The Special Assessment Bond issuance is proposed to finance three projects for a total of approximately $4.9 million as follows:

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1 To: Harris Ranch Community Infrastructure District No.1 Board From: Anne Wescott, Galena Consulting Date: September 24, 2010 Re: September 28 th Meeting of the Harris Ranch Community Infrastructure District No. 1 Board Action Required: The District Board will consider approving the Special Assessment Feasibility Report; hold a public hearing regarding the adoption of the FY11 HRCID operating budget; consider adopting the operating budget (HRCID 8-10); and consider approving the Investment Banking Services Agreement with Stone and Youngberg (HRCID 9-10). Recommendations: 1. Special Assessment Feasibility Report: The Special Assessment Bond Feasibility Report is provided at this time for Board approval. This report includes a description of the projects to be acquired; a map showing the location of the projects; an estimate of the cost of the projects; an estimated schedule for the completion of the projects; a map of the area to be benefited by the projects; a plan for financing the projects, including debt service requirements; and a Homebuyer Disclosure Form. This report has been provided by the financial consultants for the District and reviewed by City staff, bond counsel and the City s financial management firm. The report has been revised to reflect comments made by District Board Members at the September 14 th meeting. The Special Assessment Bond issuance is proposed to finance three projects for a total of approximately $4.9 million as follows: Acquisition of Warm Spring Parkway Right-of-Way approximately $2.7 million. Construction of Greenbelt from Marianne Williams Park to Lystad approximately $1.7 million 1. Financing of sewer and water extensions necessary to begin construction on Fire Station #15 - $552, The City and developer are negotiating the terms of the construction of the Greenbelt project as part of current development agreements.

2 It is recommended that the Board approve the report as follows: I move that the Harris Ranch Community Infrastructure District No. 1 Feasibility Report for Special Assessment Bonds (Assessment Area One) dated September 21, 2010 be approved. 2. District Operating Budget Hearing: State statute requires the District to approve an operating budget and file estimates with the Clerk according to the municipal budget process. The estimated operating budget for FY11 is as follows: HARRIS RANCH COMMUNITY INFRASTRUCTURE DISTRICT NO. 1 REVENUE AND EXPENSES FOR OPERATION OF THE DISTRICT FISCAL YEAR 2011 REVENUE Developer Reimbursements $ 22,865 EXPENDITURES City Staff Legal $ 5,125 Treasurer $ 6,000 Finance $ 3,000 City Clerk $ 1,740 Subtotal City Staff $ 15,865 Other Mailing and Noticing Expenses/Fees (title, recording, etc.) $ 500 Appraisal $ 6,500 $ 22,865 Debt Proceeds General Obligation Debt Proceeds $75,000 Special Assessment Debt Proceeds $6,500,000 Use of General Obligation Debt Proceeds ($75,000) Use of Special Assessment Debt Proceeds ($6,500,000) 2 These improvements were already financed with City funds via development agreement; bond proceeds will reimburse the City. 2

3 3. HRCID It is recommended that at the conclusion of the public hearing on the proposed District operating budget that the Board considers adopting the resolution as follows: I move that HRCID 8-10, the resolution approving the District s operating budget for FY 11 be approved. 4. HRCID Pursuant to an RFP managed by the City s financial advisor, PFM, the firm of Stone & Youngberg has been selected as the underwriter for the sale of the special assessment bonds for the Harris Ranch CID. It is recommended that the District Board approve this selection. I move that HRCID 9-10, the resolution approving the District s Investment Banking Services Agreement with Stone and Youngberg be approved * * * * * * * * * * * * * * * * General comments on the agenda items: Fiscal Impact/Budget Implications: The issuance of General Obligation or Special Assessment Bonds for the CID will create no fiscal or budgetary impact to the City other than District Board, City staff, bond counsel, and outside consulting costs required to a) administer the District, and b) review and analyze proposed bond issuances. The District administrative levy on the owners of the property will recover all of these costs. The exception will be the City s need to reimburse the District approximately $1.7 million for the cost of the Greenbelt extension which will be funded by the issuance of special assessment bonds. The City is required by ordinance to fund this project by Phase 4 of the Harris Ranch project according to the terms of the Harris Ranch Specific Plan Code. The $1.7 million project cost has been included in the Parks Department s CIP updates for 2013/2014. Background: A Petition for the formation of the Harris Ranch Community Infrastructure District No. 1 was filed on April 2, City staff, bond counsel, and outside financial consultants reviewed and analyzed the Petition to determine its compliance with the State Community Infrastructure Act as well as the City s draft ordinance relating to community infrastructure districts; the feasibility of the financing plan; the degree of risk to the City; and the potential fiscal impact to the City and members of the District. Findings were presented to and discussed by Council during briefings held on January 26, February 16, March 2, March 30, and April 13. On May 11 th, the Council approved the petition and formed the District. On June 22, the District Board and City Council jointly held a public hearing and approved the annexation of the eastern portion of the Harris Ranch development into the Harris Ranch Community Infrastructure District No. 1 (CID), and modification of the District Development Agreement. On August 3, an election was held to consider the authorization of the issuance of up to $50,000,000 in general obligation bonds to finance public infrastructure improvements within the District. The bond authorization passed. On August 31, the

4 District Board approved the General Obligation feasibility report. On September 14, the District Board approved the General Obligation Bond Anticipation Note; accepting a petition from the landowners to create Assessment Area 1; ordered a public hearing be held on the Special Assessment on October 19 th ; and set a public hearing on the adoption of the FY11 operating budget for September 28 th. Next Steps City staff, bond counsel, the City financial management firm, and financial consultants for the developer continue to work to complete the necessary steps to issue the aforementioned bonds. Some of these tasks include: Preparing bond offering documents Preparing resolutions for Board consideration regarding the adoption of the special assessment district, and the criteria for the sale of the bonds. Developing a plan for the City to reimburse the District from impact fees or other revenues for costs associated with the construction of the Greenbelt extension included in the Special Assessment issuance. Developing preliminary bond offering documents. GO bonds to be sold and delivered in October. Sale of SA bonds to occur in late fall. 4

5 RESOLUTION NO. BY THE BOARD: CLEGG, EBERLE, AND SHEALY A RESOLUTION APPROVING THE INVESTMENT BANKING SERVICES AGREEMENT BETWEEN THE HARRIS RANCH COMMUNITY INFRASTRUCTURE DISTRICT NO. 1 AND STONE AND YOUNGBERG FOR BOND UNDERWRITING SERVICES; AUTHORIZING THE CHARIMAN AND CLERK TO RESPECTIVELY EXECUTE AND ATTEST SAID AGREEMENT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, pursuant to an RFP managed by the City s financial advisor, PFM, the firm of Stone & Youngberg has been selected as the underwriter for the sale of the special assessment bonds for the Harris Ranch CID. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF THE HARRIS RANCH COMMUNITY INFRASTRUCTURE DISTRICT NO. 1 (CITY OF BOISE, IDAHO): Section 1. That the Investment Banking Services Agreement between the Harris Ranch Community Infrastructure District No. 1 and Stone and Youngberg, attached hereto as Exhibit A and incorporated herein by reference, be, and the same hereby is, approved as to both form and content. Section 2. That the Chairman and District Clerk, be, and are hereby, authorized to respectively execute and attest said Agreement for and on behalf of the District. Section 3. adoption and approval. That this Resolution shall be in full force and effect immediately upon its ADOPTED and APPROVED by the Board of the Harris Ranch Community Infrastructure District No. 1, Boise, Idaho, this 28th day of September, APPROVED: ATTEST: CHAIRMAN DISTRICT CLERK HRCID-9-10

6 Exhibit A One Ferry Building, San Francisco, California (415) Via INVESTMENT BANKING SERVICES AGREEMENT September 23, 2010 Mr. Kent Rock Treasurer City of Boise, P.O. Box 500 Boise, Idaho Dear Mr. Rock: This letter will serve as an agreement between the City of Boise s Harris Ranch Community Infrastructure District (the District") and Stone & Youngberg LLC (the Underwriter ) to serve as underwriter to the District until the parties enter into a Bond Purchase Agreement (the Purchase Agreement ) regarding the negotiated sale of its 2010 Community Infrastructure District Special Assessment Bonds (the Bonds ) to be authorized and sold by the District. We understand that the District intends to issue the Bonds to raise funds for public infrastructure improvements. For this purpose, the District desires the services of the Underwriter to assist in structuring the financing and marketing the Bonds to investors. As the Underwriter for the proposed Bonds, Stone & Youngberg will use its best efforts to bring the Bonds to market at the most favorable interest rates practicable given the structure and credit quality of the Bonds and given the market conditions existing at the time of their sale. The District and the Underwriter shall mutually agree upon the date of sale, which shall be scheduled so that proceeds may be delivered to the District for the purpose of timely meeting its objectives. Nothing in this agreement shall obligate the District or the Underwriter to enter into the Purchase Agreement. The Underwriter and District agree to the following: A. Preparing the Financing 1. The Underwriter will work with the District, its Bond Counsel, Disclosure Counsel, and other members of the District's financing team in evaluating

7 City of Boise Harris Ranch CID No. 1 September 23, 2010 Page 2 of 4 specific terms and conditions affecting the Bonds for the purpose of meeting the District s financing objectives. 2. The Underwriter will work with the District to create a feasible and efficient structure for the Bonds. 3. The District and Disclosure Counsel will prepare the Official Statements (preliminary and final versions) for sale of the Bonds in accordance with the standards of Rule 15c2-12 of the Securities Exchange Commission and other applicable securities laws. The approval, execution and delivery of the Official Statement will be authorized by the District for use by the Underwriter in marketing the Bonds. 4. If requested, the Underwriter will assist the District in identifying a suitable investment vehicle for Bond proceeds. B. Marketing the Bonds 1. At least one day prior to the submission of any formal offer to the District for the purchase of the Bonds, the Underwriter will indicate to the District the anticipated interest rate or rates on the Bonds, the purchase price from the District, and the public offering price of the Bonds that the Underwriter then estimates will be included in such offer. The Underwriter will furnish information to the District relating to the interest rates for similar municipal bond issues recently sold secured by special taxes or assessments. 2. At the designated time for sale of the Bonds, the Underwriter will submit an offer to the District to purchase the Bonds by way of the Purchase Agreement. The purchase offer will be executed subject to pertinent resolutions of the District, the Official Statement, and all other necessary documents, approvals and proceedings governing such Bonds having been determined by Bond Counsel, District Counsel, the District and the Underwriter to be satisfactory in all respects for financing purposes. It is intended that once purchased, the Bonds will be re-offered to the public on the basis of a bona fide public offering. 3. The fee for the Underwriter s services will be taken in the form of a discount purchase of the Bonds and, unless specifically agreed to otherwise, is fully contingent upon the sale of the Bonds. Our final fee will be reasonably agreed to by the District taking into consideration the credit of the Bonds and prevailing market conditions, but will not exceed 1.75% of the par amount of the Bonds.

8 City of Boise Harris Ranch CID No. 1 September 23, 2010 Page 3 of 4 C. General Provisions Relating to the District and the Underwriter 1. The District agrees to make available to the Underwriter and its counsel without cost, sufficient copies of any applicable reports, agreements, contracts, resolutions and other relevant documents regarding the District and the Bonds as reasonably may be required from time to time for the prompt and efficient performance by the Underwriter of its obligations. 2. The Underwriter will pay its own out-of-pocket and other expenses, including the cost of any legal counsel which may be retained by the Underwriter, Blue Sky and any advertising expenses in connection with the public offering of the Bonds. 3. The District will pay from the proceeds of the Bonds, or otherwise, all customary costs and expenses including the cost of preparing, printing and distributing the Official Statement, and any other documents, the fees and expenses of its counsel, Bond Counsel and Disclosure Counsel, Trustee fees and expenses, and costs of any other experts or consultants retained by the District in connection with the financing. 4. The District will make its own independent decisions to enter into this transaction and as to whether the transaction is appropriate or proper for it based upon its own judgment and upon advice from advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the Underwriter as investment advice or as a recommendation to enter into the transaction. 5. It is understood and agreed that the Underwriter (including the Underwriter s employees) is an independent contractor and that no fiduciary relationship exists between the parties. It is further understood and agreed, that as independent contractors and not employees or agents of the District, neither the Underwriter nor Underwriter s assigned personnel shall have any entitlement as an District employee, right to act on behalf of the District in any capacity whatsoever as agent, nor to bind the District to any obligation whatsoever. 6. Upon 2 days written notice to the Underwriter, the District may terminate this Agreement with cause and, in the event the termination for cause is the result of the Underwriter failing to perform adequately the services outlined in Sections A or B above, the District may continue to pursue the sale of the Bonds without any further obligation or compensation owed to Stone & Youngberg.

9 City of Boise Harris Ranch CID No. 1 September 23, 2010 Page 4 of 4 Upon your acceptance set forth below, this letter will constitute an agreement between the District and the undersigned. Very truly yours, STONE & YOUNGBERG LLC This Agreement is executed on this day of September 2010 City of Boise and the Harris Ranch Community Infrastructure District