense of the Property Owner, the necessary consultants to analyze the proposed formation of the CFD. 4. Use of CFD Proceeds. The District and the Property Owner shall, from time to time as CFD Proceeds become available, determine the amount of CFD Proceeds to be deposited in the Other Facilities Accounts of the Improvement Fund and each subaccount thereof. 5. Disbursements for WMWD Fee Facilities. a. Upon the funding of the Other Facilities Accounts of the Improvement Fund, the District shall notify WMWD of the amount of CFD Proceeds to be reserved to fund WMWD Fee Facilities and WMWD may execute and submit a Disbursement Request for payment to the District requesting disbursement of such amount from the Other Facilities Accounts of the Improvement Fund to the extent such funds are available in the Other Facilities Accounts of the Improvement Fund. Upon WMWD's receipt of funds pursuant to such Disbursement Request, Property Owner shall receive reimbursement of the Advances from WMWD to the extent of the amount of CFD Proceeds received for WMWD Fee Facilities. Upon such notice and WMWD's receipt of such disbursement relating to WMWD Fee Facilities, Property Owner shall be deemed to have satisfied the applicable WMWD Fees with respect to the number of dwelling units or lots for which the WMWD Fees would otherwise have been required in an amount equal to such disbursement. b. From time to time following the funding of the Other Facilities Accounts of the Improvement Fund from additional CFD Proceeds, the Property Owner may notify WMWD in writing and WMWD may request a further disbursement from the Other Facilities Accounts of the Improvement Fund to fund WMWD Fee Facilities by executing and submitting an executed Disbursement Request to the CFD. Upon receipt of such Disbursement Request completed in accordance with the terms of this Agreement, the CFD shall wire transfer or otherwise pay to WMWD such requested funds to the extent that CFD Proceeds are available in the Other Facilities Accounts of the Improvement Fund for such purpose. Upon such notice and WMWD's receipt of such disbursement relating to WMWD -5-

45 Fee Facilities, Property Owner shall be deemed to have satisfied the applicable WMWD Fees with respect to the number of dwelling units or lots for which the WMWD Fees would otherwise have been required in an amount equal to such disbursement. c. WMWD agrees that prior to submitting a Disbursement Request requesting payment from the CFD it shall review and approve all costs included in its request and will have already paid or incurred such costs of WMWD Fee Facilities from its own funds subsequent to the date of this Agreement, or will disburse such amounts to pay the costs of WMWD Fee Facilities following receipt of funds from the CFD. In the event that WMWD does not disburse any CFD Proceeds received by it to third parties within five banking days of receipt, it will trace and report to the CFD all earnings, if any, earned by WMWD, from the date of receipt of such CFD Proceeds by WMWD to the date of expenditure by WMWD for capital costs of the WMWD Fee Facilities. Such report shall be delivered at least semiannually until all CFD Proceeds are expended by WMWD. WMWD agrees that in processing the above disbursements it will comply with all legal requirements for the expenditure of CFD Proceeds under the Internal Revenue Code of 1986 and any amendments thereto. d. WMWD agrees to maintain adequate internal controls over its payment function and to maintain accounting records in accordance with generally accepted accounting procedures. WMWD will, upon request, provide District and/or Property Owner with access to WMWD's records related to the WMWD Fee Facilities and will provide to District its annual financial report certified by an independent certified public accountant for purposes of assisting District in calculating the arbitrage rebate obligation of the CFD, if any. e. District or the CFD agrees to maintain full and accurate records of all amounts, and investment earnings, if any, expended from the Other Facilities Accounts of the Improvement Fund. District or the CFD will, upon request, provide WMWD and/or Property Owner with access to District's or the CFD's records related to the Other Facilities Accounts of the Improvement Fund. f. Nothing herein shall supersede the obligation of an owner of the Property to make an Advance or pay WMWD Fees to WMWD when due. The purpose of this Agreement is to provide a mechanism by which the CFD may issue the Bonds to provide a source of funds to finance WMWD Fee Facilities in satisfaction of the payment of WMWD Fees. In the event that CFD Proceeds, including investment earnings thereon, are not available or sufficient to satisfy the obligation, then the Property Owner shall remain obligated to make an Advance or pay WMWD Fees to WMWD as a condition of receiving water service to the Property. 6. Ownership of WMWD Fee Facilities. At all times, the WMWD Fee Facilities shall be and remain the property of WMWD. 7. Acquisition Facilities. The Parties acknowledge that WMWD may require the Property Owner, pursuant to the WMWD Rules and Regulations, to design, construct and dedicate to WMWD the Acquisition Facilities as a condition to providing water and sewer service to the Property. The following provisions of this Section 7 shall apply solely with -6-

46 respect to those Acquisition Facilities to be constructed by Property Owner and acquired by WMWD with CFD Proceeds. a. Construction of Acquisition Facilities. i) The Property Owner will complete the Plans and Specifications for such Acquisition Facilities. The Plans and Specifications shall include WMWD's standard specifications and shall be subject to WMWD approval, which shall not be unreasonably withheld. WMWD agrees to process any Plans and Specifications for approval with reasonable diligence and in a timely manner. The Property Owner may proceed with the construction of any such Acquisition Facilities in accordance with the provisions of Section 7(b) hereof. ii) The cost of all surveying, compaction testing and report costs associated with such Acquisition Facilities furnished and constructed by any contractors or sub-contractors (collectively, "Contractors") shall be included among the Actual Costs which are eligible to be paid from the Other Facilities Accounts of the Improvement Fund iii) WMWD shall not be responsible for conducting any environmental, archaeological, biological, or cultural studies or any mitigation requirements related to the Acquisition Facilities to be constructed by Property Owner that may be requested by appropriate Federal, State, and/or local agencies. Any such work shall be paid for and such work shall be conducted by, or on behalf of Property Owner and the Actual Costs of such work shall be eligible to be paid from the Other Facilities Accounts of the Improvement Fund b. Public Works Requirements. In order to insure that the Acquisition Facilities to be constructed by the Property Owner and acquired with CFD Proceeds will be constructed as if they had been constructed under the direction and supervision, or under the authority of, WMWD, so that they may be acquired by WMWD pursuant to Government Code Section , the Property Owner shall comply with all of the following requirements i) The Property Owner shall solicit a minimum of three (3) bids from firms reasonably determined to be qualified to construct the Acquisition Facilities in conformance with the Plans and Specifications. ii) The contract or contracts for the construction of such Acquisition Facilities shall be awarded to the responsible bidder(s) submitting the lowest responsive bid(s) for the construction of such Acquisition Facilities. iii) The Property Owner shall require, and the specifications and bid and contract documents shall require all such Contractors to pay prevailing wages and to otherwise comply with applicable provisions of the Labor Code, Government Code and Public Contract Code relating to public works projects to the extent expressly applicable to a non- governmental entity constructing infrastructure to be acquired by a public entity. -7-

47 iv) Said Contractors shall be required to furnish labor and material payment bonds and contract performance bonds in an amount equal to 100 percent of the contract price naming the Property Owner and WMWD as obligees and issued by insurance or surety companies reasonably approved by WMWD. All such bonds shall be in a form approved by the WMWD Representative. Rather than requiring its Contractors to provide such bonds, the Property Owner may elect to provide the same for the benefit of its Contractors. v) All such Contractors shall be required to provide proof of insurance coverage throughout the term of the construction of such Acquisition Facilities which they will construct in conformance with the approved Plans and Specifications. vi) The Property Owner and all such Contractors shall comply with such other requirements relating to the construction of such Acquisition Facilities which WMWD may impose by written notification delivered to the Property Owner and each such Contractor at any time either prior to the receipt of bids by the Property Owner for the construction of such Acquisition Facilities or, to the extent required as a result of changes in applicable laws, during the progress of construction thereof. In accordance with this Section 7(b), the Property Owner shall be deemed the awarding body and shall be solely responsible for compliance and enforcement of the provisions of the Labor Code, Government Code, and Public Contract Code to the extent expressly applicable to a non-governmental entity constructing infrastructure to be acquired by a public entity. c. Inspection; Completion of Construction. i) WMWD shall have primary responsibility for providing inspection of the construction of the Acquisition Facilities constructed by the Property Owner to insure that the construction is accomplished in accordance with the Plans and Specifications. WMWD's personnel shall have access to the site of the work at all reasonable times for the purpose of accomplishing such inspection. Upon Substantial Completion of the construction of such Acquisition Facilities by Property Owner, the Property Owner shall notify WMWD in writing that the construction of such Acquisition Facilities has been Substantially Completed. ii) Upon receiving such written notification from the Property Owner. and upon receipt of written notification from its inspectors that construction of any of the Acquisition Facilities by Property Owner has been Substantially Completed, WMWD shall within 15 days notify the Property Owner in writing that the construction of such Acquisition Facilities has been satisfactorily completed. Upon receiving such notification, the Property Owner shall forthwith file with the County Recorder of the County of Riverside a Notice of Completion pursuant to the provisions of Section 3093 of the Civil Code. The Property Owner shall furnish to WMWD a duplicate copy of each such Notice of Completion showing thereon the date of filing with the County Recorder. Any actual costs reasonably incurred by WMWD in inspecting and approving the construction of any Acquisition Facilities by Property Owner not previously paid by the Property Owner shall be an Actual Cost eligible to be reimbursed from the Other Facilities Accounts of the Improvement Fund or paid directly by Property Owner. -8-

48 d. Allocation of Costs. If Property Owner incurs costs that (1) apply to more than one Acquisition Facility (e.g., soft costs) or (2) apply to both Acquisition Facilities and improvements other than the Acquisition Facilities (e.g., grading), Property Owner shall allocate, or cause the contractor to reasonably allocate, such costs between the Acquisition Facilities (in the case of clause (1)) or between the Acquisition Facilities and the improvements other than the Acquisition Facilities (in the case of clause (2)) (the WMWD Facilities Allocation ). The WMWD Facilities Allocation shall be presumed to be reasonable and shall be accepted for all purposes of this Agreement unless WMWD notifies Property Owner of its good-faith reasonable disapproval of the allocation within five (5) days of submittal of the payment request. If WMWD has properly disapproved the WMWD Facilities Allocation, then WMWD and Property Owner shall promptly allocate such costs, on a reasonable basis, between the Acquisition Facilities (in the case of clause (1)) or between the Acquisition Facilities and the improvements other than the Acquisition Facilities (in the case of clause (2)) (the Agreed-Upon Allocation ). Based on the WMWD Facilities Allocation or the Agreed-Upon Allocation, as applicable, WMWD shall include the costs allocated to a specific Acquisition Facility as part of the Actual Costs of such Acquisition Facility when such Acquisition Facility is subject to a payment request. e. Liens. i) Upon the expiration of the time for the recording of claim of liens as prescribed by Sections 3115 and 3116 of the Civil Code, the Property Owner shall provide to WMWD such evidence or proof as WMWD shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment on behalf of Property Owner for the construction of any Acquisition Facilities have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation. f. Acquisition, Acquisition Price; Source of Funds. i) Provided the Property Owner has complied with the requirements of this Agreement, WMWD agrees to acquire the Acquisition Facilities from the Property Owner. Notwithstanding the above, nothing herein shall be construed as requiring Property Owner to construct and deliver any Acquisition Facility. The price to be paid by the CFD for the acquisition of such Acquisition Facilities by WMWD (the "Acquisition Price") shall be the lesser of (i) the value of the Acquisition Facilities or (ii) the total of the Actual Costs of the Acquisition Facilities. The Property Owner shall transfer ownership of the Acquisition Facilities to WMWD by grant deed, bill of sale or such other documentation as WMWD may require. Upon the transfer of ownership of the Acquisition Facilities or any portion thereof from the Property Owner to WMWD, WMWD shall be responsible for the maintenance of the Acquisition Facilities or the portion transferred. ii) For purposes of determining the Acquisition Price to be paid by the CFD for the acquisition of the Acquisition Facilities by WMWD, the value of such improvements shall be presumed to be the amount determined by the WMWD Engineer to be the value of the Acquisition Facilities based on the Actual Costs submitted by the Property Owner, as hereinbefore specified; provided, however, that if the WMWD Engineer determines that such Actual Costs, or any of them, are excessive and that the value of the -9-

49 Acquisition Facilities is less than the total amount of such Actual Costs, the Acquisition Price to be paid by the CFD for the acquisition of the Acquisition Facilities shall be the value thereof as determined by the WMWD Engineer. iii) Upon completion of the construction of any Acquisition Facilities by Property Owner, the Property Owner shall deliver to WMWD copies of the contract(s) with the Contractor(s) who have constructed the Acquisition Facilities or other relevant documentation with regard to the payments made to such Contractor(s) and each of them for the construction of such Acquisition Facilities, and shall also provide to WMWD copies of all invoices and purchase orders with respect to all supplies and materials purchased for the construction of such Acquisition Facilities. WMWD shall require the WMWD Engineer to complete its determination of the value of the Acquisition Facilities as promptly as is reasonably possible. iv) To the extent funds are available therein, the Acquisition Price of any Acquisition Facilities may be determined and paid out of the Other Facilities Accounts of the Improvement Fund prior to transfer of ownership of the Acquisition Facilities to WMWD upon a determination of Substantial Completion of such Acquisition Facility. Property Owner shall submit a payment request form to the District or the CFD which must also contain therewith approval of WMWD, which approval shall not be unreasonably withheld v) Notwithstanding the preceding provisions of this section, the sole source of funds for the acquisition by WMWD of the Acquisition Facilities or any portion thereof shall be the CFD Proceeds made available by the CFD pursuant to Section 4 above. If for any reason beyond WMWD's control, the proceedings for the formation of the CFD are not completed or the Bonds are not sold, WMWD shall not be required to acquire any Acquisition Facilities from the Property Owner. In such event, the Property Owner shall complete the design and construction and offer to the WMWD ownership of such portions of Acquisition Facilities as are required to be constructed by the Property Owner as a condition to recordation of subdivision maps for the Property or any other agreement between Property Owner and WMWD, but need not construct any portion of the Acquisition Facilities which it is not so required to construct g. Easements. The Property Owner shall, at the time WMWD acquires the Acquisition Facilities as provided in Section 7(e) hereof, grant to WMWD, by appropriate instruments prescribed by WMWD, all easements on private property which may be reasonably necessary for the proper operation and maintenance of such Acquisition Facilities, or any part thereof. h. Maintenance. i) Prior to the transfer of ownership of an Acquisition Facility by the Property Owner to WMWD, as provided in Section 7(e) hereof, the Property Owner shall be responsible for the maintenance thereof and shall maintain and transfer such Acquisition Facility to WMWD in as good condition as the Acquisition Facility was in at the time the -10-

50 Property Owner notified the WMWD that construction of same had been completed in accordance with the Plans and Specifications. ii) After WMWD has accepted an Acquisition Facility, and to the extent that the Property Owner has any post-acceptance obligations to maintain the Acquisition Facility, the terms maintain and maintenance mean the repair, replacement, or correction of any defects in the Acquisition Facility, and shall not mean the day-to-day upkeep or correction of normal wear and tear of the Acquisition Facility (such as watering or weeding for landscape improvements, painting, graffiti removal, etc.). i. Responsibility for Acquisition Facilities. The Parties acknowledge and agree that all responsibility and obligation for the design, construction and dedication of such Acquisition Facilities to WMWD, in accordance with all applicable statutes and the WMWD Rules and Regulations, shall be and remain the responsibility of the Property Owner. The Parties acknowledge and agree that all responsibility and obligation for the design, construction and dedication of such Acquisition Facilities to WMWD, in accordance with all applicable statutes and the WMWD Rules and Regulations, shall be and remain the responsibility of the Property Owner. 8. Indemnification. a. Indemnification by District. District shall assume the defense of, indemnify and save harmless, WMWD, its respective officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of District with respect to this Agreement and the issuance of the Bonds; provided, however, that District shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees. b. Indemnification by WMWD. WMWD shall assume the defense of, indemnify and save harmless, District and the CFD, their respective officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of WMWD with respect to this Agreement, and the design, engineering and construction of the WMWD Facilities constructed by WMWD; provided, however, that WMWD shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees. Further, WMWD will not be liable for any defect or failure of any water facilities which have been constructed by Property Owner or its successors and assigns. 9. Expectations of the Parties. The Parties understand and agree that (i) Property Owner will be constructing Acquisition Facilities and making Advances prior to the availability of CFD Proceeds that will be used to pay for such Acquisition Facilities and WMWD Fee Facilities, (ii) WMWD may be inspecting such Acquisition Facilities and processing and completing payment requests for the payment on such Acquisition Facilities -11-

51 and WMWD Fee Facilities with knowledge that there may be insufficient CFD Proceeds available at such time, (iii) the Acquisition Facilities may be conveyed to and accepted by WMWD when there are insufficient CFD Proceeds to pay the Acquisition Prices of such Acquisition Facilities, and (iv) in any such case, the payment of any approved payment requests for the Acquisition Prices of such Acquisition Facilities and any WMWD Fee Facilities will be deferred until there are sufficient CFD Proceeds available to pay the Acquisition Prices of such Acquisition Facilities and the WMWD Fee Facilities, at which time the CFD will make such payments in accordance with this Agreement. At all times, Property Owner will be constructing such Acquisition Facilities with the expectation that the Acquisition Prices for such Acquisition Facilities will be paid from the CFD Proceeds. The conveyance of Acquisition Facilities to WMWD prior to receipt of the Acquisition Prices for such Acquisition Facilities shall not be construed as a dedication or gift, or a waiver of the payment of the Acquisition Prices, or any part thereof, for such Acquisition Facilities. Likewise, the Property Owner will be making Advances with the expectation that such Advances will be returned to the Property when there are sufficient CFD Proceeds to finance WMWD Fee Facilities. The payment of Advances prior to the availability of CFD Proceeds shall not be construed as a dedication or gift of the Advances, or a waiver of the return of the Advances, it being the intention that the WMWD Fee Facilities be paid by the CFD Proceeds to the extent of the CFD Proceeds. 10. Amendment and Assignment. This Agreement may be amended at any time but only in writing signed by each Party hereto. This Agreement may be assigned, in whole or in part, by the Property Owner to the purchaser of any parcel of land within the Property, provided, however, such assignment shall not be effective unless and until WMWD and District have been notified, in writing, of such assignment. 11. Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the Parties with respect to the subject matter of this Agreement. 12. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either Party shall be deemed to have received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: District: WMWD: Riverside Unified School District th Street Riverside, California Attention: Assistant Superintendent, Operations Western Municipal Water District Meridian Parkway Riverside, California Attention: General Manager -12-

52 Property Owner: Lennar Homes of California, Inc. 980 Montecito Avenue, Suite 302 Corona, California Attention: Jeffrey T. Clemens, Vice President Each Party may change its address for delivery of notice by delivering written notice of such change of address to the other Party hereto. 13. Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference. 14. Attorney s Fees. In the event of the bringing of any action or suit by any Party against any other Party arising out of this Agreement, the Party in whose favor final judgment shall be entered shall be entitled to recover from the losing Party all costs and expenses of suit, including reasonable attorneys fees. 15. Severability. If any part of this Agreement is held to be illegal or unenforceable by court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 16. Governing Law. This Agreement and any dispute arising hereunder shall be governed by interpreted in accordance with the laws of the State of California. 17. Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party hereto, or the failure by a Party to exercise its rights upon the default of another Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by such other Party with the terms of this Agreement thereafter. 18. No Third Party Beneficiaries. No person or entity other than the CFD, when and if formed, shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than WMWD, District, the CFD, and Property Owner (and their respective successors and assigns, exclusive of individual homebuyers), any rights, remedies, obligations or liabilities under or by reason of this Agreement. 19. Singular and Plural; Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine. 20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. -13-

53 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written above. RIVSERSIDE UNIFIED SCHOOL DISTRICT Superintendent ATTEST: By: Clerk of the Board WESTERN MUNICIPAL WATER DISTRICT John V. Rossi, General Manager ATTEST: By: Thomas P. Evans, Secretary of the Board of Directors [Signatures Continue on Next Page] -14-

54 LENNAR HOMES OF CALIFORNIA, INC., A California corporation By: Name: Title: -15-

55 EXHIBIT A DEPICTION OF PROPERTY -16-

56 EXHIBIT B DESCRIPTION OF PROPERTY THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND INCLUDES THE FOLLOWING PARCELS:

57 EXHIBIT C WMWD FACILITIES DESCRIPTION Acquisition Facilities. The type of Acquisition Facilities eligible to be financed by the CFD under the Act are as follows: "Acquisition Facilities" means those facilities constructed by or on behalf of Property Owner and needed by WMWD in order to provide services to the Property and also includes any of the following: WMWD sewer and water transmission lines, reclaimed water transmission lines, sewer lift stations, water pump stations, water reservoirs, including all costs of site acquisition, planning, design, engineering legal services, materials testing, coordination, surveying, construction, staking, construction inspection and any and all appurtenant facilities relating to the foregoing. The Acquisition Facilities listed above are representative of the types of facilities eligible to be financed by the CFD. Detailed scope and limits of specific projects will be determined as appropriate, consistent with the standards of WMWD. WMWD Fee Facilities. The type of WMWD Fee Facilities eligible to be financed by the CFD under the Act are as follows: Those water and sewer facilities included in WMWD s water and sewer capacity and connection fee programs used to finance expansion projects, including annexation fees, exclusive of in-tract facilities constructed by Developer. WMWD Fee Facilities include, but are not limited to the following: water and sewer transmission pipelines, sewer treatment facilities, pumping plants, lift stations, and water reservoirs, including all costs of site acquisition, planning, design, engineering, legal services, materials testing, coordination, surveying, construction staking, construction, inspection and any and all appurtenant facilities and appurtenant work relating to the foregoing. -18-

58 EXHIBIT D DISBURSEMENT REQUEST FORM (WMWD Facilities) 1. Riverside Unified School District Community Facilities District No. 32 ("CFD") is hereby requested to pay from the CFD Proceeds to Western Municipal Water District ("WMWD"), as Payee, the sum set forth in 3 below. 2. [FOR WMWD FEE FACILITIES] The undersigned certifies that the amount requested for WMWD Fee Facilities has not formed the basis of prior request or payment, and is being made with respect to the connection of the property described below to the WMWD system. [FOR ACQUISITION FACILITIES] The undersigned certifies that the amount requested for Acquisition Facilities has not formed the basis of prior request or payment, and is being made with respect to the Acquisition Facilities described below: (insert description). 3. Amount requested: For WMWD Fee Facilities: $ For Tract/Lot Nos: For Acquisition Facilities $ 4. The amount set forth in 3 above is authorized and payable pursuant to the terms of the Joint Community Facilities Agreement by and among Riverside Unified School District, WMWD, and Lennar Homes of California, Inc., dated (the "Agreement"). Capitalized terms not defined herein shall have the meaning set forth in the Agreement. By requisitioning CFD Proceeds as described above, WMWD is not passing upon, determining or assuming the tax-exempt status of the Bonds for federal or California income tax purposes. LENNAR HOMES OF CALIFORNIA, INC., A California corporation By: Name: Title: Date: -19-

59 WESTERN MUNICIPAL WATER DISTRICT By: Name: Title: Date: -20-

60 Attachment 3 Exhibit B Lennar Homes - Citrus Heights (Tract 36390) Riverside Unified School District CFD No. 32 Preliminary List of CFD Eligible Facilities September 18, 2015 Per Unit Total Units 343 Avg Home S.F. 3,408 Riverside Unified School District Total - RUSD Fees $ 21,457 $ 7,359,712 County Transportation (a) Fairway Street Improvements (b) $ 10,204 $ 3,500,000 Collector Roads (Street A, C, EE) 4,082 1,400,000 Drainage Improvements - - McAllister Street Improvements 1, ,761 Design, Planning, and Engineering (10%) 1, ,076 Total - County $ 16,967 $ 5,819,837 Western Municipal Water District (a) WMWD Added Facility Charge 3/4" Meter $ 3,048 $ 1,045,464 WMWD Sewer Connection Fee 4,500 1,543,500 WMWD Meter Fee ,620 Subtotal - WMWD Fees $ 7,888 $ 2,705,584 WMWD - 8" Reclaimed Water Line (Approx 15,000') 3,207 1,100,000 Water Improvements (Estimate) 5,248 1,800,000 Sewer Improvements (Estimate) 3,644 1,250,000 Design, Planning, and Engineering (10%) 1, ,000 Subtotal - WMWD Improvements (a) $ 13,309 $ 4,565,000 Total WMWD $ 21,197 $ 7,270,584 Total CFD Eligible Improvements $ 59,621 $ 20,450,133 Total Footnotes : (a) (b) Estimated amounts provided by Developer. Funding of Fairway Street improvements will require a JCFA with the City of Riverside and the County of Riverside as a portion of this facility is located within both jurisdictions.

61 Exhibit C Lennar Homes - Citrus Heights (Tract 36390) Riverside Unified School District CFD No. 32 CFD Effective Tax Rate & Bond Sizing Analysis September 18, 2015 Assumptions Estimated Sources & Uses of Funds Allocation of Improvement Fund Bond Issuance Date 1/1/2017 Sources Agency - Description Per Unit Total Special Tax Escalation 0.00% Par Bond Amount $ 21,025,000 RUSD School Fees $ 21,457 7,359,712 Est. Wtd Average Tax Rate 1.77% County Street Improvements 16,967 5,819,837 Weighted Average Bond Yield 4.25% Uses (e) WMWD Fees & Improvements 16,855 5,781,426 Priority Administrative Expense $ 30,000 Reserve Fund $ 1,246,745 CFD Total $ 55,280 $ 18,960,975 Capitalized Interest (Mnths TBD) - Underwriter Discount 420,500 Underwriter Discount 2.00% Cost of Issuance (2 Series) 396,780 Debt Service Coverage 110% Improvement Fund 18,960,975 Gross Special Tax Revenues $ 1,402,115 Total Uses $ 21,025,000 Special Revenues for Bonding $ 1,247,377 Land Use Information & Total Property Tax Rates Special Tax Revenues Estimated Ad Other CFD Tax Home Sq. Ft. Base Valorem Fixed Special Tax Total Tax Total Tax Special Annual Tax Zone Product Plan Size (a) Category Price (a) Taxes (b) Chrgs (c) Per Unit (d) Per Unit Rate % Tax Unit Mix Collections 1 Orchard 1 2,413 2,600 $ 525,000 $ 5,641 $ 381 $ 3,248 $ 9, % $ 3, $ 90,944 1 Orchard 2 2,820 2,601-3, ,000 5, ,420 9, % 3, ,760 1 Orchard 3 3,625 3,401-3, ,000 7, ,388 12, % 4, ,864 1 Orchard 4 4,122 3, ,000 7, ,630 12, % 4, ,640 2 Nbhd 2 1 3,100 3, ,000 6, ,766 10, % 3, ,406 2 Nbhd 2 2 3,300 3,201-3, ,000 6, ,112 11, % 4, ,704 2 Nbhd 2 3 3,500 3, ,000 7, ,457 12, % 4, ,194 3 Hillcrest 1 2,832 3, ,000 6, ,593 10, % 3, ,755 3 Hillcrest 2 3,615 3,401-3, ,000 7, ,284 11, % 4, ,940 3 Hillcrest 3 4,644 4, ,000 8, ,803 13, % 4, ,908 Total / Wtd Avg 3,408 $ 646,560 $ 6,947 $ 381 $ 4,088 $ 11, % $ 4, $ 1,402,115 Footnotes: (a) Product and pricing information provided by Lennar Homes. (b) Ad Valorem taxes for FY total % of assessed value. (c) Estimated other fixed charges and assessments included are the following: CSA No. 152 NPDES Charge (Estimate) $ MWD charges a stand by fee at a rate of $9.22 per acre, or $9.22 per parcel if less than an acre An assessment is levied by the County of Riverside for flood control improvements at an estimated amount of $4.00 per unit CSA No. 132 Street Lights (Estimate) L&LMD 89-1 C (Estimate) Total Fixed Assessments $ (d) Represents the estimated Special Tax to be levied by CFD No. 32 upon buildout of the project. The portion of the special tax allocable to the WMWD Facilities is approximately $996 per unit, which includes debt service coverage. (e) The cost to use CFD financing is between 4% and 10% of the entire issuance, depending on how much, if any, of the reserve fund is used during the term of the debt.

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63 December 14, 2015 TO THE FINANCE COMMITTEE: Director S.R. Al Lopez Director Brenda Dennstedt FROM: Rod LeMond, Assistant General Manager/CFO REPORT REQUIREMENT FOR SB 1760 WATER & SEWER CAPACITY CHARGES RECOMMENDATION: The following item is being presented to the Board of Directors for approval at the December 16, 2015 regular Board Meeting: Receive and file the report requirement for SB 1760 Water & Sewer Capacity Charges. BUDGET IMPACT: None DETAIL: SB 1760, also known as the 1998 amendment to the Fee Mitigation Act, provides that: Capacity charges must be maintained in a separate fund; Must be accounted for separately to avoid co-mingling with other monies, except for investment purposes; Revenue may be expended only for the purposes for which the capacity charge was imposed; Any interest earned on the invested funds may be used only for the same purpose; and Within 180 days of the end of each fiscal year, information must be made available regarding the charges deposited in the fund, the beginning and ending balance of the fund, interest earned, the amount of charges collected during the year, and any transfers or loans made from the fund.

64 Finance Committee December 14, 2015 Page 2 Staff has reviewed all Western Municipal Water District water and sewer charges and has prepared the attached report in compliance with SB ROD LeMOND Assistant General Manager/CFO RL:vz Attachment: SB 1760 Reporting Requirement Water & Sewer Capacity Charges for the Fiscal Year Ended June 30, 2015

65 Attachment 1 SB 1760 REPORTING REQUIREMENT WATER & SEWER CAPACITY CHARGES FOR THE FISCAL YEAR ENDED JUNE 30, 2015 RIVERSIDE POTABLE WATER NORTH ADDED FACILITY CHARGE (AFC) FUND 201 Beginning Balance at 7/1/14 $ 12,002, Funds Received for Fiscal Year , Interest Earned 224, Debt Service Payment (59,305.32) 1 Project Expenses Reclassed to Other Funding Sources During the Year: Riverside Campbell Interconnection (#3522) moved to Riverside Potable Water System Improvement Fund 137, Riverside North Recharge Basin Project (#3542) moved to Water Resource Development Fund 99, Project Expenses During the Year: Added Facility Charge (AFC) Fee Update Study (96,873.86) Mills to Lurin Pipeline (#3311) (26,528.39) Water Storage Site Study (#9079) Ending Balance at 6/30/15 $ 12,549, Debt Service Payment for 2012A Bonds relating to Harley John Reservoir (#1810). RIVERSIDE POTABLE WATER SOUTH AFC FUND 202 Beginning Balance at 7/1/14 $ - Funds Received for Fiscal Year , Debt Service Payment (66,080.00) 2 Ending Balance at 6/30/15 $ - 2 Partial Debt Service Payments for 2012A Bonds relating to El Nido 5.0 MG Reservoir and Steel Valley Improvements (#2457); and for 2010A & 2010B Bonds relating to 2320 PZ 24" Pipeline (#3216), Hidden Valley Pipe (#3258) and Hidden Valley Tank (#3218). RIVERSIDE POTABLE WATER DISTRIBUTION SYSTEM FEE (DSF) Fund 203 Beginning Balance at 7/1/14 $ 3,909, Funds Received for Fiscal Year , Interest Earned 72, Ending Balance at 6/30/15 $ 4,031,299.44

66 SB 1760 REPORTING REQUIREMENT WATER & SEWER CAPACITY CHARGES FOR THE FISCAL YEAR ENDED JUNE 30, 2015 MARCH EAST WATER AFC FUND 221 Beginning Balance at 7/1/14 $ 15, Funds Received for Fiscal Year $ 13, Interest Earned Ending Balance at 6/30/15 $ 29, MURRIETA WATER AFC FUND 231 Beginning Balance at 7/1/14 $ - Funds Received for Fiscal Year , Reimburse General District for prior Interfund Borrowings (8,585.59) Debt Service Payment (69,249.13) 3 Ending Balance at 6/30/15 $ - 3 Debt Service Payments for 2010A & 2010B Bonds relating to New Pipeline in Hayes Ave from Ivy (#3586). MURRIETA WATER DSF Fund 233 Beginning Balance at 7/1/14 $ 299, Interest Earned 5, Project Expenses During the Year: New Clay Pipeline Extension (#9097) (12,410.85) Ending Balance at 6/30/15 $ 292, WRCRWA SEWER AFC Fund 311 Adjusted Beginning Balance at 7/1/14 $ 199, Debt Service Payment (144,159.36) 4 Interest Earned 33, Addition to Capacity Rights in WRCRWA Plant for Fiscal Year (88,903.57) Ending Balance at 6/30/15 $ - 4 Debt Service Payments for Loans from State Water Resource Control Board relating to South Regional Pumping Station project, 2012A Bonds relating to WRCRWA 1996 Bonds.

67 SB 1760 REPORTING REQUIREMENT WATER & SEWER CAPACITY CHARGES FOR THE FISCAL YEAR ENDED JUNE 30, 2015 WWRF SEWER TREATMENT AFC Fund 321 Beginning Balance at 7/1/14 $ - Funds Received for Fiscal Year , Debt Service Payment (68,182.80) 5 Ending Balance at 6/30/15 $ - 5 Partial Debt Service Payments for 2012A & 2009B Bonds and 2010A & 2010B Bonds relating to WWRF Phase II Expansion (#3313). WWRF SEWER CONVEYANCE WEST AFC Fund 341 Adjusted Beginning Balance at 7/1/14 $ 8,220, Funds Received for Fiscal Year , Debt Service Payment (73,301.67) 6 Interest Earned 118, Ending Balance at 6/30/15 $ 8,293, Debt Service Payments for 2012A Bonds relating to Cajalco Sub Area Sewer project and Note Payable relating to Archer Land Purchase. MURRIETA SEWER AFC FUND 351 Beginning Balance at 7/1/14 $ 202, Interest Earned 3, Ending Balance at 6/30/15 $ 206,140.99

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69 December 14, 2015 TO THE FINANCE COMMITTEE: Director S.R. Al Lopez, Vice President Director Brenda Dennstedt FROM: Rod LeMond, Assistant General Manager/CFO CONSIDER AUTHORIZING THE USE OF WATER SUPPLY PENALTY REVENUE PREVIOUSLY EARNED TO OFFSET PURCHASED RETAIL WATER COSTS IN CALENDAR YEAR 2016 RECOMMENDATION: The following item is being presented to the Board of Directors for approval at the December 16, 2015 regular Board Meeting: Authorize the use of $650,000 in Water Supply Penalty revenue previously received from potable retail water customers in the Riverside Service Area to pay for water purchases from the city of Riverside during calendar year BUDGET IMPACT: Transferring $650,000 from the Water Supply Penalty Fund to the Riverside Potable Water Fund during calendar year 2016 will offset a portion of the cost of purchasing water from the city of Riverside. This transfer in essence lowers the cost of water to our customers, thereby allowing retail water rates in the Riverside Service Area to be lower than if the transfer was not made. BUSINESS PLAN REFERENCE: No specific Business Plan reference; this action is part of Western s routine business activities. DETAIL: During last fiscal year, approximately $723,000 in Water Supply Penalty revenue was received from retail customers in the Riverside Service Area that had potable water deliveries in the penalty tiers. Staff is seeking Board approval to use $650,000 of this revenue to purchase approximately 1,175 acre-feet of potable water during calendar year 2016 from the city of Riverside. Similar requests were approved by the Board for the last three years that authorized $650,000 in supply penalty revenue applicable to both calendar years 2015 and 2014, and $300,000 to calendar year 2013.

70 Finance Committee December 14, 2015 Page 2 of 2 According to the Public Notice sent in 2011 that described the new water supply penalty, Revenues generated from customers using water in excess of their water budget would be used to fund programs designed to increase efficiency and reduce water waste, and to acquire water necessary to meet this excessive demand. (Italics added.) The associated Board letter and resolution communicated a similar purpose for the supply penalty revenue. Since excessive demand occurred this year and is expected again this coming year (i.e. demand beyond Water Budget Tiers 1 and 2), staff and legal counsel concur that an appropriate use of the Water Supply Penalty revenue would be to acquire additional water. Even though the assumption was the cost of additional water would be more expensive than current supplies, acquiring water at less than or equal to the cost of current supplies is acceptable. An additional benefit to the District and our rate payers is acquiring this water from the City at a rate lower than MWD s rates. This allows the District to incorporate the savings into the calculation of our Tier 1 and Tier 2 potable water rates, thus benefitting all customers in the Riverside Service Area. ROD LeMOND Assistant General Manager/CFO RL:kcm

71 3E

72 December 14, 2015 TO THE FINANCE COMMITTEE: Director S.R. Al Lopez, Vice President Director Brenda Dennstedt FROM: Rod LeMond, Assistant General Manager/CFO PRESENTATION OF ANNUAL REPORTS ON THE COMMUNITY FACILITIES DISTRICT (CFD) NO. 88-1, IMPROVEMENT AREA NO. 2 OF CFD NO AND CFD NO TO COMPLY WITH THE LOCAL AGENCY SPECIAL TAX BOND AND ACCOUNTABILITY ACT RECOMMENDATION: The following item is being presented to the Board of Directors for approval at the December 16, 2015 regular Board Meeting: Receive and file the Annual Reports on the Community Facilities District (CFD) No. 88-1, Improvement Area No. 2 of CFD No and Community Facilities District No (collectively referred to as CFD s) to comply with the Local Agency Special Tax Bond and Accountability Act. BUDGET IMPACT: None BUSINESS PLAN REFERENCE: No specific Business Plan reference; this action is part of Western s routine business activities. EXECUTIVE SUMMARY: The Local Agency Special Tax Bond and Accountability Act (the Act), enacted by Senate Bill 165 (SB 165) and codified in the California Government Code Sections through 53412, requires local agencies to submit an annual report to its governing body on local

73 Finance Committee December 14, 2015 Page 2 special tax measures subject to voter approval sold after January 1, The following bonds of each of the CFD s fall within these reporting requirements: $3,630,000 Series 2011 Special Tax Bonds of Community Facilities District No $2,590,000 Series 2011 Special Tax Refunding Bonds of the Improvement Area No. 2 of CFD No $2,220,000 Series 2011 Special Tax Refunding Bonds of Community Facilities District No In September 2011, the bonds listed above were used to refinance the then outstanding bonds of the CFD s, as well as generating $615,000 in new money under CFD No to finance capital improvements in CFD Through June 30, 2015, SB 165 reporting period, approximately $322,000 of the $615,000 has been spent for modifications of the North and New Clay wells. The remaining balance of $293,000 will be spent for additional capital improvement projects. The attached reports for each of the CFD s explain and address the reporting requirements of the Act. The reports were prepared by Albert A. Webb Associates, CFD administration services provider, under Finance staff s direction. ROD LeMOND Assistant General Manager/CFO RL:ab Attachments: 1. CFD No Senate Bill 165 Annual Report 2. Improvement Area No. 2 of CFD 88-1 Senate Bill 165 Annual Report 3. CFD No Senate Bill 165 Annual Report

74 Attachment 1 Senate Bill 165 Community Facilities District No Series 2011 Special Tax Bonds Senate Bill 165 shall be cited as the Local Agency Special Tax and Bond Accountability Act. This Act requires that any local special tax/local bond measure subject to voter approval contain a statement indicating the specific purposes of the special tax, require that the proceeds of the special tax be applied to those purposes, require the creation of an account into which the proceeds shall be deposited, and require an annual report containing specified information concerning the use of the proceeds. The Act only applies to bonds issued on or after January 1, 2001 in accordance with Sections and of the California Government Code. Some of the requirements of the Act are handled at the formation (bond issuance) of the Special Tax District and others are handled through annual reports. This section of the report intends to comply with Sections and of the California Government Code that states. The chief fiscal officer of the issuing local agency shall file a report with its governing body no later than January 1, after the bonds have been issued and at least once a year thereafter. The Annual report shall contain all of the following: (a) The amount of special taxes that have been collected and expended: Fiscal Year Revenues (1) Assessments Received $ 451,453 Total Assessments Received $ 451,453 Fiscal Year Expenditures (1) Bond Principal 10/1/2014 $ 285,000 Bond Interest 10/1/ ,972 Bond Interest 4/1/ ,837 Transfer to Admin Expense Funds (2) 49,099 Total Expenditures $ 448,909 Beginning Special Tax Fund Balance $ 321,511 Ending Special Tax Fund Balance 324,055 Net Change in Special Tax Fund Balance 6/30/2015 $ 2,544 Due to additional transactions occurring subsequent to the required reporting period of June 30, 2015, the District is providing the following activities through October 31, 2015 (month of Bond Principal Due Date related to FY15 levy). Special Tax Fund activities from 7/1/ /31/2015 Beginning Special Tax Fund Balance at 7/1/2015 $ 324,055 Add: Assessments Received 32,839 Less: Bond Interest Payment 10/1/2015 (55,838) Less: Bond Principal Payment 10/1/2015 (290,000) Ending Special Tax Fund Balance at 10/31/2015 $ 11,056 (1) This is unaudited financial information. (2) This amount was transferred to the Admin Expense Fund per the Fiscal Agent Agreement to fund the Administrative Expense Account. Not all of this amount has been spent as of 6/30/2015. (b) The status of any project required or authorized to be funded as identified in subdivision (a) of Section and Section The Community Facilities District No. 88-1, of the Murrieta County Water District was formed to fund the construction of water transmission lines and storage tanks, and sewer lines. The Community Facilities District No of Western Municipal Water District Series 2011 Special Tax Bonds refunded the outstanding Series 1996 and 2000 Special Tax Bonds, previously issued by Murrieta County Water District and issued additional Bonds to provide additional funds for construction of improvements and modifications to the water supply and distribution system of the Water District servicing CFD 88-1, including the repair of the wells proximate to CFD Western Municipal Water District Community Facilities District No Senate Bill 165 for Fiscal Year ending June 30, 2015

75 Senate Bill 165 The following table shows the Initial Amount deposited to the Improvement Fund, the amount expended, the District s June 30, 2015 Improvement Fund balance and the project status: Table 4-1 Improvement Fund Balance As of June 30, 2015 District Name Initial Amount Deposited to Improvement Fund Amount Expended June 30, 2015 Balance Project Status CFD 88-1 $615, $322, $293, In Progress Improvements to be funded with the proceeds of the CFD are in progress. Western Municipal Water District Community Facilities District No Senate Bill 165 for Fiscal Year ending June 30, 2015

76 Attachment 2 Senate Bill 165 Community Facilities District No Improvement Area 2, Series 2011 Special Tax Refunding Bonds Senate Bill 165 shall be cited as the Local Agency Special Tax and Bond Accountability Act. This Act requires that any local special tax/local bond measure subject to voter approval contain a statement indicating the specific purposes of the special tax, require that the proceeds of the special tax be applied to those purposes, require the creation of an account into which the proceeds shall be deposited, and require an annual report containing specified information concerning the use of the proceeds. The Act only applies to bonds issued on or after January 1, 2001 in accordance with Sections and of the California Government Code. Some of the requirements of the Act are handled at the formation (bond issuance) of the Special Tax District and others are handled through annual reports. This section of the report intends to comply with Sections and of the California Government Code that states: The chief fiscal officer of the issuing local agency shall file a report with its governing body no later than January 1, after the bonds have been issued and at least once a year thereafter. The Annual report shall contain all of the following: (a) The amount of special taxes that have been collected and expended. Fiscal Year Revenues (1) Assessments Received $ 338,104 Total Assessments Received $ 338,104 Fiscal Year Expenditures (1) Bond Principal 10/1/2014 $ 235,000 Bond Interest 10/1/ ,829 Bond Interest 4/1/ ,244 Transfer to Admin Expense Funds (2) 33,136 Total Expenditures $ 337,209 Beginning Special Tax Fund Balance $ 256,450 Ending Special Tax Fund Balance 257,345 Net Change in Special Tax Fund Balance 6/30/2015 $ 895 Due to additional transactions occurring subsequent to the required reporting period of June 30, 2015, the Improvement Area is providing the following activities through October 31, 2015 (month of Bond Principal Due Date related to FY15 levy). Special Tax Fund activities from 7/1/ /31/2015 Beginning Special Tax Fund Balance at 7/1/2015 $ 257,345 Add: Assessments Received 24,894 Less: Bond Interest Payment 10/1/2015 (33,244) Less: Bond Principal Payment 10/1/2015 (240,000) Ending Special Tax Fund Balance at 10/31/2015 $ 8,995 (1) This is unaudited financial information. (2) This amount was transferred to the Admin Expense Fund per the Fiscal Agent Agreement to fund the Administrative Expense Account. Not all of this amount has been spent as of 6/30/2015. (b) The status of any project required or authorized to be funded as identified in subdivision (a) of Section and Section The Community Facilities District No. 88-1, Improvement Area No. 2 of the Murrieta County Water District was formed to fund the design and construction of certain street and related drainage improvements, water transmission and distribution lines, sewer lines and utility facilities. The Series 1996 Improvement Area Refunding Bonds of the Murrieta County Water District were refunded by Western Municipal Water District Series 2011 Special Tax Refunding Bonds. Western Municipal Water District Community Facilities District No Improvement Area No. 2 Senate Bill 165 for Fiscal Year ending June 30, 2015

77 Senate Bill 165 The following table shows the Initial Amount deposited to the Improvement Fund, the amount expended, the District s June 30, 2015 Improvement Fund balance and the project status. Table 4-1 Improvement Fund Balance As of June 30, 2015 District Name Initial Amount Deposited to Improvement Fund Amount Expended June 30, 2015 Balance Project Status CFD 88-1 IA 2 Not Applicable Not Applicable Not Applicable Completed The Improvements were completed prior to the issuance of the 2011 Special Tax Refunding Bonds; therefore there is no Improvement Fund. Western Municipal Water District Community Facilities District No Improvement Area No. 2 Senate Bill 165 for Fiscal Year ending June 30, 2015

78 Attachment 3 Senate Bill 165 Community Facilities District No. 99-1, Series 2011 Special Tax Refunding Bonds Senate Bill 165 shall be cited as the Local Agency Special Tax and Bond Accountability Act. This Act requires that any local special tax/local bond measure subject to voter approval contain a statement indicating the specific purposes of the special tax, require that the proceeds of the special tax be applied to those purposes, require the creation of an account into which the proceeds shall be deposited, and require an annual report containing specified information concerning the use of the proceeds. The Act only applies to bonds issued on or after January 1, 2001 in accordance with Sections and of the California Government Code. Some of the requirements of the Act are handled at the formation (bond issuance) of the Special Tax District and others are handled through annual reports. This section of the report intends to comply with Sections and of the California Government Code that states: The chief fiscal officer of the issuing local agency shall file a report with its governing body no later than January 1, after the bonds have been issued and at least once a year thereafter. The Annual report shall contain all of the following: (a) The amount of special taxes that have been collected and expended. Fiscal Year Revenues (1) Assessments Received $ 212,693 Total Assessments Received $ 212,693 Fiscal Year Expenditures (1) Bond Principal 10/1/2014 $ 90,000 Bond Interest 10/1/ ,953 Bond Interest 4/1/ ,963 Transfer to Admin Expense Funds (2) 36,071 Total Expenditures $ 212,987 Beginning Special Tax Fund Balance $ 123,240 Ending Special Tax Fund Balance 122,946 Net Change in Special Tax Fund Balance 6/30/2015 $ (294) Due to additional transactions occurring subsequent to the required reporting period of June 30, 2015, the District is providing the following activities through October 31, 2015 (month of Bond Principal Due Date related to FY14-15 levy). Special Tax Fund activities from 7/1/ /31/2015 Beginning Special Tax Fund Balance at 7/1/2015 $ 122,946 Add: Assessments Received 21,647 Less: Bond Interest Payment 10/1/2015 (42,963) Less: Bond Principal Payment 10/1/2015 (90,000) Ending Special Tax Fund Balance at 10/31/2015 $ 11,630 (1) This is unaudited financial information. (2) This amount was transferred to the Admin Expense Fund per the Fiscal Agent Agreement to fund the Administrative Expense Account. Not all of this amount has been spent as of 6/30/2015. (b) The status of any project required or authorized to be funded as identified in subdivision (a) of Section and Section The Community Facilities District No of the Murrieta County Water District Series 2000 Special Tax Bonds was formed to fund certain water and sewer facilities to pay the costs of planning, designing, acquiring, constructing and improving water and sewer facilities, school facilities meaning those grades K through 12 school facilities, including classrooms, non-classroom campus facilities, on-site office space, central support and administrative facilities, interim housing, transportation facilities and buses needed by Murrieta Valley Unified School District. Western Municipal Water District Community Facilities District No Senate Bill Fiscal Year Ending June 30, 2015

79 Senate Bill 165 The Series 2000 Special Tax Bonds were refunded by Western Municipal Water District Series 2011 Special Tax Refunding Bonds. The following table shows the Initial Amount deposited to the Improvement Fund, the amount expended, the District s June 30, 2015 Improvement Fund balance and the project status. Improvement Fund Balance As of June 30, 2015 Initial Amount Deposited to District Name Improvement Fund Amount Expended June 30, 2015 Balance Project Status CFD 99-1 Not Applicable Not Applicable Not Applicable Completed The Improvements were completed prior to the Issuance of the 2011 Special Tax Refunding Bonds; therefore there is no Improvement Fund. Western Municipal Water District Community Facilities District No Senate Bill Fiscal Year Ending June 30, 2015

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81 December 14, 2015 TO THE FINANCE COMMITTEE: Director S.R. Al Lopez Director Brenda Dennstedt FROM: Rod LeMond, Assistant General Manager/CFO CONSIDER APPROVAL TO ALLOCATE REVENUE FROM THE WATER RELIABILITY CHARGE TO FUND CERTAIN CAPITAL PROJECTS RECOMMENDATION: Staff proposes that the Finance Committee recommend the Board of Directors allocate revenue generated from the Water Reliability Charge to fund two capital projects in accordance with the previously adopted Water Reliability Charge Revenue Use Policy. The two capital projects are the Chino Desalter Phase 3 Expansion and the La Sierra Pipeline (a portion of the Riverside-Corona Feeder project). The estimated cost for the two projects, including financing costs, is $92 million, which will be paid over the next 33 years. BUDGET IMPACT: There is no impact to the Operating Budget. However, this action allows the General District Fund to be reimbursed from the Water Reliability Charge Fund for approximately $18 million in inter-fund borrowing advanced for these two projects. Of the $18 million, an initial reimbursement to the General Fund in this fiscal year is estimated at $4.5 million. In addition, this action allows the payment of approximately $74 million in future expenditures for all project costs, including financing costs, for these two projects. The reimbursement of past costs and the payment of projected future costs totals $92 million. BUSINESS PLAN REFERENCE: No specific Business Plan reference; this action is part of Western Municipal Water District s ( Western ) routine business activities. EXECUTIVE SUMMARY: A Water Reliability Charge was established by Western s Board of Directors on May 19, 2010, and is a rate applicable to all potable and non-potable retail water deliveries in