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Home My WebLink AboutRES 2005-07 - Board TRUCKEE DONNER Resolution No. 2005 - 07 RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT, ACTING AS THE LEGISLATIVE BODY OF TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 04-1 (GRAY'S CROSSING), AUTHORIZING THE SALE AND ISSUANCE OF SPECIAL TAX BONDS OF SAID COMMUNITY FACILITIES DISTRICT, APPROVING DOCUMENTS RELATING THERETO AND AUTHORIZING AND DIRECTING CERTAIN RELATED ACTIONS WHEREAS, the Board of Directors (hereinafter sometimes referred to as the "legislative body of the Community Facilities District" or the "Board"), of the Truckee Donner Public Utility District has heretofore undertaken proceedings and declared the necessity to issue bonds on behalf of Truckee Donner Public Utility District Community Facilities District No. 04-1 (Gray's Crossing) (the "Community Facilities District") pursuant to the terms and provisions of the Mello- Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the "Act"); and WHEREAS, based upon a resolution adopted by the legislative body of the Community Facilities District on June 16, 2004 and an election held on July 21, 2004 authorizing the issuance of bonds by the Community Facilities District, the Community Facilities District is now authorized to issue bonds in one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $35,000,000; and WHEREAS, the Community Facilities District and The Bank of New York Trust Company, N.A., successor in interest to BNY Western Trust Company, (the "Trustee") have heretofore entered into the Trust Indenture dated as of March 1, 2004 (the "Original Indenture") and, pursuant thereto, the Community Facilities District has issued bonds in an aggregate principal amount of $15,375,000 designated as the Truckee Donner Public Utility District Community Facilities No. 04-1 (Gray's Crossing) Special Tax Bonds, Series 2004 (the "2004 Bonds"); and WHEREAS, the legislative body of the Community Facilities District intends to provide additional funds the financing of the cost of planning, designing, constructing, acquiring, modifying, expanding, improving, furnishing, equipping or rehabilitating certain improvements, and all appurtenances and appurtenant work in connection with the foregoing (collectively, the "Facilities") and the incidental expenses incurred and to be incurred in connection with financing the Facilities, including costs associated with the issuance of bonds and the establishment and replenishment of a bond reserve fund, through the issuance of bonds in an aggregate principal amount not to exceed $19,625,000 designated as the "Truckee Donner Public Utility District Community Facilities District No. 04-1 (Gray's Crossing) Special Tax Bonds, Series 2005" (the "2005 Bonds" and, together with the 2004 Bonds, the "Bonds") that will constitute "Parity Bonds" within the meaning of the Original Indenture; and WHEREAS, the legislative body of the Community Facilities District has determined all requirements of the Act for the issuance of the 2005 Bonds as Parity Bonds under the Original Indenture have been satisfied; WHEREAS, in connection with the authorization, sale and issuance of the Bonds and the acquisition and construction of the facilities, forms of the following documents have been presented to this Board for approval: 1. the First Supplemental Trust Indenture, dated as of June 1, 2005, by and between the District and the Trustee (the "First Supplemental Indenture"); 2. the Continuing Disclosure Agreement, dated as of June 1, 2005 by and between MuniFinancial, as dissemination agent (the "Dissemination Agent"), and the Community Facilities District (the "Continuing Disclosure Agreement"); 3. the Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement"); and 4. the Bond Purchase Agreement relating to the Bonds (the "Bond Purchase Agreement") by and between the Community Facilities District and UBS Financial Services Inc. (the "Underwriter"); NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT, ACTING AS THE LEGISLATIVE BODY OF TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 04-1 (GRAY'S CROSSING), DOES HEREBY RESOLVE, DETERMINE, AND ORDER AS FOLLOWS: Section 1. The above recitals, and each of them, are true and correct. Section 2. The proposed forms of the First Supplemental Indenture and the Continuing Disclosure Agreement are hereby approved; and the President of the Board of Directors (the "President") and the District Clerk (the "Clerk") are hereby authorized and directed for and in the name and on behalf of the Community Facilities District to execute, acknowledge and deliver to the respective other parties, the First Supplemental Indenture and the Continuing Disclosure Agreement in substantially said forms, with such additions thereto, completions thereof and/or changes therein as the officers executing the same may approve as necessary or desirable (consistent with the provisions of this Resolution and with form of the Bond Purchase Agreement approved pursuant hereto), such approval to be conclusively evidenced by the execution and delivery thereof. Section 3. The issuance of the Bonds pursuant to the Original Indenture and the First Supplemental Indenture in an aggregate principal amount approved by the General Manager of the Truckee Donner Public Utility District (the "General Manager") as being necessary to fund the various funds and accounts created by the Indenture in the amounts specified in the Preliminary Official Statement (or as determined by the General Manager), and to pay the costs of issuing the Bonds and the other costs described in the Preliminary Official Statement, is hereby authorized, Res. 2005-07 2 provided that the principal amount of the Bonds shall not exceed the lesser of: (a) $19,625,000 or (b) the remainder of (i) one-quarter of the value of the property within the Community Facilities District that will be subject to the Special Tax, as such value is estimated in an appraisal prepared for the Community Facilities District by Christopher T. Donaldson, MAI, CCIM (a copy of which is set forth in Appendix B to the Preliminary Official Statement) minus the principal amount of all other bonds outstanding, if any, that are secured by a special tax levied pursuant to the Act on property within the Community Facilities District or a special assessment levied on such property (as shown in the report of California Municipal Statistics, Inc. which appears as Table 2 in the Preliminary Official Statement). The Bonds shall mature on the dates and in the amounts, and bear interest at the rates, set forth in the Bond Purchase Agreement to be executed on behalf of the Community Facilities District in accordance with Section 8 hereof. Section 4. In connection with the issuance of the Bonds, the President and the Clerk are hereby authorized and directed for and in the name and on behalf of the Community Facilities District to execute, acknowledge and deliver to the respective other parties such additional agreements, as the officers executing the same may approve (including, but not limited to an Investment Agreement, as defined in the Original Indenture) as necessary or desirable to provide reductions in the yields of Bonds or additional debt service relief or cash flow savings or increased payments to the Community Facilities District, such approval to be conclusively evidenced by the execution and delivery thereof. Section 5. The form of the Bonds, as set forth in the form of the First Supplemental Indenture (as the Indenture may be modified pursuant to Section 2 hereof), is hereby approved; and the President and the Clerk are hereby authorized and directed to execute them by manual or facsimile signature in the name and on behalf of the Community Facilities District. Section 6. The proposed form of the Preliminary Official Statement is hereby approved with such changes thereto as may be approved by the General Manager in order to make such Preliminary Official Statement final as of its date, except for the omission of certain information, as permitted by Section 240.15c2-12(b)(1) of Title 17 of the Code of Federal Regulations (the "Rule"); and the distribution of the Preliminary Official Statement in connection with the sale of the Bonds, with such changes included, is hereby authorized. The General Manager is authorized and directed to execute and deliver a certificate relating to compliance with the Rule. The President and the General Manager are each authorized and directed, jointly and severally, to execute and deliver to the Underwriters a final Official Statement in substantially the form of the Preliminary Official Statement hereby approved with such changes as may be approved by the officer executing said document as necessary or desirable, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. In accordance with the provisions of Section 53360.4, the Board hereby finds and determines that a negotiated sale of the Bonds to the Underwriters in accordance with the terms of the Bond Purchase Agreement will result in a lower overall cost to the Community Facilities District than a sale conducted pursuant to Section 53360 of the Act. Section 8. The proposed form of the Bond Purchase Agreement and the sale of the Bonds pursuant thereto are hereby approved, provided that (a) the aggregate purchase price of the Bonds (exclusive of any original issue discount) shall not be less than ninety-eight and seventy hundredths percent (98.70%) of the original aggregate principal amount of the Bonds, (b) the average annual rate of interest on the Bonds shall not exceed six and one-half percent (6.5%), (c) the final maturity of the Bonds shall be not later than September 1, 2035 and (d) the maturity dates and purchase price of and interest rates applicable to the Bonds shall have been approved by a pricing committee consisting of the General Manager, the Assistant General Manager, and the Res. 2005-07 3 Administrative Services Manager with the advice of Fieldman, Rolapp &Associates; and, subject to such approval, the President and the Clerk are hereby authorized and directed to evidence the Community Facilities District's acceptance of the offer made by said Bond Purchase Agreement by executing and delivering to the Underwriters said Bond Purchase Agreement in said form with such changes therein as the officers executing the same may approve as necessary or desirable, such approval to be conclusively evidenced by the execution and delivery thereof. Section 9. In the event the President is unavailable to execute and deliver any of the documents that the President is authorized and directed to execute and deliver pursuant to the terms of this Resolution, then any other member of this Board is hereby authorized and directed to do so. Any of the documents that the General Manager is authorized and directed to execute and deliver pursuant to the terms of this Resolution may be executed by any officer of the Truckee Donner Public Utility District designated to do so by the General Manager. Section 10. The President and the General Manager and other officers of the Truckee Donner Public Utility District are hereby authorized and directed, jointly and severally, to execute and sign any and all approvals, certificates, statements, requests, requisitions and orders of the Community Facilities District in connection with the issuance of the Bonds; and any action specifically authorized or directed by this Resolution to be undertaken by any of such officers may be undertaken by either of the others with the same force and effect as if it had been undertaken by the officer specifically authorized or directed to do so. Section 11. If any section, paragraph or provision of this Resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any remaining provisions of this Resolution. Section 12. This Resolution shall take effect from and after its adoption. ADOPTED and APPROVED by the Board of Directors of the Truckee Donner Public Utility District on this 1st day of June, 2005 by the following vote: AYES: Directors Aguera, Hemig and Thomason NOES: Director Sutton RECUSE: Director Taylor ABSENT: None ABSTAIN: None TRUCKEE DONNER P BLIC UTILITY DISTRICT By: J. o emig, President of the Boar of Directors ATTEST: Peter L. Holzmeis er, District Clerk Res. 2005-07 4 TRUST INDENTURE a THIS FIRST SUPPLEMENTAL TRUST INDENTURE,dated as of June 1,2005, supplements the Trust Indenture between Truckee Donner Public Utility District Community 1 Facilities District No.04-1(Gray's Crossing)and The Bank of New York Trust Company,N.A., (successor in interest to"BNY Western Trust Company"),dated as of September 1,2004,governing s the terms of the District's Special Tax Bonds. x RECITALS. WHEREAS,the Board of Directors(hereinafter sometimes referred to as the"legislative body of the District")of the Truckee Donner Public Utility District has heretofore undertaken FIRST SUPPLEMENTAL TRUST INDENTURE proceedings and declared the necessity to issue bonds on behalf of Truckee Donner Public Utility District Community Facilities District No.04-1(Gray's Crossing)(the"District")pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982,as amended,being Between Chapter 2.5,Part 1,Division 2,Title 5,of the Government Code of the State of California(the "Act");and TRUCKEE DONNER PUBLIC UTILITY DISTRICT WHEREAS,based upon a resolution adopted by the legislative body of the District on COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) July 21,2004 and an election held on July 21,2004 authorizing the levy of a special tax and the issuance of bonds by the District,the District is now authorized to issue bonds in one or more series, pursuant to the Act,in an aggregate principal amount not to exceed$35,000,000;and r And WHEREAS,the District and The Bank of New York Trust Company,N.A.(successor in g interest to BNY Western Trust Company)(the"Trustee")have heretofore entered into the Trust THE BANK OF NEW YORK TRUST COMPANY,N.A., Indenture dated as of March 1,2004(the"Original Indenture")and,pursuant thereto,the District has as Trustee issued bonds in an aggregate principal amount of$15,375,000 designated as the Truckee Donner Public Utility District Community Facilities No.04-1(Gray's Crossing)Special Tax Bonds,Series 2004(the"2004 Bonds");and TRUCKEE DONNER PUBLIC UTILITY DISTRICT WHEREAS,the legislative body of the District intends to provide additional funds the COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) financing of the cost of planning,designing,constructing,acquiring,modifying,expanding, SPECIAL TAX BONDS improving,furnishing,equipping or rehabilitating certain improvements,and all appurtenances and appurtenant work in connection with the foregoing(collectively,the"Facilities")and the incidental expenses incurred and to be incurred in connection with financing the Facilities,including costs Dated as of June 1,2005 associated with the issuance of bonds and the establishment and replenishment of a bond reserve fund,through the issuance of bonds in an aggregate principal amount of$ designated as the"Truckee Donner Public Utility District Community Facilities District No.04-1(Gray's Crossing)Special Tax Bonds,Series 2005"(the"2005 Bonds"and,together with the 2004 Bonds, the"Bonds")that will constitute"Parity Bonds"within the meaning of the Original Indenture;and WHEREAS,the legislative body of the District has determined all requirements of the Act for the issuance of the 2005 Bonds as Parity Bonds under the Original Indenture have been satisfied; NOW,THEREFORE,in order to establish the terms and conditions upon and subject to which the 2005 Bonds are to be issued,and in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the 2005 Bonds by the Owners thereof,and for other valuable consideration,the receipt of which is hereby acknowledged,the District and The Bank of New York Trust Company,N.A.,as Trustee,hereby covenant and agree, 1 DOCSOC/1102124v4/22925-0016 DOCSOC/1102124v4/22925-0016 `t Section 11.5 Redemption of 2005 Bonds. The 2005 Terns Bonds maturing on September 1, shall be called before maturity and redeemed,from the Sinking Fund Payments that have been deposited into the Principal Account,on (c) Optional Redemption. Subject to the limitations set forth below,the 2005 Bonds may September 1, ,and on each September 1 thereafter prior to maturity,in accordance with the be redeemed,at the option of the District from any source of funds,other than Prepayments,on any schedule of Sinking Fund Payments set forth below. The Bonds so called for redemption shall be Interest Payment Date,in whole,or in part in the order of maturity selected by the District and by lot selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Bond within a maturity,at the following redemption prices,expressed as a percentage of the principal equal to the principal amount thereof,plus accrued interest to the redemption date,without premium, i amount to be redeemed,together with accrued interest to the date of redemption: as follows: Redemption Dates Redemption Prices Redemption Date (September 1) Principal Amount In the event the District elects to redeem 2005 Bonds as provided above,the District shall give written notice to the Trustee of its election to so redeem,the redemption date and the principal (maturity) amount of the Bonds to be redeemed. The notice to the Trustee shall be given at least 60 but no more than 90 days prior to the redemption date,or such shorter period as shall be acceptable to the Trustee. If during the Fiscal Year immediately preceding one of the redemption dates specified in(b) above the District purchases 2005 Term Bonds,at least 45 days prior to the applicable redemption (d) Mandatory Sinking Fund Redemption. The 2005 Term Bonds maturing on date the District shall deliver to the Trustee a Certificate of an Authorized Representative specifying September 1, shall be called before maturity and redeemed,from the Sinking Fund Payments the principal amount purchased and the principal amount of 2005 Bonds so purchased shall be that have been deposited into the Principal Account,on September 1, ,and on each September credited at the time of purchase,to the extent of the full principal amount thereof,to reduce such ` 1 thereafter prior to maturity,in accordance with the schedule of Sinking Fund Payments set forth upcoming Sinking Fund Payment for such Term Bonds. All Bonds purchased pursuant to this below. The Bonds so called for redemption shall be selected by the Trustee by lot and shall be subsection shall be cancelled pursuant to Section 10.1. redeemed at a redemption price for each redeemed Bond equal to the principal amount thereof,plus accrued interest to the redemption date,without premium,as follows: In the event of a partial redemption of 2005 Term Bonds,other than as a result of Sinking Fund Payments,each of the remaining Sinking Fund Payments for such 2005 Term Bonds that were Redemption Date partially redeemed,as described above,will be reduced,as nearly as practicable,on a pro rata basis (September 1) Principal Amount in increments of$5,000,and the District shall provide the Trustee with a revised sinking fund $ schedule. (e) Spgcial Mandatory Redemption From Prepayments. The 2005 Bonds are subject to special mandatory redemption on any Interest Payment Date from amounts on deposit in the Prepayment Account,in integral multiples of$5,000,in whole or in part as hereinafter provided,at f the following redemption prices,expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: (maturity) Redemption Dates Redemption Prices t The Trustee shall select 2005 Bonds for redemption pursuant to the provisions of this subsection from the maturities of all Bonds of all Series so that the ratio of Outstanding Bonds to the Bonds originally issued shall be approximately the same in each maturity of each Series as specified by the District. The particular Bonds of each maturity of a Series to be redeemed shall be selected by lot in whatever manner the Trustee chooses. 3 4 5 DOCSOC/l 102124e4/22925-0016 DOCSOC/1102124v4/22925-(N 16 the month in which the Interest Payment Date occurs(the"Record Date")at such Registered The Bonds are also subject to special mandatory redemption on any Interest Payment Date,in Owner's address as it appears on the registration books maintained by the Trustee. whole or in part,from certain funds derived from the prepayment of Special Taxes,at the following redemption prices,expressed as a percentage of the principal amount thereof,together with accrued This Bond is one of a duly authorized issue of"Truckee Donner Public Utility District interest to the date of redemption: Community Facilities District No.04-1(Gray's Crossing)Special Tax Bonds,Series 2005"(the Redemption Dates Redemption Prices "Bonds")issued in the aggregate principal amount of$ pursuant to the Mello-Roos Community Facilities Act of 1982,as amended,being Sections 53311 et seq.,of the California Government Code(the"Act"). The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the Board of Directors of the Truckee Donner Public Utility District,acting in its capacity as the legislative body of the District on August 18,2004 and a Trust Indenture dated as of September 1,2004,by and between the District and the Trustee,as supplemented by a First Supplemental Trust Indenture between the District and the Trustee,dated as Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the of May 1,2005(the"Indenture"),and this reference incorporates the Indenture herein,and by registered owners thereof not less than 30 nor more than 60 days prior to the redemption date by first acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The class mail,postage prepaid,to the addresses set forth in the registration books. Neither a failure of Bonds are issued as Parity Bonds under the Indenture and are secured on a parity with the District's the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of Special Tax Bonds,Series 2004,which were issued under and pursuant to the Indenture in an the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to aggregate principal amount of$15,375,000. The Indenture is adopted under and this Bond is issued accrue interest on the specified redemption date;provided that funds for the redemption are on under,and both are to be construed in accordance with,the laws of the State of California. deposit with the Trustee on the redemption date. Thereafter,the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Pursuant to the Act and the Indenture,the principal of,premium,if any,and interest on this Bonds. Bond are payable solely from the annual special taxes authorized under the Act to be levied and collected within the District and certain other amounts pledged to the repayment of the Bonds as set This Bond shall be registered in the name of the Registered Owner hereof,as to both forth in the Indenture. The District has covenanted for the benefit of the owners of the Bonds that principal and interest,and the District and the Trustee may treat the Registered Owner hereof as the under certain circumstances described in the Indenture it will commence and diligently pursue to absolute owner for all purposes and shall not be affected by any notice to the contrary. completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds. The Bonds are issuable only in fully registered form in the denomination of$5,000 or any 4 integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of f other authorized denominations of the same issue and maturity,all as more fully set forth in the Subject to the further limitations set forth in the Indenture,the Bonds may be redeemed,at the option of the District from any source of funds on any Interest Payment Date,in whole,or in part Indenture. This Bond is transferable by the Registered Owner hereof,in person or by his attorney in the order of maturity selected by the District and by lot within a maturity,at the following duly authorized in writing,at the principal office of the Trustee or such other location as may be redemption prices,expressed as a percentage of the principal amount thereof,together with accrued designated by the Trustee,but only in the manner,subject to the limitations and upon payment of the interest to the date of redemption: charges provided in the Indenture,upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal Redemption Dates Redemption Prices amount of the same issue and maturity will be issued to the transferee in exchange therefor. The Trustee shall not be required to register transfers or make exchanges of(i)any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed,or(ii)any Bonds chosen for redemption. In addition,the Tern►Bonds maturing on September 1, and September 1, are The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time,and in certain cases without notice to or the consent of the registered owners,to subject to mandatory sinking fund redemption prior to maturity commencing on September 1, and September 1,_,respectively,in part,by lot,from Sinking Fund Payments(as defined in the the extent and upon the terms provided in the Indenture. Indenture)at a redemption price equal to the principal amount thereof,plus accrued interest to the THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE TRUCKEE DONNER date of redemption,without premium,to the extent,in the manner and subject to the terms of the PUBLIC UTILITY DISTRICT OR OF TRUCKEE DONNER PUBLIC UTILITY DISTRICT Indenture. COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING)FOR WHICH THE j TRUCKEE DONNER PUBLIC UTILITY DISTRICT OR THE DISTRICT IS OBLIGATED TO In the event of a partial redemption of Term Bonds,other than as a result of Sinking Fund ,each of the remaining Sinking Fund Payments for the Term Bonds that were partially LEVY OR PLEDGE,OR HAS LEVIED OR PLEDGED,GENERAL OR SPECIAL TAXES, Payments OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED redeemed will be reduced,as nearly as practicable,on a pro rata basis. A-3 A-2 DOCSOC/1102124v4/22925-0016 DOCSOC/1102124v4/22925-0016 s i s [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson&Rauth,a Professional Corporation,in connection with the issuance of,and dated as of the date of the original delivery of,the Bonds. A signed copy is on file in my office. I District Clerk of the Truckee Donner Public Utility District [FORM OF ASSIGNMENT] For value received the undersigned do(es)hereby sell,assign and transfer unto 6 3 (typewrite name,address and social security or federal tax identification number) t the within-registered Bond and hereby irrevocably constitute(s)and appoint(s) attorney, to transfer the same on the Bond Register of the Trustee with full power of substitution in the premises. Dated: Signature Guaranteed: E Note: Signature guarantee shall be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the k Trustee. Note: The signature(s)on this assignment must correspond with the name(s)as written on the face of the within-registered Bond in every particular,without alteration or enlargement or any change whatsoever. A-6 DOCSOC/1102124v4/22925-0016 PRELIMINARY OFFICIAL STATEMENT DATED JUNE_,2005 .2 NEW ISSUE-BOOK-ENTRY-ONLY NO RATING sr c_� In the opinion oJ'Stradling Yocca Carlson&Routh.a Professional Corporation.Newport Beach,California("Bond Counsel'). C s under existing statutes,regulations.rulings and judicial decisions,and assuming certain representations and compliance with certain n y covenants and requirements described herein,interest(and onQinal issue discount)on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes ojcalculating the federal alternative minimum tax imposed MATURITY SCHEDULE* c° on individuals and corporations. In the further opinion o Boma+Counsel,interest(and original issue discount)on the Bonds is exempt T a from State o(fCalifornia ersonal income tax andthe difference between the issue puce of Bond(the first price at which a substantial a T amount oj14 Bonds a a maturity is to be sold to the public)and the stated redemption price at maturity with respect to the Bond t c constitutes original issue discount.'See"TAXAIA7TER.S'herein with respect to tax consequences relating to the Bonds. Maturity $18,250,000 Date Principal Interest E E (September 1) Amount Rate Price C y o @ TRUCKEE DONNER PUBLIC UTILITY DISTRICT T A COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) SPECIAL TAX BONDS,SERIES 2005 Dated:Date of Delivery Due:September 1,as shown on the inside page The Truckee Donner Public Utility District Community Facilities District No.04-1(Gray's Crossing)Special Tar Bonds, A ;, Series 2005(the"Bonds')are being issued and delivered to finance various public improvements needed to develop property located E within Community Facilities District No.04-1(Grays Crossing)(the"District"). The District has been formed by Truckee Donner $ `o Public Utility District("TDPUD")and is located in the Town of Truckee(the"Town"),County of Nevada,California. 9=•E The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982,as amended (Sections 53311 et sea.of the Government Code of the State of California),and pursuant to a Trust Indenture,dated as of September 1, 2004,by and between the District and The Bank of New York Trust Company,N.A.,as trustee(the"Trustee"),as supplemented by a o E�.2 First Supplemental Trust Agreement,dated as of June 1,2005,by and between the District and the Trustee(as supplemented,the au "Indenture"). The Bonds are special obligations of the District and are payable on a parity with the$15,375,000 outstanding aggregate E ,°, principal amount of the District's Special Tar Bonds,Series 2004 solely from revenues derived from certain annual Special Taxes(as Qdefined herein)to be levied on and collected from the owners of the taxable land within the District and from certain other funds pledged y under the Indenture,all as further described herein. The Special Taxes are to be levied according to the rate and method of apportionment approved by the Board of Directors of TDPUD and the qualified electors within the District. See"SOURCES OF PAYMENT FOR THE BONDS-Special Taxes."The Board of Directors of TDPUD is the legislative body of the District. E'96 The Bonds are issuable in fully registered form and when issued will be registered in the name of Cede&Co.,as nominee of '= E The Depository Trust Company,New York,New York("DTC").Individual purchases may be made in principal amounts of$5,000 and o 0 ( �° integral multiples thereof and will be in book-entry form only. Purchasers of Bonds will not receive certificates representing their $ /o Term Bond due September 1,20_Yield: /o € E beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be $ %Term Bond due September 1,20_Yield: % a transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described herein. interest on the Bonds will v p E be payable on September 1,2005 and semiannually thereafter on each March 1 and September 1. Principal of and interest on the Bonds E will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the `o.g beneficial owners of the Bonds.See"THE BONDS-Description of the Bonds"and"-Book-Entry-Only System"herein. t c n Neither the faith and credit nor the taxing power of TDPUD,the County of Nevada,the State of California or any political 15 E a subdivision thereof is pledged to the payment of the Bonds. Except for the Special Taxes,no other taxes are pledged to the payment of o the Bonds. The Bonds are special tax obligations o the District able sole) rom amounts derived from certain annual Special Taxes p g I' per' vJ f ne (as defined herein)and other amounts held under the Indenture as more fully described herein. The Bonds are subject to optional redemption,special mandatory redemption and mandatory sinking fund redemption prior to y o maturity as set forth herein.See"THE BONDS-Redemption"herein. .� CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE DISTRICT TO PAY THE PRINCIPAL OF AND 9 INTEREST ON THE BONDS WHEN DUE. THE PURCHASE OF THE BONDS INVOLVES SIGNIFICANT RISKS,AND A E.2 THE BONDS ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS. SEE THE SECTION OF THIS OFFICIAL ,'a $ STATEMENT ENTITLED"SPECIAL RISK FACTORS"FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT t SHOULD BE CONSIDERED,IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN,IN EVALUATING THE T °c c INVESTMENT QUALITY OF THE BONDS. a u This cover page contains certain information for general reference only. It is not intended to be a summary of the security or c terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an u informed investment decision. c t •�� 3 MATURITY SCHEDULE w.o (See Inside Cover Page) .o a 'C > The Bonds are offered when,as and if issued and accepted by the Underwriter,subject to approval as to their legality by a Stradling Yocca Carlson&Rauth,a Professional Corporation,Bond Counsel,and subject to certain other conditions. Certain iegal matters will be passed on for TDPUD and the District by Dennis W.De Cuir,A Law Corporation,Roseville,California,for the o Developer by its counsel Hefner,Stark&Marois LLP,Sacramento,California,and for the Underwriter by its counsel Nossaman, i y E:= Guthner,Knox&Elliot LLP,Irvine,California.It is anticipated that the Bonds in book-entry form will be available for delivery to DTC ;a 2 in New York,New York,on or about July 13,2005. v UBS FINANCIAL SERVICES INC. O 6 E Dated: 2005 S O o Preliminary,subject to change. E s •Preliminary,subject to change. £ DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-W I6 a 4 I `t TABLE OF CONTENTS TABLE OF CONTENTS Page Page EndangeredSpecies......................................................................................................................................36 INTRODUCTION.................................................................................................................................................1 Natural Disasters..........................................................................................................................................36 General...........................................................................................................................................................I Hazardous Substances..................................................................................................................................37 Forward Looking Statements..........................................................................................................................I Parity Taxes and Special Assessments.........................................................................................................37 TheDistrict.....................................................................................................................................................2 Disclosures to Future Purchasers..................................................................................................................37 C Sources of Payment for the Bonds..................................................................................................................3 Non-Cash Payments of Special Taxes.......................... s Description of the Bonds................................................................................................................................4 Payment of the Special Tax Is Not a Personal Obligation of the Owners....................................................38 TaxMatters.....................................................................................................................................................4 Land Values..................................................................................................................................................38 Professionals Involved in the Offering...........................................................................................................4 FDIC/Federal Government Interests in Properties.......................................................................................39 ContinuingDisclosure....................................................................................................................................5 Bankruptcy and Foreclosure.........................................................................................................................40 Bondowners'Risks.........................................................................................................................................5 No Acceleration Provision............................................................................................................................41 OtherInformation...........................................................................................................................................5 Loss of Tax Exemption.................................................................................................................................41 ESTIMATEDSOURCES AND USES OF FUNDS.............................................................................................6 Limitations on Remedies..............................................................................................................................41 LimitedSecondary Market...........................................................................................................................41 tTHE BONDS.........................................................................................................................................................7 Proposition 218.............................................................................................................................................42 ' General Provisions..........................................................................................................................................7 Ballot Initiatives...........................................................................................................................................43 Redemption.....................................................................................................................................................7 Book-Entry-Only System...............................................................................................................................9 CONTINUING DISCLOSURE..........................................................................................................................43 Debt Service Schedule for the Bonds...........................................................................................................12 TAX MATTERS.................................................................................................................................................44 SOURCESOF PAYMENT FOR THE BONDS.................................................................................................13 Tax Opinion and Certain Matters.................................................................................................................44 GeneralProvisions........................................................................................................................................13 Special Circular 230 Tax Disclaimer............................................................................................................45 SpecialTaxes................................................................................................................................................13 LEGAL OPINION..............................................................................................................................................45 SpecialTax Fund..........................................................................................................................................14 LITIGATION......................................................................................................................................................45 Principal Account and Interest Account.......................................................................................................14 r Reserve Account...........................................................................................................................................14 NO RATING.......................................................................................................................................................45 AdministrativeExpense Account..................................................................................................I..............15 Acquisitionand Construction Fund..............................................................................................................15 UNDERWRITING..............................................................................................................................................46 Proceedsof Foreclosure Sales......................................................................................................................16 FINANCIAL INTERESTS.................................................................................................................................46 Reduction of Maximum Special Taxes.........................................................................................................16 ParityBonds.................................................................................................................................................17 PENDING LEGISLATION................................................................................................................................46 LimitedObligation.......................................................................................................................................19 ADDITIONAL INFORMATION.......................................................................................................................47 THE COMMUNITY FACILITIES DISTRICT..................................................................................................21 General Description of the District...............................................................................................................21 APPENDIX A-RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX................................A-1 Descriptionof Authorized Facilities.............................................................................................................21 APPENDIX B-COMPLETE APPRAISAL..................................................................................................... Taxpayers.....................................................................................................................................................21 APPENDIX C-GENERAL INFORMATION CONCERNING THE TOWN OF TRUCKEE.......................C-1 Estimated Direct and Overlapping Indebtedness..........................................................................................21 APPENDIX D-SUMMARY OF INDENTURE............................................................................................. Expected Tax Burden...................................................................................................................................23 APPENDIX E-CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT...................................E-1 Appraisal.......................................................................................................................................................23 APPENDIX F-CONTINUING DISCLOSURE AGREEMENT OF DEVELOPER......................................F-1 Estimated Value-to-Lien Ratios...................................................................................................................24 APPENDIX G-FORM OF OPINION OF BOND COUNSEL.......................................................................G-1 THE DEVELOPMENT AND PROPERTY OWNERSHIP................................................................................26 TheDeveloper..............................................................................................................................................26 DevelopmentPlan........................................................................................................................................28 EnvironmentalCompliance..........................................................................................................................33 ° Development Agreement..............................................................................................................................33 SPECIALRISK FACTORS................................................................................................................................33 Concentrationof Ownership.........................................................................................................................33 LimitedObligations......................................................................................................................................34 Insufficiencyof Special Taxes.....................................................................................................................34 TaxDelinquencies........................................................................................................................................34 Failureto Develop Properties.......................................................................................................................35 Future Land Use Regulations and Growth Control Initiatives.....................................................................35 i n DOCSSF/50914v6/22925-(X)16 DOCSSF/50914v6/22925-0016 $18,250,000" FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH TRUCKEE DONNER PUBLIC UTILITY DISTRICT FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL SPECIAL TAX BONDS,SERIES 2005 STATEMENT. The District INTRODUCTION Formation Proceedings. The District has been formed by the Truckee Donner Public Utility District General ("TDPUD")pursuant to the Act. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services,especially in developing areas of the State of This introduction is not a summary of this Official Statement. It is only a brief description of and California(the"State"). Any local agency(as defined in the Act)may establish a community facilities district guide to,and is qualified by,more complete and detailed information contained in the entire Official Statement to provide for and finance the cost of eligible public facilities and services. Generally,the legislative body of and the documents summarized or described herein. A full review should be made of the entire Official the local agency which forms a community facilities district acts on behalf of such district as its legislative Statement. The sale and delivery of Bonds(as defined below)to potential investors is made only by means of body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other the entire Official Statement. All capitalized terns used in this Official Statement and not defined shall have provisions of the Act,a legislative body of a local agency may issue bonds for a community facilities district the meanings set forth in Appendix D-"SUMMARY OF INDENTURE—Definitions." and may levy and collect a special tax within such district to repay such indebtedness. The Board of Directors of TDPUD(the"Board of Directors")acts as the legislative body of the District. The purpose of this Official Statement,which includes the cover page,the table of contents and the attached appendices(collectively,the"Official Statement"),is to provide certain information concerning the Pursuant to the Act,the Board of Directors adopted the necessary resolutions stating its intent to issuance of the$18,250,000*Truckee Donner Public Utility District Community Facilities District No.04-1 establish the District,to authorize the levy of Special Taxes on taxable property within the boundaries of the (Gray's Crossing)Special Tax Bonds,Series 2005(the'Bonds"). The proceeds of the Bonds will be used to District,and to have the District incur bonded indebtedness. Following public hearings conducted pursuant to l construct and acquire various public improvements needed with respect to the proposed development within the provisions of the Act,the Board of Directors adopted resolutions establishing the District and calling Truckee Donner Public Utility District Community Facilities District No. 04-1 (Gray's Crossing) (the special elections to submit the levy of the Special Taxes and the incurring of bonded indebtedness to the "District"),to fund the Reserve Account securing the Bonds,to fund capitalized interest on the Bonds and to qualified voters of the District. On July 21,2004,at an election held pursuant to the Act,the landowners who F pay costs of issuance of the Bonds. comprised the qualified voters of the District,authorized the District to incur bonded indebtedness in the aggregate principal amount not to exceed$35,000,000 and approved the rate and method of apportionment of f The Bonds are authorized to be issued pursuant to Mello-Roos Community Facilities Act of 1982,as the Special Taxes for the District to pay the principal of and interest on the bonds of the District which is set amended(Sections 53311 et.5M.of the Government Code of the State of California)(the"Act")and a Trust forth in Appendix A hereto(the"Rate and Method"). Indenture,dated as of September 1,2004,by and between the District and The Bank of New York Trust Company,N.A.(the"Trustee"),as supplemented by a First Supplemental Trust Agreement,dated as of June 1, The District. The District consists of approximately 757.2 gross acres and is located north of 2005,by and between the District and the Trustee(as supplemented,the"Indenture"). The Bonds are secured Interstate 80 in the eastern portion of the Town of Truckee,California(the"Town"),on both the east and west ' under the Indenture on a parity with$15,375,000 outstanding aggregate principal amount of the District's sites of State Highway 89. The District has an irregular shape with mostly level topography with same gently Special Tax Bonds,Series 2004(the"Series 2004 Bonds")by a pledge of and lien upon Net Taxes(as defined sloping and undulating areas. The land in the District is fully entitled and subject to a Development herein)and all moneys in the funds and accounts under the Indenture other than the Rebate Fund and the Agreement,dated March 25,2004,between the Developer(defined below)and the Town. The District is Administrative Expense Account. expected to be developed into a mountain resort community consisting of 408 single family lots,89 single family freestanding cottages,115 attached townhomes,21 residential lofts,approximately 40,700 square feet Forward Looking Statements of commercial space and various community space. 28 of the cottages, 8 of the townhomes and the community space will not be subject to the Special Tax levy. On-site recreational amenities are expected to Certain statements included or incorporated by reference in this Official Statement constitute include a Peter Jacobsen/Jim Hardy-designed 18-hole championship golf course and pro shop as well as a "forward-looking statements"within the meaning of the United States Private Securities Litigation Reform Act fitness center. The development is expected to occur in three phases with some overlap between phases. The of 1995,Section 2 1 E of the United States Securities Exchange Act of 1934,as amended,and Section 27A of development in the District will be known as "Gray's Crossing." See "THE DEVELOPMENT AND the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the PROPERTY OWNERSHIP—Development Plan." terminology used such as"plan,""expect,""estimate,""project,""budget"or other similar words. Such forward-looking statements include,but are not limited to,certain statements contained in the information The Developer. The master developer of the majority of the land in the District is Gray's Station r under the caption "THE COMMUNITY FACILITIES DISTRICT" and "THE DEVELOPMENT AND LLC,dba Gray's Crossing,LLC(the"Developer"),a land holding wholly-owned subsidiary of East West PROPERTY OWNERSHIP." Resort Development V,L.P.,L.L.L.P.,a Delaware limited partnership,limited liability limited partnership ("EWRDV"). East West Partners, the appointed manager of EWRDV, has been responsible for the THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN development of over$1 billion of residential and commercial real estate. Such development has included SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, resort communities in California and Colorado that are similar to the development proposed in the District. UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, East West Partners,through EWRDV and its subsidiaries, is currently developing several projects in the PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY vicinity of the District. The investor limited partner of the EWRDV is a subsidiary of Crescent Real Estate Equities Company,one of the largest publicly held Real Estate Investment Trusts in the United States. See r "THE DEVELOPMENT AND PROPERTY OWNERSHIP—The Developer." Preliminary,subject to change. 1 2 DOCSSF/50914%6/229254X116 DOCSSF/50914v6/22925-0016 t Rolapp&Associates is acting as Financial Advisor to TDPUD in connection with the Bonds. Certain legal ESTIMATED SOURCES AND USES OF FUNDS matters will be passed on for TDPUD and the District by Dennis W.De Cuir,A Law Corporation,Roseville, California,for the Developer by its counsel,Hefner,Stark&Marois LLP,Sacramento,California,and for the The following table sets forth the expected uses of Bond proceeds: Underwriter by its counsel Nossaman, Guthner, Knox & Elliot LLP, Irvine, California("Underwriter's Counsel"). Other professional services have been performed by MuniFinancial,Temecula, California,as Sources of Funds Special Tax Consultant,and Cushman&Wakefield of Colorado,Inc.,Park City,Utah,as Appraiser. Principal Amount of Bonds $ For information concerning the respects in which certain of the above-mentioned professionals, Original Issue Discount advisors, counsel and agents may have a financial or other interest in the offering of the Bonds, see "FINANCIAL INTERESTS"herein. TOTAL SOURCES $ Continuing Disclosure Uses of Funds The District and the Developer have agreed to provide,or cause to be provided,to each nationally Acquisition and Construction Fund $ recognized municipal securities information repository and any public or private repository or entity Reserve Account designated by the State as a state repository for purposes of Rule 15c2-12(b)(5)adopted by the Securities and Cost of Issuance Account') Exchange Commission certain annual financial information and operating data. The District has further agreed Administrative Expense Account to provide notice of certain material events. These covenants have been made in order to assist the Interest Account�1 Underwriter in complying with Rule 15c2-12(b)(5). See "CONTINUING DISCLOSURE" herein, Underwriter's Discount APPENDIX E and APPENDIX F hereto for a description of the specific nature of the annual reports to be filed by the District,the annual and semi-annual reports to be filed by the Developer,and notices of material events TOTAL USES $ to be provided by the District. Includes legal costs,printing costs,consultant fees and other costs of issuing the Bonds. 1 Bondowners'Risks (Z Represents capitalized interest on the Bonds through September 1,2005. r Certain events could affect the timely repayment of the principal of and interest on the Bonds when due. See the section of this Official Statement entitled"SPECIAL RISK FACTORS"for a discussion of certain factors which should be considered,in addition to other matters set forth herein,in evaluating an investment in the Bonds. The Bonds are not rated by any nationally recognized rating agency. The purchase of the Bonds involves significant risks, and the Bonds are not suitable investments for all investors. See "SPECIAL RISK FACTORS"herein. Other Information This Official Statement speaks only as of its date,and the information contained herein is subject to change. Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture,the Bonds and the constitution and laws of the State as well as the proceedings of the Board of Directors,acting as the legislative body of the District,are qualified in their entirety by references to such documents,laws and proceedings,and with respect to the Bonds,by reference to the Indenture. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. Copies of the Indenture,the Continuing Disclosure Agreements and other documents and information referred to herein are available for inspection and(upon request and payment to TDPUD of a charge for copying,mailing and handling)for delivery from TDPUD at P.O.Box 309,Truckee,CA 96160,Attention: t Secretary. I t E t E 5 6 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 i redemption and failure to mail or to receive any such notice,or any defect therein,shall not affect the validity transmission to them of notices of significant events with respect to the Bonds,such as redemptions,tenders, of the proceedings for the redemption of such Bonds. defaults,and proposed amendments to the security documents. Beneficial Owners of Bonds may wish to l ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Upon surrender of Bonds redeemed in part only,the Trustee shall authenticate and deliver to the Beneficial Owners,or in the alternative,Beneficial Owners may wish to provide their names and addresses to t registered owner a new Bond or Bonds,of the same maturity,of any authorized denomination in aggregate the registrar and request that copies of the notices be provided directly to them. principal amount equal to the unredeemed portion of the Bond or Bonds. tr Redemption notices shall be sent to Cede&Co. If less than all of the Bonds within a maturity are d Book-Entry-Only System being redeemed,DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. 1 DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede&Co.(DTC's partnership nominee). One fully-registered certificate Neither DTC nor Cede&Co.(nor such other DTC nominee)will consent or vote with respect to the will be issued for each maturity of the Bonds,each in the aggregate principal amount of such maturity,and will Bonds. Under its usual procedures,DTC mails an Omnibus Proxy to the District as soon as possible after the be deposited with DTC. record date. The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date(identified in a listing attached to the Omnibus DTC is a limited-purpose trust company organized under the New York Banking Law,a"banking Proxy). organization"within the meaning of the New York Banking Law,a member of the Federal Reserve System,a "clearing corporation"within the meaning of the New York Uniform Commercial Code,and a"clearing Principal of and interest on the Bonds will be made to DTC(or such other nominee as may be agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC requested by an authorized representative of DTC). DTC's practice is to credit Direct Participants'accounts holds securities that its participants("Direct Participants") deposit with DTC. DTC also facilitates the upon DTC's receipt of funds and corresponding detail information from the District or the Trustee on the date settlement among Direct Participants of securities transactions,such as transfers and pledges,in deposited in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial securities through electronic computerized book-entry changes in Direct Participants' accounts, thereby Owners will be governed by standing instructions and customary practices,as is the case with securities held eliminating the need for physical movement of securities certificates. Direct Participants include securities for the accounts of customers in bearer form or registered in"street name,"and will be the responsibility of brokers and dealers,banks,trust companies,clearing corporations,and certain other organizations. DTC is such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulatory owned by a number of its Direct Participants and by the New York Stock Exchange,Inc.,the American Stock requirements as may be in effect from time to time. Payment of principal and interest to Cede&Co.(or such Exchange,Inc.,and the National Association of Securities Dealers,Inc. Access to the DTC system is also other nominee as may be requested by an authorized representative of DTC)is the responsibility of the District available to others such as securities brokers and dealers,banks,and trust companies that clear through or or the Trustee,disbursement of such payments to Direct Participants shall be the responsibility of DTC,and maintain a custodial relationship with a Direct Participant,either directly or indirectly("Indirect Participants"). disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect The Rules applicable to DTC and its Direct and Indirect Participants are on file with the Securities and Participants. Exchange Commission. DTC may discontinue providing its services or securities depository with respect to the Bonds at any Purchases of Bonds under the DTC system must be made by or through Direct Participants,which will time by giving reasonable notice to the District or the Trustee. Under such circumstances,in the event that a receive credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond successor securities depository is not obtained,Bonds are required to be printed and delivered. ("Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants'records. Beneficial Owners will not receive written confirmation from DTC of their purchase,but Beneficial Owners are expected The District may decide to discontinue use of the system of book-entry transfers through DTC(or a to receive written confirmations providing details of the transaction,as well as periodic statements of their successor securities depository). In that event,Bonds will be printed and delivered and will be governed by holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the the provisions of the Indenture with respect to payment of principal and interest and rights of exchange and transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the transfer. books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds,except in the event that use of the book- The District cannot and does not give any assurances that DTC participants or others will distribute entry system for the Bonds is discontinued. payments with respect to the Bonds received by DTC or its nominee as the registered Owner, or any redemption or other notices,to the Beneficial Owners,or that they will do so on a timely basis,or that DTC To facilitate subsequent transfers,all Bonds deposited by Direct Participants with DTC are registered will service and act in the manner described in this Official Statement. in the name of DTC's partnership nominee,Cede&Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede The information in this section concerning DTC and DTC's book-entry system has been obtained &Co.or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the from sources that the District believes to be reliable,but the District takes no responsibility for the accuracy actual Beneficial Owners of the Bonds;DTC's records reflect only the identity of the Direct Participants to thereof whose accounts such Bonds are credited,which may or may not be the Beneficial Owners. The Direct or Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. In the event that the book-entry system described above is no longer used with respect to the Bonds, the principal of the Bonds is payable upon surrender thereof at the corporate trust office of the Trustee. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Interest on the Bonds is payable on each Interest Payment Date to the registered owner thereof as of the close g Participants to Indirect Participants,and by Direct Participants and Indirect Participants to Beneficial Owners of business on the Record Date immediately preceding each Interest Payment Date,such interest to be paid by i will be governed by arrangements among them,subject to any statutory or regulatory requirements as may be check of the Trustee,mailed by first-class mail to the registered owner at his or her address as it appears on the in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment Register(or at such other address as is firrnished to the Trustee in writing by the registered owner). A f F 4 9 10 DOCSSF/50914v6/2 2 92 5-00 1 6 DOCSSF/50914v6/22925-0016 SOURCES OF PAYMENT FOR THE BONDS may,by resolution,provide for any other appropriate method of collection of the Special Tax,including direct billing to property owners. General Provisions Although the Special Tax will constitute a lien on the taxed parcels of land within the District, Pursuant to the Indenture,the Bonds and the Series 2004 Bonds are equally secured b a first pledge the Special Tax does not constitute a personal indebtedness of the owners of property within the District. q Y Y P dg P�� pe P Pe b' 3 of the Net Taxes and by other amounts held in the Special Tax Fund other than the Administrative Expense There is no assurance that the property owners will be financially able to pay the annual Special Tax or Account and Rebate Fund. that they will pay such taxes even if financially able to do so. See"SPECIAL RISK FACTORS"herein. 3 "Net Taxes"means, for each Fiscal Year, Gross Taxes(exclusive of any penalties and interest Special Tax Fund € accruing with respect to delinquent Special Tax installments)minus amounts(not in excess of the current Administrative Expense Cap) set aside to pay Administrative Expenses and minus the portion of any The Trustee shall,on each date on which the Special Taxes are received from the TDPUD or the prepayment of Special Taxes not required to be deposited in the Special Tax Fund pursuant to the Indenture. District,deposit the Special Taxes in the Special Tax Fund to be held by the Trustee,provided that any Prepayment shall be deposited in the funds and accounts(and in the respective amounts)specified in the "Gross Taxes"means the amount of all Special Taxes received by the District,together with the certificate of the Special Tax Administrator delivered to the Trustee in connection with the delivery of the proceeds collected from the sale of property pursuant to the foreclosure provisions of the Indenture for the Prepayment to the Trustee. The Trustee shall transfer the amounts on deposit in the Special Tax Fund on the delinquency of Special Taxes remaining after the payment of all the costs related to such foreclosure actions, dates and in the amounts set forth in the Indenture,in the following order of priority,to: including,but not limited to,all legal fees and expenses,court costs,consultant and title insurance fees and expenses. (a) The Administrative Expense Account, "Special Taxes"means the taxes authorized to be levied by the District in accordance with the Rate (b) The Interest Account, and Method,as the Rate and Method may be amended from time to time. (c) The Principal Account, "Administrative Expense Cap"means the amount S25,500,with such amount escalating by 2%per Bond Year beginning September 2, 2005, provided that the District may, in its sole discretion, fund (d) The Redemption Account, Administrative Expenses,without limitation, from any other funds available to the District, including the Surplus Fund. (e) The Reserve Account, Special Taxes (f) The Rebate Fund,and The Special Tax is exempt from the tax rate limitations of California Constitution Article XIIIA (g) The Surplus Fund. because,pursuant to Section 4 of Article XIIIA,the Special Tax was authorized by a two-thirds vote of the qualified electors of the Community Facilities District. Consequently, the District has the power and is Principal Account and Interest Account obligated,pursuant to the covenants contained in the Indenture,to assure the levy of the Special Tax,including without limitation,the enforcement of delinquent Special Taxes. The Special Tax thus levied and collected The principal of and interest due on the Bonds and the Series 2004 Bonds until maturity,other than will be used to pay the principal of and interest on the Bonds and the Series 2004 Bonds and the principal due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest Administrative Expenses due or coming due and to replenish the Reserve Account,if necessary. Account,respectively. The Trustee shall make the required transfers from the Special Tax Fund on each Interest Payment Date first to the Interest Account and then to the Principal Account;provided that if amounts Because the Special Tax levy is limited to the maximum rates set forth in the Rate and Method, in the Special Tax Fund are inadequate then any deficiency shall be made up by an immediate transfer from the no assurance can be given that,in the event of Special Tax delinquencies,the receipts of the Special Tax Reserve Account. will,in fact,be in sufficient amounts in any given year to pay debt service on the Bonds and all other obligations of the District. In addition to the transfers to the Interest Account and Principal Account described above,the Trustee shall also transfer thereto such portions of a Prepayment as may be directed in the certificate of the Special Tax The Board of Directors,as legislative body of the District,shall fix and levy the Special Tax in an Administrator delivered to the Trustee in connection with the Prepayment. amount sufficient,together with other amounts on deposit in the Special Tax Fund,to pay(a)the principal x (including Sinking Fund Payments)of and interest on the Bonds and the Series 2004 Bonds when due,(b)to Reserve Account the extent permitted by law,the Administrative Expenses,and(c)any amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement. See"APPENDIX A—RATE AND There shall be maintained in the Reserve Account an amount equal to the Reserve Requirement. The METHOD OF APPORTIONMENT OF SPECIAL TAX." amounts in the Reserve Account shall be applied as follows: i The Special Tax shall be payable and be collected in the same manner and at the same time and in the (a) Moneys in the Reserve Account shall be used solely for the purpose of(i)paying the principal same installments as the general taxes on real property are payable,and have the same priority,become of,including Sinking Fund Payments,and interest on any Bonds and Series 2004 Bonds when due in the event delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties that the moneys in the Interest Account and the Principal Account are insufficient therefor,(ii)making any and interest after delinquency as do the ad valorem taxes on real property. However,the Board of Directors required transfer to the Rebate Fund upon written direction from the District,and(iii)making any required 13 14 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 i 3 to be levied on parcels in the District below the levels provided in the Indenture would interfere with the timely combination thereof,shall be established to provide for the retirement of all such Parity Bonds on or before retirement of the Bonds. The District determined it to be necessary in order to preserve the security for the their respective maturity dates; Bonds to covenant,and,to the maximum extent that the law permits it to do so,the District covenants that it will take no action that would discontinue or cause the discontinuance of the Special Tax levy or the District's (iv) The description of the Parity Bonds,the place of payment thereof and the procedure authority to levy the Special Tax,including the initiation of proceedings to reduce the Maximum Special Tax for execution and authentication; rates for the District,unless,in connection therewith,(a)the District receives a certificate or certificates from the Special Tax Administrator and/or one or more Independent Financial Consultants which, when taken (v) The denominations and method of numbering of such Parity Bonds; E together,certify that,on the basis of the parcels of land and improvements existing in the District as of the July 1 preceding the reduction,the maximum amount of the Special Tax which may be levied on then existing (vi) The amount and due date of each mandatory Sinking Fund Payment,if any,for such Developed Property(as defined in the Rate and Method)in each Bond Year will equal at least 110%of the Parity Bonds and the redemption provisions for such Parity Bonds; sum of the estimated Administrative Expenses and Annual Debt Service in that Bond Year on all Bonds to remain Outstanding after the reduction is approved,(b)the District finds that any reduction made under such (vii) The amount,if any,to be deposited from the proceeds of such Parity Bonds in the conditions will not adversely affect the interests of the Owners of the Bonds and(c)the District receives both Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve Requirement; (i)a certificate of the Developer specifying the development activity that the Developer expects will take place within the District in each Fiscal Year until all such development is complete,which specification shall be (viii) The form of such Parity Bonds;and sufficiently detailed to permit the preparation of the certificate required pursuant to(ii),and(ii)a certificate or certificates from the Special Tax Administrator and/or one or more Independent Financial Consultants which, (ix) Such other provisions as are necessary or appropriate and not inconsistent with the when taken together,in the determination of the District,certify that(A)on the basis of the parcels of land and Indenture. improvements existing in the District as of the July 1 preceding the proposed reduction and(B)on the basis of the future development activity described in the certificate of the Developer described in(i),the maximum (c) The Trustee shall have received the following documents or money or securities,all of such amount of the Special Tax which may be levied each Fiscal Year on all property within the District that is documents dated or certified,as the case may be,as of the date of delivery of such Parity Bonds to the Trustee subject to the levy of the Special Taxes will equal at least 110%of the sum of the estimated Administrative (unless the Trustee shall be directed by the District to accept any of such documents bearing a prior date): Expenses and Annual Debt Service in each applicable Bond Year on all Bonds subsequent to the proposed reduction. For purposes of estimating Administrative Expenses for the foregoing calculations,the Independent (i) A certified copy of the Supplemental Indenture authorizing the issuance of such Financial Consultant or Special Tax Administrator shall compute the Administrative Expenses for the current Parity Bonds; Fiscal Year and escalate that amount by two percent(2%)in each subsequent Fiscal Year. (ii) A written request of the District as to the delivery of such Parity Bonds; Parity Bonds (iii) An opinion of Bond Counsel to the effect that(a)the District has the right and power The District may issue Parity Bonds payable from the Net Taxes and other amounts deposited in the under the Act to adopt the Indenture and the Supplemental Indentures relating to such Parity Bonds,and the Special Tax Fund(other than in the Administrative Expense Account therein)and secured by a lien and charge Indenture and all such Supplemental Indentures have been duly and lawfully adopted by the District,are in full upon such amounts equal to the lien and charge securing the Bonds and any other Parity Bonds theretofore force and effect and are valid and binding upon the District and enforceable in accordance with their terms issued for any purposes authorized under the Act. Parity Bonds may be issued subject to the following (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws additional specific conditions,which are made conditions precedent to the issuance of any such Parity Bonds: relating to the enforcement of creditors'rights);(b)the Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in the Indenture,subject to the application thereof to the (a) The District shall be in compliance with all covenants set forth in the Indenture and any purposes and on the conditions permitted by the Indenture;and(c)such Parity Bonds are valid and binding Supplemental Indenture then in effect and a certificate of the District to that effect shall have been filed with limited obligations of the District,enforceable in accordance with their teens(except as enforcement may be the Trustee;provided,however,that Parity Bonds may be issued notwithstanding that the District is not in limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the creditors'rights)and the terms of the Indenture and all Supplemental Indentures thereto and entitled to the District will be in compliance with all such covenants. benefits of the Indenture and all such Supplemental Indentures,and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act(or other applicable laws)and the Indenture and all (b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act and all such Supplemental Indentures;and a further opinion of Bond Counsel to the effect that,assuming compliance applicable laws, and the issuance of such Parity Bonds shall have been provided for by a Supplemental by the District with certain tax covenants,the issuance of the Parity Bonds will not adversely affect the Indenture duly adopted by the District which shall specify the following: exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds theretofore issued on a tax exempt basis,or the exemption from State of California personal income taxation of (i) The purpose for which such Parity Bonds are to be issued and the fund or funds into interest on any Outstanding Bonds and Parity Bonds theretofore issued; which the proceeds thereof are to be deposited,including payment of all costs and the funding of all reserves incidental to or connected with such issuance; (iv) A certificate of the District containing such statements as may be reasonably 1 necessary to show compliance with the requirements of the indenture; (ii) The authorized principal amount of such Parity Bonds; (v) A certificate or certificates from the Special Tax Administrator and/or one or more (iii) The date and the maturity date or dates of such Parity Bonds;provided that(i)each Independent Financial Consultants which,when taken together,certify that: maturity date shall fall on a September 1,and(ii)fixed serial maturities or Sinking Fund Payments,or any 17 18 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 THE COMMUNITY FACILITIES DISTRICT nor the Underwriter have independently verified the information in the Debt Report or guarantees its completeness or accuracy. General Description of the District TABLE 2 The District consists of approximately 757.2 gross acres located north of Interstate 80 in the eastern portion of the Town of Truckee,California on both the east and west sides of State Highway 89. The District DIRECT AND OVERLAPPING LAND SECURED DEBT has an irregular shape with mostly level topography with some gently sloping and undulating areas. Description of Authorized Facilities 2004-05 Local Secured Assessed Valuation:$14,721,564 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable Debt 5/1/05 The facilities authorized to be acquired by the District with the proceeds of the Bonds consist of Sierra Joint Community College District School Facilities Improvement District No.1 0.I47% $ 29,400 various public improvements described in Table 1 below. These facilities represent certain of the public Tahoe-Truckee Joint Unified School District 0.140 16,931 improvements needed to complete the planned development within the District. The Town is requiring that Tahoe-Truckee Joint Unified School District School Facilities Improvement District No.1 0.283 87,437 certain of these facilities be installed as a condition of development. Truckee Donner Public Utility District Community Facilities District No.04-1 100. 15375.000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $15,508,768 TABLE 1 OVERLAPPING GENERAL FUND OBLIGATION DEBT: ESTIMATED COSTS OF PUBLIC IMPROVEMENTS TO BE FINANCED BY THE DISTRICT Nevada County Certificates of Participation 0.131% $22,650 Nevada County Superintendent of Schools Certificates of Participation 0.131 308 € Sierra Joint Community College District Certificates of Participation 0.029 3,266 Estimated Portion to be Estimated Tahoe-Truckee Joint Unified School District Certificates of Participation 0.147 17,5(x) s Paid with Series 2004 Portion to be Paid Town of Truckee General Fund Obligations 0.459 26,920 Public Improvement Total Cost Bond Proceeds with Bond Proceeds Truckee Donner Public Utility District Certificates of Participation 0.440 6,688 TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT $77,332 Water Facilities $8,916,000 $4,951,000 $2,799,353 Electric Facilities 8,248,000 1,450,000 2,646,000 COMBINED TOTAL DEBT $I5,Sg6,I tx1 1z' Sewer Facilities 8,385,000 2,250,000 1,306,000 Roads 12,396,000 2,273,000 4,297,025 Excludes Mello-Roos Act bonds to be sold. p Storm Drain 2,396,000 2, 73,000 4,297,025 (2) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and tax allocation bonds and non-bonded 977 Natural Gas Facilities 1,032,000 235,000 __ capital lease obligations. k Power Line Relocation 1,331,000 -- 1,234,000 Ratios to 2004-05 Assessed Valuation: Highway Improvements 2,662,000 -- -- Direct Debt($15,375,000)..................................._....................104.44% t Fiber Infrastructure 1,162,000 -- 555,354 Total Direct and Overlapping Tax and Assessment Debt.............105.35% Total Public Improvements $47,857,000 $12,349,000 $15,338,709 Combined Total Debt...................................................................105.87% f STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/04: $0 Source: The District Taxpayers Source: California Municipal Statistics Inc. Excluding the 101 single family lots owned by individual owners,all land in the District is currently owned by the Developer or Village at Gray's Crossing L.P. The initial Special Tax levy in fiscal year 2005-06 is expected to total $1,873,480. Based on current ownership in the District, the Developer would be responsible for$1,512,915 of the fiscal year 2005-06 Special Tax levy,or 80.8%of the total,Village at Gray's Crossing L.P.would be responsible for$54,564 or 2.9%,while individual lot owners would collectively be responsible for$306,000,or 16.3%of the total. Estimated Direct and Overlapping Indebtedness Within the District's boundaries are numerous overlapping local agencies providing public services. a Some of these local agencies have outstanding bonds which are secured by taxes and assessments on the parcels within the District and others have authorized but unissued bonds which,if issued,will be secured by taxes and assessments levied on parcels within the District. The approximate amount of the direct and overlapping debt secured by such taxes and assessment on the parcels within the District for fiscal year 2004-05 is shown in Table 2 below(the"Debt Report"). The Debt Report has been derived from data assembled and reported to the District by California Municipal Statistics,Inc. Neither the District,TDPUD m 21 22 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 o 0�,,,,,„o,,o o, THE DEVELOPMENT AND PROPERTY OWNERSHIP Except for the information under the captions "—Appraisal," the Developer has provided the Q° w E information in this section. > g The information herein regarding ownership ofproperty in the District has been included because it is c e E 2 L o 8 c� considered relevant to an in evaluation of the Bonds. The inclusion in this Official Statement of o E4 information related to existing owners of property should not be construed to suggest that the Bonds,or the o.� N - -—o 0 o Special Taxes that will be used to the Bonds,are recourse obligations o the property owners. A property c o _. o a ° v P Pal g r P P ty P P t1 w"� '" >. li owner may sell or otherwise dispose of land within the District or a development or any interest therein at any time. 'S 4 �- �y c w o 3 No assurance can be given that the proposed development within the District will occur as described r o r o,— o00 0 = H below. As the proposed land development progresses and:nits are sold,it is expected that the ownership of ao r or a, aaa E'A E, � o cl 01 ^�? °o E�yy E 8� the land within the District will become more diversified. No assurance can be given that development of the �O In�n t-00 M N g.� (0 00 figuration or intensity v7 ua a � 'c vt w � a� described herein,or that any landowner described herein or the Developer will obtain or retain ownership of E any of the land within the District The Bonds and the Special Taxes are not personal obligations of any N E landowners or the Developer and,in the event that a landowner or the Developer defaults in the payment of oa o the Special Taxes,the District may proceed with judicial foreclosure but has no direct recourse to the assets of Z o C1 $00 $ ; R any landowner or the Developer. As a result, other than as provided herein, no financial statements or o o 00 o 00 M o c 3 0 y N information is,or will be,provided about the Developer or other landowners. The Bonds are secured solely by the Net Taxes and other amounts pledged tinder the Indenture. See"SOURCES OF PAYMENT FOR THE o co.bt m° BONDS"and"SPECIAL RISK FACTORS." F y vi o c C 2 y '� c n The Developer W Q o00o 9-a = " .4 „ 8o e o 8 8 0 a 3 N Gray's Crossing,LLC. The Developer is a wholly-owned subsidiary of EWRDV. EWRDV is a Q W 8 0 8 e 8 e M d�' °� o Delaware limited partnership, limited liability limited partnership in a family of related but independent E z > �M c 01°N q % o ; companies formed to build,sell,manage and support high-quality real estate properties. East West Partners, 6s M 00 a 0 .2 b the appointed manager of the Developer and EWRDV,along with related entities have developed over$1 N billion of residential and commercial real estate. Over the past 20 years,East West Partners and related QE.E 8.4 —.E entities have developed primarily residential plan communities;club,recreation,and hospitality facilities;and p E e c h resort properties combining residential and recreational facilities. Projects developed by East West Partners E and related entities also include destination resorts,hotels,condominiums and fractional ownership units. 2gdC. z� Projects have been developed in various locations in Colorado including Vail, Beaver Creek, Eagle, j P g g 0- w c c w Breckenridge,Silverthorne,Bachelor Gulch and Downtown Denver,as well as in Truckee and Lake Tahoe, o California,and Charleston,South Carolina. W O > G pU> a>> The general partner of EWRDV is HF Holding Corp. and the managing limited partner is HF w >>,A >>, -a c ts N Management LLC. The investor limited partner,Crescent Resort Development, Inc.,owns an 89.8989% A z° t.a 5.�V p'-j c c interest in EWRDV and is the primary source of EWRDV's investor capital. OO btiOZ c ° O^-avv Z.; a a o c i �, S E< .� Crescent. Crescent Resort Development,Inc.,("CRDI")the investor limited partner of the Developer, 7 a ¢ is a wholly-owned subsidiary of Crescent Real Estate Equities Company("Crescent"). Crescent is one of the > > A, > ,', o c a'� qv 3 0 ° largest publicly held real estate investment trusts in the United States. Through its subsidiaries and partners, o �? F A 'y N a c �,e 4, g Crescent owns and manages a portfolio of 73 premier office buildings totaling approximately 29.5 million C y a 0'C '«'C O N a a o i O o o ° o o a m .� square feet primarily located in the southwestern United States,with major concentrations in Dallas,Houston oz ° H o] ,0-e y w ? v " ° ° and Austin,Texas,and Denver,Colorado. 1 E 4~-2 m c > — a on'- N b o O c -g o 9 In addition,Crescent invests in world-class resorts and spas and upscale residential developments. '7 O N C & u'O iC a^ '^ o y o y �> q o Crescent,through CRDI,has been a principal investor in East West Partners and its subsidiaries for the last 8 A N 0 �>4 c y A c c w years and has invested in excess of$200 million in the partnership. Crescent stock is publicly traded on the 0 M.5 E>o.E N "4 a 4 'A New York Stock Exchange under the ticker symbol"CET." U F E ar °pp' a �'o v'> a O O 0 3 a c y o-'� �.O v tOi o MMC7U 0.A 0. o�V7 L°tn 9 > y 0 — — — — 26 DOCSSF/50914v6/2 2 925-00 1 6 R Single Family Lots. The development at Gray's Crossing includes 408 single family home lots(the Development rights with respect to the Lofts were sold by the Developer to Village at Gray's Crossing "Lots"). 165 of the Lots will be located along the fairways of the golf course in Gray's Crossing. See"—Golf L.P.in December 2004. For a discussion of with respect to Village at Gray's Crossing L.P.,see the caption"— Course and Other Recreational Amenities." Phase 1 includes 101 Lots in the western portion of the District. Development Plan—Village at Gray's Crossing L.P. None of such Lots are located along the golf course fairways. All 101 phase 1 lots have been sold to 't individual owners at an average sale price of$245,000. The phase 1 Lots average approximately 0.4 acres in Pursuant to the Rate and Method,all Lofts will be subject to the levy of Special Taxes. I size. Lots in future phases will also average 0.4 acres in size with sales prices dependent on market conditions. Phases 2 and 3 are expected to include 195 and 112 Lots,respectively. Individual owners will be responsible Golf Course and Fitness Center. Gray's Crossing will feature the only Peter Jacobsen/Jim Hardy- for the financing and building of homes on the Lots but will be under no obligation to further develop their designed 18-hole golf course in the Lake Tahoe area(the"Golf Course"). The Golf Course will be a full lots. Such owners will be offered membership in the Tahoe Mountain Club,as described below under"— championship course with a length of over 7,000 yards. The Developer expects the Golf Course to be open for Tahoe Mountain Club." play annually in the months of May through October depending on snow and other weather conditions. The Golf Course will include 6,000 square feet for pro shop/club house facilities,a short game practice area and a In 2004,preliminary marketing activity with respect to the phase 1 Lots resulted in more than 500 driving range. Construction of the Golf Course is expected to commence in spring 2005 as part of phase 2. reservation. Each reservation holder was entered into a lottery for first opportunities to purchase phase 1 Lots The Developer expects the Golf Course to open for play by Spring 2007. when formal sales began in October 2004. The Developer expects to utilize the same sales launch process for phase 2 Lots in 2005. By the end of 2005,the Developer anticipates to have sold approximately 120 phase 2 Gray's Crossing will also feature an 2,500 square foot fitness center featuring a lap pool,locker rooms Lots at an approximate average sales price of approximately$400,000 per Lot. and outdoor patio/dining area(the"Fitness Center"). The Developer expects to develop the Fitness Center as part of phase 3 with an opening by July 2007. Pursuant to the Rate and Method,all Lots will be subject to the levy of Special Taxes. According to the Rate and Method,Special Taxes will be levied on the Golf Course and Fitness [ Cottages. The District also is expected to include 89 freestanding single family cottages (the Center. Both the Golf Course and Fitness Center will be owned by Tahoe Club Company,LLC(described Cottages"). The cottage unit concept is designed to create more economic housing opportunity by efficiently below),an affiliate of EWRDV. using land area and reducing typical single family infrastructure by sharing common driveways and courtyards. The Cottages are estimated to average of 1,500 square feet in size site on a minimum lot area of 3,000 square Tahoe Mountain Club. East West Partners has created a private club membership concept for a family feet. Both 1 and 2-story unit designs are envisioned. The Cottages will be clustered in groups of four to eight of resort properties and amenities located in the vicinity of the District. The club is referred to as the Tahoe units. Mountain Club. A separate ownership entity of EWRDV,Tahoe Club Company,LLC,funds the development of and operates the amenities for Tahoe Mountain Club. All Cottages will be located in western portion of the District and their development will be part of phase 1. Development is expected to begin on the Cottages in the fall of 2005 with initial completions and The benefits of the Tahoe Mountain Club are considered by the Developer to be a key marketing tool t sales shortly thereafter. The Developer anticipates all 89 Cottages to be sold by October 2006. in the sales of product at Gray's Crossing. Membership in the Tahoe Mountain Club must be purchased separately by the owners in the District. Facilities offered to members of the Tahoe Mountain Club are located Pursuant to the Rate and Method,61 of the 89 Cottages will be subject to the levy of Special Taxes. both on-site at Gray's Crossing and off-site. All club facilities are in the vicinity of Gray's Crossing. On-site 28 of the Cottages will be set aside as affordable housing and not subject to the Special Tax levy. amenities at Gray's Crossing include:(i)the Peter Jacobsen/Jim Hardy-designed 18-hole golf course accessible to Full Golf Membership holders in the Tahoe Mountain Club,(ii)the Fitness Center,and(iii)the short game Townhomes. There are a total of 115 attached townhome units(the"Townhomes")proposed for the area and driving range located at the Golf Course accessible to Full Golf Membership holders in the Tahoe District. The Townhomes will be located on the east side of the District and are intended to provide a medium Mountain Club. Off-site privileges include:(i)special privileges at the existing 18-hole Coyote Moon Golf density residential use. In design,the Townhomes will be two-story,four-plex buildings with two interior Course in the Town,including priority tee times,(ii)special access to the 18-hole Jack Nicklaus Signature Old units and two end units. Two-bedroom,two-bath unit configurations are planned,with an average unit size of Greenwood golf course,(iii)access to the existing Pavilion at Old Greenwood(swim,tennis, fitness and 1,800 square feet. The buildings will incorporate subterranean parking and trash storage to maximize open dining facility),(iv)preferred reservations at the Wild Goose Restaurant located on the north shore of Lake space. The Townhomes will be part of phases 2 and 3. Tahoe, (v) valet ski storage and member privileges in the Alpine Club at the Village-at-Northstar, and (vi)access to Schaffer's Camp,a members-only,on-mountain restaurant at the Northstar-at-Tahoe ski resort Development rights with respect to 31 of the Townhomes subject to the Special Tax levy were sold by estimated to be completed in 2005. the Developer to Village at Gray's Crossing L.P.in December 2004. For a discussion with respect to Village at Gray's Crossing L.P.,see the caption"—Development Plan—Village at Gray's Crossing L.P." The Golf Course will be available to members of the Tahoe Mountain Club who have purchased property outside of the District in other related projects and have purchased a Full Golf Membership in the Pursuant to the Rate and Method,the 107 of the 115 Townhomes will be subject to the levy of Special Tahoe Mountain Club. The Gray's Crossing Golf Course is a members-only course and the cost of Taxes. 8 of the Townhomes will be set aside as affordable housing and not subject to the Special Tax levy. memberships will fund the cost of course construction. The golf course and fitness center will be operated by the Tahoe Club Company,an affiliate. Lofts. 21 loft units(the"Lofts")are planned as second level units above the retail/office space in the commercial area of the District. The Lofts will average approximately 1,000 square feet with one or two Commercial Property. The development plan for Gray's Crossing includes an allowance for 38,900 bedrooms and an open living/dining/kitchen area. Lofts will be built at the same time as the underlying square feet of commercial space for retail and office uses. This 16.3 acre area of Gray's Crossing will be commercial and retail space and should be completed in phases 2 and 3(approximately 2006 to 2008). known as the"Village at Gray's Crossing." The Village at Gray's Crossing is planned as six buildings along State Highway 89 frontage at the southeast corner of Prosser Dam Road and State Highway 267. The Village at Gray's Crossing plan is anticipated to include a grocer, restaurants, a 120-room lodge and shopping 1 29 30 D0CSSF/50914v6/22925-(x)16 DOCSSF/50914v6/22925-0016 The projected sources and uses of funds in Table 6 has been prepared based upon assumptions of of;and interest on,the Bonds,when due. See"SPECIAL RISK FACTORS—Failure to Develop Properties" future sales revenues,development costs,operating costs,property taxes,public facilities financing and other below. items. The project's actual sources and uses of funds may vary from the table above. Therefore,there can be no assurance that the actual revenues will not be less than projected or occur later than projected by the Furthermore, no assurance can be made that the Developer, or its successors,will complete the Developer. intended construction and development in the District. See "SPECIAL RISK FACTORS — Failure to Develop Properties" below. As a result, no assurance can be given that the Developer and the other j To the extent that actual revenues are less than projected in Table 6 or are received more slowly than landowners within the District will continue to pay Special Taxes in the future or that they will be able to pay projected in Table 6,other needed financing mechanisms are not put into place or actual expenses are greater such Special Taxes on a timely basis. See "SPECIAL RISK FACTORS—Bankruptcy and Foreclosure" than or occur earlier than projected above,there could be a shortfall in the cash required to complete the below,for a discussion of certain limitations on the District's ability to pursue judicial proceedings with development as projected above. respect to delinquent parcels. Environmental Compliance Limited Obligations The Town certified a Final Environmental Impact Report and associated Notice of Determination with The Bonds and interest thereon are not payable from the general funds of TDPUD. Except with respect to the property in the District. A Phase 1 Environmental Site Assessment(the"Assessment")with respect to the Special Taxes,neither the credit nor the taxing power of the District nor TDPUD is pledged for respect to property in the District was prepared by HK Holdrege&Kull in December 2000. The Assessment the payment of the Bonds or the interest thereon,and,except as provided in the Indenture,no Owner of the did not reveal evidence that incidents involving hazardous or potentially hazardous materials have impacted Bonds may compel the exercise of any taxing power by the District or TDPUD or force the forfeiture of any the District. The Developer is not aware of any threatened or endangered species on any property in or TDPUD or District property. The principal of,premium,if any,and interest on the Bonds are not a debt of adjacent to the District. TDPUD or a legal or equitable pledge,charge,lien or encumbrance upon any of TDPUD's or the District's property or upon any of TDPUD's or the District's income,receipts or revenues,except the Special Taxes and Development Agreement other amounts pledged under the Indenture. Development of the land within the District is subject to a Development Agreement,dated March 25, Insufficiency of Special Taxes 2004,by and between the Town and the Developer(the"Development Agreement"). The Development Agreement sets forth the development standards that must be followed in connection with the building out of If for any reason property within the District becomes exempt from taxation by reason of ownership Gray's Crossing and vests development rights in the Developer. So long as the Developer is in compliance by a non-taxable entity such as the federal government,another public agency or a religious organization, with its responsibilities under the Development Agreement,the Town's ability to change or add conditions to subject to the limitations of the maximum authorized rates,the Special Tax will be reallocated to the remaining the development of Gray's Crossing,or restrict such development,is limited. The Appraisal summarizes taxable properties within the District. This would result in the owners of such property paying a greater t certain portions of the Development Agreement. See"APPENDIX B—COMPLETE APPRAISAL." amount of the Special Tax and could have an adverse impact upon the ability and willingness of the owners of such property to pay the Special Tax when due. SPECIAL RISK FACTORS Moreover,if a substantial portion of land within the District became exempt from the Special The purchase of the Bonds involves a high degree of investment risk and therefore,the Bonds are not Tax because of public ownership,or otherwise,the maximum Special Tax which could be levied upon appropriate investments for many types of investors. The following is a discussion of certain risk factors the remaining property within the District might not be sufficient to pay principal of and interest on the which should be considered,in addition to other matters set forth herein,in evaluating the investment quality Bonds when due and a default could occur with respect to the payment of such principal and interest. of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness ofproperty owners in the Tax Delinquencies District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition,the occurrence of Under provisions of the Act,the Special Taxes, from which funds necessary for the payment of one or more of the events discussed herein could adversely affect the value of the property in the District. See principal of,and interest on,the Bonds are derived,are customarily billed to the properties within the District Land Values"and" Limited Secondary Market"below. on the ad valorem property tax bills sent to owners of such properties. The Act currently provides that such Special Tax installments are due and payable,and bear the same penalties and interest for non-payment,as do Concentration of Ownership ad valorem property tax installments. See"SOURCES OF PAYMENT FOR THE BONDS—Special Taxes," for a discussion of the provisions which apply,and procedures which the District is obligated to follow under i A majority of the land in the District is currently owned by the Developer. Assuming the current the Indenture, in the event of delinquencies in the payment of Special Taxes. See "— Bankruptcy and ownership status in the District,approximately 80.8%of the projected 2005-06 Special Tax levy would be paid Foreclosure"below,for a discussion of the policy of the Federal Deposit Insurance Corporation(the"FDIC") 1 by the Developer with the balance being paid by Village at Gray's Crossing L.P.and individual owners. If regarding the payment of special taxes and assessment and limitations on the District's ability to foreclosure on sales of phase 2 Lots occur before the levy of the 2005-06 Special Tax,a higher percentage of the levy will be the lien of the Special Taxes in certain circumstances. allocated to the individual owners. See"THE COMMUNITY FACILITIES DISTRICT—Taxpayers." Until 1 the additional sale of Lots to individuals, the receipt of the Special Taxes is largely dependent on the None of the Developer,EWRDV nor Village at Gray's Crossing L.P.is currently delinquent in the willingness and the ability of the Developer to pay the Special Taxes when due. Failure of the Developer,or payment of any special taxes,property taxes or assessments and none have any history of such delinquency any successor,to pay the annual Special Taxes when due could result in a default in payments of the principal since their formation. 33 34 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 Hazardous Substances Special Tax be levied at the maximum tax rate and the risk of such a levy and,at the time of such a levy,has the ability to pay it as well as pay other expenses and obligations.TDPUD has caused a notice of the Special One of the most serious risks in terms of the potential reduction in the value of a parcel is a claim with Tax lien to be recorded in the Office of the Recorder for the County against each parcel. While title companies regard to a hazardous substance. In general,the owners and operators of a parcel may be required by law to normally refer to such notices in title reports,there can be no guarantee that such reference will be made or,if remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The made,that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes property within the District or lending of money thereon. referred to as"CERCLA"or the"Superfund Act,"is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these The Act requires the subdivider(or its agent or representative)of a subdivision to notify a prospective laws,the owner or operator is obligated to remedy a hazardous substance condition of property whether or not purchaser or long-term lessor of any lot,parcel,or unit subject to a Mello-Roos special tax of the existence and the owner or operator has anything to do with creating or handling the hazardous substance. The effect, maximum amount of such special tax using a statutorily prescribed form. California Civil Code therefore,should any of the taxed parcels be affected by a hazardous substance,is to reduce the marketability Section 1102.6b requires that in the case of transfers other than those covered by the above requirement,the and value of the parcel by the costs of remedying the condition,because the purchaser,upon becoming owner, seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a will become obligated to remedy the condition just as is the seller. format prescribed by statute. Failure by an owner of the property to comply with the above requirements,or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax,could Further,it is possible that liabilities may arise in the future with respect to any of the parcels resulting adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due. from the existence,currently,on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened,or may arise in the future resulting from the Non-Cash Payments of Special Taxes existence,currently on the parcel of a substance not presently classified as hazardous but which may in the r future be so classified. Further,such liabilities may arise not simply from the existence of a hazardous Under the Act,the Board of Directors as the legislative body of the District may reserve to itself the substance but from the method of handling it. All of these possibilities could significantly affect the value of a right and authority to allow the owner of any taxable parcel to tender a Bond in full or partial payment of any parcel that is realizable upon a delinquency. installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus,if Bonds can be Neither TDPUD nor the Developer has knowledge of any hazardous substances being located on the purchased in the secondary market at a discount,it may be to the advantage of an owner of a taxable parcel to property within the District. The Assessment discussed under"THE DEVELOPMENT AND PROPERTY pay the Special Taxes applicable thereto by tendering a Bond. Such a practice would decrease the cash flow OWNERSHIP—Environmental Compliance"revealed no evidence that incidents involving hazardous or available to the District to make payments with respect to other Bonds then outstanding;and,unless the potentially hazardous materials have impacted the District. practice was limited by the District,the Special Taxes paid in cash could be insufficient to pay the debt service due with respect to such other Bonds. In order to provide some protection against the potential adverse impact Parity Taxes and Special Assessments on cash flows which might be caused by the tender of Bonds in payment of Special Taxes,the Indenture includes a covenant pursuant to which the District will not authorize owners of taxable parcels to satisfy Property within the District is subject to the lien of several overlapping public agencies. See"THE Special Tax obligations by the tender of Bonds unless the District shall have first obtained a report of an COMMUNITY FACILITIES DISTRICT—Estimated Direct and Overlapping Indebtedness." Independent Financial Consultant certifying that doing so would not result in the District having insufficient Net Taxes to pay the principal of and interest on all Outstanding Bonds when due. The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and Payment of the Special Tax Is Not a Personal Obligation of the Owners special assessments levied by TDPUD and other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Taxes have An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather,the Special priority over all existing and future private liens imposed on the property except,possibly,for liens or security Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel interests held by the Federal Deposit Insurance Corporation. See"—Bankruptcy and Foreclosure"below. is not sufficient,taking into account other liens imposed by public agencies,to secure fully the Special Tax,the District has no recourse against the owner. Neither TDPUD nor the District has control over the ability of other public agencies and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of Land Values the property within the District. In addition,the landowners within the District may,without the consent or knowledge of TDPUD,petition other public agencies to issue public indebtedness secured by The value of the property within the District is a critical factor in determining the investment quality special taxes or assessments. Any such special taxes or assessments may have a lien on such property on of the Bonds. If a property owner is delinquent in the payment of Special Taxes,the District's only remedy is a parity with the Special Taxes and could reduce the estimated value-to-lien ratios for property within to commence foreclosure proceedings in an attempt to obtain funds to pay the Special Taxes. Reductions in the District described herein. property values due to a downturn in the economy,physical events such as earthquakes,fires or floods,stricter land use regulations,delays in development or other events will adversely impact the security underlying the Disclosures to Future Purchasers Special Taxes. See"THE COMMUNITY FACILITIES DISTRICT—Estimated Value-to-Lien Ratios"herein. x The willingness or ability of an owner of a parcel to pay the Special Tax even if the value of the parcel The assessed values set forth in this Official Statement do not represent market values arrived at is sufficient may be affected by whether or not the owner was given due notice of the Special Taxes at the time through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current the owner purchased the parcel,was informed of the amount of the Special Tax on the parcel should the owner,adjusted annually by an amount determined by the Nevada County Assessor,not to exceed an increase 37 38 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 I S 1 the GI MI ruling could still result in the treatment of post-petition special taxes as"administrative expenses," DISCLOSURE." The failure to provide the required annual financial information does not give rise to rather than as tax liens secured by real property,at least during the pendency of bankruptcy proceedings. monetary damages but merely an action for specific performance. Occasionally,because of general market conditions,lack of current information,or because of adverse history or economic prospects connected with a According to the court's ruling, as administrative expenses, post-petition taxes would be paid, particular issue, secondary marketing practices in connection with a particular issue are suspended or assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such terminated. Additionally,prices of issues for which a market is being made will depend upon then prevailing administrative expenses may be allowed to be deferred. Once the property is transferred out of the bankruptcy circumstances. Such prices could be substantially different from the original purchase price. estate(through foreclosure or otherwise),it would at that time become subject to current ad valorem taxes. Proposition 218 The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how a An initiative measure commonly referred to as the"Right to Vote on Taxes Act"(the"Initiative")was bankruptcy court would treat the lien for Special Taxes levied after the filing of a petition in bankruptcy. approved by the voters of the State of California at the November 5, 1996 general election. The Initiative Glasoly is controlling precedent on bankruptcy courts in the State. If the GI MI precedent was applied to the added Article XIIIC and Article XIIID to the California Constitution. According to the"Title and Summary" levy of the Special Taxes, the amount of Special Taxes received from parcels whose owners declare of the Initiative prepared by the California Attorney General, the Initiative limits"the authority of local bankruptcy could be reduced. governments to impose taxes and property-related assessments, fees and charges." The Initiative could potentially impact the Special Taxes available to the District to pay the principal of and interest on the Bonds The various legal opinions to be delivered concurrently with the delivery of the Bonds(including as described below. Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments,by moratorium,bankruptcy,reorganization,insolvency or other similar laws affecting the rights Among other things, Section 3 of Article XHI states that". the initiative power shall not be of creditors generally. prohibited or otherwise limited in matters of reducing or repealing any local tax,assessment,fee or charge." The Act provides for a procedure which includes notice,hearing,protest and voting requirements to alter the No Acceleration Provision rate and method of apportionment of an existing special tax. However,the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the payment default or other default under the Bonds or the Indenture. reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1,1997,a bill was signed into law by the Governor of the State enacting Government Code Section 5854, f Loss of Tax Exemption which states that: As discussed under the caption "TAX MATTERS," the interest on the Bonds could become "Section 3 of Article XIIIC of the California Constitution, as adopted at the includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds as a November 5, 1996, general election, shall not be construed to mean that any owner or result of a failure of the District to comply with certain provisions of the Internal Revenue Code of 1986,as beneficial owner of a municipal security,purchased before or after that date,assumes the risk amended. Should such an event of taxability occur,the Bonds are not subject to early redemption and will of,or in any way consents to,any action by initiative measure that constitutes an impairment remain outstanding to maturity or until redeemed under one of the redemption provisions of the Indenture. of contractual rights protected by Section 10 of Article I of the United States Constitution.' Limitations on Remedies Accordingly,although the matter is not free from doubt,it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely Remedies available to the owners of the Bonds may be limited by a variety of factors and may be retirement of the Bonds. inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of the Bonds. It may be possible,however,for voters or the Board of Directors acting as the legislative body of the District to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the Bonds,but which does reduce the maximum amount of Special Taxes that may be levied in any year below the extent that enforceability may be limited by bankruptcy,insolvency,reorganization,fraudulent conveyance or existing levels. It may also be possible for voters or the Board of Directors to change the Rate and Method in a transfer, moratorium, or other similar laws affecting generally the enforcement of creditors' rights, by manner that would alter the amount of Special Taxes for which various types of properties are responsible(for equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or example,by shifting the order in which various types of property are taxed). Furthermore,no assurance can be the limitation of remedies may entail risks of delay,limitation or modification of the rights of the owners of the given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the Bonds. timely retirement of the Bonds. Therefore,no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless,to the maximum extent that the law permits it to do so,the District Limited Secondary Market has covenanted that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates on taxable parcels within the District on which a completed structure is located to less than an amount equal to There can be no guarantee that there will be a secondary market for the Bonds or,if a secondary 110%of Maximum Annual Debt Service on the Outstanding Bonds. In connection with the foregoing market exists,that such Bonds can be sold for any particular price. Although the District and the Developer covenant,the District has made a legislative finding and determination that any elimination or reduction of have committed to provide certain financial and operating information on an annual basis,there can be no Special Taxes below the foregoing level would interfere with the timely retirement of the Bonds. The District assurance that such information will be available to Bondowners on a timely basis. See"CONTINUING also has covenanted that,in the event an initiative is adopted which purports to alter the Rate and Method,it 41 42 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 C = e taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson&Rauth,a Professional UNDERWRITING corporation. The Bonds are being purchased by UBS Financial Services Inc.(the"Underwriter"). The Underwriter Although Bond Counsel has rendered an opinion that interest(and original issue discount)on the has agreed to purchase the Bonds at a price of S (being S aggregate principal Bonds is excluded from gross income for federal income tax purposes provided that the District continues to amount thereof less net original issue discount of S less Underwriter's discount of S ). comply with certain requirements of the Code,the ownership of the Bonds and the accrual or receipt of interest The purchase agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if (and original issue discount)with respect to the Bonds may otherwise affect the tax liability of certain persons. any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly,before purchasing any such purchase agreement,the approval of certain legal matters by counsel and certain other conditions. of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the offering price stated on the cover page hereof. The offering price may be changed from time to time by the A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX G. Underwriter. Special Circular 230 Tax Disclaimer FINANCIAL INTERESTS Certain portions of Bond Counsel's opinion address federal income tax matters other than(A)the The fees being paid to the Underwriter,Underwriter's Counsel,Financial Advisor and Bond Counsel excludability of interest(and original issue discount)on Bonds from gross income under Section 103 of the are contingent upon the issuance and delivery of the Bonds. From time to time,Bond Counsel represents the Code,and(B)whether interest(and original issue discount)on the Bonds is an item of tax preference for Underwriter on matters unrelated to the Bonds. purposes of calculating the federal alternative minimum tax imposed on individuals and corporations(these other matters not referred to in(A)or(B)above are hereinafter referred to as the"Non State and Local Bond PENDING LEGISLATION Opinion Portions"). The District is not aware of any significant pending legislation which would have material adverse The Non State and Local Bond Opinion Portions(A)are not intended or written by Bond Counsel to consequences on the Bonds or the ability of the District to pay the principal of and interest on the Bonds when be used,and cannot be used,by any Bondowner(or other taxpayer)for the purpose of avoiding penalties that due. may be imposed on the Bondowner or other taxpayer and(B)have been written to support the promotion or marketing of the Bonds. Bondowners(and other taxpayers)should seek advice based upon their particular circumstances, from an independent tax advisor, with respect to the Non State and Local Bond Opinion Portions applicable to the Bonds. t LEGAL OPINION The legal opinion of Stradling Yocca Carlson&Rauth,a Professional Corporation approving the validity of the Bonds in substantially the form set forth as Appendix G hereto,will be made available to purchasers at the time of original delivery. A copy of the legal opinion for the Bonds will be provided with each definitive bond. LITIGATION No litigation is pending or threatened concerning the validity of the Bonds or the pledge of Net Taxes to repay the Bonds and a certificate of the District to that effect will be fiunished to the Underwriter at the time of the original delivery of the Bonds. Neither the District nor TDPUD is aware of any litigation pending or threatened which questions the existence of the District or contests the authority of the District to levy and collect the Special Taxes or to issue and retire the Bonds. NO RATING D The District has not made and does not contemplate making application to any rating agency for the assignment of a rating of the Bonds. 45 46 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 r E "Board of Directors"or"Board"means the Board of Directors of the TDPUD. "Expected Affordable Units"means a total of 36 Units within CFD No. 04-1 that are expected to be Affordable Units. If,in any Fiscal Year,the Administrator identifies a total number of Affordable Units within "Bonds"means bonds or other debt(as defined in the Act),whether in one or more series,issued,insured or CID No.04-1 that exceeds 36 Units,only the first 36 Units for which building permits were issued shall 1 assumed by CFD No.04-1 related to public infrastructure and/or improvements that are authorized to be remain exempt from the Special Tax pursuant to Section G below. Affordable Units for which permits are funded by CID No.04-1. issued after building permits for the 36 Expected Affordable Units have been issued shall be taxed as follows: (i)based on the size of the lot if the Unit is Single Family Detached Property,as Single Family Attached "Building Square Footage"means the total gross square footage of the floor area of a non-residential Property if the Unit meets the definition set forth for such property below,or(iii)as a Loft Unit if the Unit is building determined by calculating the combined floor area contained within the building's exterior walls located above a retail establishment. including the area of an addition where floor area is increased. Parking areas and exterior walkways shall not be included in the calculation of Building Square Footage. "Expected Land Uses"means the total number of Units and size of SFD Lots expected to be constructed within the CFD as determined from time to time by the Administrator after applying the steps in Section D "Capitalized Interest"means funds in any capitalized interest account available to pay debt service on Bonds. below. At CFD Formation,the Expected Land Uses were those expected to be reflected in the Tentative Map. The Expected Land Uses at CFD Formation are summarized in Attachment 1 hereto;the Administrator shall "Center for the Arts Property" means the property on which a building permit has been issued for update Attachments 1 and 2 each time a change occurs to the land use plans for property in the CFD. construction of the"Center for the Arts"required pursuant to the Development Agreement,subject to the limitation set forth in Section G below. "Expected Maximum Special Tax Revenues"means the amount of annual revenue that would be available if the Maximum Special Tax was levied on the Expected Land Uses. The Expected Maximum Special Tax "CFD Formation"means the date on which the Resolution of Formation to form CFD No.04-1 was adopted Revenues as of CFD Formation are shown in Attachment 1 of this Rate and Method of Apportionment of by the Board of Directors. Special Tax. "Church Property"means,in any Fiscal Year,any Parcel in CFD 04-1 that meets both of the following "Final Bond Sale"means the last series of Bonds that will be issued on behalf of CFD No.04-1(excluding criteria:(i)the Parcel is owned by a religious organization which is exempt from ad valorem property tax,and any Bond refundings),as determined in the sole discretion of the TDPUD. (ii)a building permit has been issued for construction of a building on the Parcel that will be used solely as a place of worship. The amount of Church Property within the CFD shall be subject to the limitation set forth in "Final Map"means a final map,or portion thereof,recorded by the County pursuant to the Subdivision Map Section G below. Act(California Government Code Section 66410 et seq.)that creates individual lots on which building permits for new construction may be issued without further subdivision and for which no further subdivision is "County"means the County of Nevada. anticipated pursuant to the Tentative Map. "Developed Property"means,in any Fiscal Year,the following: "Fiscal Year"means the period starting July 1 and ending on the following June 30. • for Single Family Detached Property,all parcels for which a Final Map was recorded prior to "Fitness Facility Property"means any Assessor's Parcels within the CFD that meets both of the following May 1 of the preceding Fiscal Year criteria(i)a building permit has been issued for construction of a swim or fitness facility on the Parcel,and(ii) based on the size of the Parcel,no other buildings can be constructed on the Parcel. • for Single Family Attached Property, all parcels for which a building permit for new "Fractional Unit"means a single family detached unit or a single family attached unit for which multiple construction of a residential structure was issued prior to May 1 of the preceding Fiscal Year owners may each purchase a fractional share of ownership(also referred to as a timeshare unit by the • for Golf Course Property,all Parcels that make up the Golf Course Property if the certificate California Department of Real Estate). { of occupancy for the proshop or clubhouse associated with the golf course was issued at least "Golf Course Property"means any property within CFD No.04-1 that is used as a golf course,including but twenty-four(24)months in advance of May 1 of the preceding Fiscal Year not limited to,a driving range,clubhouse,pro shop,parking,outbuildings,and other golf-related amenities. ! for Non-Residential Property,all parcels for which a building permit for new construction of Golf Course Property shall also include any property within the CFD that is used or expected to be used for a i a non-residential structure(which may include Loft Units)was issued prior to May I of the swim and/or fitness facility if such facility is located on the same Assessor's Parcel as the clubhouse,pro shop t or other golf-related buildings. preceding Fiscal Year "Development Agreement"means the Development Agreement executed between the Town and Gray's "Lodging Unit"means a unit that is(i)offered for rent to the general public on an overnight or limited stay g basis, as defined in the Development Agreement,and(ii)constructed within the geographic area labeled Crossing LLC on March 25,2004. Neighborhood Commercial in Attachment 2. If Fractional Units are built within the Neighborhood "Excess Public Property"means the acres of Public Property that exceed the acreage exempted in Section G Commercial area,all such units shall be taxed at the same rate as other Units of Single Family Attached below. In any Fiscal Year in which a Special Tax must be levied on Excess Public Property pursuant to Step 5 Property within the CFD. in Section E below,Excess Public Property shall be those Assessor's Parcel(s)that most recently became t Public Property based on the dates on which Final Maps recorded creating such Public Property or,if an i Assessor's Parcel became Public Property other than through a Final Map,as deterrrrined by the Administrator. A-2 A-3 t DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 a In addition,the Administrator shall,on an ongoing basis,monitor whether changes in land use have been 3. Loft Units proposed that will affect the Expected Land Uses and whether Final Maps that have been proposed for approval by the Town are consistent with the Expected Land Uses. If changes to the Expected Land Uses are The Maximum Special Tax for Loft Units for Fiscal Year 2004-05 is$1,200 per Unit. On July 1,2005 and on proposed,the Administrator shall apply the steps set forth in Section D below. each July 1 thereafter,this Maximum Special Tax shall be increased by an amount equal to two percent(2%) of the amount in effect for the prior Fiscal Year. C. MAXIMUM SPECIAL TAX 4. Non-Residential Properly 1. Single Family Detached Property The Maximum Special Tax for Non-Residential Property for Fiscal Year 2004-05 is$2.50 per square foot of The Maximum Special Tax for Single Family Detached Property for Fiscal Year 2004-05 is shown in Table I Building Square Footage. On July 1,2005 and on each July 1 thereafter,this Maximum Special Tax shall be below: increased each Fiscal Year thereafter by an amount equal to two percent(2%)of the amount in effect the prior TABLE 1 Fiscal Year. TDPUD CFD No.2004-1 5 Golf Course Property Maximum Special Tax for Single Family Detached Property The Maximum Special Tax assigned to Golf Course Property for Fiscal Year 2004-05 is$200,000.On July 1, Maximum Special Tax in Maximum Special Tax 2005 and on each July 1 thereafter,this Maximum Special Tax shall be increased each Fiscal Year thereafter Tax Zone#1 in Tax Zone#2 by an amount equal to two percent(21/o)of the amount in effect the prior Fiscal Year. If the Golf Course Type of Property Lot Size Fiscal Year 2004-05* Fiscal Year 2004-05* Property is fully contained within one Assessor's Parcel,the Maximum Special Tax identified above shall be Single Family Greater than $3,300 per $4,125 per collected from the Parcel. If the Golf Course Property is spread over more than one Assessor's Parcel,the `t Detached Property 22,000 square feet SFD Lot SFD Lot following steps shall be applied in the first Fiscal Year in which the Golf Course Property is Developed Single Family 20,001 to 22,000 $3,200 per $4,000 per Property to determine the Maximum Special Tax to be assigned to each Parcel: Detached Property square feet SFD Lot SFD Lot r Single Family 18,001 to 20,000 $3,100 per $3,875 per Step 1: Multiply the total Maximum Special Tax assigned to the Golf Course Property by Detached Property square feet SFD Lot SFD Lot fifty percent(50%); Single Family 16,001 to 18,000 $3,000 per $3,750 per Detached Property square feet SFD Lot SFD Lot Step 2: Determine the combined Acreage of all Assessor's Parcels on which the clubhouse, Single Family 14,001 to 16,000 $2,900 per $3,625 per pro shop,driving range,parking lot,and other outbuildings are located; Detached Propert y square feet SFD Lot SFD Lot Single Family 12,001 to 14,000 $2,800 per $3,500 per Step 3: Divide the amount determined in Step 1 by the Acreage identified in Step 2 to Detached Property square feet SFD Lot SFD Lot calculate a per-acre Special Tax; Single Family 8,000 to 12,000 $2,700 per $3,375 per square feet SFD Lot SFD Lot Step 4: Multiply the per-acre Special Tax calculated in Step 3 by the Acreage of each Detached Property Single Family Less than $SFD per $1,800 per Assessor's Parcel on which the clubhouse,pro shop,driving range,parking lot,and Detached Pro 8 000 square feet SFD Lot SFD Lot other outbuildings are located to calculate the Maximum Special Tax for each of the Parcels; On July 1,2005 and on each July 1 thereafter,the Maximum Special Taxes shown in Table I above shall Step 5: Determine the combined Acreage of all Assessor's Parcels of Golf Course Property be increased by an amount equal to two percent(2%)of the amount in effect for the prior Fiscal Year. that were not included in the Acreage calculated in Step 2 above; The square footage of SFD Lots shall be determined by reference to County Assessor's Parcel Maps or,to the Step 6. Divide the amount determined in Step 1 by the Acreage calculated in Step 5 to extent such Maps do not reflect square footage of the SFD Lots,by reference to the lot size summary provided by the engineering firm that produced the Final Map. calculate aper-acre Special Tax; 2. Single Family Attached Property Step 7. Multiply the per-acre Special Tax calculated in Step 6 by the Acreage of each Assessor's Parcel included in the figure determined in Step 5 to calculate the 4 Maximum Special Tax for each of the Parcels. The Maximum Special Tax for Single Family Attached Property for Fiscal Year 2004-05 is$1,800 per Unit. On July 1,2005 and on each July 1 thereafter,this Maximum Special Tax shall be increased by an amount The Maximum Special Tax determined for each Assessor's Parcel of Golf Course Property pursuant equal to two percent(2/o)of the amount in effect for the prior Fiscal Year. to the steps set forth above shall be increased on July 1 of the following Fiscal Year,and on each July 1 thereafter,by an amount equal to two percent(2%)of the amount in effect the prior Fiscal Year. If E an Assessor's Parcel of Golf Course Property is further subdivided or otherwise reconfigured,the Maximum Special Tax assigned to the Parcel shall be allocated to the new Parcels on an Acreage basis. IA-6 A-7 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 Step 6. If additional revenue is needed after Step 5, the Special Tax shall be levied "Public Facilities Requirements"means either$24,000,000 in 2004 dollars,which shall increase on Proportionately on each Assessor's Parcel of Excess Public Property,exclusive of January 1, 2005, and on each January 1 thereafter by the percentage increase, if any, in the property exempt from the Special Tax pursuant to Section G below,up to 100%of construction cost index for the San Francisco region for the prior twelve(12) month period as the Maximum Special Tax for Undeveloped Property for such Fiscal Year published in the Engineering News Record or other comparable source if the Engineering News determined pursuant to Section C. Record is discontinued or otherwise not available,or such other number as shall be determined by the TDPUD to be an appropriate estimate of the net construction proceeds that will be generated from all ' F. COLLECTION OF SPECIAL TAX Bonds that have been or are expected to be issued on behalf of CFD No.2004-1. The Public Facilities Requirements shown above may be adjusted or a separate Public Facilities Requirements identified The Special Taxes for CFD No.04-1 shall be collected in the same manner and at the same time as ordinary ad each time property annexes into CFD No. 04-1; at no time shall the added Public Facilities valorem property taxes,provided,however,that prepayments are permitted as set forth in Section H below and Requirement for that annexation area exceed the amount of public improvement costs that are provided further that the TDPUD may directly bill the Special Tax,may collect Special Taxes at a different expected to be supportable by the Maximum Special Tax revenues generated within that annexation time or in a different manner,and may collect delinquent Special Taxes through foreclosure or other available area. In addition,the Public Facilities Requirement may be adjusted if the total number of Units methods. The Special Tax for Fractional Units may be billed either directly to individual fractional share authorized to be constructed within the CFD is increased by the Town;this adjustment to the Public owners or to a homeowners association,which shall then bill the individual fractional share owners;non- Facilities Requirement shall not exceed the amount of public improvement costs that are expected to payment of Special Taxes billed by the homeowners association shall result in interest and penalties,and the be supportable by the Maximum Special Tax revenues generated by the additional number of Units fractional ownership shall be subject to foreclosure proceedings as set forth in the Bond covenants. approved by the Town. The Special Tax shall be levied and collected until principal and interest on Bonds have been repaid,TDPUD's "Remaining Facilities Costs"means the Public Facilities Requirements(as defined above),minus costs of constructing or acquiring authorized facilities from Special Tax proceeds have been paid,and all public facility costs funded by Outstanding Bonds(as defined above),developer equity,and/or any administrative expenses have been reimbursed. However,in no event shall a Special Tax be levied after Fiscal other source of funding. Year 2043-44. Pursuant to Section 53321(d)of the Act,the Special Tax levied against a Parcel used for private residential purposes shall under no circumstances increase more than ten percent (10%) as a The Special Tax obligation applicable to an Assessor's Parcel in the CFD may be prepaid and the obligation of consequence of delinquency or default by the owner of any other Parcel or Parcels and shall,in no event, the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein, provided that a exceed the Maximum Special Tax in effect for the Fiscal Year in which the Special Tax is being levied. prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor's Parcel k at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation G. EXEMPTIONS shall provide the TDPUD with written notice of intent to prepay.Within 30 days of receipt of such written notice,the TDPUD or its designee shall notify such owner of the prepayment amount for such Assessor's Notwithstanding any other provision of this Rate and Method of Apportionment of Special Tax,no Special Parcel. Prepayment must be made not less than 75 days prior to any redemption date for Bonds to be t Tax shall be levied on up to 42.2 acres of Public Property,237.7 acres of Association Property,2 acres of redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount shall be calculated as property on which Lodge Units have been or,based on building permits that have been issued,are expected to follows:(capitalized terms as defined below): be built,0.67 of an acre of Center for the Arts Property,Fitness Facility Property,and 9 acres of Church ` Property. A separate amount of public acreage may be exempted each time property annexes into CFD No. Bond Redemption Amount s 04-1,and such additional exemption shall only apply to property within the annexation area. A Special Tax plus Remaining Facilities Amount P Y PP Y P PertY P P g may be levied on Excess Public Property pursuant to Step 5 of Section E;however,a public agency may plus Redemption Premium prepay or cause the prepayment of the special tax obligation on land conveyed to it that would be classified as plus Defeasance Requirement Excess Public Property. plus Administrative Fees and Expenses IFss Reserve Fund Credit In addition,no Special Tax shall be levied in any Fiscal Year on Rental Property or Affordable Units. equals Prepayment Amount H. PREPAYMENT OF SPECIAL TAX As of the proposed date of prepayment,the Prepayment Amount shall be determined by application of the following steps: The following definitions apply to this Section H: Step 1. Compute the total Maximum Special Tax that could be collected from the Assessor's "Outstanding Bonds" means all Previously Issued Bonds which remain outstanding, with the Parcel prepaying the Special Tax in the Fiscal Year in which prepayment would be following exception: if a Special Tax has been levied against,or already paid by,an Assessor's Parcel received by the TDPUD or,in the event of a prepayment pursuant to Step 3.b in making a prepayment,and a portion of such Special Tax will be used to pay a portion of the next Section D,compute the amount by which the Maximum Special Tax revenues would principal payment on the Bonds that remain outstanding(as determined by the Administrator),that be reduced by the Land Use/Entitlement Change and use the amount of this reduction next principal payment shall be subtracted from the total Bond principal that remains outstanding,and as the figure for purposes of this Step 1. the difference shall be used as the amount of Outstanding Bonds for purposes of this prepayment formula. Step 2. Divide the Maximum Special Tax from Step 1 by the then-current Expected Maximum Special Tax Revenues for the CFD. "Previously Issued Bonds"means all Bonds that have been issued on behalf of the CFD prior to the date of prepayment. A-10 A-11 DOCSSF/50914v6/22925-M16 DOCSSF/50914%6/22925-0016 t ATTACHMENT 1 ATTACHMENT 2 EXPECTED LAND USES AND EXPECTED MAXIMUM SPECIAL TAX REVENUES TRUCKEE DONNER PUBLIC UTILITY DISTRICT AT CFD FORMATION COMMUNITY FACILITIES DISTRICT No.04-1 (GRAY'S CROSSING) Number of Expected Maximum Special Lots/Units/ Tax Total Expected Acres/ Per Unit/ Maximum IDENTIFICATION OF TAX ZONES Building Square Foot, Special Tax Expected Land Uses Square Feet FY 2004-05* Revenues* TAX ZONE#1 SFD Lots Greater than 22,000 Square Feet 2 $3,300 per SFD Lot $6,600 t SFD Lots,20,001 to 22,000 Square Feet 4 $3,200 per SFD Lot $12,800 SFD Lots,18,001 to 20,000 Square Feet 12 $3,100 per SFD Lot $37,200 SFD Lots,16,001 to 18,000 Square Feet 32 $3,000 per SFD Lot $96,000 SFD Lots,14,001 to 16,000 Square Feet 46 $2,900 per SFD Lot $133,400 SFD Lots,12,001 to 14,000 Square Feet 5 $2,800 per SFD Lot $14,000 s SFD Lots,8,000 to 12,000 Square Feet 0 $2,700 per SFD Lot $0 SFD Lots Less than 8,000 Square Feet 61 $1,800 per SFD Lot $109,800 s TAX ZONE#2 E } SFD Lots Greater than 22,000 Square Feet 10 $4,125 per SFD Lot $41,250 SFD Lots,20,001 to 22,000 Square Feet 7 $4,000 per SFD Lot $28,000 SFD Lots,18,001 to 20,000 Square Feet 19 $3,875 per SFD Lot $73,625 SFD Lots,16,001 to 18,000 Square Feet 100 $3,750 per SFD Lot $375,000 SFD Lots,14,001 to 16,000 Square Feet 118 $3,625 per SFD Lot $427,750 SFD Lots,12,001 to 14,000 Square Feet 43 $3,500 per SFD Lot $150,500 SFD Lots,8,000 to 12,000 Square Feet 10 $3,375 per SFD Lot $33,750 SFD Lots Less than 8,000 Square Feet 0 $1,800 per SFD Lot $0 Single Family Attached Units 107 $1,800 per Unit $192,600 Loft Units 21 $1,200 per Unit $25,200 Non-Residential Building Square Footage 40,700 $2.50 per square foot $101,750 N/A Golf Course N/A $200,000 Total Expected Maximum Special Tax Revenues $2,059,225 'Figures are shown in fiscal year 2004-05 dollars and will escalate two percent(2%)per year thereafter. 1 t i a A-14 A-15 DOC.SSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 APPENDIX C COUNTY OF NEVADA Labor Force,Employment and Unemployment GENERAL INFORMATION CONCERNING THE TOWN OF TRUCKEE Annual Averages from 2000 through 2004 This appendix sets forth general information about the Town of Truckee ("Truckee') including Unemployment information with respect to its finances. The following information concerning Truckee,the County of Nevada Year Area Labor Force Employment Unemployment Rate (the"County')and the State of California(the"State')is included only for general background purposes. It 2000 is not intended to suggest that the Bonds are payable from any source other than the Net Taxes and amounts in Nevada ,5W 4, 0 1, 0 4.6 California 17,090,800 16,245,600 845,2W 4.9 certain funds and accounts created by the Indenture. United States 140,863,000 135,208 5,655,000 4.0 2001 Population Nevada 46,270 44,570 1,700 3.0 California 17,362,300 16,435,200 927,100 5.3 The January 2005 population for the Truckee community was estimated to be 15,657. Truckee has United States 141,815,000 135,073,000 6,742,000 4.8 experienced steady growth over the past decade. Population has increased by 174.8%since 1980,compared to 2W2 a 55.5%increase for the State of California(the"State")for the same time period. A summary of Truckee's, Nevada 04,5W 41,3W 2,2W 6.7 Pe m�Y California 17,404,600 16,241,800 I,I62,8W 6.7 the Cotnty's and the State's population growth is shown below. United States 144,863,000 136,485,000 8,378,W0 5.8 2003 ' CITY OF TRUCKEE AND NEVADA COUNTY POPULATION Nevada 47,900 45,6W 2,300 4.7 FROM 1980 TO 2005 California 17,460,000 16,282,700 1,177,3W 6.7 United States 146,510,000 137,736,000 8,774,000 6.0 Town of Truckee Nevada County State of California 2004 Nevada 49,040 46,500 2,540 5.2 Annualized Annualized Annualized California 17,562,300 16,459,900 1,092,400 6.2 Percent Percent Percent United States 148,136,000 140,092,000 7,794,000 5.4 Change Change Change f Year Number Over Interval Number Over Interval Number Over Interval � Source: California State Employment Development Department 1980.......................... 5,696 - 51,645 23,668,145 1990..................... 9,985 75.3% 78,510 52.0% 29,760,021 25.7% The following is a summary of average employment by industry in Nevada County during 2000 1995.......................... 11.318 11.8 85,933 9.5 31,711,000 6.6 " 1996................ ... 11,451 1.2 86,823 1.0 31,962,W0 0.8 through 2004. This does not include self-employed persons, volunteer workers, unpaid family workers, 1997.......................... 11.880 3.6 87,744 1.1 32,452,000 1.5 farmers,private household workers,or persons involved in labor-management disputes. 1998.......................... 12,197 2.6 88,790 1.2 32,862,000 1.3 1999.......................... 12,452 2.0 89,644 1.0 33,417,W0 1.7 EMPLOYMENT BY INDUSTRY IN NEVADA COUNTY(') 2000............... ...... 13,914 10.5 92,278 2.9 34,088,000 2.0 2W1.......................... 14,296 2.7 94,030 1.9 34,758,000 2.0 2000 2001 2002 2003 2004 2002.......................... 14,746 3.1 95,286 1.3 35,037,000 0.8 2(N)3.........._.._........ 14,850 1.0 95,700 0.7 35,591,W0 1.7 Wage and Salary Employment`2): 2004.......................... 15,000 1.0 96,I W 0.4 36,144.000 1.5 Agriculture................................................... 90 80 100 100 90 2005................ 15,657 4.3 98,955 2.9 36,810,358 1.8 Construction................................................ 2,710 2,880 3,300 3,100 3,240 Manufacturing............................................. 2,540 2,430 1,800 1,800 1,950 Source: 1980 and 1990 figures from U.S.Census. Other figures from the California State Department of Finance. Transportation,Utilities............................... 580 650 500 400 510 Wholesale Trade.......................................... 690 610 500 5W 400 { Retail Trade................................................. 6,260 6,310 4,300 4,2(N) 4,120 I Employment Finance,Insurance,Real Estate................... 1,410 1,500 2,200 2,IW 2,000 Services...........................................-.......... 8,350 8,670 ll,0W 11,000 11,150 Government,Federal................................... 480 430 400 400 400 The District is part of the Nevada County Labor Market reported on periodically by the State Government,State and Local...................... 4,850 5,090 5,400 5,300 5,030 t Department of Employment Development. As of December 2004,this labor market had a total civilian Total......................................_................ 27,970 28,720 29,500 28,900 28,890 4 employment of 49,040. Columns may not add to totals due to independent rounding. Services account for approximately 22%of all wage and salary workers in the Nevada County Labor Z'Based on place of work. Market. The next largest major categories of wage and salary employment are retail trade, government, Source: State Department of Employment Development. construction and manufacturing. g[t f C-1 C-2 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-00 16 a TOWN OF TRUCKEE APPENDIX D BUILDING PERMIT VALUATION (as of December 31) SUMMARY OF THE INDENTURE 1 Industry 2000 2001 2002 2003 2004 Valuation(in thousands of dollars): New Residential Single $48,515 $30,858 $38,158 $42,210 $66,525 Multiple 8 265 2,793 16,195 22 244 25,353 Total New Residential $56,780 $33,651 $54,353 $64,454 $91,878 Number of New Housing Units: Single 280 157 173 177 235 Multiple 92 30 144 122 100 Total Units 372 187 317 299 335 Source: Economic Sciences Corporation. 6 €9 f 5 { F i 1 s F C-5 D-1 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 I t A APPENDIX G the faith and credit nor the taxing power of the District,the PUD,the County of Nevada,the State of 1 California,or any other political subdivision is pledged for the payment thereof. FORM OF OPINION OF BOND COUNSEL (2) The Indenture has been duly executed and delivered by the District. The Indenture creates a valid pledge of,and the Bonds are secured by,the Net Taxes and the amounts on deposit in c [Delivery Date] certain funds and accounts established under the Indenture, as and to the extent provided in the Indenture,except as the same may be limited by bankruptcy,insolvency,reorganization,fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of 4 Board of Directors creditors'rights,by equitable principles and by the exercise of judicial discretion in accordance with a Truckee Donner Public Utility District general principles of equity or otherwise in appropriate cases and by limitations on remedies against Truckee,California public agencies in the State of California; provided, however, we express no opinion as to the g enforceability of the covenant of the District contained in the Indenture to levy Special Taxes for the t Re: Truckee Donner Public Utility District Community Facilities District No.04-1 payment of Administrative Expenses or as to indemnification,penalty,contribution,choice of law, (Gray's Crossing)Special Tax Bonds,Series 2005 choice of forum or waiver provisions contained therein. Dear Members of the Board of Directors: (3) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount)on the Bonds is excluded from gross income for federal income tax purposes We have examined the Constitution and laws of the State of California,a certified record of the and is not an item of tax preference for purposes of calculating the federal alternative minimum tax proceedings of the Truckee Donner Public Utility District(the"PUD")taken in connection with the formation imposed on individuals and corporations; however, it should be noted that, with respect to of Truckee Donner Public Utility District Community Facilities District No. 04-1 (Gray's Crossing)(the corporations, such interest(and original issue discount)may be included as an adjustment in the "District")and the authorization and issuance of the District's Special Tax Bonds,Series 2005 in the aggregate calculation of alternative minimum taxable income,which may affect the alternative minimum tax principal amount of S (the"Bonds")and such other information and documents as we consider liability of corporations. necessary to render this opinion. In rendering this opinion,we have relied upon certain representations of fact and certifications made by the District,the PUD,the Developer,the initial purchasers of the Bonds and others. (4) Interest on the Bonds is exempt from State of California personal income tax. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us. (5) The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity are to be sold to the public)and the stated redemption The Bonds have been issued pursuant to the Mello-Roos Community Facilities Act of 1982, as price at maturity with respect to such Bond constitutes original issue discount. Original issue discount amended,being Sections 53311 et seq. of the Government Code of the State of California), Resolution accrues under a constant yield method,and original issue discount will accrue to a Bondowner before No. adopted by the Board of Directors of the PUD,acting in its capacity as the legislative body of the receipt of cash attributable to such excludable income. The amount of original issue discount deemed District,on May_,2005,and a Trust Indenture,dated as of September 1,2004,by and between the District received by a Bondowner will increase the Bondowner's basis in the applicable Bond. Original issue and The Bank of New York Trust Company,N.A.,as trustee,as supplemented by a First Supplemental Trust discount that accrues to the Bondowner is excluded from the gross income of such owner for federal Indenture,dated as of June 1,2005(as supplemented,the"Indenture"). All capitalized terms not defined income tax purposes,is not an item of tax preference for purposes of the federal alternative minimum herein shall have the meanings set forth in the Indenture. tax imposed on individuals and corporations(as described in paragraph(3)above),and is exempt from State of California personal income tax. The Bonds are dated their date of delivery and mature on the dates and in the amounts set forth in the Indenture. The Bonds bear interest payable semiannually on each March 1 and September 1,commencing on (6) The amount by which a Bondowner's original basis for determining loss on sale or September 1,2005,at the rates per annum set forth in the Indenture. The Bonds are registered Bonds in the exchange in the applicable Bond(generally the purchase price) exceeds the amount payable on form set forth in the Indenture,redeemable in the amounts,at the times and in the manner provided in the maturity(or on an earlier call date)constitutes amortizable Bond premium which must be amortized Indenture. under Section 171 of the Code;such amortizable Bond premium reduces the Bondowner's basis in the applicable Bond(and the amount of tax-exempt interest received),and is not deductible for federal a Based upon our examination of the foregoing,and in reliance thereon and on all matters of fact as we income tax purposes. The basis reduction as a result of the amortization of Bond premium may result deem relevant under the circumstances,and upon consideration of applicable laws,we are of the opinion that: in a Bondowner realizing a taxable gain when a Bond is sold by the owner for an amount equal to or less(under certain circumstances)than the original cost of the Bond to the owner. (1) The Bonds have been duly and validly authorized by the District and are legal,valid and binding limited obligations of the District,enforceable in accordance with their terms and the The opinion expressed in paragraphs(3)and(5)above as to the exclusion from gross income for terms of the Indenture,except as the same may be limited by bankruptcy,insolvency,reorganization, federal income tax purposes of interest and original issue discount on the Bonds is subject to the condition that fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the the District and the PUD comply with all requirements of the Internal Revenue Code of 1986,as amended(the enforcement of creditors'rights or by the exercise of judicial discretion in accordance with general "Code"),that must be satisfied subsequent to the issuance of the Bonds to assure that interest and original issue principles of equity or otherwise in appropriate cases and by limitations on remedies against public discount will not become includable in gross income for federal income tax purposes. Failure to comply with 't agencies in the State of California. The Bonds are limited obligations of the District but are not a debt such requirements of the Code might cause interest and original issue discount on the Bonds to be included in t of the PUD,the County of Nevada,the State of California or any other political subdivision thereof gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District and within the meaning of any constitutional or statutory limitation;and,except for the Net Taxes,neither G-1 G-2 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) "Repository"means each National Repository and each State Repository. SPECIAL TAX BONDS SERIES 2005 "Rule"means Rule 15c2-12(bx5)adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. DISTRICT CONTINUING DISCLOSURE AGREEMENT "State Repository" means any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement,there is no This Continuing Disclosure Agreement, dated as of May 1, 2005 (the "Disclosure State Repository. Agreement")is executed and delivered by the Truckee Donner Public Utility District Community Facilities District No.04-1 (Gray's Crossing)(the"District")in connection with the issuance of Section 3. Provision of Annual Reports its $ aggregate principal amount of Truckee Donner Public Utility District Community Facilities District No.04-1 (Gray's Crossing)Special Tax Bonds,Series 2005(the (a) The District shall provide,or shall cause the Dissemination Agent to provide,to "Bonds"). The Bonds are being issued pursuant to a Trust Indenture dated September 1,2004,by each Repository an Annual Report which is consistent with the requirements of Section 4 of this and between the Community Facilities District and The Bank of New York Trust Company,N.A. Disclosure Agreement by not later than six months after the end of the District's fiscal year in (the"Trustee"),as supplemented by a First Supplemental Trust Indenture,dated as of May 1, each year,commencing not later than January 1,2006(which initial Annual Report shall consist r 2005(collectively,the"Indenture"). The District covenants and agrees as follows: only of the requirements set forth in Section 4(a)hereof). Not later than fifteen(15)Business Days prior to said date,the District shall provide the Annual Report to the Dissemination Agent Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being (if other than the District). The Annual Report may be submitted as a single document or as executed and delivered by the District for the benefit of the holders and beneficial owners of the separate documents comprising a package,and may include by reference other information as Bonds and in order to assist the Participating Underwriters in complying with S.E.C.Rule 15c2- provided in Section 4 of this Disclosure Agreement;provided that the financial information on 12(bx5). the District called for in the Annual Report may be submitted separately from the balance of the Annual Report,and later than the date required above for the filing of the Annual Report if not Section 2. Definitions. In addition to the definitions set forth in the Indenture,which available by that date. If the District's fiscal year changes,the District,upon becoming aware of apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this such change,shall give notice of such change in the same manner as for a Listed Event under Section,the following capitalized terms shall have the following meanings: Section 5(c). "Annual Report"means any Annual Report provided by the District pursuant to,and as (b) If by fifteen(15)Business Days prior to the date specified in subsection(a)for described in,Sections 3 and 4 of this Disclosure Agreement. providing the Annual Report to the Repositories, the Dissemination Agent has not received a copy of the Annual Report,the Dissemination Agent shall contact the District to determine if the "Dissemination Agent" means MuniFinancial, or any successor Dissemination Agent District is in compliance with subsection(a). designated in writing by the District and which has filed with the District and the Trustee a written acceptance of such designation. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repositories by the date required in subsection(a),the Dissemination Agent shall "Listed Events" means any of the events listed in Section 5(a) of this Disclosure send a notice to each Repository in substantially the form attached as Exhibit A. Agreement. (d) The Dissemination Agent shall,unless the District has done so pursuant to Section "National Repository" means any Nationally Recognized Municipal Securities 3(a)above: Information Repository for purposes of the Rule. The National Repositories currently recognized by the Securities and Exchange Commission are currently set forth in the SEC website located at (i) determine the name and address of each National Repository and each http://www.sec.gov/info/municipal/nrmsir.htm. State Repository,if any,each year prior to the date for providing the Annual Report;and "Participating Underwriter" means any of the original underwriters of the Bonds (ii) if the Dissemination Agent is other than the District or the Trustee,file a k required to comply with the Rule in connection with offering of the Bonds. report with the District certifying that the Annual Report has been provided pursuant to t 1 2 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 6. Adverse tax opinions or events affecting the tax-exempt status of the security. Section 7. Dissemination Agent. From time to time,the District may appoint or engage a 7. Modifications to rights of security holders. Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, 8. Bond calls. and may discharge any such Agent,with or without appointing a successor Dissemination Agent. 9. Defeasances. If at any time there is not any other designated Dissemination Agent,the District shall be the 10. Release,substitution or sale of property securing repayment of the Bonds. Dissemination Agent. 11. Rating changes. Section 8. Amendment Waiver. Notwithstanding any other provision of this Disclosure (b) The Dissemination Agent shall,within three(3)business days of obtaining actual Agreement, the District may amend this Disclosure Agreement, and any provision of this knowledge of the occurrence of any of the Listed Events,contact the District,inform such person Disclosure Agreement may be waived,provided that the following conditions are satisfied: of the event,and request that the District promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f); provided, however, that the (a) if the amendment or waiver relates to the provisions of Section 3(a),4 or 5(a),it Dissemination Agent shall have no liability to Bond owners for any failure to provide such may be made only in connection with a change in circumstances that arises from a change in notice. legal requirements,change in law, or change in the identity,nature,or status of an obligated person with respect to the Bonds,or type of business conducted; (c) Whenever the District obtains knowledge of the occurrence of a Listed Event,the District shall determine as soon as possible if such event would constitute material information (b) the undertakings herein,as proposed to be amended or waived,in the opinion of for Holders of Bonds within the meaning of the federal securities laws. nationally recognized bond counsel,would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or (d) If the District has determined that knowledge of the occurrence of a Listed Event interpretations of the Rule,as well as any change in circumstances;and would be material,the District shall notify the Dissemination Agent promptly in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection(f). (c) the proposed amendment or waiver either(i)is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of 1 e) If in response to a request under subsection b the District determines that the holders,or(ii)in the opinion of national) recognized bond counsel,does not material) impair 1 ( P q O, P Y g Y P Listed Event would not be material, the District shall so notify the Dissemination Agent in the interests of the holders or beneficial owners of the Bonds. writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection(f). Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the District from disseminating any other information,using the means of (f) If the Dissemination Agent has been instructed by the District to report the dissemination set forth in this Disclosure Agreement or any other means of communication,or occurrence of a Listed Event,the Dissemination Agent shall file a notice of such occurrence with including any other information in any Annual Report or notice of occurrence of a Listed Event, the Repository. Notwithstanding the foregoing,notice of Listed Events described in subsections in addition to that which is required by this Disclosure Agreement. If the District chooses to (ax8)and(9)need not be given under this subsection any earlier than the notice(if any)of the include any information in any Annual Report or notice of occurrence of a Listed Event in underlying event is given to the Holders of affected Bonds pursuant to the Indenture and notice addition to that which is specifically required by this Disclosure Agreement,the District shall of any other Listed Event is only required following the actual occurrence of the Listed Event; have no obligation under this Disclosure Agreement to update such information or include it in and any future Annual Report or notice of occurrence of a Listed Event. (g) The Dissemination Agent may conclusively rely on an opinion of counsel that the Section 10. Default. In the event of a failure of the District to comply with any provision District's instructions to the Dissemination Agent under this Section 5 comply with the of this Disclosure Agreement, the Dissemination Agent may (and, at the request of any requirements of this Rule. Participating Underwriter or the holders of at least 25% aggregate principal amount of i Outstanding Bonds, and upon being indemnified to its satisfaction, shall), or any holder or Section 6. Termination of Reporting, Obli ag tom. The District's and Dissemination beneficial owner of the Bonds may take such actions as may be necessary and appropriate, Agent's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, including seeking mandate or specific performance by court order,to cause the District to comply prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement final maturity of the Bonds,the District shall give notice of such termination in the same manner shall not be deemed an Event of Default under the Indenture,and the sole remedy under this as for a Listed Event under Section 5(c). 5 6 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT 1 e Name of Issuer: Truckee Donner Public Utility District Community Facilities District No. 04-1(Gray's Crossing) Name of Bond Issue: Truckee Donner Public Utility District Community Facilities District No. 04-1(Gray's Crossing)Special Tax Bonds,Series 2005 Date of Issuance: 2005 NOTICE IS HEREBY GIVEN that the Truckee Donner Public Utility District (the "District") has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement dated May 1,2005 executed by x the District for the benefit of the holders and beneficial owners of the above-referenced Bonds. The District anticipates that the Annual Report will be filed by Dated: t MUNIFINANCIAL By: Title: cc: Issuer z 9 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 E TRUCKEE DONNER PUBLIC UTILITY DISTRICT (representing the principal amount of the Bonds,less an Underwriter's discount of$ i COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) and[less net original issue discount][plus net original issue premium]of$ SPECIAL TAX BONDS SERIES 2005 (b) The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of,and shall be payable and be subject to redemption as provided in, a Trust Indenture, dated September 1, 2004, by and between the Community Facilities BOND PURCHASE AGREEMENT District and The Bank of New York Trust Company,N.A.(the"Trustee"),as supplemented by a 1 First Supplemental Trust Indenture,dated as of May 1,2005(collectively,the"Indenture"). 2005 (c) The Underwriter has previously distributed to potential purchasers of the Bonds the Preliminary Official Statement for the Bonds,dated 2005(which Preliminary Official Statement,together with its cover page and all appendices thereto,is herein referred to Board of Directors as the"Preliminary Official Statement"and which,as amended with the prior approval of the Truckee Donner Public Utility District,as legislative Underwriter and executed by the Community Facilities District,will be referred to herein as the body of Truckee Donner Public Utility "Official Statement"). Such distribution of the Preliminary Official Statement by the District Community Facilities District Underwriter subsequent to its receipt of a certificate from the Community Facilities District No.04-1(Gray's Crossing) deeming the Preliminary Official Statement final for purposes of Rule 15c2-12 of the Securities P.O.Box 309 and Exchange Commission("Rule 15c2-12"). The Community Facilities District hereby ratifies Truckee,California 96160 the use by the Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and distribute the Official Statement, the Indenture, the Community Facilities District r Gentlemen: Continuing Disclosure Agreement,dated as of May 1,2005, by and between the Community Facilities District and MuniFinancial, as Dissemination Agent (the "District Continuing UBS Financial Services Inc.,on behalf of itself and Banc of America Securities LLC Disclosure Agreement"),this Bond Purchase Agreement,any other documents or contracts to (collectively,the"Underwriter"), acting not as a fiduciary or agent for you, but on behalf of which the Community Facilities District is a party,and all information contained therein,and all itself,offers to enter into this Bond Purchase Agreement with Truckee Donner Public Utility other documents,certificates and statements furnished by the Community Facilities District to District Community Facilities District No.04-1 (Gray's Crossing)(the"Community Facilities the Underwriter in connection with the transactions contemplated by this Bond Purchase District")which,upon acceptance,will be binding upon the Community Facilities District and Agreement,in connection with the offer and sale of the Bonds by the Underwriter. the Underwriter. This offer is made subject to its acceptance by the Community Facilities District on the date hereof, and it is subject to withdrawal by the Underwriter upon notice (d) At 8:00 A.M.,Los Angeles time,on 2005,or at such earlier time delivered to the Community Facilities District at any time prior to the acceptance by the or date as shall be agreed upon by the Underwriter and the Community Facilities District(such Community Facilities District. Capitalized terms that are used in this offer and not otherwise time and date being herein referred to as the"Closing Date"),the Community Facilities District defined herein shall have the respective meanings ascribed to them in the Indenture (as will deliver (i) to The Depository Trust Company in New York, New York, the Bonds in hereinafter defined). definitive form(all Bonds being in book-entry form registered in the name of Cede&Co.and having the CUSIP numbers assigned to them printed thereon),duly executed by the officers of 1. Purchase,Sale and Delivery of the Bonds. the District as the officials of the Community Facilities District as provided in the Indenture,and (a) Subject to the terms and conditions, and in reliance upon the representations, (ii)to the Underwriter, at the San Francisco,California offices of Stradling Yocca Carlson& warranties and agreements set forth herein, the Underwriter agrees to purchase from the Rauth,a Professional Corporation("Bond Counsel"),the documents herein mentioned;and the Community Facilities District, and the Community Facilities District agrees to sell to the Underwriter shall accept such delivery and pay the purchase price of the Bonds in same day Underwriter, all (but not less than all)of the $ principal amount of Truckee funds(such delivery and payment being herein referred to as the"Closing"). Donner Public Utility District Community Facilities District No.04-1(Gray's Crossing)Special (e) The Underwriter agrees to make a bona fide public offering of the Bonds at the Tax Bonds,Series 2005(the"Bonds")in the aggregate principal amount specified in Exhibit A initial offering prices set forth in the Official Statement,which prices may be changed from time hereto. The Bonds shall be dated the Closing Date(as hereinafter defined),bear interest from to time by the Underwriter after such offering. ¢ said date (payable semiannually on March 1 and September 1 in each year, commencing 1,200_)at the rates per annum,and mature on the dates and in the amounts set 2. Representations, Warranties and Agreements of the Community Facilities forth in Exhibit A hereto. The purchase price for the Bonds shall be $ District. The Community Facilities District represents, warrants and covenants to and agrees with the Underwriter that: 2 GrysCrsngBond PurchaseAgrmnt,Apr27,05 GrysCrsngBond PurchaseAgrmnt,Apr27,05 E for any supplement to the Official Statement necessary so that the statements therein, as so (m) Any certificate signed by any authorized official of the District or the Community supplemented,will not be misleading in light of the circumstances existing at such time;and the Facilities District authorized to do so shall be deemed a representation and warranty to the Community Facilities District shall promptly furnish to the Underwriter a reasonable number of Underwriter as to the statements made therein; copies of such supplement(as used herein,the term"end of the underwriting period"means the later of such time as(i)the Community Facilities District delivers the Bonds to the Underwriter, (n) The Community Facilities District will apply the proceeds of the Bonds in or(ii)the Underwriter does not retain,directly or as a member of an underwriting syndicate,an accordance with the Indenture and the Acquisition Agreement and as described in the Official unsold balance of the Bonds for sale to the public;and,unless the Underwriter delivers written Statement; notice to the contrary to the Community Facilities District prior to the Closing specifying another date to be deemed the"end of the underwriting period,"the"end of the underwriting period" (o) The Official Statement (except the portion thereof entitled "THE DEVELOPMENT AND PROPERTY OWNERSHIP,"as to which no view need be expressed) shall be deemed to be the Closing Date), is,as of the date thereof,and will be,as of the Closing Date,true,correct and complete in all (j) The Indenture creates a valid pledge of the Net Special Taxes and the moneys in material respects;and the Official Statement(except the portion thereof mentioned above,as to Special Tax Fund established pursuant to the Indenture, including the investments thereof, which no view is expressed),does not,as of the date thereof,and will not,as of the Closing Date, subject in all cases to the provisions of the Indenture permitting the application thereof for the contain any untrue statement of a material fact or omit to state a material fact required to be purposes and on the terms and conditions set forth therein; stated therein or necessary to make the statements therein,in light of the circumstances under which they were made,not misleading,and (k) Except as disclosed in the Official Statement,no action,suit,proceeding,inquiry or investigation,at law or in equity,before or by any court,regulatory agency,public board or (p) The Preliminary Official Statement heretofore delivered to the Underwriter has body is pending or,to the knowledge of the Community Facilities District,threatened against the been deemed final by the Community Facilities District as of its date,except for the omission of Community Facilities District (i)which would materially adversely affect the ability of the such information as is permitted to be omitted in accordance with paragraph(bx 1)of Rule 15c2- Community Facilities District to perform its obligations under the Community Facilities District 12. The Community Facilities District hereby covenants and agrees that, within seven (7) Documents or the Bonds,or(ii)seeking to restrain or to enjoin:(A)the development of any of business days from the date hereof, or(upon reasonable written notice from the Underwriter) the land within the Community Facilities District,(B)the issuance,sale or delivery of the Bonds, within sufficient time to accompany any confirmation requesting payment from any customers of (C)the application of the proceeds thereof in accordance with the Indenture or the Acquisition the Underwriter,the Community Facilities District shall cause a final printed form of the Official s Agreement,or(D)the collection or application of the Special Tax,or the pledge thereof,or in Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the any way contesting or affecting the validity or enforceability of the Bonds, the Community Underwriter and the Community Facilities District so that the Underwriter may comply with Facilities District Documents, any tentative or final subdivision map or building permits paragraph(b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal applicable to property within the Community Facilities District,any other instruments relating to Securities Rulemaking Board. 3 the development of any of the property within the Community Facilities District,or any action contemplated by any of said documents, or(iii)in any way contesting the completeness or 3. Conditions to the Obligations of the Underwriter. The obligations of the accuracy of the Preliminary Official Statement or the Official Statement or the powers or Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject,at authority of the Community Facilities District with respect to the Bonds, the Community the option of the Underwriter,to the accuracy in all material respects of the representations and Facilities District Documents,or any action of the Community Facilities District contemplated warranties on the part of the Community Facilities District contained herein,as of the date hereof by any of said documents; nor is there any action pending or, to the knowledge of the and as of the Closing Date, to the accuracy in all material respects of the statements of the Community Facilities District, threatened against the Community Facilities District which officers and other officials of the Community Facilities District and the statements of the officers alleges that interest on the Bonds is not excludable from gross income for federal income tax and other officials of the Developer made in any certificates or other documents furnished purposes or is not exempt from California personal income taxation; pursuant to the provisions hereof,to the performance by the Community Facilities District of its obligations to be performed hereunder at or prior to the Closing Date and to the following (1) The Community Facilities District will furnish such information, execute such additional conditions: instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sale under (a) At the Closing Date, the Community Facilities District Documents and the the"Blue Sky"or other securities laws and regulations of such states and other jurisdictions of Developer Continuing Disclosure Agreement,dated as of May 1,2005,between the Developer the United States as the Underwriter may designate; provided, however, that the Community and MuniFinancial, as dissemination agent (the "Gray's Crossing Continuing Disclosure Facilities District shall not be required to register as a dealer or a broker of securities or to Agreement"),and the Continuing Disclosure Agreement,dated as of May 1,2005,between the consent to service of process in connection with any blue sky filing; Village at Gray's Crossing L.P., a ("Village at Gray's Crossing") and t 'To be verified. i 5 6 GrysCrsngBond PurchaseAgrmnt,Apr27,05 GrysCrsngBond PurchaseAgrmnt,Apr27,05 moratorium, insolvency or other laws affecting creditor's rights or remedies and is subject to validly existing under the Constitution and laws of the State as a public utility district;(ii) the general principles of equity and to the exercise of judicial discretion in appropriate cases;(ii)the District has full legal right, power, and authority to execute and deliver, on behalf of the Bonds are not subject to the registration requirements of the Securities Act of 1933,as amended, Community Facilities District, the Community Facilities District Documents, (iii) the and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939,as Community Facilities District have been duly authorized,executed,and delivered by the District 1 amended;and(iii)the statements contained in the Official Statement under the captions"THE on behalf of the Community Facilities District and,assuming due authorization and execution by BONDS," "SOURCES OF PAYMENT FOR THE BONDS," "TAX MATTERS," and any other applicable parties thereto,the Community Facilities District Documents constitute the "CONTINUING DISCLOSURE," and in APPENDIX D and APPENDIX G, insofar as such valid and binding obligations of the Community Facilities District,enforceable in accordance statements expressly summarize certain provisions of the Bonds, the Indenture, the other with their respective terms, subject to laws relating to bankruptcy, insolvency, or other laws g agreements and the opinion of such firm concerning the exclusion from gross income for federal affecting the enforcement of creditors'rights generally and the application of equitable principles income tax purposes and exemption from State of California personal income taxes of interest on if equitable remedies are sought;(iv)the District adopted the resolutions and ordinances forming the Bonds,are accurate in all material respects, the Community Facilities District, confirming the Special Tax, approving the Community Facilities District Documents and authorizing the sale and issuance of the Bonds at meetings of (5) The opinion of Stradling Yocca Carlson& Rauth, a Professional the Board which were called, held and conducted pursuant to law and with all public notice Corporation,dated the Closing Date and addressed to the Community Facilities District and to required by law and at which a quorum was present and acting throughout,and such resolutions the Underwriter,to the effect that,without having undertaken to determine independently the and ordinances are now in full force and effect and have not been amended, modified or accuracy or completeness of the statements contained in the Official Statement,but on the basis rescinded;(v) to the best of such counsel's knowledge,after due inquiry,there are no actions, of their participation in conferences with representatives of the Community Facilities District, suits, proceedings, inquiries, or investigations, at law or in equity, before or by any court, the Developer,the Appraiser and others,and their examination of certain documents,nothing has governmental agency,public board,or body,pending or threatened against the District or the come to their attention which has led them to believe that the Official Statement contains any Community Facilities District, for which the District or the Community Facilities District has untrue statement of a material fact or omits to state a material fact required to be stated therein or been served,to restrain or enjoin the formation of the Community Facilities District,the issuance necessary to make the statements therein,in light of the circumstances under which they were of the Bonds,the collection or application of the Special Tax,or the payment of principal of and made,not misleading(except that no opinion or belief need be expressed as to any financial interest on the Bonds,or in any way contesting the validity of the Bonds or the other District statements or other financial, statistical or engineering data or forecasts, numbers, charts, Documents or this Bond Purchase Agreement;(vi)the execution and delivery of the Community s estimates,projections,assumptions,or expressions of opinion,any information about valuation, Facilities District Documents and the approval of the Official Statement,and compliance with l appraisals, absorption, archeological or environmental matters, or any information about The the provisions thereof and hereof,under the circumstances contemplated thereby,do not and will ` Depository Trust Company or the book-entry-only system); not in any material respect conflict with or constitute on the part of the District or the Community Facilities District a breach of or default under any agreement or other instrument to (6) A certificate, dated the Closing Date and signed by an authorized which either is a party or by which either is bound or any existing law,regulation,court order or representative of the Community Facilities District, ratifying the use and distribution by the consent decree to which either is subject,(vii)the Special Tax constituting the security for the Underwriter of the Preliminary Official Statement and the Official Statement in connection with Bonds has been duly and lawfully levied under and pursuant to the Act and constitutes valid and the offering and sale of the Bonds and certifying that(i)the representations and warranties of the legally binding liens on the properties on which it has been levied;and(viii)to the best of such Community Facilities District contained in Section 2 hereof are true and correct in all material counsel's knowledge, without conducting an independent investigation, the information respects on and as of the Closing Date with the same effect as if made on the Closing Date contained in the Official Statement relating to the District,the Community Facilities District,the except that all references therein to the Preliminary Official Statement shall be deemed to be Special Tax and the Bonds(except for the financial statements and other financial,statistical or references to the Official Statement; (ii)to the best of his or her knowledge, no event has engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or occurred since the date of the Official Statement affecting the matters contained therein which expressions of opinion,any information about valuation,appraisals,absorption,archeological or should be disclosed in the Official Statement for the purposes for which it is to be used in order environmental matters,the Appendices thereto,or any information about The Depository Trust to make the statements and information contained in the Official Statement not misleading in any Company or the book-entry-only system,as to which no view need be expressed)is correct in all material respect,and the Bonds and the Community Facilities District Documents conform as to material respects and does not contain any untrue or misleading statement of a material fact or form and tenor to the descriptions thereof contained in the Official Statement; and (iii)the omit a material fact required to be stated therein or necessary to make the statements therein,in Community Facilities District has complied with all the agreements and satisfied all the light of the circumstances under which they were made,not misleading; conditions on its part to be performed or satisfied under the Community Facilities District Documents and the Official Statement at or prior to the Closing Date; (8) An opinion, dated the date of the Closing and addressed to the Underwriter,of Nossaman,Guthner,Knox&Elliott,LLP,counsel to the Underwriter,in such z (7) An opinion,dated the Closing Date and addressed to the Underwriter,of form as may be acceptable to the Underwriter and counsel to the Underwriter, including an Dennis W.De Cuir,A Law Corporation,Special Counsel for the District,dated the Closing Date opinion that the Bonds are not subject to the registration requirements of the Securities Act of and addressed to the Underwriter,to the effect that(i)the District was duly organized and is 1933,as amended. 9 10 GrysCrsngBond PurchaseAgrmnt,Apr27,05 GrysCrsngBond PurehaseAgrmnt,Apr27,05 5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth 10. Partial Unenforceability. Any provision of this Bond Purchase Agreement which herein: is prohibited or unenforceable in any jurisdiction shall,as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions (a) The Underwriter shall be under no obligation to pay, and the Community of this Purchase Agreement or affecting the validity or enforceability of such provision in any Facilities District shall pay or cause to be paid (out of any legally available funds of the other jurisdiction. Community Facilities District) all expenses incident to the performance of the Community Facilities District's obligations hereunder,including,but not limited to,the cost of preparing and 11. No Prior Agreements. This Bond Purchase Agreement supersedes and replaces delivering the Bonds to DTC,the cost of preparation,printing,distributing and delivering of the all prior negotiations,agreements and understandings between the parties hereto in relation to the Indenture,the Preliminary Official Statement,the Official Statement and all other agreements sale of Bonds for the Community Facilities District. and documents contemplated hereby(and drafts of any thereof)in such reasonable quantities as requested by the Underwriter;and the fees and disbursements of the Trustee, Bond Counsel, 12. Governing Law. This Bond Purchase Agreement shall be governed by the laws of Disclosure Counsel and any financial advisors,special tax consultants,appraisers,accountants, the State of California. engineers or any other experts or consultants the Community Facilities District retained in connection with the Bonds;and 13. Counterparts. This Bond Purchase Agreement may be executed simultaneously in several counterparts,each of which shall be an original and all of which shall constitute one and (b) The Community Facilities District shall be under no obligation to pay, and the the same instrument. Underwriter shall pay,any fees of the California Debt and Investment Advisory Commission,the f cost of preparation of any"blue sky"or legal investment memoranda and this Bond Purchase Very truly yours, Agreement;expenses to qualify the Bonds for sale under any"blue sky"or other state securities laws;and all other expenses incurred by the Underwriter in connection with its public offering UBS FINANCIAL SERVICES INC.,on behalf of and distribution of the Bonds (except those specifically enumerated in paragraph(a) of this itself and Banc of America Securities LLC section),including the fees and disbursements of its counsel and any advertising expenses. i 6. Notices. Any notice or other communication to be given to the Community Facilities District under this Bond Purchase Agreement may be given by delivering the same in BY writing to the Community Facilities District in care of Truckee Donner Public Utility District at Title: the address shown on page one hereof,and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to UBS Financial Services Inc.,777 South Figueroa Street,50th Floor,Los Angeles,CA 90017,Attention: Dan Gangwish. BY Title: 7. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Community Facilities District and the Underwriter(including its successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. ACCEPTED: 8. Survival of Representations, Warranties and Agreements. The representations, TRUCKEE DONNER PUBLIC UTILITY DISTRICT warranties and agreements of the Community Facilities District set forth in or made pursuant to COMMUNITY FACILITIES DISTRICT N0.04-1 this Bond Purchase Agreement shall not be deemed to have been discharged, satisfied or (GRAY'S CROSSING) otherwise rendered void by reason of the Closing and regardless of any investigations made by } or on behalf of the Underwriter(or statements as to the results of such investigations)concerning such representations and statements of the Community Facilities District and regardless of g delivery of and payment for the Bonds. By: General Manager,Truckee Donner 9. Effective Date. This Bond Purchase Agreement shall become effective and Public Utility District binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance. 13 14 GrysCrsngBond PurchaseAgrmnt,Apr27,05 GrysCrsngBond PurchaseAgrmnt,Apr27,05 1 F ri F l i and have conferred with our counsel for the purpose of discussing the meaning of Developer in writing setting forth the particulars of such claim or action and the its contents. Developer shall assume the defense thereof, including the retaining of counsel reasonably acceptable to the Indemnified Party and the payment of all expenses. d 6. All information concerning the Developer,the ownership of the Developer,and Notwithstanding the Developer's election to appoint counsel to represent the the Developer's property within the Community Facilities District submitted in Indemnified Party in an action, the Indemnified Party shall have the right to 1 writing by, or on behalf of, the Developer to the Underwriter,the Community employ separate counsel(including local counsel),and the Developer shall bear Facilities District, Bond Counsel or Disclosure Counsel in connection with the the reasonable fees,costs and expenses of such separate counsel if(i)the use of t preparation of the Preliminary Official Statement and the Official Statement,to counsel chosen by the Developer to represent the Indemnified Party would the Appraiser in connection with preparation of the Appraisal,and to the Special present such counsel with a conflict of interest; (ii) the actual or potential Tax Consultant in connection with the Rate and Method of Apportionment was,to defendants in,or targets of,any such action include both the Indemnified Party the best of my knowledge,true,complete,and correct at the time given. and the Developer and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which 7. The statements relating to the Developer,the ownership of the Developer and the are materially different from or additional to those available to the Developer;(iii) Developer's property within the Community Facilities District contained in the the Developer shall not have employed counsel reasonably satisfactory to the Official Statement do not contain any untrue statement of a material fact or omit Indemnified Party to represent the Indemnified Party within a reasonable time to state a material fact required to be stated therein or necessary to make the after notice of the institution of such action;or(iv)the Developer shall authorize statements therein,in light of the circumstances under which they were made,not the Indemnified Party to employ separate counsel at the expense of the Developer. misleading. The Developer will not, without the prior written consent of the indemnified ' 8. No proceedings are pending or,to the best knowledge of the undersigned,after parties,settle or compromise or consent to the entry of any judgment with respect due inquiry,threatened in which the Developer may be adjudicated as bankrupt or to any pending or threatened claim,action,suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the discharged from any and all of its debts or obligations or granted an extension of indemnified parties are actual or potential parties to such claim or action)unless r time to pay its debts or a reorganization or readjustment of the debts. ( such settlement,compromise or consent includes an unconditional release of each ' 9. No action,suit,proceeding,inquiry,or investigation,at law or in equity,before or Indemnified Party from all liability arising out of such claim, action, suit or b an court,regulatory agency,public board or body,is pending or,to the best proceeding. f Y Y g rY g Y�P Y• P g knowledge of the Developer, threatened in any way seeking to restrain or to 11. Promptly after receipt by any Indemnified Party of notice of any complaint or the enjoin the development of the property within the Community Facilities District. commencement of any action or proceeding in connection with any matter for 3 which the Developer is obligated to indemnify an Indemnified Party as set forth in 10. The Developer agrees to indemnify and hold harmless the Underwriter, the the preceding paragraph, the Indemnified Party shall notify the Developer in District,the Community Facilities District and each person,if any,who controls writing of such complaint or of the commencement of such action or proceeding (as such term is defined in Section 15 of the Securities Act of 1933,as amended) and, if the Developer so elects or is requested by the Indemnified Party, the the Underwriter(each, an "Indemnified Party")against any and all judgments, Developer shall assume the defense of such action or proceeding, including the losses,claims,damages,liabilities and expenses(i)arising out of any statement or employment of counsel reasonably satisfactory to the Indemnified Party and the information in the Preliminary Official Statement or in the Official Statement, payment of the fees and disbursements of such counsel, in which event the relating to the Developer,the ownership of the Developer and the Developer's Developer shall not be obligated to pay the reasonable fees and disbursements of property within the Community Facilities District and the development thereof as separate counsel for the Indemnified Party in such action. In the event,however, described in the Official Statement,that is or is alleged to be untrue or incorrect in that an Indemnified Party's legal counsel has determined that defenses may be any material respect or the omission or alleged omission therefrom of any available to an Indemnified Party that are different from or in addition to those statement or information that should be stated therein, or that is necessary,to available to the Developer or that there is or could reasonably be expected to be a make the statements therein not misleading in any material respect,and(ii)to the conflict of interest by reason of the Developer and an Indemnified Party having extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission common counsel in any action or proceeding, then the Indemnified Party may if such settlement is effected with the written consent of the Developer. In case employ separate counsel to represent or defend it in any such action or proceeding any claim shall be made or action brought against an Indemnified Party based in which such Indemnified Party may become involved or is named as defendant upon the Official Statement for which indemnity may be sought against the and the Developer shall pay the reasonable fees and disbursements of such Developer, as provided above, the Indemnified Party shall promptly notify the separate counsel. B-2 B-3 4 EXHIBIT B-2 Community Facilities District submitted in writing by,or on behalf of,Village at i TRUCKEE DONNER PUBLIC UTILITY DISTRICT Gray's Crossing to the Underwriter, the Community Facilities District, Bond ' COMMUNITY FACILITIES DISTRICT N0.04-1 Counsel or Disclosure Counsel in connection with the preparation of the (GRAY'S CROSSING) Preliminary Official Statement and the Official Statement, to the Appraiser in SPECIAL TAX BONDS connection with preparation of the Appraisal,and to the Special Tax Consultant in SERIES 2005 connection with the Rate and Method of Apportionment was,to the best of my knowledge,true,complete,and correct at the time given. CERTIFICATE OF VILLAGE AT GRAY'S CROSSING L.P. 7. The statements relating to Village at Gray's Crossing,the ownership of Village at In connection with the issuance and sale of the above-captioned bonds,and pursuant to Gray's Crossing and Village at Gray's Crossing's property within the Community the Bond Purchase Agreement,dated 2005,by and between Truckee Donner Facilities District contained in the Official Statement do not contain any untrue statement of a material fact or omit to state a material fact required to be stated Public Utility District Community Facilities District No.04-1 (Gray's Crossing) (the therein or necessary to make the statements therein,in light of the circumstances "Community Facilities District")and the representative of the Underwriter named therein(the under which they were made,not misleading. "Bond Purchase Agreement"), the undersigned hereby certifies, represents, warrants and covenants,on behalf of Village at Gray's Crossing L.P.("Village at Gray's Crossing")that: 8. No proceedings are pending or,to the best knowledge of the undersigned,after due inquiry,threatened in which Village at Gray's Crossing may be adjudicated 1. The undersigned is, and at all pertinent times mentioned herein has been, the as bankrupt or discharged from any and all of its debts or obligations or granted authorized representative of Village at Gray's Crossing,and is authorized to make an extension of time to pay its debts or a reorganization or readjustment of the this certification on behalf of Village at Gray's Crossing. debts. 2. Capitalized terms that are not defined herein shall have the meanings ascribed to 9. No action,suit,proceeding,inquiry,or investigation,at law or in equity,before or them in the Bond Purchase Agreement. by any court,regulatory agency,public board or body,is pending or,to the best knowledge of Village at Gray's Crossing, threatened in any way seeking to 3. Village at Gray's Crossing is a duly organized and validly existing in good standing under the laws of the State of restrain or to enjoin the development of the property within the Community Facilities District. 4. Village at Gray's Crossing has full power and authority to execute,deliver,and 10. Village at Gray's Crossing agrees to indemnify and hold harmless the perform its obligations under the Village at Gray's Crossing Continuing Underwriter,the District,the Community Facilities District and each person, if Disclosure Agreement, dated as of May 1, 2005, between Village at Gray's any,who controls(as such term is defined in Section 15 of the Securities Act of Crossing and MuniFinancial, as dissemination agent (the "Village at Gray's 1933, as amended)the Underwriter(each,an"Indemnified Party")against any Crossing Continuing Disclosure Agreement")and the Village at Gray's Crossing and all judgments,losses,claims,damages,liabilities and expenses(i)arising out Continuing Disclosure Agreement has been duly authorized, executed, and of any statement or information in the Preliminary Official Statement or in the delivered by Village at Gray's Crossing and, assuming due authorization, Official Statement, relating to Village at Gray's Crossing, the ownership of Village at Gray's Crossing and Village at Gray's Crossings property within the execution and delivery by the other parties thereto,constitutes legal,valid,and Community Facilities District and the development thereof as described in the binding agreement of Village at Gray's Crossing,enforceable in accordance with Official Statement,that is or is alleged to be untrue or incorrect in any material its terms, subject to laws relating to bankruptcy, insolvency, or other laws respect or the omission or alleged omission therefrom of any statement or affecting the enforcement of creditors' rights generally and the application of information that should be stated therein, or that is necessary, to make the G equitable principles if equitable remedies are sought. statements therein not misleading in any material respect,and(ii)to the extent of € the aggregate amount paid in settlement of any litigation commenced or i 5. I have reviewed the contents of the Preliminary Official Statement and the " contents of the Official Statement. I have reviewed the contents of this Certificate threatened arising from a claim based upon any such untrue statement or omission and have conferred with our counsel for the purpose of discussing the meaning of if such settlement is effected with the written consent of Village at Gray's } its contents. Crossing. In case any claim shall be made or action brought against an Indemnified Party based upon the Official Statement for which indemnity may be 6. All information concerning Village at Gray's Crossing,the ownership of Village sought against Village at Gray's Crossing, as provided above, the Indemnified at Gray's Crossing, and Village at Gray's Crossing's property within the Party shall promptly notify Village at Gray's Crossing in writing setting forth the B-6 B-7 EXHIBIT C With respect to factual matters underlying our opinions herein, we have made no independent investigation or inquiry and have relied solely upon the Developer's Certificate. We { FORM OF DEVELOPER COUNSEL OPINION advise you that the phrase"to our knowledge,"as used herein,means that no facts have come to § our attention, based upon an inquiry of attorneys in this firm who devote substantive legal attention to Developer, or as a result of our examination of the Developer's Certificate, that We have acted as counsel to (the"Developer")in connection with(i) indicate to us anything contrary to the statement to which the phrase relates. Except as expressly z the proposed development known as Gray's Crossing(the"Development")to be located in the set forth above,the phrase does not mean that we have conducted any investigation or inquiry or City of Truckee(the"City")as described in the Official Statement(as defined herein),and(ii) performed any other examination or review. We have no reason to believe that any factual the issuance and sale of$ Truckee Donner Public Utility District("the District") matters or assumptions relied upon by us are not true,correct and complete. Community Facilities District No. 04-1 Special Tax Bonds, Series 2005(the"Bonds"). This opinion is rendered with reference to the Bond Purchase Agreement dated 2005 Our opinions herein are limited to the internal laws of the State of California and the (the"Bond Purchase Agreement")between the District,acting for itself and on behalf of the federal laws of the United States of America. We express no opinion whatsoever with respect to Truckee Donner Public Utility District Community Facilities District No. 04-1 and UBS the laws of any other jurisdiction and assume no responsibility for the applicability of such laws. Financial Services Inc, as representative of the Underwriter. Capitalized terms used herein without definition shall have the meanings set forth in the Bond Purchase Agreement. In rendering our opinions herein,we have assumed the following,with your approval: In rendering the opinions set forth herein, we have reviewed and examined such (i) The genuineness and authenticity of all signatures on original documents documents as we have determined to be appropriate,including the following documents: submitted to us (other than any signatures on behalf of Developer); the authenticity and completeness of all documents submitted to us as originals; the conformity to originals of all 1.0 The Bond Purchase Agreement, documents submitted to us as copies;where any signature,other than any signature on behalf of Developer purports to have been made in a corporate,governmental,fiduciary or other capacity, 2.0 The Official Statement for the offer and sale of the Bonds dated the person who affixed such signature had the full power and authority to do so; 2005(the"Official Statement"); (ii) The due authorization,execution and delivery of the applicable agreements by the 3.0 The Acquisition and Disclosure Agreement dated as of 2005, parties thereto, other than the Developer, and the legality, validity, binding effect and between Developer and the District; the Development Agreement, dated March 25, 2004 enforceability against such parties of their respective obligations under such agreements; between Developer and the Town of Truckee (the "Town") and the Developer Continuing Disclosure Agreement, dated May 1, 2005 between Developer and the disseminating agent (iii) The truth,accuracy and completeness of all factual representations and warranties named therein(collectively,the"Developer Agreements"); of all parties under the documents described in paragraphs A through H,above,and 4.0 The Articles of Organization for Developer filed with the (iv) The constitutionality or validity of a relevant statute,rule,regulation or agency Secretary of State on (date), and certified as true and complete by the action is not in issue unless a reported decision in the State of California has specifically Secretary of State as of 2005; addressed but not resolved,or has established,its unconstitutionality or invalidity. 5.0 The Operating Agreement of the Developer dated and Based upon the foregoing and in reliance thereon,and based on our examination of such certified by the Developer to be the Operating Agreement in effect on 2005; questions of law as we have deemed appropriate under the circumstances, and subject to any further assumptions,comments,exceptions,qualifications and limitations set forth below,as of 6.0 The Resolution of the Managers of Developer authorizing the execution of all the date hereof,it is our opinion that: documents necessary to accomplish the sale of the Bonds, dated ,2005; 1. Developer is a limited partnership, limited liability limited partnership, duly 7.0 The Certificate of Good Standing of Developer issued by the formed and validly existing in the State of Delaware and in good standing under the laws of the Secretary of State,dated as of 2005;and State of Delaware. 8.0 The Property Owner's Certificate Regarding Official Statement(the"Developer's 2. The Developer Agreements have been duly authorized,executed and delivered by Certificate")dated as of 12005. Developer, and constitute legal, valid and binding obligations of the Developer, enforceable against the Developer in accordance with its terms. C-2 GrysCrsngBond PurchaseAgrmnt,Apr27,05 i s transaction documents,provided that such distribution shall not expand in any way the permitted 3. The execution and delivery by Developer of the Developer Agreements and the uses of this letter. We assume no responsibility for the effect of any fact or circumstance i performance of its obligations thereunder will not conflict with or result in a violation of, or occurring subsequent to the date of this letter,including without limitation,legislative or other breach of or a default under,as applicable(a)to our knowledge,the Articles of Organization of changes in the law. Further, we assume no responsibility to advise you of any facts or Developer, (b) to our knowledge, any indenture, mortgage, deed of trust, lease, note, circumstances of which we become aware after the date hereof,regardless of whether or not they commitment, agreement or other instrument to which Developer is a party, or by which may affect our opinions herein. This opinion is given as of the date hereof and we assume no Developer or its property is bound or(c)to our knowledge,of any order,rule or regulation any obligation to update our opinions herein after the date hereof court or other governmental body having jurisdiction over Developer,the conflict,violation or breach of which, in the case of clauses (b) or(c) would have a material adverse effect on Very truly yours, Developer or the development,use,occupancy or operation of the Development or any material portion thereof. `r 4. To our knowledge, there are no actions, suits or proceedings pending or threatened against Developer in the Superior Court of the State of California, County of Sacramento,the California Court of Appeal,Third Appellate District,the United States District Court, Eastern District of California, the United States Bankruptcy Court, Eastern District of California, and the United States Ninth Circuit Court of Appeals, which, if determined adversely,would have a material adverse effect(a)on the ability of Developer to perform its obligations under the Developer Agreements, or (b) on the development, construction, use, occupancy or operation of the Development or a material portion thereof. 5. Without having undertaken to independently determine the accuracy, completeness or fairness of the discussion contained in the Official Statement,nothing has come to our attention which would lead us to believe that such discussion contains any untrue F statements of a material fact or omits to state a material fact necessary to make the statements contained therein,in the light of the circumstances under which they were made,not misleading. In addition, all of our opinions expressed hereinabove are specifically subject to and limited by the following: a) The effect of laws or court decisions relating to bankruptcy, insolvency, fraudulent conveyance, equitable subordination, reorganization, arrangement, moratorium or other laws or court decisions relating to or affecting creditors'rights generally. b) Limitations imposed by California or federal law or equitable principles upon the availability of the remedy of specific performance of any of the remedies,covenants or other provisions of any document or agreement and upon the availability of injunctive relief or other equitable remedies. R In addition,we express no opinion as to the title of the property within the District or any F entitlements,permits,approvals or other assets relating to the Development. This letter is intended solely for your use in relation to the Bond Purchase Agreement and may not be reproduced or filed publicly or relied upon for any other purpose by you or for any purpose whatsoever by any other party without the express written consent of the undersigned except that this Opinion may be copied and distributed as part of a closing book of the bond C-3 C-4 i I k t P particulars of such claim or action and Village at Gray's Crossing shall assume defendant and Village at Gray's Crossing shall pay the reasonable fees and the defense thereof,including the retaining of counsel reasonably acceptable to disbursements of such separate counsel. the Indemnified Party and the payment of all expenses. Notwithstanding Village at Gray's Crossing's election to appoint counsel to represent the Indemnified 12. Village at Gray's Crossing is fully qualified by all necessary permits, licenses, Party in an action,the Indemnified Party shall have the right to employ separate and certifications,to conduct its business as it is presently being conducted and, counsel(including local counsel),and Village at Gray's Crossing shall bear the except as may be required under blue sky or other securities laws of any state,and reasonable fees, costs and expenses of such separate counsel if(i) the use of except for such licenses,certificates,approvals,variances,and permits which may counsel chosen by Village at Gray's Crossing to represent the Indemnified Party be necessary for the construction of improvements within the Community would present such counsel with a conflict of interest;(ii)the actual or potential Facilities District,there is no consent,approval,authorization,or other order of, defendants in,or targets of,any such action include both the Indemnified Party or filing with,or certification by,any regulatory authority having jurisdiction over and Village at Gray's Crossing and the Indemnified Party shall have reasonably Village at Gray's Crossing except as such have been obtained and are in full force concluded that there may be legal defenses available to it and/or other and effect, for the consummation by Village at Gray's Crossing of the actions indemnified parties which are materially different from or additional to those contemplated to be consummated by Village at Gray's Crossing under the Official available to Village at Gray's Crossing;(iii)Village at Gray's Crossing shall not Statement. have employed counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of the 13. To the best knowledge of the undersigned,after due inquiry, Village at Gray's institution of such action;or(iv)Village at Gray's Crossing shall authorize the Crossing is not in violation of any provision of,or in default under,its operating Indemnified Party to employ separate counsel at the expense of Village at Gray's agreement or any material agreement,lease,or other contract,the violation of or d Crossing. Village at Gray's Crossing will not,without the prior written consent default under which would materially and adversely affect the business, 1 of the indemnified parties,settle or compromise or consent to the entry of any properties,assets,liabilities,or conditions(financial or other)of Village at Gray's judgment with respect to any pending or threatened claim, action suit or Crossing. t proceeding in respect of which indemnification or contribution may be sought s 14. Village at Gray's Crossing has never failed to comply with an obligation to file an hereunder(whether or not the indemnified parties are actual or potential parties to such claim or action)unless such settlement,compromise or consent includes an annual disclosure report with the appropriate information repositories as required unconditional release of each Indemnified Party from all liability arising out of under Securities and Exchange Commission Rule 15c2-12. such claim,action,suit or proceeding. 15. Other than as described in the Official Statement,to the knowledge of Village at r 11. Promptly after receipt by any Indemnified Party of notice of any complaint or the Gray's Crossing, (i) no public debt secured by a special tax or assessment on f commencement of any action or proceeding in connection with any matter for Village at Gray's Crossings land in the Community Facilities District exists or is which Village at Gray's Crossing is obligated to indemnify an Indemnified Party in the process of being authorized,and(ii)no assessment district or community as set forth in the preceding paragraph,the Indemnified Party shall notify Village facilities district exists or is in the process of being formed,in each case which at Gray's Crossing in writing of such complaint or of the commencement of such would include any portion of Village at Gray's Crossing's land within the action or proceeding and,if Village at Gray's Crossing so elects or is requested by Community Facilities District. the Indemnified Party, Village at Gray's Crossing shall assume the defense of 16. None of the parcels of land within the Community Facilities District owned by such action or proceeding, including the employment of counsel reasonably Village at Gray's Crossing is delinquent in the payment of any taxes or satisfactory to the Indemnified Party and the payment of the fees and assessments disbursements of such counsel,in which event Village at Gray's Crossing shall not be obligated to pay the reasonable fees and disbursements of separate counsel 17. The execution and delivery by Village at Gray's Crossing of Village at Gray's for the Indemnified Party in such action. In the event, however, that an Crossing Continuing Disclosure Agreement and the performance of its obligations Indemnified Party's legal counsel has determined that defenses may be available thereunder do not and will not result in violation of any provision of,or in default to an Indemnified Party that are different from or in addition to those available to under, Village at Gray's Crossing's operating agreement or any material Village at Gray's Crossing or that there is or could reasonably be expected to be a agreement,lease,or other contract to which Village at Gray's Crossing is a party conflict of interest by reason of Village at Gray's Crossing and an Indemnified or by which it or its properties are bound. Party having common counsel in any action or proceeding,then the Indemnified Party may employ separate counsel to represent or defend it in any such action or Dated: 2005 proceeding in which such Indemnified Party may become involved or is named as [Village at Gray's Crossing Signature Block] a B-8 B-9 i 12. The Developer is fully qualified by all necessary permits, licenses, and By: certifications, to conduct its business as it is presently being conducted and, Blake L.Riva,Vice President except as may be required under blue sky or other securities laws of any state,and except for such licenses,certificates,approvals,variances,and permits which may be necessary for the construction of improvements within the Community Facilities District,there is no consent,approval,authorization,or other order of, or filing with,or certification by,any regulatory authority having jurisdiction over the Developer except as such have been obtained and are in full force and effect, for the consummation by the Developer of the actions contemplated to be consummated by the Developer under the Official Statement. 13. To the best knowledge of the undersigned,after due inquiry,the Developer is not in violation of any provision of,or in default under,its operating agreement or any material agreement,lease,or other contract,the violation of or default under which would materially and adversely affect the business, properties, assets, liabilities,or conditions(financial or other)of the Developer. 14. The Developer has never failed to comply with an obligation to file an annual s disclosure report with the appropriate information repositories as required under Securities and Exchange Commission Rule 15c2-12. 15. Other than as described in the Official Statement, to the knowledge of the Developer, (i) no public debt secured by a special tax or assessment on the Developer's land in the Community Facilities District exists or is in the process of being authorized,and(ii)no assessment district or community facilities district exists or is in the process of being formed,in each case which would include any portion of the Developer's land within the Community Facilities District. 16. None of the parcels of land within the Community Facilities District owned by the Developer is delinquent in the payment of any taxes or assessments 17. The execution and delivery by the Developer of the Developer Documents and the performance of its obligations thereunder do not and will not result in violation of any provision of,or in default under,the Developer's operating agreement or any material agreement,lease,or other contract to which the Developer is a party or by which it or its properties are bound. Dated: 2005 GRAV'S CROSSING,LLC By:EAST WEST RESORT DEVELOPMENT V, L.P.,L.L.L.P.,its Manager By:HF HOLDING CORP.,its General Partner B-4 B-5 EXHIBIT A EXHIBIT B-1 MATURITY SCHEDULE TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.04-1 (GRAY'S CROSSING) SPECIAL TAX BONDS Maturity Date Price or SERIES 2005 s (September 1) Principal Amount Interest Rate Yield CERTIFICATE OF DEVELOPER In connection with the issuance and sale of the above-captioned bonds,and pursuant to the Bond Purchase Agreement,dated ,2005,by and between Truckee Donner Public Utility District Community Facilities District No.04-1 (Gray's Crossing) (the "Community Facilities District")and the representative of the Underwriter named therein(the "Bond Purchase Agreement"), the undersigned hereby certifies, represents, warrants and covenants,on behalf of Gray's Station LLC,dba Gray's Crossing,LLC(the"Developer")that: r I. The undersigned is, and at all pertinent times mentioned herein has been, the authorized representative of the Developer, and is authorized to make this certification on behalf of the Developer. 2. Capitalized terms that are not defined herein shall have the meanings ascribed to them in the Bond Purchase Agreement. 3. The Developer is a duly organized and validly existing limited liability company in good standing under the laws of the State of Delaware,and is a wholly-owned subsidiary of East West Resort Development V, L.P., L.L.L.P., a Delaware limited partnership,limited liability partnership. 4. The Developer has full power and authority to execute,deliver,and perform its obligations under the Acquisition and Disclosure Agreement, dated as of , 2005 between the Developer and the Truckee Donner Public Utility District (the "District") (the "Acquisition Agreement"), the Developer Continuing Disclosure Agreement, dated as of May 1, 2005, between the Developer and MuniFinancial,as dissemination agent(the"Developer Continuing Disclosure Agreement")and the Development Agreement,dated as of March 25, 2004(the"Development Agreement"),between the Developer and the Town of 7 Truckee (collectively, the "Developer Documents"), the Developer Documents have been duly authorized, executed, and delivered by the Developer and, assuming due authorization,execution and delivery by the other parties thereto,as applicable, constitute legal, valid, and binding agreements of the Developer, enforceable in accordance with their respective terns,subject to laws relating to bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought. 5. I have reviewed the contents of the Preliminary Official Statement and the contents of the Official Statement. I have reviewed the contents of this Certificate A-1 B-1 d k (9) The Developer Continuing Disclosure Agreements, in substantially the Appraisal referred to in the Official Statement are reasonable,and(d)no events or occurrences form set forth in APPENDIX F of the Official Statement; have been ascertained by the Appraiser or have come to the Appraiser's attention that would materially change the opinion set forth in the Appraisal; (10) A certificate of the Developer and Village at Gray's Crossing,each dated the Closing Date,in substantially the form attached hereto as Exhibit B; (14) A certificate of the Trustee,dated the Closing Date,in form and substance reasonably acceptable to the Underwriter; (11) An opinion of Hefner, Start & Marois, counsel to the Developer [and Village at Gray's Crossing],dated the date of the Closing and addressed to the Community (15) An opinion,dated the Closing Date and addressed to the Underwriter and Facilities District and the Underwriter,in form and substance acceptable to the Underwriter and the Community Facilities District,of counsel to the Trustee in form and substance acceptable to Underwriter's Counsel in substantially the form set forth in Exhibit C hereto; the Community Facilities District and the Underwriter, (12) A certificate,dated the Closing Date,of MuniFinancial("MuniFinancial") (16) Evidence satisfactory to the Underwriter that no ad valorem taxes, to the effect that(i)the Special Tax,if collected in the maximum amounts permitted pursuant to assessments,special taxes or Special Tax applicable to the property within Community Facilities the Rate and Method of Apportionment,will generate in each Fiscal Year at least 110%of the District are delinquent;and debt service payable with respect to the Bonds in the calendar year that begins in such Fiscal Year,based on such assumptions and qualifications as shall be acceptable to the Community (17) Such additional legal opinions, certificates, instruments and other Facilities District and the Underwriter, (ii)all information supplied by MuniFinancial to the documents as the Underwriter may reasonably request to evidence the truth and accuracy,as of Appraiser,as hereinafter defined,is true and correct as of the date of the Official Statement and the date hereof and as of the Closing Date,of the statements and information contained in the as of the Closing Date,based on such assumptions as may have been supplied to such firm by the Preliminary Official Statement and the Official Statement,of the Community Facilities District's Appraiser, (iii)the information contained in the Appraisal with respect to taxes and tax rates representations and warranties contained herein, and of the Developer's representations and applicable,and projected to be applicable,to the property in the Community Facilities District is warranties set forth in its certificates and the due performance or satisfaction by the Community consistent with such information provided by MuniFinancial to the Appraiser,(iv)the statements Facilities District at or prior to the Closing of all agreements then to be performed and all concerning the Rate and Method of Apportionment and the statistical and financial data set forth conditions then to be satisfied by the Community Facilities District in connection with the in the tables and discussion in the Official Statement which were derived from information transactions contemplated hereby and by the Official Statement. supplied by MuniFinancial for use in the Official Statement and in APPENDIX A thereto are { true,correct and complete in all material respects and do not contain any untrue statement of a If the Community Facilities District shall be unable to satisfy the conditions to the material fact or omit to state a material fact required to be stated therein or necessary to make the obligations of the Underwriter to purchase,accept delivery of and pay for the Bonds contained in statements therein,in light of the circumstances under which they were made,not misleading and this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, accept no events or occurrences have been ascertained by MuniFinancial or have come to its attention delivery of and pay for the Bonds shall be terminated for any reason permitted by this Bond that would substantially change such information set forth in the Official Statement; (v) Purchase Agreement,this Bond Purchase Agreement shall terminate and neither the Underwriter MuniFinancial has the full power and authority to enter into and perform its duties under the nor the Community Facilities District shall be under any further obligation hereunder,except that District Continuing Disclosure Agreement and the Developer Continuing Disclosure Agreement the respective obligations of the Community Facilities District and the Underwriter set forth in (collectively, the "Continuing Disclosure Agreements"); and (vi) the Continuing Disclosure Section 5 and Section 6 hereof shall continue in full force and effect. Agreements have been duly authorized,executed and delivered by MuniFinancial and constitute the valid and binding obligation of MuniFinancial in accordance with their respective terms. 4. Conditions of the Community Facilities District's Obligations. The Community Facilities District's obligations hereunder are subject to the Underwriter's performance of its (13) A letter from Cushman&Wakefield of Colorado,Inc.(the"Appraiser"), obligations hereunder,and are also subject to the following conditions: dated the Closing Date and addressed to the Community Facilities District and the Underwriter, to the effect that the Appraiser has prepared the appraisal report with respect to the property (a) As of the Closing Date,no litigation shall be pending or,to the knowledge of the located within the Community Facilities District dated as of 2005 (the duly authorized officer of the Community Facilities District executing the certificate referred to "Appraisal")and that:(a)the Appraisal was included in the Preliminary Official Statement and in Section 3(cx6)hereof,threatened,to restrain or enjoin the issuance or sale of the Bonds or in l any way affecting any authority for or the validity of the Bonds or the Community Facilities { the Official Statement with its permission,(b)neither the Appraisal nor the information in the Official Statement referring to it contains any untrue statement of a material fact or omits to state District Documents or the existence or powers of the Community Facilities District;and t a material fact necessary in order to make the statements therein,in light of the circumstances (b) As of the Closing Date, the Community Facilities District shall receive the under which they were made,not misleading,(c)in its opinion,the assumptions made in the opinions referred to in Section 3(c)(3)and(5)hereof. To be confirmed. 11 12 GrysCrsngBond PurchaseAgrmnt,Apr27,05 GrysCrsngBond PurchaseAgrmnt,Apr27,05 MuniFinancial,as dissemination agent(the"Village at Gray's Crossing Continuing Disclosure (4) establishment of any new restrictions on securities materially affecting the Agreement"and, with the Gray's Crossing Continuing Disclosure Agreement,the"Developer free market for securities(including the imposition of any limitations on interest rates)or the Continuing Disclosure Agreements")shall be in full force and effect,and shall not have been charge to the net capital requirements of the Underwriter established by the New York Stock amended, modified or supplemented, except as may have been agreed to in writing by the Exchange,the Securities and Exchange Commission,any other Federal or state agency or the Underwriter,and there shall have been taken in connection therewith,with the issuance of the Congress of the United States,or by Executive Order; Bonds and with the transactions contemplated thereby and by this Bond Purchase Agreement,all such actions as,in the opinion of Bond Counsel,shall be necessary and appropriate; (5) any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially (b) Between the date hereof and the Closing Date,the market price or marketability adversely affecting the tax status of the Community Facilities District, its property, income, of the Bonds at the initial offering prices set forth in the Official Statement shall not have been securities(or interest thereon),the validity or enforceability of the Special Tax or the ability of materially adversely affected,in the judgment of the Underwriter(evidenced by a written notice the Community Facilities District to construct or acquire the improvements as contemplated by to the Community Facilities District terminating the obligation of the Underwriter to accept the Community Facilities District Documents or the Official Statement or the right of any owner delivery of and pay for the Bonds)by reason of any of the following: of the property within the Community Facilities District to develop such property in the manner described in the Official Statement,or (1) legislation introduced in or enacted(or resolution passed)by the Congress of the United States of America or recommended to the Congress by the President of the United (6) any event occurring, or information becoming known, which, in the States, the Department of the Treasury, the Internal Revenue Service, or any member of judgment of the Underwriter,makes untrue in any material respect any statement or information Congress,or favorably reported for passage to either House of Congress by any committee of contained in the Official Statement,or results in the Official Statement containing any untrue such House to which such legislation had been referred for consideration or a decision rendered statement of a material fact or omitting to state a material fact required to be stated therein or by a court established under Article III of the Constitution of the United States of America or by necessary to make the statements therein,in light of the circumstances under which they were the Tax Court of the United States of America,or an order,ruling,regulation(final,temporary or made,not misleading. proposed),press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America,with the purpose or (c) On the Closing Date,the Underwriter shall have received counterpart originals or seffect,directly or indirectly,of imposing federal income taxation upon the interest that would be certified copies of the following documents,in each case satisfactory in form and substance to received by the holders of the Bonds beyond the extent to which such interest is subject to the Underwriter: taxation as of the date hereof, 's (1) The Community Facilities District Documents,together with a certificate (2) legislation introduced in or enacted(or resolution passed)by the Congress dated as of the Closing Date of the Secretary of the Board to the effect that each such document of the United States of America, or an order, decree or injunction issued by any court of is a true,correct and complete copy of the one duly approved by the Board; competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange (2) The Official Statement, duly executed by the Community Facilities Commission,or any other governmental agency having jurisdiction of the subject matter,to the District; effect that obligations of the general character of the Bonds,or the Bonds,including any or all underlying arrangements,are not exempt from registration under or other requirements of the (3) The opinion of Bond Counsel,dated the Closing Date and addressed to the Community Facilities District, in substantially the form attached to the Preliminary Official Securities Act of 1933,as amended,or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, Statement as APPENDIX G,and a reliance letter from such firm,dated the Closing Date and addressed to the Underwriter, to the effect that such approving opinion addressed to the offering or sale of obligations of the general character of the Bonds,or of the Bonds,including any or all underwriting arrangements,as contemplated hereby or by the Official Statement or Community Facilities District may be relied upon by the Underwriter to the same extent as if otherwise is or would be in violation of the federal securities laws, rules or regulations as such opinion was addressed to them; amended and then in effect; (4) The supplemental opinion of Bond Counsel,dated the Closing Date and (3) the occurrence of any outbreak of hostilities or other national or addressed to the Underwriter,to the effect that(i)this Bond Purchase Agreement,the Indenture international calamity or crisis,or the escalation of an existing national or international calamity and the Community Facilities District Continuing Disclosure Agreement have been duly { or crisis,the effect of such outbreak,calamity or crises on the financial markets of the United authorized, executed and delivered by the Community Facilities District, and, assuming such agreements constitute valid and binding obligations of the other parties thereto, constitute the States(it being acknowledged by the Underwriter that as of the date hereof no such event is legally valid and binding agreements of the Community Facilities District enforceable in occurring); accordance with their respective terms,except as enforcement may be limited by bankruptcy, s S 7 8 GrysCrsngBond PurchaseAgrmnt,Apr27,05 GrysCrsngBond PurchaseAgrmnt,Apr27,05 (a) The Truckee Donner Public Utility District(the"District")is duly organized and delivery of the Community Facilities District Documents,(iii)authorized the preparation and is validly existing under the Constitution and laws of the State as a public utility district,has full delivery of the Preliminary Official Statement and the Official Statement,and(iv)authorized and legal right, power, and authority to execute, deliver and perform its obligations under the approved the performance by the Community Facilities District of its obligations contained in, Acquisition and Disclosure Agreement, dated as of , 2005 (the "Acquisition and the taking of any and all action as may be necessary to carry out, give effect to and Agreement") between Gray's Station LLC, dba Gray's Crossing, LLC, a Delaware limited consummate the transactions contemplated by, each of said Community Facilities District liability company (the "Developer") and the District and to carry out all transactions Documents(including,without limitation,the collection of the Special Tax),and the Community contemplated by the Acquisition Agreement. Facilities District has been validly formed, the Special Tax has been approved and its levy authorized, and(assuming due authorization, execution and delivery by other parties thereto, (b) The District has duly adopted a resolution forming the Community Facilities where necessary)the Community Facilities District Documents and the Bonds will constitute the District(the"Resolution of Formation")and an ordinance authorizing the levy of a special tax on valid, legal and binding obligations of the Community Facilities District enforceable in the taxable property within the Community Facilities District(the"Special Tax Ordinance")and accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, all other ordinances and resolutions referred to in the Resolution of Formation and the Special moratorium and other laws affecting the enforcement of creditors' rights in general and to the Tax Ordinance. The District has caused to be recorded in the real property records of the County application of equitable principles; of Nevada a Notice of Special Tax Lien(the"Notice of Special Tax Lien")(such ordinances and resolutions and Notice of Special Tax Lien being collectively referred to herein as the (f) The Community Facilities District is not in breach of or default under any "Formation Documents"). Each of the Formation Documents remains in full force and effect as applicable law or administrative rule or regulation of the United States or the State of California, of the date hereof and has not been amended. or of any department, division, agency or instrumentality of either of them, or under any j applicable court or administrative decree or order,or under any loan agreement,note,resolution, f# (c) The Community Facilities District is duly organized and validly existing as a indenture,contract,agreement or other instrument to which the Community Facilities District is community facilities district under the Mello-Roos Community Facilities Act of 1982, as a party or is otherwise subject or bound, a consequence of which could be to materially and amended(the"Act")and the laws of the State of California and has,or at the Closing Date will adversely affect the performance by the Community Facilities District of its obligations under have,as the case may be,full legal right,power and authority(i)to execute,deliver and perform the Community Facilities District Documents or the Bonds;and compliance with the provisions its obligations under this Bond Purchase Agreement,the Indenture and the District Continuing of each thereof will not conflict with or constitute a breach of or default under any applicable law Disclosure Agreement, and to carry out all transactions contemplated by each of such or administrative rule or regulation of the United States or the State of California, or of any agreements,(ii)to issue,sell and deliver the Bonds to the Underwriter as provided herein,and department,division,agency or instrumentality of either of them,or under any applicable court 4 (iii)to carry out,give effect to and consummate the transactions contemplated by the Formation or administrative decree or order,or a material breach of or default under any loan agreement, Documents and the Official Statement and by the Indenture,this Bond Purchase Agreement,the note, resolution, indenture, contract, agreement or other instrument to which the Community F District Continuing Disclosure Agreement and the Acquisition Agreement (collectively, the Facilities District is a party or is otherwise subject or bound; "Community Facility District Documents"); (g) Except for compliance with the"blue sky"or other states securities law filings,as (d) The Community Facilities District has complied,and at the Closing Date will be to which the Community Facilities District makes no representations,all approvals,consents, in compliance, in all material respects, with the Act and the Community Facilities District authorizations, elections and orders of or filings or registrations with any State governmental Documents;and any immaterial compliance therewith by the Community Facilities District,if authority,board,agency or commission having jurisdiction which would constitute a condition any,will not impair the ability of the Community Facilities District to carry out,give effect to or precedent to,or the absence of which would materially adversely affect,the performance by the consummate the transactions contemplated by the foregoing. From and after the date of issuance Community Facilities District of its obligations hereunder,or under the Community Facilities of the Bonds,the Community Facilities District will continue to comply with the Act and the District Documents or the Bonds,have been obtained and are in full force and effect; covenants of the Community Facilities District contained in the Community Facilities District Documents; (h) The Special Tax has been duly and lawfully authorized and may be levied and collected under the laws of the State of California; and, when levied, the Special Tax will (e) The District has duly and validly: (i)taken or caused to be taken,all proceedings constitute a valid and legally binding continuing lien on the properties on which it is levied; necessary under the Act and the Constitution and laws of the State of California in order to form the Community Facilities District,to authorize the levy of a special tax(the"Special Tax")on (i) Until the date which is twenty-five(25)days after the"end of the underwriting the taxable property within the Community Facilities District pursuant to the Rate and Method of period" (as hereinafter defined), if any event shall occur of which the Community Facilities Apportionment of Special Tax approved pursuant to the Resolution of Formation(the"Rate and District becomes aware, as a result of which it may be necessary to supplement the Official Method of Apportionment"),to cause the Special Tax to be secured by a continuing lien on each Statement in order to make the statements in the Official Statement,in light of the circumstances parcel of Taxable Property (as defined in the Rate and Method of Apportionment) and to existing at such time,not misleading,the Community Facilities District shall forthwith notify the } authorize the sale and issuance of the Bonds, (ii)authorized and approved the execution and Underwriter of such event and shall cooperate fully in furnishing any information available to it 's 0 3 4 GrysCrsngBond PurchaseAgrmnt,Apr27,05 GrysCrsngBond PurchaseAgrmnt,Apr27,05 Disclosure Agreement in the event of any failure of the District to comply with this Disclosure Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of Agreement shall be an action to compel performance. the District, the Trustee,the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds,and shall cause no rights in any other Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The person or entity. Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to indemnify and hold harmless(but only to the extent of TRUCKEE DONNER PUBLIC UTILITY Special taxes available for such purpose) the Dissemination Agent, its officers, directors, DISTRICT COMMUNITY FACILITIES employees and agents,against any loss,expense and liabilities which the Dissemination Agent DISTRICT NO.04-1(GRAY'S CROSSING) may incur arising out of or in the exercise or performance of its powers and duties hereunder, SPECIAL TAX BONDS including the costs and expenses(including attorneys' fees)of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Neither the Trustee nor the By: Dissemination Agent shall be required to consent to any amendment which would impose any General Manager,Truckee Donner Public Utility greater duties or risk of liability on the Trustee or the Dissemination Agent. No person shall District have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Agreement. The Dissemination Agent shall not The undersigned hereby agrees to act as Dissemination Agent pursuant to the foregoing be liable under any circumstances for monetary damages to any person for any breach of this Continuing Disclosure Agreement t Agreement. The Dissemination Agent shall have no responsibility whatsoever for the content of any report or notice required of the District hereunder. MUNIFINANCIAL,as Dissemination Agent By: Authorized Signatory i 7 8 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 this Disclosure Agreement,stating the date it was provided and listing all the Repositories provided, however, that parcels with delinquencies of$2,500 or less may be grouped to which it was provided. together and such information may be provided by category. (e) Any filing under this Disclosure Agreement may be made solely by transmitting (iv) an update of Table 4 in the Official Statement for the Bonds,based on the such filing to the Texas Municipal Advisory Council ("MAC") as provided at assessed values(rather than appraised values)within the District and the Special Tax levy www.disclosureusa.org,unless the United States Securities and Exchange Commission("SEC") for the fiscal year in which the Annual Report is being filed, has withdrawn the interpretative advice in its letter to the MAC dated September 7,2004,or such (v) any changes to the Rates and Method of Apportionment of the Special Tax other central post office approved by the SEC. approved or submitted to the qualified electors for approval prior to the filing of the Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate Annual Report; by reference the following: (vi) the status of any foreclosure actions being pursued by the District with (a) The audited financial statements of the District for the most recent fiscal year of respect to delinquent Special Taxes; the District then ended,which may be included in the audited financial statements of the Truckee (vii) any information not already included under(i)through(vi)above that the Donner Public Utility District(the PUD"). If the audited financial statements are not available Board of Directors of the PUD is required to file in its annual report to the California by the time the Annual Report is required to be filed, the Annual Report shall contain any Debt and Investment Advisory Commission pursuant to the provisions of the Mello-Roos unaudited financial statements of the District in a format similar to the audited financial Community Facilities Act of 1982,as amended;and statements,and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. Audited financial statements of the District shall be audited (viii) such further information, if any, as may be necessary to make the j by such auditor as shall then be required or permitted by State law or the Indenture. Audited statements specifically required pursuant to this Section 4(b), in the light of the financial statements shall be prepared in accordance with generally accepted accounting circumstances under which they are made,not misleading. principles as prescribed for governmental units by the Governmental Accounting Standards s Board,provided,however,that the District may from time to time,if required by federal or state Any or all of the items above may be included by specific reference to other documents, legal requirements,modify the basis upon which its financial statements are prepared. In the including official statements of debt issues of the District or related public entities,which have event that the District shall modify the basis upon which its financial statements are prepared,the been submitted to each of the Repositories or the Securities and Exchange Commission. If the District shall provide a notice of such modification to each Repository,including a reference to document included by reference is a final official statement, it must be available from the f the specific federal or state law or regulation specifically describing the legal requirements for Municipal Securities Rulemaking Board. The District shall clearly identify each such other the change in accounting basis. document so included by reference. (b) The Annual report shall also contain the following information: Neither the Trustee nor the Dissemination Agent shall have any responsibility for the content of the Annual Report,or any part thereof. (i) the principal amount of the Bonds outstanding as of the June 30 preceding the filing of the Annual Report; Section 5. Reporting of Significant Events (ii) the balance in each fund under the Indenture as of the June 30 preceding (a) Pursuant to the provisions of this Section 5,the District shall give,or cause to be the filing of the Annual Report; given, notice of the occurrence of any of the following events with respect to the Bonds, if (iii) The Special Tax delinquency rate for all parcels on which the Special Tax material: is levied,as shown on the assessment roll of the Nevada County Assessor last equalized 1. Principal and interest payment delinquencies. prior to the September 30 immediately preceding the date of the Annual Report, the 2. Non-payment related defaults. number of parcels within the District on which the Special Tax is levied that are 3. Unscheduled draws on debt service reserves reflecting financial delinquent in payment of the Special Tax,as shown on the assessment roll of the Nevada difficulties. County Assessor last equalized prior to the September 30 immediately preceding the date 4. Unscheduled draws on credit enhancements reflecting financial of the Annual Report,the amount of each delinquency and the length of time delinquent, difficulties. or similar information pertaining to delinquencies deemed appropriate by the District; 5. Substitution of credit or liquidity providers,or their failure to perform. 3 4 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 GrysCrsng-DistrictContinuingDisclAgrmnt,Apr27,05 t the PUD have covenanted to comply with all such requirements. Except as forth in paragraphs(3),(4),(5)and (6)above,we express no opinion as to any tax consequences related to the Bonds. The opinions expressed herein are based upon an analysis of existing statutes,regulations,rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the foregoing opinions may be affected by actions taken(or not taken)or events occurring(or not occurring)after the date hereof. We have not undertaken to determine,or to inform any person,whether such actions or events are taken(or not taken)or do occur(or do not occur). The Indenture and the Tax Certificate executed by the District with respect to the Bonds as of the date hereof permit certain actions to be taken or omitted if a favorable opinion of Bond Counsel is provided with respect thereto. We express no opinion as to the exclusion from gross income of interest and original issue discount on the Bonds for federal income tax purposes on and after the date on which any such action is taken or omitted upon the advice or approval of counsel other than Stradling Yocca Carlson&Rauth,a Professional Corporation. We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Bonds or other offering material relating to the Bonds,and purchasers of the Bonds should not assume that we have reviewed the Official Statement. SKcial Circular 230 Tax Disclaimer 4 Certain portions of this opinion address federal income tax matters other than(A)the excludability of interest(and original issue discount)on a Bond from gross income under Section 103 of the Code,and(B) r whether interest(and original issue discount)on Bond is an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations(these other matters not referred G to in(A)or(B)above are hereinafter referred to as the"Non State and Local Bond Opinion Portions"). The Non State and Local Bond Opinion Portions(A)are not intended or written by Bond Counsel to be used,and cannot be used,by any Bondowner(or other taxpayer)for the purpose of avoiding penalties that may be imposed on the Bondowner or other taxpayer and(B)have been written to support the promotion or marketing of the Bonds. Bondowners(and other taxpayers)should seek advice based upon their particular circumstances, from an independent tax advisor,with respect to the Non State and Local Bond Opinion Portions applicable to the Bonds. The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, r` f x "s r i B r e f G G-3 DOCSSF/50914v6/22925-11016 i C f � 6 APPENDIX E APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT CONTINUING DISCLOSURE AGREEMENT OF DEVELOPER 3 e i E-1 F-1 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 Commercial Activity The following table compares the median household effective buying income for the County,the State and the nation. The following table indicates the history of taxable transactions for the County for the years 1999 through 2003. MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME COUNTY OF NEVADA Year County of Nevada State of California United States TAXABLE TRANSACTIONS (in thousands of dollars) 1999 37,275 39,492 37,233 2000 41,696 44,464 39,129 L 2000 2L01 2002 2003 2001 40,849 43,532 38,365 Retail Stores: 2002 41,790 42,484 38,035 Apparel Stores $ 19,942 $ 20,939 $ 20,869 $ 20,990 $ 21,530 2003 42,851 42,924 38,201 General Merchandise Stores 68,793 72,125 75,121 75,033 76,884 Specialty Stores 75,490 85,948 89,031 90,588 89,344 Source: "Survey of Buying Power,"Sales&Marketing Management. Food Stores 79,612 81,008 94,709 95,595 95,390 Eating/Drinking Places 72,807 78,551 79,410 81,936 84,010 Transportation Home Furnishings& Appliances 28,528 33,806 36,098 35,210 36,665 Building Materials&Farm Truckee is served directly by Interstate 80,the major northerly highway between San Francisco and Implements 104,676 111,261 118,540 119,878 124,520 New York City. This freeway connects Truckee with Sacramento and San Francisco to the West and Reno, Auto Dealers&Auto Supplies 131,584 145,656 153,820 154,060 156,018 Nevada to the east. State Route 89 heads north to the Feather River Canyon and south to Lake Tahoe. I All Other Retail Stores Group 32.435 32.930 29,707 27.729 28,603 6 Retail Store Total $618,867 $662,224 $ 697,305 $ 701,019 $ 712,764 Greyhound provides interstate bus service from Truckee. The Tahoe Area Regional Transit("TART") t Business and Personal Services 43,312 49,776 49,508 54,620 51,452 is a locally financed bus service which connects all of the resorts on the north and west shores of Lake Tahoe. All Other outlets 249,589 285.050 273.1 283,978 300"24_o TART also provides service to the major ski areas including Squaw Valley and Alpine Meadows. Total All Outlets $911,768 $997,050 $1,019,922 $1,039,617 $1,064,456 Number of permits 3,919 3,931 3,935 4,087 4,253 The Union Pacific Railroad main line passes through Truckee,connecting the area with San Francisco to the west and all points east. Airport facilities are available at Truckee and Reno. The Reno airport is served Source:State Board of Equalization. by most major carriers with flight to virtually everywhere in the nation and several international destinations. Educational Facilities 4 Income There are five elementary schools,three of which encompass grades K-3,one K-5 and one 4-5,one The following table,based on data reported in the annual publication"Survey of Buying Power" middle school for grades 4-6 and one intermediate school for grades 6-8, two high schools, and one continuation high school within the Tahoe Truckee Unified School District. published by Sales and Marketing Management,summarizes the total EBI and the median household EBI for the County,the State and the nation for the years 1998 through 2003. Construction TOTAL EFFECTIVE BUYING INCOME Housing unit and building permit data for the Truckee for the years 2000 through 2004 is summarized (in Thousands) below. Year County of Nevada State of California United States 1998 $1,520,772 $551,999,317 $4,621,491,730 1999 1,612,432 590,376,663 4,877,786,658 2000 1,823,279 652,190,282 5,230,824,904 2001 1,823,619 650,521,407 5,303,481,498 2002 1,986,273 647,879,427 5,340,682,818 2003 2,046,520 674,721,020 5,466,880,005 Source: "Survey of Buying Power,"Sales&Marketing Management. C-3 C-4 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 I �a APPENDIX B M COMPLETE APPRAISAL p rw A�° HOP, aU Xi H �Q 4 LOU i- X t I A-16 B-1 DOCSSF/50914v6/22925-00I6 DOCSSF/50914v6/22925-0016 t E M Step 3. Multiply the quotient computed pursuant to Step 2 by the Outstanding Bonds to be made by the TDPUD by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in compute the amount of Outstanding Bonds to be retired and prepaid(the "Bond this Rate and Method of Apportionment of Special Tax. Redemption Amount'j. t Step 4. Compute the current Remaining Facilities Costs(if any). 1 Step 5. Multiply the quotient computed pursuant to Step 2 by the amount determined pursuant to Step 4 to compute the amount of Remaining Facilities Costs to be prepaid (the"Remaining Facilities Amount'j. Step 6. Multiply the Bond Redemption Amount computed pursuant to Step 3 by the applicable redemption premium,if any,on the Outstanding Bonds to be redeemed (the"Redemption Premium'). Step 7. Compute the amount needed to pay interest on the Bond Redemption Amount starting with the first Bond interest payment date after which the prepayment has been received until the earliest redemption date for the Outstanding Bonds,which, depending on the Bond offering document,may be as early as the next interest payment date. Step 8: Compute the amount of interest the TDPUD reasonably expects to derive from reinvestment of the Bond Redemption Amount plus the Redemption Premium from the first Bond interest payment date after which the prepayment has been received until the redemption date for the Outstanding Bonds. Step 9: Take the amount computed pursuant to Step 7 and subtract the amount computed pursuant to Step 8(the"Defeasance Requirement'). Step 10. Determine the costs of computing the prepayment amount,the costs of redeeming Bonds,and the costs of recording any notices to evidence the prepayment and the redemption(the"Administrative Fees and Expenses'l. Step 11. If and to the extent so provided in the indenture pursuant to which the Outstanding Bonds to be redeemed were issued,a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment(the"Reserve Fund Credit'). Step 12. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Steps 3, 5,6, 9, and 10, less the amount computed pursuant to Step I I (the "Prepayment Amount"). A partial prepayment may be made in an amount equal to any percentage of full prepayment desired by the party making a partial prepayment. The Maximum Special Tax that can be levied on an Assessor's Parcel after a partial prepayment is made is equal to the Maximum Special Tax that could have been levied prior to the prepayment,reduced by the percentage of a full prepayment that the partial prepayment represents,all as determined by or at the direction of the Administrator. I. INTERPRETATION OF SPECIAL TAX FORMULA The TDPUD reserves the right to make minor administrative and technical changes to this document that do not materially affect the rate and method of apportioning Special Taxes. In addition,the interpretation p and application of any section of this document shall be left to the TDPUD's discretion. Interpretations may F A-12 A-13 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 r s 6. Undeveloped Property If multiple Land Use/Entitlement Changes are proposed at one time(which may include approval of multiple Final Maps at one time),the Administrator may consider the combined effect of all the Land 4 The Maximum Special Tax for Undeveloped Property for Fiscal Year 2004-05 is 517,500 per Acre. On July Use/Entitlement Changes to determine if there is a reduction in Expected Maximum Special Tax 1,2005 and on each July 1 thereafter,this Maximum Special Tax shall be increased by an amount equal to Revenues that necessitates implementation of Step 3.b. If,based on this comprehensive analysis,the two percent(2 )of the amount in effect for the prior Fiscal Year. Administrator determines that there is a reduction in Expected Maximum Special Tax Revenue,and all of the Land Use/Enddement Changes are being proposed by the same land owner, the Administrator shall determine the required prepayment(pursuant to Step 3.b)by analyzing the D. BACK-UP FORMULA combined impact of all of the proposed Land Use/Entitlement Changes. Notwithstanding the foregoing, if the Administrator analyzes the combined impacts of multiple Land Use/Entitlement The Maximum Special Taxes set forth in Section C above were calculated based on the Expected Land Uses at Changes,and the Town subsequently does not approve one or more of the Land Use/Entitlement CFD Formation. The Administrator shall review Tentative Map revisions and other changes to the land uses Changes that was proposed,the Administrator shall once again apply the three steps set forth above to within the CFD and compare the revised land uses to the Expected Land Uses to evaluate the impact on the determine the combined impact of those Land Use/Entitlement Changes that were approved Expected Maximum Special Tax Revenues. In addition,the Administrator shall review Final Maps to ensure simultaneously by the Town. they reflect the number and size of SFD Lots that were anticipated in the Tentative Map. IC based on the comprehensive analysis,the Administrator determines that there is a reduction in If,prior to the Final Bond Sale,a change to the Expected Land Uses(a"Land Use/Entidement Change")is Expected Maximum Special Tax Revenue,and the Land Use/Entitlement Changes are not all being proposed that will result in a reduction in the Expected Maximum Special Tax Revenues,no action will be proposed by the same land owner, the Administrator shall consider the proposed Land needed pursuant to this Section D as long as the reduction in Expected Maximum Special Tax Revenues does Use/Entitlement Changes individually to determine the required prepayment from each owner. not reduce debt service coverage on outstanding Bonds below the amount committed to in the Bond documents.Upon approval of the Land Use/Entitlement Change,the Administrator shall update Attachment 1 E. METHOD OF LEVY OF THE SPECIAL TAX to show the reduced Expected Maximum Special Tax Revenues,and the reduced Expected Maximum Special Tax Revenues shall be the amount used to by the TDPUD to make future decisions with respect to Bonds. t Each Fiscal Year,the Administrator shall determine the Special Tax Requirement to be collected in that Fiscal If a proposed Land Use/Entitlement Change would reduce the debt service coverage required on outstanding Year,and the Special Tax shall be levied according to the steps outlined below. Bonds or if the Land Use/Entitlement Change is proposed after the Fenal Bond Sale,the following steps shall Step 1: The Special Tax shall be levied Proportionately on each Parcel of Developed be applied: Property within the CFD that is Single Family Detached Property,Single Family Attached Property,or a Loft Unit up to 100%of the Maximum Special Tax for each Step l: By reference to Attachment 1(which will be updated by the Administrator each time Parcel for such Fiscal Year until the amount levied on such Developed Property is a Land Use/Entitlement Change has been processed according to this Section D),the Administrator shall identify the Expected Maximum Special Tax Revenues for CFD equal the Special Tax Requirement n�or to applying any Capitalized Interest that is available ble in the CFD accounts. No.04-1; Step 2. The Administrator shall calculate the Maximum Special Tax revenues that could be Step 2. If additional revenue is needed after Step 1,and after applying Capitalized Interest to collected from property in the CFD if the Land Use/Entidement Change is approved; the Special Tax Requirement,the Special Tax shall be levied Proportionately on each Parcel of Developed Property within the CFD that is Non-Residential Property Step 3: If the amount determined in Step 2 is higher than that calculated in Step 1,the Land up to 100%of the Maximum Special Tax for such Developed Property for such Use/Entitlement Change may be approved without further action. If the revenues Fiscal Year determined pursuant to Section C. calculated in Step 2 are ICU than those calculated in Step 1,and if: Step 3: If additional revenue is needed after Step 2, the Special Tax shall be levied (a) The landowner does not withdraw the request for the Land Use/Entitlement Proportionately on each Parcel of Developed Property within the CFD that is Golf Change that was submitted to the Town;or Course Property up to 100%of the Maximum Special Tax for such Developed Property for such Fiscal Year determined pursuant to Section C. (b) Before approval of the Land Use/Entitlement Change, the landowner Step 4: If additional revenue is needed after Step 3, the Special Tax shall be levied requesting the Land Use/Entitlement Change does not prepay a portion Proportionately on each Assessor's Parcel of Undeveloped Property within the CFD, the Special Tax for the CFD in amount that corresponds to the losstt up to 100%of the Maximum Special Tax for Undeveloped Property for such Fiscal Maximum Special Tax revenue, as determined by applying the steps set Year determined pursuant to Section C. forth in Section H below; Step 5. If additional revenue is needed after Step 4, the Special Tax shall be levied ( then,the amount of the prepayment determined in Step 3.b shall be allocated on a per-acre basis and Proportionately on each Parcel of Association Property within the CFD,up to 100% included on the next property tax bill for all Assessor's Parcels within the property affected by the of the Maximum Special Tax for Undeveloped Property for such Fiscal Year Land Use/Enfidement Change. The amount allocated to each Assessor's Parcel shall be added to and, determined pursuant to Section C. until paid,shall be a part o1 the Maximum Special Tax for the Assessor's Parcel. A-8 A-9 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 l "Loft Unit"means a residential Unit located above and attached to a commercial establishment,which shall legal document that sets forth these terms;(ii)proceeds received by CFD No.04-1 from the collection of not under any circumstance include a residential Unit within which the owner of such Unit operates an at-home penalties associated with delinquent Special Taxes;and(iii)any other revenues available to pay debt service business operation. on the Bonds as determined by the Administrator. "Taxable Property"means all of the Assessor's Parcels within the boundaries of CFD No.04-1 which are not "Maximum Special Tax"means the greatest amount of Special Tax that can be levied on an Assessor's Parcel exempt from the Special Tax pursuant to law or Section G below. in any Fiscal Year determined in accordance with Section C below,as may be adjusted pursuant to Step 3 in Section D below. "Tax Zone"means one of the two mutually exclusive geographic areas defined below and identified in Attachment 2 of this Rate and Method of Apportionment of Special Tax,and any subsequent Tax Zones "Non-Residential Property"means,in any Fiscal Year,all Parcels of Taxable Property which are not Single created to contain property annexed into the CFD after CFD Formation. Family Detached Property,Single Family Attached Property,Golf Course Property,Loft Units,Association t Property,Excess Public Property,or Undeveloped Property. As discussed below,Loft Units shall be taxed "Tax Zone#1"means the geographic area that is specifically identified in Attachment 2 of this Rate and separately from the non-residential Building Square Footage on the Parcel. Method of Apportionment of Special Tax as Tax Zone#1. "Proportionately"means,for Developed Property,that the ratio of the actual Special Tax levied in any Fiscal "Tax Zone#2"means the geographic area that is specifically identified in Attachment 2 of this Rate and Year to the Maximum Special Tax authorized to be levied in that Fiscal Year is equal for all Assessor's Parcels Method of Apportionment of Special Tax as Tax Zone#2. of Developed Property,and for Undeveloped Property that the ratio of the actual Special Tax to the Maximum Special Tax is equal for all Assessor's Parcels of Undeveloped Property. "TDPUD"means the Truckee Donner Public Utility District. "Public Property"means any property within the boundaries of CFD No.04-1 that is owned by the federal "Tentative Map" means the tentative subdivision map for the Gray's Crossing Planned Development government,the State of California,the County,the Town,the TDPUD,or other public agency. approved by the Town on February 5,2004. "Rental Property"means,in any Fiscal Year,all Parcels within the CFD for which a building permit was "Town"means the incorporated Town of Truckee. issued for construction of a residential structure with multiple Units that share common walls,all of which are offered or are expected to be offered for rent to the general public and/or employees. Fractional Units and Loft "Undeveloped Property"means,in any Fiscal Year,all Parcels of Taxable Property within the CFD that are Units within the CFD shall at no time be categorized as Rental Property. Lodging Units shall also be not Developed Property. categorized as Rental Property for purposes of this Rate and Method of Apportionment of Special Tax. ' "Unit"means(i)for Single Family Detached Property, an individual single-family detached unit, (ii)an "SFD Lot"means an individual residential lot,identified and numbered on a recorded Final Map,on which a individual Loft Unit,and(iii)for Single Family Attached Property,an individual residential unit within a building permit has been or is permitted to be issued for construction of a single family detached unit without duplex,triplex,fourplex,townhome,or condominium structure. further subdivision of the lot and for which no further subdivision of the lot is anticipated pursuant to the Tentative Map. B. DATA FOR ANNUAL ADMINISTRATION "Single Family Attached Property"means,in any Fiscal Year,all Parcels of Developed Property for which a On or about July 1 of each Fiscal Year,the Administrator shall identify the current Assessor's Parcel numbers building permit was issued for construction of a residential structure consisting of two or more Units that share for all Parcels of Taxable Property. The Administrator shall also determine:(i)whether each Assessor's Parcel common walls and are offered or expected to be offered as for-sale units,including,but not limited to,such of Taxable Property is Developed Property or Undeveloped Property, (ii) for Developed Property, which residential structures that meet that statutory definition of a condominium contained in Civil Code Section Parcels are Single Family Detached Property, Single Family Attached Property, Loft Units, Golf Course 1351. Property and Non-Residential Property,(iii)for Parcels of Single Family Attached Property,the number of Units on each Parcel,(iv)for Single Family Detached Property,the size of each residential lot within Final "Single Family Detached Property"means,in any Fiscal Year,all Parcels of Developed Property for which Maps that have been recorded,(v)whether there are Parcels of Rental Property,Excess Public Property,or a building permit was issued or is permitted to be issued for construction of a Unit that does not share a Parcels with Affordable Units,and(vi)the Special Tax Requirement. t common wall with another Unit,including detached Fractional Units. For Single Family Attached Property,the number of Units shall be determined by referencing the site plan, "Special Tax"means a Special Tax levied in any Fiscal Year to pay the Special Tax Requirement. condominium plan,or other development plan. For Non-Residential Property that includes Loft Units,the Administrator shall reference the condominium map or other such development plan to determine the Building "Special Tax Requirement"means the amount necessary in any Fiscal Year to:(i)pay principal and interest Square Footage,or if such map or plan is not available,the Administrator shall determine the Building Square on Bonds which is due in the calendar year that begins in such Fiscal Year;(ii)create and/or replenish reserve Footage associated with the Loft Units and subtract the square footage thereof from the total Building Square funds for the Bonds;(iii)cure any delinquencies in the payment of principal or interest on Bonds which have Footage to determine the square footage that will be subject to the Maximum Special Tax for Non-Residential ( occurred in the prior Fiscal Year or,based on existing delinquencies in the payment of Special Taxes,are Property. It;in any Fiscal Year,an Assessor's Parcel includes both Developed Property and Undeveloped expected to occur in the Fiscal Year in which the tax will be collected;(iv)pay Administrative Expenses;and Property,the Administrator shall determine the Acreage associated with the Developed Property,subtract this (v)pay the costs of public improvements and public infrastructure authorized to be financed by CFD No.04-1. Acreage from the total Acreage of the Assessor's Parcel,and use the remaining Acreage to calculate the k The amounts referred to in clauses(i)and(ii)of the preceding sentence may be reduced in any Fiscal Year by: Special Tax that will apply to Undeveloped Property within the Assessor's Parcel (i)interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against debt service pursuant to a Bond indenture,Bond resolution,or other ti A-4 A-5 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 p t ADDITIONAL INFORMATION APPENDIX A The purpose of this Official Statement is to supply information to prospective buyers of the Bonds. RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement fr do not purport to be complete,and reference is made to such documents for full and complete statements and 1 their provisions. A Special Tax applicable to each Assessor's Parcel in the Truckee Donner Public Utility District Community Facilities District No. 04-1 (Gray's Crossing) [herein "CFD No. 04-1"] shall be levied and collected The execution and delivery of this Official Statement by the President of the Board of Directors and according to the tax liability determined by the Board of Directors or its designee,through the application of the General Manager of TDPUD has been duly authorized by the Board of Directors acting in its capacity as the appropriate amount or rate for Taxable Property,as described below. All of the property in CFD No. the legislative body of the District. 04-1,unless exempted by law or by the provisions of Section G below,shall be taxed for the purposes,to the extent,and in the manner herein provided,including property subsequently annexed to the CFD unless a TRUCKEE DONNER PUBLIC UTILITY separate Rate and Method of Apportionment is adopted for the annexation area. DISTRICT COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) A. DEFINITIONS The terms hereinafter set forth have the following meanings: By: "Acre"or"Acreage"means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map,or President of the Board of if the land area is not shown on an Assessor's Parcel Map,the land area shown on the applicable Final Map or Directors other parcel map recorded with the County. `r s "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, (commencing with Section 53311),Division 2 of Title 5 of the California Government Code. By: General Manager of Truckee "Administrative Expenses"means any or all of the following: the fees and expenses of any fiscal agent or Donner Public Utility District trustee(including any fees or expenses of its counsel)employed in connection with any Bonds,and the t expenses of the TDPUD carrying out its duties with respect to CFD No.04-1 and the Bonds,including,but not limited to,levying and collecting the Special Tax,the fees and expenses of legal counsel,charges levied by the County Auditor's Office,Tax Collector's Office,and/or Treasurer's Office,costs related to annexing property g _ into the CFD,costs related to property owner inquiries regarding the Special Tax,amounts needed to pay rebate to the federal government with respect to the Bonds, costs associated with complying with any continuing disclosure requirements for the Bonds and the Special Tax and all other costs and expenses of the TDPUD in any way related to the establishment or administration of the CFD. "Administrator"means the person or firm designated by the TDPUD to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. "Affordable Unit"means any Unit within CFD No.04-1 which is subject to(i)a deed-restricted cap limiting the appreciation that can be realized by the owner of the Unit for thirty(30)years,or(ii)another such deed restriction that replaces the 30-year appreciation cap in future years. In the Fiscal Year after the Fiscal Year in t which the deed-restriction on an Affordable Unit expires,such Unit shall be taxed as Single Family Detached g Property or Single Family Attached Property,as applicable. s "Assessor's Parcel"or"Parcel"means a lot or parcel,including an airspace parcel for a condominium unit or Loft Unit,shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map"means an official map of the County Assessor designating parcels by Assessor's Parcel number. "Association Property"means any property within the CFD that is owned by a homeowners association, excluding such property under the pad or footprint of a Unit. Association Property shall also include property designated as open space in a recorded Final Map whether or not such property has yet been dedicated to a homeowners association,public agency,or private land trust. 47 A-1 DOCSSF/509146/22925-0016 DOCSSF/50914v6/22925-0016 t will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. TAX MATTERS However,no assurance can be given as to the enforceability of the foregoing covenants. Tax Opinion and Certain Matters The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above,and it is not possible at this time to predict with certainty In the opinion of Stradling Yocca Carlson&Rauth,a Professional Corporation,Newport Beach, the outcome of such determination or the timeliness of any remedy afforded by the courts. See"SPECIAL California,Bond Counsel,under existing statutes,regulations,rulings and judicial decisions,interest on the RISK FACTORS-Limitations on Remedies." Bonds is excluded from gross income for federal income tax purposes,and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the Ballot Initiatives further opinion of Bond Counsel,interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that,with respect to corporations,interest on the Bonds may be included as an adjustment } Article XIII A,Article XIII B and Proposition 218 were adopted pursuant to measures qualified for in the calculation of alternative minimum taxable income which may affect the alternative minimum tax the ballot pursuant to California's constitutional initiative process. On March 6,1995 in the case of Rossi v. liability of corporations. In addition,the difference between the issue price of a Bond(the first price at which Brown,the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition a substantial amount of the Bonds of a maturity is to be sold to the public)and the stated redemption price at of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. maturity with respect to the Bond constitutes original issue discount. Original issue discount accrues under a From time to time,other initiative measures could be adopted by California voters. The adoption of any such constant yield method, and original issue discount will accrue to a Bondowner before receipt of cash initiative might place limitations on the ability of the State,TDPUD or local districts to increase revenues or to attributable to such excludable income. The amount of original issue discount deemed received by a increase appropriations or on the ability of the landowners within the District to complete the remaining Bondowner will increase the Bondowner's basis in the applicable Bond. The amount of original issue discount proposed development. See"SPECIAL RISK FACTORS-Failure to Develop Properties"herein. that accrues to the owner of the Bond is excluded from gross income of such owner for federal income tax purposes,is not an item of tax preference for purposes of the federal alternative minimum tax imposed on CONTINUING DISCLOSURE individuals and corporations,and is exempt from State of California personal income tax. Y Pursuant to a Continuing Disclosure Agreement with MuniFinancial,as dissemination agent(the Bond Counsel's opinion as to the exclusion from gross income of interest on the Bonds(and original "Disclosure Agreement"),the District,has agreed to provide,or cause to be provided,to each nationally issue discount)is based upon certain representations of fact and certifications made by the District and others recognized municipal securities information repository and any public or private repository or entity and is subject to the condition that the District complies with all requirements of the Internal Revenue Code of designated by the State as a state repository for purposes of Rule 15c2-12(b)(5)adopted by the Securities and 1986,as amended(the"Code"),that must be satisfied subsequent to the issuance of the Bonds to assure that Exchange Commission (each, a "Repository") certain annual financial information and operating data interest on the Bonds(and original issue discount)will not become includable in gross income for federal concerning the District. The Annual Report to be filed by the District is to be filed not later than January 1 of income tax purposes. Failure to comply with such requirements of the Code might cause the interest on the each year, beginning January 1, 2006, and is to include audited financial statements of TDPUD. The Bonds(and original issue discount)to be included in gross income for federal income tax purposes retroactive requirement that TDPUD file its audited financial statements as a part of the Annual Report has been included to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements. in the Disclosure Agreement solely to satisfy the provisions of Rule 15c2-12. The inclusion of this information does not mean that the Bonds are secured by any resources or property of TDPUD other than as The amount by which a Bondowner's original basis for determining loss on sale or exchange in the described hereinabove. See "SOURCES OF PAYMENT FOR THE BONDS" and "SPECIAL RISK applicable Bond(generally,the purchase price)exceeds the amount payable on maturity(or on an earlier call FACTORS—Limited Obligations." TDPUD failed to file in a timely manner its annual reports required date)constitutes amortizable Bond premium,which must be amortized under Section 171 of the Code;such under the continuing disclosure obligation undertaken in connection with previously issued certificates of amortizable Bond premium reduces the Bondowner's basis in the applicable Bond(and the amount of tax- participation. In early 2003,TDPUD filed all required reports and TDPUD is now current on all filings exempt interest received),and is not deductible for federal income tax purposes. The basis reduction as a required pursuant to its previous continuing disclosure undertaking. result of the amortization of Bond premium may result in a Bondowner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less(under certain circumstances)than the original cost of the To assist the Underwriter,in complying with Rule 15c2-12(b)(5),the Developer will enter into a Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, certain Continuing Disclosure Agreement(the"Landowner Disclosure Agreement")covenanting to provide an computation and collateral consequences of amortizable Bond premium. Annual Report not later than September 1 of each year beginning September 1,2005,and a Semi-Annual Report each March 1 beginning September 1,2005. The Annual Reports provided by the Developer are to The Internal Revenue Service(the"IRS")has initiated an expanded program for the auditing of tax- contain audited financial statements, if any are prepared,and the additional financial and operating data exempt bond issues,including both random and targeted audits. It is possible that the Bonds will be selected outlined in the Landowner Disclosure Agreement attached in APPENDIX F. for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds(or by an audit of similar bonds). The Landowner Disclosure Agreements will inure solely to the benefit of the District, any Dissemination Agent,the Underwriter,and owners or beneficial owners from time to time of the Bonds. Bond Counsel's opinions may be affected by actions taken(or not taken)or events occurring(or not occurring)after the date hereof. Bond Counsel has not undertaken to determine,or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the exclusion from gross income for federal income tax purposes of interest(and original issue discount)with respect to any Bond if any such action is 43 44 DOCSSF/50914v6/229254)016 DOCSSF/50914v6/22925-0016 t I of more than 2%per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed the FDIC acquires its fee interest in the property,nor will it recognize the validity of any lien to the extent it value. purports to secure the payment of any such amounts. Special taxes imposed under the Mello-Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy The Appraiser has estimated,on the basis of certain definitions,assumptions and limiting conditions Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth contained in the Appraisal,that as of April 1,2005 the value of the land within the District was SI51,030,000. Circuit has issued a ruling on August 28,2001 in which it determined that the FDIC,as a federal agency,is The Appraisal is based on the assumptions as stated in APPENDIX B—"COMPLETE APPRAISAL." The exempt from Mello-Roos special taxes. Appraisal does not reflect any possible negative impact which could occur by reason of future slow or no growth voter initiatives,any potential limitations on development occurring due to time delays,the presence of The District is unable to predict what effect the application of the Policy Statement would have in the hazardous substances within the District,the listing of endangered species or the determination that habitat for event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has endangered or threatened species exists within the District,or other similar situations. The Appraiser has or obtains an interest,although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure conditioned the Appraisal on the specific condition that there are no environmental issues which would slow or sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such thwart development of the District. an outcome could cause a draw on the Reserve Account and perhaps,ultimately,if enough property were to become owned by the FDIC,a default in payment on the Bonds. Prospective purchasers of the Bonds should not assume that the land within the District could be sold for the appraised amount described above at a foreclosure sale for delinquent Special Taxes. In arriving at the Bankruptcy and Foreclosure estimates of value,the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period,which is not always present in a foreclosure sale. See APPENDIX B Bankruptcy,insolvency and other laws generally affecting creditors rights could adversely impact the for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions interests of owners of the Bonds in at least two ways. First,the payment of property owners'taxes and the used by the Appraiser. ability of the District to foreclose the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure proceedings may be limited by bankruptcy,insolvency or other laws generally affecting No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes creditors'rights or by the laws of the State relating to judicial foreclosure. In addition,the prosecution of a offered for sale at foreclosure or,if a bid is received,that such bid will be sufficient to pay all delinquent foreclosure could be delayed due to many reasons, including crowded local court calendars or lengthy Special Taxes. procedural delays. FDIC/Federal Government Interests in Properties Secondly,the Bankruptcy Code might prevent moneys on deposit in the Special Tax Fund from being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments may be against a landowner and if the court found that any of such landowner had an interest in such moneys within limited with regard to properties in which the Federal Deposit Insurance Corporation(the"FDIC"),the Drug the meaning of Section 541(a)(1)of the Bankruptcy Code. Enforcement Agency,the Internal Revenue Service,or other federal agency has or obtains an interest. In the event that any financial institution making any loan which is secured by real property within the District is Although a bankruptcy proceeding would not cause the Special Taxes to become extinguished,the taken over by the FDIC,and prior thereto or thereafter the loan or loans go into default,then the ability of the amount and priority of any Special Tax lien could be modified if the value of the property falls below the value District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid of the lien. If the value of the property is less than the lien,such excess amount could be treated as an Special Taxes may be limited. unsecured claim by the bankruptcy court. In addition,bankruptcy of a property owner could result in a delay in procuring Superior Court foreclosure proceedings. If enough parcels were involved in bankruptcy The FDIC's policy statement regarding the payment of state and local real property taxes(the"Policy proceedings,court delays would increase the likelihood of a delay or default in payment of the principal of, Statement")provides that property owned by the FDIC is subject to state and local real property taxes only if and interest on,the Bonds and the possibility of delinquent tax installments not being paid in full. those taxes are assessed according to the property's value,and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement,the FDIC will pay On July 30, 1992,the United States Court of Appeals for the Ninth Circuit issued its opinion in a its property tax obligations when they become due and payable and will pay claims for delinquent property bankruptcy case entitled In re Glasply Marine Industries. In that case,the court held that ad valorem property taxes as promptly as is consistent with sound business practice and the orderly administration of the taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a institution's affairs,unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on the property. pay claims for interest on delinquent property taxes owed at the rate provided under state law,to the extent the Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition,unpaid taxes interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of imposed after the filing of the bankruptcy petition were declared to be"administrative expenses"of the fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes(including bankruptcy estate,payable after all secured creditors. As a result,the secured creditor was able to foreclose on interest)on FDIC-owned property are secured by a valid lien(in effect before the property became owned by the property and retain all the proceeds of the sale except the amount of the pre-petition taxes. the FDIC),the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy,attachment,garnishment,foreclosure or sale without the FDIC's consent. In addition, The Bankruptcy Reform Act of 1994(the"Bankruptcy Reform Act")included a provision which the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without excepts from the Bankruptcy Code's automatic stay provisions,"the creation of a statutory lien for an ad the FDIC's consent. valorem property tax imposed by...a political subdivision of a state if such tax comes due after the filing of the petition [by a debtor in bankruptcy court]." This amendment effectively makes the Glasnly holding The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes,including inoperative as it relates to ad valorem real property taxes. However,it is possible that the original rationale of special assessments,on property in which it has a fee interest unless the amount of tax is fixed at the time that 39 40 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 i Failure to Develop Properties reduction in land values increases the likelihood that in the event of a delinquency in payment of Special Taxes a foreclosure action will result in inadequate funds to repay the Bonds when due. Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Bondowners should it be necessary for the District to foreclose on the property due to the Completion of construction of any proposed structures on the vacant land within the District is subject nonpayment of Special Taxes. The failure to complete development in the District as planned,or substantial to the receipt of approvals from a number of public agencies concerning the layout and design of such delays in the completion of the development due to litigation or other causes may reduce the value of the structures,land use,health and safety requirements and other matters. The failure to obtain any such approval property within the District and increase the length of time during which Special Taxes will be payable from could adversely affect the planned development of such land. The Development Agreement,however,vests undeveloped property,and may affect the willingness and ability of the owners of property within the District certain development rights on the Developer, subject to California law limiting such vesting rights, and to pay the Special Taxes when due. restricts the Town from modifying development approvals,all as described under"THE DEVELOPMENT AND PROPERTY OWNERSHIP—Development Agreement." Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments,the nature and Under current State law,it is generally accepted that proposed development is not exempt from future extent of improvements,construction activity,land use,zoning and health requirements,as well as numerous land use regulations until building permits have been issued and substantial work has been performed and other matters. There is always the possibility that such approvals will not be obtained or,if obtained,will not substantial liabilities have been incurred in good faith reliance on the permits. Because future development of be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such governmental vacant property in the District could occur over many years, if at all,the application of future land use requirements would adversely affect planned land development. The Development Agreement,however,vests regulations to the development of the vacant land could cause significant delays and cost increases not certain development rights in the Developer,subject to California law limiting such vesting rights,and restricts currently anticipated,thereby reducing the development potential of the vacant property and the ability or the Town from modifying development approvals, all as described under"THE DEVELOPMENT AND willingness of owners of such land to pay Special Taxes when due or causing land values of such land within PROPERTY OWNERSHIP—Development Agreement." Finally,development of land is subject to economic the District to decrease substantially from those in the Appraisal. considerations. Endangered Species Additionally,the Developer may need to obtain financing to complete the development in the District. No assurance can be given that the required funding will be secured or that the proposed development will be The Developer is not aware of any threatened or endangered species on property in or adjacent to the partially or fully completed,and it is possible that cost overruns will be incurred which will require additional District. Any action by the State or federal governments to protect species located on or adjacent to the funding beyond what is assumed in the Appraisal. Such funding may or may not be available. Added costs property within the District could negatively impact the ability of the owners of that land to complete r could result in a reduction in the value of the land in the District. See"THE DEVELOPMENT AND development. This,in turn,could reduce the likelihood of timely payment of the Special Taxes levied against p PROPERTY OWNERSHIP—Appraisal"herein. such that land and would likely reduce the value of such land and the potential revenues available at the foreclosure sale for delinquent Special Taxes. See"—Failure to Develop Land"above. There can be no assurance that land development operations within the District will not be adversely affected by a future deterioration of the real estate market and economic conditions or future local,State and Natural Disasters federal governmental policies relating to real estate development,the income tax treatment of real property ownership,or the national economy. A slowdown of the development process and the absorption rate could The District,like all California communities,may be subject to unpredictable seismic activity,fires, adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special flood,or other natural disasters. In the event of a severe earthquake,fire,flood or other natural disaster,there Taxes. In that event,there could be a default in the payment of principal of;and interest on,the Bonds when may be significant damage to both property and infrastructure in the District. due. There are several faults in the vicinity of the District,including the Dog Valley Fault which was the Bondowners should assume that any event that significantly impacts the ability to develop land in the source of an earthquake in 1966 measuring 6+on the Richter scale. However,no faults in the area have been District would cause the property values within the District to decrease substantially from those estimated by designated as Alquist-Priolo Special Study Zones,a designation used by the State to identify significant hazard the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the zones along faults. Special Taxes when due. _ The Developer has implemented an extensive Timber Harvest Management Plan as well as defensible Future Land Use Regulations and Growth Control Initiatives space and fire prevention measures(also called a shaded fuel break)to lessen the possibility of a fire jumping to or from the development in Gray's Crossing. It is possible that future growth control initiatives could be enacted by the voters or future local,state or federal land use regulations could be adopted by governmental agencies and be made applicable to the A natural disaster could result in a substantial portion of the property owners being unable or development of the vacant land within the District with the effect of negatively impacting the ability of the unwilling to pay the Special Taxes when due. In addition,the value of land in the District could be diminished owners of such land to complete the development of such land if they should desire to develop it. This in the aftermath of such a natural disaster,reducing the resulting proceeds of foreclosure sales in the event of possibility presents a risk to prospective purchasers of the Bonds in that an inability to complete desired delinquencies in the payment of the Special Taxes. development increases the risk that the Bonds will not be repaid when due. The owners of the Bonds should assume that any reduction in the permitted density,significant increase in the cost of development of the vacant land or substantial delay in development caused by growth and building permit restrictions or more restrictive land use regulations would cause the values of such vacant land within the District to decrease. A 35 36 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 i yEpE 8 0 ? C] C y i9 boutiques. The retail commercial space will be centered around a village green gathering place. Construction t of the Village at Gray's Crossing is anticipated to begin in spring 2006 and is expected to be completed by o g 2008. c s N A Q Development rights with respect to the Village at Gray's Crossing were sold by the Developer to ~ " •� n n r v oy Cn r- •0 G to Village at Gray's Crossing L.P. in December 2004. For a discussion with respect to Village at Gray's S o �� ?ei w y a p 0 n H Crossing L.P.,see the caption"-Development Plan-Village at Gray's Crossing L.P. �a ra y, ' ��ro 3,00 � 0> n � �v�a c o n m o < Pursuant to the Rate and Method,the commercial property in the Village Center will be subject to the 3 x w w $ y: 0 n 'c levy of Special Taxes. o r w �;y o. y Community Space. Gray's Crossing includes more than 400 acres of open space in addition to the C c y OR C c Golf Course. Approximately 100 Lots border on this permanent open space. Within the project,six miles of < O c ; 9 hiking and biking trails connect the neighborhoods and also connect with the greater Truckee trail system. 3. i3 Gray's Camp will be a park/gathering place located at the top of The Bluffs(101 Lots in Phase 1). Prosser Camp is a similar gathering place to be located on the far east side of the project. The Community space described in this paragraph will not be subject to the Special Tax levy. Village at Gray's Crossing L.P. Village at Gray's Crossing L.P., is a newly formed limited partnership. Village at Gray's Crossing L.P.is managed by a corporate general partner,RW Development, ' C Inc.,a Delaware sub-chapter S corporation. Willis J.Wright,principal of RW Development,Inc.has extensive r real estate development experience in Vail,Colorado. Mr.Wright has been a partner or managing partner in a o0 numerous projects in the Vail area including Arrowhead,Mountain Star,and Eagle Ranch. The Village at td Grays Crossing development will be funded through equity and conventional construction debt financing. e 1 p aN rn N � o0 00 N Neither Village at Gray's Crossing nor an of its affiliates have ever filed bankruptcy or been delinquent with o o o rn W N a 00 0 �,oo c s e° `0 ag Y $ Y P cY q � �w � N O w 0 � a oo rn �p----� u respect to property tax payments. on, O Finance Plan. The full development of the property within the District requires the expenditure of ^' N N rn substantial amounts. Table 6 below has been provided by the Developer to indicate its present projection of y 0 a ^'9°- w o c a the sources and uses associated with the development of the District. There can be no assurance that the °D ^WN �o a,0,00 0,o 00a 00 rn H ° 0rn 0t.A00v, 0 o in Developer will have timely access to the sources of funds(as shown in Table 6 below)which will be necessary o to complete the proposed development. There can also be no assurance that there will be no substantial v, changes in the sources and uses of funds shown below. Table 6 reflects the Developer's current projections of F,��w �.,costs associated with developing the property within the District. Many factors beyond the Developer's "c a - -N ,oo o t- ��-J000000� � o0ocontrol,or a decision by the Developer to alter its current plans,may cause the Developer's actual sources and auses of funds to differ from the projections in Table 6. Table 6 is presented to show that expected revenues ao 0 0 S-- o o g make the development proposed feasible and not to guarantee a particular cash flow to the Developer. El" a,20 �V� O O O� , J J 00 O� 'o In to LA lJi ILIIp ILI .- p p p O 1 Imo- rwO?O�Ot.n Ooa, ? In J O-1 J QD�w�l W t/i LA s EA 69 69 i 69 c wv�v�wc�A�oo to w�ao V.O l N A W 000 pp W O 'A �tNn N W A 00 O J�c �O 00 00 N O EL E t A R 31 DOCSSF/50914v6/22925-0016 Projects in Vicinity of District. East West Partners is currently managing the development of several Mark J.Wasley is Vice President of Finance and is responsible for managing the financial aspects of additional projects in the vicinity surrounding the District. Old Greenwood,a destination resort community East West Partner's operations in the Lake Tahoe region. Before joining East West Partners,Mr.Wasley was located in the Town,in currently under construction. When completed,Old Greenwood will include 99 single the Controller for Parker Development,a developer of high-end communities located in the Sacramento area, family lots(96 of which have been sold),74 fractional interest detached cabins,72 fractional interest attached specifically Serrano in El Dorado Hills,California. Mr.Wasley earned his CPA while employed in the audit cottages and four whole ownership log-home style cabins. The average price of the 96 homesites was department at KPMG Peat Marwick. He has a Bachelor's in Business Administration-Accounting from $348,000. To date,270 fractional interest ownerships have been sold totaling approximately$31,789,000. California State University—Sacramento. On-site recreational amenities,include a Jack Nicklaus Signature Design 18-hole championship golf course $ and pro shop as well as a recreation pavilion featuring swim,tennis and fitness facilities. The Village-at- Development Plan Northstar and Northstar Highlands,two resort communities to be developed by East West Partners are located s approximately six miles north of Lake Tahoe at the Northstar-at-Tahoe ski resort. The Village-at-Northstar Introduction. The land within the District was acquired by subsidiaries of East West Partners in has 99 of 100 phase 1 condominiums under contract at an average sales price of�1.4 million or$830 per November 2000 and was part of a larger purchase within the town limits of the Town of Truckee. Subsequent r square foot. In addition,58 of 92 phase 2 condominiums were placed under contract in April 2005 at an to acquisition,approximately 35 acres of land west of State Highway 89 was donated to the Tahoe-Truckee average price of$1.3 million or$1,020 per square foot. Northstar Highlands received certification for its Unified School District. The remaining acreage comprises the District. The District is accessed via entrances ! at the intersection of Donner Pass Road and State Highway 89,the intersection of Prosser Dam Road and State Environmental Impact Report in February 2005. Upon completion,these communities will collectively consist y of approximately 1,800 residential condominium and town home units and approximately 125,000 square feet Highway 89,and entrances on Prosser Dam Road and Alder Drive. All access points are within one mile of a of commercial retail space. dedicated exit from Interstate 80. East West Partners is also developing several recreational facilities throughout the Lake Tahoe region Gray's Crossing is situated at the north end of the Martis Valley. Higher elevation portions of the which will be available on a membership basis to residents of various communities developed by East West District enjoy panoramic mountain views of the valley,Northstar-at-Tahoe ski resort,the Carson range,and Partners,including the residents of the District. Such facilities include Coyote Moon Golf Course in the Town Tinker's Knob. Lower elevations are characterized by rolling topography and alpine meadows. The District and Wild Goose Restaurant located on the north shore of Lake Tahoe. See"—Development Plan—Tahoe has direct highway access to area ski resorts,downtown Truckee,and Lake Tahoe. Squaw Valley,Alpine Mountain Club." Meadows,Northstar-at-Tahoe,and Sugar Bowl are each less than 15 minutes away. Lake Tahoe's north shore is 14 miles to the south. Key Staff of East West Partners. Key staff members of the Developer are discussed below. a Gray's Crossing is expected to be developed into a mountain resort community consisting of 408 Blake L.Riva is a senior partner and former Chief Financial Officer of East West Partners providing single family lots, 89 single family freestanding cottages, 115 attached townhomes, 21 residential lofts, management decision authority over the Gray's Crossing development and the other Lake Tahoe area projects approximately 40,700 square feet of commercial space and various community space. 28 of the cottages,8 of being developed by East West Partners. Prior to joining East West Partners,Mr.Riva was controller for the townhomes and the community space will not be subject to the Special Tax levy. On-site amenities are F Seattle-based Lorig Associate,Inc.Mr.Riva holds a business degree from the University of Washington and expected to include a Peter Jacobsen/Jim Hardy-designed 18-hole championship golf course and pro shop as has been a Certified Public Accountant. well as a fitness center. Development of Gray's Crossing is anticipated to occur in 3 phases with some overlap between phases. Phase 1 is expected to be completed in fall 2006,phase 2 in fall 2007 and phase 3 in fall Rick McConn serves as the project manager for the Gray's Crossing development. Prior to joining 2008. The following table summarizes the expected features of Gray's Crossing as well as the anticipated East West Partners,Mr.McConn served as president of Brehon Investments,a Texas-based real estate and phasing. consulting company. Mr.McConn also served as president,COO and general counsel for RCS Investments of Dallas. Mr.McConn,an attorney,has an extensive background in finance and taxation and was formerly a tax TABLE 5 principal with Arthur Young&Company. Mr.McConn has a degree in Business Administration with a major in accounting from Kansas State University. SUMMARY OF DEVELOPMENT A. William Fiveash serves as the sales and marketing manager for all Tahoe Mountain Resorts Feature Units Phase or Estimated Completion Date projects including the Gray's Crossing development. Mr.Fiveash has served in several capacities with East Single Family Lots 408 1,2,3 West Partners including property management and real estate sales. His primary expertise is with fractional Single Family Cottages 891" 1 ownership projects such as the Hyatt Mountain Lodge in Beaver Creek,Colorado,and Main Street Station in Townhomes 115", 2,3 Breckenridge,Colorado. Mr.Fiveash received a Masters of Business Administration with an emphasis of Lofts 21 2,3 hospitality management and operation from the University of Denver and a dual Bachelor's degree in Employee Housing 92(3) 2 Business and Geography from Wittenberg University. Commercial -- 2,3 -- Jeffrey E. Butterworth manages design and construction activities for the Gray's Crossing Community Space 2006Golf Course -- 2007 development. Prior to joining East West Partners,Mr.Butterworth was a project engineer for GE Johnson Fitness Center -- 2007 Construction Company in Beaver Creek,Colorado. He was involved with the development of McCoy Peak Lodge,Market Square,Villr Center for the Arts,Villa Montane Townhomes,Villas at Beaver Creek and the Source: Developer. Hyatt Mountain Lodge,all in Beaver Creek Colorado. Mr.Butterworth received a Bachelor's degree in o�28 units will be set aside as affordable housing and not be subject to Special Tax levy. Construction Management from Colorado State University. 'Z'8 units will be set aside as affordable housing and not be subject to Special Tax levy. 'None of the 92 units will be subject to the Special Tax levy. 27 28 DOCSSF/50914v6/22925-W 16 DOCSSF/50914v6/22925-0016 l [ Expected Tax Burden and included a premium for those Lots that front the Golf Course. In the event the Golf Course is not completed as planned,the value of such Lots could be significantly less than the value reported in the Table 3 below sets forth an estimated property tax bill for a hypothetical phase 1 single family home Appraisal. The Golf Course,however,has not yet been constructed. Although there can be no guarantee that in tax zone 1 of the District. the Golf Course will be built,the Developer anticipates completing the Golf Course by Spring 2007,as described under"-Development Plan—Golf Course and Fitness Center." TABLE 3 In arriving at its statement of value,the Appraiser also assumed that there are no hidden or unapparent t SAMPLE PROPERTY TAX BILL conditions of the property or subsoil that render it more or less valuable,that all required licenses,certificates PROJECTED FOR FISCAL YEAR 2005-2006 of occupancy or other legislative or administrative authorizations from governmental agencies or private entities or organizations have been or can be obtained,that no hazardous waste and/or toxic materials are Estimated Assessed Valuation located on the property within the District that would affect the development process,that the improvements to Sale Price"' $1,200,000 be funded with the Bonds and the Series 2004 Bonds are completed and that the proposed development is Ad Valorem Basis 1,200,000 constructed in a timely manner with no adverse delays(i.e.,construction will proceed as proposed with no limitations on development occurring). Ad Valorem Property Taxes Rate Amount Base Property Tax Rate 1.00000/0 $12,000 The Appraiser made several other assumptions and assumptions when arriving at the total appraised Unified School District A or Elementary School Lease 0.0048 58 value set forth in the Appraisal, all as set forth in APPENDIX B. No assurance can be given that the Unified School District B or High School Bond 0.0185 222 assumptions made by the Appraiser will,in fact,be realized,and,as a result,no assurance can be given that the Tahoe Truckee 1998 A(School)or Hospital 0.0029 35 property within the District could be sold at the appraised values included in the Appraisal. See"APPENDIX Tahoe Truckee Unified School District 0.0076 91 B—COMPLETE APPRAISAL." Tahoe Truckee Jt.Unified SFID#l,2001 0.0201 241 Sierra Joint Community College District SFID#1 0.0280 336 Subtotal Ad Valorem Taxes"' 1.0819 $12,983 Estimated Value-to-Lien Ratios Special Taxes,Assessments,and Charges=' The value of the land within the District is significant because in the event of a delinquency in the Truckee Recreation-Pool-Voter Approved-Parcel Charge(Code 218/219) $g payment of Special Taxes the District may foreclose only against delinquent parcels. Table 4 below estimates Tahoe/Truckee Joint Unified Tax Voter Approved-Parcel Charge(Code 363/364) 80 the appraised value-to-lien ratios for property in the District based on the principal amount of the Bonds. The Truckee Donner PUD Standby(Code 012/013) 100 assessed value of all land within the District(including land not subject to the Special Tax levy)for fiscal year C Truckee Donner PUD CFD 04-1 3,366 2004-2005 is$14,721,564. The estimated assessed value-to-lien ratio of the property within the District Subtotal Special Taxes&Assessments 3,554 following the issuance of the Bonds based on the fiscal year 2004-2005 Assessor's roll is.45 to 1 The appraised value of the land within the District as set forth in the Appraisal is$151,030,000. The estimated Total $16,537 appraised value-to-lien ratios based upon the land values in the Appraisal as of April 1,2005 is 4.65 to 1 As set forth in Table 2 above,there is$77,332 of additional land-secured debt which is payable from taxes and Total Effective Tax Rate 1.38% assessments levied on property within the District which, if included in the estimated value-to-lien calculations,would lower the ratios somewhat from that stated above and from the ratios in Table 4 below. Source: MuniFinancial. The District will provide updated assessed value-to-lien data in its Annual Report prepared pursuant to Based on a hypothetical sales price of a home. No actual homes yet exist on sold lots. Z'Based on 2004-05 tax rates. the Continuing Disclosure Agreement but will not update the appraised values or appraised value-to-lien estimates. Appraisal The Appraiser valued the taxable property within the District primarily based upon a sales comparison approach to value and based upon a number of assumptions and limiting conditions contained in the Appraisal as set forth in APPENDIX B. Under the sales comparison approach to value,the Appraisal takes into account the development status of the land in the District,analyzes the market for similar properties and compares these properties to the properties in the District. The Appraiser is of the opinion that the aggregate"as is" value of the land within the District that is subject to the Special Tax levy as of April 1,2005,assuming the completion of all improvements to be financed with proceeds of the Bonds was$151,030,000. The Appraisal allocates$127.53 million of the total value to the residential land to the District,$17.8 million to the Golf Course (as defined under the caption "THE DEVELOPMENT AND PROPERTY OWNERSHIP - Development Plan"),and allocates the remaining$5.7 million to the commercial property. When valuing certain of the Lots (as defined under the caption "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Development Plan"),the Appraiser assumed the existence of the Golf Course Preliminary,subject to change. 23 24 DOCSSF/50914v6/229254)016 DOCSSF/50914v6/22925-0016 (A) The Maximum Special Taxes that may be levied in each Fiscal Year on property that is not then delinquent in the payment of any ad valorem taxes or any Special Taxes is not less than the sum of the Administrative Expense Cap plus 110%of the Annual Debt Service in the Bond Year that begins in such Fiscal Year; (B) The Value of Taxable Property is not less than four(4)times the sum of Direct Debt for Taxable Property plus Overlapping Debt for Taxable Property; (C) The Value of Developed Property is not less than four(4)times the sum of Direct Debt for Developed Property plus Overlapping Debt for Developed Property; (D) The Value of Undeveloped Property is not less than three(3)times the sum of Direct Debt for Undeveloped Property plus Overlapping Debt for Undeveloped Property; (E) The Maximum Special Taxes applicable to Parcels that are then delinquent in the payment of any ad valorem taxes or any Special Taxes shall not exceed 10 percent of the aggregate amount of the Maximum Special Tax then applicable to the Taxable Property;and [DISTRICT MAP] (F) No Parcel that is owned by the Developer or an Affiliate of the Developer } shall be delinquent in the payment of any ad valorem taxes or any Special Taxes. For purposes of the foregoing certificate,all calculations shall consider the Parity Bonds proposed to be issued to be Outstanding. `s These provisions shall not apply to Parity Bonds issued for the purpose of refunding Outstanding Bonds if the District shall have received a certificate from an Independent Financial Consultant to the effect that Annual Debt Service after the issuance of such Parity Bonds will be no larger than Annual Debt Service would have been prior to the issuance of such Parity Bonds in each Fiscal Year in which Bonds or Parity Bonds(other than the refunding Parity Bonds)will remain Outstanding. (vi) Such finther documents,money and securities as are required by the provisions of the Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds. Limited Obligation t The Bonds are limited obligations of the District payable on a parity with the Series 2004 Bonds solely from Net Taxes pledged therefor and from certain other amounts held in the Special Tax Fund pursuant to the Indenture. The faith and the credit of neither the District, TDPUD, the State of California nor any political subdivision thereof is pledged to the payment of the principal of,premium,if any,or interest on the Bonds. The issuance of the Bonds shall not directly,indirectly or contingently obligate the District,TDPUD, the State of California or any political subdivision thereof to levy or pledge any form of taxation whatsoever therefor,other than the Special Taxes,or to make any appropriation for their payment other than from Net Taxes and from certain other amounts held in the Special Tax Fund i 19 20 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 transfer to the Prepayment Account. If the amounts in the Interest Account or the Principal Account are specified portion to the Special Tax Fund. Upon receipt of a Certificate of the General Manager that all or a insufficient to pay the principal of including Sinking Fund Payments,or interest on any Bonds and Series specified portion of the amount remaining in the Costs of Issuance Account is no longer needed to pay Costs 2004 Bonds when due,or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate of Issuance,the Trustee shall transfer all or such specified portion of to the Administrative Expense Account. Fund when required,the Trustee shall withdraw from the Reserve Account for deposit in the Interest Account or the Principal Account or the Rebate Fund,as applicable,moneys necessary for such purposes. Proceeds of Foreclosure Sales (b) Whenever moneys are withdrawn from the Reserve Account, after making the required A potential source of funds to pay debt service on the Bonds is the proceeds received following a transfers,the Trustee shall transfer to the Reserve Account from available moneys in the Special Tax Fund,or judicial foreclosure sale of land within the District resulting from the landowner's failure to pay the Special from any other legally available funds which the District elects to apply to such purpose,the amount needed to Tax when due. Pursuant to the Act,in the event of any delinquency in the payment of any Special Tax levied, restore the amount of such Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund the District may order the institution of a Superior Court action to foreclose the lien securing such unpaid shall be deemed available for transfer to the Reserve Account only if the Trustee determines that such amounts Special Tax within specified time limits. In such an action,the real property subject to the unpaid Special Tax will not be needed to make the deposits required to be made to the Interest Account or the Principal Account may be sold at a judicial foreclosure sale. for the next succeeding Interest Payment Date. If amounts in the Special Tax Fund or otherwise transferred to replenish the Reserve Account are inadequate to restore the Reserve Account to the Reserve Requirement,then Under the Act,the commencement of judicial foreclosure following the nonpayment of a Special Tax the District shall include the amount necessary fully to restore the Reserve Account to the Reserve is not mandatory. However,the District has covenanted for the benefit of the Owners of the Bonds that it(i) Requirement in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates and will commence judicial foreclosure proceedings against all parcels owned by a property owner where the as permitted by the Act. aggregate delinquent Special Taxes on such parcels is greater than$7,500 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due and(ii)will commence judicial foreclosure (c) In connection with an optional redemption of the Bonds or a partial defeasance of the Bonds proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each and Series 2004 Bonds,amounts in the Reserve Account may be applied to such optional redemption or partial Fiscal Year in which it receives Special Taxes in an amount which is less than 95%of the total Special Tax defeasance so long as the amount on deposit in the Reserve Account following such optional redemption or levied for such Fiscal Year,and(iii)will diligently pursue such foreclosure proceedings until the delinquent partial defeasance equals the Reserve Requirement. Special Taxes are paid;provided that,notwithstanding the foregoing,the District may elect to defer foreclosure proceedings on any parcel which is owned by a delinquent property owner whose property is not,in the (d) To the extent that the Reserve Account is at the Reserve Requirement as of the first day of the aggregate,delinquent in the payment of Special Taxes for a period of three years or more or in an amount in final Bond Year for Outstanding Bonds,amounts in the Reserve Account may be applied to pay the principal excess of$12,000 so long as(1)the amount in the Reserve Account of the Special Tax Fund is at least equal to of and interest due on the Bonds in such final Bond Year. Moneys in the Reserve Account in excess of the the Reserve Requirement,and(2)the District is not in default in the payment of the principal of or interest on Reserve Requirement not transferred in accordance with the provisions of the Indenture shall be withdrawn the Bonds. The District may,but shall not be obligated to,advance funds from any source of legally available from the Reserve Account on each Interest Payment Date and transferred to the Interest Account. funds in order to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement or to avoid a default in payment on the Bonds. Administrative Expense Account The District covenanted that it will deposit the proceeds of any foreclosure which constitute Net Taxes In addition to Bond proceeds deposited therein,the Trustee shall not less often than annually transfer in the Special Tax Fund. from the Special Tax Fund and deposit in the Administrative Expense Account from time to time amounts necessary to make timely payment of Administrative Expenses upon the written direction of the District; The District will not,in collecting the Special Taxes or in processing any such judicial foreclosure provided,however,that the total amount of the deposits into the Administrative Expense Account in any Bond proceedings,exercise any authority which it has pursuant to the California Government Code in any manner Year shall not exceed the Administrative Expense Cap until such time as(i)there has been deposited in the which would materially and adversely affect the interests of the Bondowners and,in particular,will not permit Interest Account and the Principal Account an amount,together with any amounts already on deposit therein, the tender of Bonds in firll or partial payment of any Special Taxes except upon receipt of a certificate of an that is sufficient to pay the interest and principal on all Bonds and Series 2004 Bonds due in such Bond Year Independent Financial Consultant that to accept such tender will not result in a reduction in the maximum and(ii)there has been deposited in the Reserve Account the amount,if any,required in order to cause the Special Taxes that may be levied on the taxable property within the District in any Fiscal Year to an amount amount on deposit therein to equal the Reserve Requirement. In addition to the foregoing,the Trustee shall less than the sum of 110%of Annual Debt Service in the Bond Year ending on the September 1 following the also deposit in the Administrative Expense Account the portion of any Prepayment directed to be deposited in end of such Fiscal Year plus the estimated Administrative Expenses for such Bond Year. the certificate of the Special Tax Administrator delivered to the Trustee in connection with such Prepayment. No assurances can be given that the real property subject to foreclosure and sale at a judicial tAcquisition and Construction Fund foreclosure sale for nonpayment of the Special Tax will be sold or,if sold,that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. The moneys in the Acquisition and Construction Fund shall be applied exclusively to pay the Project Costs and Costs of Issuance. Amounts for Project Costs or Costs of Issuance shall be disbursed by the Trustee Reduction of Maximum Special Taxes from the Project Account or the Costs of Issuance Account,as the case may be,pursuant to a requisition signed by an Authorized Representative of the District,which must be submitted in connection with each Pursuant to the Indenture,the District found and determined that,historically,delinquencies in the requested disbursement. payment of special taxes authorized pursuant to the Act in community facilities districts in California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to Upon receipt of a Certificate of the General Manager that all or a specified portion of the amount make timely payment of principal of and interest on the outstanding indebtedness of such community facilities 8 remaining in the Project Account is no longer needed to pay Project Costs,the Trustee shall transfer all or such districts. For this reason,the District also determined that a reduction in the Maximum Special Tax authorized 15 16 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 � P r registered owner of$1,000,000 or more in principal amount of Bonds may be paid interest by wire transfer in Debt Service Schedule for the Bonds immediately available funds to an account in the United States if the registered owner makes a written request of the Trustee no later than the applicable Record Date. The principal of and interest on the Bonds shall be The table below sets forth the annual debt service requirements on the Bonds and the Series 2004 payable in lawful money of the United States of America. Bonds along with annual debt service coverage based on the maximum Special Tax levy. 1 Total Senes 2004 Total Bonds and Period Ending Bonds Bonds Total Bonds Bonds Debt Series 2004 Bonds Maximum Special Debt Service (September 1) Pnnci Interest Debt Service""" Service" Debt Service"' Tax a "' Coverage"' 2006 $1,002,535 $870,305 $1,872,840 $1,873,48(041 1.00 2007 1,037,535 885,305 1,922,840 2,115,887"' L10 2008 1,056,450 904,818 1,961,268 2,158,205"' 1.10 2009 1,079,663 918,593 L998,255 2,201,369 1.10 2010 1,101,943 936,643 2,038,585 2,245,397 1.10 2011 1,123,268 958,738 2,082,005 2,290,305 1.10 2012 1,148,458 974,605 2,123,063 2,336,111 1.10 2013 1,167,058 994,258 2,161,315 2,382,833 1.10 2014 1,189,380 1,017,608 2,206,988 2,430,490 1.10 2015 1,210,243 1,039,278 2,249,520 2,479,099 1.10 2016 1,234,585 1,059,278 2,291863 2,528,681 1.10 2017 1,262,265 1,077,548 2,339,813 2,579,255 1.10 2018 1,287,865 1,099,028 2,386,893 2,630,840 1.10 2019 1,311,305 1,123,393 2,434,698 2,683,457 1.10 2020 1,342,505 1,145,303 2,487.808 2,737,126 1.10 2021 1,366,130 1,169,678 2,535,808 2,791,869 1.10 I 2022 1,397,370 1,191,158 2,588,528 2,847,706 1.10 2023 1,425,695 1,214,653 2,640,348 2,904,660 1.10 2024 1,450,908 1,240,040 2,690,948 2,962,753 1.10 4 2025 1,482,670 1,262,265 2,744,935 3,022,008 1.10 2026 1,510,408 1,291,328 2,801,735 3,082,449 L 10 2027 1,539,120 1,316,653 2,855,773 3,144,098 1.10 2028 1,568,520 1,343,240 2,911,760 3,206,979 1.10 2029 1,603,320 1,365,803 2,969,123 3,271,119 1.10 2030 1,637,420 1,394,340 3,031,760 3,336,541 1.10 2031 1,671,010 1,422,790 3,093,800 3,403,272 1.10 2032 1,703,800 1,451,310 3,155,110 3,471,338 1.10 2033 1,735,500 1,479,610 3,215,110 3,540,764 1.10 2034 1,770,820 1,507,400 3,278,220 3,611,580 1.10 2035 1,809.180 1,539.390 3,348.570 3,683,811 1.10 TOTALS $4L226.929 S35194359 $76421282 $82.080.002 "s ( Preliminary,subject to change. (2)Excludes interest on Bonds capitalized through September 1,2005. tst Net of annual Administrative Expenses paid prior to debt service and capped at$25,500 per year(escalated 2%annually). Maximum Special Tax figures in years 2009 through 2035 assume full development of the District. (4)Represents expected(not maximum)levy based on current development status shown in the Appraisal. Ifthe maximum Special Tax were applied to all property in fiscal year 2005-06,total taxing capacity would be$10,782,165,nearly 5.7 times 1 estimated debt service in fiscal year 2005-06. 151 Based on hypothetical maximum Special Tax assuming all property is in final build out categories. Actual maximum Special Taxes for such years will be based on land use at time of levies. f 9 t 1 6 3 4 [ 11 12 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 THE BONDS Redemption Dates Redemption Prices General Provisions Through March 1,20_ September 1,20_,and March 1,20_ k The Bonds will be dated their date of delivery and will be issued in the aggregate principal amount of September 1,20,and March 1,20_ $18,250,000'. The Bonds will bear interest from their dated date at the rates per annum set forth on the inside September 1,20 and thereafter cover page hereof,payable semiannually on each March 1 and September 1,corrunencing September 1,2005 (individually,an"Interest Payment Date"),and will mature in the amounts and on the dates set forth on the Mandatory Sinking Fund Redemption. The Bonds maturing on September 1,20_are subject to inside cover page hereof. Interest on the Bonds will be computed on the basis of a 360-day year consisting of mandatory sinking payment redemption in part on September 1,20_,and on each September 1 thereafter to twelve 30 day months. The Bonds will be issued in fully registered form in denominations of$5,000 or any maturity,by lot,at a redemption price equal to the principal amount thereof to be redeemed,together with integral multiple thereof accrued interest to the date fixed for redemption,without premium,from sinking fund payments as follows: Principal of and interest on the Bonds are payable in lawful money of the United States of America. Interest is payable by check of the Trustee mailed to the registered owners appearing on the registration books Redemption Date Principal of the Trustee as of the close of business on the fifteenth day of the month next preceding each Interest (September 1) Amount Payment Date. Principal and any premium on the Bonds are payable upon surrender of the Bonds at the Principal Office of the Trustee. The Bonds,when issued,will be registered initially in the name of Cede&Co.,as registered owner and nominee of DTC. So long as DTC,or Cede&Co.,as nominee,is the registered owner of all the Bonds, principal and interest payments on the Bonds will be made directly to DTC, and disbursement of such payments to the DTC Participants(defined below)will be the responsibility of DTC,and disbursement of such payments to the Beneficial Owners(defined below)will be the responsibility of the DTC Participants,as more fully described under"—Book-Entry-Only System" *Final Maturity. Redemption Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20 are subject to Mandatory Prepayment Redemption. All of the Bonds are subject to redemption prior to their stated mandatory sinking payment redemption in part on September 1,20 and on each September 1 thereafter to maturities on any Interest Payment Date from the proceeds of prepayments of Special Taxes,in whole or in maturity,by lot,at a redemption price equal to the principal amount thereof to be redeemed,together with part(in integral multiples of$5,000),at a redemption price(expressed as a percentage of the principal amount accrued interest to the date fixed for redemption,without premium,from sinking fund payments as follows: of the Bonds or portions thereof to be redeemed)as set forth below,together with accrued interest thereon to the date fixed for redemption: Redemption Date Principal Redemption Dates Redemption Prices (September 1) Amount Through March 1,20_ September 1,20_,and March 1,20_ September 1,20 ,and March 1,20_ September 1,20 and thereafter Optional Redemption. The Bonds are subject to optional redemption,from sources of funds other than prepayments of the Special Tax prior to their stated maturity as a whole,or in part(in integral multiples of $5,000)in order of maturity selected by the District and by lot within a maturity,on any Interest Payment Date *Final Maturity. on or after 1,200_,at a redemption price(expressed as a percentage of the principal amount of the Bonds or portions thereof to be redeemed)as set forth below,together with accrued interest thereon to the The amounts in the foregoing table shall be reduced pro rata by the principal amount of all Term date fixed for redemption: Bonds which are redeemed as a result of any prior partial redemption of Term Bonds. Redemption Procedures. The Trustee shall cause notice of any redemption to be mailed by first class mail,postage prepaid,at least thirty(30)days but not more than sixty(60)days prior to the date fixed for redemption, to the respective registered owners of Bonds designated for redemption, at their addresses appearing on the Bond registration books; but such mailing shall not be a condition precedent to such Preliminary,subject to change. Preliminary,subject to change. I s F 78 DOCSSF/50914v6/22925-W 16 DOCSSF/50914N 6/22925-0016 Development Status. The Developer completed the sitework and infrastructure for the first 101 phase appraised value or assessed values described herein,or for a price sufficient to pay the principal of and interest 1 single family lots in October 2004. Sales contacts with individual owners for all 101 single family lots were on the Bonds in the event of a default in payment of Special Taxes by the current or future landowners within executed at the sales launch event on October 2,2004. All sales closed by the end of 2004. Total revenues the District. See "SPECIAL RISK FACTORS — Land Values" and APPENDIX B - "COMPLETE from such sales exceeded$24,000,000 with an average sales price of approximately$245,000 per single APPRAISAL"herein. family lot. The Developer is completing the public bid process for sitework and infrastructure for 195 phase 2 single family lots that are anticipated to be developed and offered for sale in 2005. The Developer currently EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE estimates sales of approximately 120 single family lots in 2005 at an estimated average price of$400,000 per PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS lot. Development activities in connection with the 89 freestanding single family cottages of phase 1 is OF TDPUD NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE SPECIAL t anticipated to begin in the fall of 2005 with sales to commence shortly thereafter. Mass grading and OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES AND AMOUNTS excavation of the golf course is scheduled to begin in summer 2005,with completion expected in Spring 2007. HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN. In December 2004,the Developer sold the commercial property and rights to develop 35 attached Description of the Bonds townhomes and 21 lofts to Village at Gray's Crossing L.P. Village at Gray's Crossing L.P.is not affiliated with the Developer and will be responsible for the development of such properties. Development of the The Bonds will be issued and delivered as fully registered Bonds,registered in the name of Cede& commercial property and attached townhomes is expected to commence in 2005. Co.as nominee of The Depository Trust Company,New York,New York("DTC"),and will be available to actual purchasers of the Bonds(the"Beneficial Owners")in the denominations of$5,000 or any integral Appraisal. Cushman & Wakefield of Colorado, Inc., Park City, Utah (the "Appraiser"), has multiple thereof,under the book-entry system maintained by DTC,only through brokers and dealers who are conducted an appraisal(the"Appraisal")of the land within the District and has concluded,based upon the or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical assumptions and limiting conditions contained in the Appraisal,that,as of April 1,2005,the value of land delivery of the Bonds. In the event that the book-entry-only system described herein is no longer used with within the District that is subject to the Special Tax levy was$151,030,000. The Appraisal allocates$126.53 respect to the Bonds,the Bonds will be registered and transferred in accordance with the Indenture. See"THE million of the total value to the residential land in the District,$17.9 million to the golf course and$5.7 million BONDS—Book-Entry-Only System"herein. to the commercial property. See"THE DEVELOPMENT AND PROPERTY OWNERSHIP-Appraisal"and APPENDIX B-"COMPLETE APPRAISAL." Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such Sources of Payment for the Bonds payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry- only system is no longer used with respect to the Bonds,the Beneficial Owners will become the registered Net Taxes. Under the Indenture,the District has pledged to repay the Bonds from the Net Taxes and owners of the Bonds and will be paid principal and interest by the Trustee,all as described herein. See"THE amounts on deposit in the certain funds and accounts established under the Indenture other than the Rebate BONDS—Book-Entry-Only System"herein. Fund and the Administrative Expense Account. The Bonds are subject to optional redemption,extraordinary mandatory redemption and mandatory The Net Taxes are the primary security for the repayment of the Bonds. In the event that the Net sinking fund redemption as described herein. For a more complete descriptions of the Bonds and the basic Taxes are not paid when due,the only sources of funds available to pay the debt service on the Bonds are documentation pursuant to which they are being sold and delivered,see"THE BONDS"and APPENDIX D- certain amounts held by the Trustee,including amounts held in the Reserve Fund. See"SOURCES OF "SUMMARY OF INDENTURE"herein. PAYMENT FOR THE BONDS—Reserve Fund." Tax Matters The Bonds are payable on parity with the Series 2004 Bonds. In the opinion of Stradling Yocca Carlson&Rauth,a Professional Corporation,Newport Beach, Foreclosure Proceeds. The District has covenanted for the benefit of the owners of the Bonds that it California("Bond Counsel"),under existing statutes,regulations,rulings and judicial decisions,and assuming (i)will commence judicial foreclosure proceedings against all parcels owned by a property owner where the certain representations and compliance with certain covenants and requirements described herein,interest(and aggregate delinquent Special Taxes on such parcels is greater than$7,500 by the October 1 following the close original issue discount)on the Bonds is excluded from gross income for federal income tax purposes and is not of each Fiscal Year in which such Special Taxes were due and(ii)will commence judicial foreclosure an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each individuals and corporations. In the further opinion of Bond Counsel,interest(and original issue discount)on Fiscal Year in which it receives Special Taxes in an amount which is less than 95%of the total Special Tax the Bonds is exempt from State of California personal income tax. See"TAX MATTERS"herein. levied for such Fiscal Year,and(iii)will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid;provided that,notwithstanding the foregoing,the District may elect to defer foreclosure Set forth in APPENDIX G is the form of opinion of Bond Counsel expected to be delivered in proceedings on any parcel which is owned by a delinquent property owner whose property is not,in the connection with the issuance of the Bonds. For a more complete discussion of such opinion and certain tax aggregate,delinquent in the payment of Special Taxes for a period of three years or more or in an amount in consequences incident to the ownership of the Bonds,see"TAX MATTERS"herein. excess of$12,000 so long as(1)the amount in the Reserve Account of the Special Tax Fund is at least equal to the Reserve Requirement,and(2)the District is not in default in the payment of the principal of or interest on Professionals Involved in the Offering r the Bonds. The District may,but shall not be obligated to,advance funds from any source of legally available funds in order to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement or to UBS Financial Services Inc. is the Underwriter of the Bonds. The Bank of New York Trust avoid a default in payment on the Bonds. See"SOURCES OF PAYMENT FOR THE BONDS—Proceeds of Company, N.A., San Francisco, California, will act as Trustee under the Indenture. All proceedings in tForeclosure Sales"herein." There is no assurance that the property within the District can be sold for the connection with the issuance and delivery of the Bonds are subject to the approval of Bond Counsel. Fieldman kF A 3 4 DOCSSF/509146/22925-0016 DOCSSF/5o914v6/22925-0016 l� I t f g [REGION MAP] [TAHOE AREA MAP] fr 4 3 I f 1 I G t DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 Except where otherwise indicated,all information contained in this Official Statement has been provided by TDPUD and the District. No dealer,broker,salesperson or other person has been authorized by TDPUD,the District,the TRUCKEE DONNER PUBLIC UTILITIES DISTRICT Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of BOARD OF DIRECTORS the Bonds other than those contained herein and,if given or made,such other information or representations must not be relied upon as having been authorized by TDPUD,the District,the Trustee or the Underwriter. This Official Statement Joseph R.Aguera does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person J.Ron Hemig in any jurisdiction in which it is unlawful for such person to make such an offer,solicitation or sale. Patricia S.Sutton Tim F.Taylor All information for investors regarding TDPUD, the District and the Bonds is contained in this Official William L.Thomason Statement. While TDPUD maintains an internet website for various purposes,none of the information on that website is intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds. No dealer,broker,salesperson or other person has been authorized by TDPUD to provide any information or to make any representations other than as contained herein and,if given or made,such other information or representation DISTRICT STAFF must not be relied upon as having been authorized by TDPUD or the District. Peter L.HoL nteister,General Manager This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Stephen Hollabaugh,Assistant General Manager and Electric Utility Manager Statements contained in this Official Statement which involve estimates,forecasts or matters of opinion,whether or not Raymond Edward Taylor,Water Utility Manager expressly so described herein,are intended solely as such and are not to be construed as representations of fact. Mary Chapman,Administrative Services Manager and Treasurer The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of,its responsibilities to investors under the federal securities laws as applied to the facts BOND COUNSEL and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Stradling Yocca Carlson&Rauth,a Professional Corporation Newport Beach,California The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall,under any circumstances,create any implication that there has been no change in the affairs of TDPUD,the District or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively and do FINANCIAL ADVISOR TO THE DISTRICT pure p Y p Y not purport to be complete statements of an or all of such provisions. Reference is hereby made to such documents on file with TDPUD for further information in connection therewith. Fieldman Rolapp&Associates Irvine,California Certain statements included or incorporated by reference in this Official Statement constitute"forward-looking statements"within the meaning of the United States Private Securities Litigation Reform Act of 1995,Section 21 E of the United States Securities Exchange Act of 1934,as amended,and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as"plan,""expect,""anticipate," SPECIAL TAX CONSULTANT "estimate,""project,"`budget"or other similar words. Such forward-looking statements include,but are not limited to, certain statements contained in the information under the captions"THE COMMUNITY FACILITIES DISTRICT"and MuniFinancial "THE DEVELOPMENT AND PROPERTY OWNERSHIP." Temecula,California THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR REAL ESTATE APPRAISER ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS 1 Cushman&Wakefield of Colorado,Inc. SET FORTH IN THIS OFFICIAL STATEMENT. Park City,Utah IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN TRUSTEE MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. The Bank of New York Trust Company,N.A. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS San Francisco,California AMENDED,IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. 1 DOCSSF/50914v6/22925-0016 DOCSSF/50914v6/22925-0016 6 OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL IN WITNESS WHEREOF,Truckee Donner Public Utility District Community Facilities TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A District No.04-1(Gray's Crossing)has caused this Bond to be dated as of the Dated Date,to be DEBT OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT,THE STATE OF signed on behalf of the District by the President of the Board of Directors of the Truckee Donner CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF Public Utility District,acting as the legislative body of Truckee Donner Public Utility District ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION. Community Facilities District No.04-1(Gray's Crossing)by his facsimile signature and attested by t the facsimile signature of the Clerk of the Truckee Donner Public Utility District. This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee. I IT IS HEREBY CERTIFIED,RECITED AND DECLARED that all acts,conditions and things required by law to exist,happen and be performed precedent to and in the issuance of this Bond do exist,have happened and have been performed in due time,form and manner as required by President of the Board of Directors of the Truckee Donner { law,and that the amount of this Bond,together with all other indebtedness of the District,does not Public Utility District,acting as the legislative body of i exceed any debt limit prescribed by the laws or Constitution of the State of California. Truckee Donner Public Utility District Community Facilities District No.04-1(Gray's Crossing) ATTEST: District Clerk of the Truckee Donner Public Utility District [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within-defined Indenture. Dated: 2005 THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By: Authorized Signatory i R i z DOCSOC/l 102124v4/22925-0016 A-4 DOCSOC/1102124v4/22925d>U16 A-5 t IN WITNESS WHEREOF,the parties have executed and attested this Trust Indenture by EXHIBIT A their officers duly authorized as of the date and year first written above. FORM OF 2005 BOND 4 TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.04-1 No. _ $ (GRAY'S CROSSING) UNITED STATES OF AMERICA STATE OF CALIFORNIA By. COUNTY OF NEVADA President of the Board of Directors of the Truckee Donner Public Utility District,acting as TRUCKEE DONNER PUBLIC UTILITY DISTRICT the legislative body of the Truckee Donner COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING) Public Utility District Community Facilities SPECIAL TAX BOND,SERIES 2004 District No.04-1(Gray's Crossing) INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NO. ATTEST: REGISTERED OWNER: CEDE&CO. District Clerk of the PRINCIPAL AMOUNT: DOLLARS Truckee Donner Public Utility District TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.04-1(GRAY'S CROSSING)(the"District")FOR VALUE RECEIVED,hereby promises to pay,solely from certain amounts held under the Indenture(as hereinafter defined),to the THE BANK OF NEW YORK TRUST COMPANY, Registered Owner named above,or registered assigns,on the Maturity Date set forth above,unless N.A.,as Trustee redeemed prior thereto as hereinafter provided,the Principal Amount set forth above,and to pay interest on such Principal Amount from the Interest Payment Date(as hereinafter defined)next preceding the date of authentication hereof,unless(i)the date of authentication is an Interest By: Payment Date in which event interest shall be payable from such date of authentication,(ii)the date Its: Authorized Officer of authentication is after a Record Date(as hereinafter defined)but prior to the immediately succeeding Interest Payment Date,in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication,or(iii)the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing,if at the time of authentication of this Bond interest is in default,interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or,if no interest has been paid or made available for payment,interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September I(each,an"Interest Payment Date"),commencing September I,2005,at the Interest Rate set forth above,until the Principal Amount hereof is paid or made available for payment. } The principal of and premium,if any,on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the office of The Bank of New York Trust Company,N.A.(the"Trustee")or such other location as may be designated by the Trustee. Interest on this Bond shall be paid by check of the Trustee mailed by first class mail,postage prepaid,on the applicable Interest Payment Date or in certain circumstances described in the Indenture by wire transfer to an account within the United States,to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding S-1 A-1 DOCSOC/1102124v4/22925-0016 DOCSOC/1102124v4/229254Nt 16 1 E for the benefit of the Owners of the 2005 Bonds which may be issued hereunder from time to time, that the Original Indenture is amended to add thereto an Article XI to read as follows: Interest shall be payable on each 2005 Bond from the date established in accordance with Section 2.5 on each Interest Payment Date thereafter until the principal sum of that 2005 Bond has ARTICLE XI been paid;provided,however,that if at the maturity date of any 2005 Bond(or if the same is 4 redeemable and shall be duly called for redemption,then at the date fixed for redemption)funds are SERIES 2005 BONDS available for the payment or redemption thereof in full,in accordance with the terms of this Indenture,such 2005 Bonds shall then cease to bear interest. Interest due on the 2005 Bonds shall be Section 11.1 Definitions. Unless the context otherwise requires,the following terms shall calculated on the basis of a 360-day year comprised of twelve 30-day months. have the following meanings when used in this Article: Section 11.3 Form of Bonds. The 2005 Bonds and the certificate of authentication shall "2005 Bonds"means any of the District's Special Tax Bonds,Series 2005 that are be substantially in the form attached hereto as Exhibit A,which forms are hereby approved and Outstanding under the Indenture. adopted as the forms of such Bonds and of the certificate of authentication. Notwithstanding any provision in this Indenture to the contrary,the District may,in its sole discretion,elect to issue the "Parity Bonds"means all bonds,notes or other evidences of indebtedness issued subsequent 2005 Bonds in book entry form. to the issuance of the 2004 Bonds that are payable from Net Taxes on a parity with the 2004 Bonds or,if no 2004 Bonds are then outstanding,on a parity with the then outstanding Parity Bonds. Section l IA Creation of Accounts and Subaccounts;Application of Proceeds. "Term Bonds"means the 2005 Bonds maturing September 1, and September 1, (a) There are hereby created and established and shall be maintained by the Trustee the following accounts and subaccounts: Section 11.2 Description of 2005 Bonds;Interest Rates. The 2005 Bonds shall be issued in fully registered form in denominations of$5,000 or any integral multiple thereof. The 2005 Bonds (i) a Capitalized Interest Subaccount for the 2005 Bonds in the Truckee Donner shall be numbered as determined by the Trustee. Public Utility District Community Facilities District No.04-1(Gray's Crossing)Special Tax Fund; The Bonds shall be designated"Truckee Donner Public Utility District Community Facilities (ii) a Rebate Account and an Alternative Penalty Account for the 2005 Bonds in District No.04-1(Gray's Crossing),Special Tax Bonds,Series 2005." The 2005 Bonds shall be the Truckee Donner Public Utility District Community Facilities District No.04-1(Gray's Crossing) dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in Rebate Fund;and the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below: (iii) a Costs of Issuance Account and a Project Account for the 2005 Bonds in the Truckee Donner Public Utility District Community Facilities District No.04-1(Gray's Crossing) Maturity Date Acquisition and Construction Fund. (September 1) Principal Amount Interest Rate $ % (b) The proceeds of the sale of the 2005 Bonds received by the Trustee on behalf of the District shall be deposited and transferred as follows: (i) $ shall be deposited in the Capitalized Interest Subaccount for the 2005 Bonds in the Interest Account of the Special Tax Fund for disbursement in accordance with Section 3.4; (ii) $ shall be deposited in the Costs of Issuance Account for the 2005 Bonds in the Acquisition and Construction Fund for disbursement in accordance with Section 3.10; (iii) $ shall be deposited to the Project Account for the 2005 Bonds in the Acquisition and Construction Fund for disbursement in accordance with Section 3.10;and (iv) $ shall be deposited in the Reserve Account of the Special Tax Fund(equaling the Reserve Requirement)to be disbursed in accordance with Section 3.7. The Trustee may,in its discretion,establish a temporary fund or account in its books and records to facilitate such transfers. 1 2 3 DOCSOC/1102124v4/22925-0016 DOCSOC/1102124v4/22925-0016 1